COSATU budget expectations statement 2023

19 February 2023

The Congress of South African Trade Unions (COSATU) is looking forward to the 2023/24 Budget due to be tabled at Parliament, this week, 22 February 2023.  This budget needs to move away from ineffectual and failing budget cuts that have only served to suffocate and squeeze an already struggling economy.

It is deeply worrying that since 2014, the Department of Finance has viewed the budget as a primary tool for implementing a contractionary fiscal policy. Since 2014, both the revenue and expenditure sides of the budget have been confined within GEAR’s parameters.

The immediate objectiveof macro-economic stability as a mechanism to underpin the main objective, development, has become inverted; containing expenditure, taxes and the budget deficit increasingly took primary over utilizing the budget to redress the country’s social deficit.

As COSATU we believe that the country is facing at least five critical socioeconomic challenges, against which the Treasury’s tax and spending policies must be measured, namely:

Rising extreme poverty.

Unprecedented level of unemployment.

Rising multi-dimensional and intersecting inequalities.

Dilapidated economic and social infrastructure.

Elite corruption and widespread crime.

For far too long, the government’s formulaic persistence with Neoliberal macroeconomic fiscal and monetary policies has been dismally against this yardstick. The Federation expect a People’s budget that will be used to take forward the programme of redistribution and social delivery outlined in the ANC resolutions and various Manifestos.

COSATU wants the budget to be transformed into an effective tool for economic revival, transformation, and improved service delivery. It needs to be viewed as a developmental tool that prioritizes pro-poor social expenditure and adopts increased progressivity of taxation.

Workers are tired of the blind pursuit of budget deficit targets within arbitrary parameters which have no logical or scientific basis. Deficit reduction has prevented the substantial real increase in social spending which is required to deal with the apartheid legacy.

In so far as the government has managed to somewhat maintain spending, this has largely been due to improvements in revenue collection.

Over and above the inadequate resource allocation on the social services side, deficit reduction has severely squeezed spending on infrastructure and economic services. Reduced spending in these crucial categories has severely constrained our capacity to restructure the economy and increase our production capacity.

Fiscal ‘austerity is undermining the government’s own flagship economic initiatives. The cuts in programmes have led to the government lagging in Information Technology, a breach of contractual obligations in terms of investment support, a negative effect on foreign direct investment, and a slowing down of local investment in manufacturing decreasing opportunities for job creation.

This has also undermined the NDP by limiting the ability to execute the government’s mandate on SMME promotions. It is near impossible to build a strong economy with the government’s economic programmes being emasculated by fiscal austerity.

The Federation wants the government to pursue a social investment strategy that in the long term would reduce government debt as a proportion of DGP at a much faster rate than either of the scenarios contemplated by the government: Economic growth would boost tax revenue which can be used to fund increased spending or reduce debt. Secondly, by expanding GDP the debt: GDP ratio falls automatically or proportionally for any level of debt.

The Federation hopes that government will rise to the occasion and table a decisive and bold budget that will spur an economy struggling to emerge from a devastating recession and global pandemic, providing a variety of measures to reduce a dangerously high (43%) unemployment rate.

It should offer meaningful relief to the poor and unemployed and include a package of measures to reduce and end load-shedding. We expect a detailed plan on how to secure our railway network and rebuild embattled State-Owned Enterprises and dysfunctional municipalities. The budget needs to speak on the plan to accelerate the fight against crime and corruption. 

What we cannot afford is a limp-wristed budget that deceives the government into believing that our sole crisis is reducing the public deficit and if that is done, then miraculously all other challenges will simply disappear.

COSATU welcomes the Declaration of a State of Disaster to tackle the nation’s electricity crisis. This needs to be accompanied by the necessary support to enable Eskom to reduce and end load shedding over the next six (6) months. This includes a debt relief package that relieves Eskom of up to two-thirds of its debt burden. However, we hope this move to relieve Eskom of its debt burden is solely intended to improve its solvency ratio, to enable it to take a lead in investing in renewable electricity generation rather than a stealthy manoeuvre to prepare for the fire sale of its power plants.

It needs to support the power utility to improve its procurement systems and reduce wasteful expenditure, halt the rising levels of municipal debt to Eskom which now stands at R57 billion. The lack of reliable and affordable energy is the main threat to the economy.

