INDEPENDENT MEDIA Finance Minister Nhlanhla Nene. Photo: Simphiwe MbokaziCape Town - While Finance Minister Nhlanhla Nene delivers his maiden Budget speech on Wednesday in tough economic times, the United Front (UF) is expected to picket outside Parliament for real spending allocations to stop load shedding and to support the poor and working class.
“We think the budget will be an anti-poor budget despite the rhetoric. We want a budget that will end load shedding,” said UF national secretary Mazibuko Jara on Monday.
Permission was not granted for a Section 77 strike, or one on socio-economic issues, and thus it is not protected. The demonstration would be made up of workers not on duty and representatives of civil society and the UF.
Billed to speak outside the gates of Parliament are Ronnie Kasrils, the former intelligence minister who is now part of the UF interim national working committee, and Karl Cloete, metal workers’ union deputy general secretary.
Inside the National Assembly Nene has a tricky task of presenting a budget just four months after tax increases were hinted at in an austerity-focused medium-term budget policy statement.
In a country frequently described as the most unequal in the world, South Africa cannot but maintain social security and infrastructure development spending. While the official unemployment rate continues to hover around 25 percent, according to Statistics South Africa, the expanded definition including discouraged work seekers stands at 35.8 percent. Effectively this means about 8 million people of working age are not working.
In a difficult domestic and global economic environment, Nene has to find R44 billion over the next three years, including the R23 bn to help Eskom keep the lights on, which was announced in the State of the Nation Address this month.
He also has to find the money to repay South Africa’s debt, a burden that has increased due to rand weakness and downgrades by rating agencies last year. A ratings downgrade effectively makes it more difficult and more expensive to borrow.
Already in place are state austerity measures to save an estimated R25bn over two years by cutting spending on consultants, catering, travel and accommodation, alongside a public service job freeze and vacancy review.
Some economists have called for VAT to be raised from the current 14 percent. That would be a political gamble not only for Nene, but for the government as a whole, since such a move has been opposed for years by trade union federation Cosatu and a range of civil society organisations.
An increase in VAT would hit the millions of poor South Africans whose lives government policies and programmes aim to improve. Because only a limited number of basic foods are excluded from VAT, and all services, including electricity, carry VAT charges, an increase in VAT would affect the poor as it would the rich.
South African consumers are already battling to keep up with above-inflation electricity tariff hikes, food inflation and the pending reversal of recent petrol price reductions. The drop of inflation to 4.4 percent in the last quarter of 2014, from 5.3 percent in the same period in 2013, has been described as a temporary fluke, with inflation set to bounce back soon to over 5 percent level. Despite a recent decline, household debt remains high and families’ indebtedness, particularly in the unsecured lending sector, is a worry.
However, Nene may just find some wiggle room. Last week the national Treasury showed its willingness to take money from underspending provinces and reallocate it to those who do spend. Limpopo had more than R500 million in human settlement funds taken away to be diverted to four other provinces, including KwaZulu-Natal and the Western Cape.
Political Bureau
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