- Political parties and Cosatu have asked Finance Minister Tito Mboweni to table a budget that cushions the country from the tough economic times that lie ahead.
- The ANC and its alliance partners have said the best budget would be one that avoids further hardships on the working class and the poor.
Political parties have called on Finance Minister Tito Mboweni to table a budget that will help South Africa embrace the impact of a looming economic crisis.
Mboweni will deliver the special emergency budget on Wednesday afternoon. This follows the announcement by President Cyril Ramaphosa in April that government would spend R500 billion to support the economy as it continues to take a beating while battling the global Covid-19 pandemic.
Mboweni’s address also comes on the back of Statistics South Africa releasing the quarterly labour force survey, which showed that unemployment had gone up to 30.1% in the first quarter of 2020. That is a 1% increase from 2019’s 29.1%.
READ MORE | South African jobless rate swells to 30.1%
The ANC’s alliance partners the SACP and labour federation Cosatu seem to agree with opposition parties, including the DA, EFF and IFP, that the minister has to deliver a budget which appreciates the depth of the country’s economic crisis and the urgency in which the interventions he announces are implemented.
The DA’s spokesperson on finance Geordin Hill-Lewis told News24 Mboweni’s budget should build national resilience.
“A resilience budget must acknowledge that neither austerity nor a big expansion in spending is possible now,” Hill-Lewis said.
He said the only option left to explore was debt to fund the crisis response, while at the same time ensuring economic reform to spark growth.
Hill-Lewis suggested measures to spark growth including cutting the public sector wage bill, selling or shutting down some state-owned enterprises and ending Eskom’s monopoly by opening up the market to competition.
He also suggested the minister reject some policies linked to the governing party’s vision for the country, including the National Health Insurance and nationalisation of the South African Reserve Bank.
His views are directly at odds with labour, as Cosatu has argued against touching the public service, saying the country has learnt the hard way that “weakening public service is not the thing to do”.
Labour force
Cosatu spokesperson Sizwe Pamla said the focus had to be on jobs, calling on Mboweni to find ways to cushion the anticipated blow awaiting the country’s labour force.
Pamla listed a stimulus package worth more than a trillion rand to save jobs, mass public infrastructure to create employment opportunities and a regulatory framework that would see portions of the pension fund being invested into the infrastructure projects.
“At the end of the day people are going to lose jobs. What we need there is more funding so we can develop a jobs plan,” said Pamla.
He raised concerns over the pressure both pension funds and the Unemployment Insurance Fund (UIF) would face as the country’s situation became more dire.
Pamla said an increase in statutory severance packages had to be considered as these hadn’t changed since the dawn of democracy in 1994, along with adopting a “human face” to retrenchments, which wouldn’t leave millions back in the unemployed queue but would instead reskill those affected.
The labour federation’s spokesperson said the stimulus package had to be conditional, saying the options and incentives put on the table needed to include caveats such as commitments to not retrench and for the money saved to be ploughed back into the country.
“Whatever he is handing over to the private sector, it’s our money. Tax incentives is money, it’s tax they were supposed to pay that they are not paying. In the past, instead of investing in the economy they hoard that money, invest it out of the country or invest it in technology,” he complained.
The SACP said it was also interested in what the finance minister had to say regarding a mass infrastructure roll-out as a way to bolster the economy.
The communist party’s spokesperson Dr Alex Mashilo said the country would have fared far better if it wasn’t as under-developed as it is, pointing out that fighting the pandemic meant finally delivering on basic needs, such as delivering water to rural areas.
Mashilo said of the special budget:
We really don’t need any further hardships on the working class and the poor. We will be having an eye on the reprioritisation in that regard,
He also said Mboweni had to deliver both fiscal and monetary policy interventions.
“The budget cannot move in the old ways, where fiscal policy is considered in a silo and separate from monetary policy or where monetary policy is coordinated for the big banks but doesn’t touch the people,” Mashilo said.
The EFF, which described Mboweni’s February offering as not having been a budget, said it hoped the minister would make some provision for the basic income grant to be increased to R500 and to be made permanent.
The party brought up the concerns of the taxi industry, which held demonstrations this week after clashing with government over its Covid-19 bailout, saying it was hoping Mboweni would find the funds to ensure each taxi would get R20 000 from the state.
READ MORE | Mbalula pleads with the taxi industry; this is not the time for war
“We want to see decisive intervention in state-owned companies to ensure that we avoid liquidation, and workers are paid,” said EFF national spokesperson Vuyani Pambo.
Pambo said the red berets also wanted to see the minister aggressively pursuing tax avoidance and putting in place measures at Treasury to ensure money wasn’t stolen.
The IFP, which has pledged to support Mboweni’s approach to the unfolding crisis, said it had to be a carefully crafted balancing act.
But like the DA’s Hill-Lewis, who raised some concerns over the role of the ANC and alliance politics in the emergency budget, the IFP said it worried about Mboweni’s opponents who were “political and ideologically at war with the state coffers”.
The IFP’s deputy president and spokesperson on finance Mzamo Buthelezi said the party expected Mboweni to focus on job creation and economic recovery along with cuts of non-service delivery and non-essential items in the budget.
“This budget must predominantly focus on healthcare, food security and local economic development, and should fundamentally transform the way we do business in our country,” Buthelezi said.
He also cautioned against more bailouts for the country’s embattled airline South African Airways, while suggesting other state-owned enterprises should be put back into shape, close shop or enter into partnerships with the private sector.
The head of the ANC’s subcommittee on economic transformation Enoch Godongwana said numerous difficulties had necessitated the revival of the country’s budget outlook.
While he wouldn’t comment on certain matters, such as Cosatu’s demands regarding severance packages for workers in the public sector because it was still under discussion, he said there was one key area of concern.
“For us, we wish the infrastructure spend would not be touched. We would have thought this is the thing that would give us a key to economic recovery,” he told News24.
Mboweni will delivery the supplementary budget at 14:00 on Wednesday.
