BHEKI NTSHALINTSHALI: The MTBPS is an opportunity for government to prove it listens and cares

The recent local government elections outcomes form part of the overall feedback South Africans have been giving to their government about the state of the country, and the economy in particular. They are deeply unhappy with the direction the country is taking and are discontent with the choices that have been made by policymakers and decisionmakers.

The upcoming medium term budget policy statement (MTBPS) offers the ANC government an opportunity to prove to South Africans not only that it is listening to them, but that it understands the message and plans to do something about it.

Over the last few years the common message from the elite has been that we have now entered a new “Age of Austerity” which means the people must tighten their belts. In other words, on behalf of monopoly capital government has been transferring the costs of the Covid-19 inspired economic crisis to the working class and broader middle-strata by cutting public services, public sector wage bills and by embarking on retrenchments of public sector workers, all while continuing to meet their bailout commitments to the private sector.

As usual in the face of an economic crisis, the SA government has resorted to digging in its heels by implementing more of the same neoliberal policies that led to the crisis in the first place. We argued from the beginning that the growth, employment and redistribution policy would only serve to restore profitability for capital and entrench the inherited colonial growth path — an economy mainly characterised by a dependency on mineral extraction and unskilled cheap labour.

In January this year the IMF urged countries to “spend as much as they can” in the face of the prevailing contraction, but our National Treasury continued with its superstitious hold on its destructive neoliberal austerity straitjacket.

The Nasrec conference called for a paradigm shift from the current neoliberal trajectory and mandated the ANC government to develop a new economic growth path with an industrial strategy at its core, as part of the review of the existing macro and micro economic policies.

The upcoming MTBPS therefore needs to reflect the mandate given to the ANC by the Nasrec conference and by SA voters when they endorsed the 2019 ANC election manifesto.

We expect it to place more emphasis on job creation and the reduction of inequalities rather than a fixation with a percentage as a growth target. In our view government needs to ensure the parameters of fiscal policy are consistent with employment creation and retention strategies, and avoid imposing rigid and rapid deficit reduction targets that limit public expenditure and infrastructure development.

We therefore hope the Treasury seizes this opportunity to positively adjust its deficit and debt containment targets. In other words, we call on the Treasury to abandon its current austerity approach of subordinating all the socioeconomic challenges the country is facing to the narrow focus on its primary budget surplus and debt containment targets.

This must include abandoning its austerity war against public servants, among whom are the brave and hardworking frontline health and care workers who have seen the country through the most catastrophic year in terms of a public health emergency in the democratic SA. 

The MTBPS needs to redefine the role of the state in the economy, giving an account and update on the progress regarding the research around the creation of a state-owned bank, the fixing and reorientation of state-owned enterprises and development finance institutions in terms of the planned investment targets and development objectives. Recent reports that Mango Airlines is being allowed to fall off the cliff is another sign that this government has abandoned the ANC manifesto.

The Treasury needs to come out clearly in the MTBPS on how it plans to fight corruption and improve the management of limited state resources. It must appreciate that in addition to allocating funds from the fiscus it has an ethical duty to see to it the money is used for its designated purposes, and where there are persistent less-than-clean audits that it proactively supports capacity building and accountability during the bidding phase of the budget process.

We need to hear of a solid plan of action to curb corruption, fruitless and wasteful expenditure. The Zondo commission and numerous auditor-general reports highlight a monumental failure of National Treasury as a custodian of public finances, especially given the fact that the common thread is about public-private partnerships, which it peddled and institutionalised during the heady days of neoliberalism.

On monetary policy, the recent decisions by the SA Reserve Bank on interest rates have only served to confirm that the bank and National Treasury are not interested in an alignment of macroeconomic policies, in particular the alignment of monetary policy with industrial policy and other objectives.

Despite the fact that everybody agreed that SA’s economy was less affected by the 2008-09 financial meltdown because of the remaining exchange controls, the National Treasury has since relaxed exchange controls further, exposing our currency to international capital flows and speculators.

It can be argued that the drastic removal of exchange controls was intended to ensure that any major shift in policy can be quickly disciplined through capital flight and destabilisation of the rand. Sadly, without stronger exchange controls we will continue to see the economy losing over R80bn annually, as reported by the State Security Agency.

The IMF made it very clear that austerity measures hurt demand and worsen unemployment, while admitting that capital controls are a viable, and sometimes the only option to deal with the volatility of capital flows.

This austerity-centred fiscal framework accompanied by ongoing electricity cuts are sinking this country ever deeper into stagnation. Going forward we can expect a deeper economic recession and rising unemployment if there is no paradigm shift away from the neoliberal macroeconomic framework.

The message from South Africans is unambiguous; either there is going to be a change in economic policy direction or there will be a change of government. Government has been warned!

Ntshalintshali is Cosatu general secretary.