The budget needs to include urgent bold measures to secure and rebuild our passenger and freight rail network which is being decimated by rampant criminality, in particular cable theft and arson. 

A functioning rail network is key to maintaining and creating hundreds of thousands of jobs in the mining, manufacturing, and agricultural sectors and to transporting millions of workers and commuters in our urban centres. 

Turnaround plans, including the necessary financial and management interventions, are needed to stabilize, re-pivot and rebuild other embattled State-Owned Enterprises, many of which are in freefall.  These turnaround plans cannot be based upon fleecing workers of monies legally due to them or sending them to the unemployment queue, as is being done to 16 000 workers at the Post Office. 

The rapid deterioration in many municipalities with 90% now in severe financial distress, basic services in countless municipalities disintegrating; and 20 municipalities in the Northern and Eastern Cape, North-West, and Free State routinely failing to pay their staff; is deeply alarming.

The deathly silence by COGTA and SALGA is scandalous.  This collapse of local government is forcing many rural businesses to close and retrench workers.  The Budget needs to table a package of interventions to stem this tide.

Key to rebuilding the state is tackling our ingrained levels of crime and corruption.  The benefits of investing in state capacity are being seen at SARS which has now begun to exceed revenue collection targets.  COSATU is pleased that the government is beginning to heed its call to reverse the massive decline in SAPS headcount levels, with the appointment of 10 000 recruits in 2022 and a commitment to employ a further 10 000 in 2023. 

Whilst this is welcome, more needs to be done to rebuild the capacity of SAPS, the NPA, the judiciary and other key law enforcement institutions.  SARS needs to be empowered to conduct lifestyle audits of all politicians, senior state management and wealthy individuals.

The Budget needs to provide stimulus to spur the economy and reduce unemployment.  This includes adjusting the Bounce Back Scheme to provide help for SMMEs.  The industrial master plans need to be accompanied by the necessary resources and support.  The 32% of the fuel price regime that goes towards taxes needs to be reduced to provide relief to commuters and the economy and lower inflation.

The Presidential Employment Stimulus has done well to provide 500 000 young people with work opportunities.  This needs to be expanded to 1 million active participants by April and 2 million by the October MTBPS. This is key to helping young people enter the labour market.  Critical vacancies in the public service need to be filled, in health, education and law enforcement.

The Special Relief Dispensation Grant has been a lifeline for over 8 million unemployed persons.  We cannot sustain a society where we leave a quarter of the population behind with no source of income.  The administrative blockages bedevilling the SRD Grant need to be fixed and all 12 million unemployed persons should access it.  It needs to be raised to the food poverty line as it has not been adjusted for inflation since its inception in 2020.  Its recipients should be linked to skills development and employment placement programmes where possible.

COSATU welcomes the progress made with drafting the Revenue Laws Amendment Bill enabling financially struggling workers early access to their pension funds.  The revised Bill needs to be tabled at Parliament by Treasury by March to ensure that Parliament can pass it into law by September 2023. This will mean that it can finally come into effect by no later than 1 March 2024.  Workers cannot afford further delays.

All the commitments made in the State of the Nation Address will only be achieved if government fixes its relationship with public servants.  Nurses are exhausted from covering countless vacancies, doctors are working 48-hour shifts, teachers are overwhelmed by rising classroom numbers, and Home Affairs staff battle to cope with endless queues and offline systems. The SAPS members are expected to catch well-resourced criminals whilst at the same time worrying about drowning in debt.  

Public servants, like other workers, are drowning in debt and over the past few years have seen their wages being eroded by inflation.  The government needs to respect collective bargaining, rebuild its broken relationship with its employees, and understand their need to earn a living wage to cope with the rising costs of living.  Outsourcing the bill for corruption and mismanagement to ordinary nurses and cleaners will deliver nothing but a demoralised public service.

Workers and the public expect a bold and decisive budget to be tabled at Parliament on Wednesday.  The government needs to understand that society’s patience is not infinite.  People expect results and will be judging the government over the next few months and rendering the verdict in the 2024 elections.

Issued by Sizwe Pamla, National Spokesperson, COSATU, 20 February 2023