COSATU 2013/2014 Medium Term Expenditure Framework Expectations
The Congress of South African trade Unions has significant expectations from the 2013/14 Medium Term Expenditure Framework to be presented by Finance Minister, Pravin Gordhan on 23rd of October 2013 due to:
- The global economic crisis;
- South Africa's perpetual unemployment crisis;
- The shedding of jobs by the manufacturing, trade and private households; and
- The state's inability to decisively increase the levels of economic growth, job creation, decent work, the eradication and change the structure of South Africa's economy.
Whilst much has been done by government, COSATU expects the Minister to allocate more funding for the ANC 2009 Manifesto's 5 key priority areas, namely decent work, education, health, rural development and land reform, and the fight against crime and corruption to tackle the following problems:
- Employment has dropped further in the last two quarters;
- A third of matriculants remain unemployed;
- 44% of South Africans live on less than R10 a day;
- Most sectors of the economy remain highly concentrated amongst a few companies; Africans own less than 16% of agricultural land;
- Education remains woefully underperforming;
- Crime and corruption threaten to undermine many of government's achievements.
Fiscal Reform
COSATU calls upon the Minister to introduce the following badly needed tax reforms to bring about a more equitable tax regime:
- A progressive tax system with a tax category for the super rich;
- A solidarity tax to cap the growth of the earnings of the top 10% and accelerate the earnings of the bottom 10%;
- Luxury as well as imported goods taxes;
- Increase in corporate tax to encourage reinvestments, job creation and decent work, and to reduce the financialisation of company assets;
- Zero-rating VAT for medicines, water, domestic electricity, education materials and additional staple foods;
- Export taxes on strategic minerals and metals to support downstream industries and value added production;
- Investment tax credits to encourage the procurement of local machinery;
- Capital gains taxes to limit capital outflows and to encourage productive investment;
- Reinstatement of capital controls to prevent asset stripping by industries;
- Additional taxes on companies that pay below minimum wages and to channel such revenue back to the concerned workers;
- The abandonment of inflation targeting; and
- Prioritise economic growth and employment targets.
Education
South Africa's woefully inadequate education system lies at the heart of the economy's stubbornly slow growth and employment absorbing rates. Whilst much has been achieved in 19 years of democracy, it is not an exaggeration to state that the fundamental inequalities of an apartheid education system have not been overcome.
Most Black and African schools remain badly under resourced, under staffed, unsafe and badly prepared to produce well educated matriculants. The fact that thousands of schools still lack basic sanitation, experience massive overcrowding and frequent incidents of crime and violence points to the desperate need for decisive leadership and intervention by government in the education system.
Health
COSATU acknowledges the massive strides government has made in the past few years in the rolling out of ARVs to millions of South Africans and the positive impact this has had upon life expectancy. We appreciate the political commitment shown towards the establishment of a National Health Insurance system.
However we remain deeply concerned by the dire state of most public healthcare institutions. There is an urgent need for the White Paper on the National Health Insurance fund to be released. Government needs to indicate how far it is with the NHI pilot projects and when they will be expanded to all public health care institutions. COSATU remains convinced that the NHI should be based upon a single funder and not a proliferation of private medical funds. Progress is needed with regards to the establishment of a state-owned pharmaceutical enterprise.
Job Creation, Decent Work and Anti-Poverty Strategy
An unemployment rate accounting for more than 1 in 3 South Africans remains South Africa's fundamental impediment towards the realisation of a better life for all. The economy remains unable to absorb the large numbers of unemployed and the new labour market entrants each year. Most workers continue to earn wages far below the poverty level with little hope of respite.
Whilst social grants play an important role they are not sufficient to alleviate society's massive poverty levels. Only the creation of decent work can. Expanded public and community works programmes paying R63 a day for two months at a time are not decent permanent jobs. They are short term interventions at best. However they are being used as a form of cheap labour to fulfil what are meant to be permanent decent municipal and state jobs, e.g. cleaning and maintaining roads.
What is needed is for government to ensure, as indicated by President Zuma in his State of the Nation Addresses, that:
All government vacancies will be filled as a matter of urgency,
Departments will spend their budgets, especially their infrastructure allocations and pay suppliers timeously,
The Departments of Treasury, Trade and Industry and Economic Development find ways of supporting the reindustrialisation of the economy, the growth of the manufacturing and other key sectors of the economy and do so in ways that do not amount to wage subsidies.
COSATU remains adamant that the proposed Tax Incentives in the Employment Tax Incentives Bill amount to wage and profit subsidies for employers. They will depress wages, displace existing workers and industries and further entrench exploitative practises and employment relations.
Transport
COSATU has been encouraged by the commitment given by government to refurbish the Metrorail infrastructure and to provide for the building of trains in Tshwane. We remain concerned about the lack of a decent safe and viable public transport. The rail network to transport goods and take them off the roads remains badly neglected.
COSATU remains vehemently opposed to e-tolling which amounts to the privatisation of Gauteng's freeways by the addition of a second tax (road users already pay a fuel levy meant for this very purpose) and the lack of viable alternative routes and public transport. Private companies, especially those that are foreign owned, should not be allowed to profit from publicly funded and built roads. Worse when the shareholders of such companies are not publicly disclosed.
Rural Development and Land Reform
The lack of progress in rural development and land reform remains one of South Africa's ticking time bombs. The current levels of land reform and redistribution are not sustainable. Government needs to come up with a meaningful plan that will benefit ordinary rural residents and not serve to enrich traditional leaders. In this regard, we hope that the Restitution of Land Rights Amendment Bill will benefit ordinary victims of apartheid land dispossessions and rural residents and not merely serve to open the doors for traditional leaders to dictate the processes of land reform, restitution and redistribution to their benefit.
Housing
In terms of volumes, we recognise that government has ensured that more than 2 million houses built for the poor since 1994. However the quality and sizes of these houses threatens to overshadow and undo this achievement. Private companies should not be allowed to profiteer at the expense of people's right to decent quality housing. A state owned housing company is needed to build quality public housing.
Crime and Corruption
Crime and corruption remains one of government's Achilles' heels. Whilst government has done well to significantly increase the size of the South African Police Service, much more needs to be done to adequately equip and train the police, and to address the massive challenges facing the judiciary, correctional and police services.
Statement issued by Patrick Craven, COSATU national spokesperson, October 23 2013
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