COSATU statement on the upcoming Medium Term Budget Policy Statement
23 October 2017
The Congress of South African Trade Unions is looking forward to the upcoming Medium Term Budget Policy Statement with some trepidation and we hope government and the Minister of Finance Malusi Gigaba will rise to the occasion. This policy statement comes at a time when the economy has barely recovered from the technical recession and is yet to pull through towards a firm growth trajectory.
South Africa is currently struggling with the real unemployment rate of 38%, with close to 10 million people struggling to get jobs and 17 million people on welfare. The latest data by Statistics South Africa report shows that out of a population of 56 million, around 13,8 million people are now living below the food poverty line of R17.38 per person per day .It also shows that more than 30 million people out of 56 million are by and large poor.
We have lost more 650 000 is the last 24 months and with an economic recovery that is still subdued; the minister has a mammoth task of providing some answers to questions thrown up by the current economic challenges facing our country.South Africa is in a long term economic crisis with 4 out of 10 workers unemployed and with little hope of finding a job, let alone a decent permanent work.
It is disquieting that the fifth administration has been presiding over economic contraction and job-losses over an extended period ;and we hope that the mini budget statement can come up with policy proposals to arrest this downward spiral.
This is made worse by the recent dramatic cabinet reshuffles ,in March and October, that saw some ministers fired, and two of the western sovereign rating agencies condemning our economy to a junk status. Despite the recent rhetoric around radical economic transformation, the country is now more vulnerable to the policy dictates of these western institutions and monopoly capital, which is now strongly linked to global finance capital.
The medium-term repayment of the R2.2 trillion worth of the total public debt some of which is denominated in US Dollars or other foreign currencies has the potential to actually undermine our national self-determination and threaten the course of the NDR. This heavy debt burden can only balloon even more as long as the governance of most of the State Owned Enterprises (SOEs) continues to deteriorate, as we now regularly read disturbing reports of massive looting that is taking place in the SOEs linked to the Guptas and others.
Minister Gigaba has the unenviable task of delivering a convincing policy statement under an administration whose legacy is of systematic looting and corruption. This is difficult in an environment where no one is being prosecuted for corruption. Key parastatals such as Eskom, SAA, SABC, and Transnet have been stripped by a coterie of individuals, who continue to have a very toxic relationship with the president of the republic. The role of the state Capture and Corruption in sabotaging the economy and destroying jobs cannot be overlooked. The minister cannot pretend as if the Public Protector’s report never identified these twin evils as an albatross around our economy and government’s neck.
The minister needs to be more clear and coherent about dealing with institutions like KPMG. Their toxic role should not be downplayed and it’s about time the government of the country implemented the law on criminalisation of cartels. We cannot condemn corruption but still shield executives from being criminally prosecuted.
The fight against corruption cannot continue to be cloaked in rhetorical preambles and slogans; we need to hear more about the cleaning up of parastatals and the elimination of corruption. It is a travesty that the social grants system continues to be outsourced to white monopoly capital in repeated defiance of the Constitutional Court. The minister needs to come up with a plan to reduce government spending on consultants.
Currently, close to 90% of the population is excluded from the mainstream economy, we expect the minister to use the midterm budget to talk about racially transforming the economy from the one dominated by white monopoly capital and to the one based on equality of outcomes and not equality in respect of the constitution. It must take into account the facts that more than 30 million people are poor and vulnerable and that the quality of black/coloured education is declining. If the decline in education and training for black learners is not arrested, it would entrench the status of black people as “hewers of wood and drawers of water” or manual unskilled workers, as intended by colonisers and apartheid planners. Therefore we expect the budget to clarify the demand for free education; free accommodation, free tuition fees, and free meals for learners. One of the measures to reverse the colonial apartheid legacy is to educate and train black learners /people in order to take over the commanding heights of the economy.
What is patently clear is that the form in which growth and recession take place in our economy underscores the structural fault-lines of the semi-peripheral South African economy. This economy is still trapped in a condition of dependency to the European Union and China for its mineral exports, with no substantial beneficiation or industrialisation and dominated by few monopolies.
The relative persistence of this socioeconomic structure of colonialism of a special type also means that production and power still remain concentrated in white capitalist hands, the old Apartheid oligarchy. The long-term solution lies is transforming this economy and ensuring that the previously disadvantaged are brought into the mainstream economy through deliberate action from government.
The minister needs to find a way of forging an alignment of the macroeconomic policies, in particular the monetary policy, with the industrial policy and job-creation as proposed in the New Growth Path. The reintroduction of the trickle down neoliberal economics that says the private sector knows best and that the state must play a lesser role in the economy is not the solution, as shown by the deepening poverty, growing unemployment and widening inequality.
COSATU wants Eskom’s status as a natural monopolist in the electricity supply market to be protected and defended. Energy is a public good and must remain state owned otherwise we will continue to pay high tariffs, which are detrimental to job creation and industrial development. Independent Power Producers must be systematically introduced and renewable energy must be sold at 31 cents kWh instead of the proposed 67 cents. The Minister needs to make it clear that he is opposed to the nuclear deal because the country cannot afford it at the moment.
COSATU hopes that the midterm policy statement will be informed by the needs of the people unlike the cabinet reshuffles that are rooted in narrow self interests. We hope to hear from the Minister how government plans to do the following:
How do they plan to stabilise, clean up and return to good governance and a healthy financial state our collapsing state owned companies like SAA, Eskom, SABC and Post Office?
When is SASSA going to in-source the payment of social grants via the Post Office?
When will the Post Bank be converted into a fully fledged state owned financial institution?
How government will grow the economy and create jobs for the 38% unemployed?
How does it plan to boost exports, support the manufacturing sectors, reindustrialise the economy and protect vulnerable industries from cheap subsidise imports?
How and when free tertiary education will be provided for the working and middle class students?
How do they plan to address the infrastructure mess collapsing our education system?
When will the long promised National Health Insurance will be fully established?
What is the plan to address the national water crisis considering the fact that the Minister concerned is running the department down?
When will they end the freezing of badly needed public service vacancies, in particular in the police, teachers, nurses, doctors, prisons staff etc.
When is government going to progressively reform the tax system to lessen the burden upon working and middle class families and ensure that the rich pay their fair share?
What is the government’s plan to the cry for the fast tracking of land reform?
Issued by Sizwe Pamla, National Spokesperson, COSATU, 23 October 2017