Chairperson and hon members, yesterday this country celebrated and commemorated Human Rights Day 46 years from the day that unarmed citizens were massacred for protesting against an unjust system that oppressed the majority of the indigenous inhabitants of this country.
We celebrated because South Africa today is a different country. It is free, and the rights of all human beings are guaranteed and protected in the Statute Book and in practice. We commemorated the day because we were also paying tribute to those who laid down their lives in pursuance of this cause of building a South Africa that belongs to all who live in it, without discrimination.
It is for this reason that one of our institutions supporting democracy, the Human Rights Commission, took stock of how far we have come as a country to realise these human rights, as entrenched in our Constitution. The findings of this commission are encouraging indeed. This progressive realisation of basic human rights has been made possible by the ANC government's commitment to its historical principle that has characterised this movement over decades without flinching.
The distribution of resources has been informed by the People's Charter, which categorically guaranteed equality before the law in the economy and at a social level.
It was only 12 years ago when the ANC came into power and faced daunting economic challenges of severe poverty, inequality and economic stagnation. It was beyond imagination how the ANC government was going to address these challenges, as it has done in the first decade of our democracy.
To use the wise words of Alan Hirsch in his book Season of Hope, he said that:
... the ANC government followed a consistent economic philosophy that had the following elements: ... at the centre is a social democratic approach to social reform - it is the state's job to underwrite the improvement in the quality of life of the poor and to reduce inequalities, but with a firmly entrenched fear of the risks of personal dependency on the state and of the emergence of entitlement attitudes. The state exists within a market economy that depends on private investment, and therefore a successful state creates an environment that supports high levels of private investment.
It is in the context of this emerging market economy faced with new challenges of a shortage of suitable skills, persistent poverty and unemployment, and limited uptake of investment opportunities that this year's Budget was tabled.
The economic outlook for the coming Medium-Term Expenditure Framework period remains positive and is set to continue improving. We have been experiencing higher than expected economic growth and expect an average of 5% over the medium term. The expansionary fiscal stance adopted since 2001 continues, with an increase in government expenditure in pursuit of the accelerated shared growth initiative goals.
This initiative is consistent with the ANC government's unwavering commitment to the ideals of the Freedom Charter; the Reconstruction and Development Programme; and the Growth, Employment and Redistribution policy, as these refocus government's efforts to the new challenges.
The Freedom Charter captured the aspirations of all South Africans, whilst the Reconstruction and Development Programme was a programme that served as the ANC's manifesto for the 1994 elections. And then the Growth, Employment and Redistribution policy was our macroeconomic policy that made it possible for this government to increase expenditure in areas that would have redistributive outcomes.
Real increases in social spending, with significant increases in infrastructure development and a renewed commitment to skills development - given that these are some of the pillars of the Accelerated and Shared Growth Initiative for South Africa, Asgisa - seek to address the constraints on economic growth.
Asgisa, in line with government's main policy aims of reconstruction and development, supports the fiscal stance that offsets the impact of the commodity price cycle and the robust consumption. It further identifies that the recent growth, although welcomed, is not balanced as it is based on strong commodity prices, capital inflows and domestic consumer demand, which have increased imports and have strengthened the currency beyond desirable levels, as observed by the Minister of Finance in his speech.
The Minister further warned that the current boom in commodity prices is not sustainable in the absence of support on the production side. The economists that appeared before the committee share the Minister's view and added that, historically, economic growth has been followed by a period of recession in which commodity prices were major catalysts for growth, citing 1981 and 1994 as examples of this phenomenon.
An important feature of the government's economic management is the Medium- Term Expenditure Framework, with projections spanning over a three-year period. The committee noted that government's projections have been relatively conservative, hence the higher than expected growth rate in 2005- 06.
According to the Medium-Term Budget Policy Statement, inflation is expected to remain within the target range of 3% to 6% over the MTEF, further underlining the fact that the economy is on a structurally stronger growth path.
This positive economic outlook is underpinned by a number of factors, among which are: a sound and sustainable macroeconomic platform; favourable global economic conditions, particularly the growth in Japan and China, and a growing market in Africa; the improvement in policy co-ordination between National Treasury and the Reserve Bank in keeping inflation within the target range, moderate interest rates and reduced costs of capital; and a rise in commodity prices.
