South African Students Congress

Budget Speech - old wine packed in new Gordhan bottle

18 February 2010

Stripped of the pomp and demagogy so reminiscent of the former Minister of Finance, Pravin Gordhan has not deviated one bit from Manuel's unpopular fiscal austerity and inflation targeting antics. Despite all the rhetoric about the need to focus on the jobless and poor, the budget speech signals another year of prosperity and unabated accumulation for the capitalist class while the poor will once more watch the gravy train pass by.

We are appalled that government has not detailed any financial plans to resuscitate collapsing parastatals, or any political solutions to their financial crisis such as moratorium on golden handshakes for failed executives. If government seeks to avoid the unpalatable disaster that will engulf our parastatals it has got to take decisive action. The financial chaos in Eskom, Telkom and SABC is as much a fault of the executives as it is of the government that allows these parastatals to run in the same way as private companies do. We know that Eskom will attempt to resolve its cashflow problems by deferring costs to the consumers particularly the working class and we are totally opposed to this because it will inevitably force institutions of higher learning to increase fees.

It is difficult to understand the lack of increase in company tax while the Finance Minister himself acknowledges a fall in revenue. It cannot be that tax relief is extended even to the wealthy bourgeoisie in the same way as it is done for the working class and the poor. This illusion that tax relief for capital will result in job creation will once more be proven as wishful thinking.

We are concerned by Minister Gordhan's hint that suggests that the Reserve Bank should remain independent, quoting the constitution. The government continues to act as though it is oblivious of the fact that the Reserve Bank is one of the few that remain outside total government control far surpassing even the most avowed liberal and capitalist states.

Certain aspects of the budget remain totally laudable and impressive though. The decision for stern action against tax evasion particularly by companies is welcome. We also welcome the increase of sin tax. We welcome the increase of grants, however we believe given the increased inflation of the past few years necessitated a much more substantive increase on grants. This re-enforces our call for a Basic Income Grant. We also welcome increased spending on education but we believe it remains miniscule and cannot resolve the deep structural problems of the sector.

We believe that the budget speech was a missed opportunity to reign on companies that profit from South Africa but play no role in job creation or in decreasing the gap between the rich and the poor. The Minister missed the opportunity to once and for all accept the toothlessness of the capitalist market and direct us towards rigorous government participation in the economy. The Minister missed an opportunity to decrease economic stratification by increasing taxation on the rich.

Instead of developing a new path, Pravin Gordhan's budget speech is nothing but old wine packed in a new bottle. The excitement over the neo-liberal in outlook of the budget speech by DA, COPE and other opposition parties, exposes this.

For details Contact

Mbulelo Mandlana (President)
071 879 3408
Lazola Ndamase (Secretary General)
082 679 8718