‘South Africa is the worst country in the world in terms of inequality’ – SAFTU

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Living conditions in a township – 14% of South Africans still live in shacks and backyard dwellings

Albert Einstein is widely credited with saying, ‘The definition of insanity is doing the same thing over and over again, but expecting different results,’ the South African Federation of Trade Unions (SAFTU) said in a statement on Monday ahead of this week’s budget.

SAFTU’S statement reads:

‘Minister of Finance Tito Mboweni’s 2019 Budget speech on 20 February 2019 will be delivered in the midst of South Africa’s biggest crisis since 1994. But SAFTU has no expectation that he will deliver any solution to this crisis.

He will deliver more of his predecessors’ catastrophic neoliberal “business as usual” policies which caused today’s crisis in the first place – policies dictated by the credit ratings agencies on behalf of multinational big business.

For nearly 25 years now, the ANC government has implemented an inappropriate macroeconomic policy framework that has led to economic stagnation, worsened unemployment, deepened poverty and made South Africa the worst country in the world in terms of inequality.

These GEAR (Growth, Employment and Distribution) macroeconomic and fiscal policies included massive corporate tax cuts at a time when the world expected that we would introduce wealth and solidarity taxes to close the gap between the white and black inequalities we inherited from apartheid.

The ANC government introduced monetary policies that led to the cutting of exchange controls, resulting in billions leaving our shores, money we so desperately needed to build new industries. Government allowed our big companies to shift their listing to London and New York, again robbing our economy of resources we need.

The ANC introduced inflation target policies of between 3% and 6%. As if this is not enough of a sabotage of the development agenda, the ANC did nothing to stop illicit cash and trade outflows and mispricing that cost the economy billions.

These have been the ANC government’s policies since the imposition of the GEAR strategy in 1996, which ensured that economic power would remain in the hands of the same mainly white capitalist class, and that financial policies would be dictated by their interests.

Workers and the poor will now yet again have to pay the price though tax increases and cuts in spending on key public services, which will lead to even more job losses in both the public and private sectors.

One of GEAR’s biggest champions was former Finance Minister Trevor Manuel, who boasted in 2008 that he had achieved a budget surplus for the first time since 1958. He achieved this through austerity budgets for the poor, with tax cuts for the rich.

His budgets robbed us of the resources the country required to meet the basic needs of the poor black majority who remain trapped in the apartheid racial fault lines.

These neoliberal policies, together with inaction to stop illicit cash flows, foreign listing of companies, the removal of exchange controls and reduction tariffs have all contributed to the current economic catastrophe, in which:

• Economic growth last year was below 1% and the World Bank estimates it will be no more than 1.3% this year, which will not keep pace with the expected 1.6% increase in the population.

• Unemployment at 37.0% is the one of the sixth highest in the world. Still more job losses loom, with threatened retrenchments in Eskom, the mines, the public service and possibly the SABC, SAA and Edcon.

• 55% of the population live in abject poverty and six million children live below the food poverty line.

• Inequality is the world’s highest. Executives’ salaries have risen from 50 times bigger than workers’ wages to 500 times bigger; the share of wages in GDP has plummeted, from 57% in 1991 to below 50%.

• Inequality has also grown by cuts in the ‘social wage’ – spending on public services – by years of austerity budgets. The two-tier level of service delivery remains and is widening.

• Education remains starkly divided, between well-endowed private schools for a wealthy, mainly white, minority, while most public schools for the majority are under-staffed, ill-equipped and often structurally derelict.

• Public hospitals and clinics struggle with over-worked staff, lack of drugs and long queues for treatment, while the rich can pay for quality private service.

• 14% of South Africans still live in shacks and backyard dwellings.

All these problems have been made far worse by the wave of corruption, theft and fraud by public officials, SOE executives, political leaders and their cronies in the private sector, which has lost the country an estimated R27 billion a year.

Workers and the poor will now yet again have to pay the price for all these problems through tax increases and cuts in spending on key public services, which will lead to even more job losses in both the public and private sectors.

At the top of Mboweni’s agenda will be measures to reduce the debt/GDP ratio level which stands at almost 60%, and Eskom’s massive R420 billion debt which amounts to 15% of all national debt.

Eskom’s debt crisis has now coincided with the latest round of load-shedding, the failure of generators, including the two new ones at Medupi and Kusile, and the attempt to impose massive tariff increases. This has already wreaked havoc for both domestic users and manufacturing and commercial businesses.

If not rectified this crisis will lead to an economic implosion of the entire economy, for which electricity is its life-blood. Thousands more jobs will be at risk and living standards will plummet.

What Mboweni will not admit however is that the root cause of this crisis was a decision of by his predecessor, Trevor Manuel, who in 2009, while boasting about his budget surplus, refused a request from the Eskom Board for a R1000 billion recapitalisation programme.

This was so as to weaken Eskom and eventually hand it over to the private sector, a process continuing with the plan to introduce IPPs to compete with Eskom, so that Eskom will subsidise the private sector, and continuing with the plan to Eskom into three components – generation, distribution and transmission. SAFTU views this as concealed privatisation and is therefore a declaration of war.

Eskom’s disaster has been compounded by a decade of corruption, incompetence’ mismanagement and sabotage, involving board members private suppliers, including Gupta-owned companies, and the ANC’s investment arm, Chancellor House, which all robbed the public of billions of rands.

This also led to the massive structural problems and faults at the new power stations, which NUMSA members pointed out years ago, but which were ignored, in order to cover up the corruption involved in the contracts with the company which built them.

Mboweni knows that Eskom is too big to fail and that his budget will have to include a bail-out, which will once more be paid for by the public, with more tax increases and even bigger cuts in public spending on everything in the public sector.

SAFTU demands that it is those responsible for the disaster, not the workers and consumers, who must pay back all the stolen money – members of Eskom’s past and present boards, its corrupt suppliers, in particular coal suppliers, and those in government who oiled the wheels of the hijacking of this public utility. Those guilty of crimes must be brought to justice and punished.

Mboweni will also not admit that the underlying problem at Eskom, and in the economy as a whole, is that they are owned – or in Eskom’s case managed – by a capitalist class who are only interested in making as much money as possible, as quickly as possible and without any regard for the dire consequences of this for the workers, consumers and the whole country.

Eskom must remain in public ownership but not run as if it had already been privatised. It has to be taken out of the hands of corrupt business representatives and run democratically by elected representatives of the workers, consumers and the state, who must be subject to recall and punished if they repeat the crimes of the former bosses.

SAFTU insists that energy, including renewables, water, education, healthcare, public transport, information dissemination, public transport, including access to roads, and security of citizens, amongst others, should be in the hands of the people as a whole, and are too critical to be used for for making profit.

SAFTU demands a People’s Budget, which will increase taxes on the rich, recover their unpaid taxes and illicitly exported funds, stop the laundering of money into tax havens, a programme to reverse the deep social expenditure cuts and to increase spending on vital public services and job-creating initiatives.’

SAFTU