COSATU statement on the rise in the price of fuel and paraffin
4 September 2023
The massive increase in the price of fuel on Wednesday provides a further blow to an already fragile economy and struggling working class. We expect government to act decisively to intervene on behalf of workers and poor households. The increase of petrol by 95 cents, diesel by R2.84 cents and paraffin by R2.78 spells bad news for all South Africans but the impact on poor families will be even worse.
It will spur inflation which had been falling to rise next month, and thus nudge an already zealous Reserve Bank to increase the repo rate once again. Poor households are already struggling to survive under these difficult conditions and an increase in the price of paraffin will leave many poor families worse off.
This increase in fuel prices will create a level of hardship for a society that is already suffering from high levels of unemployment and stagnant or declining real wages. Low- and moderate-income families are going to be plunged further and further into debt because their wages are now inadequate to afford the basic amenities.
The National Credit Regulator’s reports confirm workers are drowning in debt. This coupled with electricity price, food prices and rising interest rates will make it even harder for workers to take care of their families. It will push thousands to default on their loans and risk losing their homes, cars and other possessions. These higher fuel prices drain the purchasing power of most South Africans and retard economic recovery.
This will also threaten the sustainability of thousands of SMMEs and place their employees in danger of losing their meagre wages and being retrenched.
We are still puzzled by the government’s reluctance to release the research report on the feasibility of a fuel price cap in South Africa, and a comprehensive review of the fuel price regime with the intention of reducing the taxes which constitute 28% of the fuel price regime. This unfulfilled commitment was made by then Minister for Energy, Jeff Radebe in September 2019 and Ministers for Mineral Resources and Energy and Finance, Gwede Mantashe and Enoch Godongwana in April 2022.
Whilst there is little that government can be do about the international oil price volatility, it can, as it did in 2022, provide relief to commuters and the economy by lowering our fuel taxes. This will have the additional benefit of reducing inflation and the insatiable temptation by the Reserve Bank to raise the repo rate and thus further impoverishing workers and suffocating the economy.
The Department of Transport needs to be nudged out of its comfort zone to place the Road Accident Fund (RAF) under administration and retable the RAF and Road Accident Benefits Scheme Bills at Parliament. These are key to fixing the anarchy prevalent at the RAF and reducing its dependency on above inflation increases for the Fuel Levy. It is beyond shameful that the government continues to pretend as if all is ok at the RAF.
COSATU expects government to adjust social grants in the Medium Term Budget Policy Statement, in particular the SRD Grant, to protect their recipients from to the impact of higher prices.
The Department of Transport with the Passenger Rail Authority of South Africa (PRASA) must speed up the reopening of the remaining Metro Rail lines still shut since the COVID-19 pandemic. Government should also consider expanding subsidies for public transport and invest in our transport system. There is an urgent need to improve the quality and efficiency of public transport, particularly in poorer communities and rural areas.
This unrestrained escalation in the cost of living will poison the upcoming wage negotiations and will automatically push our affiliates to demand above inflation salary adjustments for our members.
It is in the best interest of government to find a workable solution to this ever-present challenge.
Issued by Matthew Parks, Acting National Spokesperson & Parliamentary Coordinator, COSATU, 4 September 2023
