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Unions welcome the MTBPS 2003

14th November 2003

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The People's Budget Campaign (comprised the Congress of South African Unions (Cosatu), the South African Council of Churches (SACC) and South African NGO council) all say that they welcome the commitment to expanding real growth in public spending contained in the 2003 Medium Term Budget Policy Statement (MTBPS).

The growth of 5,7% in non-interest government spending in real terms over the next three years continues the moderately expansionary trend of recent years.

This commitment is especially significant given slower than expected economic growth.

Other than a slowdown in the global economy, there are also significant domestic factors that contributed to a decline in growth. The unions also welcome indications that government is intending to pursue a more developmental fiscal policy, which may signal a long-awaited shift from the previous restrictive targets.

However, they believe that still more resources could be released for social development. In terms of revenue from taxes, they say that they are disappointed that the Minister has indicated government's intention to hold the tax:GDP ratio below 25% for the life of the new MTEF.

They say that allowing the tax: GDP ratio to moderately increase above this self-imposed limit could generate several billions more for social investment without damaging the economy, and previously recommended a ratio of up to 29%.

The People's Budget Campaign also welcomes the expanded public works programme, as per the agreements of the Growth and Development Summit, as well as the provision of resources for anti-retroviral treatment in the public health system, and the allocation for the extension of the Child Support Grant.

They also welcome the increase in the equitable share to local government from R12.- billion in 2003/4 to R17,1-billion in 2006/7, but would like to see further details on targeted spending in this regard. The People's Budget notes the prevalent phenomenon of poor community participation at local government.
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