Put people first, fight the cost-of-living crisis

5 November 2023

Foremost, the South African Communist Party extends its heartfelt congratulations to the Springboks on their remarkable victory in the 2024 Rugby World Cup.

This achievement not only showcases the extraordinary talent and dedication of our national rugby team but also underscores the importance of the clearly visible progress made in the Springboks towards redress, which is crucial in our South African transformation imperative to build a completely non-racial society.

We cannot overemphasise the importance of uplifting black people who endured racial oppression with far-reaching and long-lasting impacts and legacy still affecting one generation after another even after the hard-won democratic victory against the apartheid regime in April 1994. This remains a fundamental goal. The Springboks’ success serves as a beacon of hope, reminding us of the collective strength that arises from unity and shared goals in our journey towards a more equitable and inclusive non-racial South Africa.

The SACP is leading this Red October Campaign 2023 under the theme “Put people first, fight the cost-of-living crisis”.

On Wednesday, Enoch Godongwana, the Minister of Finance, tabled the Medium-Term Budget Policy Statement, adjusting the current financial year’s budget, ending on 31 March 2024. The statement outlines fiscal policy for the next three financial years, starting on 1 April 2024. We cannot overcome the cost-of-living crisis without tackling the problems with the adjustments and the fiscal policy outlined.

There are at least two problematic trends in the Medium-Term Budget Policy.

The first problematic trend is a contractionary fiscal policy stance involving austerity, cuts in government expenditure affecting development. The ruthless budget cuts badly impact the government’s ability to achieve inclusive growth and large-scale employment creation, and to bring down unemployment, poverty and inequality.

The second problematic trend is an expansionary stance in favour of private sector domination of post-COVID-19 pandemic economic recovery and development if both will be achieved. This involves opening up, expanding and converting more space in the state into a field of profit-driven private capital accumulation competition.

Infrastructure network areas such as new power generation, bulk water infrastructure, railways, ports and other logistics networks are currently a major target of the current wave of microeconomic liberalisation agenda to insinuate profit-driven private capital accumulation competition in what was the state sector and public functions before.

The SACP rejects and denounces the neoliberal agenda with the contempt it deserves. We issue a resounding and unwavering rejection of austerity. We unequivocally denounce it in the strongest terms possible. Austerity is an affront to the well-being of our citizens. Today, we reiterate our stance.

Through budget cuts, the Medium-Term Budget Policy Statement enforces draconian measures, masked as fiscal consolidation, the euphemism of austerity.

It projects the stranglehold of austerity over our nation up to 31 March 2027.

During this financial year, austerity cuts municipal and provincial conditional grants by R3.4 billion and R6.2 billion respectively. The best approach, as opposed to the cuts, is to enhance governance and administrative capacity and technical expertise for municipalities and provinces to deliver and maintain infrastructure and other essential services and serve the people diligently.

The cuts affect the government’s total expenditure less debt service costs called non-interest spending. Included are net cuts of R21.7 billion for this financial year, ending 31 March 2024, R37.3 billion for the financial ending 31 March 2025, and R47.7 billion for the financial year ending 31 March 2026.

We will strengthen our effort and capacity, including by forging a popular left front and building a powerful, socialist movement of the workers and poor, with the utmost resolve and determination to dislodge neoliberal policy capture and stranglehold, including austerity, on our national policy direction.

We are also part of the civil society and working-class formations that signed the joined statement co-ordinated by the Institute of Economic Justice. When the statement was released at the press conference on Tuesday, we said we will advance the way forward it elaborates through our campaigns, including this Red October Campaign.

In particular, our support in the statement goes to the twelve-point way forward, which is consistent with the declarations, resolutions and measures we ourselves have articulated already. In doing so, we submitted the measures as part of our input in Alliance engagements on fiscal policy.

True to history, we reiterate the twelve-point way forward today. This includes the call for the government to increase the Social Relief of Distress Grant, expand access to cover more beneficiaries and transform this grant into a universal basic income grant. This, together with increasing the social relief of distress, child support and foster care grants to the level of the food poverty line, should form part of redistributive measures to put people first and tackle the cost-of-living crisis.

