'snatching defeat from victory'

'NOTHING NEW':Finance Minister Pravin Gordhan. Pic. Yolande Snyman. 17/02/2010. ©  Unknown.
Minister of Finance Mr PJ Gordhan delivers the National Budget Speech, National Assembly, Parliament, Cape Town, 17/02/2010
'NOTHING NEW':Finance Minister Pravin Gordhan. Pic. Yolande Snyman. 17/02/2010. © Unknown. Minister of Finance Mr PJ Gordhan delivers the National Budget Speech, National Assembly, Parliament, Cape Town, 17/02/2010

THE Congress of SA Trade Unions has lashed out at Finance Minister Pravin Gordhan over his first Budget yesterday, calling it "old wine in new bottles".

Cosatu general secretary Zwelinzima Vavi said the framework Gordhan had used to draw up his Budget "is the same framework that has failed our country so dismally".

Vavi said he had hoped Gordhan would "reconsider" the Mbeki administration's policy of inflation targeting, or move away from keeping inflation under six percent, which causes frequent interest rate hikes.

He also slammed Gordhan's talk about a "wage subsidy for the bosses" and the "massive drive to push down the deficit".

"Employers should be celebrating tonight. They have snatched victory from the jaws of defeat. But the workers have snatched defeat from the jaws of victory," Vavi said.

He also said that the R3,6billion Gordhan allocated to help the car and textile industries was not enough to support the ANC's planned massive new industrialisation programme.

Yesterday Gordhan gave journalists a copy of a letter he sent to Reserve Bank governor Gill Marcus on Tuesday in which he tells Marcus to "continue to pursue a target of 3 to 6 percent inflation".

He said that the Occupation Specific Dispensation increases given to public servants last year had "overstepped the mark".

"In the next year or two we need more moderate settlements that take account of the fact that we are emerging from a recession."

As has been the norm the past four years, Gordhan gave the highest allocation of R165billion to education.

Another R28million was being provided for annual national assessments of literacy and numeracy at the key stages of grades.

To make provision for the extra two million beneficiaries of social grants an additional almost R10billion was added to the R80billion spent last year. This is to cater for the 18-year-olds that the social grants will now cover.

Child grants will increase by R10 from R240 to R250. To qualify for the R250 a month grant, parents will now have to provide proof of school enrolment to the Department of Social Development and regular school reports.

Pensions and disability grants also rose by a low R70 to R1080 a month. An additional R9billion was being provided over the three-year medium-term spending framework period for teachers' salaries.

Higher education institutions will also get a boost of R1billion in subsidies over the next three years.

The National Student Financial Aid Scheme has been boosted with an extra R5,6billion.

Spending on rural areas and medication for people living with HIV-Aids is up, but the millions whose survival depends on social grants have again had their hopes crushed.

Gordhan lived up to the government's promises to pay soldiers better salaries, allocating R2,2billion to improving their conditions.

And over the next three years, rural families will receive a new R1,2billion water programme.

A packet of 20 cigarettes will cost R1,24 more, a bottle of hard liquor R2,22 more and a can of beer 6,5c more. Petrol will rise by 25,5c a litre.The tax threshold has been raised for low earners. Last year all those earning under R132 000 had to pay 18 percent tax, and now all those earning under R140000 per year will pay 18 percent.

Deputy Finance Minister Nhlanhla Nene said if he had to explain to a parent struggling on the R250 grant, he would say that they were trying to find a balance between extending the grant to everyone under 18.

Gordhan also announced that the cost of the Gautrain had risen again - this time by R103million.

Provincial health departments get almost R6billion more this year to turn around the hopeless state of their hospitals and clinics.

But the proposed national health insurance system, which was an ANC elections manifesto promise, was not allowed for. The NHI will only be in place in five years' time, Gordhan said, only after public hospitals had been upgraded.

While Zuma said last week that a wage subsidy for young jobseekers was in the pipeline, this was also not in the Budget. Treasury will instead spend the next year finalising their plan to get 800000 young people into subsidised work.

Gordhan said the recession meant government had collectedR69billion less in taxes than they had budgeted for. And government will only save R25,6billion over the next three years - not enough to make up for the shortfall.

Spending on transport projects will increase to nearly R30billion over the next three years.