COSATU response to the 2023/23 Budget Speech by Minister Godongwana

22 February 2023

The Congress of South African Trade Unions (COSATU) notes the 2023/24 Budget tabled in Parliament, today, by the Minister of Finance, Mr Enoch Godongwana.  In 1969 at the Morogoro Conference, the ANC adopted an ANC Strategy and Tactics document that says; “Our drive towards national emancipation is therefore in a very real way bound up with economic emancipation… Our people are deprived of their due in the country’s wealth; their skills have been suppressed and poverty and starvation have been their life experiences. The correction of these centuries-old economic injustices lies at the very core of our national aspirations.”

The year 2023 is the 11th year since the ANC government adopted the National Development Plan (NDP), 2030. The NDP was prefaced with a familiar quotation from the Reconstruction and Development Programme that says: “no political democracy can survive and flourish if the mass of our people remains in poverty, without land, without tangible prospects for a better life. Attacking poverty and deprivation must be the priority of a democratic government”.

It can be said that in general, the NDP set out noble objectives, including eliminating poverty, and reducing inequality and unemployment as it identified this crisis-level of our triple socioeconomic challenges as its core focus. But COSATU has consistently warned the government that it was wishful thinking to pursue such transformative objectives whilst persisting with the NDP’s Neoliberal macroeconomic straitjacket and with no clear interventions to structurally transform the economic base.

After this uninspiring and jaded budget, it is clear that the apathetic and indifferent sixth administration has either forgotten or abandoned these commitments made to the people of South Africa.  

We welcome the fact that in 2022, the economy avoided recession as it registered a 2.5% growth rate, however, the underlying structural fault lines and constraints, which amongst others include the domination of the now significantly foreign-owned monopolies in key sectors, deepening racialized and gendered wealth and income inequalities, the untransformed Apartheid geography that keeps the black masses in the periphery, means that our economy shall continue to languish in the current low-growth trap with persisting socioeconomic crises.

Despite avoiding the recession and the recovery trend that emerged in the later part of 2022, by the end of the year official unemployment rate had remained stagnant (declining by a mere 1%) to 43%.

Official unemployment amongst the youth stood at a staggering 60%. These indicators highlight the dismal failure of the Neoliberal macroeconomic framework that has been consistently applied since 1996 under different guises – from GEAR to ASGISA and now NDP – as the racialized, gendered. and geographic nature of our triple-crises across the country and within all provinces remain intact and entrenched.

Whilst there are some positive budgetary allocations, it is depressing to note that the budget continues along the same neo-liberal trajectory that has led to the current crisis.

The budget does not provide hope of a decisive set of bold interventions that will jolt the economy from a projected growth of 0.9% in 2023, 1.5% in 2024 and 1.8%.  It is self-delusional to believe that a timid budget will spur the economy to grow and slash unemployment.

The Federation applauds the excellent work done by the workers at South African Revenue Services (SARS) who have continued to set the agency on the path to recovery. They have exceeded revenue collections by R93 billion.  This is proof that a well-capacitated and properly led state entity can deliver results.

It is now clear that despite the rhetoric from ANC and government leaders around building a capable developmental state, our state continues with the Neoliberal trajectory of outsourcing and agencification, which especially at the provincial level has severely weakened service delivery. This budget remains committed to the reduction in personnel headcount in the public service as vacancies are closed and attritional retrenchments are effected.

Central to rebuilding a capacitated developmental state, is for government to rebuild its relationship with public servants.  Most public servants are disillusioned, overworked, highly indebted, and underpaid.

The projected increase in the wage bill by 3.3% over the Medium-Term Expenditure Framework MTEF) is tantamount to outsourcing the bill for corruption and the mismanagement of the state to public servants. What is scandalous is that the same budget allocates a 4.5% increase in salaries for members of the Cabinet and Parliament over the same period.  It is obvious that they are intent on balancing the books by pickpocketing nurses, teachers, and other hard-working public servants. 

The government needs to engage on the public service wage bill with organised labour at the PSCBC in good faith and come up with a wage package that will protect the rapidly eroding wages of public servants from inflation.  We cannot afford to continue to lose skilled public servants to the private sector and overseas. 

We welcome the progressive commitment to relieve Eskom of R254 billion or two-thirds of its unsustainable debt burden.  This will enable it to shift its resources to ramp up high-impact targeted maintenance and invest in the new generation.  The government needs to share the conditions set for this debt relief. 

These conditions should not include a fire sale of Eskom’s assets.  Eskom needs additional support from Treasury to reduce wasteful expenditure and the law enforcement institutions to tackle the endemic corruption and criminality crippling it and its infrastructure.  The economy needs government to expedite interventions to reduce and end load-shedding over the next six (6) months if the economy is to grow and unemployment fall.

Similar interventions are needed to secure and rebuild our passenger and freight railway network which is under siege from rampant cable theft and criminality.  Transnet and Metrorail are key to mining, manufacturing, and agricultural jobs as well as to transporting workers and commuters to their destinations safely in our cities.  The additional allocations to repair our railway network is welcome, the R32.5 billion for 146 carriages for the Metro Rail lines over the MTEF.

