Solly Phetoe is the Secretary General of COSATU. Picture: Doctor Ngcobo / Independent Newspapers.
By Solly Phetoe
Workers have a lot riding on the Medium-Term Budget Policy Statement due to be tabled by the Minister for Finance, Mr. Enoch Godongwana, at Parliament on 30 October.
It is no exaggeration to say workers are under siege in an economy barely growing at 1%, a 42.6% general and 70% youth unemployment rates, retrenchments across sectors, rising costs of living and increasing levels of indebtedness.
Workers expect government, that they fund with their taxes, to take decisive steps to grow the economy, rebuild public and municipal services, tackle crime and corruption, and provide relief to the poor and working class.
Tragically Treasury has presented Budgets that would make sense in a well-off country with few pressing issues besides a debt to GDP ratio.
Whilst no sober person denies the need to set the debt on a sustainable path, the Treasury fixation of tackling the debt at all costs at the cost of addressing the fundamental cause of our crises, namely a stagnant economy, embattled State-Owned Enterprises as well as public services and municipalities, rising levels of unemployment and poverty, endemic crime and corruption; is a path to further economic decline.
Delusions that cutting expenditure will somehow miraculously fix the state, spur the economy and create jobs are a formula Treasury has doggedly pursued for years with little to show for it. The crisis is a growth and revenue crisis, not an expenditure crisis. No amount of cost cutting will change that.
It is something far more successful economies have long learned from and abandoned. This is something that even the IMF and World Bank have warned about. In fact, they have recently sounded the alarms on the dangers of brutal austerity budget cuts.
Vladimir Lenin aptly asked "What is to be done?" COSATU and many other progressive formations have long called for government to take an aggressive stance and utilise the full powers of the Budget to stimulate the economy and set it on a path towards inclusive growth.
It's critical government use the MTBPS to undertake the following high impact interventions: Ramp up stimulus for the economy, ranging from measures to ensure the infrastructure allocations for Eskom, Transnet, Metro Rail and municipalities are spent, to drastically increasing funding for industrial financing and export incentives.
This should be accompanied by more affordable and accessible credit for SMMEs.
Additional support for Eskom, Transnet and Metro Rail, to ensure the economy has reliable and affordable electricity; that our mining, manufacturing and agricultural products can reach their markets quickly; and commuters arrive at their destination timeously.
The revival of Eskom has shown that our once thriving SOEs can be fixed. Similar support is needed for other struggling SOEs and entities that can once again playing a positive role in their sectors, e.g. the SABC, Post Office and Postbank.
Politicians have for many years embarked upon a dangerous call to slash the public service, arguing incorrectly that it is bloated and its' wage bill out of control.
Yet now that opposition parties have been entrusted with positions of responsibility in Cabinet, they are seeing the real picture, e.g. how can Home Affairs with only 40% of its positions filled be expected to meet 100% of its targets? Successive budget cuts have seen the number of frontline service posts, e.g. nurses, doctors and police officers left unfilled rise dangerously high and the wage bill plummet from 35% to 31% of the budget.
The risks of continuing on the path of choking the public service is to accelerate the brain drain of badly needed skilled personnel to far better paying and less stressful jobs in the private sector and overseas.
The recent shock of the Western Cape Provincial Government's plans to retrench over 2 000 teachers points to the need for an urgent shift in approach to funding the state's core functions.
If we all accept the basic principles that a skilled workforce is key to growing the economy, then we must oppose cuts that reduce the number of teachers and increase learner teacher ratio. The remarkable turnaround at SARS shows the value of investing in public and municipal services.
Appoint competent management, remove corrupt elements, fill critical vacancies and invest in infrastructure and capacity and society will benefit from world-class services that boost workplace productivity and economic growth. Urgent interventions are needed to stabilise and rebuild local government which has been showing alarming signs of deterioration over the past decade.
The inability of municipalities to provide basic services, e.g. water, sanitation, roads and electricity; has seen companies close in rural towns, retrenching workers and plunging impoverished communities deeper into poverty. Whilst these key interventions will set the economy on the path to recovery, relief must be maintained and extended for the poor and unemployed whilst work is done to slash the untenable rates of unemployment.
Despite rising levels of unemployment and poverty, Treasury has bizarrely slashed the Presidential Employment Stimulus (PES) that has provided an important path to employment for young people as well as the SRD Grant that has been an invaluable lifeline for 8 million unemployed persons.
The dire circumstances facing the unemployed demand that the PES be ramped up to help at least 2 million young people enter the labour market and the SRD grant be raised to the food poverty line and its recipients linked to skills and employment opportunities.
Funds like the Unemployment Insurance Fund should be aggressively roped into support such initiatives. Unlocking the economy will help generate the revenue needed to fund these. More immediately, providing SARS with the funds it needs to increase tax compliance by the 36% of tax payers dodging paying the fiscus what it is due, will generate the state the funds it needs to provide society and the economy with the public services they require.
What is needed is an MTBPS that responds decisively to the challenges the economy has been saddled with all too long. What we cannot afford is a business-as-usual approach.
Solly Phetoe is the Secretary General of COSATU.
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