FEDUSA Budget Expectations
25 February 2020
The Federation of Unions of South Africa (FEDUSA) is deeply concerned about the dark clouds enveloping the economy as Minister Tito Mboweni prepares to table the National Budget, considering the harsh reality that South Africa’s budget deficit for the most recent fiscal year could be worse than the government had forecast. The Budget shortfall for this year as anticipated by leading economists will be a decade-high 6.3% of gross domestic product and will widen to 6.4% in 2020-21.
Whilst FEDUSA expects Minister Mboweni to give concrete details and timeframes regarding permission for large consumers of electricity such as mines, retailers and manufacturing enterprises to generate their own electricity and be taken off the national grid as outlined by President Cyril Ramaphosa in his recent SONA Address, FEDUSA believe that this is a good strategy for addressing the endless load shedding that is having serious effects on the economy. But as FEDUSA’s recent Special NEC clearly outlined around the same time, is the total rejection of any intention to use workers pensions to bail out Eskom or any other financially stressed SOE, nor to reintroduce prescribed assets as a funding option, when corruption continues unabated. We reiterate our position that there is an urgent need to come up with a fundamentally sustainable operational model for Eskom and other SOEs. Instead FEDUSA demands more vigilance by Minister Mboweni in relation to defaulting municipalities who collectively owe Eskom Billions of Rands.
While FEDUSA understands the need for sustainable government expenditure across the public sector, the federation will under no circumstances accept a situation where public servants are made sacrificial lambs and their salaries cut drastically, in order to balance the budget due to greed and self – enrichment that persists. Instead the union federation believes that the focus should be much wider to include other important areas that are a serious drain on the fiscus such as the high salaries and very generous perks for ministers, provincial MECs, senior local government officials and executive managers at SOEs.
Instead of creating a deliberate diversion demanding that public servants should either agree to a head count reduction or wage freeze, FEDUSA strongly feels that the issue of the public sector wage bill cannot be unilaterally decided by the Minister of Finance; and should instead be taken to the Public Sector Coordinating Bargaining Council (PSCBC) for proper discussions with public sector trade unions, where its frightful mandate resides. Furthermore, FEDUSA is of the opinion that there has been no scientific or credible study undertaken to support the reckless claim that the public service is bloated. FEDUSA demands that such a study be urgently carried out, and its findings be discussed by all parties at the PSCBC.
The inaction on the part of Government to recoup looted and stolen funds to redirect to key government priorities, will once again result in workers and the general public having to bear the brunt. The mooted increase in VAT by another percentage point to 16%, an undoubted increase in the fuel levy and sin taxes, will add to the hardships that thousands of retrenched workers and consumers in general in the context of low economic growth, that might not even breach the 1% for the year according to widespread consensus among economists. Attractive as the sin taxes option may appear as a way of boosting government’s tax revenues, FEDUSA would like to caution the Minister to approach this issue with great care and sensitivity as onerous sin taxes on tobacco, liquor and sugar among others, may push companies operating in these sectors into serious financial hardships, and ultimately forcing them to consider retrenching workers in order to survive commercially. The sugar tax has already forced companies to issue a flurry of Section 189 retrenchment notices.
What FEDUSA cautions the Minister against specifically, is the increase in personal income taxes. For the last 4 years, no provision has been made for tax bracket creep which further eroded the disposable income of workers and any attempts in moving in on this front would be catastrophic, warned Riefdah Ajam, FEDUSA General Secretary. Whilst the ARTO Regulations will soon be implemented and will result in adverse measures to individuals and business owners, the strongly opposed E – Tolls will add further insult to over – burdened taxpayers.
For interviews please contact:
Ms Riefdah Ajam
FEDUSA General Secretary
079 696 2625
FEDUSA Media and Research Officer
072 637 8096
FEDUSA is the largest politically non-aligned trade union federation in South Africa and represents a diverse membership from a variety of sectors in industry.
See www.fedusa.org.za for more information.