COSATU took its criticism of Finance Minister Pravin Gordhan's first medium term economic policy statement to Parliament yesterday, pressing for the abolition of inflation targeting and for the SA Reserve Bank to drop its policy rate to 3percent.

The parliamentary liaison officer for the Congress of South Africa Trade Unions, Prakashnee Govender, told Parliament's finance committee that Gordhan should also have intervened more dramatically to weaken the rand.

Speaking during the second week of public hearings on the Treasury's three-year spending programme, which Gordhan tabled last Tuesday, she said the unqualified focus should be on the creation of decent, permanent jobs.

Govender did not say how the government should fund the plans that Cosatu put on the table.

"A weaker exchange rate is necessary to discourage imports and ease pressure on local producers," she said.

Luxury imports should also be taxed more heavily to help drive down the deficit on the current account of the balance of payments, which economists see as the Achilles' heel of South Africa's economy.

"The government must reduce interest rates to ease credit market conditions, discourage speculation in the financial markets and enable fiscal policy to divert resources to social spending as opposed to servicing interest on public debt. Cosatu calls for an interest rate reduction to 3percent."

In a generally more supportive submission to the committee, Business Unity South Africa (Busa) called for a radical overhaul of the management of state-owned enterprises.

"It is quite clear that the business model that has been applied so far to the parastatals is no longer operative. We need not only to look at the funding model in the short term, but how they are structured in the longer term," said deputy director of the business lobby group, Raymond Parsons.

The committee will submit a report to Parliament on Gordhan's proposals, but has no authority to change his allocation of funds.