People's Budget Coalition expectations

People's Budget Coalition Expectation statement for the 2008-2009 Budget

19-02-08

Peoples Budget Coalition Expectations statement for the 2008-2009 Budget

The Peoples Budget Coalition (PBC) is a civil society campaign that brings together COSATU, SANGOCO and the SACC around budget and development issues. The coalition released its proposals for the 2008-2009 budget last year and will analyse the budget to be tabled by the Minister of Finance from that perspective. The primary concern of the coalition is how the budget is used to reduce poverty and unemployment so as to build an inclusive society. We are deeply concerned about the high levels of poverty, unemployment and inequality in wealth and opportunities. South Africa's is a deeply divided society along racial, gender and class lines. Inequality is further entrenching these divisions by create a two-tier society.

We take our cue from President Mbeki and the ANC Conference in highlighting the importance of accelerating transformation and unleashing a 'war on poverty'. President Mbeki has declared this period as 'business unusual' and the litmus test is now on the budget to indicate whether the state will target the right programmes, spend better and increase expenditure on key areas of concern.

We welcome pronouncements by the President that the Child Support Grant will be increased to 18 years and that government is developing a comprehensive anti-poverty strategy and the identification of poor households for support by the state. Important as these measures are they still fall far short of some of the expectations of the PBC.

In broad terms, the PBC proposals under the theme 'Spend More, spend better, and on the right programme'[1] encompasses anti poverty proposals; social development and investment in human capabilities; diversification of energy sources and proposals on economic development strategy including infrastructure, transport and job creation. The PBC also tabled proposals for revenue aimed at increasing resources to finance the development package. We expect the budget to unveil a bold allocation to poverty reduction; economic development and increasing progressivity of the tax system and the following:

Social Protection: the PBC reiterates its call for the introduction of a Basic Income Grant to be given to all South Africans. In this vein we expect the Minister to table concrete proposals on increasing the age for the child support grant to 18 years. In addition the PBC expect the Minister to increase social grants above inflation considering the high cost of food. While we remain opposed to the means test, we believe it has to be adjusted for inflation. Government currently provides free basic water and electricity and it is our expectation that the amount be increased from the current 6kl for water and 50kWh for electricity. We also expect finalisation of the discussion on a comprehensive social security system in the next financial year.

Economic Development: government unveiled an industrial policy framework and action plan towards the end of last year. In this respect we expect budget allocations for economic development to increase to give effect to the industrialisation strategy. Linked to this are the job creation programmes; investment in human capital; and infrastructure including public transport. Rural development has lagged behind and the PBC expect to see an increase in the land redistribution budget to provide land and post settlement support for poor black farmers.

Social Development: many studies show that investment in education and health care are not only important for human development but directly contribute to the productivity of society. In this regard the PBC is calling for increased investment in education to ensure access for poor children and to rebuild the education infrastructure. We further expect the Minister to table proposal to transform the current health care system through the introduction of National Health Insurance and a needs-based budget for health care.

Energy: South Africa woke to an energy crunch this year, highlighting years of declining investment, neglect and the surge of energy demand. Going forward, South Africa not only has to increase the number of coal-fired power stations but also has to diversify its energy sources. In this regard, the PBC calls for substantial investment in renewable energy and the abandonment of the Pebble-Bed Modular reactor. We urge ESKOM and government to work with civil society more in mobilising our country to confront the energy crisis. Having said this we caution that the pressures facing South Africa should not lead to privatisation of energy; job losses; rising prices for poor households; discontinuation of mass electrification and free basic electricity.

On revenue: the PBC expect the Minister to lower the rate of VAT to 13% and to introduce a dual-VAT and increase the list of zero-rated basic items such as electricity. The VAT is a regressive tax the affect the poor who spend a large portion of their income on food. While the PBC is mindful of difficulties of deficit-financing we however believe that government must increase the deficit by modest amount to increase resources that can be directed towards social and economic development. In this regard, the PBC questions the wisdom of planning for surplus in the midst of poverty, inequality and unemployment.

The PBC will issue a full statement reacting to the budget tabled by the Minister after the budget speech. Furthermore we will launch proposals for the 2009-2010 financial year on Thursday (21 February 2008 at 12:00).

Issued by the Peoples Budget Coalition, 19 February 2008

Contacts:

COSATU
Patrick Craven 082 821 7456 or patrick@cosatu.org.za

SANGOCO
Jacob Molapisi 083 669 4561

SACC
Keith Vermeulen 082 523 0701 or 021 423 2461; Sakina Mohammed sino@sacc.org.za

NALEDI
Oupa Bodibe 082 563 6970 or oupa@naledi.org.za