For the data geeks who think they can
discern the future in the numbers from the past this was a bonanza week.
Firstly there was the GDP growth rate for the last three months of 2014 and then there was the National Budget for
the coming fiscal year. And then it’s company reporting season and a deluge of
financials is flooding the newspapers, despite the JSE saying it no longer
requires them to do so. Odd that.
As usual the more one looks into any
published data the more one wonders what it is that the compiler of those
numbers doesn’t want to reveal. Minister
Nene’s budget speech managed to get by without once using the “austerity” word
but in fact this is what is going to happen. So far it has yet to trigger any
reaction from the usual suspects but soon they will spot that the government will
be taking more but giving less. The fastest growing expenditure item is the
cost of paying the interest on the government’s debt. This year it will
comprise more than 10% of the state’s total expenditure and of course there is
nothing to show for it. Worryingly, even with his finest spin, Nene is forced
to admit that this ratio could be over 11% in just 2 years time. No wonder he
wants to cut civil servants’ spending on catering, entertainment (what!?) and venues
by 8%. Home Affairs department is to get
18% less than last year. This won’t help us to get all those unabridged
certificates that are required.
In defiance of these calls for parsimony,
however, the Office of the Premier here in KZN has appointed a consultant to
run the “I Do Right – Even When Nobody is Watching” Campaign. Aside from the
disturbing grammar, the idea that such a campaign has become necessary and
furthermore is underway is dreadful. Why not simply fire anyone not doing
right?
Nene’s audience seemed pleased with the
announcement that for the first time in many years the income tax rates would
need to go up by one percentage point. But how many of those MPs have now
gathered that in their salary bracket that translates into about an extra R1000
a month in tax deductions?
Also growing by 10% pa is the sum
allocated (R47.8bn) for paying the R330 per month child support grant. That
means that we are a nation where more than 12million children (out of an
official population of around 56 million) depend on a very meagre state handout
to survive. What a scandal and disgrace for this country. The sole hope for
these kids is that their parents get employment but the dead hand of the socialism
is throttling us all to death.
Another eye-catching figure in the budget
was the almost R56n that government hopes to collect this year from the fuel
levy. This amount is about R11bn more than the National Roads Authority’s debt
and once again it is very hard to understand why the levy proceeds, which have
been paid by motorists anyway, can not be used to extinguish that debt and SANRAL
can sell those ugly and contentious e-toll gantries around Joburg to a scrap
metal merchant.
The 4th quarter 2014 GDP
growth was a very surprising 4.1%pa. The largest contributors to this still
unsatisfactorily low figure turned out to be the manufacturing and mining
sectors. Representatives from these areas seem bemused by the news. Investors
however are thrilled and the JSE All Share soared to new highs so that
February’s performance will be around 3.5%. The combined financial and
industrial index (i.e. omitting the pesky resources shares) is up 27% year on
year. The problem is that average earnings for the companies in that index are
up only 15%pa. The valuation string is stretched really taut. Will there be a
sharp snap someday? Probably.
The Proteas’ win over the West Indies this morning was very satisfactory. Our
progress through the World Cup is reasonably comfortable. The Lions on the
other hand are making a very bad start in the Super 15, although it was really
unsporting of the Sharks last week to host them in several inches of water.
Talk about a home advantage.
James Greener
27th February 2015
