THE private sector needs to start playing a greater role in the economy by investing more, as for the past four years government spending has been keeping the economy alive, Finance Minister Pravin Gordhan said on Thursday.
At a Cape Chamber of Commerce budget breakfast, he said: “The key question we (governments) ask when we meet at G-20 summits is, ‘When is the private sector going to take over?’”
Mr Gordhan said it was the policy of countercyclical spending that allowed the private sector to flourish during boom times and allowed the government to retreat and then for government to step in during recessionary times.
“Often people say that the markets are more efficient than government. However‚ one cannot have markets without government and governments need the markets for their creativity and innovation‚” he said.
Mr Gordhan pointed to the fact that the 2009 global recession began at a time when governments were urged to minimise their role in economies through deregulation‚ or even letting markets become totally unregulated.
He went on to argue that it was government spending in SA and in other countries that had greased economic wheels since the 2009 global crisis and this was marked by the shift in government spending from consumption to investment spending.
In his budget‚ Mr Gordhan said government would be spending R826bn on infrastructure development over the next three years and this would grow to potentially R4-trillion over 20 years.
“The challenge I put forward to you (business) is, when do you come to the party?”
Mr Gordhan defended government spending on welfare, while acknowledging this had grown to about 60% of its total budget. Welfare spending was important to ensure social stability, he said .
He rejected any form of government spending cut that would lead to austerity measures affecting ordinary people.