City Press reports that ahead of Finance Minister Enoch Godongwana's tabling of his medium-term budget policy statement (MTBPS) in Parliament on Wednesday, trade unions and the business sector are at loggerheads over government spending.
The National Treasury warned that spending cuts might be needed to counter revenue shortfalls and a wider-than-expected budget deficit. The Congress of SA Trade Unions (Cosatu) and the SA Federation of Trade Unions (Saftu) reiterated their calls for government to scrap proposed budget cuts. They said the solutions offered by Treasury would further decapacitate the economy, which was in desperate need of stimulus and capacitated public services. On the other hand, Business Unity SA (Busa) and Business Leadership SA (BLSA) expect Godongwana to commit government to fiscal discipline while focusing on structural reforms that will lead to economic growth. Cosatu said it understood the fiscal constraints facing government and the need to cut unnecessary spending, but it was concerned that further budget cuts in government spending, especially in social services, could stifle the economy, further weaken an already struggling government and undermine its ability to provide quality public and municipal services. Saftu questioned the honesty of Treasury's warning that SA was facing an impending fiscal cliff and spokesperson Trevor Shaku cited research from the Institute for Economic Justice (IEJ), which accused Treasury of overstating the dangers. Saftu called on government to increase the redistributive features of tax policy, such as corporate tax, and to introduce a capital gains tax, a luxury goods tax, and a tax category for the super-rich. Meanwhile, Busa’s Cas Coovadia said the warning that SA would run out of money by March 2024, unless it reduced its spending, should not be ignored. Business Leadership SA’s Busisiwe Mavuso said she expected the minister to hold the line, while also maintaining a balance between government spending and investing.
- Read the full original of the report in the above regard by Thapelo Lekabe at City Press (subscriber access only)
- Read too, Cut state spending only when totally necessary, Fedusa urges, at BusinessLive
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