ESSET Comments on the 2012/3 Budget

Thursday, 23 February, 2012 - 17:06

The Ecumenical Service for Socio-Economic Transformation, an independent ecumenical organisation that works for social and economic justice, welcomes Minister of Finance, Pravin Gordhan’s melded and promising Budget speech

The Ecumenical Service for Socio-Economic Transformation (ESSET), an independent ecumenical organisation that works for social and economic justice, welcomes Minister of Finance, Pravin Gordhan’s melded and promising Budget speech.

We welcome the emphasis placed by the Minister on infrastructure development, which will be used towards generating the much needed skills and boost job creation in the country. In this regard, the Minister mentioned 43 major infrastructure projects, amounting to R3.2 trillion in expenditure. Infrastructure development is considered by government as one of its major drivers towards job creation.

ESSET welcomes this initiative with caution as we believe such an initiative is unlikely to bring any shift in fighting poverty and inequality in the lives of many ordinary citizens, especially the youth and the unskilled poor in rural and urban parts of our country. Infrastructure development is only a temporary measure that fails to confront the systematic problems that feed inequality in the country. Although statistics show a small fall in the number of unemployed people in the second half of 2011, the levels of unemployment are still inexcusable. Currently, it is stated that the national employment average stands at 43 percent, with males averaging 51 percent of those employed and females at 37 percent (Statistics South Africa 2011).

It must be said that further analysis of employment would also show that the majority of those employed, especially women, are in lower paying, contract jobs that do not have protection of worker rights. While the government encourages entrepreneurship, the majority of poor people such as informal traders remain excluded from the benefits of our economy. Informal traders often complain that the pronouncements made by government towards small businesses are only a token that fail to reach them. Despite their entrepreneurial spirit, they are usually shun at; not recognised and deprived of every opportunity to make an honest living. Majority of people in the informal trade sector are women, whom some are breadwinners or single parents trying to fend for their families.  

ESSET is also concerned that despite the massive investments made by government towards infrastructure development, state resources are often used to preserve an institutional framework that protects and promotes the interests of big business at the expense of the majority of poor people. Often money is used to award tenders to big businesses who in turn exploit the poor labour force. If unchecked, South Africa is reaching a point beyond which it may be very difficult to inverse corruption in the public sector”. For far too long now the government procurement processes have been characterised by rampant corruption, bribery, abuse of state in improper awarding of tenders by coffers by public office bearers and senior executives’ in institutions of government is one of the serious concerns.

ESSET is disenchanted that the Minister is still hell-bent on coercing the public to pay R550 burden of funding the e-toll system in Gauteng. This will automatically lead to hike in transport costs, which will further have agonising consequences on poor people and small businesses such as informal traders.  We however welcome the move by the Minister to heed to President’s call to address lack of capacity, better project management and ensuring flawless procurement processes to safeguard the hard earned taxpayers money, avoid improper excessive spending, instil culture of financial discipline and ultimately ensure that government get value for money from any service provider contracted to render a service. It is a well-known fact that in the past, sensible promises were made but never see the light of the day but we hope the Minister will do everything possible to ensure accountability of state resources and taxpayers money.

We have noted the Minister’s consistency in tax relief throughout the years, especially towards taxpayers in low-income brackets, small business and micro-enterprises. We also welcome the move to effectively increased capital gains tax rates to 13.3 percent for wealthy individuals, 18.6 percent for companies, and 26.7 percent for trusts, effective from 1 March 2012. ESSET, however, believes that wealth taxes are only a means to address symptoms of our sick economic system that continues to produce inequality between the rich and the poor. The real challenge for South Africa is its discriminatory economic system, where the creation of wealth for some is related directly and indirectly to the increase in poverty for others.

We are worried that every year there is under spending by various institutions of government and municipalities mainly because of lack of capacity. This is despite the fact that many communities especially in townships and rural areas are without basic services. We are disappointed at yet another increase on electricity and fuel this year. If government was able to budget for infrastructure development why was it difficult to also budget for the ever increment on electricity and fuel prices.

We hope there will be political will and capacity to ensure that all the noble commitments and promised made by the Minister and the President came to be realised. In the past, sensible policy pronouncements and promises made in the budget speeches were not followed through. Maladministration, corruption, fraud, political interference, bureaucratic chaos and incapacity of public personnel were often allowed to encumber the implementation and thus delay the rights of the poor to be recognised. We urge government to support the poor by making their budget more pro-poor, so as to enable the poor to access their every daily bread.

Thabo Koole
Communication and Media Co-ordinator
Ecumenical Service for Socio-Economic Transformation.

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