Cosatu critiques Finance Minister's Budget as insufficient for economic growth

The Star

21-05-2025

Ashley Lechman | Published 7 hours ago
Trade union, The Congress of South African Trade Unions (Cosatu) said on Wednesday that it does not think Finance Minister Enoch Godongwana's third Budget attempt was enough to stimulate growth for the country's economy.
"We welcome government's decision to withdraw the proposed VAT hike as it would have been an unnecessary burden to workers struggling to cope with the rising costs of living. I t is a positive moment in our democratic evolution, when government led by the African National Congress, shows the political maturity and humility by responding positively to the concerns of Cosatu and society," Cosatu stated.
The union added that it cannot support tax hikes upon the working class and the poor who are already highly indebted.
"Whilst appreciating the scrapping of the VAT hike, we remain deeply distressed that for two years in a row, Personal Income Tax brackets have not been adjusted for inflation. This will see workers at the margins of the next tax bracket in danger of paying higher taxes when receiving their annual increases. This trend must be reversed. Whilst regretting the decision not to extend VAT exemptions for additional food items or provide further fuel price relief, we urge government to pursue additional measures to cushion indigent households from poverty, in particular expanding free electricity and water," Cosatu said.
"The Federation commends the R4 billion boost to the South African Revenue Service's tax and customs compliance efforts. SARS has shown that it has the capacity to deliver. The R7.5 billion allocated to it over the Medium-Term Expenditure Framework (MTEF) is an important step towards enabling it to ramp up collection of the R800 billion in owed taxes and improving tax compliance by at least R60 billion annually. It is critical that SARS be given every possible support to achieve these tax compliance targets. The tax regime must be reviewed to provide relief for low-income earners and ensure wealthy individuals and companies pay their fair share," Cosatu added.
Cosatu said that further discussions must take place on how the Reserve Bank's currency reserves can support the fiscus.
"We welcome government's acknowledgment that bleeding the public services working-class communities and businesses depend upon is reckless and harmful to the economy. The 5.4% increase in expenditure over the MTEF and allocations to frontline services, in particular including the rolling out of Early Childhood Education to 700 000 learners and tackling the school infrastructure backlog, refurbishing 660 health facilities, investing in Home Affairs' capacity, Defence and Correctional Services will be a step forward to repair damage inflicted by previous austerity budget cuts. However more must be done," Cosatu said.
The minister committed to hiring more teachers (1000 plus allocations to save 5500 existing posts), Home Affairs, police (4000), prosecutors (250) and border management officers, amongst other critical frontline personnel will boost public services.
"But we remain deeply dismayed by the reduced low allocations for doctors (800) and nurses. The implementation of the public service wage agreement will help public servants heal financial wounds. We are concerned about the impact the loss of valuable skills and experience by public servants who opt for early retirement, may have upon the state's ability to provide public services. Government must move with speed to identify any ghost posts in the state, as well as boost effort to tackle corruption and wasteful expenditure," Cosatu said.
The union said that it applauds the outstanding work done by Eskom and municipal workers to overcome load shedding.
"We are pleased that the debt relief package has provided Eskom breathing space to ramp up maintenance. It is critical that Eskom be given more support to tackle corruption, wasteful expenditure, cable theft and bring on board new generation capacity. The allocation of R219bn for energy infrastructure will be an invaluable boost as will the electrification of an additional 300 000 homes. These measures must translate into affordable electricity if the economy, in particular mining and industry are to survive and grow," Cosatu said in a statement.
"The turnaround of South African Airways is testimony that state-owned enterprises can be turned around to once again become enablers of economic growth. Whilst government is naturally reluctant to provide further debt relief to SOEs, Transnet should be assisted to settle its debt to free up capital for the modernisation of its port and railway network as these will unlock the mining, manufacturing and agricultural sectors, creating thousands of badly needed jobs and boosting state revenue. We are concerned by the reduction to R12.7 billion for Metro Rail's signal upgrades but hope its total R66 billion allocation will secure its efforts to return to full capacity, thus enabling 10 million workers and commuters travel quickly and save money on transport," the union added.
"Treasury needs to honour its court signed business rescue agreement to provide the Post Office with the long delayed R1.8 billion injection. This should not be delayed over the MTEF. We urge government to table the Road Accident Fund (RAF) and Benefits Scheme Bills at Parliament as part of a package of interventions to set the RAF on a sustainable path and ensure its funds are directed to the poor not the wealthy, let alone insatiable ambulance chasing lawyers," Cosatu added.
Cosatu said, "We welcome the various progressive provisions in the Budget, which Cosatu campaigned for, including allocating 61% for social wage expenditure. We are, however, disappointed by the failure to show any relief for the 8 million SRD Grants and government's continued shyness to drastically ramp up sufficient resources to support SMMEs, industrialisation and export sectors, as well as public employment programmes."
" The Budget does not foresee growth rising beyond 2% over the next decade whilst we desperately need at least 3% growth if we are to turn the corner on unemployment. We dare not normalise a 43.1% unemployment rate. This is a ticking time bomb that will one day explode and the price of picking up the pieces will be far greater than we can afford," Cosatu added.
The union said it is calling upon Parliament and Government in the run up to the MTBPS and the 2026 Budget, to initiate a national dialogue on what are our expenditure priorities and what we can live without, and what are the acceptable and unacceptable revenue streams to fund these.
"We cannot afford to continue to stumble along a meek path of business as usual and expect better results. A bold and decisive Marshall Plan is needed if we are to capacitate the state, stimulate growth and slash unemployment. We do not have endless time to make the bold changes our many socio-economic crises demand. COSATU will be seeking further engagements with government on these burning matters," the union further stated.