FEDUSA Gives a Nod to Godongwana’s Mixed Budget

24 February 2022

The Federation of Unions of South Africa (FEDUSA) has welcomed Finance Minister Enoch Godongwana’s decision to grant much needed tax relief to workers and hold a number of onerous levies unchanged. These include increasing the threshold for payable personal income tax per individual per year.

FEDUSA also welcomes the Minister’s announcement of no increases in the general fuel and the Road Accident Fund levies, but that an inter-ministerial task force has now been appointed to start work on the restructuring the design of the fuel price as promised in the Medium Term Budget Policy Statement last year in November. FEDUSA members have been hard hit by consecutive fuel increases, that have been passed on by transport operators, and the consequent increase in food process due to transportation costs

The R44 billion that has been allocated to the extension of the R350 Social Relief of Distress (SRD) Grant until the end of March 2023 comes as a much needed boost to stimulate cyclical economic activity and reduce 1 of the triple evils – poverty reduction. However, it is evident that national treasury has made no provisions for inflationary pressures on the grant. FEDUSA believes that this must be remedied with the necessary political will, as the translation of the SRD into a Basic Income Grant (BIG) can then be realised at a faster rate to achieve the lower food poverty index of R632 monthly and its eventual progression year on year.

The allocation of R8 billion to kick-start the rollout of the National Health Insurance scheme without imposing additional taxes is a highly progressive move while the R26 billion upgrade of 900 informal settlements will go a long way in protecting children and poor communities from the pandemic. FEDUSA insists however that these upgrades must be accompanied by the necessary infrastructure requirements that will bring both employment opportunities and room for further expansion into vibrant township tourism hubs.

In another good move, the Minister also announced that proposed changes to Regulation 28 which prescribes criteria for investing retirement saving funds will be gazetted next month for public comment. The intention is to laydown the legislative framework that will enable workers to access a portion of their retirement savings. However, the Minister also pointed out that the final decision to allow partial access rested with the trustees of each retirement scheme in line with their own rules. FEDUSA however implores on Government to fast track this specific piece of legislation, as South Africans can ill – afford to wait for a 2 – year parliamentary process to unfold. Moreover, the Federation cautions Government that no form of double taxation on workers will be entertained.

Although the Minister allocated addition funding of R20.5 billion in 2022/23 for public sector wage agreements last year, public servants will still be labouring under severe austerity as salaries will only increase marginally by an average annual rate of 1.8 per cent as they have only been increased marginally from R665.1 billion in 2021/22 to R702 billion in 2024/25.

The government’s commitment to loosen collateral requirements – which will be operational from next month –  and to underwrite the first 20% of losses incurred by SMMEs in the context the R15 billion loan guarantee scheme is a welcoming lifeline to SMME’s. However, it is disappointing that so far there has been a very low uptake of the loan facilities. Clear and realistic targets must be set to ensure that proper monitoring and support is in place to test the success of the interventions.  These measures will be bolstered by R76 billion that have been set aside for job creation,

FEDUSA welcomes with cautious optimism, the refreshed approach to the budgetary allocations and expenditure outlined to drive economic growth and recovery. However, it remains absolutely essential that the mistakes of the past are not repeated, so that vigorous implementation can be translated into solid economic growth, employment creation and the eventual poverty elimination.

(650 Words)

For interviews please contact:

Ms Riefdah Ajam

FEDUSA General Secretary

079 696 2625

Mr Ashley Benjamin

FEDUSA Deputy General Secretary

083 258 4433

Issued by:

Frank Nxumalo

073 637 8096