The South African Federation of Trade Unions (SAFTU) is not optimistic about the Medium-Term Budget Policy Statement (MTBPS) due to be delivered by the finance minister on October 30th, 2024. The minister will probably administer the most devastating cuts to date.Our position is informed by a posture that has characterised the National Treasury in the recent period. Below are some of the recent events that persuade us that the coming MTBPS will deliver the most savage attacks against the working class:
1. The National Treasury’s unwavering commitment to austerity was in full display when, on July 29, 2024, Government Communication and Information Systems (GCIS) issued a communique to congratulate the National Treasury for attaining a primary budget surplus—the first time since before the 2008/ 09 global financial crisis. The GCIS further commended the National Treasury for its fiscal prudence, which the latter committed to in the February 2024 Budget Review.
2. In its Macroeconomic Policy: A Review of Trends and Choices, released in February 2024, the National Treasury states that it has embarked in earnest on fiscal consolidation since 2013 to slow the spending rate, raise some taxes and rein in public debt. Informed by the Government Budget Constraint worldview, the National treasury sees the level of so-called government debt and its servicing costs as a danger to the country’s fiscus, which must be reined in. This commitment manifested itself in cruel cuts to social services, including health and education – critical services heavily reliant on by the overwhelming majority of the working class.
3. The National Treasury has proposed the fiscal anchor, which will see the National Treasury legally bound to cap government expenditure beyond a particular point. The NT says this move is intended to rein in what It calls ‘irresponsible expenditure’ and thus legislate fiscal prudence. Though the Economic Transformation Committee of the ANC has come out against the National Treasurer’s proposed fiscal anchor, arguing instead for a “balance between fiscal policy that would ensure we don’t have debt that is running ahead,” this does indicate that the National Treasury is now more than ever intent on cutting spending to attain its long coveted the fiscal surpluses.
The National Treasury’s position is informed by the neoliberal dogma, which hides behind the veil of mathematics – graphs, equations and models – to give itself scientific respectability. But mathematics or not, the NT’s actions are nonetheless a poorly concealed class warfare against the working class. That is, the NT’s unyielding commitment to austerity, which enjoys the blessings of the GNU, is not a neutral technical position imposed by the objective imperatives of the economy. Instead, it is a deliberate, class-conscious decision to make the working class shoulder the crisis of capitalism. It is also intended to subdue the working class and make it easy prey for capital owners.
This barely concealed class warfare against the working class is three-pronged: 1) It takes the form of attacks on the social wage through the defunding of the social services on which the working class depends for its livelihood – that is, health, education, and so on.2) Insistence on deregulation of the labour market and to subject the value of labour to vagaries of the market instead of the values of goods and services needed to reproduce the worker Hence, the proposed labour amendment. 3) Price deflation through the SARB’s high interest rates intentionally creates unemployment, weakening the bargaining power of workers and redistributing wealth from the working class and the middle class to the financier class. This triad of class warfare – fiscal policy, monetary policy and deregulation of the labour regime – against the working class explains the NT’s insistence on austerity.In accordance with neoliberalism’s prescripts, the National Treasury tightens fiscal policy to curtail domestic demand. The argument is that a budget deficit that is too huge will lead to high interest rates and thereby crowd out the private sector, leading to a decline in investment. This explains the NT’s refusal to fund the filling of vacant posts in the public service and its refusal to accede to the modest wage demands of the public sector unions.
These policies have brought the working class untold miseries since they were brought into effect when the ANC-led government adopted the GEAR in 1996. Over 30 million people live in poverty, and 12.3 million people are unemployed – the majority of whom are young people. The state of basic education and public health care provision is dire.
Only the working class is the loser in this deal. Corporate executives are laughing all the way to the bank. Bankers have seen unimaginable profits, while retailers have registered undreamt of profits through wage repression and unscrupulous pricing methods.
These attacks on the working class will continue under the GNU and will be intensified. In the founding Statement of Intent signed by the ANC and the DA, both parties are committed to ‘fiscal prudence’ – a well-known euphemism for austerity in neoliberal talk. Therefore, there is no reason for the working class to expect a respite, let alone a change in macroeconomic trajectory, under the GNU.
As SAFTU, we call on the National Treasury to increase social expenditure. Vacant health, education and other critical social services posts must be filled. Further, huge infrastructure backlogs exist, which can only be remedied through expanding expenditure and not austerity. But we are not naïve to think that the NT will change course simply because we call on it to do so. Hence, we are convening shop stewards throughout the country in preparation to mobilise the working class and defend ourselves against the blatant attacks on our lives and all that we need to survive. The neoliberals will not relent and retreat unless compelled to by a highly mobilised and organised working class force.
