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Friday, February 22, 2008

SAMWU statement on The Budget

SAMWU Press Statement
20th February 2008

SAMWU statement on The Budget

Trevor Manuel’s ‘stormy’ budget speech represented continued downpour on the poor and balmy weather for the rich. His defence of the conservative macro-economic programme of GEAR shows that despite what happened in Polokwane, government is still committed to furthering the interests of the wealthy against that of the poor.

The argument that GEAR macroeconomic policy implemented since 1996 has prepared a cushion for the general population against the current storm in the global economy is plainly wrong. GEAR has led to close to two million job losses, the destruction of large parts of the manufacturing sector, high interest rates, relaxed exchange controls that has deepened poverty in the country. South Africa is the third most unequal country in the world and this is because our government refuses to spend suficient amounts on the poor. SAMWU does not believe that the government should be perpetuating the notion that a budget surplus is healthy. The budget “surplus” must be spent on job creation, basic services, housing and relief for those in need.

The fact that VAT remains at 14% despite it being a regressive tax falling more heavily on the poor is contrary to government’s stated intention of providing poverty relief. Government income through VAT increased by 5c to 76c per loaf of white bread after the recent bread price hikes. Government will earn R1,29 billion in VAT on white bread alone this year. This is unacceptable given that it is a staple food in the country.

Whereas the Finance Minister refused to give up the R1, 29bn in white bread VAT, he has willy-nilly increased the allocation to the 2010 World Cup by R2bn, bringing the 2008/2009 budget for the World Cup to over R19 billion. Last year’s allocation was already over R5 billion more than the predicted 2009/2010 expenditure on housing, which Manuel said would be R12.5 billion. It was 29 times or R16.8 billion more than last year’s allocation for the electrification programme, and R16 billion or almost 13 times the amount allocated for bulk water and sanitation infrastructure last year. With service delivery protests reaching record highs, it is astonishing that Manuel has continued to fritter away the country’s budget on a sports event that will benefit mainly multi-national corporations.

SAMWU is also dismayed that there is no specific emphasis on eradicating the bucket system. Last year a Municipal Infrastructure Grant of R400 million was allocated for a “final push to eradicate the bucket system”. This did not eradicate the bucket system. Instead the goalposts were shifted to say that this money was for eradicating the bucket system in “formal” informal settlements only. Government failed to do even that and now has not allocated any money to complete the programme.

Instead, an additional R6 billion was allocated for housing, water and general built environment infrastructure. This will have to cover the eradication of the bucket system and the housing and water backlog. Given that the housing backlog has been costed at R50 billion, with an additional 200 000 homes per year adding to the backlog, the union believes that the additional R6 billion for housing, water and general built environment infrastructure is a pathetic drop in the vast ocean of need.

Last year, government said that they were planning for a budget surplus in the coming fiscal year to “create space for our future social security reforms and allows for rising funding levels for public sector infrastructure, improvements to education and other government priorities”. However, there is no social security reform! There is no basic income grant. And pensions and disability and child support grants have increased by only R70 and R20 per month respectively (with the R20 being phased in). Pensions have thus increased by a measly 8% whereas inflation currently stands at 9%. This means that state pensioners receive a 1% cut in real term. Child support grants increase by an annualised amount of 7,5%, a 1,5% cut in real terms. These measures are currently the major source of redistribution and their below inflationary increases will impact negatively on working class communities.

SAMWU notes that the equitable share of revenue to local government is again not equitable at all given the vast array of services local government is expected to provide. Only R6.5 billion has been allocated to local government through the equitable share, whereas defence and intelligence get R30.4 billion!

The Finance Minister referred to the inflation rate as being 7% and then later in his speech said the rate was somewhere between 5% and 11%. In fact the CPI rate is currently 9%. The budget increases are therefore not meaningful increases in real terms once inflation and the backlog in services is taken out.

On the other hand, business has once again benefitted from the budget. A further reduction in company tax rate from 29% to 28% shows us who the real winners are in Trevor’s budget. Capital does not have to give Trevor tips, he does it all for them.

Because of the failure of the government to sieze upon opportunities for redistribution, we are preparing ourselves to campaign for them. We cannot accept further delay, our people have waited long enough, and now is the time to enforce redistribution from below.

For comment please call the SAMWU National Collective Bargaining Officer Dale Forbes on 021 6971151



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