Memorandum to the Government, Republic of South Africa
FROM
CONGRESS OF SOUTH AFRICAN TRADE UNION, COSATU
110 Jorissen Street (Cnr. Simmonds Street)
Braamfontein, 2017 | P.O.Box 1019, Johannesburg, 2000, South Africa
Tel: +27 11 339 4911
AND
SOUTH AFRICAN COMMUNIST PARTY, SACP
4th Floor, COSATU House
110 Jorissen Street (Cnr. Simmonds Street)
Braamfontein, 2017
Tel: +27 11 339 3621
Date: Saturday, 23 April 2016
Introduction
Our country`s democratic transformation requires decisive implementation of its new, the second, more radical, phase. While deepening our democracy to achieve its full development, this process of radical democratic transformation must progressively eliminate the triple challenges of social inequality, unemployment, poverty, and bring to an end the problems of corruption and corporate state capture. The persistence of these challenges and problems can only undermine our democracy, the capacity of the democratic developmental state that we seek to achieve, and our democratic national sovereignty.
The second, more radical phase of our democratic transition must build on the achievement we have made since our 1994 democratic breakthrough to improve the quality of life of our people, especially the workers and poor who form the majority of our country`s population. We have decided to take this programmatic action, which we will intensify, to strengthen the capacity of our government to play its role in serving the people.
In particular, the state must be seen giving effect to the following priority areas as a matter of urgency.
Transformation of the financial sector to serve the people
The National Credit Regulator released a report last year indicating that South Africa has reached its highest levels ever of impaired credit records. This is because of the drive to make profits at any cost by finance and financialised institutions, including through predatory and reckless lending practices. It last year it was estimated that there were19 million credit active South Africans who have impaired credit records. More than 11 million were categorised as over-indebted. The loans and high interest rates that people owe means that they are working to pay banks, micro lenders and loan sharks, more than they are working to look after themselves, their families and meet their basic needs.
This problem must be addressed. Its prevalence and persistence show that there are still wrong practices and market conduct in our country`s financial system, despite the progress made through the National Credit Act.
Problems in the housing sector also remain unresolved.
Last October it was estimated that around 10 000 homes were being repossessed by the banks annually in our country. This level of eviction can only be comparable to apartheid-era Group Areas removals. The homes are then sold at auction, very often at a fraction of their market value. Decisive action is required to deal with unscrupulous housing evictions. This including corrupt conduct by some in our court system who collude with their counterparts in the banks and their other accomplices elsewhere causing problems of housing evictions and even facilitating administrative theft of other people`s houses who are then evicted from their homes.
Greater regulation of housing evictions with stringent requirements must be put in place. This must articulate human rights requirements and requirements relating to ensuring an alternative home or accommodation is made available in the event of possible eviction under the new regulations.
In addition, no repossessed property must be sold under its market value in instances where evictions will ultimately happen. The banks must give to Caesar what belongs to Caesar in such instances by selling the property at its market price, taking only what is owed to them and giving the rest to the repossessed family or person. There is no reason in principle why the banks must still make insurance claims in such a case when in fact they would have recovered what is owed to them. Such practices and insurance claims must be reviewed and regulated in law.
The practice of compound interest rates must be reviewed. The interest rates that are demanded by the banks on houses are just unbearable; they are another house on their own.
The entire structure of sky-high bank charges and fees must be reviewed and regulated with greater emphasis of consumer protection. The National Credit Regulator and its role must be strengthened to ensure effective enforcement.
Processes that have been under way in Parliament relating to the so-called Twin-Peaks model of financial regulation are concerned with prudential and market conduct regulation of the financial sector - which is estimated to be 6 trillion in rand value terms. It does not seek to transform the structure of the financial sector.
The banking and insurance branches of the financial sector for instances are dominated by private oligopolies and monopoly consisting of a handful of players. This needs to be addressed. Part of the sources of this skewed structure of the financial sector lies in some of the prevailing regulations. In fact this is one of the factors that are holding back our objective to build a state owned bank including the capacity of, and therefore transforming the Post-Bank to offer full banking services on a developmental basis as opposed to the commercial banks that are interested only in profit and do not care about our people.
There certainly must be differentiated regulation involving separate regulations for commercial banks and public or state owned banks whose mandate is developmental as well as for co-operative and worker owned banks. Without this it will continue to be difficult to establish public and collective forms of ownership in the banking sector. Inequality in ownership terms, and directly related to this, therefore in terms of income, will persist.
