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Picture Henk Kruger/African News Agency (ANA) Archives

Honouring public servants’ 2018 wage deal will require a special tax and printing money, says Treasury

By Loyiso Sidimba Time of article published Aug 25, 2021

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Johannesburg - The National Treasury will have to impose a special tax and start printing money if it were forced to meet the agreement to increase public servants’ salaries, which it failed to honour last year.

Jeremy Gauntlett SC QC, representing the National Treasury, on Tuesday told the Constitutional Court that the December 2020 judgment by the Labour Appeal Court (LAC) was correct when it declared the implementation of the final leg of the three-year wage agreement signed in 2018 unlawful and in contravention of the Constitution.

The apex court heard oral arguments in the application for leave to appeal the LAC’s ruling by several unions representing state employees.

Gauntlett said the LAC was correct in finding that clause 3.3 of the agreement conflicted with regulations 78 and 79 of the Public Service Regulations, which set out the requirements before a collective agreement was concluded by the government.

According to Gauntlett, the National Treasury does not plead that it is impossible or unaffordable to implement the agreement in full.

”Whatever you order will have to be done,” he said.

However, Gauntlett warned that the government would have to seek to implement measures to borrow money internationally if it could.

Other measures would be to impose a special tax.

“It (the government) would have to rob Peter to pay Paul,” he said, adding that this would include raiding other departmental budgets in order to effect the wage increases.

“There will be little justice or equity in a result that would involve that,” Gauntlett cautioned.

He said printing money would cause a social catastrophe, which would not provide a just and equitable solution.

Gauntlett asked that the application for leave to appeal not be allowed, or alternatively that the appeal be dismissed.

William Mokhare SC, arguing on behalf of the country’s biggest public service union and Cosatu affiliate Nehawu, insisted that there was compliance with regulations 78 and 79.

Acting Justice Mjabuliseni Madondo asked Mokhare why clause 3.3 of the agreement was treated differently from clauses 3.1 and 3.2, which were implemented in 2018 and 2019.

Justice Madondo said there was an agreement between the government and the unions was that there was no money allocated to implement clause 3.3, and it was conditional on cost-cutting measures being implemented.

In his response, Mokhare said clause 3.3 must be understood in the context of the government undertaking to raise the money.

Ngwako Maenetje SC, representing other Cosatu affiliates — the SA Democratic Teachers’ Union, the Democratic Nursing Organisation of SA and the Police and Prisons Civil Rights Union — argued that the government could not be allowed to walk away from the agreement, and it could not keep saying everything was impossible.

Maenetje was responding to Justice Nonkosi Mhlantla’s question about why the Constitutional Court should grant the relief the unions sought under clause 3.3 when even clauses 3.1 and 3.2 were concluded unlawfully.

Timothy Bruinders SC, representing Public Service and Administration Minister Ayanda Dlodlo, denied the unions’ allegation that their employer negotiated in bad faith, saying this was not supported by the objective facts of the matter.

He said at the Public Service Co-ordinating Bargaining Council (PSCBC) everyone knew that the agreement the unions wanted concluded was R30.2 billion above the fiscal envelope, which was R110bn.

“Far from negotiating in bad faith, the government tried to engage with the unions at the PSCBC,” said Bruinders.

He said at this stage, if clause 3.3 of the agreement was implemented, it would cost the government R29bn.

Judgment was reserved.

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Political Bureau

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