Inselele ekulu-ke ebhekene nalo hulumeni eyokuxosha ikati eziko nokudala amathuba emisebenzi ukuze abantu bahlomule kulolu hlelo lokuthuthukisa umnotho olusheshayo futhi olunkomo isengwa yiviyo.
Ingqinamba-ke kulokhu ngeyokungabikho kwamakhono afanele nobuchwepheshe besimanjemanje. Kungakho nje isabelo sezimali sokuthuthukisa amakhono sikhule ngokubonakalayo kulo nyaka. Ukukhula kwalesi sabelo sezimali sokwakhiwa kwezingqalasizinda nakho kuzoba nezithelo ezinhle ngoba kushaya izinyoni ezintathu ngetshe elilodwa, kunikeza amathuba emisebenzi, kususa ikati eziko futhi kunikeze labo abaqashiwe amakhono emisebenzi yezandla abangaziphilisa ngawo izimpilo zabo zonke. Izibalo zakamuva-ke zikhombisa ukuthi noma amathuba emisebenzi ekhulile kodwa izinga lokuqashwa alehlanga ngokwanele ngenxa yokwanda kwabantu abazama ukungena kwezomsebenzi.
Inhlangano ebhekene nokuqoqwa kwezibalo, iStatistics SA, iphezu komkhankaso wokulungiswa kwendlela eziqoqwa ngayo izibalo ukuze lezi zibalo zifeze umsebenzi wazo ngendlela efanele. (Translation of isiZulu paragraphs follows.)
[The biggest challenge facing the government is poverty alleviation and job creation so that people will benefit from the Accelerated and Shared Growth Initiative for South Africa.
The obstacle to this is a skills shortage and technology. It is for this reason that the budget for skills development has been increased this year. The budget increment for infrastructure development is also going to bear fruit because it means that we are killing three birds with one stone. It creates jobs, alleviates poverty and gives the unemployed craft skills to make ends meet.
The latest statistics show that employment opportunities have increased but the rate of unemployment has not decreased because of the increase in the number of people looking for jobs. The statistics company, Statistics SA, is in the process of changing the way in which information is collected so that statistics will serve their intended purpose in a proper way.] With the ANC having once again emerged as the only reliable champion of the poor and the vulnerable in the recent local government elections, the challenge to live up to the expectations of the masses of this country is even greater. Indeed, the people shall continue to share in the country's wealth and all shall enjoy equal human rights.
The committee is going to ensure that all matters raised during the hearings and all undertakings by the department are implemented without fail. Progress on the recommendations, as tabled in the report, is also going to be monitored on an ongoing basis. My other colleagues are going to be speaking on the aspects of oversight, social spending and tax policy in more detail.
Allow me to commend the National Treasury, under the political leadership of the Minister, Mr Manuel, the director-general and staff, the commissioner, the SA Revenue Service staff, the statistician-general and Statistics SA staff for all their hard work. I also commend committee members for their dedication and hard work, as well as the committee support staff for putting up with the pressures of the committee.
Business, labour, academia and civil society have also contributed tremendously in the hearings, and their inputs are going to inform our future engagements going forward. The ANC supports this Appropriation Bill. Thank you, Chairperson. [Applause.]
Madam Speaker, the DA wishes to congratulate the Minister on the presentation of his tenth budget to this House. Under his tenure we have seen the introduction of prudent macroeconomic policies, which appear to have a sound base for economic growth. This we applaud.
Yet, despite the sound base, we have seen our economy struggle to reach GDP levels comparable to other emerging markets, and more importantly, to grow at a level that not only absorbs the annual entrants into the labour market but also makes a dent in our stubbornly high rate of unemployment.
It is in this context that we welcome the Deputy President's growth initiative, Asgisa, aimed at projecting our GDP growth to 6% and above. We are supportive because growth in economy brings growth in jobs and alleviates poverty. The Deputy President reflected correctly that our recent growth has been unbalanced based on strong international commodity prices, strong capital flows and strong consumer demand.
We agree with the Minister of Finance that commodity prices will one day retreat and investment flows can, as they have done in the past, swing away from emerging markets.
Sustainable growth cannot take place on the back of consumption demand alone. What is needed is growth on the investment and the production side if South Africa is to be placed on a more sustainable growth path.
