SACP’s response to the 25 October 2017 Medium-Term Budget Policy Statement

The South African Communist Party notes the Medium-Term Budget Policy Statement delivered on Wednesday, 25 October 2017 in Parliament by the Minister of Finance Malusi Gigaba. The Minister set out the Medium-Term Expenditure Framework (MTEF) covering planning, priorities and constraints for the next three years. The framework does not show capacity to resolve the quintuple crisis of inequality, unemployment, poverty, widespread corruption including state capture, and rising social insecurity, both personal and household, in our communities.

Minister Gigaba correctly acknowledged the serious problem the South African economy finds itself in. Underlying our country’s economic problem, which is responsible for the quintuple crisis we are facing, is persisting colonial and apartheid capitalist legacy. Related to this is the lack of radical, both systemic and structural, socio-economic transformation that prevailed post-1994 despite the political defeat of the apartheid regime. The situation has been worsened by the inherent crisis of capitalism. The South African economy is yet to recover since the outbreak of the 2008 global economic crisis and its aftermaths.

South Africa needs increased investment in the productive sector of the economy to develop, expand and diversify national production in order to create jobs and decent work. This manufacturing orientation will alter the terms of our international trade by shifting away from the colonially designed significant reliance on raw material exports and dependency on imports of finished products. The importance of prescribed assets as an instrument through which the state can direct investment in the productive sector cannot be overemphasised.

The liberalisation and deregulation that led to massive capital flights, including elicit flows, must be rolled back. Transformation of the financial sector to serve the people and the needs of our economy is very central to the package that South Africa must adopt if we are achieve any radical economic transformation and resolve the quintuple challenges our nation is facing.   

While the Minister, on behalf of the Cabinet, has done his best to indicate the deep concern about mismanagement at key state-owned enterprises, this is overshadowed by the continuing crisis of instability and governance decay. Last week’s Cabinet reshuffle by President Jacob Zuma and his appointment of the SABC board only after he was taken to court and failed to punctually respond to court papers are latest indicators of a firmly established trend of governance decay under his leadership.

While the Minister reiterated the principle that South Africa should move at the pace and scale it can afford in regard to nuclear power, the statement is overshadowed by last week’s Cabinet reshuffle. Minister Mmamoloko Kubayi was only seven months when she was removed from the Ministry last week and replaced by Minister David Mahlobo from the crisis-ridden state security.  

Clearly, South Africa is facing a tax fall with negative impact on national revenue.  This is not a result only of the capitalist economic crisis and associated subdued economic performance. It is also a direct result of the shenanigans that have gained a grip on our once trusted national receiver of revenue, SARS.   

The MTEF sought to renew confidence through announcements on board shakeups at SAA and Eskom. It does achieve the objective, but only to a limited extent. Despite some of its positives, the MTEF does not necessarily erase the rot that has found its way up to the highest echelons of state leadership.

Unless this problem is dealt with decisively, including the appointment of the judicial commission of inquiry into state capture and the President stepping down, all measures to inspire confidence on money issues will be met with disbelief. There will always questions whether such measures have the support of a disparate President who plunges the country from one governance crisis and scandal to another.    

The commitment to public ownership of SAA is welcome. However, the sale of some of Telkom shares in the name of bailing out SAA and the SA Post Office, and the idea for private equity, could prove to be problematic. These measures therefore require serious scrutiny. Telkom is a strategic productive asset for the unfolding era of the Fourth Industrial Revolution through advanced communications and information technology. Rather than convey its ownership to private interests, the state must strengthen its control and development of Telkom to secure strategic national interests.

The SACP will scrutinise the announcements on SAA, Telkom and SA Post Office. The crisis facing the SA Post Office/Bank for instance cannot be understood in isolation from the priority the government has given to private companies, Cash Paymaster Services, a subsidiary of foreign monopoly and Grindrod in regard to the distribution of social grants. This is one of the glaring policy fault lines, in addition to looting and governance decay that contributed to the crisis facing many of our public entities. The structural and governance fault lines that are destroying public entities must be confronted holistically.

South Africa needs broad patriotic defend and deepen our democracy, including our national sovereignty and fighting against mismanagement, governance decay, corruption and state capture. In the same vein our country needs a popular front to safeguard our national wealth and public resources and deepen transformation towards our national goal of collective prosperity.

Statement issued by the SACP, 26 October 2017