FROM A CLASS PERSPECTIVE, resisting austerity is the most important struggle that needs to be waged. It is poor and working-class people who rely on state services. With every cut in the budgets of social security, health, education, housing, policing, land reform etc, these vital services are further eroded and become even more dysfunctional.
Yes, corruption, and maladministration, is a factor. But the local government, our hospitals and our schools are in shambles because they are deprived of money for their possible rehabilitation. The middle classes and the elite are not immune to the impact of budget cuts, but they are seriously protected. They have private healthcare, education, security and, increasingly, their own solar electricity. Their main concern is that the government does not tax them to pay for the services needed by the impoverished. Budget cuts and tax relief are the core aspects of what constitute austerity.
There is no comfort to be drawn from a recent report that estimates that 143 countries, covering 85% of the world population, are living under austerity measures. There is only the possibility of international solidarity. Creditor and debtor country governments alike have turned to austerity to address rising levels of debt, as higher levels of inflation have contributed to the cost of living crisis.
Once again the richest and most powerful countries have turned to the IMF and the World Bank to act as their debt collectors to secure their loans and investments. Austerity, privatisation and other reforms favour the needs of the private sector – in reality, the big transnational corporations. They are being imposed because these corporations have leverage – debtor countries must pay their loans if they want to continue to trade and access financial markets.
It is no exaggeration, nor a case of anti-government propaganda, to say that South Africa is undergoing a very harsh, IMF-type structural adjustment programme, with all the devastating social consequences associated with these programmes. Budget cuts, inflation targeting which puts up interest rates, staff cuts in the public sector, liberalisation of key sectors of the economy, and privatisation of SOEs: these are just some of the components of IMF structural adjustment programmes that are being implemented in our country right now.
Austerity fails in its own terms
Between them, the Treasury and the South African Reserve Bank have mismanaged the economy and plunged the country into an economic morass of untold suffering. On top of this, they turn to even harsher austerity measures, in spite of the fact that more than 10 years of austerity have throttled the South African economy, seen the unemployment level rise to nearly 50% and paralysed state capacity.
All of this is being done in the name of dealing with growing government debt. In the latest budget for example, interest repayments on the debt alone amount to R366 billion out of a total budget of R2.2 trillion. That’s 15%. It’s the single biggest expenditure item in the budget. Higher than basic education! “Debt to GDP ratio” is the key indicator that credit rating agencies and investors use to rate the level of risk in the South African economy. What proportion of total production (GDP) is the debt?
How much do we owe, compared to what we produce? With low economic performance, that amount is what mainstream economists consider high at 71%. And in spite of a decade of budget cuts, government finances are in such disarray that the Treasury thinks that it has to announce a further series of brutal cuts to the already crippled budget.
In other words, austerity has failed even in its own terms. The implication is that, against stated perspectives, “fiscal consolidation” (holding down spending) will continue well beyond the next three years. In 2023, the Treasury projects that government expenditure will contract by 2.2%. That’s its largest contraction in 25 years!
In a memo released on 31st August this year, the Treasury proposed a number of measures to cut spending even further than what was proposed in the 2023 budget.
This is in light of lower-than-expected tax revenues and a limping economy. Now Treasury is ordering government departments to freeze:
- hiring of new employees;
- salary increases;
- infrastructure procurement contracts; and
- all non-essential travel, conferences and workshops.
Moreover, Treasury will not make additional funds available to cover the 2023 public sector wage agreement. Departments must fund the agreed wage increase by cutting other items in their budgets.
Austerity destroys livelihoods and lives
Bongeka Buso committed suicide after killing her three children, with the debt collector at her door. A second mother, in Port St Johns in the Eastern Cape, has done the same. This gives us a sense of the desperation of poor people. And it gives the lie to the story that Bongeka’s tragedy was an isolated incident.
Rarely are such cases linked to the grinding poverty which working-class people experience. At least the Provincial Commissioner, Lieutenant General Nomthetheleli Mene, could say, “it is a concerning and heart-breaking issue that women facing poverty can be driven to such despair. Socioeconomic challenges can exacerbate their vulnerability to mental health issues.” Almost never is it acknowledged, apart from those on the political Left, that these incidents are the outcome of government economic policies. At best, corruption, bureaucratic indifference and maladministration are cited as factors.
And of course, it is difficult to finger austerity and conservative macro-economic policies as causes of the deep traumas South Africans experience. The many factors of life under capitalism combine and intersect to make it difficult to isolate a particular set of issues or causes. How is it possible to determine, in the case of Bongeka Buso, whether she was pushed over the edge by hunger, the burden of bringing up her children as a single mother impoverishment that is now long-term unemployment or the debt collectors?
There are many factors contributing to the brutal impoverishment, now the reality for the vast majority of the working classes. These include the slow recovery from the 2007/8 financial crisis, the impact of the electricity crisis, COVID-19 and the lockdowns, and most recently the cost of living crisis, in part arising from the Russian invasion of Ukraine.
However, there can be no doubt that the lack of government spending to address the country’s socio-economic crisis is a major cause of the collapse of the social fabric in our society. Public services everywhere are in disarray, not primarily because of corruption or cadre deployment, but because of government stinginess.
What can we do?
The government and the mainstream media proclaim budget cuts and tax breaks as the only response. But there are very plausible alternatives. These include taxing the rich through raising corporate taxation, introducing a wealth and financial transaction tax, and stopping profit shifting and other corporate tax evasion methods. And using those resources to invest in overcoming impoverishment, unemployment and inequality. Here we would need the government to undertake a mass housing programme, expansion of public transport and energy, and real land and agrarian reform. These would in turn stimulate downstream industries and create millions of jobs. Millions more people in employment and growing industries would boost the tax revenues of the government and stimulate even more investment in a growing economy.
An entire article would be needed to spell out the possible alternatives to austerity. But the government will not consider such alternatives for one single reason: Class interests. They benefit the workers and the poor at the expense of the rich and empowered. Over the last three decades, the ruling ANC has been transformed into a capitalist party, albeit a capitalist party of the rising black elites. Ultimately their interests are tied to those layers who control the heights of the economy.
That’s what makes it so vital to build a campaign and movement of resistance to austerity. This is not about declaring a one-day stay away, which is too short to have any significant impact and in recent times has been mostly ignored by the masses. What is required is a programme of awareness raising. Of going to the people and explaining what is austerity, and what are its alternatives, We cannot assume a spontaneous consciousness. This requires organising meetings at workplaces, distributing pamphlets, door-to-door petitioning, organising speak-outs and demonstrations. And then building on these towards wider and more generalized protests.
It requires building a broad coalition of organisations and activists from different sectors affected by the budget cuts: public sector workers and their unions, and grassroots community organisations organising in defence of public health and education. It means reaching out to the homeless, environmentalists and climate activists. Reaching out to all sectors of the society of poor and working-class people.
This is what focusing on austerity offers – an opportunity to unite that society in action. It offers the possibility of overcoming disillusionment in the political system and passivity in the face of such adversity. It offers the opportunity to forge solidarity both locally and internationally. It offers hope.
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