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ECONOMY-SOUTH AFRICA: 'We Need Interventions'

Nazeem Dramat

JOHANNESBURG, Feb 10 2009 (IPS) - The markets will be hanging on Trevor Manuel's every word when South Africa's minister of finance delivers his thirteenth Budget Speech on February 11. Expectation is even greater among poor communities, the unemployed and workers as the world's longest serving finance minister signals his government's economic plans in the face of the global economic crisis.

"We have to talk about saving jobs, saving industries, for example, retail, mining and manufacturing, so we don't put more people into poverty," the executive director of the National Labour and Economic Development Institute (NALEDI), Rudi Dicks told IPS.

"Mining houses are going to retrench big time. People are losing jobs and therefore access to food because of high food prices. We need interventions. We can reform the Unemployment Insurance Fund so we pay longer periods of unemployment; put social plans in place in mining, for example, and extend social security to reduce the slide into poverty."

NALEDI provides research and technical support to the People's Budget Campaign (PBC), a coalition of civil society actors drawn from the trade union federation Cosatu, the South African Council of Churches and the non-governmental organisation umbrella body, SANGOCO.

The coalition came into existence in the wake of the economic debates that led to the government's adoption of its growth, employment and redistribution strategy, GEAR in 1996. The macro-economic policy framework sought to stabilise the economy – then characterised by severe balance of payments constraints; globally uncompetitive business practices, high inflation and interest rates – and to reduce a crippling state debt inherited from apartheid.

The policy has since its inception been slammed by trade unions and civic bodies as favourable to business and ignoring their constituencies.

"The power dialogue at the time was a dialogue of the deaf," recalls former NALEDI director and Cosatu parliamentary officer Oupa Bodibe. "If you don't like something, trash it rather than engage it. Once government decided on a path of undemocratic policy-making they became hard of hearing."

Many of those who conceived the People's Budget initiative were seasoned community activists and trade unionists who opposed apartheid. How to influence the budget and the allocation of resources soon became the coalition's rallying point.

Repudiating state debt inherited from apartheid, spending on arms and changes to monetary policy, particularly high interest rates that the campaign blamed for reducing disposable income, were headline-grabbing issues that the coalition took up.

But the building blocks of their platform remained those concerns that resonated with its community and worker base. The People’s Budget Campaign served as a consolidation of their spending priority areas: job creation, alleviating poverty and inequality, expanding social security protection, education, health, transport, fighting crime and basic services such as water, sanitation and electricity.

The coalition joined street protests to press for a Basic Income Grant (BIG), and marched on parliament to push for greater participation in the Budget process. "It's been tough the past 12 years. Government didn't take us seriously but there has been a change in the past four to five years. One of the better moments was the minister's acknowledgement in his 2007 Budget Speech of the need for a pro-poor budget," Dicks said.

"These days our core engagement is with the National Treasury. We meet before the budget but also afterwards so that they can explain what line allocations mean and measure it against what we've said. We also engage with other departments to influence their inputs into the budget process."

The access to the corridors of power has helped it gain insights into how the budget cycles work and who to talk to influence decisions. It's been more than just a learning curve for the coalition though; they have seen some of their proposals becoming government policy.

Despite resistance to BIG, Bodibe claims, "government's own research has vindicated the People's Budget Campaign proposals around reducing poverty. If it were not for social grants, poverty would be worse. Several studies confirmed the PBC position that's why government is taking this gradualist approach."

Head of Budget Office at the Treasury, Kuben Naidoo, retorts that "because of the measures taken over the past ten years we have created the fiscal space to spend more on housing, education, health and social grants that impact directly on the poor." Last year education received 22 percent of the total budget, health 11 percent, social grants 11 percent and housing 4 percent.

While the PBC will be monitoring how budget allocations square with its demand for the state to play a greater role in creating jobs and protecting ailing industries, tax rebates to companies and high earning individuals will be as keenly watched. "Tax rebates of almost $11 billion could have paid for education in black areas or tertiary education. That can't work in a country with such high unemployment," said Dicks.

The coalition is also upbeat about Money Bills that have been introduced in parliament. "At the moment parliament really just debates and cannot change allocations. For example, spending $5 billion on arms that is not required is debated but cannot be changed in favour of other priorities," Dicks lamented.

Once this is remedied it will allow legislators to change allocations. And this, the coalition hopes, will be a first step in bringing the national process in line with municipal budgets that, by law, require community participation and consultation.

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