In Nhlanhle Nene’s first major statement as Minister of Finance he lied to the people. He claimed he would “not balance the budget on the backs of the poor”. But this is exactly what the ANC’s 2014 Medium Term Budget Policy Statement promises to do. Over the next two years the ANC plans to cut spending by R25 billion and raise taxes by R27 billion. With millions still living in poverty, suffering mass unemployment, low-pay and other deprivations and hardships, the ANC is declaring that under their rule living standards for the majority will never improve.
The leadership of the Cosatu trade union federation described the budget as “the most conservative budget statement in recent memory”. The metalworkers’ union NUMSA has been firmer in pointing out that the budget confirms “that neo-liberalism has strengthened its grip on South Africa”. Unfortunately, the leadership of the Nactu trade union federation “welcomed” the direction of the budget even if they did make noises about being “mindful” of inequality.
Also, we must not forget that in May, the Economic Freedom Fighters issued a statement that “welcomed and applauded” the appointment of Nene as Minister of Finance on the grounds that he was a “black African” completely ignoring the anti-working class and pro-capitalist class standpoint of the ANC government that appointed him. In his very first statement in office, Nene has proved that any government that commits itself to capitalism, irrespective of whether it is white or black is obliged to attack the working class. Class trumps race.
WASP believes that this budget is further confirmation that the ANC acts in the interests of the capitalist class, internationally and domestically; that it has no backbone to stand up to the imperialist powers who police the world financial system; and that it is willing to be held hostage by these powers offering up the living standards of the working and middle classes as ransom.
Capitalist appeasement
The government has created a 4.1% budget deficit putting it on course to spend R153 billion more this year than they receive in through taxes. This gap – or deficit – has to be plugged by money borrowed from the capitalist class adding to the government’s total (or sovereign) debt. The measures announced by Nene are intended to reassure the capitalist class that their loans will be repaid. For the capitalist class, such loans are of course investments, upon which they expect to make a profit.
With the government’s debt level steadily increasing due to their deficit, the increasing costs of servicing the debt (paying interest like with any loan) and the sorry state of the economy, the capitalist class are nervous about their investments. Like in the real world, taking on too much debt can lead to default (non-payment), which, if the government were to default, for the capitalists would means the loss of their investments. They are desperate to avoid this and want to squeeze the working class and middle class to ensure it does not happen and the ANC government is happy to help them.
In June, South Africa’s sovereign debt was downgraded by the global ratings agencies. The ratings agencies are the unelected, unaccountable, policemen of global capitalism. They advise the capitalists where to invest and how safe their money will be. One of these agencies is now threatening to downgrade South Africa again to ‘junk status’ which would push up borrowing costs for the government still further and potentially trigger disinvestment and capital flight as international capitalist investors avoid the ‘risk’ of default.
The ratings agencies and the capitalists on whose behalf they act, only looking out for their own narrow interests, risk creating a vicious trap for countries of the sort that has plagued European countries like Greece, Ireland and Portugal in recent years. These countries had their economies wrecked in order to ensure government’s repaid their debts to the capitalist class leading to massive suffering for the working class. But South Africa is a long way from the crisis levels of debt faced in these countries even if the situation is steadily deteriorating. SA government debt is equivalent to just over 42% of the economy – a long way from Greece’s 275%!
WASP struggles for the nationalisation of the banking and finance sector and for the introduction of a state monopoly of foreign trade and capital controls all under the democratic control of the working class as the answer to the threats of the ratings agencies and the imperialist powers behind them.
Their debt and their deficit!
The ANC government and all the capitalist parties will say that this is ‘our’ debt, or ‘the nation’s’ debt and that we are all collectively responsible for ensuring it is paid and must all accept cuts to make sure that happens. We reject this. Over two decades the ANC government has pursued pro-capitalist policies that have led to the current situation. The revelations that platinum miner Lonmin transferred R2.1 billion in profits overseas without paying any tax on it, is just one extreme example of how wealth, created by the working class, has been systematically stolen by the capitalists on the ANC’s watch. But the ANC, rather than demand that this money, as just one example, is taxed at the rate it should have been in the first place, instead promises a budget that demands the working class and middle class pays for the crisis the ANC has created via their pro-capitalist policies.
