26 June 2009
We need a collective effort to minimise the impact of the current global economic crisis, and the workers and the poor must not be the ones who pay for this
Speaker, Cde President of the Republic, honourable members and comrades, let me welcome the opportunity to participate in this important President’s budget vote.
Today I would like to address an important matter that the President has consistently and correctly raised: how to minimise the impact of the current global economic crisis on the most vulnerable.
Our main message today should be that the workers and the poor of our country are not responsible for this crisis, so they should not pay for it!
In order to appreciate the enormity of the challenges at hand, we must properly understand the genesis of the current economic crisis. Its genesis is two-fold. Firstly, crises are no accidents but are inherent in the capitalist system itself as it is, by its very nature a system sustained through the exploitation of a global impoverished majority by an increasingly globalised privileged minority, its unsustainable levels of consumption, the enormous ecological damage it inflicts on our environment as a result of its insatiable pursuit of private profit, and the accompanying cycles of overproduction and under-consumption.
The most immediate genesis of the crisis was the unregulated financial markets in the US and crass capitalism that sought to extract maximum returns from those who could least afford, starting in the sub-prime housing market. The burden and suffering have disproportionately fallen on the workers and the poor, with millions of job losses across the world. This constitutes an incontrovertible proof that contemporary neo-liberal approaches to the global economy have failed.
Our entry point in dealing with this crisis must be the "Framework for South Africa`s Response to the International Economic Crisis", collectively agreed to by the NEDLAC social partners of Government, Labour, Communities and Business. This document correctly argues that "low income workers, the unemployed and the vulnerable groups can lose much through even a relatively brief economic shock... and destabilise their welfare, including their jobs, health and education, and to increase inequality and poverty, and that our first concern must be to avoid these outcomes."
We must indeed be very proud of the fact that we are just about the only country in the world that adopted a collective approach to this crisis. Parliament has a crucial oversight role to ensure that indeed this Agreement is implemented.
The Framework agreement also differs from most responses in other parts of the world in that it is anchored around a state-led, multi-billion rand investment into infrastructure, including expanded public works programmes. The significance of this strategy is three-fold. Firstly, it is not a bail-out driven strategy, necessary as bail outs may be. Secondly, it rests on a job-creating strategy, including skills training. Thirdly, it underlines that state owned enterprises are vital in our economic development agenda, now and into the future. These are all key elements of an integrated industrial strategy.
The Framework further commits to "Protecting and expanding decent work is at the core of our programmes... The conditions of the poor and the vulnerable have to be addressed directly, through employment creation programmes, promoting sustainable livelihoods, public investment, and effective social relief and support".
South Africa has now entered its first post-apartheid recession. The global economic situation presents for South Africa both constraints and opportunities. It is for this reason that we need both defensive and offensive strategies in response to the crisis. These require a bold vision, not dictated to by the intellectual and policy bankruptcy of the very same forces that brought about this crisis.
The best way to protect the vulnerable is to keep workers’s jobs andcreate new ones. The Framework Agreement commits us to minimising retrenchments, to retraining and reskilling instead of retrenching and to using state procurement, investment in public infrastructure and expanded public works programmes to create much-needed new employment, including accelerated rural development. The integration of education and training, including the impending transfer of the SETAs into the Higher Education and Training Department will greatly facilitate our education, training and skills development efforts. Government is committed to moving with greater speed in the implementation of all these measures.
Government is also committed to accelerating essential social transfers, including increasing access to free basic services such as water and electricity, to the poor. Government will also progressively and steadily, starting in 2009, extend the Child Support Grant to age 18, as captured in the Framework Agreement.
An even bigger effort is called for on the part of public sector workers to ensure that all social assistance programmes by government are vigorously and timeously delivered. The progressive sections of the organised working class will of course understand that this as a call to revolutionary duty, to deepen and defend our democracy.
The Framework Agreement also emphasises the important role that co-operatives can play in absorbing the unemployed and the poor into sustainable means of livelihoods; and therefore need proper support and regulation. Increased effort is therefore required to ensure that a national co-operatives strategy is implemented, adequately resourced and appropriately regulated.
This brings me to my final point – the role of our own private financial sector in minimising the impact of the economic crisis.
Worryingly, we hear that the most vulnerable workers are prematurely taking retrenchment packages; banks are repossessing 6 000 cars and 4 000 houses a month, with auctioning of properties, many of them in townships. The National Credit Regulator has received over 80 000 applications for debt counselling, and continues to receive them at a rate of 7 500 per month. Sixty percent of those include debts for mortgage bonds from banks averaging R500 000, meaning that R16bn in mortgages is affected by debt counselling, yet the banks are obstructing the debt counselling process, thus forcing the National Credit Regulator to go to court to seek a declaratory order to restructure these debts, as banks are refusing to co-operate. Banks should engage in the Financial Sector Charter Council to discuss concrete ways to shield consumers from losing their homes and other possessions.
Most consumers are in trouble because of credit extended during the wave of reckless lending by banks immediately before the National Credit Act was passed in 2007. The Governor of the Reserve Bank has recently and correctly expressed his frustration at the high interest rates charged by all our banks. The Competition Commission has found that bank charges in South Africa are excessively high, with no competition amongst banks.
It was the private financial institutions that got us into the financial mess we are in, and it is therefore important that we closely examine how our own banks are conducting themselves in this period of deep economic crisis. The private insurance and pension funds need to be brought into the development of a comprehensive social security system.
Credit bureau blacklisting is proceeding as if we do not appreciate the economic crisis. Should we not be having a national debate on the need for a moratorium on blacklisting of those directly affected by the recession?
Only if all of us collectively and positively respond to this crisis shall we minimise its impact on the workers and the poor our country.