{"id":1180,"date":"2020-03-03T13:13:05","date_gmt":"2020-03-03T11:13:05","guid":{"rendered":"http:\/\/marxistworkersparty.org.za\/?p=1180"},"modified":"2020-05-01T10:10:43","modified_gmt":"2020-05-01T08:10:43","slug":"budget-2020-analysis","status":"publish","type":"post","link":"https:\/\/marxistworkersparty.net\/?p=1180","title":{"rendered":"Budget 2020: Analysis"},"content":{"rendered":"\n

by Weizmann Hamilton<\/strong><\/p>\n\n\n\n

The budget\nannounced by Tito Mboweni, signifies the most serious attack on the working\nclass since the ANC came to power. The capitalist class, backed by the\nopposition parties, including the EFF \u2018radical economic transformation\u2019\nposturers, welcomed the budget. The majority of them had wished for more brutal\ncuts but praised Mboweni for \u201cdoing his best under difficult circumstances\u201d.\nReflecting the callous indifference of the capitalists towards the masses, one analyst,\nechoing Mboweni\u2019s insistence that this was not an austerity budget, described\nit as one of \u201cprogressive prosperity\u201d.  <\/p>\n\n\n\n

Months and even\nyears of mounting hysteria in the capitalist media, about an allegedly bloated\npublic service, and lazy, overpaid public sector workers has paid-off. The ANC\ngovernment, as it showed with the Marikana massacre, in which now-president\nRamaphosa played a critical role, has heeded the call of its capitalist masters\nby launching an unprecedented offensive against the working class.<\/p>\n\n\n\n

The public sector wage bill, to be cut by R160 billion\nover the next four years by \u201cincreases\u201d based on the Consumer Price Index minus\n3% is the main target. With CPI at 4.1% this effectively means a wage increases\nof 1.1% and could be worse if CPI changes. Increases in the fuel levy, e-tolls,\nand the relentless escalation of electricity tariffs, already up by over 400%\nover the past five years, will all have a ripple effect throughout the economy\nand be passed onto the consumer. This budget constitutes the most brutal\nassault on working class living standards since the ANC came to power.<\/p>\n\n\n\n

Although there are no proposals for public \u2013sector retrenchments,\nas demanded by big business, there is no question of filling the over 200,000\nvacancies that the Public Service Commission said existed in 2016. In fact a\nstudy by academics, reflected in a 2018 policy proposal by the Institute for\nEconomic Justice, indicates that the estimated number of vacancies could be as\nhigh as one million.<\/p>\n\n\n\n

<\/div>\n\n\n\n

Public-sector\nWage Agreement<\/strong><\/p>\n\n\n\n

This budget amounts to not just a wage-cut but a jobs\nfreeze. But it is the manner in which the cuts to wages are to be implemented\nthat reflects this capitalist government\u2019s naked hostility to the working class\n\u2013 particularly organised workers. Announcing its intention to drop the axe\nimmediately, the government has opened up hostilities in the class war with its\nmost insolent act of aggression yet \u2013 a repudiation of the commitment to pay\nthe increase due to workers in April this year, the final year of the three-year\ncollective agreement signed with the public sector unions in 2018. <\/p>\n\n\n\n

In tearing up the collective agreement, the government\nhas in fact launched the most serious attack on collective bargaining since\n1999 when then Minister for Public Services & Administration, Geraldine\nFraser Moleketi, earned herself the nickname \u201cmoelikheid<\/em>\u201d by walking-out of the wage negotiations at the Public\nService Coordinating Bargaining Council and unilaterally imposing a settlement.\n<\/p>\n\n\n\n

The cuts are as savage as they are partly because of\nthe failure to reduce the public-sector headcount by 30,000 through the\nabolition of the penalty for early retirement. Only 4,600 have taken up the\noffer, mostly police, in all likelihood because the stress of fighting horrifying\nlevels of crime has become unbearable.<\/p>\n\n\n\n

<\/div>\n\n\n\n

Attack\non Wages, Jobs & Services<\/strong><\/p>\n\n\n\n

But the axe is also being taken to other areas of\nsocial spending. This budget makes provision for further cuts of R200 billion in\nsocial spending. These began in earnest after the 2008 global financial crisis\n\u2013 amongst them health, housing, local government and infrastructure spending. As\nformer Cosatu strategy coordinator, Neil Coleman, explains:<\/p>\n\n\n\n

The Minister made much-ado about the R700 billion infrastructure fund. However, even in this area, the Budget falls short. Despite its perilous state, public transport spending is reduced by R13.2 billion over the next three years, mainly on allocations to Prasa and the public transport network grant. Reductions in basic and higher education infrastructure allocations amount to R5.2 billion over the medium-term. Municipalities will see cuts to water and electricity infrastructure.<\/p><\/blockquote>\n\n\n\n