If it needs to borrow, the government must prioritise cheaper rand denominated borrowing, as opposed to accumulating foreign currency denominated debt. We are strongly opposed to imperialist denominated international financial institutions and other sections of foreign-controlled finance capital that undermine democratic national sovereignty and promote domestication of their neoliberal policy measures as conditionalities. Their behaviour destroys democracy as it replaces democratic national policy self-determination with their loan conditionalities.

In addition, the accumulation of foreign currency denominated debt exposes the country to the impact of unfavourable exchange rate fluctuations, floating currency volatility, and imperialist politics on national debt. These increase foreign currency denominated debt burden, with far-reaching consequences, including increased risks of financial exploitation and sustenance of under-development.

In drawing attention to the increase in the budget deficit by R57 billion this financial year, Minister Godongwana mentioned “a sharp fall in corporate income tax, particularly from the mining sector”, as one key reason. Who must the government blame for this, while the National Treasury engineered a fall in government revenue through a significant contribution of the drop in corporate income tax? The National Treasury did this by cutting corporate income tax by 1 per cent from 28 per cent to 27 per cent. To boost national revenue, we are calling for the government to reverse its decision to reduce corporate income tax.

The government must adopt a wealth tax and instate prescribed investment requirements to support social policy and the realisation of inclusive growth. We attach the edited full text of the twelve-point anti-austerity programme of measures we signed with other civil society and working-class formations for reference as an annexure.  

By signing the statement, we show that our political policy is not confined to engagements within the Alliance. Conversely, neither are we abandoning Alliance engagements. We are taking forward the struggle for structural economic transformation, inclusive development and caring social policy on all fronts, inside and outside the Alliance.

For instance, when we engaged in the Alliance, the National Treasury had not budgeted to honour the 2023 public service and administration wage settlement. We rejected that and called for a budget allocation to honour the settlement, as opposed to forcing national government departments, public entities and provinces to cut their budgets for already adopted priorities to foot the bill. When the minister tabled the Medium-Term Budget Policy Statement, he announced that:

“Additional funding of R24 billion this year and R74 billion over the medium-term will be used to fund the 2023/24 wage increase and the associated carry-through costs in these sectors”, referring to health, education and police services.

We welcome this shift, but we denounce its limitation, as with the entire structure of the “rob Peter to pay Paul” austerity manoeuvres. Through austerity, the Medium-Term Budget Policy path is an assault on the people, especially the approximately 12 million unemployed who need access to decent work and income security.

Our national population of poor people includes employed workers in highly exploitative low-wage jobs. In its April 2020 “Poverty and Equity Brief”, the World Bank, which we dislike because it is part of the problem’s drivers through its promotion of neoliberal policy measures, highlighted that approximately 55.5 per cent of South Africa’s population lived in poverty, at the national upper poverty line equivalent to R992 per month, while 25 per cent of our people experienced food poverty. This meant 30.3 million people lived in poverty at the national upper poverty line, while 13.8 million people experienced food poverty in South Africa.

Austerity will sustain the crisis of high unemployment, poverty and inequality. It is not a solution to but a driver of de-industrialisation. How will investment confidence rise if the government continues to suppress its support for economic development and industrialisation, and its own investment through fiscal policy into the economy? How can you suppress fiscal policy support for economic development, particularly building national production and advancing industrialisation, but expect higher inclusive growth rates? Certain assumptions that the Medium-Term Budget Policy propagates are just unthinkable, to say the least.

To resolve the unemployment crisis, South Africa needs a high impact, adequately funded industrial policy and structural economic transformation. We will continue striving for this.

We cannot condemn austerity without warning against a danger that seems to have developed in and gained arrogance within the National Treasury.

The National Treasury must be kept strictly in check and robustly held accountable. A failure to do this could pave the way for a victory of a counterrevolution.

Towards the Medium-Term Budget Policy Statement, some officials in the National Treasury exaggerated the extent of the budget deficit, by almost four times than it stands currently. They did this to deepen austerity.

If you look at especially austere measures they promoted, their action is tantamount to hamstringing the capacity of the ANC-led government to deliver development and services to the people. This will turn the people against the movement.