The allocation of R225 billion over this financial year and R903 billion over the MTEF for the infrastructure programme for rail, roads, housing, student residence, sanitation, water, energy, and ports will provide a badly needed jolt to the economy.  The allocation within this of R351 billion for transport and logistics and R132 billion for water is particularly critical.  The government needs to ensure these funds are spent and not pilfered by corrupt elements.

The allocation of R1 billion to settle SAA’s debts, R2.4 billion for the Post Office, and R5 billion for the Land Bank in addition to the already budgeted R30 billion for Transnet, SANRAL and DENEL is welcome. 

The Federation is however deeply worried by the lack of turnaround plans for our embattled SOEs Denel which has still not submitted its annual reports and the Post Office whose turnaround plan is based upon retrenching over 3 900 employees and slashing the remaining employees’ wages by 40%.

The failure to present a coherent and comprehensive turnaround plan for the SOEs shows that government seems hellbent on continuing with privatization to address the public sector debt burden and failures in the governance and management of SOEs. Treasury has not lifted a finger to deal with the pervasive levels of corruption and management incompetence in many of the SOEs. This undermines the course of building the developmental state.

We are dismayed by the silence of the budget on the implementation of the December 2017 ANC 54th policy and elective conference resolution on the creation of a state-owned bank. Delegates reaffirmed previous resolutions on the fundamental imperative and urgency of the establishment of a State Bank. Considering the feasibility study already done in this regard, the government was urged to move with speed in implementing this resolution by finding a way of capitalizing the state bank.

The additional funding for local government is welcome, but the lack of decisive interventions in the 90% of municipalities experiencing financial distress by COGTA and SALGA is scandalous and needs to be fixed.  Local government is in real trouble with many rural municipalities no longer able to provide basic services and up to twenty (20) municipalities in the Northern and Eastern Cape, North-West and Free State routinely failing to pay their employees.

A 6,1% increase in funding for NSFAS, a 7.7% increase in funding for agriculture and land reform, and the 11.4% increase in funding for roads are welcomed.  Additional funding to fill critical vacancies at the National Prosecuting Authority and the Revenue Service will be a boost in the fight against corruption and tax evasion. 

We are however deeply alarmed and outraged by the below inflation increases and thus cuts in real terms for Basic Education (3.1%), Health (2.7%), Industrial financing and Exports (2.4%), SAPS (3.7%), Courts and Correctional Services (2.9%), and Home Affairs (-0.8%).  This reckless austerity approach to key public services will further weaken the capacity of the state to provide the quality public services that society and the economy depend upon.

It is very duplicitous of the government to announce an appointment of an additional 10 000 SAPS members in 2023 but clandestinely fund only 5000.  South Africa cannot afford to continue to see the headcount of the SAPS bleed whilst population and crime levels rise. 

The relief of R4 billion for commuters by not increasing the fuel taxes will provide some comfort. Tax relief for low-income earners through bracket adjustments is welcome but similar relief for high-income earners was not necessary for this fiscal climate.  The pause in increasing the Health Promotion Levy will provide space for the sugar industry which is battling to cope with a flood of imports.

It is lamentable that the Presidential Employment Stimulus has provided work opportunities for 500 000 young people but has not been expanded to accommodate more young people. 

The SRD Grant of R350 has provided a lifeline for 8 million unemployed persons.  But is unacceptable that it has not been adjusted for inflation since it came into inception in 2020.  This needs to be fixed including the administrative hurdles inhibiting other unemployed persons from accessing it.  

COSATU welcomes the progress made in drafting the Revenue Laws Amendment Bill enabling financially struggling workers early access to their pension funds.  This Bill needs to be expedited by Treasury and Parliament to ensure that its implementation date of 1 March 2024 is not jeopardised.  Workers cannot afford any more delays.

We hope that Ministers and Departments will present solid and cogent plans during budget votes that speak to the identified priorities and there will be no rolled-over funds or missed targets.

This budget shows that the government is still obsessed with slashing spending to drive the deficit down, reducing corporate taxes, and providing tax holidays for certain investments. There is no appetite to reinstate exchange control regulations even partially. They continue to encourage wage restraint by organized workers and are steaming ahead with privatization.

Whilst we share the concern about the rapidly rising debt-service costs in terms of the budget, we have nonetheless consistently argued that using growth-enhancing fiscal and monetary measures is the most sustainable way of reducing the budget deficit and drawing down the public debt.

It is deeply disappointing that the Treasury has failed to seize the opportunity created by the better-than-expected GDP indicators of the 3rd Quarter of 2022, to positively adjust its deficit and debt containment targets.

Treasury needed to use this budget to abandon its current austerity approach of subordinating all the socioeconomic challenges that the country is facing to the narrow focus on its primary budget surplus and debt-containment targets. This budget proves that they are going to continue to wage an austerity war against public servants, amongst whom are the brave and hardworking frontline health and care workers that have seen the country through the most catastrophic period (COVID-19) in terms of public health emergency in democratic South Africa. 

COSATU reiterates its position that the source of the macroeconomic quagmire is economic stagnation and not debt, therefore, rather than choking the economy with austerity measures, the government needed to implement policies that support economic growth.

Issued by Sizwe Pamla, National Spokesperson, COSATU, 22 February 2023