The National Education, Health and Allied Workers’ Union [NEHAWU] notes the tabling of the 2025 fiscal framework by the Minister of Finance, Enoch Godongwana.
This was an unprecedented third attempt by the Government of National Unity (GNU) at delivering the Budget Speech after two failed attempts earlier this year. The aborted budget speeches were a result of a nonsensical decision by National Treasury to increase Value-Added Tax (VAT) by 2% over a period of two years.
This Budget Speech was delivered against the background of the recent release of the first quarter employment figures for 2025, indicating that unemployment has increased by 1%, with 34.9% of the population unemployed, equating to 43.1% using the expanded definition in which about 72% of the youth population continue to languish in unemployment.
Macroeconomic and fiscal policy
The Minister locates Budget 3.0 within the framework of the GNU’s four macroeconomic and fiscal pillars and these are: macroeconomic stability, structural reforms, state capability and infrastructure development. The Minister is insistent that Budget 3.0 is not an austerity budget, as non-interest expenditure increases by 5.4% over the medium-term. The Minister also insists that this is a redistributive budget, as it directs 61% of consolidated non-interest expenditure towards the so-called social wage. Lastly, the Minister insists that this is an infrastructure development budget, as it allocates R1 trillion to critical infrastructure projects.
NEHAWU has been consistent in condemning the posture and philosophy behind Treasury’s failed austerity or fiscal consolidation project. The tabling of this budget therefore, takes place after more than ten years of a self-defeating fiscal framework that will only yield tiny increases in GDP of 1.6% in 2026 and 1.8% in 2027. In his own admission, the Minister stated that: “… we [National Treasury] have been giving budget cuts for a number of years and they’ve not achieved the desired outcome. We’ve not achieved fiscal consolidation.” Today, Treasury indicated that it has achieved a balance between fiscal strategy and sustainable public finance by reducing spending (R68 billion) and stabilising projected debt-to-GDP in the 2025/26 period (77.4% of GDP). In stating this, Treasury has exposed the false dichotomy it constantly creates in the run-up to the budget. Previously, we were warned that it is either austerity budget cuts to public services or an increase in VAT, then we were faced with the false dilemma of an increase in VAT or the scrapping of the COVID-19 Social Relief of Distress [SRD] Grant. Now that Treasury has admitted that austerity has failed, that increasing VAT is unacceptable and that millions of vulnerable South African’s are reliant of the SRD Grant, there was a reasonable expectation that the countless alternatives to revenue collection, be it cancelling or adjusting medical aid tax credits (adding 3.4 billion to the fiscus), introducing a wealth tax and properly capacitating the South African Revenue Service (SARS), would be considered and incorporated.
The increase of the fuel levy for the 2025/26 fiscal year represents yet another attempt by Treasury to squeeze every cent out of the working class. The fuel levy is a regressive tax that, like VAT, negatively impacts the daily cost of living. Treasury has admitted its failures in implementing austerity, was forced to reconsider a VAT increase and has now reverted to another mechanism that would make the lives of the workers and the poor even more difficult.
Unfortunately, the GNU’s pillar of economic structural reforms override the concerns and alternatives proposals raised by trade unions, community organisations, academics, economists and civil society organisations in general. NEHAWU is strongly opposed to the rapid encroachment of privatisation on our public infrastructure through the so-called Operation Vulindlela, be it in energy, water and sanitation, rail and logistics and our borders. Moreover, we are extremely concerned with further encroachments by the private sector in local government. In this regard, NEHAWU calls for a parliamentary review of Operation Vulindlela. It is through Treasury’s own admissions and the recent unemployment statistics that the entire modus operandi of the Public-Private Partnerships (PPPs) must to be revisited. The state’s obsession in partnering with the profit motivated private sector is not conducive to building a developmental state with a capacitated public sector that is resourced and equipped to meet the basic needs of our people.
Healthcare
We note the allocation of R296.1 billion to healthcare in 2025/26, and the provisional allocation of R20.8 billion to:
• Employ 800 unemployed doctors who have completed community service.
• Protect 4 700 health posts that were under threat.
• Address shortages in medical goods, services, and accruals.
Whilst we welcome this provisional allocation, as NEHAWU we are concerned that this amount has be reduced from the R28.9 billion to R20.8 billion in terms of the budget that was presented on the 12th March 2025. Hence, it is now only about 4 700 health posts that are to be retained instead of 9 300 as promised in March. This also raises questions as to whether the commitment to advertise about 1 200 positions for doctors, 200 for nurses and 250 for other professionals in 2025 as announced by the Minister of Health, Dr Aaron Motsoaledi, on the 10th April 2025 still stands. It is unacceptable that this R20.8 billion funding is still “provisional”, which means that it is not guaranteed and remains vulnerable to fiscal revisions over the medium-term.
