Following the rejection of Finance Minister Enoch Godongwana's revised Budget by Cabinet on Monday, the Economic Freedom Fighters (EFF) has proposed an expansive fiscal policy with aggressive infrastructure spending that will build internal State capacity.

Godongwana presented a revised Budget following the postponement of last week’s Budget speech, the first under the Government of National Unity.

The postponement came after Cabinet failed to agree on a two percentage point value-added tax (VAT) hike included in the Budget. The Budget will now be held on March 12.

However, Godongwana’s revised Budget was met with more criticism from Cabinet, with the EFF claiming that this was an indication that government was in crisis.

The EFF pointed out that the proposed Budget cuts to critical services, as presented by Godongwana on Monday, would impact the poor.

“The EFF rejects with the utmost contempt, the narrow, incompetent, and misguided fiscal framework that continues to define the approach of the National Treasury. 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 party said.

Specifically pointing to Budget cuts that will affect prison warders, the defence force, public transport and R29-billion in cuts for health services and another R29-billion of cuts in the education sector, the party warned that this move would exacerbate unemployment and affect the working class and poor the most, while incapacitating State institutions further.

The EFF berated the State for outsourcing private contractors for public infrastructure projects, which it claimed resulted in corruption.

“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,” the EFF said.

The party further rejected any proposed increase to VAT or personal income tax and instead suggested a wealth tax on the rich.

“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 red party said.

It proposed increased State investment in infrastructure spending and human capital, as well as a sovereign wealth fund, aggressive action against illicit financial flows and funds to be reinvested into the economy, and increased public spending.

“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 EFF said.

It warned of protest action if the Budget deepened poverty.