Ecumenical Service for Socio-Economic Transformation Comments on the 2011/12 Budget

The Ecumenical Service for Socio-Economic Transformation (ESSET), an independent ecumenical organisation that works for socio-economic justice, welcomes Minister Pravin Gordhan’s 2011 Budget Speech. ESSET has evaluated the Budget Speech based on Christian life-giving and liberating ethical principles of the equitable sharing of resources for all and preferential option for the poor.

Against the backdrop of a slow economy recovery and post-recession, South Africa still remains one of the most unequal countries in the world with the poor being deprived both basic services and economic opportunities. The opportunities that are available mainly accrue to the ‘newly monied’ recipients of Black Empowerment deals. This class, in collaboration with the traditional big business / capital has almost exclusive access to and influence over government’s economic policy. ESSET challenges the principles of neoliberal economic ideology that promote individualism, greed, and the other systemic injustices that exclude the poor from benefiting in the economic opportunities mainly enjoyed by elites.

The Minister’s speech lack specifics on how government intend to intervene to promote the small business sector. Law enforcement agencies can also play their part by ceasing to harass people in the small business sector like informal traders who have taken the initiative to ensure that their families do not go to bed on an empty stomach and bills are paid. Our view is that intensive growth of informal enterprises is likely to create more jobs than capital-intensive growth of formal enterprises. It also costs much less to create jobs in the small business sector than in the formal economy. Given the economic contributions of the informal sector, its vitality, and its permanence, government should be looking to develop policies that recognise its importance and improve the working conditions of those who work in it.

We also noted tax incentives for manufacturing investment of R20 billion, which has a job creation potential and we hope that this is not one of the state’s initiatives to continue to enrich the capitalists. Our take on this is that the Minister was again thin on details. We expected him to have given a brief criterion for giving these tax incentives to companies. For example, he would have emphasised that only companies that give decent permanent jobs would be eligible for these incentives. We are concerned about jobs in the Expanded Public Works Programme (EPWP) - these should not be considered as they are merely a short-term poverty relief initiative that usually only benefit a few.

We welcomed the initiative of R5 billion earmarked for youth employment subsidy as set out in a discussion paper. However, we are concerned that often it is only youth that are politically connected that have access to job opportunities and skills development to the exclusion of other youth such as those in rural areas that remain reprieved of both jobs and skills training opportunities.

We note the effort of government in collaborating with other institutions to fight corruption, which has a negative impact on the state’s efficiency. For example, the Minister made mention of the effort by government to curb corruption and stated that companies bidding for tenders will be required to disclose the identity of all directors, to determine whether any of the directors are government officials or tax non-compliant. This we believe is a step in the right direction. Many times government has noble plans but their intentions are not always realised because of a lack of political will and key leaders in high echelons of government structures who are themselves corrupt or implicated in acts of corruption. We believe that government should act decisively against any element of corruption.

We hope that the government is not making the right noises only to entice voters in the year of elections. South Africans watched in disbelief last year as government displayed it capabilities by delivering an impressive world class 2010 FIFA Soccer World Cup. Therefore, the expectations are that from this year onwards, government should ably fulfil its promises and meet all the demands of its citizens, especially the creation of jobs, fast tracking service delivery and fighting corruption to mention just a few. 

ESSET call on all churches and the ecumenical organisations to continue to show solidarity with the poor and make government to account.

Thabo Koole
Ecumenical Service for Socio-Economic Transformation

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