31 October 2000
Yesterday, the Minister of Finance Trevor Manuel issued the government's Medium-Term Budget Policy Statement. According to this statement, government is to embark on an R8 billion capital and infrastructure investment programme and targeted tax relief over the next 3 years.
The South African Communist Party (SACP) welcomes this increase in capital and infrastructure investment. As the SACP we argue for a massive infra-structural development programme premised on an over-arching domestically driven and state-led industrial pol icy and programme principally directed at job creation. For this reason, we caution that the announced investment programme may not be sustainable if not linked to a state-led industrial development programme.
In line with the arguments the SACP has made within and outside the Alliance, any major economic announcements must be linked to commitments by private capital to contribute to our country's economic growth and development. As we have unfortunately witness ed in the past, the Budget Policy Statement does not have a clear programme on the role and contribution of private capital in productive investment. The Budget Policy Statement does not state how government intends to direct and discipline private capital into productive investment. As a country, we must take steps to ensure that the bosses stop their unjustified investment strike - the bosses are just not investing in productive sectors of our economy. The bosses control massive resources, which the democ ratic state must direct towards our developmental objectives.
As the SACP we believe that the economic growth projections are still within the contractionary GEAR macro-economic framework. We also wish to express serious concern with the over-reliance on linking budget expenditure to GDP growth. As it has happened in the last 3 years, when projected GDP growth was not realised we witnessed negative growth in the budget in real terms (in particular on social expenditure). The SACP is also concerned that the Budget Policy Statement does not contain any detail on specifi c job creation targets and measures. In the light of massive unemployment and job losses, surely one of the major social and economic indicators in our economy must be the extent to which the economy keeps current and creates new jobs.
Whilst tax cuts for low income groups must be welcome, as the SACP we argue that as a country we need to strengthen progressive taxation and redistribution of wealth from the rich to the poor in order that we draw enough resources to eradicate poverty and create jobs. For these reasons, the SACP warns against the hope that any shortfalls may be funded by income from privatisation of state assets. As international experience has shown, privatisation of state assets generally results in higher prices and a cu rtailment of services to the poor. Therefore, restructuring of state assets must be not be based on privatisation merely to finance government debt as this is not sustainable. Instead, it must be based on meeting reconstruction and development objectives.
Also related to tax reform is again the role and contribution of private capital. In the last few years we have seen a net reduction in company tax which has not been matched by an increase in investments by the private sector. And thus our call for govern ment policy and action to direct and discipline private capital in line with our developmental objectives.
The SACP argues for a people's budget, to ensure participation by ordinary people in the budget and actual budget priorities and allocations. Without this, we cannot address the immense social and economic inequalities. Therefore, the SACP will work to ens ure that there is effective popular participation in the budgeting process for 2001
Finally, the limitations of our country's budget reflect an economy that remains hostage to a considerable extent to powerful domestic and international private sector forces. Therefore, the entire budgetary process must be seen and used actively as an ins trument for ongoing transformation and popular mobilisation and empowerment. We believe that the 2001 budget must be effectively used to create space for this. The SACP will play an appropriate role in regard of the issues we have raised above.
CONTACT
Mazibuko K. Jara (surname Jara)
Department of Media, Information and Publicity - South African Communist Party
Tel - 011 339-3621/2 Fax - 011 339-4244
Cell - 083 651 0271 Email - sacp@wn.apc.org