Budget Speech 2021 Deconstructed. - Youth Capital

Budget Speech 2021 Deconstructed.

 

Economics is far too important to be left to economists. It is deeply important, especially in times like these, for people to understand that you have a voice and your voice in economics is important”-Busi Sibeko.

Busi Sibeko, a Researcher and an Economist from the Institute for Economic Justice (IEJ) and Kristal Duncan-William (Youth Capital Project Lead) had a discussion to deconstruct the South African National Budget Speech 2021 delivered on 24 February, so that young people could understand its impact. 

The conversation began with Busi explaining that the South African budget works on a three-year cycle. She continued to note that there is a Medium Term Expenditure Framework and the yearly budget. The yearly budget is what is presented in February (mostly in the third week) within the three-year cycle. The Medium Term Expenditure Framework is often presented in October, and is the three year projection: this is the framework of how the government will allocate funds within the three-year period.

Information about the Medium Term Expenditure Framework and yearly budget is available on the Nation Treasury’s website. On the website, there is also a section titled SCOA that provides information about how the yearly budget is being spent.

In the same way that National Treasury publishes information about the budget on its site, provincial legislatures are expected to make their respective budgets available on their sites.

It is not enough for budgets and supporting documents to be available on websites, their content needs to be accessible to any average South African. Busi notes that “the budget itself is not written for average South Africans; it is written to appease the market”. Like many other South Africans, young people are often not able to meaningfully engage with the budget.

The jargon used in the budget is one of the barriers to accessibility and meaningful engagement. Kristal asked Busi to simplify some of the technical jargons Minister Tito Mboweni referenced during his speech.

The Budget Jargon: Fiscal Consolidation, Austerity and Zero-Based Budgeting.

Fiscal Consolidation and Austerity.

The Minister repeatedly said that the Budget was not promoting austerity. But to understand austerity, one must comprehend the concept of fiscal consolidation that means you are cutting your budget. This shrinking can happen in two ways, when the economy is growing and when it is not growing. When the country’s economy is not growing and the shrinking is applied to the budget, this is austerity. In simple terms, austerity is when the budget is cut and regressive taxes are implemented. If you are wondering what regressive taxes are, these are taxes that benefit those considered wealthy in the country over the poor. The reasoning behind austerity is to deal with the country’s debt during a period of low economic growth.

To learn more about the connection between austerity measures and debt, click here to see an illustration Busi presented during the discussion.

Zero-Based Budgeting.

Another term that has been tossed around recently in relation to the budget is zero based budgeting. This involves a yearly justification of projects, for example if there needs to be an increase. It also means that projects are not guaranteed. This approach to budgeting is problematic because the South African Constitution outlines rights that must be realised like the right to healthcare; Busi explained that “if zero-based  budgeting is applied, it means that if a TB treatment project cannot be justified then no funds will be allocated to it”,

The National Treasury is using this approach to implement austerity where budget cuts can be justified, because no substantial justification for additional funding allocation for projects was submitted.

Busi went on to explain that zero-based budgeting is also problematic because it does not take into account the views of the citizens regarding what they need. “For example, if a ward councilor cannot justify the need for the construction of roads no funding will be provided; meanwhile residents need new roads.”

If zero-based budgeting is done correctly, then the budget would meet the needs of citizens and directs where the money it needs to go.

2021 Budget Brief Review.

Armed with an understanding of some jargon terms, the discussion looked at what the budget had to say about Education, Health, Social Grants and the Presidential Stimulus Plan in relation to addressing youth unemployment.

Education.

The budget outlined massive cuts across the board. If the government was spending R20 300 per learner in 2019/20, by 2022/23 they will spend R1751 less. Between the years 2010-2019, the spending per learner decreased by 8%. This will largely affect learners for many years to come, especially with the impact of the pandemic on schools. Added to this, Busi pointed to page 59 of this year’s budget review that recognizes the fact that the cut on the compensation paid to teachers will lead to a shortage of teachers; over-crowded classes and impact on “no fee paying schools”.

Health.

On the note of what South Africans need to fight COVID 19, the budget heeded to the call for vaccine and allocated R8.2 million towards getting the vaccine and an additional R 8 million towards managing the second and third wave of the virus. For this to be possible, significant cuts had to be done. For example, conditional grants in health for multiple programmes were reduced. Although the government needs to demonstrate a strong commitment to tackle COVID 19 and its socio-economic effects, the budget cuts beg the question: “Are we sacrificing long-term health capabilities for the short-term?”  Busi argues that we need both the vaccines and improvements to healthcare.

Social Grants.

There was an increase in social grants, but when you consider inflation there is a decrease. “The worth of R1 is not the same”. Both Kristal and Busi noted that for the social grant to be meaningful, especially to young women, it needs to respond to the different needs of young women such as childcare. Busi explained that one of the reasons for the gender discrepancy is the idea that “the budget is gender blind.”

Universal income is one of the ways the gender blindness can be addressed as it takes away the divisive lines. It makes it easier for economic reforms to be implemented.

Presidential Stimulus Plan and Youth Unemployment.

During the 2020 State of the Nation Address, the President announced that R 500 billion would be allocated to the stimulus. Research by IEJ shows only one third of it was utilized. The committee running the stimulus did well but IEJ says the rand amount was not enough, especially in the context of the effects of COVID-19 on the economy.  The question that remains is why the stimulus was reduced.

In 2020 approximately 11.1 million jobs were lost despite the anticipated job bounce back that did not materialize. This loss is gendered.

Added to the job loss, Busi noted the significant cuts in labour intensive industries, which used to employ young people.

On the topic of youth employment, the budget projects a decline in the coming years for the amount allocated to public work programmes that are meant to create opportunities for young people. Busi added that opportunities created by these programmes must not be equated to long-term employment. She said, “800 thousand opportunities are not jobs”.

In as much as unemployment is the driver of poverty, low wages are also driving poverty. Thus, employment is not the only solution. Young people need actual decent work with wages that are not precarious.

The conversation also touched on what  young people can do to make their voice heard when it comes to  shaping the budget. It starts with participating in a meaningful way with existing platforms or create new spaces

  • We have to mobilize with a collective voice that calls our Members of Parliament, cabinets to reject budgets and say “This is not working for us National Treasury”. The collective voice needs to call for accountability.
  • We need to ask more questions,  for example: “where is the R 500 billion?”
  • Join campaigns/initiatives. For instance, Amandla.Mobi is running a  wealth tax campaign.
  • Go onto resource sites like PMG to find information about how to hold our leaders accountable.
  • Join the Budget Justice Coalition
  • Think creatively about how to organize and hold government accountable in light of COVID 19 regulations.

 

Busi encouraged us to start at a local level, by looking at municipal budgets. Young people need to know how the money is spent in their municipality.

It is in our power to influence how South Africa’s economy serves us and enables us to shift gears regarding youth unemployment.

 

Watch the live discussion below.

 
 

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