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The path the government is taking is not only a vote of no confidence in the state and public, but a betrayal of the people who have placed their trust in it, writes Irvin Jim

The medium-term budget policy statement presented to Parliament on 1 November 2023 by Enoch Godongwana is an all-out attack on the working class, and many of the institutions that keep society running.

Our country is on a dangerous trajectory, fuelled by austerity measures and the reckless privatisation of essential state-owned enterprises (SOEs).

This approach, spearheaded by the leadership collective under President Cyril Ramaphosa, Pravin Gordhan, and the National Treasury, is a significant threat to the stability and growth of our economy, and to society as a whole.

The economy has allowed the economy to drift into autopilot. This is evident in the handling of the energy crisis, particularly the unwarranted closure of power stations like Hendrina, Grootvlei, and Komati, resulting in a loss of 2 200MW of generating capacity.

This reckless path towards privatisation, without a just transition, is in stark opposition to the Paris Accord Agreement, which advocates for a phased approach suitable for developing countries like ours.

The push to privatise SOEs is not just an economic decision; it’s a political one with far-reaching implications.

We have seen that as power stations are closed they are replaced by independent power producers that are privately owned. We have also seen the privatisation of the transmission line infrastructure.

The steady privatisation of Eskom means that the country will not be in a position to own and control its energy provision so that it can continue to have a competitive electricity tariff to power the economy, electrify communities, and keep electricity as a public good in the service of the people.

The attack on the strategic role of the state in owning Transnet means that key economic infrastructure will be handed over to capital to be run in the interests of private profit rather than the public good.

The privatisation of profitable operations, such as those at the Durban port and the auctioning of our national airline, shows that this push to cede control of key national assets to private capital is driven by ideology rather than necessity.

The austerity measures championed by the government will lead to economic stagnation and worsen the social crisis.

These measures, purportedly in response to the growing public debt, are leading to underinvestment in vital sectors such as infrastructure, healthcare, policing, welfare, and education. The Reserve Bank’s policy of hiking interest rates to combat inflation is a misdirected effort that dampens investment and economic growth, particularly affecting the poor and unemployed.

What South Africa needs is a developmental state that intervenes in the economy, one that champions stimulus packages in key strategic sectors. This kind of state would not tolerate rolling blackouts and the collapse of critical infrastructure.

A developmental state would prioritise growth in the economy, job creation, and the protection of manufacturing capacity, leading to industrialisation, business growth, and more living-wage jobs.

It would put the unemployed and the working class at the centre of its concerns, and ensure investment in the institutions that sustain society, such as schools, hospitals, policing, and so on. The portrayal of the fiscal crisis as solely a result of public debt is a misdiagnosis.

The real issue lies in the government’s long-standing adoption of neoliberal macroeconomic policies focused on austerity.

These policies have led to an economy in complete stagnation and incapable of stimulating growth.

The budget speech fails to address the need for investment in infrastructure and stimulus packages essential for economic growth and job creation.

There is no replacement for a state that is developmental, a state that intervenes in the economy, a state that champions stimulus packages in key strategic sectors of the economy, including infrastructure.

Such a state will not voluntarily pass a vote of no confidence in itself, and on a strategic asset which it owns and controls as a shareholder such as Eskom.

Such a state will not withdraw from owning and controlling strategic commercial and profitable railway lines as critical levers to stimulate economic growth. A developmental interventionist state will not tell the people who put it into power, that it has mismanaged the country and the economy to a point where it is prepared to announce publicly that it is bankrupt and will hand over power to capital.

The path the government is taking is not only a vote of no confidence in the state and public, but a betrayal of the people who have placed their trust in it.

As a nation, we must resist this dangerous turn to extreme neoliberalism and a struggle for policies that strengthen the role of the state, invest in our people, and prioritise public good over private profit.

Only then can we hope to reverse the course of our failing economy and build a more equitable and prosperous South Africa for all.

Irvin Jim is the NUMSA General Secretary.

By Editor