Thread: Latest Budget an insult to Senior citizens

Herewith the opening remarks of the budget speech and a link to the full statement:

Honourable Speaker,
Honourable Members of the National Assembly,

1. I am honoured to present to this August House the Appropriation Bill for financial year 2011/12 and the Medium Term Expenditure Framework covering the period 2011/12 to 2013/14.

2. This budget is presented against the backdrop of 20 years of democratic governance and peace in our country. This year Namibia attains 21 years as a sovereign nation and we can look back to a record of successes on the social, political and economic fronts. We as a nation should be proud of these achievements and strive to maintain them. The stability and democracy that we have brought about laid the essential foundations for the socio-economic development that we have realised.

3. The budget is tabled at the time when the global and domestic economy has just emerged from the depth of the greatest recession since the 1930s. Over the last few years our economy has been through a challenging period of global financial and economic crises, which inevitably slowed the progress we had made on growth and job creation. However, our Government has responded promptly and effectively and this helped to steer the economy through those difficult times. Government interventions have significantly contributed to the domestic economic recovery without putting undue strain on our fiscal situation.

4. During the opening of the third Parliament, His Excellency President Hifikepunye Pohamba said amongst others: "This occasion is taking place at a time when our nation is looking to Government with great anticipation to provide answers to the pressing issues of the day. These 2
include the question of unemployment; the needed improvements in the provision of quality education, health care, housing, access to land and other social amenities." He continued "I call upon all Namibians, in all our respective capacities, to employ all the means at our disposal, and to harness the available technical, financial and natural resources in order to effectively fight and defeat the problem of unemployment."

Honourable Speaker, Honourable Members

5. We are in the fortunate situation to have the fiscal space within which we can give attention to these pressing issues of the day and hence I shall table an expansionary budget.

6. We will continue to promote economic growth and job creation, and we shall accelerate progress with achieving our development goals over the short, medium and long term. In order to realise this, we must not only look at the actions expected from our Government, but we must also get the support and firm commitment from the private sector and each individual within our great country.

7. This year‟s MTEF follows consecutive expansionary budgets that I tabled for the last two years. The previous expansionary budget helped to shield the economy from the negative effect of the crisis and we were successful indeed. This time around we expand the budget yet again to consolidate the economic recovery, create jobs and improve welfare conditions while safeguarding macroeconomic sustainability.

8. Although the worst of the global economic crisis appears to be over, considerable risks to the global recovery remain and hence we cannot become complacent. Such risks include unrest in North Africa and the Middle East, which is adding to the upward pressure on oil and commodity prices. Further, the sovereign debt crisis in the Euro Zone could derail recovery in that region with spill-over effects across the globe. In turn food prices could escalate further, placing a burden on the most vulnerable in society.

9. Alongside global risks that could impact on the domestic economy, Namibia also faces many socio-economic and structural challenges, which need to be addressed urgently. These challenges include high unemployment, poverty, inequality, labour skills shortages and a narrow 3
industrial base. For these reasons, it is appropriate that the fiscal policy stance over the coming MTEF must remain expansionary.

10. Starting this financial year, the Government will implement a Targeted Intervention Programme for Employment and Economic Growth (or TIPEEG). This program is aimed specifically at addressing economic growth and the high unemployment rate through support to strategic growth sectors. The TIPEEG will focus on four key sectors, namely, agriculture, transport, tourism and housing and sanitation.

11. The total budget for the programme over the MTEF is provided under each of the sectors and it amounts to N$ 9.1 billion. Inclusive of Public Works, the allocation for job creation amounts to N$14.7 billion. It is envisaged that the implementation of TIPEEG will result in the preservation and creation of about 104,000 direct and indirect job opportunities.

12. Maintaining an expansionary budget will be more challenging over the MTEF given risks to revenue. Government will therefore explore alternative revenue sources to ensure that a favourable fiscal position is maintained.

Honourable Speaker, Honourable Members

13. Before delving into the challenges and the interventions which this budget necessitates, let me remind the House of some of the economic and fiscal policies upon which SWAPO Party received its landslide mandate from the Namibian people.

 "Namibia‟ economic landscape will be refined to address bottlenecks of supply and obstacles that limit the pace of faster and sustainable economic growth, employment creation and poverty reduction."
 We shall "Design programmes geared towards encouraging initiatives in economic activities, such SME development….."
 Development finance institutions will be capacitated to promote investment in productive economic activities and entrepreneurship development. Capacity building for the management of financial institutions and capital market will be enhanced to ensure the credibility and reliability of the financial system in the country."
 In order to ensure broad-based economic development and growth, it is imperative that there is significant investment in economic infrastructure, which supports economic activities in the country. In this regard, strong emphasis will be put on housing, water, energy, telecommunication, roads, rail network, airports and seaports, office space and business facilities."

14. These broad policy guidelines formed the basis for the MTEF and budget. I shall now give a brief outline of the economic developments and outlook underlying this budget.

