Workers to pay the price over flawed fiscal policies

MEMBERS of the South African Federation of Trade Unions (Saftu) marched to Parliament in February to register their protest over illicit traders. Saftu, founded last year, claims to be the second-largest of the countrys main trade union federations, with 21 affiliated trade unions, altogether organising 700000 workers. INSET: Saftu general secretary Zwelinzima Vavi. David Ritchie African News Agency (ANA)

Watching Tito Mboweni delivering the Medium Term Budget Policy Framework Statement made me remember the chief propagandist of Nazi Germany who once said: “Propaganda works best when those who are being manipulated are confident they are acting on their own free will”.

Armed with a heavy artillery of more than a hundred of spokespersons trained not to question but to repeat a lie by our universities, an array of business sponsored experts and our largely untransformed media they own, the beneficiaries of the status quo have internalised Joseph Goebbels propaganda strategy.

We are told repeatedly that there is no alternative to the current economic policies despite the overwhelming evidence that they have dismally failed to address the crisis facing the majority.

A lie is repeatedly told that there is a looming crisis from our Debt/GDP ratio. We are being warned that about two countries with high levels of external debt – Turkey and Argentina – which have experienced sharp currency depreciation, rising credit spreads and large capital outflows. But nothing is being said about many successful economies with a much higher Debt/GDP ratios than South Africa’s relatively low 53%, which is well below the UK’s 83%, USA’s 105%, France’s 97 and Japan’s massive 253%.

We are told not to remember that post the 2008 world capitalist crisis and after the Second World War, many countries used borrowing to recover, relatively successfully, just like President Franklin Roosevelt’s New Deal in the 1930s. While accumulating debt is not in itself a solution to an economic crisis like South Africa’s it cannot be used as an excuse for doing nothing.

From morning to morning, twenty-four seven, we are told a lie so frequently that our corporates are paying far too much tax to justify the VAT increase. Yet South Africa ranks 172 out of 213 countries where 1 has the highest company tax and 213. In 1990 corporate tax was 50% serving a small minority of the population, today it is 28%!

We are told we have very limited resources and that we should live within our means! Any one pointing out that our corporates are hoarding a R1, 6 trillion investible cash and that there is an investment strike get so ridiculed as a dangerous socialist who wants to turn south African into another Venezuela.

There is an extraordinary silence on the loss of revenue as a result of financial outflows, money laundering and tax evasion and from recovering the money stolen through corruption and fraud. According to data released by Global Financial Integrity, between 2002 and 2011, South Africa lost a cumulative more than a trillion rand through illicit cash outflows.

Corporations use aggressive tax planning and profit shifting, known as Base Erosion and Profit Shifting to dodge tax. The Davies Tax Committee estimated that this cost the country a further R50 billion a year. The AIDC provided vivid research on this practice when they exposed how Lonmin was transferring R400 – R500 million a year to their subsidiaries located in tax havens.

Karl Marx said 140 years ago: “Accumulation of wealth at one pole is at the same time accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole.”

He was not exaggerating; he could have been writing about South Africa today.

According to Oxfam, 26% of South Africa’s population are hungry everyday; and half do not have sufficient access to affordable, nutritious and safe food to meet the basic health requirements, despite the fact that South Africa is officially food secure and produces enough food to feed the entire population. But every year R61.5billion worth of food is wasted along the production-to-consumption chain.

30.4 million people (55.5% of the population) are living in poverty and by far the biggest cause of these appalling levels of poverty is unemployment at 37.4%, the six highest in the world.

Unemployment is disproportionately a burden carried more by Black people, women and our youth. 41.2% of our women workers are unemployment. Youth account for 63,5% of the total number of unemployed persons. Within the youth, those aged 15–24 years are more vulnerable in the labour market with an unemployment rate of over 52%, an absorption rate of about 12,2% and a labour force participation rate of 25,6%.

This provides yet more evidence that the economy is sinking further into recession and that, as always it is workers who are paying the price. These dreadful statistics show the total inadequacy of President Cyril Ramaphosa’s Stimulus Plan, which failed to even begin to appreciate the depth of the economic catastrophe, which 24 years of neoliberal capitalist policies has brought about.

He promised no additional government resources, just reshuffling budgets to rob Peter to pay Paul. A conversation still has to be conducted about the real economic crisis and possible solutions. Unfortunately SAFTU, and many more unions remain locked out of Nedlac where our voices need to be heard. 

Zwelinzima Vavi is the General Secretary of SAFTU.