A group of nearly 100 economists, economic analysts and professionals have called on parliament to reject finance minister Tito Mboweni’s supplementary budget on the grounds that it fails to address the magnitude of the crisis facing the country.
The group, the Economists Initiative, includes 28 professors, 18 people with PhDs and heads of university economics departments as well as former statistician-general Pali Lehohla.
The call for greater rather than less government expenditure in the face of deepening poverty and social distress was also endorsed in other presentations by civil society organisations during public hearings by parliament’s two finance committees on the supplementary budget.
In an impassioned address, the representative of the economists, Gilad Isaacs, a lecturer at Wits University and co-director of the Institute for Economic Justice, said the supplementary budget reneged on the R500bn relief package announced by President Cyril Ramaphosa and posed a dire risk for the country.
Isaacs said the supplementary budget, which proposes budget cuts of R230bn over the next few years, represented “economic suicide” and would result in higher debt levels. “The architecture and logic of the budget is fundamentally flawed and we make the unprecedented call on the committee to reject it outright,” Isaacs said.
What was needed was significantly increased expenditure, which could be financed through a combination of solidarity taxation, increased borrowing, mobilising domestic quasi-public funds and Reserve Bank action. In the absence of such expenditure, a catastrophic economic crisis would result as the economy would shrink, tax revenue plummet and public debt soar.
“We submit that in the current crisis the budget should be guided by the need to support the public health response and keep businesses afloat, workers employed and incomes in the pockets of the poorest,” Isaacs said.
The Temporary Employer/Employee Relief Scheme (Ters), the loan guarantee scheme and the tax relief measures of the R500bn relief package had only helped a fraction of the businesses in need, Isaacs suggested.
He said he was “frankly terrified” as to what would happen to people without an effective rescue package. Millions would sink deeper into poverty.
Examples of particularly dangerous budget cuts included the R2.1bn cut in the basic education budget, the R4.6bn reduction in the transport infrastructure budget, close to R10bn in cuts to higher education and training, a cut of R2.3bn in the human settlements budget, a cut of R2.4bn in agriculture, land reform and rural development, and a reduction of R1.5bn in the programme that focuses on connecting households and using non-grid solutions to provide energy.
The C19 People’s Coalition, which was formed in response to the Covid-19 pandemic, also opposed the supplementary budget on the grounds that it failed the test of human solidarity.
The Budget Justice Coalition called for the government to move away from its path of austerity, which had involved years and years of budget cuts and low growth. The budget cuts were coming at a wrong time and were not geared to getting the country out of its crisis.
Cosatu’s parliamentary co-ordinator, Matthew Parks, said the federation was disappointed that the budget did not provide for a bold and audacious R1-trillion stimulus plan. “To say that Cosatu is underwhelmed, disillusioned and disappointed in the supplementary budget is an understatement.”