The counterrevolutionary austerity measures include measures such as instructions to national government departments, public entities and provinces to stop all new infrastructure development plans and personnel recruitment and fully implement other austerity measures by 31 March 2024. In fact, this grinds all affected state functions and areas to a complete halt. Interestingly, the agenda coincides with the intensification of 2024 national and provincial election campaigns.

Foreign forces, including in the United States, as many articles published on the internet show, are interested in the outcomes of our elections. They want the ANC to lose its majority, and they promote the idea of a right-wing coalition government replacing the ANC. Domestically, this has manifested itself in the so-called “Moonshot pact” now called a “Multi-Party Charter”.

The reactionary path from within the National Treasury might be a sign that a counterrevolution may have possibly found its way into and is using some sections of the National Treasury as its launch pad within the state. The National Treasury appears to be mostly unquestioned within the state. This has given it powers to set overall state policy, overreaching, as the Constitutional Court in one case found.

Shortly after the last elections in 2019, in August, the National Treasury released a policy document, subtitled “Towards an Economic Strategy for South Africa”. It put forward no single proposal to revise its macroeconomic policy co-ordinating mandate to roll back its 23 years of failure to overcome the macroeconomic crisis of persisting high rate of unemployment, and to bring down similarly persisting high levels of poverty and inequality, as well as to eliminate uneven development.

In short, the document had no content on the National Treasury’s own macroeconomic policy co-ordinating mandate. Instead, the National Treasury used it to push sectoral policies that fall under the competency of other departments. To make matters worse, the sectoral policies that the National Treasury pushed through the document were neoliberal reforms and anti-worker. Included in this package were policy reforms such as limiting annual wage increases in the public sector, curtailing the within-sector legal extension of collective bargaining agreements, allowing for greater influence of outsiders on wages and conditions, and a blanket exemption of at least 12 months for small and medium-sized enterprises from complying with the national minimum wage. This is the context in which the National Treasury did not budget to honour public service and administration wage increases.

Sadly, the neoliberal policy reforms from the document thenceforth became dominant in the government’s policy lexicon and direction. This demonstrated that the National Treasury is not critically engaged with and is rarely questioned in government. The measures it pushed through the document were in fact first published in France, in 2017, on pages 289 to 292 by the Paris-based OECD in its book titled “Economic Policy Reforms 2017: Going for Growth”, as its “recommendations” for South Africa. This agenda is now central in President Cyril Ramaphosa’s main policy vocabulary, called “structural reforms”.

For example, on Monday, 30 October, President Ramaphosa used the occasion of addressing the nation to congratulate the Springboks on winning the Rugby World Cup as an opportunity to propagate those neoliberal structural reforms. It was in implementing the reforms that the government, through ICASA, privatised the high radio frequency spectrum in an auction to the highest bidder. This led to the duopoly of Vodacom and MTN capturing the lion’s share of this productive national asset.

We are calling for decisive action against loss of revenue by Eskom.

In his speech tabling the Medium-Term Budget Policy Statement, Minister Godongwana said they “recognise the potential loss of revenue due to private electricity generation, and the fact that traditional revenue models relied on by public entities like Eskom, face serious disruption.” That said, then followed absolutely nothing to take decisive action to prevent or at least mitigate the problem.

The disruption that the minister referred to does not come from elsewhere. It comes right from the liberalisation of the new power generation that the National Treasury promoted from the OECD template in August 2019.

The neoliberal model favours private sector investment in new power generation capacity, especially clean energy as a new field of profit-driven capital accumulation, while it leaves Eskom behind in this area. Where supporting investment by Eskom is mentioned, more often than not, is in transmission and distribution. Hand-in-hand with this is the unbundling of Eskom, to convert its transmission section into a standalone entity that will act as a highway for moving clean energy procured from the profit-driven power producers.

If Eskom does not invest in carbon capture and storage for re-use in environmentally friendly productive activity, and if it does not invest in clean energy to remain the mainstay of our national energy supply and security, its coal-fired power generation will be discontinued towards the imperative of net zero carbon emissions to stop global warming.

In the end, Eskom will remain with only transmission, mainly, and distribution in municipalities that do not distribute electricity. This is one way in which privatised power generation will predominate. It is another form of privatisation.

