RealNet MD - mixed feelings about budget speech

Jan Davel, MD of the RealNet estate agency group, says he has mixed feelings about yesterday’s Budget. “On the one hand we welcome the positive approach to affordable housing revealed in this Budget, with the provision to build more than 400 000 low-income houses over the next three years in addition to the 2,7 million homes already provided by the Department of Housing since 1994.

“Indeed, Government’s contribution to housing and basic municipal services is a substantial component of the social wage that Finance Minister Pravin Gordhan referred to in today’s Budget speech. The budget for housing and community amenities has increased by more than 16% a year since 2008, and much progress has been made in extending access to housing, electricity, water, sanitation and refuse removal services.

“We are, however, interested to see what final decisions will be made with regard to the new local government equitable share formula that intends providing a R275 per month subsidy for free basic services to some 59% of households in SA. Our feeling is that while this could alleviate many problems in the short term, it might prove difficult to sustain unless the tax base can be substantially broadened.”

Davel also says that the “faster and more inclusive economic growth” noted as one of the key pillars of the Budget is a commendable idea, but it will only occur if there are significant successes in job creation, enterprise development, skills transfer and transformation at the appropriate levels of the country’s workforce – and could actually be hindered by the introduction of a youth wage incentive.

“My view is that incentivising employers to employ inexperienced young people would not really result in inclusive economic growth. It could lead to nominal tax benefits for the employers, but without skills or structured training to improve their skills and prospects, the young people concerned would be in danger of remaining minimum-wage employees experiencing the same socio-economic challenges as before.”

Similarly, he says, the billions of rand to be spent on infrastructure development will not necessarily result in inclusive growth unless it also provides sustainable jobs with positive career prospects provided by motivated employers. “So I was disappointed that the Budget did not include more incentives and tax relief for private sector employers, backed up by an efficient Jobs Fund implementation strategy and plans for greater practical collaboration with the Small Enterprise Development Agency and the National Youth Development Agency.”

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