COSATU statement on the underwhelming 2018 Mid-Term Budget Policy Statement (MTBPS)
24 October 2018
The Congress of South African Trade Unions (COSATU) notes government’s 2018 Mid-Term Budget Policy Statement (MTBPS) delivered by Finance Minister Tito Mboweni in Parliament today.
Considering the fiscal, revenue, corruption and expenditure crises facing the nation, this statement was very underwhelming. The MTBPS does not go far enough given the extent of the many crises facing government, workers and the economy as a whole. The reality is that we are in an economic crisis and this current crisis can only be understood by looking at the root causes in a holistic way.
The solution to our economic problems lies in bold measures of transformation, not in marginal programmes and projects. The statement was a reminder that we still lack a developmental vision, do not have a comprehensive development strategy and totally lack the necessary coordination of activities of various economic agents.
COSATU is deeply worried about the wayfoward after this placid policy statement at a time when we expected a much bolder and decisive leadership from government. This represents another missed opportunity because what is contained in the statement is nothing new.
The fact is that it was the deceleration of fiscal spending since 2014 and the outright reduction of spending that plunged the economy into the doldrums at a time of depressed private sector investment and household spending.
Economy
COSATU is perplexed as to why government seems to be fixated on calling the recession “technical” when so many people are being plunged into poverty by the worsening economic situation. This is no time to play semantics with people’s lives, when 36% of workers remain unemployed. Thousands of workers are being retrenched across most sectors of the economy, yet the National Treasury continues to downplay the mess we find ourselves in.
We were hoping to hear more from the Minister about the government’s recently announced stimulus package. We do welcome the additional funding provided to the clothing and textile sectors and infrastructure funding commitments. But there is little else that speaks to stimulating the economy, let alone to boosting manufacturing, exports and reindustrialising it. Without these we won’t grow the economy and it is disappointing that there was not even a vague reference to IPAP.
We are disappointed by the timid initiatives at a time we were expected bold measures that were going to clarify us on how and when government will implement the Job Summit commitments. There was very little in the MTBPS speaking to this.
The Minister Mboweni speaks of the need to allow the SARB Governor to do his job and manage inflation. We agree that we cannot allow inflation to grow as it will decimate workers’ meager wages. No one can argue against the importance of price stability, especially since we still depend on capitalists for job-creation and growth. But we also need to acknowledge that the mandate of the American and other global-north countries includes employment creation.
Our Reserve Bank also cannot afford to be indifferent to the economic challenges that have widened inequalities, worsened unemployment and deepened poverty. Currently reflect the neoliberal posture of the National Treasury. The unemployed workers cannot eat speeches but they need jobs and economic growth.
Corruption and Expenditure
Minister Mboweni acknowledges the destruction caused by state capture and corruption but we expected him to move beyond platitudes. Workers are demanding clear action from government. While we applaud the changing of SOE boards, the reshuffle of cabinet, the commissions of enquiry into state capture and SARS and the initial interventions at SARS, this is still not enough. We need comprehensive forensic audits of the SOEs and government departments at the epicentre of state capture. We need to see arrests, prosecutions, convictions and sentencing of the guilty. We need to see their assets frozen and confiscated. We have yet to see one person in prison, while at the same time we are spending R400 million on commissions of enquiry.
We had hoped to hear from the Minister how much looting has taken place, how much has been stopped, how much is still happening, how much has been recovered. Otherwise we are building a culture of no consequences for the looters and where workers are made to pay for the sins of others. We had also hoped to hear the Minister respond to the Auditor-General’s reports which shows that more than R100 billion has been lost to looting and wasteful expenditure. Unfortunately from the Ministers statement, we didn’t get a sense of what is the plan from government to deal with these two ticking time bombs that are the real source of our economic crisis.
We appreciate government’s infrastructure commitments but we didn’t hear how this will be different from the previous infrastructure plans. We were not told what will be done to ensure that another R100 billion isn’t lost to looting and mismanagement. Previously, we have seen Medupis and Kusiles budget excesses running over R100 billion and the PRASA’s buying trains that don’t fit our train lines.
We note government’s projections that debt levels will stabilise at 58% of the GDP in 3 years but we have heard this before. Government is not convincing in this regard and if we end up running to the IMF it will be workers who will suffer the most.
Public Service Wage Bill
We note that the MTBPS says the public service wage bill and head count has stabilised at 35% of the budget and not the nonsensical 80% that the Minister has been claiming. We are glad that Treasury has briefed the Minister in this regard.
