Cosatu rejects DA’s fiscal anchor bill

Labour federation Cosatu has vehemently rejected a DA private member’s bill proposing the introduction of a fiscal rule as being a “flawed and unashamedly anti-worker” measure that would violate the collective bargaining rights of public sector employees guaranteed by the constitution. It called on parliament to reject it.

In terms of the Responsible Spending Bill introduced by DA finance spokesperson Dion George, public sector wages (excluding those under the occupation-specific dispensation) would be frozen or decreased depending on the level of net loan debt. The bill proposes the adoption of a fiscal rule on government spending.

The Treasury is working on its own fiscal anchor, which at the moment aims for a primary budget surplus as a debt stabilisation measure.

George’s bill aims to promote responsible spending by obliging SA to reduce its debt levels and its exposure to debt. It would tie the level of government current consumption expenditure to GDP growth so that where there is negative or no growth, this expenditure must not exceed that of the previous year.

“This approach is designed to ensure that increases in government spending do not exceed the economy’s ability to support such spending sustainably,”

George told members of parliament’s finance committee when presenting the bill. The bill sets precise targets for net loan debt as a percentage of GDP and institutes specific fiscal actions for varying debt levels.

George said the government’s unchecked cycle of spending and borrowing had pushed SA’s finances to a crisis point. “Introducing another fiscal rule to act as a framework for more responsible spending will bring back stability and encourage a forward-thinking approach to budget planning.”

But Cosatu’s acting national spokesperson, Matthew Parks, criticised the bill in a presentation during the committee’s public hearings. “The objective of tackling national debt is correct but its proposals to do that by dumping the bill on nurses and police officers are shameful and would collapse public services,” Parks argued.

The real causes of SA’s fiscal crises, he added, were not public sector wages but corruption, wasteful expenditure, mismanaged state-owned enterprises, tax evasion and a stagnant economy. “The bill seeks to collapse collective bargaining by compelling the state to impose brutal wage cuts upon public servants for the foreseeable future.”

Responding to Cosatu’s comments, George said Cosatu did not oppose the spirit and intention of the bill, which was to stabilise public debt.