Nene has said that they will announce new taxes in the main budget in February. But these taxes should not fall on the working class or middle class. The collapse of African Bank in August gives an indication of the strain there already is on household budgets. The bank collapsed because of huge unsecured lending. Of the 22 million South Africans that make use of credit, nine million are three months or more in arrears. With interest rates having been hiked twice this year already – and further hikes likely – the position of all those in debt has been worsened. How does the ANC think that more taxes can be placed on the working and middle class?
At the same time the number of dollar millionaires in South Africa ($1 million = R11 million) has increased by five thousand in the past year, taking the total number of dollar millionaires to 47,000. WASP says tax big business and this super-rich elite!
Nene and ANC sow confusion to hide their class agenda
At this stage, Nene and the ANC are trying to pose their cuts as ‘efficiencies’ and ‘savings’. If this was a genuine commitment they could start with Zuma paying back the R246 million spent on his personal Nkandla residence! WASP condemns the public money lost to corruption and wasteful spending. The money Nene is trying to save from such fat-trimming measures is not going back into the pockets of the working class but, in the guise of reducing the deficit, paid in ransom to the capitalists by ‘guaranteeing’ their repayments. In that sense it is a transfer of wealth from the working class to the capitalist class. WASP demands that all ‘efficiencies’ and ‘savings’ are accounted for clearly and spent on public services to benefit the working class.
The freezing of certain budgets and the ‘cancelling’ of public sector vacancies – i.e. job cuts – is another blow to the unemployed and a blow to the already overstretched public services that the working class depends upon. It is the final clawing back of the assurances made in the 2007 and 2010 public sector strikes by the ANC. But public sector workers are not faceless paper-pushers claiming salaries for doing nothing as the ANC would have us believe in their campaign against public sector workers. They are teachers, paramedics, nurses, prison officers and police. The potential for a major struggle in the public sector is posed. In the wage negotiations that have recently begun, the public sector unions are demanding a 15% pay increase. With the ANC government’s rhetoric on the deficit and the ‘bloated’ public sector they will not easily concede to the unions demands, especially with the ratings agencies breathing down their necks and making threats.
But public sector workers have every right to demand a substantial pay rise for what is, for the majority, low-paid but vital work that benefits society. The reality of the state of our public services is shown by the conditions that forced Tshwane paramedics into strike action recently. These vital workers work nearly a week every month for free, putting in 32 hours unpaid overtime each. Ambulances have no oxygen cylinders, many ambulance stations have no water or electricity and at one station, 18 staff members share just one toilet. This is just one indication that it is urgent to fill vacancies and invest more in public services, not start cutting them.
Selling off the ‘family silver’
Finally, Nene also announced plans to privatise “non-strategic assets” in the state sector of the economy – the parastatals – and to begin looking for more private investment which can only mean private ownership by the capitalist class, in whole or in part, in order for them to make profits. This is a significant break from the ANC’s previous policy and begins to bring their economic policy more fully into line with the Western imperialist powers that sees public ownership as an evil to be eradicated. This will be the thin end of the wedge and eventually the entire state sector will be lined up for privatisation.
As WASP has warned, the ANC has learned nothing from the 2014 elections which saw their real support drop to just 35% of the voting age population. They are ploughing ahead with ever more open and ever more brazen pro-capitalist policies in their fifth term. Nene’s budget statement is just a taster of what is to come over the next five years. Such policies will provoke struggle and uprisings of the working class. It is vital to unite these struggles and continue the efforts to build a mass working class party. Armed with a socialist programme – based on nationalisation under working class control – the working class will be able to answer the lies of the likes of Nene, the capitalist class’s representative.