South Africa’s Finance Minister, Pravin Gordhan, tabled his R1,1 trillion budget for 2014/15 in parliament on 26 February. Minister Gordhan desperately talked-up the derisory amounts of pro-poor spending in the margins of the latest government income and expenditure plan. But more careful interrogation of the budget begs a fundamental question: who are the top recipients to whom South Africa’s public money is being distributed? Huge volumes of public resources are set to flow into schemes for corporate enrichment, especially businesses profiting from bulk infrastructure construction, exports and state debt, at the expense of the poor and labouring majority.
The Finance Minister anchored his budget speech in the 2030 National Development Plan, viewed as the blueprint for prioritizing state spending for decades to come. This is what Mr Gordhan told his audience from the parliamentary rostrum: “The NDP reflects the priorities underpinning this budget, and prepares the ground for the next phase of our economic and social transformation.” (Pravin Gordhan, 26 February 2014, p9) A few weeks earlier, President Jacob Zuma echoed similar messages in his 2014 State of the Nation Address, promising to fast-track the implementation of the NDP through five yearly implementation plans. For both men the NDP is the fulfillment of the Freedom Charter.
In fact, at the 2012 Mangaung Conference of the ANC, the NDP 2030 received a resounding endorsement despite bitter opposition to it from dissidents within the tripartite alliance, most noticeably the National Union of Metalworkers of the South Africa (NUMSA). It is no secret that the NDP 2030 is premised on the same capitalist logic as the 1996 Growth Employment and Redistribution (GEAR) neoliberal policy. Commitment to labour market flexibility and rampant privatization, among other neoliberal impositions, is indelible in both frameworks to safeguard corporate interests coupled with ferocious assaults on workers.
The promotion of competitiveness and exports is a dominant theme that runs through Minister Gordhan’s 2014 budget speech. This mantra unmistakably betrays his devotion to neoliberalism. A host of corporate tax breaks and subsidies (called ‘investment incentives’) are mooted and must be pleasing to the bourgeoisie. Given the neoliberal command to restrict government spending, by how much will the growing ‘investor incentives’ cut the budget for meeting the socio-economic needs of the majority, agrarian reform, etc.? The 2014 budget speech is silent on this fundamental trade-off or contradiction that pervades the actual numbers.
More importantly, tax breaks and subsidies are never enough to advertise and sell South Africa as an attractive export processing hub for the accumulators of profit. Investors demand cheap and docile labour! In the final analysis, the capitalist class must intensify the exploitation of labour if they want to beat their competitors and capture larger export markets. Compliant Mr Gordhan and his comrades in other government departments (DTI, Economic Development, etc.) thus champion the expansion of ‘special economic zones’. But export processing zones are notorious for their dehumanizing working conditions and stripping workers of basic freedoms; these enclaves are concentration camps for wage-slaves and the production of super-profits.
The much talked about youth wage subsidy, officially labeled the Youth Employment Tax Incentive, follows a similar logic for corporate enrichment. All workers, embracing the jobless and non-unionised, are set to gain from rejecting and protesting against such false remedies to South Africa’s long-running unemployment crisis.
Over the next three years, government plans to spend R847 billion on infrastructure projects, making this the largest slice of fiscal expenditure. There cannot be any dispute about the need for mass public investment to construct energy, water, transportation and other social infrastructure that uplift peoples’ living standards. Sharp disagreements stem from the flawed model that dictates how public money is to be poured into the ambitious infrastructure development programme. The Finance Minister’s plan amounts to grand-scale outsourcing to the private sector as if there are no anti-neoliberal alternatives to the building of social infrastructure.
Government debt is set to soar, partly to pay for new or upgraded infrastructure. The combined debt of all government agencies, including state-owned enterprises, stood at R1,39 trillion in 2013, according to the latest Government Debt Management report. This amounts to nearly 40% of the total value of output produced in the country (or GDP). And the cost of servicing government debt is bound to surge in tandem with higher indebtedness – aggravated by recent downgrades in the country’s credit ratings, speculation in debt markets and interest rate hikes. Paying the interest on government debt has increased by about 66% from R66,2 billion in 2010 to R114,9 billion in the latest budget- not too far below state spending on all social grants! This guarantees a steady income stream for rapacious financial capitalists.
Overall, the 2014 budget speech fosters false hopes that a flawed and bankrupt economic model (codified in the NDP 2030) will improve our quality of life. In line with neoliberal prescripts, government spending does not aim to break the stranglehold of capitalism on society, the root cause of unemployment, inequality and exploitation. On the contrary, outsourcing and state indebtedness to profit-seeking big business will increase at the expense of the poor and exploited masses. Militant movements against austere and neoliberal budgets must mobilize on the basis of a coherent anti-capitalist programme aimed at placing the entire economy under the democratic control of the labouring majority.