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26 January 2021

While Tito Mboweni delivered the government's budget speech, movements took to the streets across the country, voicing our rejection of the government's austerity project and demanding a budget that puts people and the planet first. The government's budget is completely divorced from the reality faced by most South Africans and has little regard for the millions of unemployed and marginalised people in the country. 

Let’s be clear, this was an austerity budget. 

A Finance Minister should be “economically minded”, but he should not be economical with the facts! Tito Mboweni repeatedly assured us that he hasn’t tabled an austerity budget. He claimed that this accusation of austerity doesn’t fit with empirical evidence. This is false. The data in the budget review makes it clear that the Treasury's austerity project has been intensified.

The budgets allocated to different social services has to be compared with what is actually possible to purchase with this money, given increases in the price of goods and services in the coming three years. In other words, we have to account for inflation, which is forecasted at 4.2%  to 4.4% per year.

Accounting for inflation, the spending on public health will decrease by 12.5% over the next three years. How will the more than 40 000 vacancies in the public health sector be filled? There’s not a word mentioned on this. 

Health is not the only essential service to get the sword. Basic Education, with schools struggling to cope with collapsing infrastructure will see a cut of approximately 7.4% in real terms over the coming period. The Treasury recognises the devastation this can cause when it says “Low compensation growth of 0.8% per year [without taking inflation into account!] over the MTEF period, combined with early retirement [which is promoted by the Treasury], will reduce the number of teachers. This coupled with a rising number of learners, implies larger class sizes, especially in no-fee schools [which are the majority of schools!], which is expected to negatively affect learning outcomes.”  So much for the importance of basic education for the children today and for the future of the whole economy. 

Tito Mboweni obviously doesn’t care.

In terms of the future of the country, based on the latest Quarterly Labour Force Survey, more than half of the youth are jobless and are also not in education and training. In this context implementing a Basic Income Grant is essential to avoid a complete social crisis. Instead, it was announced that social security is budgeted for an increase of 0.6% on the average per year - given the aforementioned expected inflation rate the average value of money will decrease by 4.2% - 4.4% every year, or more, considering that the price of food has been almost double the official inflation rate in the recent period – something not reflected in the official inflation reports.  This will mean real cuts to old age pension, disability and child support grants but never mind the poor.

While government intensifies its attacks on the majority of the country: the middle-class and rich, who have private medical aid schemes to the tune of R13-billion, will receive above inflationary tax rebates; the R100-billion more than expected tax revenue led the Treasury to suspend the proposed increases to personal income taxes; and taxes on corporate profits will be reduced from 28 to 27 percent!

Yet the wage freeze on the public service remains. In real terms, it will cut demand in the economy by R64-billion, over three years. This will undermine any attempt to stop the unemployment rate from going up even further, and mitigate against any possibility for a just recovery. Instead, we will see the further de-industrialisation of the economy and growing debt problems - in this way this approach is not only going against the interest of the majority of the country, it is also self-defeating. 

This budget is terrible for the unemployed and poor, and offers relief for corporations, the rich and the middle class. With this budget, a special SA strand of neoliberalism has been consolidated. The Treasury has placed itself to the right even of orthodox economists internationally, who for over a decade, have started to doubt that the private sector ever will provide essential services to the majority. But this is now where this government is heading, regardless of the consequences. 

There are alternatives and lots of resources that we can harness to pay for a budget that prioritises the needs of the people and the plant. There’s no reason the poor should be left to pay the check and bear the bulk of the costs of the debt crisis, while the private sector and the rich will profit.

 

Endorsed by:

  1. Abahlali base Mjondolo
  2. Alternative Information and Development Centre (AIDC)
  3. Amadiba Crisis Committee
  4. Amandla PE Collective
  5. Association of Mineworkers and Construction Union (AMCU)
  6. Back2work campaign
  7. Botshabelo Unemployment Movement (BUM)
  8. C19 Cash Transfers Working Group
  9. C19 PC Gauteng 
  10. Cooperative and Policy Alternative Centre (COPAC)
  11. Equal Education 
  12. Fighting Inequality Alliance South Africa
  13. Gauteng Housing Crisis Committee
  14. Housing Assembly
  15. Southern African Green Revolutionary Council (SAGRC)
  16. The Right2know Campaign
  17. Unemployed People’s Movement (UPM)
  18. Workers World Media Production (WWMP)
  19. XR Gauteng