The full speech is attached to this page

With regard to the "sin taxes" Kuuongelwa has this to say:
Change in Excise Duties („sin taxes‟ as per SACU agreement)

133. Excise duties are being applied within the Common Customs Area of SACU based on a decision by SACU Ministers of Finance. In this regard, I wish to indicate that SACU is currently looking into ways of strengthening the consultative process of setting these tariffs.

134. Rates are informed by health considerations, international benchmarks on the tax burdens for such products, and pricing information collected from industry stakeholders. In line with targets set for the total tax burdens on respective excisable commodities, the following percentage increases have been agreed upon for implementation with effect from 23rd February 2011:

• Unfortified wine 8.41 percent
• Fortified wine 7.44 percent
• Sparkling wine 4.49 percent
• Ciders & alcoholic fruit beverages 7.53 percent
• Spirits 10.00 percent
• Cigarettes 8.94 percent
• Cigarette tobacco 8.22 percent
• Pipe tobacco 10.37 percent
• Cigars 6.00 percent

135. These amended rates of duty are set out in more detail in the Taxation Proposal which I shall table here in terms of section 65(1) of the Customs and Excise Act of 1998, and will be deemed to have come into operation as from midnight 23rd February 2011.

Phew!!! Create 104,000 jobs? How exactly? Noble as it appears, I'd like to see a little more detail about this one. Ploughing huge amounts of money into job creation is one thing, but will these jobs be sustainable? Are they public- or private-sector jobs? I really have the feeling this is a Government thatr woke up one morning and realised that while it's been talking about creating jobs for over 20 years, little has come of it (notwithstanding the challenges in creating jobs in a small economy like ours). We really need to see and hear more in this one for it to create confidence.

10. Starting this financial year, the Government will implement a Targeted Intervention Programme for Employment and Economic Growth (or TIPEEG). This program is aimed specifically at addressing economic growth and the high unemployment rate through support to strategic growth sectors. The TIPEEG will focus on four key sectors, namely, agriculture, transport, tourism and housing and sanitation.

11. The total budget for the programme over the MTEF is provided under each of the sectors and it amounts to N$ 9.1 billion. Inclusive of Public Works, the allocation for job creation amounts to N$14.7 billion. It is envisaged that the implementation of TIPEEG will result in the preservation and creation of about 104,000 direct and indirect job opportunities.

12. Maintaining an expansionary budget will be more challenging over the MTEF given risks to revenue. Government will therefore explore alternative revenue sources to ensure that a favourable fiscal position is maintained.

The Namibian reports that some economists are "shocked" by the "drastic budget". ‘REVOLUTIONARY’ and ‘aggressive’ were economists’ first impressions of the 2011-12 Budget last night, with most admitting that Finance Minister Saara Kuugongelwa-Amadhila had caught them completely off guard with her N$37,7 billion spending spree.

and then again it could be just lip service again to gain votes in the next elections to come, sort of like a long term insuarance plan to score votes. It would really help if a detailed report goes with this lip service, i.e. how exactly it is planned to realise the said increase in employment, as per Uncle Paul's concern. Where can one download this document that supports TIPEEG initiative objectives? IS there such a document available to the Public domain to start with?

No pension increase while everything else has increased, how are our elders going to survive?

Budgets are by nature highly political, and this one mor so than previous ones. The Minister faces a very challenging environment, no doubt: High levels of unemployment, a restless youth, and an economy that continues to be lopsided and by nature one that consumes, rather than generatyes wealth. We know it's not an easy job. Apart from Uncle Paul's concern about the lack of detail about exactly how and where all these new jobs are going to be created, it'll also be interesting to see whether these jobs are in industries or sectors that require capital investment, and (like Uncle Paul says) are sustainable. Otherwise this will merely be consumption spending, i.e. the money is not spent on building the manufacturing and/or services sectors of our economy and attracting substantial invetment inflows. What happens if the money to sustain all these jobs runs out? Will we have another huge group fo people roaming the streets who end up begging the Government for livelihoods? Im looking forward to some detail here as well....

The budget allocation on youth spending is to a certain extent a reaction to the events unfolding among youth in countries with similar socio-economic problems such as ours. Unemployment has always been understated (since Independence), but now its is on the agenda to stay.

Many of us have been promoting entrepreneurship, self-employment, SME support, etc as ways to ensure the youth coming from our schools have an income - if not a formal occupation.

I think it is good we start throwing money at the problem. The problem is the programmes we implement and their sustainability. I hope that sane heads will look at the problem and start formulating long-term strategies as well.

Bank Windhoek’s economist, Dr John Steytler, will appear on Monday, 14 March 2011, at 6h30 in the NBC-TV program “Good Morning Namibia”.
He will speak about the national budget, the Medium Term Expenditure Framework, the Targeted Intervention Program for Employment and Economic Growth and the so-called ‘sin taxes’.