Tuesday, 25 February 2025

The Economic Freedom Fighters (EFF) reject with the utmost contempt, the narrow, incompetent, and misguided fiscal framework that continues to define the approach of the National Treasury. The rejection of Finance Minister Enoch Godongwana’s revised Budget tabled in Cabinet is a clear indication of a government in crisis—one that lacks vision, coherence, and the political will to confront South Africa’s deepening economic stagnation. The Treasury’s insistence on imposing either tax burdens on the poor or implementing budget cuts to critical services reflects a fundamental failure to grasp the root causes of our economic crisis.

For years, the National Treasury has implemented regressive austerity measures, cutting spending on essential public services while failing to stimulate economic growth. These budget cuts have resulted in stagnation, the deepening of structural unemployment, and a crisis in service delivery. Yet, despite clear evidence that austerity has failed, Treasury remains trapped in its dogmatic approach, unwilling to explore progressive alternatives that would rescue the economy from its current collapse.

The proposed budget cuts, which include R29 billion meant to hire unemployed doctors and provide essential health services, R29 billion intended for the recruitment of teachers and early childhood development, and significant reductions in funding for prison warders, defence force salaries, and public transport infrastructure, represent a direct attack on the working class and the poor. These cuts will exacerbate unemployment, deepen inequality, and leave vital state institutions even more incapacitated than they already are.

The EFF reiterates that the only viable path forward is an expansive fiscal policy that prioritises aggressive infrastructure spending, particularly in a manner that builds internal state capacity. For far too long, public infrastructure projects have been handed over to private contractors whose sole motivation is profit, leading to corruption, inflated costs, and substandard service delivery. The same private sector that looted resources during the construction of the 2010 FIFA World Cup stadiums remains unrepentant in its pursuit of profit at the expense of the people. A weak state, incapable of enforcing contract obligations or ensuring proper oversight, has enabled this looting spree.

It is precisely this failed approach—where the state abdicates its responsibilities to the whims of private capital—that has left the economy in its current state. Yet, the Treasury’s proposed budget does nothing to alter this trajectory. Instead, it offers only more of the same failed policies that have defined the past 15 years, a period during which South Africa’s economy has seen no meaningful growth due to neoliberal mismanagement.

The EFF rejects any proposal to increase VAT or personal income tax that disproportionately burden the working class. The government cannot continue to look towards the poor to finance its incompetence while protecting the profits of big business and white monopoly capital. We have consistently called for alternative revenue sources, including a wealth tax on the rich, increased corporate taxation targeting multinational corporations, and a crackdown on illicit financial flows, which rob South Africa of billions in potential revenue.

Instead of prioritising the needs of the people, Treasury is now considering deferring the government’s contributions to the Government Employees Pension Fund, a reckless move that would create long-term fiscal instability. This proposal, along with the suggestion to cut the Social Relief of Distress Grant, exposes Treasury’s complete detachment from the realities of the people it claims to serve.

The EFF maintains that economic growth will only be achieved through strategic state-led investments in infrastructure, industrial development, and job creation. This requires a decisive break from the failed neoliberal framework that has governed fiscal policy for decades. Austerity is not a solution—it is the very reason for our economic crisis. The only path forward is bold state intervention, which includes:

1. A decisive increase in infrastructure spending, led by the state and not outsourced to corrupt private contractors.
2. Investment in human capital, including the hiring of doctors, nurses, teachers, and engineers to drive economic productivity.

3. A sovereign wealth fund to leverage South Africa’s natural resources for public benefit, rather than allowing multinational corporations to exploit them unchecked.
4. Aggressive action against illicit financial flows, ensuring that stolen wealth is recovered and reinvested into the economy.
5. An end to austerity, with increased public spending in ways that stimulate demand and economic participation.

The biggest failure of the revised Budget is its lack of a clear and practical strategy for economic growth. The National Treasury continues to pretend that economic growth will miraculously emerge from nowhere, without defining the state’s role in achieving it. The last period of meaningful economic growth in South Africa coincided with increased government spending, yet Treasury refuses to learn from history.

The EFF will not stand by as the Treasury and the so-called Government of National Unity (GNU) impose policies that will only deepen poverty and suffering. We will mobilise workers, the unemployed, and all progressive forces to resist this attempt to sacrifice the people in the name of fiscal discipline. We reaffirm our commitment to fighting any VAT increase and any policy that seeks to balance the books on the backs of the poor.

The people of South Africa must prepare for mass resistance against this government’s neoliberal agenda. We will not allow our people to be subjected to further hardship while corporate elites and financial speculators continue to enrich themselves. The battle for economic freedom continues, and the EFF will lead it from the front.

No to VAT increases! No to austerity! Forward to economic freedom in our lifetime!

ISSUED BY THE ECONOMIC FREEDOM FIGHTERS

Leigh-Ann Mathys (National Spokesperson) 082 304 7572

Thato Lebyane (Media Enquiries) 078 304 7572