Thursday, February 22, 2018

COSATU Really Disappointed by Government’s Underwhelming 2018/9 Budget
21 February 2018

COSATU is disappointed by the government’s underwhelming 2018/9 budget as presented by the Minister of Finance Malusi Gigaba in Parliament today. The budget was supposed to put flesh, set targets and time frames in support of the vision articulated by SONA but it failed. It offered no concrete strategies to help us create alternatives to the neoliberal development strategy that has left many workers and poor people mired in poverty. We are not going to succeed in developing an alternative production system that is based on domestic demand and human needs with this budget.

We enthusiastically welcomed the vision and plan outlined in the State of the Nation address by President Ramaphosa last week but it’s obvious that he sold us a dummy and the whole vision was nothing but a false prospectus. While the President was emphatic on the need for government to kick-start the economy, create jobs to absorb the millions of unemployed and to tackle the scourge of corruption and state capture that; the budget is deafeningly silent on how is that going to be achieved.

Unfortunately, this is another disappointing occasion, where government has failed to rise to the occasion and come with a serious plan and budget to address the nation’s many crises. This budget bares little correlation with the SONA and it is another missed opportunity.

COSATU has continued to argue that we need to move towards a people driven and people centred development since the Neoliberal policies of the last two decades that have leaned on “market forces” have seen more people sliding into poverty

We need an alternative development strategy because pursuing economic growth for its own sake is not enough. Economic growth is only a means to an end and in itself; it is not enough to solve the triple crisis of unemployment, deepening poverty and inequality.

What matters to us as the workers is the quality of growth and not necessarily the quantity. We have experienced jobless growth before that increased inequality and poverty and also introduced technology in the workplace without caring about the plight of the workers at the same time ignoring and undermining our cultural identities.

We want growth that will optimally harness our resources and increase absorption of the labour force into productive employment and income generating activities. This budget is not going to help improve the social welfare of the majority let alone promote a programme of transformation by the state. We have been calling for a politically governed redistribution of wealth and opportunities from the formal to the non formal sectors of the economy to no avail. This budget is a clear signal that nothing has changed

Our budget is still very much biased towards the formal economy and it says very little about the survivalist informal economy that carries many of our poor citizens.

We wanted to hear about bold transformation measures and not marginal programmes that will not change anything. We have heard many of these false promises before and we are not going to fall for the aesthetics but we want real changes to the way the economy is managed. The state must take the lead to transform the legacy of underdevelopment and we want a developmental state to implement a developmental agenda.

This takes us back to the fact that the NDP is not a developmental vision and therefore we cannot have a comprehensive development strategy based on the NDP.


South Africa is in the midst of an economic crisis where one out of three workers is unemployed, where thousands of jobs have been lost across economic sectors. Yet government clearly has no plan to arrest the growing levels of unemployment. COSATU welcomed the President’s commitment to host the long promised jobs and investment summits, however job creation cannot wait until then. The President correctly said we need to have a plan to create jobs for every sector of the economy. Yet the budget only highlights job creation targets for a handful of departments. It appears only the Departments of Trade and Industry; Economic Development; Agriculture, Forestry and Fisheries; Rural Development and Land Reform; and Water and Sanitation have any job creation targets. Perhaps symbolically, the department charged with the re-industrialisation of the economy, DTI, is allocated a tiny budget of R9 billion. This is equivalent to the budget allocated to politician’s bodyguards, arts and culture and sport and recreation. The budget is silent on how we will move from jobless 1% economic growth to labour absorbing 3% economic growth.


The President was bold on the need to crush corruption and we have been told that the Hawks have identified R50 billion in stolen assets. The Auditor General has also confirmed that R64 billion was wasted last year, yet the budget is largely silent on what government will do to stop this. The budget speaks of holding officials to account for delays in payments to service providers but does not say how it will recover the stolen funds and plug the holes of wasteful expenditure. Unless we deal with these crises, we will not make any progress in stabilising state finances and ensuring service delivery to a struggling public.


COSATU might be sympathetic with government on the need to stabilise and fix its budget crisis but we are deeply disappointed that it is doing this upon the backs of the struggling working and middle classes.

Government’s response to its budget problems is to take money from workers through VAT and below inflation income tax bracket hikes. This will hurt workers and their families by taking money from their pockets and making basic food and other living expenses more expensive.

