South African Communist Party

23 February 2022 The South African Communist Party (SACP) will study the full Budget Review and produce a comprehensive response, as the budget speech does not cover all the issues and items covered in the full Budget Review. In the intervening period, the SACP wishes to highlight the following. As things stand, South Africa is far away from overcoming the entrenched systemic crises of unemployment, poverty, inequality and social reproduction. These capitalist system crises will remain entrenched and unresolved. Taking unemployment as the case in point, the situation could worsen-that is, unemployment could increase to new highs in the period ahead. There is, however, an interrelationship between unemployment, poverty, inequality and the crisis of social reproduction. This means that millions of the working-class and poor will remain trapped in the capitalist economic crisis and its effects. These observations are based on at least one influential variable or factor that the Minister of Finance Enoch Godongwana conceded to when he said the projected real Gross Domestic Product (GDP) is 2.1 per cent this year while it will average 1.8 per cent over the next three years. We need a radically different approach to start addressing the crisis in earnest. Rather than neo-liberal structural reforms, we need to advance and deepen structural transformation of the economy. Retain and incrementally adjust the Social Relief of Distress Grant to lay a foundation for building a universal basic income grant Firstly, the SACP welcomes the allocation of funds to support the extension of the R350 Social Relief of Distress (SRD) Grant introduced at the height of the global COVID-19 pandemic. However, we reiterate our call to the government to not end the SRD Grant but to instead retain it and incrementally adjust it going forward to lay a firm foundation for building a universal basic income grant for unemployed South Africans. It is important for the government to demonstrably show that it is worried about South Africa being in the midst of a long-term unemployment crisis. Within our democratic dispensation, the unemployment crisis worsened in 1996 after the government imposed its neo-liberal economic policy called Growth, Employment and Redistribution (GEAR). It was in 1996 that the unemployment rate rose to crisis-high levels of above 20 per cent in terms of both the officially preferred narrow definition of unemployment that excludes discouraged work-seekers and the expanded unemployment definition that includes them. Throughout the entire period, the expanded unemployment rate was higher than the official unemployment rate that only accounts for active work-seekers. The government introduced the SRD Grant at the height of the COVID-19 pandemic following a jobs bloodbath affecting 2.2 million workers, who were retrenched overwhelmingly by the profit-driven private enterprise in the second quarter of 2020. The unemployment crisis rose to its highest level in the third quarter of 2021, affecting a combined population of approximately 12.5 million active and discouraged work-seekers. Discard the neo-liberal policy of austerity, build a budgeting framework that responds to the needs of the people The SACP remains strongly opposed to the neo-liberal policy of austerity and will strengthen its programme, including building widest possible working-class unity and a popular Left front, to achieve a budgeting framework that is responsive to the needs of the people and our national development imperatives. In the budget speech, for instance, the Minister of Finance Enoch Godongwana states that the National Treasury will in the coming period “do more work to strengthen fiscal anchors”. On four different occasions in the full Budget Review (on pages 2, 4, 24 and 28), the National Treasury states that it will introduce new fiscal anchors. By fiscal…

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SACP Initial response to the 2022 Budget Speech