South Africa

Immoral to bail out SAA at the cost of South Africans – DA tells Mboweni

It is morally indefensible to prioritise an expected bailout of South African Airways (SAA) over empowering people, DA MP and spokesperson on finance Geordin Hill-Lewis said ahead of Wednesday’s Medium-Term Budget Policy Statement (MTBPS).

Hill-Lewis expects Finance Minister Tito Mboweni to announce another bailout for the flailing airline, to the tune of R10.5 billion, in what will be his third budget statement in an extraordinary year dominated by the economic effects of Covid-19.

Hill-Lewis said Treasury and Mboweni must restore South Africa to a sustainable debt path and re-establish fiscal discipline.

“Equally important is protecting essential public services from deep budget cuts. These two goals are related. If we spend more on interest on debt, we will have less to spend on essential services.

“And if spending is focused on wasteful projects and failing state companies, there will be less for essential services.”

‘State-led economy’

Hill-Lewis said South Africa’s economic recovery depends on a choice that the ANC must make: State ambition versus giving power to the people.

“The ANC must abandon its ambition for a state-led economy, which is smothering the entrepreneurial talent of South Africans,” he said.

“The SAA bailout is why this budget is ultimately bound to disappoint. It represents the failure of the ANC to make the choice to move away from state ambition to giving power to the people.”

He said no-one in South Africa is making a case for why SAA should be bailed out. Again.

“And yet, another bailout is coming. R10.5 billion, on top of R16.4 billion in February.

“This is perfectly symbolic of the choice of ‘state ambition’ over empowering people. It is a morally indefensible choice to make.”

Hill-Lewis said the consequences of not closing what Mboweni calls the, “mouth of the hippo” – the yawning gap between government revenue and government expenditure – will lead to, “a full-blown sovereign debt crisis that would see South Africa cede a portion of policy sovereignty to international lenders, be they based in Beijing or Washington”.

But more than that, it will also lead to far deeper cuts across every public service, affecting above all, the poor.

He said closing the mouth of the hippo would require some difficult and painful decisions in the short-term, notably deep cuts to the public wage bill, and ending the cycle of perennial bailouts for failing state entities.

The DA’s four core expectations for the MTBPS:

– The minister must show a credible path to debt stabilisation, and in the longer term, to debt reduction;

– The minister should commit himself to a formally legislated debt ceiling, ideally by supporting the DA’s Fiscal Responsibility Bill;

– The minister must protect essential public services from deep budget cuts, by focusing cuts on the public wage bill and through a root-and-branch reassessment of government spending; and

– The minister must hold the line on bailouts to failing state entities and should refuse any further bailout of South African Airways (SAA).

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