Between 2010 and 2017 basic education experienced an 8% decline in per-learner funding. <\/p>

In the health sector, over the next three years expenditure will increase by only 0.6%, 1% below population growth and despite medical price inflation remaining above CPI inflation. [1]<\/a>  <\/em><\/p><\/blockquote>\n\n\n\n

These cuts are nothing\nnew. Wages have been cut as the government\u2019s own 2018 Budget Review reveals.\nThe \u2018compensation ceilings\u2019 were reduced by R10 billion in 2017 and R15 billion\nin 2018. These cuts are consistent with the intensified austerity policies that\ngovernment has been pursuing since the 2008 financial crisis. Researcher Kirsten Pearson describes\nas \u201causterity by stealth\u201d the practice of routinely returning unspent budgets\nto the National Revenue Fund.[2]<\/a>\nIn the financial year 2019\/20 this came to R3.9 billion, affecting the departments of:<\/p>\n\n\n\n

  1. Higher\nEducation and Training: R897.1 million<\/li>
  2. Police:\nR703.6 million<\/li>
  3. Department\nof Health: R346 million<\/li>
  4. Cooperative\nGovernance and Traditional Affairs: R310.5 million<\/li>
  5. Small\nBusiness Development Department: R300 million<\/li>
  6. Department\nof Energy: R256.5 million<\/li>
  7. Department\nof Water and Sanitation: R215 million<\/li>
  8. National\nTreasury: R179.4 million<\/li>
  9. Rural\nDevelopment and Land Reform: R117.3 million<\/li>
  10. Correctional\nServices: R100 million<\/li><\/ol>\n\n\n\n
    <\/div>\n\n\n\n

    Austerity<\/strong><\/p>\n\n\n\n

    The government\u2019s policy is to \u201cpunish\u201d\ndepartments by reducing their budget allocations by the amount of under-spent\nfunds, aggravating their capacity to deliver services. <\/p>\n\n\n\n

    This means that\neven the allocations in the 2020 budget could suffer the same fate. The combined\neffect is that the elimination of the 2.3 million housing back-log has been\npostponed indefinitely, along with the eradication of mud structures and pit\ntoilets in schools. The provision of libraries, laboratories and sports\nfacilities at the rate required is effectively off the agenda. It also means\nthe building of clinics, hospitals and addressing the ongoing collapse of\nhealth infrastructure, as well as water and sanitation has been pushed further\ndown the list of government priorities. Even worse, frontline services in\nhealth and education will be starved of the critical need for more workers. The\nburden on underpaid and over-worked nurses, teachers and police will become\neven heavier.<\/p>\n\n\n\n

    To shift the\nblame for the economic and social crisis onto the shoulders of public-sector\nworkers in particular, a mountain of distortions, manipulation of statistics\nand outright lies has been built to conceal the responsibility of the government\nand its capitalist masters for the social and economic crisis.<\/p>\n\n\n\n

    <\/div>\n\n\n\n

    Generosity towards the bosses\u2026<\/strong><\/p>\n\n\n\n

    The reality is\nthat from the onset the working class was never the priority of this ANC\ngovernment. It was from the beginning a government of the aspirant black\ncapitalist class who, far from intending to overthrow capitalism as far-right\nthink tanks like the Freedom Foundation continue to suggest, they wanted to be\naccommodated within it. The 2020 budget is merely the logical outcome of the\ncapitalist policies the ANC government has followed since it was elected.<\/p>\n\n\n\n

    At Codesa, the ANC\nagreed to pay the apartheid debt, lower corporate taxes from 44%, to only 28%\ntoday, and to liberalise foreign exchange regulations. It followed this by\nallowing the relocation of the listing of the biggest companies on the Johannesburg\nStock Exchange to London. Big Business is celebrating the fact that the 2020\nbudget has removed the last remaining exchange control regulations.<\/p>\n\n\n\n

    This policy was and\nremains an open invitation to the capitalists to smuggle billions out of the\ncountry.  But this was not enough to\nsatisfy their greed.  They have continued\nto loot billions through illicit capital flows through various schemes\nincluding mis-invoicing, profit shifting and VAT fraud, amongst others.<\/p>\n\n\n\n

    Judge Dennis Davies,\nappointed by Ramaphosa to head a committee to look at tax reform, reveals that:<\/p>\n\n\n\n

