Statement on the newly appointed Finance Minister
Yesterday, Thursday 10 December, the newly appointed Finance Minister Comrade David van Rooyen was sworn in. The change and appointment occurred at a crucial time facing our economy both from external factors such as in particular the ongoing international capitalist system crisis and the consequences of the lack of radical economic transformation in the first phase of our country’s democratic transition dating back to the 1990s.
Problems such as the decay – if not stopped – facing many of our state owned enterprises, the wave of de-industrialisation and capital flight including divestment that was facilitated by the 1996 class project’s economic strategy Growth, Employment and Redistribution (Gear) through liberalisation must still be addressed.
Our national assets and resources must be managed prudently and spending reprioritised. Former Finance Minister Comrade Nhlanhla Nene was doing good work in this regard. South Africa cannot afford any screws to loosen down this grip. The SACP is therefore looking forward to the new Finance Minister Comrade David van Rooyen maintaining and improving on this record.
Similarly, corruption must be dealt with decisively. There must be no capital leakage allowed from the national revenue and expenditure system and all projects must pass a prudential test.
It is in this context that it is extremely important to appreciate the challenges facing our economy:
Our economy is expected to grow at about 1.5% this year, marginally rising to 1.7% next year – considerably lower than it was projected in February when it was envisaged it would grow by 2% this year and 2.4% next year. Investment growth remains low, and is expected to close the year at just 1.2 %. Meanwhile, there are trillions of rands that have been accumulated from our economy but are held back in an investment strike by the most reactional sections of the capitalist class. The money is not being reinvested particularly in productive activity to reduce unemployment, create decent work and absorb millions of the unemployed.
Inequality, the mother of poverty and unemployment remains stubbornly high. Out of a total working age population of 36,114 million only less than half of the workforce, 15.8 million workers are employed – but many under low wage conditions and suffer from the problem of precarious work under casualisation and labour brokers. Unemployment is persistently high, 25.5% on a narrow definition and 34.4% on an expanded definition including discouraged work-seekers. High unemployment, low quality jobs and suppressed household income constraints are holding back not only consumption – but with it – economic growth too.
The current account deficit on the balance of payments remains significant, 4.1% of Gross Domestic Product (GDP) and inflationary pressures are strengthening with higher food prices and the weakening of the rand. Financial market volatility remains high with rising borrowing rates for emerging economies including South Africa.
It is in this context – i.e. high unemployment, low wages and low growth – that the National Treasury had to revise down our national revenue estimates by R7.6 billion this year and R35 billion over the next three years. In the aftermath of the international capitalist system economic crisis, government debt increased from around 26% of GDP to 47% in March this year with the National Treasury projecting that debt will rise by a further R600 billion over the next three years.
All of these and other economic challenges facing South Africa go far beyond the capacity and responsibilities of a single individual or government department. What we need is leadership stability, certainty and the optimisation of the total strength of our country’s collective leadership including an active mass base united in action based on progressive policy changes.
Measures such as capital controls and taxing the rich and the wealthy to support our national development priorities, reducing inequality, unemployment and poverty and expanding access to post-school education and training, healthcare and improving quality in all respects cannot be over-emphasised.
The trillions of rands that are held back in an investment strike and not being re-invested particularly in the productive sector must be taxed. A cap in liquid cash that is not invested and prescribed asset requirements directing investment in the productive sector to create decent work and jobs and reduce unemployment must be enacted.
These are some of the measures that the SACP has been pushing through its Financial Sector Campaign which seeks to achieve overall transformation of the financial sector and develop a new financial architecture suitable to our country’s economic needs and development imperatives.
The SACP has been engaging with former Finance Minister Comrade Nhlanhla Nene who addressed our Augmented Central Committee last month on among other important matters prudential financial management, strengthening financial supervision as well as market conduct and consumer protection regulation.
In this regard, the SACP will make its submissions on the current Bill which proposes a “Twin Peaks” model of financial supervision and regulation and is looking forward to engaging with the newly appointed Finance Minister on this and a wide range of financial transformation matters as we have done with Comrade Nhlanhla Nene.
The SACP wishes Comrade David van Rooyen success in his new role as Finance Minister as we do with all other ministers.
Statement issued by the South African Communist Party
