Minister of Finance Tito Mboweni at medium-term budget policy statement in the National Assembly, Parliament. Date: October 30, 2019. Picture: ESA ALEXANDER/SUNDAY TIMES
The
Government has unveiled a total commitment to austerity measures, with Treasury
especially targeting our tumultuous municipalities with the most severe budget
cuts. The pleas of SAFTU and other organisations of workers and the poor fell
on deaf ears. The government refused to listen to progressive forces, and
instead gave an ear only to the rating agencies and big business.
Today
represents yet another missed opportunity for government to confront the
worsening crisis in the economy. Ever greater number are falling into the
poverty trap. Statistics show the catastrophic levels of unemployment and
deepening inequalities.
But
Treasury has turned its back on the poor majority, so as to serve the interests
of the tiny community of the multi-millionaires and billionaires. They are
smiling today because their wealth is not touched not threatened. The working
class will see deeper levels of budget cuts which will worsen their living
conditions whilst not helping to grow the economy.
The
government is using the wrong instruments to respond to the historic crisis of
poverty, unemployment and inequalities inherited from colonialism and apartheid
over three and a half centuries. Government is using the wrong measures to
respond to the world economic crisis that visited the world in 2008/09, with a
repeat global recession now looming.
A sign of
insanity is to repeat the same thing hoping to achieve different results. Neoliberalism
and austerity have failed and will fail in the future. It doesn’t matter how
many times the leadership can be changed, as long they still implement the
wrong measurers they will fail.
Specific
comments on the budget framework:
Government
still pursues the objective of keeping the debt/GDP at low levels. Yet the debt
to GDP ratio is inappropriate as a measure of our ability to solve problems
with state programmes. South African debt is not out of control, and no country
facing this magnitude of underdevelopment ever embarked on a programme to keep
debt to GDP ratio at the current levels. In order to achieve this objective of
meeting artificially-low debt/GDP levels, the government is reducing
expenditure by R21 billion in 2020/21 and 28,5 billion in 2021/22 mostly
falling on goods and services. But if instead, Treasury considered a full
accounting of the public sector ‘balance sheet’ to include our state’s mineral
wealth, then as the International Monetary Fund admitted in last year’s Fiscal
Review, South Africa is the 6th most wealthy major state in the
world. It should be our wealth, not our income, that helps Treasury expand
expenditure, and those who promote fear of a credit ratings downgrade should
take a deep breath and contemplate South Africa’s wealth.
Macroeconomic
policies pursued since the unilateral introduction of GEAR are wrong. No
country ever developed by adopting an inflation target as low as the 3 to 6%
range (as mandated within the European Unions), by removing exchange controls, by
allowing billions to leave through tax dodging schemes including mis-invoicing,
transfer pricing and illicit cash outflows. No economy dropped corporate taxes
by half – from 56% in 1994 to 28% today – at the time when it needed resources
to develop.
Austerity measures
(cutting of expenditure) will not help our economy to grow. You cannot cut
public expenditure and reduce levels of investment and then hope that will lead
to growth. SAFTU and many others have been arguing for real stimulus package of
R500 billion rands to kick start the economy. The American government needed a
750 billion dollar fiscal stimulation to respond the crisis. South Africa is
doing the opposite, yet facing our worst-ever poverty, unemployment and inequality.
SAFTU is
appalled that the government is taking steps to undermine service deliver where
it matters most, at the local government level. Transfers to the local
government will be reduced by a R20,5 billion, including a 3.2 billion from the
local government equitable share and a R17.3 billion in direct conditional
grants. Treasury admits, “These reductions are likely to affect service
delivery, particularly through delays in building infrastructure.” Treasury can
continue this arrogant approach because protests against local austerity have
often been confined to communities – but our people can see how the austerity
is already squeezing our dorpies, and they will not be hesitant in embarking on
national protests, against Treasury. This was the same breakthrough that
FeesMustFall made when protesting a MTBS in September 2015.
SAFTU
reject the IMF/World Bank like structural adjustment programmes and
conditionalities attached to the assistance to Eskom. We remain opposed to the
unbundling of Eskom as we are convinced that this is route that will lead us to
privatisation of a public good that we strongly believe must be provided by the
state.
SAFTU is
extremely worried that the R150 billon rands government need in the next 3
years to satisfy its commitment to austerity and neoliberalism will once again
be paid by the poor. We fear that the government will be tempted to once again
increase the VAT and punish the poor more through increasing the so called sin
taxes come the Budget speech in February 2020.
We remain
opposed to the reduction of the size of government, which Treasury demands not
based on any formulae to service our people. Government is short of teachers,
police officials, correctional services staff, hospital professionals, etc.
Many hundreds of thousands of workers could be hired as part of the ‘Just
Transition’, to prepare our physical and social infrastructure for climate
chaos. Instead of filling vacancies many years in the making, government
announces that it has a bloated civil service and unsustainable wage bill. We
will be watching the government very closely going forward to see what will be
in what it called the reinvigorated early retirement programme.
SAFTU
remains opposed to the privatisation of SAA. We see SAA forming a very
important cog in an integrated public transport system. Government, through its
corruption and crony capitalism, nearly collapsed SAA. Just like Eskom, DENEL
and many others, SAA were world beaters in terms of service. Now that these
companies are bleeding to death, the response of government is to typically
sell them to their business friends to be used not to provide a public good but
to generate profit and be subjected to the rules of profit logic.
SAFTU
rejects the determination to commercialise basic services including the
insistence to stick with the totally failed etolls system in Gauteng. We insist
the public transport, energy, education, healthcare, water, environment
including the right to clean air, etc are public goods who must be provided the
state not for profit but in a manner that guarantees access of the poorest of
the poor.
We agree
with Minister Mboweni when he says, “our people became poorer. Some lost their
jobs. The food cupboards are almost empty.” We agree when he says, “rock the
boat! Shake the baobab tree! Do the unusual, disrupt the comfort zones. Get
moving.”
Unfortunately
he once again indicated left and turned right! SAFTU would have liked to seek
the rocking of the boat and shaking of the baobab tree through the following measures:
A real
stimulus package of at least R500 000 that will inject a sense of urgency
and turn the wheels of the economy. Without the stimulus we are dead in the
water.
A solidary
tax or wealth tax to tax the trillions hoarded by the class of multi-millionaires
and multi billionaires
Reversal of
the programme to reduce corporate taxes back to where they in 1994 which is
56%. This will release resources we so desperate need to rebuild our industrial
base.
Change of
the monetary policy that have punished and choked the economy. This will
include scrapping of the inflation targeting policy of 3 – 6% and reduce
interests rates decisively while implementing the ANC national conference
resolutions to nationalise the Reserve Bank and change its mandate. This will
lead to making money much more cheap and bolster the household and SMMEs
expenditure.
Nationalisation
of the mineral resources and land as part of the deliberate strategy to address
property and land poverty of the majority
Taking
steps that are practical but in consultation with workers and affected
communities to introduce a well-financed Just Transition, to move the economy
from carbon to socially-owned renewable. This must be done in a manner that recognises
the massive developmental challenges of unemployment which must not – we insist
–be exacerbated.
Across the
world, austerity programmes are under attack, and states are increasingly
subject to full delegitimisation by aggrieved citizenries. SAFTU and our
feminist, environmentalist, community and other allies will now embark on an
even more committed mission, of telling truths about the way Treasury responds
to the mood of Moody’s, not the desperate need of the South African majority.