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Unprecedented budget speech, but remember this day

20 February 2025 Photo Supplied

Opinion article by Prof Johan Coetzee (MCBI, CMBE), Chairperson: Department of Economics and Finance, University of the Free State.

The Minister of Finance has not had it easy in 2025 and the budget speech not read yesterday pays testament to this. Postponing the speech to 12 March is unprecedented, and is due to the Government of National Unity (GNU) not reaching consensus on a way forward to tabling a budget. It seems as if the fallout was based largely on a proposed 2% increase to VAT that was rejected by two parties. I personally would not have supported this proposal either as the tax burden shifts disproportionally to the poor.

My initial response of the postponement was frustration and disappointment. But I soon realised that it is the outcome of a new government dispensation made up of many voices, and many dissenting at that, becoming more important. In principle, this is good for the nation, but unfortunate for us expecting the budget to be read on the day. It also does not necessarily send a good message to the markets, with the rand weakening by more than 1% within an hour of the announcement. There could also be knock-on effects that a later tabling will have on service delivery and operations of government. After some reflection, however, I have concluded that on balance, the decision to postpone is not as problematic as many have made it out to be over the past 24 hours. Clearly there are many balls to juggle by Minister Enoch Godongwana and many added complexities that have both national and international dimensions.

Lead-up to the budget

Internationally the strong nationalist policy drive by US President Donald Trump has already shown that the ‘make America great again’ mantra is alive and well as reflected in the intentional actions taken against South Africa since his second term started in January. We will see how this plays out over the coming months, but my view is that South Africa as a nation needs to be more deliberate in its policy agenda. We are at an inflection point where we must reflect on who we are as a nation and where we want to be down the line. We cannot afford to rely on handouts from other nations. There is more opportunity to this situation than threat, but we need intentional leadership to exploit it.

My big concern in the lead-up to the budget speech was that the minister would not take a firm stand on fighting the culture of non-compliance within state entities which has invariably led to unsustainable levels of irregular expenditure. For the 2023/24 financial year, the Auditor-General of South Africa reported that irregular expenditure totalled almost R50 billion, up from just over R27 billion the previous year. To put this into perspective, irregular expenditure equals approximately 2.2% of total government spending for the 2023/24 fiscal year. This might not seem significant stated as a percentage, but it has basically doubled since the previous year, and every preceding year before that too. Moreover, irregular expenditure equates to approximately 20% of the 2023/24 social grants budget and just about equals the 2024 National Student Financial Aid Scheme allocation. This is clearly a management failure and nothing seems to have been done about it over the years. As a result, the problem is escalating at an alarming rate. It is quite astounding that accountability management is not more explicit as it is clearly a very unpopular political message to send. But at what cost?

South African economy is not growing

To make matters worse, the South African economy is not growing both enough and fast enough. The most recent real GDP growth figure showed a decrease of 0.3% in the third quarter from the second quarter of 2024. Since 1994, the period with the highest annual rate of growth was a three-year period from 2005 to 2007 where growth exceeded 5% for each respective year. This period preceded the global financial crisis and since then, growth has struggled to reach 3% annually, doing so on only two occasions barring the 4.7% in 2021 which was not a true reflection of reality given the low base of the preceding year amid the COVID-19 pandemic. This is a major concern for the Minister, because with economic growth comes increased tax revenues, which in turn capacitates better budget management. Very simply, the more people spend; the more businesses sell; the larger the profit outcomes; the larger the tax revenue collections. If the economy grows, the fiscus collects more tax revenues without explicitly increasing tax rates. This built-in cyclical dynamic is simply not happening and creates a serious constraint on the ability of the Minister to manage deficits going forward.

