COSATU notes with disappointment government’s underwhelming 2024/25 budget

21 February 2024

The Congress of South African Trade Unions (COSATU) notes with disappointment Government’s underwhelming 2024/25 Budget that was tabled today at Parliament.

Treasury treated Budget as little more than a bean counting exercise and failed to seize the moment to respond decisively to the myriad of challenges workers, society, the economy and the state are facing.  The reason we are in a crisis is because the economy is not growing and unemployment remains dangerously high.  The growth in debt is a symptom not a cause of this.  The solution is to stimulate the economy, reduce unemployment, provide relief to the poor, rebuild the state and tackle crime and corruption. 

We support government’s agreement with the Reserve Bank to release R150 billion from its reserves to ease the fiscal pressures.  It is critical these reserves be used strategically to stabilise and rebuild Eskom and Transnet in particular, as this can only be a once off relief and needs to be utilised to grow the economy and reduce unemployment.

Tragically the Budget fails to meet the existential crises with the boldness they require.  By Treasury’s own admission, the economy is projected to grow between 1.3% and 1.8% over the Medium-Term Expenditure Framework (MTEF).  The recent State of the Nation Address (SONA) made a variety of progressive commitments, yet Treasury has seemingly balked on these.

Key to growing the economy is to remove the network and logistics obstacles inhibiting it.  We welcome progress in providing Eskom R253 billion worth of debt relief and the significant strides workers at Eskom have made in reducing the levels of loadshedding over the past year as well as the progress in easing municipal debt.  To turn the corner on loadshedding, government needs to fast track the rollout of the planned 14 000 kms in new transmission lines which will help unlock renewable energy generation investments.

Whilst there has been some progress in easing port congestion over the past few months, Transnet, including its Freight Rail, continue to struggle to transport goods to their markets timeously.  This is having a major impact on the mining, manufacturing and agricultural sectors, who are not only key sources of jobs but also taxes the state depends upon.  Government needs to move faster to help Transnet turn things around.  We hope the R47 billion loan guarantee provided to it will help.

We are disappointed that no new plans have been provided on how other embattled State-Owned Enterprises (SOEs), in particular Metro Rail, the Post Office and the Postbank, Denel and the South African Broadcasting Corporation will be repositioned and placed on a sustainable path.  Retrenching 6 000 workers at the Post Office is not a plan.  The revival of South African Airways though is positive news.

We are deeply worried by the state of local government, with 36 municipalities routinely failing to pay their employees, and basic services deteriorating at an alarming rate.  The increase in municipal grants as well as intervention and capacity building programmes for 140 municipalities is welcome and will hopefully see some improvement in local and rural communities. 

The recapacitation of our SOEs and local government is critical to ensure success in rolling out the massive R943 billion (R486 billion by SOEs and R214 billion by municipalities) infrastructure programme.

SONA gave hope to millions of unemployed and young people with commitments to increase and extend the SRD Grant and the Presidential Employment Stimulus.  COSATU is extremely disappointed that Treasury reneged on this commitment and failed at the minimum to adjust the SRD Grant for inflation or increase the intake of the Presidential Employment which has been cut in each Budget cycle.  These two programmes have had a positive impact upon the unemployed by helping people buy food and providing young people with invaluable experience and skills and thus improving their chances of finding permanent jobs.  The Federation is calling upon Parliament to exercise its legislative authority and amend these budget cuts.

COSATU is pleased by progress we have made with Parliament and Treasury to ensure the Two Pot Pension Reforms come into effect on 1 September 2024.  This will provide badly needed relief for millions of highly indebted workers.  It is critical Parliament conclude passing the two Bills enabling these reforms by April so the remaining processes can be attended to by the President, SARS and the pension funds.

Society depends upon well-functioning public services.  We had hoped to hear from government detailed plans on how they will rebuild front line services that have been painfully weakened by ill considered budget cuts over the years.  The below inflation increases to Health, Industrial and Exports Programmes, Agriculture and Defence are concerning.  Cuts to the CCMA, Home Affairs, Metro Rail and the electrification programme will have a dire impact on their ability to deliver upon their mandates. 

Above inflation increases for schools, the Police, Courts, housing, roads and especially water infrastructure are welcomed.  The tax incentives for the local manufacturing of electric vehicles and an additional R1 billion in industrial financing will be a positive injection for motor manufacturing jobs.

The increase in the South African Police Service headcount is positive but needs to be increased to reduce the high levels of crime.  Similar increases in skilled personnel are needed in the National Prosecuting Authority and the Courts. 

The public service wage bill, contrary to offensive neo-liberal propaganda, is not of control at 31% of the budget.  In fact, it has decreased from 35% and this is resulting in rising vacancies amongst doctors, nurses, teachers, police and other essential frontline workers.  The state cannot run on tables and graphs.  It requires skilled professionals if it is to deliver the quality public services society depends upon.

Government has done well rebuilding the South African Revenue Service.  Whilst the additional R1 billion allocated to it is welcome, more should have been given to SARS to increase tax compliance and tackle customs fraud and thus bring the revenue the state requires. 

Treasury missed the opportunity to reduce the deficit by not increasing taxes upon the wealthy, large corporations and luxury imports.  We are pained they choose instead to include working and middle class families when they opted not to adjust tax brackets for inflation.

The R4 billion Fuel Levy relief will help cushion commuters from fuel price hikes.  Cabinet needs to instruct the sleepy Department of Transport to expedite the Road Accident Fund Bill and place the RAF under administration as commuters cannot afford to continue to subside the insatiable appetites of road accident lawyers.

Issued by Matthew Parks, Acting National Spokesperson & Parliamentary Coordinator, 21 February 2024