COSATU’s supplementary budget expectations
17 June 2020
Workers across South Africa are looking forward to the upcoming supplementary budget to be delivered by the Minister for Finance, Tito Mboweni in Parliament on Wednesday, June 24th.
Considering the massive challenges facing the nation, we do not have the luxury of time for another timid, underwhelming, and tweaking at the edges budget. We also do not have time to deal with political gimmickry of zero budgeting.
South Africa was already battling with an economic recession and 40% and rising levels of unemployment before the outbreak of the Covid-19 virus. The country’s SOEs were already collapsing, there were declining levels of service delivery, and a growing cancer of corruption and wasteful expenditure.
We are now on the verge of an economic depression and the task of rebuilding the economy has not been made any easier by the repeated investment-grade downgrades to junk status by all three rating agencies.
The government needs to rise to the occasion and produce a supplementary budget that is designed to deal with this major economic crisis in a significant and audacious manner.
The previous budget tabled in February did nothing to help workers or the economy. If anything, it made matters worse by failing to provide a stimulus plan, deal with corruption and wasteful expenditure, and address service delivery. It was only an announcement of the government’s plan to pickpocket public servants of their meagre wages.
The most critical challenge now is to save and rebuild the economy. The federation expects the supplementary budget to do the following:
Significantly reprioritise expenditure and shift funds to key departments that are on the frontline in the fight against the Covid-19 virus. These include:
- Health so additional health workers can be employed, and hospitals can be properly equipped to deal with the peak of the virus and our high disease burden.
- Basic Education so learners can have decent sanitation and additional teachers employed to reduce overcrowding.
- Higher Education and Training so online learning can become a reality.
- Transport so that chaos and overcrowding on trains, taxis and busses can be sorted out to avoid them becoming mass spreaders of Covid-19 virus.
- Employment and Labour so that the less than 1900 labour inspectors can be tripled to ensure that they are able to ensure the full implementation of health and safety plans in all workplaces, educational institutions, and public transport facilities.
- Trade, Industry and Competition; Tourism; and Small Business Development so that the 14 industrial sectoral master plans can be properly resourced and that the badly needed economic relief for heavily battered sectors of the economy can be provided to prevent their collapse and begin the process of rebuilding the economy. Key sectors needing massive relief include manufacturing, retail, hospitality, tourism, entertainment, and transport.
- Provide further social relief for workers, especially those not able to work under the current lockdown restrictions, through the UIF and SASSA.
- Provide further fiscal relief for consumers, SMMEs and the economy through interventions by Treasury, the Reserve Bank, and the commercial banks.
- Announce a massive stimulus plan of not less than R1 trillion to rebuild the economy. Anything less will not be able to stop and economic tsunami that is on the horizon. We can no longer accept an unemployment rate of 40% as normal, let alone one of more than 50%.
- Stimulus funds for businesses must be conditional on them retaining and not retrenching workers. Incentives must be used to support businesses and industries who create new jobs.
- A massive infrastructure investment programme of not less than R1.5 trillion. This must be geared towards key economic infrastructure that will have an immediate impact upon the economy and jobs. These must prioritise the ports, energy and Eskom, passenger and freight rail, water, health, and education.
- This must be funded through both the fiscus and the private sector e.g. the banks and investment funds through impact investments. The infrastructure drive must be overseen by an impact advisory council consisting of government, business and labour to ensure that the infrastructure programme happens, that the private sector contributes and that it does not become another feeding trough for the tenderpreneurs.
- Honouring of the 2020 public service wage bill agreement. The government cannot expect doctors, nurses, teachers, police and correctional service officers to be at the forefront of the fight against Covid-19, risking their lives and the survival of their families; only to throw them under the bus by running away from honouring their meagre inflationary linked increase. Politicians across the political spectrum have been very efficient in feathering their nests. The least they can do is protect the miniscule wages of nurses, teachers, police officers and other public servants.
- The government will find if they stop their nonsensical belief that they can grow the economy by paying health care workers too little; that labour has concrete proposals on how to address the fiscal challenges facing the state in the next 3-year wage agreement. This includes one single government wage bill collective bargaining process, slashing bloated executive and managerial packages and perks, providing for inflationary inclusive increases for working- and middle-class public servants and cutting packages of overpaid SOE managers.
- Mandating the PIC to assist public servants struggling to qualify for home loans and the tertiary education of their children. This will help ease the pressure on public servants and their families, contribute towards their education and stimulate the housing sector.
- Serious measures to slash 10% of the budget that is lost every year to corruption and wasteful expenditure. This includes sending the culprits to prison and recovering the stolen monies.
- Additional tax revenues to ensure the wealthy pay their fair share e.g. increases in income tax for those earning above R.1.5 million, reducing tax loopholes, increasing customs duties on imports, increasing inheritance and estate duties for the wealthy.
- Plans to ensure that key SOEs currently fighting for their survival are assisted and clear turnaround plans implemented. The most critical of which is Eskom.
- The budget should be targeted at promoting investment in rural areas and the townships economy because economies are made up of people. Reduce the red-tape and improve coordination between government agencies and departments that are supposed to help SMEs.
- Offer tax breaks and incentivesto small businesses to encourage new business development. An increase in the number of start-up businesses will help with unemployment and tax revenue.
- Government should protect the economy by introducing tougher capital controls to stop money being taken illegally and giving tax incentives to encourage investors to keep revenue in the country.
- Improve access to affordable finance because mainstream banks and financial institutions do not have small businesses, as their target clientele. As a result, these small businesses are struggling to access the finance they need to grow. The government needs to intervene and expand its offer of available financial solutions, including fast-tracking the establishment of a State Bank.
- SMEs are expected to function as the driving force in South Africa’s social and economic stability, however, for this to happen and to unlock the full potential of the market as a whole, drastic and bold measures need to be taken to it is clear that there is much work that needs to be done on the part of big business, government and SMEs themselves.
This supplementary budget is unlike any other budget since 1994 and workers expect it to be progressive and we shall judge it by the extent to which it moves the tax burden away from the poor to the rich.
Government also needs to rethink the approach it takes in giving various tax concessions to promote economic and industrial growth because most of the time this does not happen.
Businesses just keep putting the money into the stock exchange and not into the direct investment such as new factories.We also are deeply worried by the failure of many departments to spend their money. There must be consequences for underspending and poor accounting in the public sector if we are to fix this economy.
Issued by Sizwe Pamla, COSATU National Spokesperson, 17 June 2020
