The banker turned party leader of Change Starts Now, Roger Jardine, says the only way to ward off future disaster in South Africa is to capitalise a R500-billion Reconstruction and Growth Fund through increased taxes on people who earn more than R1.8-million a year, as well as on corporations and pension funds.
Jardine will unveil his party’s charter, or manifesto for the change he hopes to bring, in Kliptown, on Monday, 19 February.
The business leader and former FirstRand chairperson says South Africa needs a Marshall Plan because it is in a post-war-like condition. And that Marshall Plan must be funded by what Jardine calls a “Social Solidarity Fund” of R500-billion to kickstart the economy and plough resources into the poorest communities to close South Africa’s yawning inequality gap.
It will be funded through a wealth tax for three years, with the following increases:
- A corporate income tax increase of 4.2 percentage points for three years (from 28% to 32.2%);
- A tax increase for top earners (more than R1.8-million a year) from 45% to 49.5%; and
- A 1%-a-year charge on retirement funds for three years.
In an interview with Daily Maverick, Jardine said there was support for the idea among business leaders he had met, in civil society organisations working with Change Starts Now and people he had encountered during his tour of South Africa.
“If you look at all the indicators — poverty, malnutrition, infrastructure — it’s dramatic. If you look at the impoverishment, the state of decay and the trauma in this society, it is akin to one emerging from a war. Because of the seriousness of the social condition and economic condition, we need to see it through those lenses.”
Since launching his movement in Riverlea, Johannesburg, in December, Jardine has been on a tour of inspection of what he calls a “forsaken” South Africa with “ferocious” needs.
Read more in Daily Maverick: Roger Jardine: ‘We have to fix the balance sheets of SA Inc,’ says Change Starts Now presidential hopeful
“The flower seller in Cape Town tells me she’s been waiting for 14 years for a house; she lives in a backyard with her daughter and granddaughter.
“At the Alex taxi rank, I meet a guy just released from prison for stealing mealie meal. In Jabulani, I meet a guy on a social grant. He needs to renew his grant every six months, so he wakes up at 4am and gets certified at the hospital. They see 80 patients a day, and it takes him more than five days a month to get certified. He tells me there are people in worse condition than him.
“1994 was a moment when people had their dignity restored, and we see how that dignity has been chipped away through all these lived experiences. The other day, a Member of Parliament said that load shedding is not an issue. She must tell a guy in Soweto running a butcher whose meat goes rotten after four days.
“On the first day of school [at the start of the school year in January], I visited a primary school in Sharpeville. That school hasn’t had electricity for three years, and there is almost a normalising of the dysfunction in the nation. I asked what the plan was, and there was no plan, so people were just not seen.
“A woman in Kliptown spoke about the fact that the train hasn’t been working in Pimville and what it means for them as women to have to walk to taxi ranks at the crack of dawn, half dark and how vulnerable they feel, how dangerous it is. So, from being out and about, you can feel the trauma, pain and desperation,” Jardine said.
Read more in Daily Maverick: How real is Roger Jardine as SA opposition’s next big hope?
It may seem counter-factual for a banker to propose the most radical wealth taxes out of all the party manifestos unveiled so far, but the condition of South Africa’s people means there are no other options, he said.
‘We need to intervene’
“You don’t need charts and bar graphs to tell you what’s happening in SA. Go to a township on a weekday to see the state of unemployment.
“People are in a desperate situation, and we need to intervene. How do we fix this economy while dealing with the social pressure points? We carry on as we are; we will eventually have to look at tax increases as we run out of resources. This shouldn’t be seen as a wealth tax but as a social solidarity fund.
“We used experts and modelling tools; we looked at different [tax and levy] levels to consider what people could bear. The long and short is that it allows that segment which has [a lot] to extend a hand to the rest of society.
“This three-year limited duration also addresses the fact that people are pretty jaded about how their taxes are used. Conceptually, it will need its law, and it [the social solidarity fund] will be chaired by an eminent South African. It will represent a public-private partnership and show the contributor how its money is being used.”
Jardine said the fund was an extraordinary intervention to boost capability and one of the oldest fiscal instruments around — for countries emerging from a financial crisis, a pandemic, or a war.
Similar ideas included the US Marshall Plan and Australia’s deficit levy, he said.
“Our situation is unique and our national revenue fund is stressed, corporates are stressed. This should unlock growth and reduce taxes down the line, but at current indicators, we are heading into a cloudy and unsustainable tax regime, given the social requirements in our country.”
Jardine said the top economists, civil society and other leaders he worked with believed the multiplier effect of a fund of this magnitude could see the creation of five million jobs over the medium term from infrastructure investment and targeted investment in growth sectors.
Change Starts Now also plans massive grant increases, a food security initiative to deal with near-famine conditions in the poorest parts of South Africa and expanding early childhood education, he said.
He said after contesting the election, the party wanted to be part of a progressive coalition of parties to govern South Africa.
