SANGOCO Western Cape Comments on the 2011/12 Budget

Friday, 25 February, 2011 - 11:51

We acknowledge that the global policy environment is beset with neo-liberal reformist agendas. What is also abundantly apparent is that most of our South African policy scripts are influenced through these agendas. There is an acknowledgement from the minister in his speech that talks to targeting inflation and counter cyclical fiscal policy. These are the essence of neo-liberal macroeconomics 

We acknowledge that the global policy environment is beset with neo-liberal reformist agendas. What is also abundantly apparent is that most of our South African policy scripts are influenced through these agendas. There is an acknowledgement from the minister in his speech that talks to targeting inflation and counter cyclical fiscal policy. These are the essence of neo-liberal macroeconomics.

We furthermore note that the government is trying to counter balance the impact of these neo-liberal policies with an approach which speaks to the developmental challenges within South African society. However we are of the opinion that a more progressive policy stance should be taken to rid ourselves of the neo-liberal and neo-colonial stronghold and move toward a more people-centered and development-orientated framework.

More so, we argue that this budget, in its attempt to do a balancing act of mending neo-liberal policies with developmental orientated policies is not going far enough to fundamentally address our concerns around poverty and inequality - the gap between the rich and the poor is still widening. Statistically South Africa is ranked highest when measuring levels of income inequality, as measured through the Gini Coefficient.

Furthermore, we have had 6 years of economic growth, but a decline in employment. Therefore our policies do not necessarily address the needs of the poor and marginalized despite our continued attempts at doing so. SANGOCO Western Cape, having looked at the budget speech delivered by the Minister of Finance, Mr Pravin Gordhan, hereby wishes to make the following submission:

We view people’s participation in the budget process as absolutely fundamental in enhancing and promoting the South African model of participatory democracy. We note the efforts made by government to ensure people’s participation in the budgetary process and call on the Treasury in particular to be more creative and transparent when engaging civil society constituents in the formulation of the budget.

We have also noted that when the President delivered the State of the Nation address he spoke to the whole nation. The impression that we got from the Minister however, when he delivered his speech, was that his speech was directed to the members of the House of Assembly. Our leaders must ensure that their vision is shared amongst all South African citizens.

We welcome the initiative to form economic ties with other developing economies through BRICS, however we are of the opinion that we should be careful of regulatory capture and information asymmetry. We take cognizance of the fact that we are a smaller partner in a bigger pond, and therefore the likelihood of being over shadowed is very real and putting our own development and national interests at risk.

There is a correlation between our involvement in BRICS and “macroeconomic stability in an uncertain world”. The volatile global economy, as correctly pointed out by the Minister is largely beyond our control or influence. This is of serious concern to us because the experiences of poor people in Developing Economies and Least Developed Countries (LDC’s) attest to increased levels of poverty, inequality and marginalization. The budget speech does not spell out what mechanisms our government is putting in place to ensure that we are not overshadowed by these larger economies and that our developmental needs will not be compromised. In this context we are asking for greater levels of dialogue and participation with civil society formations as vehicles to hear the voices of our communities and families.

The planned banking reforms as proposed by the Minister, although aimed at empowering consumers to move away from banks when they are unhappy with their banking arrangements and when they believe that they are being ripped off, do not in the least attempt to transform the banking sector. The banking and financial sectors are largely to blame for the current global economic crisis and it is short sighted of the Minister not to explicitly address the broader transformational requirements of this sector. As civil society we are looking forward to robust engagements around the policy proposals that the Minister was referring to in his budget speech regarding transformation of the financial sector.

With regard to creating opportunities for youth employment it is our opinion that the R5 billion tax break offered to companies favours business which means that they will be paying less taxes whilst also accessing funding for training and skills development through the SETAs. We furthermore note that there is a gap between creating an opportunity for employment and providing actual long term sustainable jobs for our people. Creating opportunities have become a statistical exercise to qualify government’s involvement in the labour market. Experience globally and locally have shown that “employment opportunity” leads to piecemeal, short term employment if not underemployment. The impression this creates is that government is ceding its responsibility to business with no guarantees that it will get a return on its investment.

We therefore call on the Minister to ensure that rigorous monitoring and evaluation mechanisms are put in place within a sound regulatory framework to determine whether we are getting value for money and intervene appropriately. Furthermore, to ensure that we develop our economy over the full industry spectrum, opportunities need to be created over a wider spectrum of industries and not only selected industries such as the services sector and financial sectors. SANGOCO supports the call for decent employment and a decent living wage that translates into sustainable long term employment.

By calculating your options of not increasing expenditure and wading off severe austerity measures your dilemma of juggling with the creation of a developmental state within a global neo-liberal economic framework is evident. We do however feel that we need a clearer policy stance with regard to which economic trajectory we are pursuing. Juggling and fence sitting always have the associated risks of principled failure and strategic miscalculation. The counter cyclical measures that government has introduced may have prevented us from succumbing to the Global Financial crisis but as you well know the situation is still volatile.

We are also weary of the disjuncture between budget allocation and budget spent. The flaw does not necessarily lie with the allocation of the budget rather the crux of the matter is how the money is spent. The service delivery protests attest to the fact that monies are not appropriately allocated or appropriately spent. So therefore the question is whether money allocated is being spent in line with what it is meant for. For instance the Education and Health budget has been increased and more monies are allocated for the sectoral education and training authorities (SETAs) and further education and training colleges, but are there proper monitoring and evaluation mechanisms in place to ensure optimum spend. We have also noted the massive cost of the NYDA hosting the International Youth Conference and that there was no proper oversight with regard to planning and spending. Certainly costs could have been saved had government stepped in appropriately to protect public money.

We call on government to address the issues of underspent resources and roll-overs because this implies a lack of planning and implementation within line departments. SANGOCO urges the Minister to play an active role in monitoring money spent and evaluating the programmes on which it is spent.

We welcome the Minister’s stance on fraud and corruption. However, inter-governmental relations are haphazard and often disjointed. Different Ministries and Departments tend to pursue different policy objectives. Officials from the different departments and different spheres of government often do not work together as one government. The notion of a seamless and integrated government must still be realized. This opens the avenue for continued disjointedness which makes monitoring and evaluation an arduous task.

The absence of proper Monitoring and Evaluation processes and mechanisms increase the risk of fraudulent and corrupt activity regarding procurement and tender procedures. Whilst citizens may fulfill their role to protect public money by exposing fraud and corruption the onus is primarily on government to put in place proper regulatory processes and systems to prevent this from happening.

Government policy may be well intended but it also has its unintended consequences which impact society. If Government fails to monitor the roll out of public monies, its seriousness about clamping down on fraud and corruption is questionable, more so its commitment to achieving its broad developmental objectives is subject to scrutiny.

SANGOCO Western Cape welcomes government’s attempts at trying to counter balance the impact of neo-liberal policies. The approach taken speaks to the developmental challenges within South African society but remains elusive in going far enough to fundamentally address our concerns around poverty and inequality. The gap between the rich and the poor has widened, unemployment has increased and poverty levels have surged - decisive policy measures are required to address these.

Tasneem Gamieldien
SANGOCO Western Cape
www.sangocowc.org 

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