22 February 2012

South Africa: Mixed Reactions to Budget

Photo: BuaNews
Finance Minister Pravin Gordhan.

Johannesburg — Union federation Fedusa on Wednesday said it was "cautiously optimistic" about Finance Minister Pravin Gordhan's budget.

However, it was concerned with unemployment, lack of public expenditure, public service capacity, road tolling, fraud and corruption.

"While Fedusa welcomes the finance minister's projected economic growth rate increase from of 3.6 percent in 2013 to 4.2 percent in 2014, the excessively high unemployment rate of 23.9 percent remains a great concern," general-secretary Dennis George said in a statement.

Fedusa was cautiously optimistic about the R3.2 trillion to be spent on 43 major infrastructure programmes. However, funding needed to be specified in greater detail. The government's implementation of projects needed to improve.

"Also, a lot is being said about new infrastructure but... government has proven to be extremely weak at maintaining the often excellent infrastructure inherited from the previous regime."

It welcomed the government's contribution to reducing the toll road debt, but was concerned that despite public protest, the Gauteng tolling system would be implemented from April 30.

The National Education, Health and Allied Workers' Union (Nehawu) maintained its stance "in rejecting the freeway tolling system". The union did not believe the Treasury had listened to public concerns about the system.

"The proposed 'appropriation of R5.8 billion' does not address the workers' demands as far as the Gauteng freeway tolling is concerned," Nehawu general secretary Fikile Majola said.

Fedusa said on financial management, the government's apparent failure to embrace Treasury's proposal that South Africa adopt a set of fiscal rules to enforce fiscal discipline, was of concern.

The appointment of a chief procurement officer however "was a step in the right direction".

The federation welcomed the announcements associated with small businesses and the tax regulatory framework.

Fedusa intended monitoring the National Health Insurance (NHI) pilot projects, and wanted clarity on how expenditure would be made productive and successful.

Nehawu welcomed announcements on the public works programme, university infrastructure and allocations for the NHI pilot projects.

However, the union was concerned with the pursuit of an extremely low budget-deficit and public-debt strategy, including use of fiscal policy to fight inflation, in an economy which had not yet recovered a big chunk of the jobs lost since 2008.

Nehawu said the public service wage bill was sustainable. It would "vehemently oppose" attempts by the Treasury to bring about "wage moderation" in the public service.

The union was concerned the Treasury would undermine the ANC's proposed funding mechanism for the NHI. It rejected any consideration of VAT and "user-charges" as part of funding mechanisms for the NHI.

Nehawu reiterated its rejection of the proposed youth wage subsidy. It said this subsidy was no more than a corporate welfare scheme and part of the Treasury's commitment to a two-tiered labour market.

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