Cosatu's Matthew Parks. Picture: SUPPLIED
Cosatu's Matthew Parks. Picture: SUPPLIED

Union federation Cosatu has expressed disappointment with finance minister Tito Mboweni’s budget saying it had no clear plan to tackle the massive crises that threaten the survival of the state and risk plunging the economy back into recession.

Cosatu said it agrees with the government that urgent and decisive action is needed to stabilise the state and state-owned enterprises (SOEs)‚ to grow the economy‚ to arrest corruption and wasteful expenditure‚ to grow the economy and create jobs‚ to increase service delivery to the poor and invest in public infrastructure.

Cosatu’s Matthew Parks said workers are also alive to crises facing the state as they bear the brunt of austerity through retrenchments‚ wage cuts and service-delivery collapse.

“In short‚ Cosatu believes that the government did not rise to the occasion. It is a missed opportunity to stabilise the state‚ save the SOEs‚ grow the economy and create jobs. The president is leading from the front in confronting these challenges, but he is being let down time and again by his ministers‚ premiers‚ mayors and managers‚” said Parks.

He criticised Mboweni of barely touching on how the government will ensure their jobs and investment targets are met. “He does not mention how many jobs have been created or will be created.”

Parks said this was a let-down following “the successful and progressive” jobs and investment summits convened by President Cyril Ramaphosa in 2018.

There is also space to increase personal income tax for those earning more than R1.5m a year‚ including a need to increase inheritance and estate-duty taxes for the wealthy
Matthew Parks, Cosatu

“Workers have seen that, since the summits were held‚ thousands of mine‚ retail‚ service‚ agriculture and manufacturing workers have been retrenched. Workers are being threatened daily with more retrenchments at Eskom‚ SABC‚ SAA‚ SA Express and Denel‚ including by this minister who has called for the dismissal of 30‚000 Eskom workers‚” he said.

“The minister and business have yet to explain how unemployment will be reduced by retrenching thousands of workers [and] how making more workers penniless will grow the demand and the economy.” 

Parks said Cosatu appreciates that the state cannot tax its way out of the crisis but it believes Mboweni’s budget misses several key interventions that could address the revenue and expenditure crises. “We believe that there is space to increase company tax from 28% to 30% without spooking investors‚ more so given how company taxes have plummeted.”

Wealth taxes

He said there is also space to increase personal income tax for those earning more than R1.5m a year‚ including a need to increase inheritance and estate-duty taxes for the wealthy. “It is not helpful for government to continue squeezing workers’ meagre salaries by not adjusting tax brackets for inflation. This is merely an income-tax hike on workers through the back door. In short‚ workers’ small increases will go to inflation and Sars.”

While acknowledging the need for government expenditure to be sustainable‚ Parks said the federation is worried that government debt levels are rising at dangerous rates and lack credibility‚ adding that Cosatu does not believe that expenditure and debt management needs to be achieved through austerity. Cosatu is also hoping to hear a clear plan on how the government will reduce corruption and wasteful expenditure‚ and recover stolen funds.

From tough talk on saving Eskom and Sars, to increases on tax on alcohol and cigarettes - we take a look at which aspects of Finance Minister Tito Mboweni’s 2019 budget will hit close to home. Subscribe to TimesLIVE here: https://www.youtube.com/user/TimesLive

Cosatu applauded the projected R526bn in infrastructure as well as the freezing of cabinet members’ salaries and below-inflation increases for senior management. “They are after all the ones who have mismanaged the state. However welcome‚ these do not go far enough. National and provincial cabinets and mayoral committees can easily be cut by 50%. They should equally accept 25% salary cuts‚” he said.

Parks called for salaries and benefits of SOE executives to be capped at the levels of the public service saying, it is not acceptable to pay SOE managers salaries of R8m, then make doctors work 48-hour shifts due to frozen posts.

Cosatu‚ whose affiliates have rejected the so-called unbundling of Eskom‚ suspecting it means privatisation‚ welcomes the additional funding allocation of R23bn a year over the medium-term expenditure framework to help stabilise Eskom.

“Workers and the economy cannot afford for Eskom to collapse. The government needs to assure workers that Eskom and the SOEs will not be privatised and that workers will not be retrenched. If headcounts are too high in one workplace‚ then those workers must be retrained and redeployed to other SOEs‚ departments, and so on, where there is a shortage of workers.”

Cosatu also welcomes the filling of medical posts and the increased allocations to building the National Health Insurance (NHI) plan and that more needs to be done to arrest the collapse of public healthcare, in particular, its infrastructure.