26 February 2020
The South African Communist Party (SACP) notes the budget statement delivered by Minister of Finance Tito Mboweni in Parliament on Wednesday, 26 February.
In its discussion document titled ‘Going to the root’, released in 2014, the SACP points to the problem of insufficient or lack of radical structural transformation of the South African economy post-1994 as a result of the rise to dominance of the neoliberal 1996 GEAR class project.
As the Party further states in its September 2019 response to the August 2019 National Treasury paper, titled ‘…an economic Strategy for South Africa’:
The post-1994 problem of insufficient or lack of radical structural transformation to develop our economy towards its full potential and rid it of colonial features, coupled with the persistent aftermath of the global economic crisis that broke out in 2008, underpin the stagnantly low growth reality in which South Africa finds itself.
The stagnantly low growth reality, in which the budget was developed, is therefore a direct result of a combination of exogenous and endogenous factors, including weaknesses in policy choices and trajectory followed over the years – resulting in embedded incapacity to overcome the structurally high levels of inequality, unemployment, poverty and consequent social reproduction crisis.
Corporate state capture, other forms of corruption and the consequent governance decay worsened the problem of our national economy.
South Africa needs increased investment in the economy, particularly the productive sector, to create employment and tackle poverty – based on development oriented poverty reduction programmes and adequate social protection towards a comprehensive social security system.
Similarly, state-led interventions directly aimed at reducing inequality are required. It is a fact that many South Africans who are employed are trapped in low wage employment and fall in the category of the working poor. This means that poverty in South Africa is not limited to the unemployed. Inequality, too, is not limited to income inequality. It includes wealth inequality. This problem also requires direct policy measures to address.
Sadly, the total reduction in consolidated government spending in 2020/2021, attributed in the budget speech as being ‘mainly the result of lowering programme baselines and the wage bill by R261 billion’, contains an offensive on the workers and the poor. The attack is a source of a serious national conflict in a society where the unemployed population numbers approximately 10.4 million active and discouraged work-seekers.
In addition, the state has entered into a binding public sector multi-year collective bargaining agreement with trade unions representing the affected workers. In the same vein, there are collective bargaining agreements covering workers in other affected state entities. These agreements must be upheld. The rights of the workers must be respected.
The SACP will scrutinise the National Treasury’s ‘Budget Review 2020’ for further details and engagement in the interest of the workers and the poor.
The SACP reiterates its December 2019 Special National Congress declaration. Our Party’s stance against neoliberal austerity is also a strong stance against recklessness in the management of our national resources. The SACP is therefore calling for decisive action to deal a blow to irregular, wasteful and fruitless spending in the entire state organisation – and at all levels.
There must also be accountability on underspending, especially when the people are in need of state services and state-led development.
It is correctly noted in the budget speech that ‘8.2 million young people between the ages of 15 and 34 are not in education, employment or training’. While sounding progressive, the 175 000 permanent jobs, 59 000 temporary jobs and 21 000 internships created from the Jobs Fund projects are a drop in the ocean in relation to the magnitude of the crisis.
On another score, the SACP welcomes the allocation set aside for the establishment of the Sovereign Wealth Fund first announced by President Cyril Ramaphosa during the State of the Nation Address on 13 February.
The SACP further welcomes the allocation set aside for Eskom and SAA. However, real recapitalisation to turn around SAA is required, considering the fact that the allocation announced for the national airline is directed towards settling guaranteed debt and interest. The investment will be in line with the shared ANC and Alliance position that SAA must be turned around to serve as a national airline with thriving domestic, regional, continental and international routes.
All SAA contracts must forensically be scrutinised in the interest of its viability. This must include uprooting irregularity, wasteful and fruitless spending and corruption. The same measure must be implemented in all public entities.
South Africa needs a developmental state banking sector. As a starting point, the establishment of the state bank is also welcome. However, the bank must play a developmental role.
The SACP welcomes the fact that the National Treasury did not increase taxes against the workers and the poor, contrary to what conservative economists and institutions were advocating for.
The SACP notes the assertion in the budget speech: ‘A sound macroeconomic framework always lays the foundation for growth’. This is actually an indictment on the macroeconomic framework followed thus far, given the stagnantly low growth reality into which the South African economy is seemingly locked.
Correctly, the current electoral mandate of the ANC, as spelled out in its 2019 general election manifesto and its foreword by President Ramaphosa, is to align the macroeconomic framework to support the other commitments made in the manifesto and the objectives of the second radical phase of our democratic transition.
The manifesto was drafted by the ANC in consultation with the Alliance and other progressive forces, and was endorsed in the ballot by a decisive majority of the electorate through a democratic vote.
ISSUED BY THE SOUTH AFRICAN COMMUNIST PARTY
