DA Motion Debate
Hon. F. Hassan
The increase in the cost of living since the Covid 19 pandemic is certainly a source of grave concern for the ANC. The ANC has always been concerned about the plight of the people especially the historically disadvantaged as historic economic exclusion has resulted in the persistent challenges of poverty, inequality and unemployment. The ANC as a party that cares about the plight of the people has since 1994 been fighting for the economic transformation of the country, inclusive economic growth and job creation to ensure that the challenges of poverty, inequality, unemployment and historic economic exclusion can be defeated. How can there ever be no caring for the gogo which runs a micro business in an urban centre or township. There are many cities in the country which acted against honest working people and seized their stock including the city of Cape Town. This resulted in the President remarking in the State of the Nation address that how can it be right that a person is arrested for trading on the streets due to the lack of a R600 permit. Perhaps we need to start in Cape Town to reduce this cost and ease the burden on Small and Micro enterprises. Instead arresting honest hardworking people we should be skilling them and reduce red tape.
While it is Important to develop measures to alleviate the escalating financial strain placed on households the measures that need to be developed to alleviate the escalating financial strain on households need to be balanced taking cognisance of any unintended consequences which may require to be managed. Measures must be targeted for the working class and poor. Over many years the ANC Government introduced measures to reduce the financial strain of the cost of living on the people especially the poor and unemployed. These programmes included the pensions for senior citizens who did not make provision for their old age due to the meagre income they earned and given their expenses on low wages. In addition the ANC Government introduced Child Support grants, Disability grant, Care Dependency grants, Elderly Grants and Foster Child Grant. These were developed to ease the burden on families in working class townships and poor communities. In addition Government introduced meals at schools in poor areas and at times this is the only meal which the children have for the day. The rationale for this was that members of the ANC came from those communities and understood the necessity to deal with the challenges of poverty. During the period of Covid 19 Government introduced the SRD grant to support the poor and indigent in our communities. Students receive free basic education and financial support is granted for tertiary education by NSFAS.
Our country under the ANC Government has a pro working class and poor budget as 60 percent of the budget is geared towards increasing the social wage for the benefit of people.
Under the current circumstances the Government of National Unity will need to do determine the measures necessary alleviate the financial strain on households due to the cost of living and implement the measures for the benefit of the working class and poor. Increased land reform to create small and medium scale farmers to boost local food production and reduce expensive imports will also create self-sufficiency and food security.
The financial strain for most families is the high interest rates on bonds and car finance which according to economist Dawie Roodt consumes about 40% of household income. The financial sector requires transformation as it sits on R23 trillion rand which needs to be productively invested in the economy to ensure the development of local industrialisation and SMME’s. House rentals especially in middle class and working class areas are very high a device of a deregulated market and in this regard Cape Town is the leader of the pack in the country. It also offers its citizens differential services as Khayaleitsha and Guguletu does not get the same services as other areas. It has been reported that a financial institution (Wesbank) had a different interest rate for blacks as it did for whites.
Yet Speaker, we are concerned about the increasing food prices and the impact which this has on working class and poor households. The Competitions Commission is dealing with market concentration and monopoly behaviour as well as predatory and collusive pricing in the market. The Competitions’ Commission has been monitoring essential food prices and needs to deal with above inflationary price increases as it has confirmed. It has taken action around food prices as the well- known case of price collusion for bread showed that it levied huge fines on the companies. Furthermore the Commission is suggesting that food price inflation is at its lowest currently. Increases are related to higher producer and retailer margins. The Department of Trade Industry and Competition needs to assess the increase in producer and retailer food margins so that an informed decision based on evidence rather than soap box politics can be made.
Government has Zero Rated for VAT a basket of basic food products and there has been a call for increasing the basket of zero rated food products. However, even these food products that have been zero rated have seen price increases since the end of the Covid 19 pandemic. This means that merely zero rating more products will only provide temporary relief as producers and retailers will continue increasing the price to absorb the VAT into their profitability. In turn it will also deprive the fiscus of revenue to support the pro poor budget and increase the social wage. So while suggesting measures that appear helpful to relieve financial strain it does not really solve the problem of high prices as tinkering and temporary solutions give false hope to the people. We need real and lasting solutions to the cost of living issue which requires regulatory, legislative and even financial intervention like the SRD grants which assist people real terms.
South Africa was built cheap black labour and exploitation of workers on the mines and in agriculture is well documented. The ANC Government has always advocated for a minimum wage to ensure that working people are not forced into poverty due to the high cost of living. However, the DA opposed the minimum wage as part of its election manifesto which is a counter measure to the high cost of living.
There has been many complaining about the high price of electricity. In this regard again Cape Town leads with the most expensive electricity in the country. The cost of electricity to the consumer is not an Eskom problem, but a factor of the level of profitability by the municipality. The Minister of Electricity and Energy given the rising cost of living must review the Free Basic Electricity subsidy and consider increasing the current 50KWh of free basic electricity.
The Department of Mineral Resources has over a period of time installed solar water geysers for working class and poor households to reduce the consumption of electricity whilst improving the quality of life for the people.
The same applies to water as water tariffs have also been increasing even more than electricity tariffs. Since the drought in the Western Cape when water tariffs were increased to dampen demand and since the recovery of water levels the cost has not decreased in fact the City of Cape Town have a water surcharge with high water tariffs. Cape Town works as the DA slogan goes, but they forgot to add at high cost. Other municipalities have done the same. We must review how we assist working class and poor communities with the costs of water.
We must develop as country a culture of paying for services as this reduces the cost burden for all the people in the country. Electricity theft only serves to increase the cost for all.
In essence ANC Government has done a lot and a lot more has to be done under the Government of National Unity to develop measures to alleviate the financial burden on households due to the cost of living. However, Government does not control the market and prices are set by the private sector and this requires a social compact and dialogue to find the best and lasting solutions. Improved regulation and perhaps even legislation is required to reduce the cost of living in the country.
Only through the removal of the people from an economy of necessity to an economy of affluence will the crisis of the cost of living be solved. This means ensuring inclusive economic growth, job creation and transformation to create a better life for all South Africans.