Introduction: Parliamentary submission responding to the MTBPS
In this parliamentary submission the Institute for Economic Justice (IEJ) welcomes the shift in focus presented by the Medium-Term Budget Policy Statement (MTBPS) regarding the key challenges facing South Africa’s economy. However, our evaluation reveals both positive aspects and concerning issues that require immediate attention.
Reimagining Fiscal Strategy for Sustainable Growth
The current fiscal strategy prioritizes stability and business confidence but fails to sufficiently address key areas of concern: growth, employment, poverty, and inequality. We believe a significant departure is necessary from the existing path of austerity, which lacks a credible strategy for economic expansion and equitable resource distribution.
Challenges and Recommendations in Fiscal Policy
The MTBPS’s narrow focus on stability and business confidence overlooks the need for a more direct government role in fostering sustained growth. Moreover, it inadequately addresses the disproportionate impact of capital-intensive industries on employment levels. We advocate for a comprehensive review and restructuring of fiscal spending, emphasizing its direct impact on growth and employment.
Social Relief and Austerity Impact
The reduction in the Social Relief of Distress (SRD) grant has led to an exclusionary process that adversely affects millions of vulnerable South Africans. We recommend increasing the SRD to the Food Poverty Line, and instituting a more inclusive and comprehensive budget to accommodate those in need.
Maximizing Available Resources for Rights-based Fiscal Strategy
Our approach emphasizes leveraging available resources to realize socio-economic rights, in accordance with constitutional and international obligations. Reducing economic leakages, addressing Illicit Financial Flows, implementing a wealth tax, and utilizing existing reserves for developmental projects are key measures.
Addressing the Private Sector Dependency and Unaccountability
The reliance on private finance for growth poses limitations and risks to public service access and state accountability. Our recommendations aim to rebalance financial dependencies, encourage developmental finance institutions’ role, and renegotiate debts, notably with entities like Eskom.
Accountability and Gender-Responsive Budgeting
There’s a crucial need for National Treasury to demonstrate the impacts of austerity measures on human rights and gender equality. A developmental-based budgetary framework, transparent state reconfiguration, and policy alignment with population growth and CPI are vital to address these concerns.
Conclusion: Towards an Inclusive Fiscal Strategy
In summary, the IEJ urges the legislature, through this parliamentary submission, to adopt a holistic approach to fiscal policy, prioritizing human rights, growth, and equitable resource allocation. Our recommendations are a proactive step towards ensuring a more inclusive and sustainable economic future for South Africa.