The government’s Medium Term Budget Policy Statement was tepid and uninspiring

The government’s Medium Term Budget Policy Statement was tepid and uninspiring

11 November 2021

The Congress of South African Trade Unions (COSATU) is disappointed by the tepid Medium-Term Budget Policy (MTBPS) tabled by government at Parliament today. The MTBPS provided few new ideas or interventions to grow an economy that is in its deepest recession and an unemployment rate of 44%.   

No new allocations were provided to stimulate a stagnant economy, and no new measures were provided to increase badly needed state revenue or to deal with the ballooning levels of corruption and wasteful expenditure.   

There are still no practical plans to rebuild our battered State-Owned Enterprises (SOEs) or fix the dysfunctional municipalities.  

The crux of the MTBPS was to resort to the same old tired solution of shifting the blame to the public service wage bill.  In short, no lessons have been learnt by government and this was another missed opportunity.  

Economic and social relief measures needed to be at the heart of the MTBPS 

COSATU had hoped government would have placed the revival of the economy and providing relief for distressed workers, the unemployed and businesses at the centre of the MTBPS.   

We expected mass stimulus package in line with what other countries like the United States, European nations and China have done to turn their economies around. Sadly, the MTBPS did not provide for that but continued with its failed austerity. 

COSATU is worried about the impact of cuts to key public service delivery functions, in particular the cuts over the next 3 years to the Health by 0.6%, Social Security by 16.9% and Police by 0.5%.  The increased allocation at below inflation levels to Basic Education is inadequate.  The inability by the City of Cape Town to spend R1.3 billion on its My Citi Service whilst Metro Rail is collapsing is inexplicable.  It is scandalous that the Basic Education department has failed to meet 80% of its target to provide sanitation to 1000 schools during the pandemic. 

The Federation supports the R11 billion allocated to the Presidential Employment Stimulus Programme that has helped create over 550 000 jobs.  It has given some young people hope.  We welcome the proposed allocation of R74 billion to it over the next 3 years but this should be increased further.   

Many key sectors that employ large numbers of workers have been devastated by the pandemic and the July riots.  Government needed to take the opportunity to provide relief and support to them. 

We look forward to more details from Treasury and the Banks’ on their commitment to develop new measures to support SMMEs. This should expedited. 

We are disappointed that no new measures or interventions to ramp up local procurement to support local industries and jobs were presented. 

The progress made by government to dispense over R32.9 billion through the various relief measures provided for to victims of the July violence in KwaZulu-Natal and Gauteng is welcome.  But the delays by the UIF in paying workers who lost their wages is shameful.  

It is disappointing that government does not have a plan to improve the capacity of the UIF’s archaic systems that have made it difficult for workers to get their money on time.   

COSATU welcomes Treasury’s commitment to release a policy paper in November and then table an Amendment Bill in the February Budget providing for distressed workers limited access to their pension funds.  This needs to be expedited because it will provide badly needed relief to highly indebted workers.  This should include both public and private sector workers.   

The R350 Special Relief Dispensation Grant has provided welcome relief to more than 9 million unemployed persons. We need a firm commitment that it will be extended and enhanced in the 2022 Budget. This is a foundation for a Basic Income Grant.  SASSA and the Post Office need to move its recipients to electronic payments to deal with the endless queues at the Post Office. 

The R500 billion and R100 billion allocated for infrastructure investments over the next 3 and 10 years respectively is a critical injection to the economy.  Treasury’s proposed amendment of Regulation 28 to allow pension funds the choice of investing in infrastructure projects is a welcome boost to our ailing economy.   

Rebuilding a capacitated developmental state is central to spurring economic growth 

The dangers of Treasury’s austerity driven approach is that it will not rebuild the state.   

The wage bill has been stable at 35% of the budget for more than a decade.  What has changed is that politicians, their friends and families have looted municipalities and SOEs to the brink of collapse.  

We demand that government abandon an unhelpful four-year wage freeze and engage Organised Labour at the Public Service Central Bargaining Council on wage increases for workers. This approach must be extended to the SALGA and SOEs’ Bargaining Councils too.    

Cabinet should lead by example and announce a cut to the exorbitant packages paid to politicians and the executive management of SOEs.  It should work with Organised Labour to establish a single collective bargaining framework for the entire state which would help both workers and government.  

The decline in headcounts for the Police of 5 842 and Basic Education by 966 are worrying.  The appointment of 18 458 nurses and health workers is a welcome boost in the fight against Covid-19. 

It is worrying that the MTBPS is silent on measures to stem the flow of corruption and wasteful expenditure that is bleeding the state.  Government needs to extend the ban on doing business with the state to the leaders of ruling political parties as well as the spouses and children of Cabinet members.  The commercial crimes courts and the National Prosecuting Authority need additional resources to ensure corruption cases are prioritised.  

A single online, transparent public procurement systems need to be established for the entire state to help reduce looting and support local procurement.  COSATU appreciates the commitment to table the Public Procurement Bill at Nedlac shortly.  

We acknowledge and salute the progress made by the South African Revenue Service to rebuild its.  The 2022 Budget needs to allocate more resources to SARS to tackle tax evasion and customs fraud.  We also expect the 2022/23 budget to include some tax increases for those earning over R1.5 million through income, inheritance and estate taxes.  Duties on luxury imports should also be raised. 

The lack of clear plans to place the embattled SOEs on a sustainable path in the MTBPS is glaring.  Eskom needs to be assisted to deal with load shedding. The economy cannot recover without reliable and affordable electricity.  The timeframes for bringing on board new generation capacity need to be expedited. 

Plans are needed for other SOEs, in particular for Transnet which is critical for our exports; PRASA which needs to provide safe and reliable transport for workers. We find it shocking that the MTBPS was silent on the delays to South African Airways’ resuscitation and the pending closure of Mango that will lead to the loss of about 700 jobs. 

We reiterate our call on government needs to retable the Road Accident Fund and Benefits Scheme Bills at Parliament.  The suffocating petrol price hikes to sustain a R450 billion RAF liability are not acceptable nor sustainable.  Government needs to provide finality to the E Tolls saga and announce a new funding model for the Gauteng freeways. 

Workers and South Africans at large have lost faith in government’s policies and commitments.  This was clear when voters gave their verdict in the local elections. The ANC and its government are running out of time to do right by South Africans. 

Issued by COSATU    

Sizwe Pamla (Cosatu National Spokesperson)     

Tel: 011 339 4911    

Cell: 060 975 6794