Image: Trevor Sampson

Finance Minister Pravin Gordhan, followed by Treasury director-general Lungisa Fuzile, arrives at a press briefing on the medium-term budget at Parliament in Cape Town.

The People's Budget Campaign (PBC) is a civil society coalition comprising of the Congress of SA Trade Unions (Cosatu), the SA Council of Churches (SACC) and the SA Non-Governmental Organisation Coalition (Sangoco).

A priority for the PBC was a  budget "that continues to see greater budget allocation that supports a number of progressive interventions in government's New Growth Path to address the structural challenges in the economy that militate against development and decent job creation."

The coalition said industrial development supported through IPAP 2 (Industrial Policy Action Plan 2) should not only create the necessary incentives for investment but support a much more active state (using and creating the necessary state owned enterprises) in achieving these objectives.

"Resource allocations must promote an inclusive economic growth strategy, reduce inequality of incomes and eliminate poverty and unemployment.

"This will require a much more diversified economy that supports the expansion of manufacturing, agriculture and agricultural processing, a green economy and a growing and supportive services sector."

However, the PBC continued to note a few fundamental challenges that hindered the implementation of those interventions in the New Growth Path. These included SA's inflation targeting policy and the "overvalued" exchange rate. 

The PBC demanded that employment and poverty eradication become a critical part of the Reserve Bank's overall mandate.

It also wanted a "stable and competitive" exchange rate that could better promote the growth of local industries and make their products competitive in global export markets, as well as drive up both skills development and employment.

The PBC favoured an introduction of capital controls "to prevent the volatility of the currency".

It was expected that the National Budget, including the medium term forecast would set out in detail the president's commitments spelt out in the state of the nation address.

"The PBC has always argued the importance of increasing our infrastructure allocations in meeting economic and social objectives. The state must continue to commit to increasing public sector investment.

"Achieving this will require significant budget allocation and political commitment. Infrastructure spend must ensure that it meets economic growth and developmental as well as social needs."

The ongoing economic and debt crisis in Europe was likely to impact on SA's export demand and investment. The PBC expected a continued emphasis on allocations to meeting the agreements elucidated in the Nedlac (National Economic Development and Labour Council) agreement: "Framework for SA's Response to the International Economic Crisis".

"This will require a steadfast commitment to a counter-cyclical fiscal policy approach that allows for increasing deficit spending to meet economic, social and other developmental challenges and stave off any second round recessionary prospects.

The PBC said allocations had to increase towards the National Jobs Initiative and ensuring expenditure targets were met, supporting a revised training lay-off scheme that improved support for workers during recessionary periods and supporting the interventions of the CCMA (the Commission for Conciliation, Mediation and Arbitration) to avoid job losses.

The coalition added that the budget had to be measured against the priorities identified in 2009 of decent jobs, health, education, rural development and land reform, crime and corruption.

In addition the PBC called for a budget that was "more supportive" in meeting housing delivery and the implementation of a radical spatial development programme that was in harmony with nature and social needs as suggested in the holistic human settlements approach.

"The PBC continues to reject human settlements that perpetuate Apartheid spatial patterns and relegates the working class to far flung reaches of all cities and towns and allows for market pricing mechanism that hampers affordable housing development in city centres and places close to employment."

It also wanted a budget that catered for improved and affordable access to basic services.

"The National Budget must address how it intends supporting low income households and labour intensive sectors against high and increasing electricity prices.

"PBC calls for immediate intervention to avoid the electricity crisis of January 2008, given the recent announcements by Eskom on expected shortages in electricity supply in the coming winter months and beyond. The budget needs to ensure that access to clean, piped water and sanitation is stepped up in rural areas and townships."

Go to Budget 2012 Special Report