We also note the R1.4 billion allocation for the construction of the Siloam Hospital and the PPP project for technology upgrade at the Tygerberg Hospital. While this infrastructure development is welcomed, we caution that PPPs must not be used to privatise clinical services. We note the freeze placed on medical scheme tax credits in this budget. However, this would have been welcomed if this money was to be ring-fence as a seed fund for the National Health Insurance Fund or spent on the infrastructural upgrade in public health institutions as part of the preparations and a transition to a unified healthcare system.
Public Service
We note with concern that the Treasury intends to cut about R312 billion from the overall budget baseline, which it regard as wasteful spending on non-performing programmes. It may be that indeed some of this amount is wasted on non-performing programmes. However, it is common course that factors behind many of the non-performing programmes is the lack of capacity to execute the implementation, not least because the pervasive vacancies that prevail in the public service. Indeed, this is due to many years of the imposition of moratoriums on the filling of vacant posts. This decision is likely to have dire implications on some of the filled posts located in those programme. NEHAWU views this as yet another means of reducing the wage bill by stealth. We expect the employer to engage with labour on the spending revenues that inform this decision. Ironically, we have been calling for a spending review on allocations for goods and services for many years, which is a channel for outsourcing and tenders and in which real wasteful expenditure continue to take place.
NEHAWU notes the “trade-offs” the Minister has afforded the public service with an increase of 5.4% over the medium term, equating to 0.85% per year. This is nothing to celebrate as it falls far short of the required levels to reverse austerity measures that have been adopted since 2012. Despite the failure of austerity, vital vacancies in the public service are still not being funded and filled. Police headcount to population is deplorable, doctor-to-patient ratios are at a critical level, Home Affairs is operating with almost half its vacancies unfilled and thousands of young doctors and medical workers are left unfunded to undertake their community service and complete their qualifications. These public service allocations must also be viewed with vigilance as Treasury continues to advocate and implement a clear Neoliberal tactic of instituting an early retirement scheme, with the intention of reducing the public service personnel by 30 000 in 2025/26 and 2026/27. As we highlighted in our March 2025 statement, we remain vehemently opposed to this scheme as we believe it is part of the continuation of the austerity measures by other means to further reduce the public service bill through cuts in personnel headcount. This is a blunt lawn-mower approach that does not take into account essential positions in the frontline service delivery departments.
NEHAWU cautiously acknowledges the promised priority spending allocations to essential frontline services and infrastructure. However, again this falls short of what is required, especially in the context of the implementation of NHI, which the Minister muted in his speech. As a reminder, NEHAWU had to take the state to court to ensure that Community Healthcare Workers’ (CHWs) interests and dignity were upheld, resulting in a victory for the CHWs and the union.
Social Protection
It is in the context of rising unemployment and an unaffordable cost of living that NEHAWU acknowledges the above inflation increase in social grants by Treasury. In any state aspiring to be developmental, it is the most vulnerable in society that require support, it is therefore totally unacceptable that Treasury has ignored the plight of 19 million SRD Grant recipients by maintaining below inflation funding to cover the grant. In addition to this, Treasury and the state were taken to court earlier this year by the Institute for Economic Justice (IEJ) and #PayTheGrants for instituting a range of regressive and heavily restrictive mechanisms to restrain the number of applications for the grant. Today, the Minister of Finance put the final nail in the coffin of any hope that the state would expand the SRD Grant into a Basic Income Grant (BIG). This, in context of numerous commitments to a BIG contained in the African National Congress’ (ANC) elections manifesto and 08 January Statement. What is even more concerning, is the Minister’s jovial adoption of the Democratic Alliance’s “job-seeker grant”, this represents a grave misdirection of the state and a critical failure to fulfil a societal commitment to our most vulnerable and marginalised.
Conclusion
NEHAWU remains resolute in our calls for a complete overhaul and rethinking of the current Neoliberal macroeconomic and fiscal policy. The numerous presentations, research and statements providing viable alternatives to increases in regressive taxes have been ignored by Treasury, this in the face of fractional GDP growth in the medium term and a dangerous increase of 1% unemployment in the first quarter of 2025.
We will therefore continue to call for an end to austerity, in whatever name or form it may take and will continue to mobilise our members, our communities and society in the call for a People’s Budget that: resources a developmental state, reverses privatisation, fills critical vacancies and builds capacity at a national, provincial and local government level.
END
Issued by NEHAWU Secretariat.
Zola Saphetha (General Secretary) at 082 558 5968; December Mavuso (Deputy General Secretary) at 082 558 5969; Lwazi Nkolonzi (NEHAWU National Spokesperson) at 081 558 2335 or email: lwazin@nehawu.org.za