cash concerns

Oupa Bodibe and Rudi Dicks

Oupa Bodibe and Rudi Dicks

The ANC national conference in December last year emerged with a number of significant resolutions on taking forward a coherent programme of action to alleviate poverty and reduce unemployment.

More so the conference reinforced the historic role of the ANC and the alliance in providing a programme for delivery to our elected representatives in the government, that the state must play an active role in the economy and in social transformation.

The People's Budget Coalition (PBC) will want to measure the budget statement against the resolutions of the Polokwane conference and President Thabo Mbeki's "war on poverty".

The coalition has released its proposals for the 2008-2009 budget and will analyse the budget to be tabled by Finance Minister Trevor Manuel today from that perspective.

The primary concern of the coalition is how the budget is used to reduce poverty and unemployment to build an inclusive society. President Mbeki has declared this period "business unusual" and the litmus test is now on the budget to indicate whether the state will target the right programmes, spend better and increase expenditure on key areas of concern.

This is certainly exacerbated by recent economic indicators that growth targets set by government programmes might not be achieved on halving unemployment and poverty by 2014. An incorrect monetary policy of a misplaced inflation-targeting strategy for a country such as South Africa has not helped too.

The consequence of conservative policies for the PBC means inadequate intervention in reducing large numbers of unemployed people having to survive on absolutely nothing to promoting sustainable livelihoods or the millions of people who live on less than R15 a day or the vast number of underemployed who continue to slave away on low wages, insufficient to support the transport, health care and education needs of their children.

In broad terms, the PBC proposals under the theme "Spend more, spend better, and on the right programme" encompasses anti-poverty proposals; social development and investment in human capabilities; diversification of energy sources and proposals on economic development strategy, including infrastructure, transport and job creation.

We expect the budget to unveil a bold allocation to poverty reduction, economic development, increasing progressiveness of the tax system and the following:

l Social Protection: The PBC reiterates its call for the introduction of a Basic Income Grant to be given to all South Africans.

In this vein we expect the minister to table concrete proposals on increasing the age for the child support grant to 18 years.

In addition the PBC expects the minister to increase social grants above inflation, considering the high cost of food.

While we remain opposed to the means test, we believe it has to be adjusted for inflation.

The government currently provides free basic water and electricity and it is our expectation that the amount be increased from 6kl for water and 50kWh for electricity.

We also expect finalisation of the discussion on a comprehensive social security system in the next financial year.

l Economic Development: The government unveiled an industrial policy framework and action plan towards the end of last year. In this respect we expect budget allocations for economic development to increase to give effect to the industrialisation strategy.

Linked to this are the job creation programmes; investment in human capital, and infrastructure, including public transport.

Rural development has lagged behind and the PBC expects to see an increase in the land redistribution budget to provide land and post-settlement support for poor black farmers.

l Job Creation: A more concerted and massive effort is required to ensure immediate interventions through a combination of public works programmes.

Learning from previous programmes, greater support for employment programmes with an integrated approach from all three spheres of government; better buy-in from the community stakeholders and targeted interventions on child care facilities, infrastructure development, and youth programmes is pivotal for the success of such programmes.

l Social Development: For the PBC, investment in education and health care are not only important for human development but directly contribute to the productivity of society.

In this regard the PBC is calling for increased investment to subsidise education to ensure access for poor children and to rebuild the education infrastructure.

We further expect the minister to table proposals to transform the health care system through the introduction of national health insurance.

l Energy: South Africa woke to an energy crunch this year, highlighting years of declining investment, neglect and the surge of energy demand.

South Africa not only has to increase the number of coal-fired power stations but also has to diversify its energy sources.

In this regard, the PBC calls for substantial investment in renewable energy and the abandonment of the Pebble-Bed Modular nuclear reactor.

l Revenue Collection: The PBC expect the minister to lower the rate of VAT to 13percent and to introduce a dual-VAT rating system, including increasing the list of zero-rated basic items such as electricity.

The VAT is a really regressive tax that affects the poor who spend a large portion of their income on food.

While the PBC is mindful of difficulties of deficit financing, we however believe that the government must increase the deficit by a modest amount to increase resources that can be directed towards social and economic development.

In this regard, the PBC question the wisdom of planning for surplus in the midst of poverty, inequality and unemployment.

Our national budget is an important fiscal tool to reduce poverty and unemployment.

The budget process must be more inclusive of views of civil society at all levels, to amend the budget where necessary.

lOupa Bodibe and Rudi Dicks are with the Peoples Budget Coalition, which consists of Cosatu, the South African Council of Churches and the South African NGO Coalition.