'Better' budget still doesn't add up to growth — Expert panel

Beneath the veneer of an improved 2026 national budget lurks a gaunt tax base and a bloated public sector wage bill, according to experts participating in the Cape Chamber 2026 budget analysis webinar.  

Last week’s generally positive budget sentiment should also not obscure the reality of a sluggish economy that continues to underperform, the experts said.

On the plus side, they noted a welcome slowdown in the rate of fiscal deterioration.

Economist Dawie Roodt delivered a sobering perspective on South Africa's ongoing challenges. "If you look at SA’s per capita GDP, it is the same as it was twenty years ago," Roodt noted, adding that our growth rate remains "horrible" compared to the rest of the world. 

He highlighted that while the Minister expects 1.4% growth, the tax burden as a percentage of GDP continues to rise. "SARS is exceptionally aggressive—essentially squeezing every last drop of blood out of the private sector," Roodt said, warning that the wage bill remains "completely out of hand."  Currently, 10.5% of GDP goes to civil servants by way of salaries, which translates into 32% of total state expenditure.  

Sanlam Chief Economist Arthur Kamp echoed this concern, noting the high fiscal risk associated with relying largely on spending constraints in a high-unemployment environment.  

Professor Deborah Tickle observed that while the budget was "good from a psychological perspective"—avoiding a VAT increase and addressing bracket creep—the reality for taxpayers is more complex. "We all think we are getting more money in our pockets, which is true to an extent, but not quite as much as we think," she noted. Tickle emphasized that "tax morality" depends on citizens believing their money is being spent well—a belief currently under pressure as spending rises without a clear source of new funding.  

Madalet Sessions, prominent economist and portfolio manager at Denker Capital, offered a sharp critique of the lack of ambition in the budget. While she welcomed the "win" of potentially redirecting funds away from failing municipalities, she questioned the political will to do so. "Monies are very important to the political leadership and patronage networks at lower levels of government," Sessions warned.  

She argued that Government is focusing on "housekeeping" rather than the significant structural reforms needed to lift SA out of its decade-long stagnation. "We are not being ambitious enough to raise growth and encourage accountability," she concluded, noting that targeting 2% growth only by 2028 is simply insufficient.  

The panel also highlighted the need for more clarity regarding efforts to bolster local government service delivery, such as performance-based grant structures. “One thing that stood out for me was when the (Finance) Minister said 63% of municipalities are in financial distress,” said Kamp, who welcomed the focus on improving municipal finances and operational efficiency.    

Sessions said global evidence supported the idea of improved service delivery where local councils are responsible for their own revenue. “Where you collect from Treasury and push it down, you have an unaccountability issue – the revenue comes through the door whether or not you deliver the service.”  

She said South African municipalities had become synonymous with patronage networks, thereby complicating the task of accountable governance. “I don’t think the method now proposed really solves the accountability issue. “Local councils will remain in place and will continue to collect the unconditional grants and do whatever they want, and only some service delivery responsibility moves to a different entity.  

“But that entity isn’t accountable either,” Sessions said.  

The Cape Chamber last week welcomed the Finance Minister’s commitment to improving national skills development – essential for improving growth prospects. The Minister’s admission that the National Skills Fund (NSF) and Sector Education and Training Authorities (SETAs) have "not yielded expected outcomes" is a significant acknowledgment of a system in crisis.  

"We are encouraged by the Minister’s commitment to a dual-training skills acquisition system," said Cape Chamber President Jacques Moolman. "For too long, the private sector has paid a Skills Development Levy into a 'black hole' of bureaucracy. Shifting toward a model that prioritises artisanal skills and workplace-based learning is the only way to address the Western Cape’s critical skills deficit in sectors like boatbuilding, green energy, and manufacturing."  

The Chamber looks forward to working closely with the government to realise a market-led skills development model that is responsive to the needs of the modern economy.