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February will be a make-or-break month for South Africa on the fiscal, economic and health fronts

Minster of Finance Tito Mboweni delivers the Medium-Term Budget Policy Statement in October 2020. (Photo: Gallo Images / Jeffrey Abrahams) / President Cyril Ramaphosa delivers the State of the Nation Address in February 2020. (Photo: Gallo Images / Jeffrey Abrahams) / A general view at the State of the Nation Address in February 2020. (Photo: Gallo Images / Brenton Geach)

Key events, such as the State of the Nation Address and the Budget, in February will be important for SA’s race to secure vaccines for the population and the government to hold the line over a three-year wage freeze for public servants.

February is always important for the South African government, fiscus and economy. The month usually kicks off with the State of the Nation Address, which sets the tone for the government’s priorities and key policy objectives for the year, while auditing previous achievements and failures (hopefully). 

This event of pomp and circumstance is followed by the Budget, which outlines the government’s expenditure or austerity objectives for the next three years. The budget also allows the government to introduce additional revenue measures such as increasing taxes to shore up public finances. 

Considering the impact of Covid-19 on the public purse and economy, which has been more significant than originally expected, the public will probably be on the hook for more taxes. Without assurance from Finance Minister Tito Mboweni or Parliament that has to adopt his Budget proposals, it has been assumed that additional tax increases will target the rich. In the October Medium-Term Budget Policy Statement (MTBPS), the government has already pencilled in tax increases of R40-billion over the next four years to boost revenue. 

Two key metrics of the fiscus are heading in the wrong direction and pushing the government to raise taxes. According to the MTBPS, the budget deficit — which is a shortfall between revenue and expenditure — will be 14.6% for 2020/21 from an earlier forecast of 6.4%. Over the same period, the government’s tax revenue will at least be R312.8-billion lower than originally budgeted for due to, in part, declining personal income tax linked to lockdown job losses and the prohibition on the sale of alcohol and tobacco products. Encouraging the nation to embrace teetotaller habits to limit alcohol-related demand for trauma beds in hospitals that are needed for Covid-19 patients (rightly so) is costing the government billions of rands in sin tax revenue.

Race for Covid-19 vaccine 

On the Covid-19 vaccine front, February will also be a crucial month. This is when the government will continue its efforts to inoculate frontline healthcare workers, who stand in line to receive 1.5-million doses of the Oxford University-AstraZeneca vaccine between January and February. A programme to vaccinate the broader public, or more than 40 million people, is expected later in the year, with no details available about the source of vaccines.

National Treasury has been absent from the public debate about the cost of inoculating the broader population and the source of funding to do so, bizarrely leaving these questions to be answered by Health Minister Zweli Mkhize. Big business and health experts expect the total cost to vaccinate the entire population to be R20-billion, which includes logistics and distribution. Private sector medical schemes might cover R7-billion of this total and the balance is expected to be shelled out by the government or the SA taxpayer. But Treasury is silent on this. 

Public sector wage bill 2.0

Trade unions representing SA’s 1.2 million public servants — including nurses, doctors, teachers and police officers — are set to put pressure on an already fragile fiscus in February. During the month, trade unions plan to table their wage demands for the coming years after a three-year wage agreement, entered into with the government in 2018, came to an end in 2020. The government prefers to sign a multiyear agreement with trade unions to anticipate and plan for the wage liability on the fiscus.

SA Democratic Teachers’ Union general secretary Mugwena Maluleke, who speaks on behalf of Cosatu-affiliated unions, said trade unions are still finalising their wage demands, which might include increases over the next three years. He said unions will inform the government about their wage demands at the beginning of February.

Trade unions to approach ConCourt over salary increases for public servants

The relationship between trade unions and the government is already adversarial because the latter did not implement agreed wage increases of between 4.4% and 5.4% in April 2020. This is because Mboweni announced a wage freeze for public servants over the next three years, which is at the heart of the government’s plan to cut its spending by R300-billion and bring state debt under control.

