SACC RESPONSE TO THE 2001/2002 NATIONAL BUDGET

The SACC affirms that the government was elected to serve all the people. The majority of the people of this country live in poverty. We would therefore expect to see a budget that exercises a preferential option for the poor.

The SACC welcomes Minister Manuel's acknowledgment that there must be a shift in emphasis from macroeconomic policy to give greater attention to microeconomic intervention. However, we continue to question the ability of the government's macroeconomic policy (GEAR) to deliver substantial benefits to the poor.

We are dismayed that the amount of money that the government has chosen to make available for reparations falls so far short of the amount requested by the TRC. Moreover, we believe that true reconciliation requires much more vigorous action to narrow the enormous gap between rich and poor.

We are concerned that the government's spending priorities are not best suited to the redistribution of wealth. We remain critical of the arms procurement package that has prompted a 50 per cent increase in the defense budget since 1999. This year, the government plans to spend more than ten times as much money on the military as it plans to dedicate to its poverty relief and job creation fund.

While we welcome the modest real increases in the health and education budgets, we regret that the welfare budget failed to keep pace with inflation. Once again this year, the nominal increase in old age pensions--R30--does not represent a real improvement. Similarly, the added R10 a month for child support grants becomes less significant when the increase is averaged over the years since the grant was introduced.

Many poor people will benefit from the zero-rating of VAT on paraffin, but we believe that the government could have made a more substantial contribution to the improving the living standards of poor households by extending zero-rating to a much larger range of basic foodstuffs.

We applaud the government's efforts to stimulate economic growth through investment. However, such investment can only be meaningful if it is based on sound ethical principles and is of benefit to the poor. In our efforts to encourage the development of a code for ethical investment, the SACC is co-hosting a conference on 1 March to explore this issue.

The SACC, as part of the People's Budget initiative, will be releasing a more detailed response to the budget at a press conference to be held at 14h30 tomorrow (Thursday, 22 February) in the Rainforest Room (120 Plein Street), to be addressed by Bishop Jo Seoka, the Bishop of Pretoria.