People’s Budget Coalition Expectations Statement on the 2012/3 Budget

Thursday, 23 February, 2012 - 11:24

South Africa continues to face a conundrum of challenges: high unemployment, stubborn poverty, increasing levels of inequality and poor service delivery. These challenges are not new but if we continue to pay lip service in dealing with these issues, then we are unlikely to see the significant social and economic transformation required in South Africa

Introduction

The People’s Budget Campaign (PBC) is a civil society coalition comprising of the Congress of South African Trade Unions (COSATU), the South African Council of Churches (SACC) and the South African Non-Governmental Organisation Coalition (SANGOCO). This coalition has for the past 12 years tabled proposals on the spending allocation and revenue collection of Government.

South Africa continues to face a conundrum of challenges: high unemployment, stubborn poverty, increasing levels of inequality and poor service delivery. These challenges are not new but if we continue to pay lip service in dealing with these issues, then we are unlikely see the significant social and economic transformation required in South Africa. Our failure to meet these challenges will simply remain a distant dream to the rural poor, young unemployed and countless families who struggle to meet basic food needs; access to basic and affordable services such as water and electricity; access to decent jobs and sustainable livelihoods.

The ongoing economic crisis in the euro-zone, which is comprised of some of South Africa’s major trading partners, will exacerbate these problems.

The 2012/13 National Budget is therefore an important tool in addressing these challenges and cushioning the South African economy from this crisis.

The PBC calls for a budget that is first and foremost pro-poor and supports fundamental changes to the structure of our economy, supports inclusive economic growth and the creation of decent work and supports policy changes that are much more redistributive in nature. Through these measures the PBC believes that continued prioritisation of the five (5) key policy areas to achieve better economic and social outcomes for workers and the poor will be an important step in the right direction.

Economic Policy

The PBC would like to see a budget that continues to see greater budget allocation that supports a number of progressive interventions in  government’s New Growth Path to address the structural challenges in the economy that militate against development and decent job creation. Industrial development supported through IPAP 2 should not only create the necessary incentives for investment but support a much more active state (using and creating the necessary State Owned Enterprises) in achieving these objectives.

Resource allocations must promote an inclusive economic growth strategy, reduce inequality of incomes and eliminate poverty and unemployment. This will require a much more diversified economy that supports the expansion of manufacturing, agriculture and agricultural processing, a green economy and a growing and supportive services sector.

However the PBC continues to note a few fundamental challenges that continue to hinder the implementation of those interventions in the New Growth Path. These include the inflation targeting policy and the overvalued exchange rate.

The PBC demands:

  • That employment and poverty eradication must become a critical part of the Reserve Banks overall mandate;
  • A stable and competitive exchange rate that can better promote the growth of local industries and make  their products competitive in global export markets, and drive up both skills development and employment;
  • Introduction of capital controls to prevent the volatility of the currency.

It is expected that the National Budget, including the medium term forecast will set in detail the President’s commitments spelt out in the State of the Nation Address. The PBC has always argued the importance of increasing our infrastructure allocations in meeting economic and social objectives. The State must continue to commit to increasing public sector investment. Achieving this will require significant budget allocation and political commitment. Infrastructure spend must ensure that it meets economic growth, developmental as well as social needs.

The ongoing economic and debt crisis in Europe is likely to impact on our export demand and investment. The PBC expects a continued emphasis on allocations to meeting the agreements elucidated in the NEDLAC agreement: “Framework For South Africa’s Response To The International Economic Crisis” This will require a steadfast commitment to a counter-cyclical fiscal policy approach that allows for increasing deficit spending to meet economic, social and other developmental challenges and stave off any second round recessionary prospects. Allocations must increase towards:

  • The National Jobs Initiative and ensuring expenditure targets are met;
  • Supporting a revised training lay-off scheme that improves support for workers during recessionary periods;
  • Support the interventions of the CCMA to avoid job losses.

The budget must be measured against the 5 key priorities identified in 2009.

Our macro-economic policy framework must provide a solid platform for delivery on our 5 key priority areas.  The PBC calls for a drastic shift from the current macro-economic framework. The PBC re-iterates its demands on the 5 key priority areas below.

Decent Jobs

The pledge to create decent jobs must remain a priority of government. Any deviation from this critical objective will perpetuate underemployment, poverty and inequality. Decent job creation must remain a central pillar of government programme to support employment creation. The National Jobs Initiative spelt out in the NFA pledged R10 billion over a three-year term and yet less than one-third has been spent.

The budget must commit towards the development of existing and new industries. The proposed one million green jobs will require budget resources to ensure that job targets in new industries are met and that effective monitoring mechanisms are in place in meeting these targets.

The PBC continues to raise doubts on any further exploration and budget allocation on the Youth Wage Subsidy. The focus on a one policy choice instead of an array of initiatives is problematic to say the least. COSATU General Secretary correctly argues that “the proposed youth wage subsidy is based on the assumption that the cause of unemployment is the high cost of labour and that jobs for young workers can be created by taxpayers subsidising firms to hire them at a lower cost. The clear danger is that employers will simple retrench an equal number of older workers and thus create no more jobs overall.”