However, a dispute over wage increases, promised by the government but never implemented, is heading to the Constitutional Court. DM/BM

Gallery

"Information pertaining to Covid-19, vaccines, how to control the spread of the virus and potential treatments is ever-changing. Under the South African Disaster Management Act Regulation 11(5)(c) it is prohibited to publish information through any medium with the intention to deceive people on government measures to address COVID-19. We are therefore disabling the comment section on this article in order to protect both the commenting member and ourselves from potential liability. Should you have additional information that you think we should know, please email [email protected]"

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  • Sorry Mr. Mahlaka, but your article is already out of date, less than a day after being published. Under the heading “Race for Covod-19 Vaccine”, Kyle Cowan, writing for News24, reported that AstraZeneca can’t sell Covid-19 vaccines in South Africa as it does not hold the rights. So this 1.5 million doses for health workers before the end of January is thus presumably also a lie by Mkhizi and the National Corona Command Council. Right now there is nothing, zero, in the pipe line. Another 16 billion bailout for SAA, but there simply is not money for vaccine jabs for the broader population. As I see it, the NCCC’s only plan is herd immunity, also presumably by more lock-up measures, with gatherings only allowed at funerals to bury dead people (that died from the virus). However, driving around in my small little Western Cape town, the gatherings exceed 50 everyday, mostly attended by people not wearing masks, sitting on pavements in front of the shops. Most of them do not have employment, food, or money to buy a proper mask, making use of filthy rags hand held in front of the mouth if a police van happened to drive past. Its called “herd (or crowd) immunity”.

    • There is no plan , masks should be available for all ! FOC , so many/month !
      Fact is , this is an avoidable disease !
      You choose to expose yourself !
      The rules have been around for over 10 months !
      Ignore at your peril !
      ‘Herd immunity ‘ how will that happen ?
      With drugs ?
      All legal ! Pharma profits .
      Taiwan got country immunity , 7 deaths , had gone 7 months without a local case . Until recently .
      You are responsible for your own health .
      They had daily updates , and a big media campaign , the basics , repeated .
      Not about eating garlic and sweet potatoes !
      Keep it simple , do this , or you might get sick or die !

  • Wow , at last someone else is wondering about the $$$ are coming from for the vaccines .
    I was asking that question as soon as the vaccine issue arose .
    Just where did the +- R300m deposit come from , overdue as it was !
    Someone found it in their back pocket ?
    Its a miracle !
    All transparent and open as usual !
    Not a word about the R20 billion , who came up with that figure ?
    Including the logistics , which would include ‘distribution’ , is that not logistics ?
    Obviously will have to ‘rush’ the procurement , tenderpreneurs are already rubbing their hands with glee !
    Is there anything left of that big ‘special’ allowance that went seriously wrong ?
    No one in jail yet !
    And no news of Treasury being approached , all fast asleep again !
    Regardless of if and when we do get a vaccine , the ‘logistics’ must be in place first !
    First phase is Jan/Feb to vaccinate 1.5 million healthcare workers .
    2 weeks left in Jan .
    So 44 days into 1.5 million , nearly 40k /day !
    And the vaccine is not even here yet !
    And 40 million vaccinated by year end ?
    3.5 million a month !
    Call Tom Cruise as this is ‘Mission Impossible ‘ , not China ! With their dubious vaccine , not certified !
    I would love to be proven wrong !
    Note , after Med aids chip in R7 billion , govt …the taxpayer …and the taxpayer …. will foot the bill !
    Taxpayers foot the bill . The govt are our employees and should have been fired years ago !
    They let the virus come into SA , from Hot spot Italy , 5th March , not a mask in sight at OR !
    So now we will be having more strikes as wage talks grind on .
    All that lost tax has left a big hole . Sure trauma beds are emptier , not filled with covid patients as services are stretched already . How many health care workers have died /sick /off work /just plain scared to go to work ?
    As such Tito has few choices , tax rises across the board , VAT ? Too sensitive for the voters , at home , with no work !