To stop loss of revenue by Eskom, among others, the state must ramp up support for Eskom to invest in carbon capture and storage for its coal-fired power station sector, for re-use in environmentally friendly productive activity, and to invest in and become the mainstay of our nation’s clean energy supply and national energy security.

The SACP urges the South African government to prioritise its citizens’ economic well-being by sourcing affordable oil from Venezuela, home to the world’s largest oil reserves.

We vehemently denounce the double standards of the imperialist United States. The United States regime has imposed unjust, unilateral sanctions on Venezuela, among others, to prevent anyone in the world from buying Venezuela’s oil, minerals and other products. Meanwhile, a delegation from the hypocritical United States has recently visited Venezuela to negotiate cheaper oil deals.

We are going to Venezuela next week. When we come back, we are going to make a public announcement. This will cover the amount of oil that Venezuela is affordably offering South Africa, based on the engagement we will hold with authorities in Venezuela. Here, we are intervening as the SACP.

The Minister of Mineral Resources and Energy, Gwede Mantashe, who is both the National Chairperson of the ANC and a member of the SACP Central Committee, will have to follow up on the announcement we will make. Mantashe will have to lead the effort for the South African government to source affordable oil from Venezuela annually, to significantly reduce oil, petrol, diesel and other oil byproducts prices in South Africa. This will contribute to a reduction in the cost of living in our country, by reducing the prices of other products in which production and transportation oil and oil byproducts are used as key inputs.

We reiterate our unwavering solidarity with the Cuban government and people.

The SACP condemns in the strongest terms the imperialist regime of the United States for imposing, maintaining and strengthening its illegal economic, financial, trade, investment and political blockade against Cuba.

We welcome the United Nations General Assembly’s vote against the regime change blockade of Cuba by the United States. When 187 countries in the UN General Assembly voted against it on Thursday, only the United States and the apartheid Israeli settler state voted to support the barbarous blockade of over 60 years against Cuba. This was not the first time the UN General Assembly voted overwhelmingly against the criminal blockade. It has done so for over 30 years now, but the United States is continuing to display its impunity against multilateralism and world democracy.

In our country, the right-wing NGO, AfriForum, with its roots in apartheid beneficiaries, to whom it is shamelessly biased, took to court the government’s decision to offer R50 million humanitarian aid to Cuba. They think they achieved victory when, on 25 October, the North Gauteng division of the high court set aside the decision. In contradiction, the court did not say it is unlawful for our government to design a package and offer humanitarian aid to Cuba. All it said is that the committee that voted for the package was not properly constituted as it did not have a quorum.

Today, we call on the government, whether it intends to appeal the high court judgment or not, to immediately design a more enhanced humanitarian aid package for Cuba. A duly constituted committee must consider and pass the stronger humanitarian package for Cuba as a matter of urgency.

Cuba has contributed immensely to Southern Africa’s national democratic struggles to overthrow colonial oppression and apartheid in South Africa, to achieve the hard-won transitions towards non-racial and non-sexist democratic dispensations. This is one reason the likes of AfriForum are against Cuba.

In building a non-racial society, advancing the struggle for a world without apartheid, the struggle for a just and peaceful world, we must not allow the hatred of the Cuban people by the likes of AfriForum to prevail.  

In the same vein, we call on the world working-class movement and progressive forces. Let us intensify solidarity with the efforts of the Cuban government and people to end the United States’ criminal blockade of Cuba. Let us intensify solidarity with the Cuban government and people for the United States to end its foreign occupation of the Cuban territory of Guantanamo Bay.

We condemn in the strongest terms possible the United States’ partner in crime, the apartheid Israeli settler state, for its atrocities and genocidal bombardment of the Palestinian people.

The apartheid Israeli embassy in South Africa must shut down and the ambassador, together with the entire staff, must be sent packing.

For 75 years following its establishment in historical Palestine, in May 1948, the apartheid Israeli settler state has systematically killed Palestinian people.

The Israeli regime has expanded through its bloody expropriation of Palestinian lands.

Israeli leaders have erected illegal settlements in a vast land of Palestinian territories, which they continue to occupy.

The Israeli settler state has segregated historical Palestine in the same way as, but is now worse than the way the apartheid regime racially segregated South Africa.

