The government needs to deliver a Budget that will capacitate the state, unlock economic growth and create jobs when it returns to Parliament on March 12.
While Wednesday’s events at Parliament were clumsy, it was better to stop a Budget that would have inflicted the pain of a 2% VAT hike upon the working class and allow space for more progressive alternatives.
Cosatu is pleased that Cabinet showed the humility and political maturity to listen to its objections to a VAT hike. A little humble pie for government is never a bad thing, especially when workers have long been aggrieved that their voices have been ignored.
With the exception of unacceptable proposal to hike VAT by 2% and a callous refusal to adjust the SRD Grant for inflation, the Budget contained many progressive proposals that Cosatu has long championed, which would go a long way towards rebuilding public services decimated by austerity budget cuts, stimulating an economy that has stumbled along 1% growth for a decade, boost public employment and provide relief for the poor.
It is critical when revising the Budget, government resists the temptation to abandon these badly needed progressive interventions and return to the dark days of austerity.
The government must ensure it tables a Budget that will capacitate not weaken the state, stimulate growth and slash unemployment. These are its three fundamental tasks and none can be abandoned.
We must resist the temptation to believe that all the state does is wrong, the private sector will be the panacea to our many socio-economic ills and the solution is thus to gut the Budget. Placing neo-liberalism on a pedestal has been done for far too long and dismally failed to deliver.
The task for March 12 is to identify alternatives to a 2% VAT hike.
The government must appreciate that society will not agree to hikes in the VAT or personal income tax on the working class.
There is space within existing expenditure to reduce here and there and leave some programmes for a later year in the Medium-Term Expenditure Framework.
It’s critical that allocations rebuilding public services battered by austerity cuts, in particular health, education, home affairs, defence, police and correctional services be maintained if we are to undo the damage caused by budget cuts and ensure they have the resources needed to deliver the quality public services society depends upon. This includes filling frontline vacancies such as doctors, nurses, teachers, police officers and home affairs staff.
Allocations for the R1 trillion infrastructure investments, especially for roads, electricity, water, passenger and freight rail, ports, hospitals and university beds must be maintained as these will unlock badly needed economic growth and create thousands of jobs.
A conversation is needed with the Development Bank, the Industrial Development and the Public Investment Corporations to take over some economic infrastructure projects, lift them from the state’s balance sheet and help alleviate the infrastructure backlog.
Similarly, discussions need to take place with these development finance institutions, banks and investment funds on how they can assist the state to ramp up support for SMMEs, industrialisation, exports and employment programmes and initiatives.
The state will never have enough resources to resolve our deep-seated socio-economic crises and hence the need to tackle and overcome the private sector investment strike.
We can continue to squeeze the Budget, but ultimately, we must find ways to mobilise every possible resource to grow the economy and reduce unemployment.
Whilst the state is being capacitated and economic growth unlocked, it is critical that provisions providing relief for the poor and the economy are protected in particular above inflation adjustments for social grants, including the SRD Grant, expanding the basket of zero-rated meat, vegetable and dairy products, and the R3 billion pilot project for tertiary education for the missing middle.
Similarly, a further fuel price levy freeze will help cushion the economy and commuters.
In addition to sharing the financial costs of economic infrastructure projects and public employment programmes and reducing wasteful expenditure and enhancing efficiency across the state; improving tax compliance must be at the centre of government’s efforts to ensure it has the funds it needs to deliver quality public and municipal services.
A highly efficient SA Revenue Service (Sars) was at the heart of Presidents Mandela’s and Mbeki’s administrations’ many successes. The government under the stewardship of President Cyril Ramaphosa has shown over the past few years that Sars has moved from being at the centre of the state capture project where it was deliberately decapacitated to once again playing its role by improving tax collection.
Sars has shown that if competent management are appointed, corrupt elements removed, critical posts filled and the institution’s infrastructure invested in; it can deliver the public services the working class, society, businesses and the economy depend upon.
Investments in the state when done well generate far greater returns than the initial Rands allocated; through businesses being able to sell their goods, workers paid, and tax revenue generated.
Once March 12th has passed, a more thorough review of government expenditure is needed to reduce wastage and shift resources to frontline public services, in particular health, education, transport, water, electricity and law enforcement.
Before the government asks society to make sacrifices, it needs to lead by example with a commitment to reduce the executive’s size, perks and costs; and wasteful and unnecessary expenditure across the state. Nor can workers be expected to continue to bear the pain and pay the price whilst the wealthy live life as normal.
What is needed over the next two weeks is for government to hear society’s frustrations, to focus on addressing the R58 billion shortfall, to reprioritise expenditure without returning to austerity budget cuts, to protect relief for the poor and the working class as well as economic stimulus and to ensure Sars is fully capacitated to tackle tax evasion.
Cosatu is committed to continuing to engage with government on how this can be done so that we emerge with a Budget that responds decisively to our many socio-economic crises.
Cosatu General Secretary Solly Phetoe
BUSINESS REPORT