    According to a report\nissued by Global Financial Integrity in November 2018, South Africa lost, in\nrespect of exports and imports, approximately $3.4 billion in revenue as a\nresult of mis-invoicing just in 2016.<\/p>\n\n\n\n

    While falling outside the strict ambit of tax evasion, the widespread problem of Base Erosion and Profit Shifting (BEPS) by companies, particularly multinational corporations, is a clear contributor to the tax gap. The diverting of profits from South Africa to lower tax jurisdictions doubtless gathered pace as SARS\u2019 capacity to respond, for example, to transfer pricing, was degraded. One study issued in 2018 estimated a loss of some R7-billion revenue a year, as a result of a series of well-known BEPS practices.[3]<\/a><\/p><\/blockquote>\n\n\n\n

    Even one of the world\u2019s big five auditing firms, Price\nWater House-Coopers, that has colluded in these crimes by advising the bosses\non how to \u2018cook the books\u2019, describes the corporate elite in SA as the most\ncorrupt in the world.<\/p>\n\n\n\n

    The logic of the\ntransition from white minority rule should have meant an increase in the size\n(in numbers employed, budgetary provisions, infrastructure spending and service\ndelivery needs) of a public sector now required to deliver services to the\nadditional 90% of the population, at whom only crumbs had been thrown under\napartheid. <\/p>\n\n\n\n

    <\/div>\n\n\n\n

    \u2026.and animosity to the working class<\/strong><\/p>\n\n\n\n

    In sharp\ncontrast to the generosity shown to the capitalist class, the ANC government\nimplemented cuts in social spending demanded by the neo-liberal Growth\nEmployment and Redistribution and Policy (Gear), formally adopted in 1996, but\npreparations for which had been underway well before. It led to the closure of\nnursing and teacher training colleges and the introduction of water charges,\nforcing people to get water from polluted rivers in KZN leading to the biggest\ncholera epidemic in SA history. <\/p>\n\n\n\n

    The commercialisation of state-owned enterprises led to\njob cuts and, through underfunding, the disastrous situation with electricity\nsupply by Eskom today. Claims that Eskom has 30,000 more workers than necessary\nignores the reality that staff costs have in fact declined. Citing a report by\nPrimasearch, Duma Gqubule points out:<\/p>\n\n\n\n

    There is a perception that Eskom staff costs have ballooned, but we find that the staff cost to revenue ratio has reduced in the past 13 years and its current level of 18.5% is lower than the 2006 ratio. Relative to its turnover, Eskom can afford its level of staffing. We do not think Eskom is significantly inefficient in its level of staffing. While there may be opportunities for efficiency improvements, we do not think rising staff cost is a major contributor to Eskom\u2019s financial problems.[4]<\/a><\/p><\/blockquote>\n\n\n\n

    Telkom employed\n57,000 in 1995. Down to 15,000 today, Telkom management wants to retrench a\nfurther 3,000. In a 2018 policy briefing, the Institute for Economic Justice\n(IEJ), headed by  Coleman, points out\nthat the number of public-sector workers was  reduced by 203,000 between 1995 and 1999. Although\nthese cuts were subsequently reversed, the net increase, at just over 23,000, falls\nfar below the increase necessary, not only to accommodate the additional 90%, but\nto keep pace with population growth. <\/p>\n\n\n\n

    <\/div>\n\n\n\n

    Is the public sector bloated?<\/strong><\/p>\n\n\n\n

    But this has not\nstopped the capitalist media from repeating the lie of a \u201cbloated public\nservice\u201d so often that it is treated as accepted fact. As the IEJ study shows,\nthe public sector employs 9% of the total workforce in SA. Under apartheid, the\nfigure was 15%. It also employs fewer workers than countries in Latin America\n(14%), East Asia (11%), and 30% in Sweden and Norway. <\/p>\n\n\n\n

    In fact the\nWorld Bank calculates that the SA public sector makes up only 3.1% of the\npopulation compared to 6.1% for middle income countries.  There is no specific size that the public\nsector should be. Initially the government manipulated statistics to give the\nfalse impression that it is in fact responding to demands for increased\nemployment to improve service delivery. Public sector vacancies were reported\nto have dropped by 120,000 in 2012\/13. Yet the number of workers employed went\nup by only 70,000. This propaganda trick was performed by changing staff\nstructures and abolishing posts. In fact the austerity programme which has entailed\nsetting expenditure ceilings, freezing of posts have reduced the number of\nposts being filled.     <\/p>\n\n\n\n

