23 February 2011
The SACP notes and welcomes the general thrust of the Budget presented by the Minister of Finance today. The budget signals an important commitment and movement by government towards funding our five priorities. It further signals a strong intention to align government expenditure to the New Growth Path that government is pursuing.
The funding set aside to increase expenditure in education and skills development must be greatly welcomed. This signals a dedicated focus on youth and addressing the challenges of unemployment facing our country and the youth specifically. Our country has a huge challenge in unlocking the problems encountered by many young people who are in transit between the schooling system and finding employment. In solving this crisis we note the announcement of funding set aside for a youth employment subsidy.
The Minister of Finance is correct this time around to say that the proposed wage subsidy will be implemented subject to consultations and discussions in various forums including NEDLAC. The SACP fully agrees with the concern raised by unions about a possible substitution of full time workers with younger workers who are on subsidy and the termination of their employment once they don’t qualify for the subsidy anymore. A wage subsidy can be subject to abuse by the employers and if we are to ever implement such measures we must have developed a system that cannot be abused by profit chasing capitalists.
We further welcome the commitments made towards the introduction progressive introduction of the National Health Insurance and expenditure on other measures in so far as social policy is concerned. This signals cabinet is taking serious the implementation of the NHI. We wish to state upfront as the SACP that as part of the options put forward around financing the NHI a consideration of VAT is not a desirable option as it will have a negative impact on the poor.
We welcome the measures announced around curbing corruption in the process of government procurement. The SACP calls on government to further consider our proposal that shortlisted companies bidding for tenders must be made public with reasons why they have been shortlisted and why the winning bidder has been chosen over and above the measures announced today. We hope measures announced today around revitalisation of housing infrastructure and improvement of informal settlements will not just be an extension of a terrain for tenderpreuners to scavenge on these good intentions but that it will be used to mobilise communities as agents of their own change.
The SACP is also worried that there is no substantial shift from the logic of improving our infrastructure and transport logistic for lowering the cost of doing business as opposed to aligning such to our developmental objectives and social needs. We are further more worried by the resistance to move away from pursuing inflation targeting bluntly and not expanding a differential approach of various interventions which amongst others are not just obsessed with low inflation rate whilst unemployment and inequality remains excessively high.
The Minister has correctly pointed out to there will be global inflationary pressures as a result of soaring oil and food prices and that some of the pressures exerted on our currency have been reversed since December last year. We welcome the Ministers commitment that government will continue to explore the possibility of imposing a tax on capital inflows and outflows, especially the outflows. Whilst speculative capital is no longer flowing in and out of the country as rapidly as it was in the recent past, the SACP strongly believes that taxing capital inflows and outflows to discourage rapid inflows and outflows is a desirable policy option. We have clearly missed the boat on this front but going forward this must be strongly considered.
The SACP further welcomes the announcements on the funding of the implementation of IPAP2. We also welcome the announcement in so far as the setting up of the Development Finance Institutions Council. In order to realign the mandate of the DFI’s to our developmental goals and objectives the SACP reiterates its call for a Financial Sector Summit, which includes both the private financial institution and public finance institutions to discuss this critical issue of financing development.
The SACP celebrates as one of the outcomes of our Financial Sector Transformation Campaign the announcement made by the Minister that it is now time “put in place measures that will ensure that banking charges are fairly set, are transparent and do not create undue hardship”. For far too long the private banks have been allowed to run away with murder and unfairly milk money from our people through a complex banking charges structures.
In order to achieve our developmental goals and to make progress in the improvement of the lives of our people in the priority areas we have all agreed to, mass mobilisation remains very critical. The SACP will continue to mobilise the working class and the poor for the achievement of the positives mentioned in the budget and the implementation of our proposals.
Issued by the SACP
Contact:
Malesela Maleka
SACP Spokesperson – 082 226 1802