South African Catholic's Bishops' Conference (SACBC)
Submission to the Portfolio Committee on Finance
Budget Hearings 1999/2000
19th February 1999

The SACBC Parliamentary Liaison Office expresses its appreciation for the invitation to contribute to the 1999/2000 Budget Hearings. The Church does not claim any particular economic expertise, but it does have a considerable experience of the day to day lives of people. For this reason, the points we wish to make today are not based on any theoretical or ideological standpoint, but on our concern for all South Africans, especially the poor.

We have been asked to address the question of job creation in the Budget. In our view job creation must be viewed as a matter of national priority. The impact of joblessness is not limited in a narrow sense to the unemployed individual - it has ramifications for the family, for the local community and for the social fabric of South Africa as a whole. No amount of crime-fighting is going to succeed in establishing stability and security for our people as long as our rates of unemployment remain as high as they are.

Given this, while we welcome the allocation of R3 billion to job-creation, we must point out that this is slightly less than 1.5% of the total budget. As such, it fails to reflect adequately the central importance of the challenge of providing work for our people. It is also unclear how much of this is to go to poverty alleviation as opposed to actual job creation. The two concepts tended to be lumped together in the budget speech. It is certainly a relief for disadvantaged communities to receive clean water or electricity for the first time, but the fact remains that they will continue to live in poverty if they do not have employment.

The argument has been made that 'government is not an employment agency', and this may well be true under normal circumstances. However, ours are not normal circumstances. For a variety of reasons - historical, structural and external - we find ourselves with an enormous backlog of unemployment. The private sector has failed to create employment at anywhere near the required rate; the GEAR macro-economic strategy proved itself unequal to the task even before the recent international economic crisis came into play. Consequently, we submit that government must indeed undertake the role of an employment creator. When overall economic circumstances change, and the private sector shows itself more willing to engage in job-creation, government can withdraw from this role. But that point would appear still to be a long way off.

The Working-for-Water programme of the Dept Water Affairs and Forestry has quite rightly been put forward as a shining example of what can be achieved by a public works programme. This programme proves that large-scale employment by the state is not only feasible, but also extremely worthwhile. Such programmes can both provide basic services for impoverished people, and at the same time generate employment. The challenge now is for other government departments to emulate Water Affairs and Forestry. The Portfolio Committee on Finance could play an important part in encouraging them to do so.

The question obviously arises as to where the money could be found to fund public works programmes. In this respect we wish to suggest that more could have been done in this budget. For example, some of the money (approximately R4.85 billion) given in tax-relief may have been better employed in direct job-creation. If R1 billion more had been allocated to such projects - in effect doubling the amount announced by the Minister in his speech - significant tax-relief would still have been possible. The point is simply this: that those who will enjoy the tax-relief are already employed; any marginal increase in their disposable income as a result of tax-relief will have far less of an effect on general levels of poverty than would the creation of new jobs for the unemployed. We also cannot forego mention of the cost of debt-servicing, which has now reached R48.2 billion. This aspect was barely mentioned in the budget speech, and government continues to gloss over the whole question of the apartheid debt. Nevertheless, there is a growing weight of opinion that various options exist to reduce the debt burden, and to free up resources for pressing public purposes, including job-creation. It is a challenge which government is failing to address to the detriment of all our people. In this regard we welcome the Minister's recognition that "too many people have become hostage to unscrupulous moneylenders" and we hope that strong action will be taken to counter this trend. However, it must also surely be recognised that, as a nation, we are still being held hostage to the unscrupulous institutions that lent money to the apartheid state. Much-needed increases in poverty-relief, job-creation and social spending cannot be put on hold indefinitely while we continue to pay the ransom. An opportunity will arise next year for the government, in line with the world-wide Jubilee 2000 movement for debt-cancellation, to announce firm steps in this regard.

The reduction in company tax is intended, in the Minister's words, to "enhance (companies') ability to play a leading role in job-creation and economic development." Having provided this incentive, however, nothing was said about what would happen should the corporate sector view the reduction not as an opportunity to create jobs, but merely to increase profits. We submit that the Portfolio Committee on Finance should monitor the success - in job-creation terms - of this initiative. The Committee should be prepared to advise the Minister to extend or to withdraw this incentive in future budgets, based upon an evaluation of the effect of this reduction in the matter of job-creation.

In conclusion, this budget has the potential to contribute significantly to job-creation. In our opinion, though, much more could have been done, and we hope that these tentative steps will be the first, not the last, to be taken. We appreciate the constraints under which government has to operate; some of these are externally imposed and beyond its control. Others, though, are self-imposed and are being allowed unnecessarily to frustrate the vital objective of increased employment. If we take into account that fact that we have one of the world's worst income disparities between rich and poor, with islands of great wealth in a sea of poverty, then the theme of the budget should not be what the Minister calls "more, for all, forever", but more, for the poor, now.

Mike Pothier
Research Officer.
18th February 1999