‘Job cuts unavoidable” students predict ahead of budget

While VAT, the proposed Sovereign Wealth Fund (SWF), and the State Bank are the expected focal points for Wednesday’s budget speech, finalists in the annual budget speech competition believe job cuts are imminent.

Speaking to the Citizen in Cape Town on Tuesday, all were in agreement that job cuts have become absolutely necessary in order to provide the wiggle room needed to move forward.

“For us to pursue efficiency, you have to skim some fat. Jobs are one of the things that are going to be skimmed in order for us to achieve our long-term goals and sustainability,” said University of Pretoria student Michelle Hartzenberg.

“With effective plans, absorbing those people in other sectors and industries and retraining them can manage that transition,” she added.

“We should expect some job cuts, especially in state-owned enterprises (SOEs),” said Masters student at University of Fort Hare Bekithemba Qeqe.

As such, inequality – especially given the current state of the economy – is a harsh reality that University of Johannesburg student Zaziwe Maluleke believes we all just have to face.

With a view to the speech, Maluleke explains that she believes Mboweni is definitely going to elaborate on how the State Bank and SWF will work, but she believes his address will be scant on the technical details for items like proposed plans for funding Eskom and SAA.

The trio are just three of the 20 finalists in the 48th annual Nedbank and Old Mutual Budget Speech Competition. They are in Cape Town ahead of the budget speech to not only make one last impression on the competition judges but to interact with policymakers from National Treasury, the Reserve Bank as well as some of the country’s top economists and business minds at a variety of events throughout the week.

They will also be in parliament to hear Mboweni’s speech first-hand.

Set up as a platform to expose tertiary students across South Africa to fiscal and economic policy planning processes, the competition calls on our top young thinkers to find practical and workable solutions to some of the country’s key social and economic challenges and present it in the form of an essay.

Among the most prominent talking points regarding this year’s budget is the expectation that Mboweni will take a leaf out of his predecessor’s book and increase VAT, a mere two years after the most recent increase.

University of Pretoria student Wihan van der Heever believes that tax is the right way to go but that the focus should be shifted from VAT to even more tax on the rich.

“We should be looking at tax brackets and what the implications of placing another bracket right at the top would be. To capture that top one percent of our population…”

“Also, bracket creep may be this year, more prominent than other years as incomes increase, because of inflation your [tax] bracket stays the same and you might find yourself in a higher bracket than you were last year.”

When asked if he believes Mboweni will toe the line of Ramaphosa’s SONA, van der Heever states that he believes there is no room to deviate from it.

“He’ll try stay in the bounds as best he can but it’s difficult. You want to cut expenses, you want to raise revenue and you’ve got all of these people expecting big things from you and you want to please everyone but it is impossible.”

Qeqe believes Mboweni will follow on Ramapahosa’s mentions of dealing with public debt and reducing the public wage bill, but adds that he would like to see the minister assure South Africans that his policy implementation will be followed up by “aggressive implementation.”

“One of the most crucial elements or considerations to make when you consider policy in South Africa is implementation.”

He referred back to the president’s pow-wow with business leaders at one of this year’s many business indabas and explained that it was agreed upon that the South African government is good at diagnosing the issues that the country faces.

Qeqe added that the government is just as good at acquiring the understanding of what needs to be done about those issues.

“However, there is a gap between that understanding and practical implementation.”

The winner of the budget speech competition dinner will be announced at a prestigious gala dinner on the evening of the speech. Either Mboweni or his deputy are expected to attend.

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