We need to turn the current low-inflation, high-consumer growth momentum into a high-fixed-investment, high-employment-growth environment.
In respect of investment, government is to be commended on the R372 billion infrastructure roll-out over three years. But even - and this is the point - if government does succeed in spending all of this allocation it will only raise fixed capital investment by between 1% and 2%. At present, fixed capital investment is at round about 16,5% of GDP, up on the recent low of 15% in 2000, but still well behind the 23,6% of emerging market countries and even further from the 25% target we have set ourselves if we are going to hit the 6% growth level.
So, my simple point is this: Where is the rest of the fixed investment going to come from? The answer is obvious: the private sector. Government itself has acknowledged that the private sector is the main engine room for sustained economic growth. Their participation is key. Yet, where are the incentives in the budget to induce the private sector to be part of government's growth initiative? Where are the measures to boost the supply side of the economy and enhance South Africa's attraction to foreign and local investors? Despite a good deal of rhetoric, a few key figures evident in the Treasury's Budget Review tell a revealing story: Firstly, net foreign direct investment inflows for the first nine months of 2005 reached about R35,7 million, a great improvement on the stagnant levels of 2003 and 2004, but if you strip out the Barclays-Absa deal, which constitutes the bulk of that amount, we are back to the stagnant levels of before. The truth of the matter is that we are just not attracting our rightful share of foreign direct investment.
Secondly, the growth of fixed capital formation in 2005 grew by 8%. However, if you focus on the private sector component of that figure, it fell to 6,7% for 2005, off the high of 9,7% realised in 2004.
Thirdly, an analysis of government's R372 billion infrastructure roll-out invites the question: what is the private sector's part in this roll-out? Almost 22% is allocated to municipalities, 38% to national and provincial government, 33% to parastatals and a mere 5% to public-private participation.
So, here is where we have to register a disappointment that the budget, we believed, failed to show that ours is a government that is business friendly, and not just business tolerant. We wanted to see bolder steps in the budget: a budget embracing the role of the private sector, challenging it; a budget that incentivises the private sector to create jobs and makes it an integral part of the Deputy President's growth initiative, not just a peripheral player.
And in this, fiscal or tax policies do play a key role. Let me welcome the reduction in tax on retirement from 18% to nine per cent. This move has long been called for by the DA and will positively affect retirement funding and increase the worryingly low savings rate. Secondly, let me also welcome the range of fiscal measures aimed at stimulating small business.
Thirdly, there can be no complaint that the budget's main impact will be on enhancing the spending power of lower-income groups both directly and through incentives for skills development. But this raises a basic dilemma - we also need to encourage savings and investments, and this is predominantly done by the corporate sector and top-income individuals. And this is where the budget fails. The tax burden and therefore the cost of doing business in SA is high in comparison to our competitor nations in other emerging markets.
I know that the Minister is sceptical, if not cynical, about the role of taxes in encouraging investment. In this he is sometimes joined by Professor Katz, but with respect to the Katz commission, when it sat it faced a completely different investment world, in and outside South Africa.
I would, quite frankly, far rather listen to Business Unity South Africa, Busa, which believes that the time has come for a critical review of corporate tax structure, including the secondary tax on companies. This follows their own research, as well as that of others such as Merrill Lynch and KPMG, which place SA on the high side in respect of international corporate tax rates and very high when one adds in the secondary tax on companies.
The Minister published in response in the portfolio committee a note that at an effective rate of 36,9%, we compared favourably with a whole list of companies. Well, I could not help but notice in respect to the whole list that he produced that these were mostly developed countries that we were comparing ourselves with. What we need to do is compare ourselves with developing countries, more particularly those in the so-called emerging market club against which we are competing for that highly mobile investment capital.
Let me deal with a few points raised by the Minister in the meeting. Yes, looking at the effective corporate tax rate in isolation is meaningless. What has to be added in is state and other taxes that our competitors may in addition need to apply, but then so too do we have to add in our municipal taxes, skills levies and who knows what the costs of BEE and other costs are in that context.
I also hear the Minister's argument that if he lowers the corporate tax rate unaccompanied by a reduction in the maximum marginal tax rate of individuals, it would result in unhealthy tax arbitrage. Here I think the Minister is being disingenuous. Firstly, the costs of corporatisation are not taken into account.
