COSATU deeply worried by the tepid MTBPS tabled by the Minister of Finance

26 October 2022

The Congress of South African Trade Unions (COSATU) is deeply concerned by the lukewarm Medium Term Budget Policy Statement (MTBPS) tabled by the Finance Minister, Enoch Godongwana in Parliament. Considering that the South African economy has been stagnant for over a decade and the country is experiencing periodical riots because of desperation and hopelessness; this budget was not bold enough.

We were hoping for a bold MTBPS that would protect workers from inflation, rebuild the state, decisively tackle corruption, provide relief to the unemployed and put measures to stimulate the economy. 

We acknowledge that there are positive interventions in the policy statement but on a macro level, this statement still fails to address the biggest challenge of economic stagnation.

It is economic stagnation that has led to the seven-fold increase in the public debt over the past decade and we reiterate our position that the most sustainable way to ensure the debt levels are brought under control is to grow the economy.

Suffocating the economy through budget cuts and scapegoating public servants has not worked. The government needs to focus on addressing the fundamental causes of the fiscal crisis, namely a stagnant economy, rampant corruption, massive unemployment, loadshedding and limping SOES, and not outsource the bill for corruption and incompetence to workers.

The government needs to resolve the current impasse with workers to avert any disruption of public services because this economy cannot afford a strike, and no one wants a strike.

The Federation is cautioning government against negotiating in Parliament when the conciliation process at the Public Service Co-ordinating Bargaining Council (PSCBC) is penciled for Monday, 31st October 2022. We reiterate our position that an amicable solution should be found to avert the strike that will impact service delivery and undermine the economy.

A public service strike will cause a major and extended labour unrest and a crisis of service delivery. The lack of sincerity and denialism about the political and economic costs of the government’s austerity strategy is astonishing.

We are deeply worried by the rapid decline in the public service head count and the devastating impact this is having on public services. The nation’s police-to-citizen ratio, nurse-to-patient ratio and teacher-to-student ratio are amongst the worst in the world.

COSATU is satisfied with the progress with regards to allowing highly indebted workers, public and private, to have limited access to their pension funds when in need. A Bill providing for this is now before Parliament and some of its final details need to be finalised between COSATU, Treasury and Parliament.

We want these issues resolved so that the Bill can be adopted in 2023 and this scheme can come into effect by October 2023.

We salute the commendable work done by the employees of the South African Revenue Service who have managed to generate an additional R83 billion in revenue for the state. It is a travesty that even these high performing workers need to take to the streets for them to get some recognition and a decent wage increase. More resources should be allocated to SARS to support their efforts to fight tax avoidance and conduct lifestyle audits of politicians, senior managers in the state and the private sector.

It is puzzling that the MTBPS is not prioritising the fight against corruption.  The country’s law enforcement agencies are not fully equipped to fight white collar crime and cybercrime. Police stations also do not have enough working tools to fix the crime situation that has left many people feeling insecure and leading to others taking law into their own hands. The Federation also expected a plan to fund a whistleblower protection programme. South Africa will not win the fight against crime if the whistleblowers are not protected and incentivised.

We are pleased that the government has agreed to the Federation’s demand for the extension of the SRD Grant that has provided relief to about 10 million people. The SDR needs to be retained beyond 2024 and increased to the food poverty line of R624. We are worried though that the National Treasury failed to pay attention to the SRD’s administrative challenges including the underspending. This is important if this program is to be used as a foundation for a Basic Income Grant.

The failure to commit to an increase in the funding for the Presidential Employment Stimulus is a letdown to the millions of unemployed young people. This also applies to the National Treasury’s failure to intervene with the banks to resolve the impediments that have led to less than 2% of the Bounce Back Scheme funds allocated to SMMEs.

COSATU demands that government must lead the way in absorbing the young people who are unemployed by compulsorily pushing all departments, SOEs and Agencies nationally and provincially to submit internship plans, and each must have a quota per year, at minimum wage level. The corporate tax reductions given to the private sector should also come with the same condition that they also submit annual internship plans at minimum wage level.   

The Federation supports the position that the fiscus needs to take over between R150 billion and R300 billion of Eskom’s debt burden.  This will allow the power utility to shift its resources to steadily increase its maintenance program and invest in new generation capacity. The current loadshedding regime is killing the economy and is unsustainable.

The National Cabinet made a commitment in 2018 and in to explore ways of dealing with record fuel price levels that are bleeding commuters and the economy. It is disheartening that there is nothing in the policy statement that addresses this important issue.

The National Treasury needs to reduce the 32% of the fuel price that goes towards taxes and work with the Department of Transport to address the problems at the Road Accident Fund. This includes DoT submitting again the Road Accident Fund and Road Accident Benefits Scheme Bills to Parliament by February to ensure the RAF’s ballooning liabilities (R400 billion) are brought under control.  Metrorail needs to be assisted to reopen all commuter lines.

The allocation of R3.6 billion to DENEL is appreciated, especially for those workers who have gone through years of not getting their salaries.  The allocation of R23.7 billion to reduce the Gauteng E-Tolls debt is welcome and a final solution is now needed to correct this policy mistake for good.

We note and welcome the allocation of an additional R5.8 billion to repair Transnet infrastructure but more needs to be done by law enforcement to protect our railway infrastructure.

The Federation is concerned that despite the doubling of the expected infrastructure investments over the Medium-Term Expenditure Framework (MTEF) to over R112 billion, the country remains far behind on infrastructure roll out programmes.

It is disappointing that halfway through the fiscal year, some key departments are woefully behind in meeting their annual targets. These include Basic Education, Human Settlements, Water and Sanitation, Transport, Mineral Resources and Energy, Small Business Development, Higher Education and Training, Justice and Correctional Services.  The President needs to deal with sluggish Ministers and their apathetic managers.

The Auditor-General has flagged the rapid decline in the functioning of municipalities, however, the MTBPS provides no details on what exactly is being done to halt this slide.  The leadership of COGTA needs to be held accountable.

COSATU believes that much more must be done to address the crises of mass unemployment, poverty and increasing inequality. Much more must be done in transforming the colonial structure of the South African economy and forging an industrialisation-led growth path.

It is disappointing that there is no explicit commitment to increase the funding to industrial sector masterplans that are supposed to be the backbone of the industrialisation strategy.

We expect government to undertake more decisive interventions to stem the unfolding de-industrialisation and job losses from cheap imports. Furthermore, COSATU calls on Treasury and the Reserve Bank to explore partial imposition of capital controls to stem the tide of capital flight.

The Federation implores the government to return to Parliament in February with a bold, decisive, and sweeping budget that will deal with this unfolding capitalist system’s multiple crises. 

Issued by Sizwe Pamla, National Spokesperson, COSATU, 26 October 2022