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Don’t expect anything groundbreaking from Mboweni‚ unions say ahead of mini budget

Finance minister Tito Mboweni.
Finance minister Tito Mboweni.

As Tito Mboweni prepares to deliver his maiden medium-term budget policy in the National Assembly on Wednesday‚ the South African Federation of Trade Unions (Saftu) says it believes nothing new will come from the newly-appointed finance minister.

“Saftu has no confidence that the finance minister’s first medium-term budget speech (MTBPS) will do anything other than deliver another budget like those of all his predecessors — dictated by big business‚ international financial institutions‚ the credit ratings agencies and the pro-capitalist media‚” general secretary Zwelinzima Vavi said on Tuesday.

Vavi said they feared Mboweni’s speech would fail to acknowledge that the country had one of the world’s highest unemployment rates.

“On the contrary‚ he is trying to shift blame for the crisis on to its victims‚ as seen in his reference in the lecture to ‘the exorbitant public sector salary bill in the wake of an unabated demand for service delivery’‚” said Vavi.

He was referencing comments made by Mboweni at a memorial lecture at the weekend. 

“So [Mboweni is saying] it is the poor who are responsible for the economic crisis‚ with their unreasonable demands for better service delivery‚ which is costing business so much of their profits to try to satisfy‚” Vavi said.

Vavi said the union wanted radical changes from Mboweni.

“His speech will give him the opportunity to reverse a succession of austerity budgets which are making an already horrendous situation for the majority of South Africans even worse.”

The former central bank governor was appointed as finance minister on October 9 following Nhlanhla Nene’s resignation over his meeting with the controversial Gupta family.

Mboweni is expected to deliver the budget speech against the backdrop of an economy which is currently in a technical recession.

The Congress of South African Trade Unions (Cosatu) said that there would be “no honeymoon” for Mboweni.

“We don’t have the luxury of time because workers are tired and battered from 36% unemployment and the ongoing retrenchments across most sectors of the economy‚” Cosatu spokesperson Sizwe Pamla said.

Pamla said Mboweni needed to present a clear plan on how government would “pull the economy from the doldrums” and create a new labour-intensive growth path.

“Unemployment remains far higher than in any comparable country in the world and‚ as a consequence‚ poverty is widespread‚ and we now have world-record levels of inequality.

“It is essential that we urgently adopt a completely new growth path to transform our economy into one based on labour-intensive industry and one that meets the basic needs of our people‚” he said.

Pamla warned that the country was at risk of a collapse in social order and as a result of the high employment rate.

“…We saw not so long ago in countries like Egypt and Tunisia‚ where unemployment triggered the revolt by young people. We must reverse the dominant neo-liberal and anti-state thinking that seeks to reduce the role of the state to that of a regulator and which argues for the provision of services to be left to the market.”

Former Reserve Bank executive‚ economist and teacher Professor Jannie Rossouw said he was eager to see how Mboweni was going to “rein in government expenditure because the tax revenue is under performing“.

“Remember he has only been in the position for about two weeks‚ so he can only make marginal changes. The budget is actually done. The documentation is printed. We will see his hand in the 2019 budget; that is where he will make somewhat of an impact‚” Rossouw said.

Economist Dawie Roodt said he was also of the view that little could be expected from Mboweni on Wednesday.

Roodt said the MTBPS was not the platform for policy changes‚ and that‚ therefore‚ no significant changes could be expected.

“Why it is important is because this certainly is the platform for the minister of finance to give us an update on how state finances are doing‚ how state revenues are doing‚ how tax collections and state spending is doing for the first six months of the year. Also‚ how the South Africa economy is performing.

“So this is more of an update. He is probably going to tell us that economic growth is lower than its original estimate. He is probably going to tell us that revenue is not doing to badly‚ and he is probably going to tell us that things are going to carry on like this and we need to cut back on state spending over time. That is the right message to send‚” Roodt said.

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