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Pre-Budget Presentation: Leftward Liaisons

Pre-Budget Presentation: Leftward Liaisons. Presented by: Dawie Roodt 6 February 2008. Chairman and Chief Economist Efficient Group 81 Dely Road Hazelwood 0081 Tel: (012) 460-9580 Cell: 082 456 0204 Email: dawie@efgroup.co.za. Dawie Roodt. Intro. To Stay or Not to Stay...??.

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Pre-Budget Presentation: Leftward Liaisons

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  1. Pre-Budget Presentation: Leftward Liaisons Presented by: Dawie Roodt 6 February 2008

  2. Chairman and Chief EconomistEfficient Group81 Dely RoadHazelwood0081Tel: (012) 460-9580Cell: 082 456 0204Email: dawie@efgroup.co.za Dawie Roodt

  3. Intro

  4. To Stay or Not to Stay...?? Source: Documented Migration Publication, StatsSA

  5. To Stay or Not to Stay...?? Sources: Economic Indicators, Economist. UN HDI 2007/2008, 7th UN Survey of Crime Trends 1998 – 2000

  6. A Quick Eish’kom Calculation Vision:"Together building the powerbase for sustainable growth and development."

  7. Load Shedding: The 3 Hour Effect Average GDP per day: • GDP, 2007 (current): R1,973.4bn • Workdays: 240 • GDP per day: R8.3bn Average GDP per sector: • Allocate equal weights to GDP sectors: (3 out of 24) • Loss per day: R1.1bn (13.3%) Average GDP loss per sector: • Allocate weights to GDP sectors: • Finance, real estate and business services (3 out of 8) • Mining and quarrying (3 out of 24),etc. • Loss per day: R1.9bn (22.8%)

  8. Potential Job Losses • Case Study: • +/- 400 000 employees in Mining Sector • Mining production at 90% electricity – Lose 15% - 20% • 1% loss in production = 1% reduction in workforce • Thus, potential reduction in mining workforce: • 60 000 – 80 000 jobs lost • Source: Thousands face job chop at GFI, 31 Jan 2008, Fin24

  9. GDP Loss: Base Case Scenario Revised Growth Estimate: 4.6% to 3.0% Loss in real terms: R19.76bn Potential Tax Revenue loss: R5.9bn

  10. Extra Load Shed on Consumers

  11. ‘Alternative Energy’ Cost - Generator Source: Efficient Research

  12. ‘Demand Side Management’ • Efficient Lighting Roll-Out Programme • Compact fluorescent light fittings (CFL’s) • Solar Water Heating Programme • Government subsidise 20% – 30% • Cost R7 000 – R20 000 (R25 000) per geyser • Fuel Switching • Liquefied Petroleum Gas used in cooking BULL!

  13. Economic Overview:The Grazing Ground

  14. Economic Overview

  15. Credit Demand Source: SARB and own calculations

  16. Household debt to disposable income 59.4% 56.9% 50.2% 44.5% Source: SARB and own calculations

  17. Savings to disposable income of households 9.2% 5.4% 2.6% 0.5% Source: SARB and own calculations

  18. Is Tax Crowding Out Savings..? Income Tax Revenue from Companies and Individuals vs Private Sector Savings Crowding Out ?

  19. Inflation 14.6% Inflation bracket 10.0% 5.3% Source: StatsSA and own calculations

  20. Interest rates

  21. GDP at Market Prices Source: StatsSA and own calculations

  22. Fiscal Policy

  23. Background Dissaving Gold

  24. Budget Sustainability Main Budget and Structural Budget Balances, 2000/01 – 2010/11 Source: Fiscal Policy, 2007 MTBPS

  25. FISCAL 2007/08…

  26. Revenue: Fiscal 2007/08

  27. Contribution to Fiscus

  28. Registered Income Tax Payers Source: Fin24, Sep 2007

  29. Redistribution *Average family consists of 4 people, aggregates taken per capita Source: Efficient Research

  30. Individual Tax Rate, per Country (2006) Denmark Ireland Median: 36.0% Russia Average: 35.4% South Africa USA Source: worldwide-tax.com

  31. Company Tax Rate, per Country (2006) Egypt Median: 29.0% USA Average: 26.6% South Africa South Africa + STC (’07) Ireland South Africa + STC (’06) Bulgaria Source: worldwide-tax.com

  32. VAT Rate, per Country (2006) Median: 18.0% Average: 16.7% Source: worldwide-tax.com

  33. 2007/08 in Review:Revenue

  34. Expenditure: Fiscal 2007/08

  35. Spending Priorities Social Spending

  36. 2007/08 in Review:Expenditure * Includes: Contingency Reserve (R3.0bn)

  37. Expenditure Analysis:Money Well Spend?

  38. Health

  39. Public Expenditure on Health Comparison (2003-04) Iceland Cuba Malawi South Africa (‘04&’06) Average: 3.5 South Africa (’07) Median: 3.0 Myanmar Source: Human Development Report, 2006 (undp.org)

  40. Core Health Care Indicators Source: World Health Statistics 2007, WHO (www.who.int)

  41. Public Health Expenditure (2003) vs. Physicians 2004) Source: Human Development Report, 2006 (undp.org)

  42. Eddjucation

  43. Education expenditure comparison (2002-2004 as available) Lesotho South Africa (’06 & ’07) Average: 4.7 Zimbabwe Equatorial Guinea Source: Human Development Report, 2006 (undp.org)

  44. The Reading Literacy of Fourth Grade Students Russian Federation(565) United States (541) Macedonia (439) South Africa (302) High Intermediate Low None Source: US Department of Education, PIRLS 2006

  45. Breakdown: Population Education Source: Community Survey 2007, StatsSA

  46. SC HG Maths & Science Passes Source: Dep of Education, Education Statistics in SA at a glance , SC Examination Results, 2006

  47. Enrolment for SC HG Maths and Science as % of SC enrolment 13.3% 9 % Source: Dep. of Education, Education Statistics in SA at a glance , SC Examination Results, 2006

  48. Government Targets for SC HG Maths passes vs Actual passes • Achieved • Targets Sources: Dep. of Education, Statistics in SA at a glance, 1999 – 2005; Senior Certificate Examination Results, 2006.

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