Further to this of course is that as deficits are run, all things remaining constant, public debt increases. The public-debt-to-GDP ratio for 2023/24 already exceeds 72% which is higher than the generally accepted benchmark of 60% and almost 2.6 times what it was in 2008 (27.8%). This has resulted in the average interest on public debt approximating R1.1 billion a day, equating to about 22% of total tax revenues, or almost 20% of total government spending respectively. To put it differently, for every R1 government spends, 20 cents is first channelled to pay the interest on the debt before any spending occurs on roads, education, infrastructure, social grants and the like. These are deeply concerning figures in an economy with already high levels of unemployment and inequality.

Might be beginning of something better

There is a leadership void that cannot be ignored anymore. It needs to be intentional and deliberate. The GNU provides the platform to exploit ‘the best that South Africa has to offer’ as it promotes a broad-based and more inclusive political structure and played itself out yesterday. I welcome this in principle, but my concern is that political in-fighting will prevail and perverse politicking will trump working together in the best interests of the South African people. Although the postponement could be interpreted negatively in terms of the GNU not being able to find common ground, I think it is rather a sign of more rigorous engagement and the enablement of a collaborative environment amongst parties in the decision-making structures of the state. Remember this day as it might be the beginning of something better than what we are used to.

News Archive

Questions about racial integration in residences answered

2007-07-31

Answers to frequently asked questions about the racial integration of student residences at the UFS

1. Why does the UFS want to change the current situation in the student residences?

There are many reasons why a new approach to placement in the student residences is necessary. However, the main reason is of an educational nature. As a university, the UFS should create an environment in its residences where students can learn to appreciate and respect the rich diversity that is on offer at the university. A university accommodates students from many different backgrounds in terms of race, language, religion, economic status, culture and other aspects. If a student can learn to appreciate the value in this rich diversity at university, he or she will also be able to appreciate the value of this diversity in the workplace and broader society.

The current situation of predominantly white and predominantly black residences has not been able to cultivate such an appreciation for diversity and respect for one another as human beings, and will not equip students with the knowledge and skills required to manage diversity.

Besides this, there are many other areas of life in the residences that need attention. For one, we need to urgently establish a human rights culture in the residences so that the rights of all students can be respected. We need to address the abuse of alcohol, provide disabled students with their rightful place, and last but not least, really entrench a culture of learning in student residences.

Let us make the residences places we can be proud of – places of learning, of diversity, of respect; places of growth and development. This is the ideal we should all strive to achieve.

2. Why does the management want to force us to integrate?

It is a false argument to debate the issue in terms of “force”. Any decision by a University, or any other organisation, regarding matters of policy, rules and regulations implies a restriction on the choice of an individual and an obligation to comply. What we should focus on is whether this decision of the Council is in the best interests of our students.

The management of the university believes that it has a responsibility to give students the best education possible, not only in terms of what you learn in the lecture rooms, but especially in the residences as well. The residences can be very powerful places of learning about matters of great importance, both academic and non-academic.

The parallel-medium language policy separates students into largely white/Afrikaans and black/English classes. Efforts are being made to bridge this divide in the classroom, but we can also try to eliminate it in the residences.

The university is committed to building a new culture for the entire institution that is based on values and principles – such as an academic culture, non-racialism, respect for human rights and diversity – among staff and students.

In the context of student residences, the application of these values and principles still allows substantial room for the voluntary exercising of choice by individuals as well as by Residence Committees, notably with regard to the placement of students (they can still place 50 percent of first-year students), as well as the determination of the future character and traditions of a diverse residence.

Furthermore, students can still choose their residences (subject to availability of places), can choose a roommate, and so forth.

3. What about freedom of association?

The rights we enjoy in a democracy must be balanced against other rights, as well as the laws of the country. This means that the right to freedom of association must be balanced against laws that make it illegal to discriminate against other people on the basis of race, language or religion, for instance.

Freedom of association pertains to the right of individuals to form voluntary organisations such as clubs or private boarding houses, or their right to join or not join existing organisations. You exercise that right when you decide to become a student of the UFS, and again when you choose to live in one of its residences.

However, once you have decided to join an organisation voluntarily, you cannot subsequently demand that that organisation should provide a “club” or residence to your liking where, for instance, you only associate with your choice of co-members. You must accept the policies of that organisation.

