South African Students Congress

Drop the invisible hand; exert a stronger hand on Capital in the interest of the working class; SASCO's Response to the 2013 Budget Speech

28 February 2013

The South African Students' Congress notes the presentation of the 2013 Budget by Minister of Finance Pravin Gordhan. We note that this Budget is delivered amidst slow recovery globally from the capitalist crisis and slow growth rates in the developing world. We also note that our government has not heeded our call to drop the neo-liberal National Development Plan, which seeks to keep the status core in terms of the ownership and structure of our economy.

We reject the notion that the NDP enjoys support from all South Africans and want to be counted amongst those that fundamentally differ; we maintain that it is a recycling of the same macro-economic policy that has failed our country by producing these high levels of unemployment, inequality and poverty. We are in agreement with the Minister that the challenges of our country will not be eradicated overnight but need a concerted effort from all role players in our economy.

We believe that a true radical transformation and paradigm shift can never be achieved through the NDP but through an egalitarian economic trajectory guided by the objectives of the Freedom Charter. We share the Ministers concern on the 7% increase in import whilst exports have increased by a percent, which exposes the consumption pattern of our economy and poor levels of productivity, mainly a result of low investment by capital in the local productive economy. We also have the following views on other aspects of the 2013 Budget;


We welcome that almost a quarter of the budget was spent on education, sports and culture which amounted to about R233 Billion. We are pleased that a special allocation of R23.9 Million was made for school infrastructure and we expect that Provincial Education departments should ensure that the days of mud schools in South Africa are a thing of the past. We will be monitoring that this happens because of the great infrastructure backlogs in our rural and township schools. We also welcome the R700 Million allocation for the recapitalization of technical secondary schools in South Africa. This vindicates our call that vocational learning in secondary education is paramount to the skills revolution, and we expect this allocation should not just reach model-c schools who already have equipped workshops. We are encouraged by the steps to prioritize Early Childhood Development (ECD); we believe this is an important step to fixing the challenges in our education system.

We note the increase in the allocation for Higher Education institutions, but our concerns about the Funding Model of Higher Education remains. We are optimistic that the Ministerial Review Committee on funding will address our concerns that the current model seeks to benefit advantaged institutions at the expense of black disadvantaged institutions. We are disgruntled at the pronouncement of an increase on student enrolment in higher education institutions from 910 00 in 2012 to 990 000 in 2015. We believe this increase does not take into account important factors such as population growth, the increasing demand for higher education which is also driven by improved performance of matriculants. This figure does not take into account what the millions of young people who are outside of the post schooling system, including those who have dropped out that, by the Ministers own acknowledgement, must be in the post schooling system.

Even though the Minister mentioned the construction of two new universities in Mpumalanga and the Northern Cape which is expected to begin later this year, he failed to inform the nation of the funding thereof. We believe the Minister also missed an opportunity to allocate for the re-capitalization of many white elephant education facilities such as the Elijah Mango College of Education, where SASCO hosted its National General Council last year.

We are disappointed that the Minister made no mention and allocation of Free Quality Education in higher education. This we believe is a complete disregard of the ANC Mangaung Conference resolution that such a scheme should be introduced in 2014; we believe the Minister should have budgeted for this. We are concerned that National Treasury may be elevating itself beyond ANC program; this was also evident in its unilateral introduction of the rejected Youth Wage Subsidy. This is even more worrisome to us because this is the forth Budget of this administration which was mandated by Polokwane and the 2009 election Manifesto to introduce Free Quality Education till undergraduate level.

Social Spending

We take exception that the Minister can cut public spending by R10.4 Billion amidst such high levels of poverty, inequality and unemployment. This reduction comes at a time where wages are below inflation, cost of living is high for the working class and poor. The cost-sharing model for public goods, which is a result of structural adjustment programs, is becoming unbearable for the working class and poor due to amongst others, Eskom's 16% electricity price hike proposal. We believe that the Minister should have rather considered cutting the wasteful expenditure in government departments and focus on combating crime which robs our nation of more than R40 Billion yearly. This R10.4 Billion could have been used to support job creation initiatives such as co-operative development, youth development and other social needs such as education and health. We are concerned that such reductions in social spending may lead us to austerity measure applied in the Eurozone.

We join the Minister in welcoming the great strides our government is making on Health, such as the increase in life expectancy, fight against HIV/AIID and TB and the piloting of the National Health Insurance (NHI). We welcome the infrastructure construction and refurbishments being undertaken in 1 967 health facilities and 49 nursing colleges. This is an indication of a government that cares for the livelihood of its people.

We welcome the subsidy of R275 for household with monthly income of R2 300 which accounts for almost 60% of South African Households for public goods such as electricity, water, and housing sanitation and refuse removals. However we remain concerned at the rising cost of these public services. We welcome increases on the social wage and believe these measures are important whilst our nation confronts the triple challenges of poverty, unemployment and inequality.

Tax Policy

Whilst we welcome that the Minister has not increased taxes, particularly for the working class, we are concerned that the Minister did not introduce progressive taxation for the rich, business and higher echelons of the public sector, especially since our revenues fell by R16.3 billion than expected. This unfortunately means that capital will continue to benefit from super profits, and income inequalities in South Africa will persist. We welcome the personal income tax relief of R7 billion, we expected the Minister to introduce income threshold so that the rich don't benefit.

