5 things Cosatu wants Mboweni to clarify in the mini budget

2019-10-26 07:00 - Lameez Omarjee
Cosatu

When Finance Minister Tito Mboweni announces the mini budget next week, he must tell South Africans what government has done and what it plans to do to take the country out of crisis mode, according to the Congress of South African Trade Unions.

The labour federation's parliamentary coordinator, Matthew Parks, on Thursday issued a statement outlining Cosatu's expectations for the mini budget. Mboweni will table the mini budget in Parliament on Wednesday, October 30.

The challenges SA faces include poor economic growth, rising unemployment, and a power utility on the "verge of collapse", said Parks.

"Cosatu expects the Minister for Finance to present a serious medium-term budget policy statement (mini budget) that will tell the nation exactly what government has done, is doing and will do to take us out of these crises," he said.

The mini budget must have clear reports, targets and timeframes, Parks added.

There are five key areas Cosatu wants to be addressed.

1. SA economy

Cosatu wants to hear government's progress in implementing the outcomes of the Presidential Jobs Summit held in October 2018. "We need to know what measures will be taken to ensure that business honours its Jobs Summit responsibilities," Parks said. The Jobs Summit involved various stakeholders such as business groups, civil society and government, who made commitments to address unemployment, Fin24 previously reported.

Parks also commented on Treasury's economic discussion paper - Economic Transformation, Inclusive Growth and Competitiveness: Towards an Economic Strategy for South Africa – which is in the process of being finalised. Cosatu has said the paper "incoherent" and "unreliable", and suggested it could result in labour market conflict.

"We hope that Minister Mboweni will not seek to revive the obnoxious anti-worker attacks in Treasury’s economic growth strategy," Parks said.

Further to economic announcements, Parks said that Mboweni should accept the resolutions of the ANC to expand the mandate of the Reserve Bank beyond price stability and include boosting economic growth and job creation.

Reserve Bank governor Lesetja Kganyago, in the past, has vigorously defended the independence of the bank with respect to its mandate. President Cyril Ramaphosa in his state of the nation address in June also affirmed the bank's key mandate to be price stability, Fin24 previously reported.

2. Government expenditure

Parks said that government's credibility had been "badly shattered" by "years of looting, mismanagement and sheer negligence". Cosatu wants Mboweni to outline how the billions lost to state capture will be recovered. Ramaphosa in October told the Financial Times Africa Summit in London that the cost of state capture could be more than R500bn, Fin24 previously reported.

Parks said it cannot be accepted that part of the budget each year is lost to "corruption and wasteful expenditure".

Several government departments must also be able to deliver positive reports on the progress they have made. Ministers of underperforming government departments must be dismissed, Parks said.

"The days of ministers spending millions exploring the world as glorified tourists with massive entourages whilst their departments disintegrate must stop. The president must fire those who are beyond redemption," he said.

3. Taxation

Parks slammed Treasury for the 1% increase in VAT over a year ago, which he labelled an abuse of workers with anti-poor tax hikes.

"The government must overhaul the tax regime to make it more progressive, ensure the rich pay their fair share and to protect the poor.

"This must include such wealth taxes on estates, land, inheritance, dividends, luxury goods and imports," Parks said.

Cosatu wants Mboweni to provide feedback on progress made in restoring the capacity and integrity of SARS, halting declining tax revenues, the crackdown on tax evasion and tackling customs fraud.

4. Public Service Wage Bill

At the mini budget last year, Mboweni flagged the public sector wage bill as a fiscal risk.

Parks contended that the public sector wage bill is not "out of control". He suggested that of government should rather slash the "exorbitant wages and perks that Cabinet, Premiers, Member of Executive Councils, Mayors, Director-Generals, CEOs of State-Owned Enterprises earn". 

"If the government really wants to address the wage gap and stop the ballooning of management perks, then it must place all public sector entities, management and public representatives under one collective bargaining process under the Public Service Collective Bargaining Council," he said.

5. Interventions at State-Owned Enterprises

Parks said there are still no "clear plans" by government to stabilise SOEs, such as Eskom, the Passenger Rail Agency of South Africa, the Road Accident Fund, the SABC and Denel. "If the government has a plan, then it must share this with all social partners," he said.

He stressed that it is in the interests of workers represented by Cosatu that SOEs are saved. "Not only do our members working at the SOEs depend upon them, but equally so do their families, communities and in fact the entire economy. 

"We are simply running out of time because bailouts are not sustainable," he added.

This week the National Assembly approved a special appropriations bill that would see Eskom receive a R59bn cash injection over the next two years to service its debt. This is over and above R69bn Treasury allocated to the power utility over the next three years.

The SABC this month received R2.1bn lifeline to aid its turnaround, this after having met several pre-conditions set out by Treasury, Fin24 previous reported. The SABC sought a R3.2bn cash injection, but Treasury will only release the balance once the SABC meets all of its conditions.

In August state arms manufacturer Denel received a R1.8bn cash injection to aid its turnaround.