    The centerpiece\nof capitalist propaganda is the claim that public sector wages are too high, have\nincreased by 40% over the past five years or so, and are crowding out funding\nfor service delivery. It is true that by international comparisons the public\nsector wage bill is high. But how has this come about? Through struggle, public\nsector workers have managed to slow down the rate of decline of wages relative\nto the constant reductions in departmental budgets. This resistance took the\nform most famously of the 2007 and 2010 public sector general strikes. But this\nhas not stopped the decline of wages as a share of total income in the economy\nas a whole from 54% in the 1990s to 46% today. Through outsourcing,\ncasualisation, contracting, short-time and retrenchments, profits enjoy a\ngreater share of annual income.  The\ngreater success private sector bosses have had in keeping wage rises down is\nnow being used to portray public sector workers as privileged. <\/p>\n\n\n\n

    Moreover, the\ngovernment has abused past wage agreements like the Occupation Specific\nDispensation conceded in 2007 to attract and retain skilled workers.  Ministers and director-generals have subverted\nthe definition of scarce skills to justify the employment of flunkeys, friends\nand family in senior positions such as chiefs of staff, special advisers,\nconsultants and the like. <\/p>\n\n\n\n

    The result, as\nthe IEJ points out, is that the top echelons \u2013 levels 13-16 which fall outside\ncollective bargaining, absorbed 15% of the salary costs in 2016 when they\nconstitute less than 6% of the workforce. On the other hand, 57% of personnel\nspending comprises 48% of the workforce on levels 0-7 which covers most\nnursing, policing and teaching jobs. The comparative increase in employment is\neven starker. Whereas teachers, nurses and police constitute 55% of the\nworkforce, they accounted for only 40% of the increases in the number of jobs\nfrom 2009-16, compared to the High Skilled Supervision sector which has grown\nfrom 6% in 2001 to 18% in 2016.<\/p>\n\n\n\n

    But by far the\ngreatest lie about allegedly overpaid public-sector workers is the one told\nabout workers employed in the various slave labour schemes under which workers\nare not paid wages, but stipends. Workers in the Extended Public Workers\nProgrammes (EPWP) are not even defined as workers so as to exclude them from\nthe benefits of the Labour Relations, Basic Conditions of Employment,\nOccupational Health and Safety and Employment Equity acts and, of course,\ncollective bargaining. <\/p>\n\n\n\n

    The IEJ\nestimates that these \u2018non-workers\u2019 employed as Community Health Workers, in\nschool nutrition schemes, Community Works Programmes, Early Childhood Development\nand youth care services, in various departments total an estimated 360,000\nearning an income of between R840 to R2,500 a month. Repeated undertakings by\nthe ANC, the latest in its 2015 manifesto, to absorb these workers and give\nthem permanent jobs, have simply been abandoned.      <\/p>\n\n\n\n

    <\/div>\n\n\n\n

    How should public sector workers respond?<\/strong><\/p>\n\n\n\n

    The 2020 budget\nis the last stage in a war of a carefully orchestrated strategy to cripple the\npublic sector unions and to clear the way for a full blown offensive on the\nentire working class.  In the execution\nof the plan, Ramaphosa has enjoyed the full cooperation of the Cosatu\nleadership.<\/p>\n\n\n\n

    From Cosatu\u2019s\ncowardly reaction to the Marikana massacre, and its support for him in the\nANC\u2019s succession battle, Ramaphosa has drawn the conclusion that the Cosatu\nleadership has now become what Trostky described as \u201clieutenants of capital in\nthe labour movement\u201d.<\/p>\n\n\n\n

    The Cosatu\nleadership has followed their condonation of the Marikana massacre with\nendorsing the slave-wage minimum wage law, offering to use workers\u2019 wages to\nbail out the capitalist parasites that have thrown Eskom into debt, the attempt\nto cripple the right to strike and offered its cooperation in \u201ccontaining\u201d the\npublic sector wage bill.<\/p>\n\n\n\n

    During the 2010\npublic sector general strike, the Cosatu, leadership, then headed by now Saftu general\nsecretary, Zwelinzima Vavi, promised the \u201cmother of all general strikes.\u201d  Denouncing Cosatu\u2019s threats by declaring that\nthere was no such thing as an indefinite general strike, Zuma called in Vavi. Without\na mandate from the unions, Vavi called-off the general strike.<\/p>\n\n\n\n

    The Cosatu\nleadership has denounced the 2020 budget as a declaration of war. Vavi, now\nsupposedly in opposition to Cosatu, has echoed this war talk with threats to\nunleash mass action throughout 2020 including the occupation of the cities.<\/p>\n\n\n\n

    The reality,\nhowever, is that neither the Cosatu leadership, nor unfortunately Vavi, has any\nserious intentions of carrying through the threats. Ramaphosa took this step\nwith the unofficial endorsement of the Cosatu leadership.<\/p>\n\n\n\n

