SAFTU regards the 2020-2021 as a declaration of war on the working class and the poorest of the poor

27 February 2020

SAFTU predicted that the 2020 Budget Speech will present the cremation of the working class alive! We were correct, indeed the working class and the poorest of the poor were placed in the frying pan and the heat underneath was increased.

The government has presented a budget whose main tenet is an attempt to solve the economic crisis on the back of the working class. We reiterate what we have said before, it is not the working class that has created the economic havoc, but the greed of the capitalist class. For example, they borrowed money they did not have to create financial bubbles, leading to the world economic crisis of 2008/9, and forced the state to borrow even more to bail out the bankers.

It is not the working class that destroyed the state owned enterprises but the government’s managerial deployees, as the ruling party tried to create a black bureaucratic bourgeoisie, one prone to corruption by both old and new capitalists.

It is not the working class that adopted neoliberalism, that has caused jobless economic growth accompanied by even deeper levels of poverty and inequality since the liberation from apartheid. leaving us now as the most unequal society in the world.

Yet in this budget, government has decided to slash a massive unprecedented R261 billion from its baseline expenditure.

SAFTU warned over and over about neoliberalism, imposed in the face of the massive developmental backlogs we inherited from colonialism, apartheid and capitalism. This philosophy will not help the country break backbone of poverty, unemployment and inequality. More dangerously an austerity programme based on a government driving down its expenditure or its contribution to investment in the economy will hasten even worse unemployment, poverty and inequality.

The massive cuts in public expenditure and public investment will not grow the economy. The public sector creates a third of the GDP. A 1% cut has a huge impact on growth. The levels of investment by the private sector has also plummeted. There is a devastating private-sector ‘capital strike’ in our country, even while the country’s stock exchange remains the most overvalued in the world (using the ‘Buffett Indicator’, measuring market capitalisation to GDP). The billionaires and multi-millionaires are hoarding over R1.4 trillion of investible cash. They are refusing to invest it because our monetary policy rewards owners of financial assets with high interests rates, so as to maintain a inflation target policy of between 3 and 6% and to allow exchange control liberalisation. This encourages the rich to put their money in the banks which earns them a profit of up to 4% for just sitting next to their swimming pool.

Minister Tito Mboweni is a veteran when it comes to advancing the interests of the rich, and he pulls the wool over the eyes of South Africans by making a misleading announcement: “total government spending is expected to grow at an average annual rate of 5.1 per cent, from R1.95 trillion in 2020/21 to R2.4 trillion in 2022/23.” But what is really going on cannot be disguised: “non-interest spending declines on average over the MTEF in real term”. The name for this philosophy is ‘austerity’ – and the worst time to impose it is during private-sector capital strike.

There will be cuts of R156.1 billion over the next three years. The total budget cuts from the baseline bill are a massive R261 billion. These will include:

1.    A cut of R14.6 billion in the human settlements budget at the time when we have a backlog of 15% for housing with informal settlements mushrooming around every city.

2.    A cut of R2.8 billion to the municipal infrastructure grant at the time when most local governments are in desperate need to maintain the current infrastructure, not to mention building more that is desperately needed.

3.    A cut of R13.2 billion mainly on allocations to the PRASA and public transport networks, leading to the suspension of new bus systems in Buffalo City, Mbombela and Msunduzi municipalities. Already there are fewer and fewer trains for workers in particular in Cape Town and Gauteng.

4.    A cut of R5.2 billion in the education infrastructure at the time when government keeps on making promises that it will wipe out latrine toilets and when still 85% of our schools have no libraries and laboratories. Talk of Smart Cities and the 4th Industrial Revolution is now laughable, as our soon-to-be workers languish under an education system that ranks near the bottom of the world in science, technology, engineering and maths.

5.    A cut of R3.9 billion from the health budget at the time when our public hospitals and clinics have chronic infrastructure backlogs.

SAFTU condemns in the strongest terms possible the cutting of R160 billion over the medium term. Government has the gall to suggest that it will even pull out of the existing pathetic agreement it rammed down the throats of the public servants who are members of COSATU unions.

In spite of 200 000 unfilled posts in the state, the ANC government goes further, stating that it won’t be employing more workers in the public service in spite of society’s vast unmet needs, such as public works, crime prevention, education and health care – all terribly under-staffed. The climate crisis is upon us, with our carbon-intensive economy among the world’s highest greenhouse gas emitters per unit of per person output (below only Kazakhstan and the Czech Republic of countries with more than ten million people). Our inadequate stormwater drains and sanitation systems, poorly-built housing, collapsing roads and bridges, and inadequate drought relief all desperately need more state workers so as to climate-proof South Africa. We need to urgently roll out the renewable energy, public transport and retrofitting of buildings, since the private sector’s efforts are too little, too late.

Mboweni has succumbed to the pressure of the three brothers who state-captured Treasury back in 1994: Standard&Poors, Fitch and especially Moody’s. It is long overdue to question their neoliberal logic, and to demand that any Finance Minister following their dictates be removed, and replaced with a woman or man who empathises with the South African people and respects our needs.

Issued by Zwelenzima Vavi, General Secretary of SAFTU, 27 February 2020