Why Finance Minister Tito Mboweni is sure to enrage the nation

24 June 2020

The Treasury, representing financial-sector and corporate power, and burdened by extreme neoliberal ideology and a Western mini-me value system, is going to impose on South Africa two more illnesses on top of Covid-19:

1)  more austerity politics aimed at poor and working-class people, via the “Zero-Based Budgeting” (ZBB) strategy; and

2)  more bailouts for some of South Africa’s most irresponsible capitalists, without regard for workers, consumers and the environment.

Zero-Based Budgeting against both poor South Africans and managerial efficiency

In the first category, the ZBB approach is a trick: forcing the state bureaucracy to justify its historic spending even though lessons from this approach in the United States include many negative features.

If a genuinely pro-poor, pro-planet government was in power, then ZBB would be potentially useful to end a variety of pro-profit state spending. That kind of spending is notorious, such as Public-Private Partnerships (also known as Public-Private Pilfering); the Treasury’s former head of Procurement Kenneth Brown estimated that fraud in outsourcing cost 35-40% extra on each procurement contract due to corrupt companies overcharging. (These are partly Black Economic Empowerment firms, but mostly the White Monopoly Capital and Western Multinational Corporations – WMCs – which get the bulk of the procurement deals.)

But SAFTU’s position is common to nearly all trade unions: insourcing of these wasteful, corrupt procurement deals is vital – as was won with university cleaners, gardeners and security staff thanks to the #FeesMustFall uprising of 2015-17. There are many such areas of wasteful spending, including carbon-intensive subsidies that help wreck the life chances of future generations, or military equipment that is corrupt and unnecessary, or mega-projects that are capital-intensive and export-oriented.

The main such wasteful, destructive project – Presidential Infrastructure Investment Commission Strategic Integrated Project #1 – is the export of 18 billion tons of coal (to be burned in India), moving from the Waterberg to Richards Bay on Transnet’s bribery-riddled China South Rail locomotives, costing an estimated R800 billion.

Another example is the subsidy of BHP Billiton’s South32 with the world’s cheapest electricity, which is provided by Eskom at about a tenth of what ordinary consumers spend on our power supply, for imported bauxite to produce aluminium at Richards Bay smelters, for export. The Australian company – the world’s largest mining house – has only 1100 workers, but uses 5% of the electricity grid.

Another is the tax subsidisation of private Medical Aid Schemes of several tens of billions of rands annually – money which the state should instead be spending on a National Health Insurance – long-promised but forever sabotaged by Treasury’s non-funding.

These are just three of many cases where existing bias towards the Minerals-Energy Complex and other local (white-dominated) and multinational corporations are detrimental to our current working-class generations, our planet and our future generations.

So ZBB might come in handy for a genuine government of the people, if such projects were to be assessed on a full cost-benefit analysis, instead of allowing them to continue to drain state and parastatal resources year after year, simply because they were funded in prior years.

But in the hands of the current neoliberal Treasury, instead, we anticipate ZBB to be used to cut social programmes and any longer-term investments by the SA state and parastatals. (One dangerous exception may well be nuclear energy investments, rife with corruption in their earlier manifestation – during the Zuma years - in the form of the Putin-Gupta, Rosatom-Oakbay alliance. The fantasy of new nuclear reactors should be rejected immediately.)

The record from the U.S. where in the 1970s ZBB was all the rage, is that this approach complements neoliberal, state-shrinking approaches.

In Washington, DC, the Brookings Institution (known as being centre-right in political orientation) admitted that ZBB was not effective, due to:

the waste of managerial time and resources;

the inappropriateness of the technique for many governmental services where it is difficult to define levels of output;

the gamesmanship temptation wherein agencies make reductions unpalatable (e.g., the Department of Interior hypothetical decision to absorb a budget reduction by closing the Washington Monument); and

the near-sightedness of ZBB’s concentration on the upcoming fiscal year at the expense of longer range issue.

So we anticipate all the worst characteristics of Treasury to be on display. The ZBB is a budget-cutter’s dream, but such budget-cutting will be aimed by bureaucrats at our society’s most vulnerable. The simple proof of the bias in Treasury was seen just months ago, when in February – knowing that Covid-19 was an imminent disaster for South Africa – the finance minister cut the national health budget by R3.9 billion rand. He also cut the public service wage bill by R161 billion over the coming three years, even though this is in direct violation of a salary deal signed with civil service unions.  

Covid-19 bailouts for the rich, peanuts for the poor

The second crisis we expect to worsen on Wednesday is the amplification of Treasury’s Covid-19 emergency plan, in ways that still offer just tokenistic spending for poor and working-class people, often self-sabotaged by non-payment, in contrast to generous bailouts to South Africa’s most irresponsible corporations and richest citizens.

How much of the alleged R500 billion fiscal stimulus was real, new funding – as opposed to just moving money around and guaranteeing loans by banks? How much really benefits poor and working-class people, given the systemic non-payment of the insultingly small R350 monthly grant to Covid-19’s economic victims? How can low-income women survive trying to raise children with the measly increment of R440 per mother (not even per child)? Why is the massive rise in food prices not taken into account by Treasury? Why are so many payment systems paralysed by corruption, cybertheft and other forms of crisis?

Other examples of Treasury’s wasteful spending (or loan guarantees) include the ways that reactionary bureaucrats in Eskom, Transnet, SAA, Prasa, Denel and other parastatals continue to impose policies, programmes and projects on South Africa’s most vulnerable people – and the environment – and demand hundreds of billions of rands worth of subsidies and tariff hike permissions.