It is unfortunate and very provocative for the Minister to want to blame workers for the fiscal crisis. It is not workers who looted Eskom, built Nkandla nor sent the money to Dubai. Workers do not fly their spouses all around the world at government expense so we do not expect to hear government complaining about overworked nurses, teachers, police officers wanting to earn a living wage.
We do not hear the Minster complaining about the R2.4 million that Ministers earn or the millions they spend flying their spouses on overseas jaunts. Government does not have a coherent plan of reducing the ballooning cabinet head count. We do not hear government talking about imposing a freeze on the salaries of SOE CEOs and management. We heard nothing about how they will reduce the massive wage gap in the public sector.
We applaud the commitments to fill critical vacancies in the health and justice departments. We had hoped to hear the integration of community health workers into the public service and not simply a plan to pay them a minimum wage. We had hoped to hear about the redeployment of the 56,000 SAPS officers at head offices and the 60,000 at desk posts at station level into policing on the ground.
The public sector vacancy rate has ballooned and it is not 148,000. This is equal to 10% yet we see a continuous ballooning of SMS posts. This is having a massive impact upon service delivery where teachers, nurses, doctors, police and prisons posts are not being filled.
State Owned Enterprises
The MTBPS is alarming for what it does not say. The state of Eskom, PRASA, SAA, SA Express, SABC, DENEL and SANRAL pose a massive threat to the survival of the state. We simply cannot afford to continue bailing them out and neither can we afford to allow them to collapse. Yet besides changing boards and bail outs, we have yet to hear a clear coherent plan to sort the SOE’s out. We have not seen comprehensive forensic audits. We not seen stolen funds returned. We have not been told the looting has stopped. We have not seen clear business plans and funding models that will ensure the turn around and survival of these SOEs.
We do appreciate the positive initial news from SAA but we are worried that the MTBPS is silent on Eskom’s plans to increase tariffs above inflation, retrench 30,000 workers and increase its debts by 50% to R600 billion. We did not see a response to the AG’s submission to Parliament that he is no longer sure if PRASA is still viable.
Whilst we appreciate the President securing funding for Eskom from China, we are alarmed as to why the conditions of these loans are not being shared with the public.
Revenue
We welcome the commitment by the Minister not to increase taxes upon the working and middle classes further but we do not know why this generosity is being extended to the rich. We need to overhaul the tax regime, including water and electricity tariffs to ensure the rich pay their fare share. Tax loopholes need to be closed and the Company Income Tax has to be increased.
We had hoped to hear more from the Minister about how they will turn SARS around. This needs to include cracking down on the massive customs evasion and fraud that allows floods of illicit goods in, decimating local industries and resulting in losses of billions in tax revenue.
We appreciate the Minister’s commitment to end the practise of SARS sitting on refunds. This is hurting taxpayers, SMMES and the economy.
We appreciate the inclusion of sanitary pads amongst the VAT exempt products. We note the inclusion of bread and cake flour. We welcome the commitment to provide free sanitary pads at schools. We had hoped government would go further and exempt locally produced poultry from VAT and supply school uniforms for free at no-fee schools.
Departments
The MTBPS paints an alarming picture of the state of the Department of Water and Sanitation. Besides the mass looting in Giyani and the fact that the Department is running out of water, it has woefully failed to deliver on 95% of its bucket sanitation removal targets. This raises the question as to why is Minister Mokonyane still in Cabinet.
Once again, the Department of Basic Education has missed 80% of its school sanitation targets.
The Department of Energy is far behind its electrification targets and still has not rolled out its solar panels for RDP homes.
Rural Development and Land Reform has processed less than 1000 land claims this year, less than 5% of the back log.
Higher Education and Training’s commitments to fund 300,000 tertiary beds is welcomed but we are worried about its failure to meet its training targets.
Social Development’s failure to meet 75% of its food distribution target for the neediest is alarming when so many people have been plunged into poverty.
Agriculture’s failure to meet most of its emerging farmers’ targets is shocking given the importance of the sector, the large numbers of emerging farmers who have collapsed and the cry for land.
The Department of SMME’s failure to achieve 75% of its targets is mind boggling.
The Minister should be warned that trying to revive the failed policy of etolls will backfire because COSATU will not stand for it.
COSATU will provide a further detailed submission to the parliamentary public hearings on the 31st of October.
Issued by Sizwe Pamla, National Spokesperson, COSATU, 24 October 2018
