The most important thing a Government of National Unity needs to fix

With the new-new South Africa poised on the precipice of its second government of national unity in 30 years, there is one thing it needs keep in focus. In front of Chief Justice Raymond Zondo at the first sitting of a newly elected parliament this week, a President, Speaker and Deputy Speaker will be elected. But that’s only the beginning.

Because there will be no Youth Day long weekend for the government of national unity. Chief Justice Zondo has also declared Saturday 15 June 2024 as the first sitting of the National Council of Provinces (NCOP) in which a Chairperson and Deputy Chairperson will be elected. However, even here, there is one more important factor …

GOVERNMENT OF NATIONAL UNITY

South Africa has as at least as many problems – if not more – than it has official languages and capital cities. All of these confounding reasons are why South Africa is as wonderful as it is infuriating to live in. A country that claims to be stronger due to its diversity. After a non-majority vote, the people have spoken and now is the time to walk the walk.

Nevertheless, from social welfare reform to violent crime, unemployment and critical skills shortages, there is one important problem that absolutely needs solving. It is the fact that under the ousted ANC government, every R1 it spent actually shrunk the economy. Basically, the ANC was terrible at spending taxpayer money. So, the government of national unity needs to be better at this.

FISCAL MULTIPLIER

What return on investment you get from every R1 spent is known as a ‘fiscal multiplier’, and it’s how you gauge the state’s effectiveness, says Business Tech. Obviously, any government wants to see a return higher than 1:1. Ideally, a lot higher and definitely not below. If every R1 spent by government results in R1 or more coming back, that’s a government that’s adding value.

Sadly, South Africa’s fiscal multiplier has been in negative territory for quite some time now. Granted, the COVID-19 pandemic was tough for every nation to swallow, but data points to some systemic problems with government spending from well before 2020. Old Mutual’s Izak Odendaal says government spending has increased in quantity but declined in quantity.

END OF MISALLOCATED FUNDS

A government of national unity needs to desperately look at how it allocates public funds going forward. Education receives a massive budget allocation and yet we’re chronically short on educated/skilled school leavers to boost the economy. Healthcare is another, but public healthcare is so mismanaged that the National Health Insurance (NHI) bill had to be rushed into law. One of the largest portions of our budget goes only towards servicing debt. And then there’s the fact that one out of every two households receives a South African Social Security Agency grant of some sort.

State-owned enterprises (SOEs) have been swallowing up taxpayer money for years with no discernible return. The country’s creditworthiness has deteriorated to the point where we are effectively categorised as a junk economy. Basically, under ANC-majority rule, leaving money in the hands of Mzansi’s taxpayers created more wealth than it did taking it away. Food for thought for the new-new South Africa’s soon-to-be-ratified government of national unity.