/ 23 February 2012

Little done to relieve pain of the poor

Little Done To Relieve Pain Of The Poor

Whereas the budget champions infrastructure development as a job creator and has increased benefits to the poor, its critics on the left say that, on closer inspection, it is still skewed towards the elite.

Dick Forslund, of the Alternative Information and Development Centre, said the infrastructure programme was not a guarantee of increased employment.

“It only increases the dominance of the mineral energy complex (mining conglomerates and electricity producers). It is centred on more extraction, transport and the export of minerals from bigger ports.”

Mazibuko Jara of the Democratic Left Front criticised the infrastructure development plan for its reliance on the mining and energy sectors to boost employment. “We need bigger incentives for industry. Mining does not create as many jobs as manufacturing.” He said that apart from being ecologically destructive, the policy of providing cheap energy through coal to big industry did not do enough to increase employment opportunities in the long run.

Jara acknowledged that the budget made room for social-wage programmes that would improve the lives of the unemployed. But he criticised the public infrastructure development plan for relying on financial markets to fund infrastructure, thus increasing debt.

Vainola Makan of the New Women’s Movement acknowledged Finance Minister Pravin Gordhan’s measures to increase job opportunities, but said they provided little immediate relief. “Those measures are going to take time to implement. In the meantime, a safety net like a basic income grant is needed.”

Makan bemoaned the fact that the budget did not acknowledge the community sector as a job creator for thousands of women. She said that women serving the welfare needs of their communities worked for little or no money and often used their own pension or child-support grants to help others.

Forslund expressed disappointment in the fact that yet more tax relief was granted to high-income earners. He said that between 1994 and 1999 the tax bracket for them had been adjusted to equal the inflation rate. However, from 1999 onwards, the government had adjusted the tax bracket at double the rate of inflation. “If the government had stuck to the rate of inflation, the highest tax bracket would today start at about R280 000, not at R617 000. Why the R9.5-billion in tax relief? [Gordhan] must break with this tradition.”

By contrast, said Forslund, social grants, up by 4.1% to 5.7%, had not been adjusted in accordance with inflation. Official inflation was already more than 6.1%.

“Stats SA said in December that inflation hitting the poorest households was more than 8%,” Forslund said. Food-price inflation then stood at 11% year on year. Forslund also labelled as conservative the tax revenue of 25% of gross domestic product. “It is even some percentage points lower than in the taxation-hostile United States,” he said. In most countries, tax revenue was greater than 30% as a share of GDP. In welfare states, it could be more than 40%.

Makan criticised the lack of adjustment of child support and pension grants to compensate for inflation, because these were the grants on which most poor families relied for their survival.

Said Jara: “Government is maintaining an inequitable system. Big oligarchs continue to benefit.”

Heidi Swart is the Eugene Saldanha Fellow in social justice reporting, sponsored by the Charities Aid Foundation, Southern Africa