    Vavi, for his\npart, has taken a position on the budget that, in the final analysis, is\nindistinguishable from that of the Cosatu leadership. The call for Tito\u2019s\nremoval is an echo of the approach of the corrupt, \u2018radical economic\ntransformation\u2019 faction of the ANC, into which the EFF has now been drawn. <\/p>\n\n\n\n

    Since the launch\nof Saftu, Vavi and the entire leadership of the new federation has betrayed the\npromise its birth represented. A budget that represented the escalation of a\nguerrilla war against the working class to a full-scale equivalent of a\nconventional war, has been greeted without a word of denunciation of capitalism\nlet alone a call for its overthrow and the socialist transformation of society.\nThe Saftu leadership is in full ideological and political retreat. Absolutely\nno action has been taken to implement the resolution adopted at the 2018\nWorking Class Summit for the establishment of a mass workers party on a\nsocialist programme.<\/p>\n\n\n\n

    Instead Vavi has\ntaken refuge in the reformist arguments of left academics and bourgeois\neconomic analysts in calling for a fiscal stimulus. Ignoring the global reality\nthat these policies \u2013 lower, even negative interest rates, and quantitative\neasing worth trillions of US dollars \u2013 have failed completely to restore\neconomic growth to the pre-2008 levels, but have created a new unprecedented\ndebt problem affecting governments, the corporate sector and households.<\/p>\n\n\n\n

    This budget is a\nconfession of political bankruptcy by the ANC, and an acknowledgement that\nthere is no solution within the framework of capitalism except intensified\nattacks on the working class.  Even from\na capitalist standpoint the \u201ccure\u201d of austerity is worse than the disease.\nThese cuts will not only further strangle consumer demand which makes up 60% of\nGDP; it will also obliterate the incentive of the capitalist to invest that\nVavi is hoping for.       <\/p>\n\n\n\n

    The birth of\nSaftu represented the hopes of Cosatu workers for the rebirth of the federation\nlaunched in 1985 with a commitment to socialism. If they have not followed the\nexodus of mineworkers from the NUM it is because Saftu has turned-out, under\nthe present leadership, to being no more than an opposition outside of the ANC,\ninstead of inside it.<\/p>\n\n\n\n

    The future of\nthe organised working class is now in the hands of the rank-and-file of both\nCosatu and Saftu. The Ramaphosa administration has declared war on the working\nclass. What is now called for a is a public-sector general strike as the first\nstep in rolling mass action to culminate in a nationwide general strike of\npublic and private sector workers.<\/p>\n\n\n\n

    These actions\nmust simultaneously be part of preparation of the reconvening of the second Working\nClass Summit to implement the resolution to form a mass workers programme\nadopted at its first. The ANC government has forfeited the right to rule. It is\ntime for a workers government, the overthrow of capitalism and to commence with\nthe socialist transformation of society.
    <\/p>\n\n\n\n

    \n\n\n\n

    [1]<\/a> The\n2020 Austerity Budget: Poor and Working-Class Communities Will be its Worst\nVictims<\/a>, Busi Sebeko & Neil Coleman, Daily Maverick<\/em> (28 February 2020)<\/p>\n\n\n\n

    [2]<\/a> Budget\nUnderspending: A Case of Austerity by Stealth<\/a>, Kirsten Pearson, Daily Maverick<\/em> (23 February 2020)<\/p>\n\n\n\n

    [3]<\/a> The\nTax Gap \u2013 Who is to blame and how do we fix it?<\/a>, Dennis Davis, Daily Maverick <\/em>(24 December 2019)<\/p>\n\n\n\n

    [4]<\/a> Report\nExplodes Myths About Eskom\u2019s Failure \u2013 and the Solutions<\/a>, Duma Gqubule, BusinessLive<\/em> (14 October 2019)<\/p>\n","protected":false},"excerpt":{"rendered":"

    The budget announced by Tito Mboweni, signifies the most serious attack on the working class since the ANC came to power. The capitalist class, backed by the opposition parties, including the EFF \u2018radical economic transformation\u2019 posturers, welcomed the budget.<\/p>\n<\/div>","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1180","post","type-post","status-publish","format-standard","hentry","category-comment"],"aioseo_notices":[],"acf":[],"brizy_media":[],"_links":{"self":[{"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/posts\/1180","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1180"}],"version-history":[{"count":2,"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/posts\/1180\/revisions"}],"predecessor-version":[{"id":1353,"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/posts\/1180\/revisions\/1353"}],"wp:attachment":[{"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1180"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1180"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1180"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}