The Congress of South African Trade Unions (COSATU) presented its submission on the Revised and Proposed Medium-Term Budget Policy Statement (MTBPS) to Parliament’s Standing and Select Committees: Finance. Whilst appreciating the turnaround in many key areas under the African National Congress led government, in particular Eskom, Transnet, Metro Rail and the South African Revenue Service (SARS), we remain deeply concerned that the MTBPS’ proposed adjustments are not bold enough to take the economy from the 1% growth it has been stuck at since 2008 nor to give hope to 12 million unemployed.
Fiscal Framework and Monetary Policy
The Federation welcomes recent positive achievements, including South Africa’s exiting from the Financial Action Task Force’ grey listing, the creation of 248 000 new jobs over Quarter 3 and the projected increase in growth over the Medium-Term Expenditure Framework (MTEF) to 1.8%. We are, however, concerned that Treasury remains excessively focused on reducing expenditure, debt and deficits as well as achieving a narrow surplus at the expense of badly needed economic growth and job creation.
We note the proposed reduction in the inflation target from 4.5% to 3%. Inflation is the enemy of workers whose meagres wages cannot afford rising costs of living. We are, however, deeply concerned that this will see the Reserve Bank deny badly needed repo rate relief to millions of highly indebted working and middle-class families and an economy badly in need of stimulus.
More must be done to address the root causes of domestic inflation, namely the ever-volatile international oil price, and its resulting impact upon our fuel price regime as well as Eskom’s unsustainable dependence upon increasingly unaffordable above inflation electricity price hikes. These are matters that government must do far more to tackle to reduce inflation. Squeezing workers further is unacceptable.
Expenditure, Public and Municipal Services, SOEs
We welcome the additional allocation of R15 billion to cover further investments in Transnet Freight Rail as well as R590 million for health to cover the shortfall in funding from the United States’ Agency for International Aid, R4 billion for school repairs, R2 billion for electricity transmission investments, R2 billion for water infrastructure in Polokwane as well as over the MTEF; R21 billion for public healthcare, R20 billion for schooling including early childhood education.
We are deeply distressed by below inflation adjustments for law enforcement and cuts for Home Affairs over the MTEF. This is something that these frontline public services cannot afford in the face of entrenched levels of crime. We are disappointed that once again government has shamefully failed to adjust the Social Relief of Distress Grant for inflation, in fact it has only once been increased since it was introduced in 2020.
At a time when unemployment remains painfully high at 42.4%, we had hoped that government would seize the moment to drastically increase the Presidential Employment Stimulus to at least R35 billion to provide a pathway to employment for millions of unemployed. We had similarly hoped government would move from commitments to action to provide relief to struggling businesses and economic sectors, through tax relief, industrial subsidies and by fixing the chaotically inefficient Unemployment Insurance Fund’s Temporary Employment Relief Scheme. Embattled workers and businesses need solidarity in action.
As we head towards the 2026 Budget Speech, a new mass industrial and SMME financing package with a target of mobilising at least R200 billion annually from the fiscus, developmental finance institutions and the private sector is an absolute necessity. We cannot continue along a path of business as usual and be surprised when growth remains low and unemployment high.
Whilst applauding the tireless efforts of the workers at Eskom to defeat loadshedding, more support is required to ensure all consumers pay their bills to enable electricity to once again become affordable. In the meantime, immediate relief is needed for industrial and other companies threatened with closure as a result of these tariff hikes.
We are encouraged by the turnaround of Transnet and Metro Rail but remain deeply worried by the lack of progress to stabilise and rebuild other State-Owned Enterprises, in particular the South African Broadcasting Corporation, the Post Office and Postbank.
Whilst welcoming proposed interventions to rebuild water and electricity services in various municipalities in Mpumalanga, a much more aggressive set of interventions is desperately needed to stabilise and rebuild increasingly dysfunctional local government. Decisive consequences are needed for those who continue to fail to pay municipal employees and pension funds, to provide basic services and maintain infrastructure.
We are encouraged by progress in identifying a potential 9 000 ghost employees. It is critical that these audits be extended to public sector entities, state-owned enterprises and municipalities and that those who have stolen from the state are made to pay the price. These savings must be utilised to hire doctors, nurses, teachers, police and other badly needed frontline staff.
It is critical that government move with speed to finalise the rollout of the Public Procurement Act. This will be a key tool in the war against state capture and corruption and a boost for locally produced goods.
Revenue
We welcome the increased allocation of R31 billion to the fiscus from Gold and Foreign Exchange Reserves. Further engagements are needed on continued support for the fiscus from these reserves in a manner that is strategic and sustainable.
COSATU applauds the work done by the employees of SARS with revenue collection improving by 9.3% to the value of R19.7 billion. Further resources must be allocated to SARS with a clear target to raise tax compliance to 75% over the MTEF. Further tax increases upon the working and middle classes must be abandoned and instead tax loopholes exploited by the wealthy as well as the dangerous rise in tax avoidance by illegal imports and illicit goods must be tackled.
There are positive achievements in the MTBPS, including progressive victories that COSATU has fought for. We are however aggrieved that we are not moving with sufficient speed, nor allocating the substantial resources required to enable the state to provide the quality public and municipal services that the working class and economy depend upon, nor that a weak economy needs to reach the 3% growth rate necessary to slash unemployment, poverty and inequality.
COSATU will continue to engage with government to adopt a much more bold and aggressive approach as we prepare for the 2026/27 Budget in February.
Issued by COSATU
Matthew Parks (COSATU Parliamentary Coordinator)
Mobile: 082 785 0687
Email: matthew@cosatu.org.za