National Education Health and Allied Workers’ Union (NEHAWU) welcomes the broad thrust of the government’s spending priorities set out for 2011/12 financial year as outlined by the Minister of Finance, Pravin Gordhan, in Parliament this afternoon. We are happy that job creation and the implementation of the five national priorities set out in the electoral mandate of 2009 remain at the centre of the government spending priorities.

NEHAWU however condemns the Treasury’s persistence with the current macroeconomic stance of a monetary policy fixated on inflation targeting and a restrictive fiscal policy geared at keeping budget deficit to around 3%. Consequently, in the stated fiscal framework there would only be about R20.7 billion added to the baseline in the current financial year and a mere 2.8% average real growth in government non-interest spending over the next three years.

This government’s countercyclical fiscal policy stance will only help to maintain economic growth at a low level, which is unlikely to help in creating the necessary number of jobs per year to keep up with the target of 5 million jobs over the next 10 years. We also reiterate our condemnation of the ongoing exchange controls relaxation announced during the Medium Term Budget Policy Statement (MTBPS). Ironically, hardly six months since the start of the implementation of these measures the Finance Minister is already expressing fears and concerns about the resultant volatility in the capital flows and in the external value of the currency in this Budget Speech.

NEHAWU considers this straight-jacketed ideological commitment to the liberalisation of our economy to be part of pre-emptive policy decisions, including wage subsidies for bosses, taken to forestall discussions on the new growth path with social partners.

NEHAWU wants to respond to the following specific proposals contained in the Budget Speech:

We welcome the fact that the 2011 Budget makes available an additional R8 billion as the first step in establishing the National Health Insurance (NHI) and it sets the health infrastructure grant, it includes the additional funding for the adoption of the family health approach to primary health care and makes additional money available for the training of medical doctors and nurses. We however reject any consideration for a general increase in the VAT rate as part of the mechanism to finance the NHI. Rather, we call for a consideration of the imposition of an earmarked levy on luxury imported items.

We welcome the increased education budget, including the R9.5 billion to expand the Further Education and Training Colleges (FETC) sector and the allocation of additional funds for student financial assistance and also to finance a new school building programme.

We are happy with the announcement that the Passenger Rail Agency of South Africa will be embarking on an 18-year programme to replace the signalling infrastructure, the coach and locomotive fleet. However, NEHAWU believes that this falls short from constituting a comprehensive programme for the recapitalisation and expansion of our commuter rail transport. We believe that increased investment to expand commuter rail network would be key in the transformation of the apartheid urban geography, in reducing the high costs of commuting experienced by workers and in reducing the greenhouse gas emissions on our roads. Even more so against the background of the introduction of the misguided toll-road system in the main arterial freeways of the Gauteng urban centres and the rising price of fuel.

Such a major programme of expansion of the commuter rail system will be difficult to undertake in the light of the delegation of the management of rail to municipalities announced in this Budget Speech. Municipalities are already struggling to undertake their current limited function of service delivery. NEHAWU calls for the cancellation of the private-public-partnership that has led to this debacle of the Gauteng toll-road system.

NEHAWU reiterates its rejection of the proposed R5 billion wage-subsidies for youth employment. In our view, this is not a job-creation initiative but corporate welfarism where hard-earned tax-payers money is given to the bosses as grants. This is a growing tendency in the light of the current global capitalist crisis whereby governments are dishing out grants to the industrial and banking bosses in the name of responding to the crisis.

In South Africa, this policy of wage-subsidies for the bosses comes from the same Treasury that has been prevaricating on the NHI and claiming that the fiscus cannot afford the Basic Income Grant whilst millions of the people with no incomes and who cannot access the current social grants suffer from hunger. In this same Budget Speech, the minister proclaims that “our aim is to put development first and not dependence on welfare” yet we know that the wage-subsidy is going to be used to terminate the employment of people older than the designated youth category as employers hire and fire in a revolving door just to obtain the provided tax credit. NEHAWU believes that youth unemployment is a complex challenge which in our view is fundamentally a crisis caused by the lack of opportunities and access to higher education and other post-schooling skills development avenues.

NEHAWU is concerned that the budget has failed to reflect the lessons learnt during the 2010 public service strike. In terms of the Resolution 6 of 2010 of the Public Service Collective Bargaining Chamber (PSCBC), as a way to avoid unnecessary wage disputes and strikes in the public service, government has committed itself to initiate and complete wage negotiations with labour in the public service before the budget envelop is finalised in February.

To date, this has not happened and yet in this budget, the Treasury is already fixing the combined increase of the public service wage bill and the costs of additional employment in the public service to a 6.6% annual growth over the MTEF period, based on a projection of a 5.2% inflation. NEHAWU regrets that this projected increase in the public service wages is completely far off the mark in terms of the mandate we are receiving from our members.

At this very earliest opportunity, NEHAWU wishes to call on government to review this position, especially in the light of the fact that the Budget Speech itself noted the risks associated with the expected increase in the food and oil prices in terms of the inflation outlook.

National Education Health and Allied Workers’ Union
www.nehawu.org.za