COSATU budget expectation statement

21 February 2021

The Congress of South African Trade Unions is looking forward to the upcoming Budget Speech to be tabled in Parliament on Wednesday 24 February 2021. We hope that the National Treasury will table a budget that speaks to the many commitments of the President’s State of the Nation Address (SONA).  We do not need a budget that will water down the plans as outlined in the SONA.

 Fiscal Framework

The upcoming Budget should signify a shift away from the Neoliberal macroeconomic framework that has suffocated the economy. Whilst we share the concern about the rapidly rising debt-service costs in terms of the budget, however, we believe that the most sustainable way of reducing the budget deficit and drawing down the public debt is to implement policies that support economic growth. The biggest crisis is economic stagnation and not debt. Even the IMF in January urged countries to “spend as much as they can” in the face of the prevailing contraction, we hope that the National Treasury will be moved and abandon its superstitious belief to its destructive Neoliberal austerity straitjacket.

The government needs to respect collective bargaining by honouring Resolution 1 of 2018 and removing the imposed wage freeze that has been proposed for the next three years. The public service wage bill has been stable at 35% of the budget since 2009.  The public service headcount has drastically declined in proportion to population growth. In 1994 there were 1,4 million public servants for a population of 34 million and today there are 1.2 million public servants for a population of almost 60 million.

 The national treasury needs to reduce the size of salary packages paid to politicians and senior managers. Stop wasteful expenditure that leaks about R150 billion from the fiscus, annually.

The National Treasury needs to appreciate that in addition to allocating the fiscus, it has the ethical duty to see to it that the money is used for its designated purposes. Where there are persistent problems it needs to proactively act to build capacity and accountability.

The Federation wants the National Treasury to reduce outsourcing and provide an analysis of the Service Level Agreements or contracts pertaining to outsourcing or Public-Private Partnerships with a view to revoke those that haemorrhage resources and to implement insourcing.

The Federation wants a coherent plan to stabilize key State-Owned Enterprises. The state of deterioration and collapse of many SOEs destroying the lives of innocent workers.

 The Reserve Bank needs to champion not only protecting the value of the currency but also measures that can spur economic growth and job creation.  This must include further cuts to the repo rate and when needed quantitative easing.

 Tax Reforms

 The government needs to adopt a more progressive tax regime and stop overburdening working-class families.  Recent years have seen the bulk of tax increases being imposed upon workers e.g., VAT, fuel levy, tax bracket non-adjustments etc.

SARS needs to be capacitated to deal with tax loopholes exploited by the wealthy and customs evasion used to dump illicit goods that cost the state and economy billions annually.

 Health -Covid-19

 Covid-19 has clearly shown the need for a proficient and sell resourced state.  Government needs to fill health service vacancies and ramp up preparations for a National Health Insurance. 

The procurement and dispensing of vaccines need to be drastically expedited and National Treasury needs to allocate adequate resources.  We cannot afford another economic lockdown.

 Economic and Social Relief Measures

 The National Treasury needs to stop sabotaging the process of public service employees joining the UIF. The Unemployment Insurance Fund to date has been the single largest source of relief to the economy.  Millions of workers’ jobs and thousands of businesses have been saved by the nearly R60 billion UIF contribution. The government like all other employers needs to pay its UIF contributions. 

 We welcome the R350 Covid-19 Grant’s extension for 3 months. The National Treasury needs to initiate the implementation of the ANC resolution on the Basic Income Grant.

 In line with the President’s commitment to the revamping of the Loan Guarantee Scheme, we expect the National Treasury to give more details. The Federation would like to see lower interest rates, easier repayment terms, and grants to incentivise job retention and creation. 

 Government should ensure that banks provide meaningful debt relief to distressed consumers and businesses and prioritise productive investments. 

 The budget needs to assist restricted and embattled economic sectors like tourism, liquor and others through tax relief and appropriations.

 Economic Recovery and Reconstruction Plan (ERRP)

 The budget needs allocate sufficient resources to ensure the success of the ERRP.  The heart of our crises is a stagnant economy.  It needs to be helped to get back onto a growth trajectory.  Key to this is:

- Clear measures to stem the flood of job losses are needed.  This must include increasing allocations to key job creation programmes in the state, in particular the Industrial Financing programme of the DTIC.  Bold job creation targets for each department, entity, SOE and municipality are needed.  Tackling unemployment must be at the centre of all that the state does.

- The irresponsible budget cuts to the CCMA and other key labour market institutions must be reversed.

- The budget needs to indicate what is being done to increase impact investments by the private sector and to address regulatory obstacles to investments and economic growth.

- We expect drastic steps to increase local procurement by all government departments, municipalities, and entities. Clear targets for local procurement by the state are critical.

- The public procurement system is archaic and a source of looting and wasteful expenditure. A single online, transparent public procurement system for the entire state is needed.  The Public Procurement Bill has been delayed for far too long. It needs to be prioritised and passed into law by the end of 2021.

- The roll-out of the infrastructure programme must be sped up.  In particular, the modernisation of ports and Transnet as this will boost manufacturing and agricultural exports, as well as rebuilding a wrecked Metrorail so workers can get to work on time. 

- Investments in energy generation maintenance and expansion are critical to ensuring the economy can operate.  The Eskom Social Compact and Implementation Plan has begun to be implemented and the National treasury needs to give an update on this process.

- The government needs to inject competition into the financial sector and utilise the Post Bank, Land Bank, and other state financial institutions to form a State Bank.

- About 90% of municipalities are financially distressed and the budget needs to show a plan to address the serious challenges facing local government.

- A skilled workforce is key to growing the economy and the budget needs to speak to properly resourcing our education system and ensuring that quality, basic and tertiary education is truly accessible to all. The NSFAS crisis needs to be resolved through an adequate allocation of funds.

- Land reform needs to be fast-tracked and farm workers and women need to be prioritised.  Land on its own is insufficient and needs to be accompanied by adequate access to credit, training, infrastructure, and markets. The budget needs to address the insufficiencies and supply resources.  

This upcoming budget speech will make or break the government’s economic recovery plans and determines the future of this country. We hope the Minister, his department and the entire executive will rise t the occassion. 

Issued by Sizwe Pamla, National Spokesperson, COSATU, 21 February 2021