The trivial subsidy of R1.1 billion to the kombi taxi industry – which caused a massive strike on Monday that adversely affected countless poor and working people – stands in contrast to the many billions directed at the luxury transport systems that favour rich consumers, including airlines, airports and the Gautrain.

We also anticipate confirmation of massive subsidies for extremely unpatriotic banks in South Africa – nearly 30 of which are under Competition Commission investigation for currency manipulation (a charge that the Treasury and Reserve Bank are brazenly unconcerned about) – via the R200 billion in bailout funding for their favoured customers.

In all these ways, we expect the worst from Treasury.

Citizen empowerment will be erased.

Transparent budgetary values will be turned into opaque forms of crony capitalism.

Potential redistributive measures will continue to be merely tokenistic and in any case largely broken.

Classical forms of state-capture – not only by brothers known as Guptas, Watsons and Shaiks, but also by the three brothers Standard&Poors, Fitch and Moody’s – will be amplified.

Carbon-belching businesses – like coal-fired power plants, mines and smelters, luxury automobile exporters, airlines, shipping and tourism – that have dubious futures will get massive cash infusions.

The workers in these industries being replaced by machines or simply fired using the excuse of Covid-19 get only rhetoric about a Just Transition, without genuine hope of retraining or a green new deal that guarantees them gainful employment.

And as President Ramaphosa’s refusal to sign the Copyright Amendment Bill last week shows, our government will continue to be maneuvered by U.S. imperialism (protecting Hollywood and publishing corporations in this particularly instance, as witnessed by Trump’s extreme bullying tactics).

Our environmental legacy to our children and their descendants will be a shockingly destructive toxic stew of CO2, methane, nuclear waste, plastics, acid mine drainage, water scarcity, polluted oceans, freshwater, land and air – getting worse all the time under Ramaphosa’s pro-corporate leadership.

Xenophobia in Treasury pronouncements is alarming.

In short, it is easy to predict that the Treasury will again deliver up a deal with an eye to serving financial-market, climate-destroying and capital-intensive corporate interests – not the life-and-death needs of 60 million residents of this country.

What we need, even more than ever, is a revival of the spirit of revolt against injustice!
This spirit is now incredibly inspiring, in what traditionally is a politically-backward United States, as that country’s brutal daily racism are under attack. But we have that spirit in our own genes:

It is the spirit that since 1973 at the Durban harbour, and for decades before and after, led to the defeat of apartheid.

It is the spirit that overthrew the Mbeki government’s murderous AIDS-denial policy, and because medicines were demanded as free, generic, and state-supplied, raised life expectancy from 52 in 2005 to 65 today.

It is the spirit that allows ‘service delivery protests’ to identify municipal fraud and Treasury austerity – and win genuine gains in water and sanitation, electricity and other social policies.

It is the spirit of protesters against manipulation of food parcels, and of those campaigning for genuine ‘food sovereignty,’ starting with an the organic (not GM) seed, straight through to equitable, nutritious consumption;

It is the spirit that motivated #FeesMustFall to win the right to free tertiary education for working-class students.

It is the spirit of women combating patriarchy (including discrimination in housework and childcare duties), homophobia and gender-based violence.

It is the spirit that welcomes our African compatriots to South Africa, and identifies the need to halt divide-and-conquer practices by unethical employers and landlords sales that feed xenophobia, so that the artificial borders on our continent set in 1885 in Berlin can finally be erased.

It is the spirit of internationalism that gratefully acknowledges the sacrifices of Cuban doctors, and gives inspiration to Palestinians demanding the Boycott-Divestment-Sanctions of the apartheid-Israeli regime, as well as all those fighting injustices and imperialist domination anywhere in the world.

It is the spirit of mutual aid that ensures civil society stalwarts step in to watchdog state regimes and step up to provide emergency assistance to those in need.

It is the spirit of radical intellectuals who criticise unthinking proponents of orthodoxy whose biases are towards powerful white-race, ruling-class, male and anti-ecological interests.

It is the spirit of our LGBTQ+ comrades who are always confirming that a deeper humanity is possible, notwithstanding both traditionalist and modern prejudices.

It is the spirit of our progressive faith community, whose principled ‘preferential option for the poor’ (in the language of liberation theology) ensures a steady, reliable alliance of those serving a higher order, with those of us demanding immediate social justice.

It is the spirit of our independent media, fighting the corporate- and state-controlled ‘fake news’ and advertisers who always try to mislead us.

It is the spirit of our children who have been standing up to insist we cease the emission of greenhouse gases which will kill them, especially those in the Global South where climate catastrophe is already hitting hardest.

It is the spirit of trade unions and independent workers, ever more insistent in demanding not only wage increases and benefits, but a new mode of production and social reproduction, since capitalism can plainly not deliver the goods to our people and provide future generations with a liveable planet.

These are fused spirits of a united front – one that, sooner or later, will crowd out, drown out and ultimately overthrow Treasury neoliberalism. At that point we will look back on June 24 2020 as a day of infamy: but also a day of hope, because we can predict the sparks of anger created by Treasury’s feeble offerings will feed the wildfire needed to burn out the injustices that reign supreme in South Africa, even more today than when on March 1, Covid-19 arrived on our shores.

Issued by ZwelinzimaVavi, SAFTU General Secretary, 24 June 2020