South Africa's Finance Minister Pravin Gordhan climbs stairs as he walks towards the National Assembly building in the South African Parliament, to deliver his 2017 Budget address, on February 22, 2017, in Cape Town.
Pravin Gordhan, Minister of Finance for the Republic of South Africa, got a standing ovation from the Economic Freedom Fighters as he was called to the podium by Baleka Mbete, the Speaker of Parliament. A praise poet stood up in the public gallery and began his oration; the moment seemed unplanned, even to the speaker herself. Gordhan seemed a popular man.
Of course, all this was theatre. The opposition members’ applause for a finance minister whose policies have been entirely in line with the very economic system they oppose has less to do with policy matters, and more to do with what has come to be known as ‘politicking’. Many South Africans understand there to be a stand-off between the finance minister and the President of the Republic, Jacob Zuma, who appointed him to the post in December 2015. Many see him as the ‘good guy’ in a battle over ‘state capture’, in which the ‘bad guys’ supposedly includes some of his colleagues in cabinet, and some venture, even the very man who appointed him.
But all that deep background merely goes to underscore the content of the budget speech. Many were relieved that there was no increase in value added tax; such an increase would have been deeply unpopular with labour organisations whose members would have found life even more unaffordable than they already do. Instead, there was the modification of tax on those who earn more than R1.5 million, who will now have to surrender 45% of their income to the South African Revenue Services. One observer thought this constituted ‘a squeeze on the rich’. Really? Perhaps those ‘rich’ South Africans (who are merely the upper end of the middle, because above them, far above them, is the stellar arrangement of the plutocrats and oligarchs, whose annual income and property makes R1.5 million sound like a weekend vacation budget) ought to compare their ‘burden’ to those of ordinary Swedes.
Of course, with income inequality at the levels that they are in South Africa, many of us do not earn anywhere near R1.5 million. It is therefore difficult to imagine people who do feeling a squeeze in the way domestic workers and farm labourers feel the squeeze on their lives when the fuel price increases, or when they have to make tough choices with a R20 note: bread, or milk, but not both.
And in what world is R380 (after a R20 increase in the child grant), which many bourgeois and bourgeois aspirant South Africans decry as an incentive for profligate exploitation by women who procreate to receive the grant, going to make a meaningful difference in the life chances of highly impoverished children? Yes, the child grant makes a difference in the lives of many, but how significant and substantial is that difference in a majority young country with the skills and education challenges which South Africa has, and with the development and poverty reduction goals it has set for itself?
One opposition party member continued to insist that the increase in tax for the lucky few in a population of 55 million people who earned more than R1.5 million was unfair. Why, the Member of Parliament for the Freedom Front Plus asked, should 5 million people carry the burden of the other 50 million? A valid question, from a certain perspective. But one of the many follow-up questions then ought to be, ‘What kind of country would the 5 million rather live in?’ An increase in value-added tax, the absence of which the MP regretted, would of course have increased tax revenue, but it would also have plunged millions into greater penury because all sorts of goods and services would have become even more unaffordable.
Transport and food costs, already fairly high in South Africa, would have increased substantially. But of course, for some, the poor ought to subsist, not live. Any pleasure they engage in that involves a cost is seen as wasteful. Food and transport prices will rise, anyway, because of increases in the fuel and road accident fund levies. The increases in the social grants are not likely to keep pace with those increases. And with concentration of ownership in the economy, the long history of price fixing, collusion and exploitation of consumers, especially among the vulnerable poor in South Africa, does not bode well for the year ahead.
In a different budget speech, perhaps, one which can only be dreamed of, a different finance minister may have announced a reduction by half or more of all cabinet level salaries. That dream minister may have announced cuts by half or more of all salaries of the members of both houses of parliament. Add to that list premiers, municipal mayors, and then proceed to the many director-generals, directors, MECs, and begin to work towards income equality. Graduates across the Eastern Cape whose families have sacrificed much to educate them, protested about the unemployment they have had to deal with. One woman who holds a Master’s degree, sells sweets at the roadside. Meanwhile there are MPs and ministers who are often caught sleeping on their highly paid jobs, literally and figuratively.
The most tragic detail of the Budget 2017 speech was the reminder that more than 50% of Grade 5 pupils in South Africa cannot read in any language. We are a country with 11 official languages. Each of them will have an expression of horror at what that detail reveals of the expensive debt we are bequeathing the next generation, despite the closing remarks from the Minister of Finance about the need to avoid doing just that, and despite the standing ovation at the end, with a few notable abstentions from some of his colleagues.
The squeeze is on, and it’s on all of us.