COSATU expectations statement on the upcoming Mid-Term Budget Policy Statement

The Congress of South African Trade Unions is looking forward to the upcoming Mid-Term Budget Policy Statement (MTBPS) to be delivered by Minister Tito Mboweni on Wednesday, 28 October 2020. There is a lot riding on the upcoming MTBPS as a result of our economic decline, skyrocketing unemployment rates and deepening poverty. This is made worse by the subdued levels of the global growth rate that has set in since the COVID-19 inspired global capitalist crisis that erupted early this year.

 In South Africa, this crisis is accompanied by high corporate and public debts and the country finds itself bogged down under the weight of the rising debt burden and the predicament of Neoliberal policies that continues to suffocate the economy.

 The reality for South Africa is that we are where we are because of previous decisions taken by the policymakers and decision-makers. The deepening socioeconomic crises that is currently engulfing South Africa, can partially be attributed to the misguided macroeconomic policy framework that has been implemented over the years, especially since the beginning of the year.

 The unemployment rate has continued to climb in 2020, a consistent trend since the 2009 recession, reaching 50% in the second quarter of 2020 in real terms. Thus, officially there are about 14 million unemployed people, in which women and the youth bear the worst brunt of the economic stagnation.

 This is the reason workers hope that government will rise to the occasion and table an MTBPS that speaks to and is in sync with the Economic Reconstruction and Recovery Plan tabled by the President at Parliament last week.  What we cannot afford is government policy incoherence, where the National Treasury says one thing, whilst the President says another.  The Economic Recovery Plan was extensively engaged upon at Nedlac with social partners; it is critical for government and business to move with speed to implement it.

 The MTBPS should address other detrimental issues that stifle economic development that include the vast scale and deepening levels of corruption and wastages within the state.

We call for the fast-tracking of the public procurement bill and the introduction of the national online public procurement system. We also demand transparency in the procurement of certain large goods within the state.  

 All the best plans will remain meaningless unless the government deals with the pandemic of corruption and wasteful expenditure. According to the Auditor-General’s reports consumes on average 10% of the budget or in other words more than R150 billion per annum.  The recent arrests and court appearances are welcome but these need to result in convictions and the return of stolen assets to the state. 

 COSATU wants to see a policy statement focused on diversifying and building the productive capacity of the economy. To save jobs, the government needs to inject new money into the economy to stimulate it. We expect details on the announced government infrastructure programme.

 Whilst it is hoped that the economy will begin to recover as it reopens, millions of workers will remain destitute and in danger of losing their jobs.  Further relief measures must be provided for, these include the extension of the UIF TERS relief to affected workers.

It is inexcusable and callous that almost two months after the President made this commitment, the government has failed to act.

 The extension of the R350 long term unemployment grant is welcome.  However, it needs to be extended beyond the three months and should be used as the foundation for a basic income grant for the unemployed.

 The Federation hopes that Treasury will announce interventions in the Loan Guarantee Scheme which 7 months later has shamefully only managed to approve 8% of its committed to R200 billion funding. 

 Whilst further budgetary reprioritisations need to take place, these should not be done at the expense of key investments and allocations to key economic departments.  The Supplementary Budget’s cuts of R1.9 billion to the Departments of Trade, Industry and Competition, R1 billion to Tourism, R2 billion to PRASA and R2 billion to public transport undermine the economy’s revival and must be reversed.

 The government needs to cease its war against public servants.  It must honour its legally binding 2018 wage agreement and move to engage labour at the PSCBC on the next 3-year agreement. 

In terms of government’s own definition, consolidated government spending comprises total expenditure by national and the provincial government, social security funds and selected public entities, including transfers to municipalities or other entities. Therefore, consolidated government spending on remuneration is all-encompassing well beyond the wage dispensation determined at the Public Service Coordinating Bargaining Council (PSCBC).

 The Treasury’s Austerity strategy is narrowly and almost exclusively focussed on the wage bill pertaining to the PSCBC.  This is problematic and ideologically driven.

 The MTBPS needs to deal with the messy pay and benefits structures within the vast plethora of agencies and public entities that contribute to the current size of the consolidated government spending on remuneration.

 We also expect a solid proposal on how to fix and turnaround State-Owned Enterprises. These SOEs need to be sorted and fast , we expect a solid and comprehensive plan on how to rationalise and merge them. Many of these entities are depended on the fiscus and are actually redundant and duplicate each other whilst some have no clearly defined roles, not to mention the fact that some of them are simply ineffective in implementing their mandates.

 We also expect the policy statement to address the issue of private consultants who take billions from municipalities, government departments and State entities every year with no results. This needs to be stopped. COSATU wants the issue of outsourced state operations to be tackled because they are used as channels through which the state haemorrhages scarce resources.

 In interventions to reduce budget baselines of departments, we demand a review of the existing Service Level Agreements (SALs) or contracts involved in Public-Private Partnerships because many of them have produced poor quality of outputs and outcomes. They exponentially raise the costs to the state. The outsourcing of functions and PPPs were sold to the public as the means to save costs but in reality, they are the source of corruptive inflation of costs. We hope Treasury will abandon its austerity strategy because it is bound to depress demand and thus cause an economic depression

 The government can only do so much in rebuilding the economy given its limited resources.  The private sector, in particular, the banks and investment funds need to come to the party.  They need to ensure that credit is affordable and accessible to consumers and businesses.  The private sector needs to honour its own commitments to urgently inject funding into the economy, in measures that will save and create jobs, support fragile economic sectors and infrastructure.

 The government needs to discourage cash hoarding and an investment strike by imposing a tax on those who hoard cash. We also need capital controls to protect the currency and deal with illicit financial flows.

Issued by COSATU

 Sizwe Pamla (Cosatu National Spokesperson)
Tel: 011 339 4911
Fax: 011 339 5080
Cell: 060 975 6794