Health

The continued support for the implementation of the NHI is a step in the right direction. The successful implementation of the NHI requires ongoing budget support in addressing key deficiencies in the public health care system. These include:

  • Improvement in management and skills in the running of health facilities;
  • Improvement in procurement of medication and other resources required to run health facilities;
  • Improvement in service delivery at the point of delivery for patients.

The PBC welcomes the initiative of creating a state-owned pharmaceutical company in order to support the roll out of more affordable ARV medication. The 2012-2013 budgets must ensure that this happens. This is expected to bring to an end the challenges of poor access to ARVs in a stop-start cycle that increases resistance to drugs and exacerbates problems in the health sector.

Education

Our Education system remains fraught with challenges!

Firstly, we remain appalled that after 17 years of democracy we continue to have learners taught in mud schools. This is a disgrace and requires immediate attention.

  • The PBC demands an immediate elimination of mud schools in the 2012/2013financial year

Secondly, budget allocations continue to fail in reducing teacher-learner ratios in the rural and township schools. Many rural and township schools continue to have higher learner -teacher ratios, lack well skilled and qualified teachers, sufficient resources and infrastructure support. In contrast former Model C Schools continue to operate as if the education system has never changed. Clearly we cannot continue on this road. The PBC suggests a significant review of the basic education road map in dealing with teacher re-deployment; teacher-learner ratios; resource allocation and the continued racial biasness in learner enrolments at schools.

The budget must continue to support teacher education and ongoing teacher professional development to address poor performance.  Undoubtedly this will improve throughput ratios of learners in the entire basic education pipe-line. This must include a greater focus on budgetary provisions for support of Maths and Science programmes at schools.

The PBC welcomes the announcement made by the President in the development of two new universities in Mpumalanga and Northern Cape. The National Budget must reflect an array of expenditure allocations from construction, to resourcing to supporting the efficient and well managed institutions. While the expansion of university centres are critical, budget allocations must promote increasing FET intake and support in providing quality outputs and graduates for the labour market.

The PBC continues to question the political commitment provided on free education for all learners, including under graduate students and the failure to provide resources. This has simply not been implemented with many students having to commit to costly loans in supporting their Higher Education needs. Many of the country’s universities have expanded to accommodate the ever-increasing number of matriculants and yet budget allocations have not met this demand.

Rural Development and Land Reform

The PBC continues to note the poor performance in land reform and rural development programmes. Beyond the “willing buyer, willing seller” principle being ineffective, the PBC calls for its scrapping. Land reform requires radical steps to support fundamental transformation in land distribution and rural development. The state must play a central role in committing resources to ensure land distribution is radically reformed in order to meet new land redistribution targets.

The budget needs to provide support for small scale farmers and agro -processing for new and emerging farmers. The PBC calls for greater resource allocation, support and promotion of alternative forms of ownership such as cooperatives and other forms of collective ownership of farms and agro-processing industries. The PBC suggests an urgent resource support in ensuring long term food security for our country and the region. However, we need immediate and significant intervention that militates against spikes in food prices and support for overall lower food prices for the poor.

Any rural development strategy requires significant infrastructure development: roads, public transport and other basic services to meet social and economic needs. The delivery of basic infrastructure is largely urban biased. Budget support must attempt to attract sufficient number of skilled and qualified person to support ongoing infrastructure delivery programmes in rural communities, particularly in former Bantustan areas.

Crime and Corruption

The PBC urges Treasury to continue with supporting interventions to reduce corruption and crime.

This will require much emphasis on vulnerable groups such as women and children to reduce incidents similar to the “mini-skirt abuse”, increasing incidents of gender based violence and continued abuse of children.

There is also a need for the budget to focus also on “hate crimes” which affect black foreign nationals, gays and lesbians. In addition there is a marked increase in human trafficking and the budget needs to respond appropriately to this challenge.

The community policing forums continue to do good work in reducing crimes in our communities. Sadly they do this work with very little budgetary support.

The de Lange Report on the state of the policing and judiciary indicated that there is a need to improve the investigative capacity of the police service and support for the judiciary to process cases speedily and effectively. The PBC calls for measures to be instituted to allow for the absorption of police reservists into mainstream police service in order to ensure that we expand the police service (especially in the rural areas) and to ensure the overall improvement of the police service capacity.

In addition the PBC calls for:

A budget that is more supportive in meeting housing delivery and the implementation of a radical spatial development programme that is in harmony with nature and social needs as suggested in the holistic human settlements approach. The PBC continues to reject human settlements that perpetuate Apartheid spatial patterns and relegates the working class to far flung reaches of all cities and towns and allows for market pricing mechanism that hampers affordable housing development in city centres and places close to employment.

A budget that caters for improved and affordable access to basic services. The National Budget must address how it intends supporting low income households and labour intensive sectors against high and increasing electricity prices. PBC calls for immediate intervention to avoid the electricity crisis of January 2008, given the recent announcements by Eskom on expected shortages in electricity supply in the coming winter months and beyond. The budget needs to ensure that access to clean, piped water and sanitation is stepped up in rural areas and townships.

Budget support on climate change programmes as well as the resulting and growing impact of natural disasters on communities and households. The budget must, therefore, support public education on climate change and disaster management; resource allocation for climate change interventions as well as disaster management.

Patrick Craven
National Spokesperson
Congress of South African Trade Unions.

 

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