Govt must not increase VAT - COSATU

Federation also says privatisation of Eskom would cause electricity to become unaffordable for workers

COSATU’s Budget Speech expectations

The Congress of South African Trade Union waits with anticipation and apprehension the 2016 Budget Speech to be delivered by the Minister of Finance, Pravin Gordhan Wednesday. This budget comes at a very difficult time for the workers, with the economy stagnating and haemorrhaging jobs at an alarming rate. The poverty levels are deepening and the inequalities are worsening. Government has made far too little progress in addressing the level of employment and the 34% long term unemployment cannot be ignored anymore. 

We have been in an economic crisis for four decades and not simply since Minister Nene’s removal. Our massive levels of unemployment, poverty and inequality are a ticking time bomb waiting to explode and are as a result of lack economic transformation. The only outcome for our failure to deal with unemployment will be social instability.

The creation of jobs all too often is a task simply left to the Departments of Trade and Industry and Economic Development. We need to be creating at least 100 000 jobs per month in order to absorb new labour market entrants and to reduce our long term unemployment. We expect the government to mandate all government departments and other spheres to drive job creation. 

Government has done admirable work in investing in public infrastructure. The Departments of Trade and Industry and Economic Development has made some critical interventions in some key economic sectors to protect local industries and helping the process of job creation.

Much more needs to be done in this regard, in particular in the mining, manufacturing, textile, automotive, agriculture, aquaculture, transport and tourism sectors. We expect the budget to look at supporting and consolidating this work by the department. More must be done to support and stimulate beneficiation as a key of saving and sustaining our battered mining sector.

The Department of International Relations and Cooperation needs to play a more active role in promoting South African exports in coordination with DTI. There must be a large economic value the country receives in exchange for the large budget that DIRCO receives. 

Tourism has emerged as the largest sector of the economy over the last 20 years and has helped create jobs for hundreds of thousands of workers More needs to be done to help it grow domestic tourism and to involve emerging black SMMEs. The budget should come out clearly on how this sector would be assisted to create more jobs.

The budget should outline ways that government would expand, sustain and grow the agricultural sector as a key source of job creation and a strategic economic sector. More funds need to be allocated to overcome the effects of the drought and to support land restitution, land equity and reform for farm workers and emerging farmers.

We expect adequate resources to be provided for the newly created state owned pharmaceutical company ,to ensure that it can fulfil its developmental mandate of delivering affordable medicines for our people.

With low economic growth, the private sector investment strike and high unemployment; government needs to increase its economic stimulus and infrastructure investments. To reduce them will further weaken economic growth. We cannot afford to repeat the mistakes of the austerity approach of the European Union which further exasperated their economic crisis. We must drive economic growth and stimulus through infrastructure development and job creation programmes. This approach is what has seen China emerge as the second largest economy with 7% GDP growth per annum and seen the United States cut its unemployment by half in a few years.

The federation strongly believes that now is not the time to cut expenditure in infrastructure development. This investment is needed to kick start the economy, more especially ,when we are projected to have 0.7% economic growth this year. 

On the area of social services, our government has made important strides in tackling the legacies of apartheid since 1994. However much remains to be done to save people from poverty and starvation and COSATU demands that more be done to cushion the poor majority from poverty and unemployment.

The budget should speak to the issue of a fully funded National Health Insurance. This cannot be delayed forever and government must not buckle to pressure from the medical industry which has grown fat on exorbitant medical aid fees. However ,whilst it will take some time to achieve a fully fledged NHI, government must act to ensure that public hospitals and clinics are sufficiently resourced, well functioning and safe.

We are happy as a federation that government has acceded to the worker’s demands for the scrapping of the forced annuitisation outlined in government's retirement reforms legislation. Government must table its long delayed discussion paper on comprehensive social security. 

This budget should ensure also that pensioners are given annual increases well above inflation levels. Our education system should be sufficiently funded and we are worried that most township schools remain woefully under resourced in all ways.

The minister speech should ensure that tertiary education is made accessible and affordable to all deserving students. Student fees for lower and middle income families must be scrapped and government must ensure that universities and colleges are adequately funded so they can fulfil this. Government must be bold and act to end outsourcing and labour broking in our publicly funded universities and colleges.

