Supplementary Budget 2020

Budget 2020 | DA says tough talk lacks credibility, EFF calls speech 'neoliberal'

The DA says the announcement by Finance Minister Tito Mboweni of major cuts to the public sector wage bill to rein in the deficit may be a "welcome movement in the right direction," but has questioned whether the state can follow through on its proposal.

"[Mboweni's] tough talk lacks credibility, because the government has only just begun negotiations with unions. So while the minister has already budgeted for the full cut, there is no guarantee whatsoever that this cut will actually materialise," said Geordin Hill-Lewis, the party's finance spokesperson.

Trade union federation, and ANC ally Cosatu, has said that instead of a clear diagnosis of the problems facing SA, National Treasury attempted to "dump the bill for industrial-scale looting on public servants". The federation promised to push back against proposed wage cuts.

The minister on Wednesday announced a proposal to reduce the public sector wage bill by about R160 billion over three years.

"For the credibility of our fiscal stance, that R160 billion or so needs to be found," Mboweni told journalists at a pre-Budget briefing. Treasury expects SA to pay R229 billion in debt-servicing costs in 2020/21, which would make it the third-largest item on the state's Budget, behind only basic education and health.

While some form of cuts to the state's wage bill was anticipated by analysts ahead of the Budget, the scale of the proposed reduction came as a surprise.

Hill-Lewis said that, even with the wage cut pencilled in, total debt is still growing.

"That means that if the full wage reduction is not achieved, debt will be even worse than now projected."

The Economic Freedom Fighters, meanwhile, described Mboweni's address as "unsurprisingly neo-liberal and uninspiring".

"The Budget speech is a confirmation of the surrender of the South African economy, one that is dressed in unimaginative poetry and a misplaced faith in the private sector," it said.

The ruling party’s inability to grow our economy, create jobs and build an economically independent South Africa is made a collective incapacity, for which the poorest of the poor must suffer and subsidise."

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