We note with scepticism the proposed youth employment incentive tax whilst we welcome the rejection of the Youth Wage Subsidy. We are concerned however that this could be a tactic to sneak in the rejected Subsidy under the carpet, and assure the South African working class and poor that we will guard this process as it unfolds in Nedlac and parliament. We are uncomfortable with continued incentivising of private capital in South Africa and the obsession to reduce cost of doing business at the expense of the working class and poor.

We again are convinced that the Minister missed an opportunity to introduce an Education Tax, which would tax capital, the higher echelons of both public and private sector to contribute to the funding of Free Quality Education. This would have increased revenue for the fiscus and lead to more young people entering the schooling system and therefore lowering number of employment seekers, whilst advancing the skills revolution.

We have always maintained that our government exerts a very soft hand on capital in South Africa, particularly foreign Monopoly Capital, which because of weak capital flight regulations, invests profits made in South Africa in their own countries. Finance Capital in particular and the big conglomerates controlling our Mineral and Energy Complex do not invest in the productive economy of South Africa and as the Minister mentioned avoid to pay tax in our country, this is part of the imperialist program to exploit our economy and condemn our people to poverty and underdevelopment. We call on the Minister to take practical steps with SARS to deal with this urgently, and we call for our ANC-led government to use its legislative muscle to regulate the flow of capital off our shores.

We are deeply concerned that beneficiaries of state tenders not only inflate prices, stealing billions from the state parse, but also refuse to pay taxes in South Africa. As much as this further justifies our case that the state should build its own capacity, we do believe that the state should blacklist those guilty of this crime against our people and should not award them further contracts. We welcome the efforts to deal with tax avoidance through trust funds.

Infrastructure and Spatial development

Our government is spending more than R800 billion on infrastructure development though the Presidential Infrastructure Co-ordination Commission; this is a great step that all South African should celebrate. Of course the opposition in South Africa claims our government is not exercising leadership in the economy for political expediency, whilst in fact it is main constituency, private capital, which is not contributing to nation building. We again applaud our government and appreciate the progress in the Strategic Infrastructure Projects (SIPs) and their contribution to job creation. We however call for the government to ensure that these projects contribute to work placement and in-service training for our FET graduates and those from Universities of Technology.

SASCO is concerned about the high influx of our people into cities and towns and the report by the census that 62% of South African lives in towns and cities. This is a result of the spatial patterns of apartheid social geography, which concentrated economic activity in towns and cities where the white minority was located. It is therefore not a surprise that post Apartheid our people seeking employment opportunities and public services would migrate to urban areas.

As much as we agree with the integrated urban regeneration programs we strongly believe that rural development is the key to reversing spatial development. Our cities and towns have reached their zenith in term of expansion and therefore there is a growing need to build new work opportunities in the rural periphery and taking jobs to the people. We believe the Industrial Parks that are planned to be build should be directed to the rural areas to create economic activity there, advancing infrastructure development and creating employment opportunities. The need to build new cities in South Africa is overdue and this should also create markets for our rural co-operatives (particularly agricultural). Programs such as Agro-Processing would be beneficial to the rural youth and our Agricultural Colleges located in those areas.

Reserve Bank

We take this opportunity again to call for the nationalization of the Reserve Bank and the fast tracking of the registration of the Post Bank and Co-operative Banks in South Africa for financial inclusion of the working class and poor. We believe that the slow pace of the development of co-operative banks and registration of the Post Bank is amongst other a result of a Reserve Bank that represents the interest of foreign capital.

Regional Integration and BRICS

We welcome efforts to ensure that intra-trade in Africa are advanced for Africa's development. South Africa has been tasked by the African Union to Chair the commission on the advancement of the NEPAD Infrastructure program, which seeks to transform the bearers to African trade which are a result of poor infrastructure mainly. We believe we should play a leading role therefore in our trade relation with African countries and promote regional integration and move even beyond SADC region. We note the developments in BRICS countries particularly after the capitalist crisis, we are optimistic about the BRICS Development Bank, and will continue to take keen interest in the developing world and advance South to South development.

Fighting Corruption

Contrary to the opposition rhetoric we do welcome the efforts that our government agencies are doing to combat corruption, but the challenges still persist and therefore much more needs to be done. We welcome the plans to introduce a Chief Procument Officer and measures stated by the Minister that have been taken by SARS, Treasury and the Financial Intelligence Centre. We are concerned at the high levels of tender fraud in South Africa and have always raised our conviction that a tender system is inherently corrupt. Unlike the opposition which calls for cosmetic changes in procument we have made the case for the state to build its own capacity and for the transformation of the capitalist mode of production in South Africa and the world which promotes greed and therefore reproduces corruption.

The believe the Minister played into liberal sentiments by omitting to speak to corruption in the private sector which continues to further exploit the working class and poor. Capital in South Africa and particularly Monopoly Capital continue to fix prices and inflate costs, which directly affects the working class and poor who have to bare the brunt by increased food prices or rising cost of living. We believe the Minister should have taken the opportunity to put practical and decisive measures to curb this corruption.

Ngoako Selamolela, SASCO President, 071 875 2224
Themba Masondo, SASCO Secretary General, 079 199 3421