JOHN STEENHUISEN: How to stop SA’s slide into more hunger and poverty

The DA welcomes Business Day’s support for scrapping VAT on bone-in chicken, expressed in a recent editorial (“Zero rating chicken will benefit farmers and consumers”, January 30). The party advocated strongly for this before the medium-term budget last year, and we will push for it again ahead of the upcoming budget.

Zero rating bone-in chicken would cost the fiscus about R3bn, but experts have suggested the intervention would pay for itself through improved health, work and learning outcomes.

Bone-in chicken is a high-quality source of protein and by far the most popular one for low-income households, making up 14% of low-income household food budgets. Poor South Africans need an affordable source of protein to prevent them shifting to a less nutritious high-carb diet as their budget is squeezed. It is also versatile and quick to cook, saving on energy costs.

Ongoing stage 6 load-shedding has pushed SA’s hunger crisis to a new level. A survey in August last year showed 81% of households are skipping at least one daily meal. The 18.65% electricity price hike on April 1 will deal them a further devastating blow.

Load-shedding is also doing immeasurable indirect harm to households by driving water outages, bankruptcies, job losses and revenue losses, plunging more and more households into ever-deepening poverty and state dependency.

SA Reserve Bank governor Lesetja Kganyago said last week that the economy is only expected to grow by 0.3% in 2023. Against a population growth rate of about 1.2%, this means South Africans will continue to get poorer on average, as they have been since 2014.

The DA’s call for zero rating bone-in chicken is just one element of our proposed social relief plan, which includes three implementable, realistic, tangible interventions that would bring immediate, meaningful relief to millions of households if announced in this month’s budget. The government should:

• Urgently review the list of zero-rated food items ahead of the budget, with a view to expanding it to include more items commonly purchased by the poorest 50% of households, such as bone-in chicken, beef, tinned beans, wheat flour, margarine, peanut butter, baby food, tea, coffee and soup powder. Dropping the 15% VAT on some of these items would help households to stretch their food budgets a lot further and purchase more nutritious food.
• Review import tariffs on certain food items. According to trade experts advising the DA, dropping tariffs on those chicken categories most commonly purchased by SA’s most vulnerable households, such as chicken carcasses and giblets, will have a negligible impact on the fiscus but a large impact on hunger and malnutrition levels; and
• Reduce fuel taxes and levies to lower the cost of transport. This would enable people to put more money towards their food budget. And it would decrease the cost of food because the high cost of transporting food is pushing up food prices at the till.

Depending on how deep the cuts to the fuel taxes, this proposal would cost the fiscus up to R86bn. The ANC could also lower the fuel price by supporting the DA’s private members bill to deregulate the fuel price.

Of course, any cuts to food and fuel taxes announced in the budget can and must be covered by cutting corruption and wasteful expenditure, reallocating funds such as the VIP protection budget and opening the economy for growth.

One such longer-term reform the government should urgently undertake is to provide private title to all land reform beneficiaries on state land and landholders in communal areas. This will increase food production and improve food security while bringing down the cost of food. This would be extremely powerful in tackling hunger and poverty by making more land productive.

If short-term interventions are not coupled with fundamental long-term reforms they become nothing but populist policies that will need to be paid for in socially harmful ways such as raising the VAT rate or printing more money, which will erode the value of social grants and leave poor households worse off than before.

SA must implement a combination of short-term interventions to mitigate the immediate risks and longer-term ones to fix the underlying problems. We need both. Plastering over the wound now without fixing the underlying pathologies will only delay and ultimately aggravate human suffering.

The energy crisis and the hunger crisis have the same root causes, which is the ANC’s ongoing socialist flirtation with a centrally controlled economy. This was the motivation for its policy of cadre deployment, which has so hollowed out the ability of the state to deliver services, as the Zondo state capture commission revealed. To centrally control all levers of power, the ANC needed to deploy loyal ANC cadres to every institution of the state.

The multiple crises unfolding in SA today are a result of the corruption and incompetence brought on by this ruinous policy. This is why the DA was in court recently to have cadre deployment declared illegal (“Abuse of ANC’s cadre deployment policy no reason to ditch it, says counsel”, January 24). And it is why we are in court again this week to get access to the minutes of the ANC deployment committee while it was headed by President Cyril Ramaphosa, during the worst years of state capture.

In next year's make-or-break general election the DA’s offer to South Africans will be to not just do things better, but to do things differently. We are offering fundamental rather than superficial reform — liberal democracy rather than socialist kleptocracy — in line with our four core governing principles.

These are firstly a commitment to the rule of law, which includes zero tolerance of corruption. This commitment was in the spotlight again recently when the DA-run Cape Town received yet another clean audit, illustrating that where the DA governs outright public money is spent on public goods, rather than extracted for private benefit at huge socioeconomic cost.

Our second core principle is our commitment to a market-driven economy, where economic decision-making power is decentralised to all producers and consumers rather than centralised in the hands of a small group of politicians who are themselves shielded from the effects of their decisions.

Imagine, for example, how much more energy would be generated in SA daily had all private producers always been allowed to sell electricity into the grid, and imagine how much cheaper it would be. Imagine too how much more seriously cabinet ministers would take the energy crisis if their own official residences were also affected by load-shedding, and if they paid for their own electricity and generators.

Third is our commitment to building a capable state that delivers to all. This requires the separation of party and state with public appointments made on merit — the very antithesis of cadre deployment.

Fourth is our commitment to a nonracial society. If the politicians interfering with Eskom these past two decades had focused less on the race of the utility’s engineers and more on their ability to maintain SA’s energy infrastructure, the country would be in a far better position today.

In next year’s election voters need to think deeply about the kind of country they want to live in — liberal democracy under the DA or socialist kleptocracy under the ANC. Only those who vote can stop SA’s slide into more hunger and poverty.

• Steenhuisen is DA leader.