Alternative Information and Development Centre on the MTBPS: "Worse than business as usual"
The focus and drive behind government strategy is to do everything to encourage rich investors. There is nothing in the Mid Term Budget Policy Statement (MTBPS) on the need to redistribute wealth and drive a massive job creation programme. None of the measures announced in the MTBPS have previously been able to address the mass unemployment crisis. If anything, this type of measures has only led to worsening the situation. The budget policy statement is in some ways worse than business as usual.
The "public sector wage bill" has become a swear word. But there is a difference between administration and the salaries of managers and politicians, on the one hand, and living wages to those who do the job on the ground, on the other. A hundred thousand posts and more are vacant within public health and in public schools. It has been proved beyond doubt that the building of houses should not be done by private firms. Indeed, the "public sector wage bill" needs to be expanded. This means greater government expenditure, in the right places.
The tax subsidy to employers will increase the divide between the mass of poor paid workers and the very few that have secured a living wage. It will put a general pressure on wage levels, doing this when the median youth wage already being 25% lower than the adult median wage. Wage compression will lower the total demand for goods and services in the SA economy even further, to the detriment of small and medium large firms that do not produce for export.
But for the vested interests of "export-led" economic privilege and power, profits are always too low and the price society must pay is never too high. Symbolically this is no better represented than by the allocation of more money for another polluting coal fired electricity plant. The Mineral Energy Complex that has undermined the diversification of the economy is back at the centre of the South African economy.
If the government were serious on cutting costs, they would cut cronyism and hand-outs to white and black business. It would prosecute those responsible for Nkandlagate and the endemic corruption that grips every level of government activity. It would dare to impose more than symbolic fines on the price colluding building companies. Considering the options available, the crack-down on government perks as part of the drive to cut costs is nothing but symbolism.
The revenue side of the budget must be expanded by dumping the 25% tax rule, in favour of a tax to GDP ratio of at least 30%. Taxes of the top ten percent of income earners should be adjusted back to the levels that were scrapped 12 years ago. Corporate tax evasion, using tax havens like Barbados, should be blocked.
Led by the Treasury, the government chooses to continue and deepen its failed policy. Only a citizen based democratic counter power can turn things around.
Statement issued by Alternative Information & Development Centre, (AIDC), October 24 2013
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