Whilst government has been bold in taxing workers, it has avoided increasing taxes on the rich, company tax or significantly increasing luxury goods and imports taxes. What we have is a situation where politicians and their friends have looted the state and now nurses, teachers, police officers and other lowly paid workers are forced to now foot the bill.

We are left with no other conclusion except that this government does not have a plan to deal with its long term debt and expenditure targets but it will be gunning for the workers , while pursuing the same policies that have created the haves and the have nots.

At the heart of our revenue shortfall is the capture of the leadership of SARS by criminal elements and tax dodgers. Whilst COSATU welcomes the planned commission of enquiry into the crisis in SARS leadership, some things cannot wait. A change to the leadership of SARS must happen immediately; otherwise we will be faced with another revenue shortfall in October.


Whilst government is seeking to balance the budget within a difficult environment, expenditure cuts are hitting workers hard. Public service posts have been cut by 3% over the past two years and nurses and doctors are battling to cope. The police head count will be cut whilst crime is rising alarmingly and the teachers are faced with rising learner ratios, often at levels of 60 to 100 learners in a class.

Whilst government is squeezing hard working public servants, we have seen a rise in bling expenditure by politicians and no freeze on top management posts in departments and state owned enterprises. Whilst SAPS is forced to tighten its belts, we have seen a bloated Presidency , including the Department of Planning and Monitoring.

There is no sense from this budget on how wasteful expenditure will be curbed, in particular on traveling, advertisements and use of consultants. It fails to acknowledge the fact that the state has been looted by the rise of tenderpreneurs.

With a government pleading poverty and cutting critical posts, it is hypocritical that numerous departments plan to spend billions on building and refurbishing their head offices and DIRCO plans to spend R2 billion on embassy properties.

State Owned Enterprises

The President had a lot to say on the need to clean up the mess at our SOEs but the budget is very vague and timid on this matter of highest importance. We have seen initial moves to clean up Eskom and the SABC, yet we do not get a sense that there is a plan to deal with the mass looting at Prasa, Denel, Transnet, SASSA and SAA.

COSATU is adamant that we will not be able to clean up and save our SOEs without them being subject to comprehensive forensic audits. This must include the life style audits of politicians, senior government and SOE executives and business leaders as called for by the President in Parliament yesterday. Arrests, asset seizures and prosecutions must happen otherwise there will be no deterrence and looting will remain the core function of the leadership of the SOEs. The end result will be the collapse of the SOEs, tariff hikes fleeced upon the poor and mass retrenchment of workers. The President must intervene to stop the planned retrenchment of 900 workers at Prasa as stated in the budget.

It is alarming to note that government is silent on its plans to grow the Post Bank. COSATU appreciates the increased funds for the Post Office, however this must include a commitment not to retrench postal workers.


COSATU is hopeful that the President will engage the Alliance on how to slash our bloated cabinet immediately and clean out the dead and captured wood bedeviling government’s progress. We look forward to that dialogue on how departments can be merged and consolidated in ways that will save money and protect jobs.

DTI, EDD, SMME and Science and Technology Departments

It is long overdue that these economic departments be reintegrated. Their fragmentation has weakened government’s economic programmes and duplicated and wasted badly needed funds. In the build up to the Presidential jobs summit, government needs to engage business and labour on how these departments should be better geared towards re-industrialising the economy, boosting manufacturing and exports. They need to be aligned better towards supporting job intensive sectors ,where South Africa has natural advantages and opportunities e.g. agriculture, tourism, energy, water, transport, automotive, electronics, forestry etc.

Mineral Resources

COSATU welcomes government’s willingness to engage business and labour about how to save and grow the sector. This needs to include an end to retrenchments, a plan to provide decent housing and a plan to reduce fatalities and accidents.


COSATU welcomes the DOL’s planned increase in labour work place inspections and reduction in fatalities on duty. However its targets are woefully inadequate. A 10% reduction in work place injuries in the context of daily deaths and injuries on our mines is shamefully insensitive. Again DOL needs to be adequately resourced and equipped with more labour inspectors. More needs to be done to modernise the UIF and DOL offices and to speed up the turnaround time on the processing of claims.


We welcome the pledge to fastrack the National Health Insurance and the news that Medical aid tax rebates will be reduced by R700 million andthis will be shifted to the NHI. Unfortunately the budget , yet again is silent on what this means in practical terms. There is a real danger that these medical aid rebates will be used to plug holes in the department and workers will receive little benefits in exchange. COSATU does strongly welcome the plan to refurbish all health clinics but we still want to see more being done to fix and poperly resource all public hospitals.