The state must redirect its financial transactions, including social grants, away from corrupt tenders such as the United States of America-based multinational corporation Cash Paymaster to the Post-Bank. South Africa needs a financial sector and banks which will serve the people!
There must be differentiated interest rates involving separate regulation for productive use and consumption with capping requirements for both.
The financial system must be transformed to encourage investment in creating productive work, away from its current focus on speculative activities of the casino economy taking place through financial dealings in stock markets and computer aided operations without creating any work on the ground.
Prescribed asset requirements must therefore be put in place, to encourage investment in productive activity. There must also be taxation on liquid cash of huge proportions above a defined value that is held in what in our view constitutes an investment strike by the capitalist bosses.
We want strengthened regulation of inflows and outflows of capital our of our country, including international transaction taxes, to protect our economy from the deleterious impact of volatile financial markets conditions as well as to reduce or cap risk in terms capital flight and the expatriation or outflows of huge amounts of money. The Constitutional Court ruling dealing a blow to Mark Shuttleworth, who moved huge amounts of money out of our country to a tax haven and did not want our economy protected, is an important instrument reaffirming our right as a country to strengthen regulation in this regard!
We demand comprehensive social security for all, and an end to all efforts that seek to take over control of workers retirements funds
The Department of Social Development must to play its lead role working together with other departments to develop comprehensive social security programme for our country. This is long overdue. The process that was announced by the President in this regard following the recent problem of signing into law the Tax Laws Amendment Act and the Tax Administration Laws Amendment Act of 2015 must be accelerated.
Among others the new tax laws, had the problematic provisions not been halted, sought to give effect on 1 March 2016 to the retirement fund reforms that have been pushed by the National Treasury. This would have had far reaching implications for workers without comprehensive social security!
The reforms, which were introduced without agreement with workers on the management of their own funds, were meant to curtail their retirement fund withdrawal benefits that they relied on after losing their jobs. When workers lose their jobs in South Africa they find themselves largely alone, without any comprehensive social security.
The reforms were pushed without an equal effort to introduce comprehensive social security to give workers adequate social protection in the event they lose their jobs.
National Health Insurance
Along with measures to introduce comprehensive social security for all, implementation of the National Health Insurance and continued improvement of the quality of, and access to, healthcare must be accelerated. Private capital accumulation interests must not be allowed from holding back the advance. The private sector is interested in profit above everything else. It has been the single, largest consumer, in profits, of funds in workers` medical aid schemes that are mostly depleted by midyear.
Increased investment in primary healthcare to build a strong focus on prevention is an absolute necessity. Similarly, continued investment in education and training for healthcare professionals is essential condition, and must be accelerated. Public healthcare must be protected from a brain drain by the private sector.
The hearings under way on the cost of private healthcare must culminate in strong price regulation.
National minimum wage and labour brokers
In the same vein, we demand accelerated implementation of a national minimum wage, which is one of the important objectives of the Freedom Charter, to protect workers from deepening exploitation by their bosses. The importance of a national minimum wage cannot be overemphasised.
The practice of labour brokers must be brought to an end once and for all! While important, current legislative interventions have not succeeded to solve the problems caused by labour brokers.
Efforts to take over control of workers retirements funds must stop forever!!
The must be no reform of workers retirement funds and control over them without workers` mandate.
Nothing can serve the best interests of workers without workers!
Outsourced operations must be in-sourced
Outsourcing has crippled the capacity of the state to live up to its democratic mandate. It has compromised the quality of public service and rendered workers in the jaws of ever deepening exploitation in outsourced operations where profit for the capitalist bosses is the only priority.
Free quality post-school education and training
No amount of theory will deliver on the objective of free quality post-school education and training for students from working class and poor households that cannot afford college and university student fees. It is increased funding to higher education and training that will deliver the financing of accelerated introduction of the progressive roll out of free quality higher education and training including technical and vocational education and training.
While the government`s efforts in terms of the objective to progressively roll out of free quality higher education are welcome, it is clear more funding and transformation of the system to optimise resource utilisation including through shared services are needed. The government must act decisively, among others through accelerating the coming into effect and the work of the commission appointed by the President on this matter.
Handed over on behalf of COSATU and the SACP
________________________________________
________________________________________
Received on behalf of the Government:
________________________________________
________________________________________
