The PBC cautiously welcomes the Minister of Finance’s budget speech. We are in the process of studying the details of the proposals and will issue a further more detailed statement due course.
The test by which today’s statement must be judged is to what extent it takes forward the progressive policy proposals in last week’s State of the Nation speech and those of the ANC Election Manifesto. While we welcome the Minister’s commitments to prioritise job creation and poverty reduction, many detailed proposals fall short of what is required.
We welcome the many increases in government spending and a significantly greater role of state-owned enterprises, and applaud the Minister’s attack on the “unregulated (or aggressively deregulated) wild-west model of free-market capitalism”. The proposed use of mining royalties for economic development in mining towns and labour sending areas is welcome and meets a long-term demand of COSATU and the NUM.
We are worried that spending on electricity and the Eskom loan is disappointingly insufficient. The costs are likely to be passed onto users especially in respect of increased infrastructure development in the sector. The grant to SAA should have had conditions attached.
On jobs, we understand the Minister’s admission that the global financial crisis continues to impact on poverty and jobs and that “progress in these areas will be more difficult over the period ahead”. The crisis is already being felt in many sectors of the economy such as the auto-industry, mining, retail and manufacturing and the 3rd quarter employment figures of 2008 have already indicated a reversal in the jobs trend.
It is commendable that the Minister promises greater effort to accelerate employment growth, but while we welcome the extension of the Expanded Public Works Programme and increased infrastructure spending, especially associated with service delivery, we expected more emphasis on the creation of decent, sustainable jobs in line with the ANC manifesto commitments through industrial policy interventions.
Expenditure increases on education are disappointingly low. The average real increase over the next 3 years will be only 4.5%. We would have hoped for more emphasis on eventual introduction of free schooling as opposed to being limited to no-fee schools.
Health expenditure over next year increases by only 1.69% and trends over the next three years average only 3.78%. This raises concerns about the implications if NHI is eventually introduced.
On poverty the PBC feels that the budget does not go far enough to protect the poor. There is no mention of the comprehensive social security plan promised last year. While we welcome the increase of the tax threshold to low-income earners of R4 500 per month and less, on the other hand only people who are earning over R150 000 per annum will benefit from the tax cuts.
A third of the tax cuts go to people earning over R250 000. The PBC remains critical of income tax cuts that disproportionally benefit working people when we continue to have a high unemployment rate. These tax reliefs should have been pumped into increasing education or health expenditure.
Increases in social grants are below the level of inflation. The Child Support Grant increases by 9% and pensions and disability only by 5.2%. This is insufficient to provide a meaningful buffer within the current economic crisis. The CSG is only extended to 15 years and the Minister says “consideration will be given” to extend it to 18-year-olds, and yet this has already been announced as a policy decision!
South African Council of Churches