‘Dangerous and reckless’
Cosatu reacts to wage bill plans
Cosatu has reacted with anger to the budget speech, accusing the government of using public servants as scapegoats for the failures of leadership.
Its parliamentary coordinator Matthew Parks said the government’s announcement that it was seeking to pull out of this year’s wage agreement and the announcement by finance minister Tito Mboweni that they were seeking a R160bn reduction in the public sector wage bill had made their members very angry.
“They are not addressing the wasteful expenditure, the corruption, they are not addressing the collapse of SOEs.
“They haven’t even looked at increasing taxes on the rich, they are not looking at tax loopholes that can be plugged. The only thing out of this budget is to say we want to squeeze public servants, and the way they have done it is in a very dangerous and reckless way,” he said.
Parks said that the federation viewed plans to trim the wage bill and to collapse the multi-year wage agreement as an extreme act of provocation.
“We had made compromises for this year’s wage agreement; it is the lowest wage agreement in 11 years, now they say they want to walk away from it.
“They just want to shift the blame to public servants,” he said.
Parks said after the medium-term budget was tabled in October, Cosatu soon realised that there were no plans to deal with the crisis in stateowned entities.
He said the federation then approached the government and the ANC to present concrete solutions to rescue the economy – including the proposal to use R250bn in pensions of public servants to recapitalise Eskom but they were ignored.
“We are stretching to negotiate, to compromise, and it’s basically putting a gun to our heads and seeking to mobilise the public against workers and against unions, somehow to make us the scapegoats for the failure of leadership in government and the ANC,” said Parks.
The finance minister’s announced that the government was drastically cutting spending after the tax revenue shortfall increased to R63.3bn, the budget deficit widened, while the national debt was racing towards 71% of GDP in the next three years.
Mboweni also announced that there would be no salary hikes for public office bearers such as MPs‚ ministers‚ judges and magistrates in the coming financial year.
The National Treasury has revised economic growth downwards from an expected 1.5% in 2019 and 1.7% in 2020, to just 0.3% in 2019 and 0.9% in 2020.
Revenue collection stood at R1.5 trillion for 2021, while expenditure was higher at R1.9 trillion, resulting in a R370bn deficit.
“By 2022/23, interest payments will exceed health spending,” treasury noted.
The biggest expenditure item remains education, which receives R396bn, social development is allocated R310bn, while R229bn goes towards public healthcare services.
Eskom, which is regarded as the biggest risk to the economy, receives an additional R43bn this year to meet its operational requirements, while SAA, which is in business rescue, will receive R16bn over the next three years to service its debt.
But the finance minister said it would be wrong to classify this as an austerity budget as that would require more radical trimming than this.
“We are not at a point of austerity; we are at a point of cleaning up our house. We are still spending, but not at the rate of change which we would have wanted,” said Mboweni.
“If we were in austerity, we’d probably say we are closing the following schools and hospitals, we are retrenching so many people, that the cabinet is going to be cut in size to only six ministers. That’s austerity.”
He said the message being conveyed by government was that these spending cuts were necessary if government is to push for growth in the next 18 months.
Mboweni announced that the sovereign wealth fund, which was announced by President Cyril Ramaphosa in his State of the Nation Address, would be kickstarted with a capital injection of R30bn.
He also outlined plans to launch a state-owned bank.