SA Budget Speech 2022: A Budget for the Rich


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Finance Minister, Enoch Godongwana’s budget speech to Parliament on 23 February 2022 confirms the South African (SA) government’s commitment to capitalism at all costs, come hell, high water or Covid-19. Despite his claims to “save lives, livelihoods and inclusive growth” and provide “income and employment support to the most vulnerable”, Godongwana’s budget is dedicated to implement government’s neoliberal policies and support the private sector, especially big capital. Even in a pandemic there are no major changes in government’s fundamental choices.

Budgets are tools for governments to use, depending on their orientation and commitment to amongst others, issues of social class, environment and climate justice, equity, children’s development and women’s emancipation. Government’s choose the path of how income is raised; whether to make loans, who is taxed and by how much; who and what it spends its revenue on; and how that expenditure takes place. Government budgets therefore reflect the goals and the kind of society it wants to develop and reproduce. In this year’s budget we see that the SA government remains committed to a neoliberal economy that creates wealth for the rich, and from what trickles-down, for the poor majority. The food riots in July 2021 reflect the worsening food insecurity and poverty caused by government’s choices.

In SA, even in a pandemic, the government shields wealthy elites from taxation at the expense of the majority. In 2020 in the wake of pandemic, Finance Minister Tito Mboweni, cut the Budget, including the health budget, instead of increasing expenditure for much needed basic needs (water, housing, food and healthcare). To avoid taxing the rich, the SA government set up the Solidarity Fund so big capital could decide if and how much they want to donate. While elites sit on billions of Rands the people are dependent on charity.

Debt above people
In this year’s budget, despite 70% unemployment amongst youth, the government chose to use most of its income to pay the debt to banks (wealthy shareholders) instead of using the income to provide for the needs of the majority by funding public works programmes to kickstart the economy, for example.

Financial markets exist as no country (or corporate) is expected to subsist on the income (through taxes) it collects, especially not in a pandemic. Many governments resort to debt to finance projects to create income (and jobs) and then bring down the debt. Godongwana decided against this strategy of investing in infrastructure, goods and services to create employment and then decrease the debt; instead choosing to pay the debt even if this is “more than is spent on health, policing and basic education.”

There are many other countries with similar debt ratios (77%) to its gross domestic product, such as Austria, Albania, Argentina, Belgium, Brazil, Canada, France, Germany, Israel, Mauritius, Britain and the EU. Having debt is not unusual for countries, especially in a pandemic. While the pandemic is forcing many countries to question its economic models, the SA government slavishly supports neoliberalism and big capital, even as it excludes broader access to living and livelihoods.

Grants for the poor!
What will the poor get? According to Godongwana, 46% of the population receives social grants. The grants are not a ‘safety net’ but prevent people from abject poverty. This is an indictment of the ANC government and its neoliberalism after almost 30 years of democracy. ‘Development for the poor’ is grants!

Yet, despite the weight of the grants for social reproduction of families’ subsistence, both the Child Support Grant (CSG) and the Foster Care Grant (FCG) were increased by a measly R20. In contrast, company tax was decreased from 28% to 27%, giving back to companies R2.6 billion, which could have meaningfully changed the livelihoods of women and children. Experience internationally demonstrates that cash disbursements to households improve living conditions.

The COVID-19 Social Relief Grant continues till March 2023 with R44 billion allocated but we expect the working class’s experience of poor delivery and corruption from within government departments in its roll out of the SRD grant to continue, in contrast to the efficiency of SARS.

Big capital to assist the poor?
The Banks and financial institutions have priority positions within this budget, guaranteeing profits for private shareholders. For instance, R76 billion is available for job creation but must be done through the private banks. Investment (R17,5 billion) for government infrastructural programmes is available through private financial institutions. Small business loan guarantees (R15b) is available through banks and development finance institutions and government will partner with loan providers and underwrite the first 20% of losses for the banks. Government’s support for the banks and financial institutions is not even veiled.

Historically the banks have been hostile and inaccessible to working class people and even the middle classes and small businesses since apartheid, blatantly supporting ruling elites. Instead of strengthening public sector institutions like the post office (which is accessible to working class people), and ensuring medium-term developmental infrastructure, government funds will now strengthen private banks and private shareholders will benefit. Similarly, despite widespread unemployment, government chooses not to develop catalytic public works for sustainable infrastructure and sustainable job creation, but to place responsibility in the hands of the private sector. Godongwana’s budget strengthens the private sector and transfers wealth to the rich.

Covid-19 deepened existing patterns of social inequality because of government’s choices and unconditional support for big capital. Despite lip-service to climate justice and a just transition, government’s focus remains on narrow ‘growth in a neoliberal market-driven economy’ whereas globally many are questioning this trickle-down model where capital is accumulated privately. Neoliberal policies have already eroded SA’s industrial base and prospects for sustainable economic growth are slim, yet this government continues down this doomed path.

This article is an opinion piece submitted on 9 March 2022. The views expressed by the author do not necessarily reflect those of Karibu! Online or Khanya College. You may republish this article, so long as you credit the authors and Karibu! Online (www.Karibu.org.za), and do not change the text. Please include a link back to the original article.

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