SAFTU’s verdict on the MTBPS

25 October 2018

The South African Federation of Trade Unions predicted that the Medium-term Budget Policy Statement would take us to hell. 

Finance Minister Tito Mboweni must have listened to us, as in his opening sentences he promised that “as a country, we stand at a crossroads. We can choose a path of hope; or a path of despair. We can go directly to Heaven, or…  we can go the other way”.

He says he has “chosen the difficult path of redemption”. For workers and the poor majority it is a road to damnation. Everything that followed in his speech made it certain that SAFTU was right - that we as a country are traveling the other way - to a hell of even worse depths of poverty, unemployment and inequality. 

It is a hell of a country with one of the world’s six highest levels of unemployment at 37.2%, almost 10 million workers with no job, appalling levels of poverty, almost zero economic growth and the most unequal society in the world.

It is a hell of a country ravaged by terribly poor service delivery, crime corruption and looting, which, as the minister admits, have hit the poor the hardest.

There was absolutely nothing new in this statement that could begin to free us from this hell. It could have been drafted by any of the previous ministers of finance over the last 24 years, with the same disastrous consequences of following neoliberal capitalism policies which created this hell for the poor majority. 

It was yet another promise of ‘business as usual’ and appeals to international big business to have ‘confidence’ that their investments will be safe. 

Economic growth

Mboweni conceded that GDP growth is now expected to average 0.7% in 2018, and could only promise that it would rise gradually to 2.3% by 2021. That will not bring us anywhere close to the growth of wealth we need to give the majority ‘confidence’ that they have any escape route from the inferno.

His mandate was the five point plans outlined by president Ramaphosa in his ‘Stimulus Plan’, which SAFTU has already condemned as little more than vague pledges of better things to come, but without clarity on how even these promises will be achieved and especially how they will be paid for. 

The plan assured big business that “the reprioritisation of spending we are outlining as part of this stimulus and recovery plan will take place within the current fiscal framework and in line with the normal budgetary process”.

The minister has obeyed his mandate, and confirmed there will be no overall budget increase beyond what was announced in last February’s austerity budget. This means that in real terms a zero percent increase! It will just mean more shuffling the same amount of money around to rob Peter to pay Paul.

Service delivery

We welcome plans to use the army to clean up the polluted Vaal River, as well as yet another promise to abolish pit latrines in all schools, a promise first made as long ago as 2004, when former president Thabo Mbeki in his State of the Nation Address promised that “by the end of this financial year we shall ensure that there is no learner and student learning under a tree, mud-school or any dangerous conditions that expose learners and teachers to the elements. By the end of the current financial yea we expect all schools to have access to clean water and sanitation.”

Fourteen years later Tito Mboweni in his MTBPS said “Nobody should learn in a school that is unsafe. Our children must have access to adequate sanitation. We have committed to eradicating pit latrines at schools. The President has directed that there is a plan to ensure that all schools have safe and appropriate sanitation.”

Even if these promises are finally honored it will have to be at the cost of further cuts in other areas which are in no less need of more resources.

SAFTU is particularly shocked by the statement that “the 2018 public-service wage agreement exceeds budgeted baselines by about R30.2 billion through 2020/21. National and provincial departments are expected to absorb these costs within their R1.8 trillion compensation baselines over the same period.”

That will mean that all national and provincial government departments will have even less to spend. Job losses and even worse levels of service are the inevitable consequences. SAFTU will fight to save all jobs and to stop any retrenchments and join communities in fighting even lower levels of service delivery.

He has ignored a report by the Public Service Commission that 129 306 posts in the public service are vacant. That’s almost 10% of the total staff. Yet Mboweni’s solution will leave employers even less money to fill those vacancies, and under pressure to reduce staff levels even further and deprive the most needy South Africans of vital services.

The reality is that public service is labour-intensive. Teachers, nurses and police officers can never be replaced by robots. The fewer that are employed, the worse will be the service they can deliver. If there are any workers in the public service who are not performing satisfactorily the solution is not to get rid of them but to retrain them to do the vital tasks with currently too few workers.

Debt to GDP ratio

The minister tried to justify this austerity budget with the argument that “We must choose a path that stabilises and reduces the national debt. We cannot continue to borrow at this rate.”

To justify this he misleadingly mentioned two countries with high levels of external debt – notably Turkey and Argentina - which have experienced sharp currency depreciation, rising credit spreads and large capital outflows. But he said nothing about many successful economies with a much higher debt/GDP ratios than South Africa’s relatively low 53%, which is well below the UK’s 83%, USA’s 105%, France’s 97% and Japan’s massive 253%.

These countries used borrowing to recover, relatively successfully, from the 2008 financial crisis, just like President Franklin Roosevelt’s New Deal in the 1930s. While accumulating debt is not in itself a solution to an economic crisis like South Africa’s it cannot be used as an excuse for doing nothing, like Mboweni. 

E-tolls

The federation is appalled at the minister’s insistence that e-tolls on Gauteng

Highways will remain, that we need to pay our tolls and that “Government remains committed to the user pay principle because it is the most efficient and effective way to ensure that the direct benefits of services are paid for by those who use them”.

He seems oblivious to the mass campaign of non-payment against this commodification of a public service, including many within his own ANC. 

Privatisation of state-owned companies

Of grave concern to SAFTU and other unions in the state-owned enterprises is the minister’s veiled but nevertheless clear intention to privatize sections of state-owned companies. He never used the word ‘privatization’ but talked of ‘partnerships’ and ‘private-sector investment in public enterprises’.