The manifesto
In the run-up to the elections, Daily Maverick has been presenting major political party manifestos to help you decide whom to vote for. This is a summary of the Change Starts Now manifesto that will be launched in Kliptown on 19 February.
Introduction
“We are like a country after war,” says Change Starts Now, setting the scene.
Before sharing its Imagined South Africa, it describes the country’s challenges as ferocious.
“What might a South Africa that hadn’t been forsaken, and its people largely abandoned to unemployment, poverty, crime and inequality by its political leadership look like?
“It might be a country where men and women, young and old, capable of working, would have good jobs; and where those unable to do so would have social assistance and decent healthcare when sick and infirm.
“It would be a land of sufficient food and clean water for all; of a stable, reliable supply of clean and sustainable energy necessary to power our growing economy.”
Then, it sets out its fundamental ideas to power such a society.
Basic income grants/social support policy
- End the segmentation of society into permanent “winners” and “losers”;
- Significant increases in social and welfare grants from the cradle to the grave;
- Urgently and publicly evaluate and consider proposals for universal basic income;
- Apply the principle, “…the most vulnerable receive urgent care and can live with dignity and hope…”; and
- Only 46% of South Africans have a running tap in their homes — water is an emergency.
Climate change/environment
- Promote renewable energy;
- Be a global supplier of critical minerals; and
- Set up green industrial parks to become net exporters of electricity.
Crime and corruption
- South Africans live in fear;
- Decentralise crime-fighting to improve safety — introduce more community-level policing;
- Use partnerships effectively;
- Get illegal guns out of the system through dedicated intelligence-driven, specialist firearm units;
- Initiate state/community shared safety plans; and
- Restore and strengthen trusted, targeted and specialised policing units.
Economy
- A Reconstruction and Growth Fund capitalised and ring-fenced outside the fiscus to protect it. Funded by a once-off, three-year temporary reconstruction tax. This will raise R500-billion to fund immediate social protection interventions;
- Funded through a wealth tax of 1.5% a year for three years;
- Corporate income tax increase of 4.2 percentage points for three years (from 28% to 32.2%);
- Tax increase for top earners (more than R1.8-million a year) from 45% to 49.5%;
- A 1%-a-year charge on retirement funds for three years;
- Relentless focus on electricity, logistics and water infrastructure to increase GDP growth to above 2.5%;
- Competition in network industries to increase growth by a further 1%;
- Utilise the private sector for a massive infrastructure investment drive through public-private partnerships; and
- Accelerate investment to 22% of GDP over five years to help create five million jobs and reduce unemployment by 37%.
Education
- Expand early childhood education — only 1.6 million of 11 million children aged o-4 years old are in education programmes. Fix this.
Food
- Emergency relief for an epidemic of hunger;
- One in five people don’t have enough food to eat — increase the child support grant; target support for children younger than three facing stunting;
- Increase support for subsistence and smallholder farmers; and
- Make nutritious, basic foodstuff cheaper.
Governance
See Professionalisation.
Health
- Centralise strategic decision-making and decentralise operational decisions;
- Treat public hospitals as autonomous facilities;
- Develop a bridge between the public and private systems;
- Give provincial hospitals greater autonomy to contract;
- Incentivise medical schemes to purchase from either public or private health;
- Allow private practitioners to follow their patients into the public sector;
- Develop a universal framework for emergency care; and
- Adopt the recommendations of the Health Market Inquiry.
Housing
- End apartheid spatial inequality by promoting mixed-income, high-density housing development; and
- Reorient the housing budget to increase demand-side subsidies rather than direct-supply programmes.
Jobs
- Use infrastructure investment to drive massive employment — five million opportunities;
- (See Economy above).
Land
- A National Land Council to review the different aspects of land reform.
National Health Insurance – NHI
- Adopt the recommendations of the Health Market Inquiry, which focused on excessive private-sector costs, and make significant proposals;
- Build bridges between the private and public systems;
- Decentralise health services; and
- Jardine says the current NHI Bill is a plan for a R600-billion state-owned enterprise, built on a failed model.
Power cuts
- A relentless focus on electricity, logistics and water infrastructure;
- End load shedding in three to four years; and
- Focus on renewable energy and on becoming a critical minerals exporter of note.
The professionalisation of the civil service
- This is a pivotal focus for Change Starts Now;
- It proposes the wholesale improvement of public service and administration; and
- Models for viable institutions of shared governance that harvest the best ideas, energy and collaborations.
Reality check
It’s a beautiful and short manifesto that starts with an essay to envision a future state for South Africa — this resonates with the Freedom Charter, the Constitution and the National Development Plan, which all start this way.
The tax increases for a Reconstruction Fund will require a lot of influence work, because South Africa’s small tax base is already highly taxed and poorly serviced, with high dependency levels on individuals.
Cool things
The health, food security and early childhood education proposals are excellent. DM