Budget 2022/3 statement: Tell no lies, claim no easy victories
by Cry of Xcluded | 23 February 2022
“Accordingly, we have decided to keep money in the pockets of South Africans.“ – Minister Enoch Godongwana
This is an ideologically driven budget, which assumes that the way out of the country’s economic and social crisis is through creating the conditions for businesses to make greater and faster profits. Which South Africans have money in their pockets? The pockets of the many remain empty, while those of the wealthy few overflow.
This budget continues the pro-big business reform agenda of SA’s billionaire President, Cyril Ramaphosa. It is astounding, that in a period during which 2.1 million workers have been made unemployed, left with a measly R350/month grant (that did not rise in spite of the 4.5% inflation rate), the super-wealthy and corporate investors are prioritised. There are no pronouncements on a basic income grant, on the burden of care women face, or on repaying the public sector wages that were illegally cut, again and again, violating the 3-year wage agreement that should have gone through 2021. Workers remain under attack and in spite of a few hundred thousand temporary minimum-wage jobs, retrenchments of public sector workers will inevitably result.
Trickle-down economics shapes this budget and government’s overall recovery plan, symbolically represented by a reduction in the corporate tax rate from 28% to 27%. At the heart of the budget is a programme of structural reform entailing budget cuts to create a primary budget surplus (i.e., cuts everywhere except paying bankers back for what is largely illegitimate “Odious Debt” such as Gupta/Hitachi/ChinaSouthRail-influenced Eskom and Transnet corruption). On top of this are the tax breaks for the corporates and hence wealthiest South Africans, and an accelerated programme of privatisation.
The 14 million unemployed, the 55% of the population who have an income of just R1335, the majority of which are women, – the excluded and those with empty pockets have nothing to celebrate in this budget. Not even the extension of the tokenistic R350 social relief of distress grant, which amounts to less than a loaf of bread per day.
The goal of achieving a budget surplus by 2024/25 in order to appease international credit rating agencies and financiers has triumphed over the needs of South Africa’s excluded majority. It is simply not true that this budget increases the social wage, as Godongwana says.
The population grows by 1.3% each year, or 4% by 2024/25, and inflation will be 14% over the same period. Yet the budget cuts begun by Tito Mboweni are even worse now, than during his regime, with a 7.5% decline in spending per person over this period, adjusted for inflation. The poor suffer these cuts the most: in social development (including grants), the per person real (after-inflation) cuts are 27% over the next three years; and for healthcare, 15%. This is economic violence of a sort that causes “IMF Riots” in the poorest countries – such as we witnessed when budget cuts contributed to the “powder keg” social explosion last July.
Education sees further cuts, despite the low quality of education in the country. Spending on basic education will have a real cut of 7.1 percent over the next 3 years, equivalent to a reduction of more than R20 billion. There will be fewer teachers as a result. The full budget review (2022) itself acknowledges that slow growth of 1.9 per cent on the compensation of employees in basic education over the medium term will result in fewer teachers and increased class sizes in some provinces (page 58).
Health and Education are not a “cost” to the fiscus, but an investment.
While the Social Relief of Distress (SRD) grant has been extended until March 2023, the allocation for 2023/24 and 2024/25 has been decimated. This is an indication that the government will terminate the provision of social relief, leaving the almost 10 million people currently receiving the grant out in the cold. In addition, compared to 2021 social protection, in general, is cut by R33.3 billion over three years, a real reduction of 12.9 percent.
The ongoing crisis of social reproduction and gender-based violence is worsened by all cuts to the public sector, but especially important are the cuts to spending on women, youth and people with disability under social protection, as well as the effective cuts to foster care and care-in-aid. Gender-based budgeting is nowhere to be found.
The full scope of this austerity budget is not captured by the above cuts alone. Essential public services are also funded through local government, which sees “increases” well below the average inflation over the MTEF.
This budget talks about using its R181bn revenue windfall to provide “inflationary relief”. As we can plainly see from the above, there is no “inflationary relief” for the poor and unemployed.
It turns out that relief comes only for the rich. The treasury has slated a 1% decrease in the corporate income tax rate beginning with the new tax year in April, and a 4.5% adjustment to personal income tax brackets and rebates resulting in relief of between 1 – 3.5% for those earning more than R750 000 per year. This comes at a cost of R16.1bn to the fiscus.
Tax relief for the rich happens in a context where transnational corporations are shifting over R300 bn. illicitly out of the country into tax and secrecy havens every year. Most of these TNCs operate in the mining and extractive sectors of the economy, which government prioritises for growth. The bosses of these corporations are looting the country’s wealth while paying workers poverty wages. Workers and communities do not benefit from the abusive practices of these mining companies. The very same corporations, Sibanye Stillwater is a case in point while making record profits, refuse to invest in health and safety and meet the basic wage demands of workers. Government works hand-in-hand with these big corporations. For example, the government still ignores the clarion call by the Association of Mineworkers and Construction Union (AMCU) to amend the health and safety Act to save workers’ lives in the mines.
Privatisation and Structural Reforms:
Looking beyond these vicious cuts, this budget also gives us the shape of Ramaphosa’s privatisation programme to come. This budget makes repeated mention of the sales of state assets, opening up sectors for corporate investment, public-private partnerships and bank financing of the government’s infrastructure development programme. Critically, it speaks to the “rationalisation” (commercialisation) of state-owned enterprises. This involves an upcoming set of criteria for the continued funding of SOEs, which will be reliant on their financial performance; in turn, forcing them to act more and more like profit-hungry corporations.
We are on a disastrous economic and political trajectory, one that austerity and tokenistic social support cannot rescue us from. We need radical progressive alternatives centred on decent health and education, the right to work, the right to say no, basic income grant, and a large functional public sector focused on the provision of public goods. These are the kinds of alternatives that have been called for by mass movements like the Cry of the Xcluded, and they are the bare minimum needed to avert social catastrophe.
Issued by the Assembly of the Unemployed & the Cry of the Xcluded.
- South African Federation of Trade Unions (SAFTU)
- South African Municipal Workers Union (SAMWU) back to work campaign
- Association of Mineworkers and Construction Union (AMCU)
- Treatment Action Campaign (TAC)
- Amadiba Crisis Committee (ACC)
- Home Based Workers South Africa Association (HBWSAA)
- NUPSAW EC (National Union of Public Service and Allied Workers)
- Fighting Inequality Alliance (FIA) – South Africa
- People’s Health Movement South Africa (PHM-SA)
- Trust Community Outreach and Education (TCOE)