Eskom provided a good example. “Restructuring of the electricity sector is underway,” he said. “This must include a long-term plan to restructure Eskom and deal with its debt obligations. A review of the current Electricity Pricing Policy will form a part of this process. We are building partnerships to find solutions to the development challenges faced by South Africa and the region. Partnerships are essential…

“Reconfiguring our state-owned companies requires us to take a hard look at how they operate. Our current challenges with state-owned companies present an opportunity to demolish the walls that exist between the private and public sectors.” (SAFTU’s emphasis).

This explains his earlier comment that “Eskom needed to shed about 30 000 jobs. They are broken, their salary bill is so big.” As SAFTU said: “The Minister is shooting from hip and falling over himself to please the capitalist class and the rating agencies. It is intolerable for a Minister to talk about cutting thousands of jobs…  Eskom’s main financial problems are not the fault of the workers, but the corruption and looting and the agreement with the Independent Power Producers (IPPs) who are making millions from Eskom, which is buying electricity from the IPPs for R2.14 per kilowatt-hour and selling it at 89 cents.

That gives us a glimpse into the role that private capitalists would play if sections of this key national resource were to be handed over to people only concerned with looting public assets for private profit.

Reserve Bank nationalisation

SAFTU also condemns the minister’s reference to those who make “attacks on the mandate and independence of the South African Reserve Bank”, obviously those who call for its nationalization. His justification is that 224 (2) of the Constitution says that “The South African Reserve Bank, in pursuit of its primary object, must perform its functions independently and without fear, favour or prejudice”. 

It speaks volumes about his entrenchment in the capitalist class that he believes its ‘independence’ can only be guaranteed by private share-holders rather than elected representatives of the people!

VAT and fuel levies

The federation is concerned that Mboweni, while noting that electricity and fuel prices had risen, gave no indication that he intended to do anything to bring these prices down. The fuel levy has nothing do with the world market price of oil, yet it goes up every time petrol prices go up. So why can it not be scrapped or to least reduced?

We welcome the zero rating for VAT on sanitary towels, bread flower and cake flower, but these small concession do not justify his refusal to scrap his predecessor’s increase on almost everything else.

His reference to cake flower reminds one of the comment by Queen Marie Antoinette during the French Revolution, who, when told that the people have no bread, is said to have replied “let them eat cake”!

Corruption

The federation welcomes Mboweni’s strong stand against corruption at VBS, the Giyani Water Project and elsewhere, but makes no mention of the growing number of large private companies being exposed for their role in bribing public officials give them tenders or employ them as overpaid consultants. 

He said at one point that “there should be no holy cows”, yet throughout his address he never once suggested that big business should be scrutinized in the same critical way that he was doing with public institutions. On the contrary his central message was how to attract more investment from the big international monopoly companies.  

That may explain the extraordinary silence on the loss of revenue as a result of financial outflows, money laundering and tax evasion and from recovering the money stolen through corruption and fraud. According to data released by Global Financial Integrity, between 2002 and 2011, South Africa lost a cumulative R1, 007 billion to illicit outflows, i.e. more than a trillion rand. 

This, together with wealth, solidarity and land taxes on the rich, is where more taxes can and must be raised to fund all the services now being cut.

SAFTU’s alternative

SAFTU’s expectation that this would be a statement by a member of the capitalist class, putting forward policies to protect their interests and not anyone else’s has been fulfilled. 

South Africa will become an even more unequal society. The owners and executives of the 20 companies who hold 80% of listed assets on the JSE, all except four of which are primarily in mining or finance, will emerge even wealthier and more powerful, while the poor will get poorer still.

That is why SAFTU said in its MTBPS expectations statement said that economic strategy must be based not on the dictates of credit ratings agencies and global big business, but on the implementation of the economic clauses of the Freedom Charter, which said:

- The national wealth of our country, the heritage of South Africans, shall be restored to the people;

- The mineral wealth beneath the soil, the banks and monopoly industry shall be transferred to the ownership of the people as a whole;

- All other industry and trade shall be controlled to assist the wellbeing of the people;

It is worth repeating what the federation said:

Central to this economic transformation must be the democratic nationalisation of the financial industry, the mines and key manufacturing monopolies so that the government can ensure that the new growth path leads to rapid economic growth and thus generates more income for the Treasury

Austerity budgets can then be replaced by expansionary budgets to end the two-tier provision of education and healthcare, provide free and quality service to all South Africans and begin to transform the lives of the majority and build an equal society and abundance for all.

Tragically however there is no chance of the Finance Minister offering any such way forward. He is stuck in the failed class politics, which have led to our current socio-economic disaster. 

Only mass pressure and protests in the streets will liberate the working class and bring about lasting change. SAFTU, with its allies in the movement launched at the Working-Class Summit, are committed to mobilising the fight back and a mass campaign to end the exploitative capitalist system and replace it by a new democratic socialist order. 

The SAFTU Special Central Committee has called for a three-days mass stay away in response to this assault of the living standards of the poor. We are convening the meeting of the Working Class formations to take these discussions forward. Statements no matter how articulate will continue to be ignored until the poor vote on its feet. 

That is the only way, in which the country’s wealth will be planned, controlled and shared by the working people and not a super-rich elite of exploiters.  

Issued by Patrick Craven, SAFTU Acting Spokesperson, 25 October 2018