MEDIA RELEASE
2025-02-25

SUMMARY: The Labour Party of South Africa (Labour Party) notes that while the Budget Speech promised investor-friendly reforms, the working class continues to confront broken services, corruption and deep inequality that no amount of rhetoric can mask. The Party argues that true transformation in South Africa requires ethical governance and practical solutions that reach communities where children still cross rivers in drums to attend school. Until that happens, economic optimism will ring hollow for many. The Party will monitor the effects of these reforms on addressing unemployment and inequality, which will be the true test of their success.

The Labour Party awaited the delivery of the Budget Speech on 25 February. Commentary from various experts leading up to the speech reflected optimism, driven by improved precious metal prices, a year-on-year rise in tax revenue to 10.4%, and South Africa’s removal from the Financial Action Task Force grey list in October 2025.

These developments are widely regarded as strengthening investor confidence and lowering borrowing costs.

The Labour Party is especially cautious of these seemingly positive interventions because sustainable transformation requires institutional and constitutional reform.

The Labour Party, therefore, argues that the budget speech appeared overly focused on being responsive rather than progressive and innovative in addressing the core issues in South Africa.

There also was a hint of making South Africa attractive to investors, while insufficient attention was paid to governance failures at municipal level. Widespread corruption and mismanagement have left communities without water for weeks, children learning by candlelight, and infrastructure deteriorating due to neglect. “These challenges do notrequire only private investment,” noted Joseph Mathunjwa, interim President of the Labour Party. “They require clean, ethical, and accountable governance.”

In last year’s Medium Term Budget Policy Statement, the Minister of Finance, Enoch Godongwana emphasised that planned reforms in the 2026 budget would “help government cut waste and improve the effectiveness of spending.” Mathunjwa responded by arguing that meaningful reform must include a leaner, more efficient public sector. “South Africa’s parliament is bloated, and taxpayers fund a luxurious lifestyle for pension-politicians while the working class sees little benefit. Commissions of inquiry cost billions yet often yield limited tangible change.”

In terms of the various commissions underway, the Minister simply said that the extension of the commissions requested will be dealt with in the future. “That is not sufficient accountability to the taxpayers who bear the burden of these commissions and extensions”, said Mathunjwa.

Government plans to strengthen public finances include accelerating infrastructure investment and supporting municipal capital budgets with R54 billion over six (6) years to unlock private investment. While such measures are welcomed in principle, the Labour Party cautions that additional funding without improved governance risks repeating cycles of mismanagement and corruption.

Today, the Minister announced that R1 trillion will be allocated for infrastructure over the next three years. Transnet, according to the 2025 budget speech, did not meet its targets in terms of rail performance, yet the Minister noted that Transnet has requested an additional R11.2 billion. Yet the very same Transnet is being privatised.

The working class is already drowning in tax, yet all that could be mentioned is that personal income tax brackets and medical tax credits will be adjusted to inflation. This implies that the respective tax brackets and credits could very well be upwardly adjusted increased if the recently set 3% inflation target does not reap the intended outcomes.

Recent high-cost initiatives also raise questions of fiscal priorities. The National Dialogue carried an estimated cost of R700 million as stipulated in the President’s announcement, and hosting the G20 summit cost over a public estimate of R600 million. Together, these exceed R1 billion in expenditure.

Meanwhile, communities continue to face severe service delivery challenges. These are opportunity costs: children crossing dangerous bodies of water in plastic drums to reach school, limited access to safe drinking water, under-resourced clinics, long-drop (pit) toilets, and inadequate school facilities. These realities highlight a growing gap between large-scale governmental projects and everyday service delivery.

“Municipalities may need resources,” Mathunjwa argued, “but without clean governance and proper capacity-building, additional funding risks becoming another cycle of waste and corruption.” Sustainable solutions require both investment and institutional reform.

The budget also emphasises debt stabilisation and an inflation target of 3%, which could support long-term economic stability and potentially reduce the cost of living.

However, the Labour Party questions how household spending can rise in a context marked by inequality, unemployment and poverty.

For genuine economic transformation, South Africa must pursue industrialisation and beneficiation rather than short-term fixes. The Labour Party maintains that there should be localised supply chains through building factories and investing in local farming. This will in turn create jobs and enhance local economies.

The Labour Party also holds that the minerals and resources natural to South Africa must benefit the working class. This can be achieved through value-added mineral processing in South Africa. Lastly, the Labour Party advocates for an education system that will educate students based on the minerals and resources of South Africa such as investing in technical and vocational education specific to beneficiation and industrialisation. This will prepare them for an internationally competitive arena and job market.

The country faces a contradiction: it possesses a progressive constitution and regional influence on paper yet struggles with high unemployment and widespread social inequality. Gender-based violence has been declared a national crisis and youth unemployment is at record levels, further underscoring systemic social challenges.

“South Africans are poor because sustainable jobs are scarce,” Mathunjwa concluded.

“This reflects a leadership deficit – one that requires pragmatic solutions and compassionate governance, not symbolic events or reactive policymaking.”

The Labour Party is of the view that the current grant system has helped many South Africans but also created a dependent state. As such, conscription for eligible citizens, progressive social wage which will reduce the cost of living, vocational studies which will guide the youth to employment guarantees, tax incentives for manufacturing and beneficiation will create a proactive citizenry.

In today’s Budget Speech the Minister increased various grants by R15 – R80. Despite the SRD grants being at the baseline of the budget, he resolved to give context as to eligibility and criteria for the grants throughout the year.

The Labour Party believes that increasing SRD grants is not a sustainable intervention to address poverty. Instead, the Party holds that it becomes an enabler and pacifier.

“South Africans need to understand that if millions can be spent on giving them money, the government can afford to build sustainable jobs that will restore dignity”, commented Mathunjwa.

In the spirit of separation of powers, the minister announced various shifts of funds to ensure that institutions can manage their own affairs without undue encroachment.

The Labour Party is adamant that in order to reset the country, a constitutional reform and the introduction of federalism as a system of governance is necessary. This will ensure that there is separation of power through separate but partially interdependent states.

Furthermore, the Labour Party argues that a presidential democracy will ensure that the government and the President of the country are accountable to the people and not its political party.

While the budget outlines potential pathways to fiscal stability and economic growth, the Labour Party argues that success will depend on implementation and accountability.

“Without addressing governance failures and structural inequality, economic reforms risk falling short of delivering tangible benefits to ordinary citizens. Therefore, the Labour Party will monitor implementation and hold government accountable”, concluded Mathunjwa.

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