SACP RESPONSE TO THE 2010 BUDGET SPEECH

The SACP noted the budget speech delivered today by the Minister of Finance in the National Assembly (see here). In many respects the 2010/11 budget has reinforced government's commitment to the six priority areas as outlined in the State of the Nation Address .

This indeed was a difficult budget delivered in difficult times. It must be borne in mind that whilst there are signs of an early recovery globally and in our country from the capitalist crisis that have ravaged the world economies over the past two years, we believe that the world as a whole remain vulnerable given that the underpinning factors behind the crisis remain largely in place.

We welcome the broad approach that has been adopted in the budget as opposed to a rigid narrow neo-liberal framework that has characterised the previous budgets. A commitment to put our economy on a different growth path and not just any kind of a growth path but one that prioritises the creation of jobs should be welcomed. Whilst the minister has reaffirmed the 3-6% inflation band, we welcome the fact that he has specifically mentioned that it will be applied with some sense of flexibility and that other factors will be taken into consideration as well. This flexibility and a commitment to a continued debate about appropriate policy options are an important shift and we will continue to engage on that front.

The SACP welcomes the Minster's commitment to meet with the CEO's of banks to find appropriate mechanism to address the recommendations of the Banking Enquiry Panel of the Competition Commission.  We are also pleased by the commitment to revitalise the Financial Sector Charter. For long the banks have played hide and seek on major transformation issues of the sector. All of the abovementioned we have raised repeatedly with our partners in the Financial Sector Campaign Coalition. For too long the banks have sought to elbow out the community and labour constituency from the Charter Council processes. We will continue to campaign to break the manner in which the big banks have an undue hold in the sector and have throttled any meaningful attempts at transformation.

We also warmly welcome the Minister's commitment to scrutinise bank charges. The SACP has for close on to 10 years now been campaigning for lowering of bank charges, as South African consumers are literally being fleeced by the banks in this regard.

The SACP is also pleased on the Minister's announcement of a series of measures to fight fraud and corruption, including exploring new methods of combating tender fraud. Government can be assured of the SACP's full co-operation in the all important struggle to expose and deal very firmly with tenderpreneurs.

We welcome tough measures that have been announced to be undertaken by SARS including lifestyle audits of those who run cash business in order to avoid tax. There are many examples of South Africans who are living beyond what they earn and many clearly from corrupt activities in the public sector be it in the criminal justice system, home affairs, customs control and those who make a killing out of tenders. 

The SACP is however worried about an unclear stance on the health sector and the reluctance to assert the role of the public sector. The private health care providers are not interested in the well being of our people but in maximising profit at their expense. We will deepen mobilisation against the greedy capitalists who have now seen a money making opportunity in the implementation of the NHI. We wish to engage robustly on this bold assertion of the use of public private partnerships in improving our hospital system. These PPP's have not been immune to corruption and government has been forced to bear the risk for the failures of the private sector. Careful consideration and thorough debate is needed in this regard before government dives headlong into these PPPs.

It is also clear from the speech that there is a range of unfinished business regarding the relationship between macro and micro economic policies, as well as the urgent matter of the role of the Reserve Bank. Whilst it appears that the Minister is signalling the need for flexibility on inflation targeting, the SACP is of the view that it is now time to bring finality on discussions within the Alliance on all these matters, including the mandate of the Reserve Bank, which we believe must move away from the narrow inflation targeting approach. Our view is simply that a new growth path requires a new macro and micro economic policy dispensation.

Statement issued by Malesela Maleka, SACP spokesperson, February 17 2010

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