Government must stop punishing lower and middle income families, who have borne the brunt of retrenchments, unemployment, low wages, job insecurities, declining conditions etc.

The National Treasury must not increase income taxes on lower and middle income earners again. The federation demands that government refuse to increase VAT because the poor can no longer cope with being squeezed by government.

Government must increase taxes on the rich, non-beneficiated mineral exports, luxury goods, luxury imports and sin taxes. Government must end the youth wage subsidy, which has become a subsidy for labour brokers with the majority of the subsidy going to labour brokers.

Government must rein in Eskom and stop its continuous annual and biannual double, triple and even quadruple inflation increases. The state should consult with all social partners to explore funding models to help Eskom and forget about privatisation.

Privatisation would cause electricity to become an unaffordable luxury for workers. Nuclear energy at a cost of between R1.5 trillion and R3 trillion is simply unaffordable and this means that we need to invest in renewable energy. We need to see more heavy investment in this area because; we will be able to create more jobs.

National government must intervene to deal with the water crisis. The Treasury should invest in infrastructure must be maintained and if provinces fail, then national government must intervene. More must be done to ensure water is saved and conserved and investments in water desalination must be prioritised. The solution to our water crisis cannot be to simply price it out of the reach of lower and middle income families. Water is a human right and not a luxury.

Government needs to reconsider its approach to resolving the housing crisis. Good work has been done by government to build millions of homes to the poor. However due to the pursuit of profit at all costs by constructors, all too often the quality of the houses is terrible and the size of the plot too small for the family to build on to it. The budget should speak to the creation of a state housing company ,which can provide quality affordable housing.

Massive work has been done by our ANC led government over the last 22 years to provide basic services for all. However all too often informal areas are left behind because they are on private or parastatal land. The state must allocate money to assist the land expropriation process in order to make land available for the poor. It cannot be acceptable that so many informal areas still lack basic services.

COSATU hopes that the budget will provide meat to the correct commitments that government made in 2015 to address climate change as a matter of urgency. Workers bear the burden of pollution and other negative consequences of climate change. Government needs to act now before it is too late.

Government must abandon its privatisation plans. It must stop creating agencies every time it encounters problems in departments and it should fulfil its promise to end outsourcing and labour broking in the public service, in particular in hospitals, parastatals and universities.

The SOEs need to brought into line and proper management must be put in place at the SOEs. They must also be provided with adequate funding to ensure they are viable and able to deliver their developmental levels. They must not be bankrupted so that it becomes politically palatable to privatise them. Special attention needs to be given to the crises at SAA, the Post Office and Telkom. They cannot be allowed to mismanage public funds and then to retrench, outsource and hire labour brokers at the expense of vulnerable battered workers.

Government must accept the reality that E Tolls have been rejected by the public and they must be banned. It is time for government to end E Tolls and focus its energies of providing safe, affordable, accessible and reliable public transport in the form of trains, busses and taxies.

The budget should speak to how government plans to equip the police and ensure that they are not victims of criminals. SAPS must be provided with adequate training and protection to do their jobs. The budget needs to fund the justice department , allocate money to train interpreters and help courts to recruit in order to fund backlogs. The mayhem and corruption in the prisons must be eradicated and resources should be made available

More must be done to deal with an estimated R80 billion lost to corruption, R30 billion spent on consultants and R70 billion infrastructure funds rolled over each year.

Further wasteful and unnecessary expenditure must be cut, e.g. high salaries for parastatal CEOs, cars for Ministers, bloated Ministries (in a 75 member Cabinet), colour adverts of government leaders in newspapers etc.

These cuts though must not be made at the expense of lowly paid public servants, e.g. nurses, police officers, teachers, wardens, cleaners etc. Government must further narrow the public service wage gap and stop blaming lowly paid public servants for wanting a decent living wage so that they can take care of their families.

COSATU appreciates the strong support provided by the President, Cde. JG Zuma, and the Deputy President, cde. CM Ramaphosa, to the national minimum wage negotiations at Nedlac. However these talks cannot be allowed to take forever. Government must ensure that they reach a progressive conclusion and if needs be to pressurise business to accept and support a decent living national minimum wage. This NMW is critical to breaking our apartheid poverty wage gaps.

Statement issued by COSATU, 23 February 2016