EFF statement on 2021 budget speech

24 February 2021

The EFF notes the budget presented by Finance Minister Tito Mboweni devoid of South Africa's economic realities and continue to be premised on outdated economic policies. The reality is that Mboweni and the National Treasury have run out of ideas and failed to present a fiscal framework that is capable of reviving South Africa's struggling economy with the capacity to centre government's procurement budget as a driver for localization and industrialization.

The EFF is not surprised that the budget presented has retained the same division of revenue framework that has seen local government allocated less, despite being the most important sphere of government responsible for service delivery. In fact local government has collapsed in many places across the country; our people who do not have access to water, electricity, sanitation and other basic infrastructure will continue to suffer with more degeneration of service. For local government to receive only 9.7 per cent of the revenue raised nationally is the most indicative of the government's lack of interest in provision of sustainable basic services.

The EFF further notes with serious concern the continued onslaught on the poor, the working class and particularly students from poor and working-class families. Despite the claim by the Finance Minister that this is not an austerity budget, by all accounts and empirical evidence, it is an austerity budget. Since the advent of democracy, the Treasury has been hellbent on neoliberal ideas, practices and policies across all spheres of lives based on austerity fiscal framework.

The majority of allocation in the 2021/2022 financial year and over the medium-term continue to decline, and this includes the budget for social grants, education and agriculture through negative growth over the medium term and allocation reductions.

In real terms, government expenditure is not increasing. Over the medium term, public servants' budget will be reduced by R300 billion, provincial and municipal budgets will be reduced by R62 billion and the budget for job creation does not grow in real terms. The increases in social grants across the board are nowhere near the increases in transport, food and electricity needed for basic survival.

The budget presented by the Finance Minister did not put forward a believable and implementable plan to revive the economy through localization and industrialization. It missed an opportunity to redirect and position government expenditure to turn South Africa into a manufacturing site for the local production of industrial and household goods. This is important given the country's chronic unemployment that has locked more than 11 million people out of jobs. In addition, the continued dependence on the private sector who proved at the peak of the COVID-19 pandemic that they will prioritize profits of livelihoods is misguided.

The budget has vindicated the EFF as we have called Cyril Ramaphosa bluff on his rhetoric about building internal state capacity. If anything, the budget has shown that the intention is to move more towards privatization including privatization of water, rail and sanitation services based on the neoliberal, out-dated and misguided Economic Reconstruction and Recovery Plan.

The Finance Minister did not put forward a believable plan towards building a capable SARS that will be able to maximally collect taxes. There is no plan on how taxes will be collected from e-commerce platforms such as Zoom, Takealot, Facebook, Google and all other platforms. There is also no plan to deal decisively with base erosion, profit shifting and aggressive tax avoidance that continues to create a hole in the fiscus. Challenges facing SARS are not going to be solved by money only but also legislative reforms that make it near impossible for companies that have enjoyed weak state capacity and legislation that has too many loopholes.

We must, however, welcome the funding to the Land Bank and call for a mandate that is closely linked with the current process of Parliament to amend Section 25 of the Constitution to allow expropriation of land without compensation to give the bank a mandate that is linked with a redistribution of land equally to our people.

The EFF further welcomes the sensible approach wherein taxes were not adjusted for workers as many homes have fallen into difficulties due to COVID-19. However, the reduction of corporate income tax to attract non-existence investors is based on defunct understanding of economic stimulus, particularly in the period of a pandemic.

Finally, the minister provided no believable energy stabilisation plan. Without a stable provision of energy in our country, no impactful economic activity can be envisaged.

Issued by Vuyani Pambo, National Spokesperson, EFF, 24 February 2021