COSATU congratulates government on its massive increases in funding for tertiary students. This is a huge achievement and a first step towards free and affordable tertiary education for the working and middle class. However, the missing middle will still largely be left out of this. This means that more medium and long term planning and sustainable funding is needed to ensure free and affordable education. We have difficulty taking serious government’s targets to eradicate mud schools and ensure all schools have decent sanitation and infrastructure, when year after year it fails to meet its targets. The past year government did not meet 50% of its school infrastructure targets. All reports so far point to the fact that school building projects are sites of looting by tenderpreneurs with little action by government.

Social Development

The federation has no faith in the intransigent leadership of the Department of Social Development and SASSA. The budget also said very little about how social grants payments will be transferred to the Post Office and Bank. The Presidency and Treasury need to take over the transfer of this function to the Post Office because pensioners cannot continue to be political footballs.

Agriculture, Forestry and Fisheries; and Rural Development and Land Reform

The time has arrived for all these departments were reintegrated because their split never made sense anyway. We do welcome government’s agricultural, forestry, aquaculture and fishing job creation targets. We welcome the land reform and emerging farmer targets. However the budget is thin on how these progressive targets will be achieved. We do not believe these departments have been adequately resourced to meet these critical objectives.

Water and Sanitation, and Environmental Affairs

South Africa is number 30 amongst the water scarce countries in the world and the three Cape Provinces are already facing a water crisis, as are parts of the Free State, KZN, Gauteng and Mpumalanga. Yet this department failed to meet the majority of its targets last year but continued to mismanage funds. The President committed government to providing leadership to the water crisis but there is no plan to conserve, recycle and desalinate water at a national, provincial or local level. The budget merely says that the Department and the City of Cape Town must talk to each other! Government; nationally, provincially and locally; is abandoning its constitutional duty to guarantee water to its people. The President must intervene in this ticking time bomb. We are pleased though that the Department for Environmental Affairs takes job creation as a matter of importance. However more needs to be done to clean our townships, informal areas, rivers, oceans etc.


We are alarmed by a lack of coherent leadership or plans in the energy sector. Corruption has caused havoc at Eskom and coal workers are being threatened with retrenchments. Electricity tariff hikes are far above inflation and the Minister is still deluding himself by pursuing a nuclear expansion that we cannot afford. We need a serious plan to manages our energy evolution and we need to once again export electricity to the rest of Africa. Eskom needs to become a leader of renewable energy production and workers must be re-skilled and absorbed as the sector evolves. We want government to ensure that solar panels are made locally.

Justice, Correctional, Police and Intelligence Services

It is deeply alarming to note the planned cuts in SAPS personnel, whilst we are battling increases in all types of crimes. This needs to stop; it does not make sense. We are concerned that the budget does not go far enough to address the backlogs in our courts. Workers wait still for 2 years to have their cases heard in the labour courts. We also do not understand how government hopes to rehabilitate prisoners when only 5% of them will be offered training etc. at any time. We welcomes the inclusion of the SSA’s budget figures, however given the corruption allegations at the SSA, more information must be provided to the public on what it spends tax payers’ money on.

Public Works and Provincial and Local Government, and Human Settlements

COSATU is deeply worried about how permanent government and municipal jobs are being outsourced as cheap labour through the expanded public and community works programmes. They are now being used to perform permanent government jobs e.g. cleaning streets, municipal police, electricity provision etc. This must stop and government must adequately fund municipalities and eliminate wasteful expenditure and corruption in these municipalities instead of treating workers as glorified slaves. We applaud the budget’s housing targets but we are equally worried on its silence on when will all informal areas be replaced by formal housing.


We are dismayed that government still has no public transport plan and no plan to intervene at Prasa. There is no plan to address the crises at Metro Rail and there is still this silly and denialist belief that E Tolls remain part of the future for both Gauteng and numerous other roads.

Overall this budget has been very underwhelming and disappointing for us as the workers. It also proved that the ANC government is yet to be rehabilitated from its addiction to Neoliberal policies and the ANC itself has not recovered its lost fortitude that will allow it to ensure that its National Treasury is familiar with its policies. We shall be convening our three day Central Executive Committee meeting next week to engage on it and plot our way forward.

Issued by COSATU
Sizwe Pamla (Cosatu National Spokesperson)

Tel: 011 339 4911
Fax: 011 339 5080
Cell: 060 975 6794

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