Introduction
On 06 April 2025, the Congress of South African Trade Unions (COSATU) presented its formal submission to the Parliament’s Standing Committee on Appropriations concerning the Division of Revenue Bill for the 2025/26 financial year.
COSATU remains a critical ally of the African National Congress (ANC), historically rooted in the Tripartite Alliance alongside the South African Communist Party (SACP). Its posture toward the Government of National Unity (GNU) reflects both its loyalty to the ANC and its ideological vigilance. While COSATU supports the idea of unity in principle, it has echoed the sentiments of another Tripartite Alliance partner, the South African Communist Party (SACP) in having serious reservations about the inclusion of the Democratic Alliance (DA) in the GNU, citing the DA’s longstanding opposition to progressive labour reforms and transformation policies.
The federation fears that the DA’s influence could dilute pro-worker policies and reverse socio-economic gains. As such, COSATU has insisted that the GNU must be anchored in the ANC’s manifesto and policy framework. This demand underscores COSATU’s dual role, a partner in governance, but also a principled watchdog, determined to ensure that the unity government does not compromise on the core values of economic justice, worker rights, and social transformation.
As the legislative instrument that governs the equitable division of public funds across national, provincial, and local spheres, the Division of Revenue Bill holds substantial implications for developmental planning and service delivery. COSATU’s response reflects both cautious optimism about shifts in budgetary priorities and deep concern about the institutional weaknesses that could derail progress.
This reflection weaves together COSATU’s key positions with critical analysis, drawing out the implications for South Africa’s developmental trajectory, governance, and fiscal integrity.
Infrastructure Investment: A Tool for Development
COSATU’s strong endorsement of the R46 billion increase in infrastructure spending signals a shared understanding with government on the centrality of infrastructure-led growth. The cumulative R1.03 trillion investment over three years reflects a deliberate strategy to stimulate economic activity, address long-standing service delivery gaps, and build state capacity.
The focus on sectors like roads (R402 billion), water (R156 billion), ports, rail, and healthcare facilities respond directly to both economic imperatives and social demands. The Federation’s support for this scale of infrastructure spending reflects its endorsement of a developmental state agenda one where the state uses public investment to address historical service delivery deficits and stimulate job creation.
By linking infrastructure with broader goals such as healthcare access and regional equity, COSATU reframes such investments as not merely economic, but also social and redistributive. However, this optimism is tempered by realism. COSATU flags critical risks: corruption, sabotage (such as cable theft), and the influence of construction mafias, all of which threaten to undermine project delivery.
Its insistence on strong law enforcement and parliamentary oversight suggests that infrastructure alone will not deliver transformation unless backed by institutional capacity and political will. Thus, infrastructure becomes a litmus test for the state’s credibility and functionality.
Governance and Oversight: The Achilles’ Heel
COSATU raised alarms about the capacity of provincial and municipal governments to implement budgeted programmes efficiently and transparently. This concern reflects a recurring theme in South Africa’s post-apartheid governance: progressive policies often falling short due to weak execution. The Federation also called for stringent parliamentary oversight to ensure that targets are met, and that Broad-Based Black Economic Empowerment (BBBEE) and local procurement policies are not side-lined.
COSATU’s demand for a “tight leash” over sub-national entities is an appeal for consequence management in the face of entrenched maladministration. More than a critique, this is a strategic positioning. COSATU is not only defending public expenditure but claiming its place as a custodian of transformation. By demanding strict compliance with empowerment and procurement policies, it seeks to ensure that public money works for the historically excluded.
Yet, the submission also indirectly acknowledges the limits of policy in the absence of institutional reform. Without tackling endemic inefficiencies and political patronage, even well-crafted budgets are at risk of becoming vehicles for rent-seeking.
Social Spending and Public Services: A Course Correction?
The Federation welcomed renewed investment in public services: R29 billion for education, R28.9 billion for health, and the hiring of 1,800 doctors, 4,000 police officers, and numerous frontline staff. The R814 million allocated for the National Health Insurance (NHI) was also praised as a sign of commitment to universal public healthcare.
COSATU frames these allocations as a corrective measure to years of austerity-induced erosion of state capacity. The narrative is pointed: past cuts were not just fiscal, according to the Federation, but ideological and part of a “neo-liberal” turn that undermined the public sector’s ability to serve the most vulnerable.
In this light, the increased social spending is not just a budgetary change it is a political pivot. It affirms the state’s role in protecting rights to education and healthcare and in restoring dignity to public service delivery. While the scale may still be insufficient to reverse years of neglect, COSATU views this as a moral and developmental course correction that must be deepened.
Crisis in Local Government: A Growing Threat
Despite welcoming the R2.3 billion allocation for prepaid electricity meters, COSATU warned about the dysfunction of local government, citing 16 municipalities that are unable to pay staff across several provinces. The Federation called for urgent intervention, a new funding model, and acceleration of the District Development Model (DDM). This section of the submission brings to light one of the most critical governance crises in the country: the collapse of municipal capacity. Local government is the face of the state for most South Africans, and its failure erodes trust, deepens inequality, and destabilises communities.
Additionally, COSATU’s call for systemic reform rather than stopgap measures indicates its belief that the current model of intergovernmental fiscal transfers is failing. The DDM is endorsed not just as a technical solution, but as a structural shift towards better coordination and accountability. However, the deeper question remains: can any model succeed without rooting out political patronage, capacitating municipalities, and enforcing financial discipline?
Employment Programmes: A Step in the Right Direction
COSATU commended the R8.8 billion allocated to the Presidential Employment Programme, including R3.7 billion for Teaching Assistants and R22 billion from the Unemployment Insurance Fund (UIF) for broader job creation. These employment interventions, while temporary and limited in scale, are viewed by COSATU as both relief and opportunity. They offer immediate income and skills development, especially for youth, and contribute to social stability.
However, the Federation is clear-eyed: these programmes are not a panacea for the country’s unemployment crisis. Structural reforms in industrial policy, education, and labour market regulation will be necessary to move beyond stopgap solutions. Still, in the current economic climate, COSATU regards these allocations as a step in the right direction and proof that the state can and should be an active player in job creation.
Conclusion
COSATU’s submission to Parliament highlights key concerns and affirmations regarding the 2025/26 budget. The Federation strongly opposes the proposed 0.5% VAT increase, arguing it will disproportionately harm poor and working-class households. At the same time, it welcomes the above inflation increases to social grants, benefiting nearly 19 million recipients, as a necessary step to protect vulnerable communities though it maintains that grants alone are not a substitute for job creation and economic reform.
Politically, COSATU has not directly credited the ANC for the social spending increases but insists that the GNU must be guided by the ANC’s manifesto, given its leading role. This reflects COSATU’s desire for ideological consistency and pro-poor policymaking amid a potentially unstable coalition context.
Overall, COSATU reaffirms its role as both a social partner and a critical voice, pushing for equitable, transformative, and accountable governance.
