People's Budget Coalitions Response to the Minister of Finance's Budget Speech 20 -02-07

 

Peoples Budget Coalition's response to the Minister of Finance's Budget Speech

A missed opportunity

The People's Budget Coalition - the SA Council of Churches, the SA NGO Coalition and the Congress of SA Trade Unions -believe that the Minister of Finance's budget speech was a missed opportunity.

Despite much rhetoric about all human life being of equal worth, and the unacceptable scourge of poverty and inequality, there was nothing in his speech to make significant inroads into the appalling levels of unemployment, poverty and hunger, which still blight our country. The wealthy business community that benefited most from the first 12 years of democracy will still get richer while the poor will see no real or significant improvement in their lives.

The real growth of 9% in the budget is welcomed but overall it falls short of addressing fundamentally the issues of unemployment, poverty and inequality. It is scandalous to present the fact that the country has a surplus in the midst of 40% unemployment, with between 40% - 50% of the population facing grinding and dehumanising poverty and with the highest inequalities in the world.

Many of the most important budget policies the PBC has argued for have not been realised in the budget proposals. The Minister's rhetoric should have been accompanied by real policy changes to improve the lives of the poor and the working class. The reality is that there no cuts in the VAT on basic food stuffs, no introduction of Basic Income Grant and no overall restructuring of the tax structure to ensure that the burden of tax is shifted more to those who can afford it.

There are however a number of important victories for the people, which the PBC has campaigned for over the years and thus welcome. We welcome the increases in spending on employment in public sector. We are clearly moving away from the previous years' neo liberal attacks on the public service and staff, to an acceptance of the central role the public servants play in the delivery of basic services. There is a clear commitment to increase the numbers of educators, health workers and security personnel with a view to improving service to the poor. This is well appreciated.

These include the increase in the number and pay of schoolteachers and support staff to schools. This will contribute to improve the quality of education but there was no commitment to universal access to free education for all primary and secondary school learners. The continued poor focus on early childhood education (ECD) continues to be a concern, as it is crucial to the development of kids in poor households.

The invitation for real public participation in determining the poverty line is welcomed, but the involvement of StatsSA must not relegate this to a mere technical exercise, and the PBC is on standby to participate meaningfully to really put hunger in retreat.

Despite these "victories" we continue to demand a budget that will address the historical and current levels of poverty and inequality. This means sustained and systematic structural changes to the way the economy works, redirecting it towards one that truly ensures that "human life has equal value."

The rate of job creation about which the minister boasted, will not halve unemployment by 2014. If we look at recent data, the jobs that are being created are in predominantly low-paid, casual forms of employment, and the 500 000 new jobs must be seen in the context on 300 000 new entrants into the labour market per year.

The increases in social grants are too small to eradicate the shocking levels of poverty and reduce inequality. Fiscal space has been squandered, and an opportunity missed to tackle an unemployment rate of 40%, using the broad definition.

While most of the announcements provide some relief for the employed and high-income households, government fails to use the budget as a tool to deal with the most vulnerable, unemployed and poverty stricken households. We are particularly angry that the Minister failed to even consider the Basic Income Grant to relieve the poverty of the many millions who do not qualify for the existing social grants.

We also regret that there was no cut in VAT, a very regressive tax.

We welcome the abolition of the tax on retirement funds, but this, and other tax cuts give nothing at all to the millions of low earners and the unemployed who pay no taxes.

The PBC is unhappy that the minister said nothing about its call for reform of the budget itself. Parliament is still unable to amend money bills despite a constitutional requirement that it have this power.

For further information, please contact:

COSATU: Patrick Craven 082 821 7456

SANGOGO: Hassen Lorgat 082 411 2946

SACC: Desmond Lesejane 084 581 6306