SACP reaction to 2008 budget speech

Statement issued February 20 2008.

The SACP welcomes the general thrust of the 2008/9 Budget tabled this afternoon in the National Assembly by the Minister of Finance, cde Trevor Manuel. The budget reflects broad continuity in government's endeavours to attack poverty, stimulate job creation, and broaden the social wage while weathering major systemic crises in the world economy. 

Minister Manuel was absolutely correct to situate this budget within the context of a down-turn in the US economy and serious knock-on effects in Europe . This turbulence is, however, not a mere passing storm, nor is it simply the result of sub-prime loans. The latter are a symptom of systemic problems in the heartlands of capitalism and the shift out of productive investment into trillions of dollars of footloose speculative capital.

In this context, the SACP supports government's commitment to lowering our exposure to these global risks, and to ensuring as much as possible national sovereign leverage over policy decisions.

On the job creation front, the SACP welcomes increased spending on the expanded public works programme, although we believe that there is insufficient mass roll-out of the programme and the increased amount remains insufficient. The programme is also still too much based on the illusion that a few months of work will provide training and skills to enable participants to migrate into the mainstream economy. Budgetary allocations to other important areas, like home-based care and early childhood development, that provide the potential for sustainable livelihoods for hundreds of thousands of township dwellers, notably women, are extremely important.

The SACP likewise welcomes government's sustained commitment to infrastructural spend, including on water, housing, public transport and electricity. We note that all the commentators got it wrong in predicting that government would allocate R60bn off-budget to Eskom. As Minister Manuel emphasised this is not a grant.

The Minister announced a reduction of company tax from 29% to 28%. We assume that the Minister hopes to encourage increased productive investment through yet another reduction in company tax. The SACP is sceptical, and we certainly need to monitor very closely whether this reduction will indeed increase investment and job creation. We suspect that it will be squandered on more inflated executive salaries, bonuses and share options.

The repeated emphasis by the Minister on environmental sustainability is an important beginning, as is the commitment to use the current energy challenges to re-shape the current growth path.

Issued by the SACP February 20 2008