The need for a new macroeconomic framework: New targets and resourcing for rights realisation
In 2022, the Institute for Economic Justice made a submission that argued that the National Budget should be underpinned by pro-growth macroeconomic policy measures. This entails a shift from targeting only debt and inflation to also targeting unemployment, poverty, inequality, and structural transformation of the economy.
National budgets have systematically undermined this objective, cementing a regressive macroeconomic policy framework and prioritising debt stabilisation through a rush to reach a primary budget surplus. As a result, cuts have been made to public goods such as public services while tax windfalls have been used to pay down debt.
In line with this strategy, the tabled National Budget and Medium-Term Expenditure Framework (MTEF) propose a reduction in non-interest expenditure of R162 billion in real terms over the medium term. This is a real decrease of 2.65% and comes on top of previous budget cuts.
Cuts to real non-interest expenditure continue to undermine the provision of public services. This has a disproportionate impact on the poor who rely on public services. In addition, it increases the burden of unpaid care work mostly undertaken by women. Moreover, as women are overrepresented in public employment, cuts in public services increase unemployment.
The Budget Review states that reaching a “primary budget surplus in the current financial year marks a significant achievement”. However this year, the levels of private and public investment are the lowest since 1994, while the growth forecast has been revised downwards to 0.9% for 2023. The record low levels of investment and poor economic growth projection should be understood as outcomes stemming from austerity measures.
Budget 2023 is anti-poor. This is because it is based on a macroeconomic framework that has prioritised debt stabilisation at the expense of service provision. The continued policy of austerity has also undermined levels of public and private investment and failed to grow the economy. We reiterate that the committee must reject this Budget and call for one that prioritises addressing unemployment, poverty, and inequality.