Fiscal manipulation of election outcomes?

The National Treasury in South Africa has proposed to implement an austerity budget immediately before the South African elections. Elections in which the margins are extremely narrow and the majority party is at serious risk of losing its majority. While I tend to agree with the view that the rate of increase of debt and debt service costs is unsustainable at the current economic growth rate, I have not been convinced that the proposed approach is a correct, or even justifiable, one.

In essence, the Budget proposes to slash public expenditure while doing very little, if anything, to get those who are more able to pay to contribute more. One of the basic principles of public economics is that ‘ability to pay’ should be a key consideration in raising societal resources. To effectively ignore that principle and shift the burden disproportionately on to less well off citizens and firms is a bizarre thing to do, especially before an election in which it is the votes of those less well off voters that will sway the outcome.

The current Budget proposals, for example, propose to slash spending on two key employment creation programmes: the Expanded Public Works Programme and the Community Work Programme. For one of them this involves a reduction in the work opportunities provided by 20%: from 250,000 to 200,000. The impact on the other is less clear because the effects are not aggregated in the Budget documents [at least not that I could find] but they are likely to be similar. Bear in mind that given high unemployment rates in South Africa and dependency on those who do have work, cutting 50,000 jobs/work opportunities could negatively affect 150,000 voting age adults. Across two programmes that could be 300,000 voting-age adults negatively affected: enough on its own to swing a tight election result.