In any case, how would that right of yours be balanced against the right of another individual who wishes to associate with a different set of co-members? (For instance – what about the freedom of a student to associate with students NOT from his own background, but indeed from another language, cultural, racial or economic background?)

The constitutional right to freedom of association can, in any case, not be used to exclude or discriminate on the basis of race or religion (Section 18 of the Bill of Rights).

Besides, the new policy guidelines will still make provision for freedom of association. This right can be exercised freely within a diverse residence with regard to friendships, joint academic work, socialising, sport, etc.

4. Will residences not lose their traditions?

The University appreciates that there are many valuable elements of tradition in residences. However, we must bear in mind that the traditions and character of student residences have evolved and changed over time, and they will continue to evolve and to change. In addition, we do not need to accept all aspects of residence life purely on the basis of tradition, including the unacceptably high level of alcohol abuse and unsavoury, humiliating and discriminatory orientation practices. The new approach to integrated residences provides the opportunity to retain the positive aspects of the current traditions and character, but also to develop new traditions and give residences a new character.

We can now establish a tradition and a character for each residence that are reconcilable with the values of the University as a place of scholarship and are aligned with the human rights approach of our country’s Constitution, the laws of our country and the strengths and diversity of the students in a particular residence.

5. Have students been involved in this process? Is there a role for them to play after the decision has been taken by the Council of the UFS?

In the first semester of 2007, during two rounds of consultations, the primes, SRC and student organisations were consulted about the proposed new placement policy to increase diversity in residences. Some residences also made written submissions on the matter (such as Madelief, Soetdoring, Wag-'n-bietjie, Vergeet-my-nie, Emily Hobhouse). Other residences requested and were granted more time, but did not make any submissions in the end (such as Reitz and Armentum).

Management also had several meetings with the above-mentioned structures to hear first-hand from students their concerns and solutions regarding possible challenges presented by integration in residences.

During these interactions, several excellent ideas and proposals were put forward by students. These views had a definite impact on the eventual proposal that was taken to the University Council, in particular regarding the minimum level of diversity (30%) in junior residences and the fact that residences still want to have a say in the placement of students, rather than the placement decision being left in the hands of Management alone (hence the 50% placement portion of residences). Management values the effort that was put into the process by the primes and residence committees, and thanks them for their contributions.

However, it should be stressed that consultation should not be understood as a process of negotiation, nor does it imply that consensus must be reached. What it means is that Management must take a considered decision after hearing the views of stakeholders.

Management would like students to continue to provide input and ideas regarding the implementation details of the policy guidelines. Task teams have been established and students will be informed about how they can interact with the task teams on an ongoing basis.

6. But integration in the residences was tried in the past (in the late 1990s), and then it failed. Why will it work now?

Yes, the University of the Free State did integrate its residences as far back as 1993, and for a few years it worked. The UFS did it at that time and is now doing so again, because it is the right thing to do. Yet it is important to understand why the previous attempt at racial integration in residences was not successful.

Firstly, both black and white students were much polarised because of the apartheid past. Secondly, there was insufficient management support for students in the residences, the student leaders generally as well as residence heads, in terms of dealing with diversity and related issues. Thirdly, the institutional culture of the UFS and the residences in particular was not addressed as part of broader transformation and integration in residences, whereas it is now being addressed.

In addition, the current decision to integrate residences has the benefit of being implemented after several more years of integration in schooling, sport, workplaces and other aspects of life.

This decision is also based on Management’s commitment to give all the possible support it can to this process.

This is a very important initiative that the UFS is undertaking. Management, in co-operation with students, must ensure that it succeeds. Integrated residences that produce high-quality graduates equipped to deal with the challenges of the workplace and our society is a worthwhile ideal we should all strive to achieve.

If you would like to make a proposal regarding the implementation and practical aspects of the new policy, please send it to the following email address: rector@ufs.ac.za

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