It is the Israeli settler state that has adopted and imposed other policies of apartheid oppression, extermination and displacement of Palestinian people.

It is inhumane and war crimes, as the apartheid Israeli settler state has done in Gaza since last month, to cut access to water and electricity for everyone, including newly born babies, children, pregnant women, people living with disability, elderly people, to bombard hospitals and civilians, and to destroy dwellings and wipe off whole families through shelling from air, sea and land, and to commit genocide, having ordered the victims to leave their homes and their own land.

In short, by killing Palestinian people, by expropriating and occupying Palestinian lands, and by unleashing colonial and apartheid oppression on Palestinian people, the Israeli settler state must be held directly responsible for the wars it has caused in and around historical Palestine.

The imperialist United States regime must also be held accountable.

Together with the apartheid Israeli settler state, the imperialist United States regime must be held responsible. What goes up, must come down. The United States will not permanently dominate the world economically, militarily and politically. Its imperialist hegemony will fall after waning, as the world’s balance of forces changes. This process is already underway, despite the United States remaining dominant. At last, United States leaders will be held to account for the atrocities they have engendered, supported and committed in every part of the world.

Among others, not only has the imperialist regime of the United States armed the Israeli extermination and atrocious human rights violations against the Palestinian people. Its president, Joe Biden, has declared he will unleash war against anyone who may seek to intervene to stop the Israeli genocide against the Palestinian people.

Let us deepen the struggle to eliminate patriarchy and achieve gender equality now, during and beyond the 16 Days of Activism against Gender-Based Violence campaign.

As the United Nations states in its concept note for the campaign, its underlying theme is “Unite to end violence against women”. Its theme for 2023 is “Invest to Prevent Violence Against Women and Girls”. Promoted by the United Nations worldwide, the 16 Days of Activism against Gender-Based Violence campaign takes place every year.

The campaign begins on 25 November, the International Day for the Elimination of Violence against Women, and ends on 10 December, the International Human Rights Day, highlighting that violence against women is the most pervasive breach of human rights worldwide. This year’s campaign theme is also in line with the Commission on the Status of Women’s priority theme for 2024, focused on “Accelerating the achievement of gender equality and the empowerment of all women and girls by addressing poverty and strengthening institutions and financing with a gender perspective”.

Issued by Alex Mohubetswane Mashilo, National Spokesperson, 6 November 2023

Annexure

1. Twelve-point anti-austerity programme adopted by civil society and working-class formations, including the SACP. A developmental and rights-based approach to budgeting, in particular a human rights impact assessment [to rid our fiscal policy direction of negative impacts on human rights: SACP].

2. Close the budget mismatch through innovative use of resources available from the South African Reserve Bank and cheaper, short-term rand-denominated borrowing [as opposed to accumulating foreign currency denominated debt: SACP].

3. Protect public service delivery and support public employment, including reversing the decision to freeze hiring in the public sector.

4. Increase and expand the Social Relief of Distress Grant, the Child Support Grant, [and Foster Care Grant: SACP] to the level of the food poverty line and transform the Social Relief of Distress Grant into a universal basic income grant.

5. Adopt effective measures to eliminate hunger and malnutrition, [elaborate and implement a clear poverty eradication programme: SACP].

6. Extend the Public Employment Stimulus to promote access to productive work, skill development and youth participation in the economy, to bring down unemployment.

7. Enhance transparency and public participation in the budgeting process.

8. Ensure greater accountability, especially consequence management, [to ensure value for money and clamp down on corruption and illicit activity: SACP].

9. Raise additional revenue by, among others,

9.1. Removing tax breaks for high-income earners and eliminating or reducing tax breaks for those earning above R750,000 per year

9.2. Reversing the reduction of corporate income tax from 28 per cent to 27 per cent

10. Remove ineffective corporate tax subsidies, such as the Employment Tax Incentive from which the government is losing about R6.6 billion a year with little evidence that it has supported youth employment.

11. Reduce the cost of borrowing by moving to cheaper, shorter-term loans and renegotiating the terms of a particular debt, instating prescribed assets undertaking interest rate management through capital management techniques.

12. Adopt and implement a Wealth Tax, and avoid any increase in Value Added Tax.