#Budget2016 / If a visitor from another planet was sitting in the South African Parliament on Wednesday, listening to Pravin Gordhan’s Budget speech, he or she would conclude that South Africa is a wealthy, peaceful country, with maybe just a few little problems here and there, caused by worldwide economic stagnation and the drought, neither of which the government can be blamed for.
Credit: AP
Finance Minister Pravin Gordhan delivers the annual Budget speech in Parliament on February 24, 2016. Picture: Mike HutchingsThe contrast between the finance minister’s bland and complacent picture of the country and the grim reality of desperate poverty, sky-high unemployment, widening inequality and epidemic levels of corruption that are facing the majority of its people could not be greater.
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His guiding principle appeared to be to tell international credit rating agencies that they have nothing to worry about, certainly nothing to justify downgrading South Africa to “junk” status, because everything is under control and the country is on the brink of an economic revival.
The reality is that the crisis is getting even worse and this Budget contained nothing to suggest that it would be getting better any time soon. On the contrary, the minister maintained the path he and his predecessors have pursued in successive austerity budgets, based on the neoliberal Gear strategy of the 1990s and its continuation in the National Development Plan.
On inequality Comrade Gordhan did not even make the widely expected token gesture of raising taxes on the very rich, only an assurance that “our current taxes on wealth are under review by the Davis Committee”. One of the biggest reasons for South Africa becoming the world’s most unequal society is the illicit flow of capital to tax havens, depriving Sars of trillions of rands of unpaid taxes, the minister could only promise that “with effect from 2017, international agreements on information sharing will enable tax authorities to act more effectively against them”.
No good news for poor
But while he is putting off action to tackle millionaire tax dodgers for a year, there is no similar good news for the poor. Social grants are to be increased, but by amounts well below the expected levels of inflation for poor families, given a potential 16 percent Eskom tariff hike and the anticipated double-digit food prices as a result of the drought and the fall in the rand. So real inflation for the poorest families will be above 10 percent, while the increase for the average grant recipient is between 3.5 percent and 7 percent.
Nor was there any good news on the long-awaited National Minimum Wage, Comprehensive Social Security Plan and National Health Insurance system. The best he could promise was that “Progress has been made towards a minimum wage framework, and to reduce workplace conflict. The National Health Insurance White Paper has been published, and proposals for comprehensive social security will be released by mid-year”.
I noted that the minister said he was tabling a draft Revenue Laws Amendment Bill, which was intended to postpone by two years the compulsory annuitisation of provident funds, which all workers were so angry about. But he was too late, as the Taxation Laws Amendment Act was scheduled to be implemented on Tuesday.
I welcome the additional R16.3 billion for higher education over the next three years, but credit for this must go not to the minister but the students whose #FeesMustFall campaign compelled government to keep fees for the 2016 academic year at 2015 levels.
But it remains a scandal that South Africa’s budget for universities as a percentage of gross domestic product is lower, at 0.75 percent, than the African average of 0.78 percent, the world-wide proportion of 0.84 percent and the proportion spent by Organisation for Economic Co-operation and Development countries of 1.21 percent.
For me the most alarming features of the Budget speech, was what Comrade Gordhan insisted on not calling “privatisation”, but was clearly just that. He says: “We must broaden the range and scope of our co-funding partnerships with private sector investors. This requires an appropriate framework to govern concession agreements and associated debt and equity instruments, and appropriate regulation of the market structure.”
Private sector
Minister Lynne Brown, he reported, was in discussion with Transnet’s leadership on measures to accelerate private sector participation in the ports and freight rail sector. The Budget Review also says government is looking at “strategic partnerships to allow SAA “to draw on private sector capital and technical expertise to improve its performance and expand its network”.
“The recent tremors felt by emerging markets,” he said, “are a warning that we need to take corrective steps urgently or we will be worse off. At the same time, we need to move forward to mobilise the resources and capacity of all our people, large and small enterprises, civil society organisations and public-private partnerships.”
This is without doubt a policy of creeping privatisation, a green light to capitalist hyenas to start preparing to get their teeth into publically owned enterprises and run them to maximise profits, rather than operate a public service.
In conclusion I repeat what I said in my response: “The Budget speech today, like all other before, simply does not represent any new direction. It blatantly refuses to accept the deepening crisis of poverty, unemployment and inequalities or even the scale of corruption. It is the continuation of the old business as usual ignoring the plight of the black working class and the poor.”
* Zwelinzima Vavi is the former Cosatu general secretary.
** The views expressed here do not necessarily reflect those of Independent Media.
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