Secondly, but more importantly, the Minister knows that if he had not raised the threshold to R400 000 in respect of the top marginal rate, but lowered the marginal rate itself, it would have had the same effect as far as revenue is concerned but eliminated the arbitrage potential.
Finally, in respect of STC, Busa indicates that this form of double taxation does not go down well internationally. The objective of STC was to encourage companies to retain earnings and invest as opposed to taking those earnings out. I think we have to critically examine that. The trade- off the Minister makes of saying that shareholders will prefer the tax paid in companies' hands as opposed to taking the dividend in theirs, wrongly places the purpose of this tax. Secondary tax on companies was never intended to be a tax on dividends, nor was it intended to be a trade-off. The tax on dividends was abolished in 1990; STC was brought in with a different objective in 1993.
We recognise that a scrapping of the RSC levy does positively impact on certain companies. Firstly, the RSC levy is deductible against tax and therefore it is not a R7 billion tax write-off, but closer to a R5 billion tax write-off. Secondly, the RSC levy, as I made the point, is turnover- and employment-based and therefore only high turnover and high employment companies will really benefit. Now, Minister, let us understand one another as far as this is concerned: Our plea is not for a race to the bottom but for a competitive rate.
We believe that committing SA to a 25% corporate tax rate, by say 2010, would have brought the tax rate down to the nominal international norm, sent out a strong signal of confidence in the economy and provided business with an incentive to commit to expansionary projects; and most importantly, create jobs and alleviate poverty.
And here we would have liked to see the Minister use the tax system more creatively and encourage the private sector to create jobs by introducing wage subsidies for persons employed on a full-time basis. We give incentives for investments of a capital nature, why not of a human employment nature?
Now let me concede: Fiscal policy is both complex and integrated. We might be wrong, Busa might be wrong. But I think the time is right, as part of the growth initiative, for a critical review of our tax structure. And so I ask the Minister - if he is listening - is it not time for him to constitute a task team of all stakeholders to address this issue?
In a similar vein, we are disappointed by the slow progress of privatisation, which, besides other positive spin-offs, would significantly reduce government's public sector borrowing requirements.
Eskom's recent indication that its plans to build a power station in Lephalale may be put on hold, because a Canadian consortium plans to build one across the border in Botswana, has a logic all of its own. We are happy to buy electricity from the private sector across the border but reluctant to buy electricity from the private sector within our own borders. That does not make sense.
On skills, while we welcome the extension of learnership advances to 2011, as well as the raising of limits, the budget does little, in our view, to address our capacity and skills crisis. The Setas have failed SA miserably and yet their cost to the SA taxpayer is R5 billion and rising. The money, we believe, could have been far more usefully spent on further incentivising the private sector to do the job.
Finally, another area of debate that needs to be opened up is that around the level of the budget deficit. Government is now projecting a deficit of 1,5% before borrowing for 2006-07 and which, in all likelihood if overruns continue, will come in again well below projections, below 1% with even a possible surplus. Such prudence may gain praise for a developed country, but for a developing one such as ours, levels closer to 3% would have been sustainable and provided a flexibility regarding increased employment incentives and other categories of spending.
As indicated Minister, we will be supporting the budget. But let me close by quoting the Financial Mail of 17 February:
On the whole this is a steady-as-you-go budget: Prudent, sound, but unimaginative and not innovative. But that is no small feat; and back in 1994 few could have predicted the revolution we have seen for the better in the handling of our public finances by government. The Minister has now delivered 10 budgets and is entitled to take much of the credit for this.
Thank you, hon House Chairperson and hon members. As the hon member spoke here I was wondering whether it is my time that is wrong or maybe the House Chairperson's time, but the House Chairperson correctly said to me he was within his time.
I would like to congratulate the Minister of Finance, Trevor Manuel, for presenting a budget representing the spirit of hope embodied in the state of the nation address, which was made in this House by our President, the hon President Mbeki.
In tabling the 2006 Budget, the Minister of Finance correctly used the quotation from Ben Okri's book, A Way of Being Free. Central to this quotation he used, in my view, is a reminder that there are no easy victories. What we have been able to achieve as a country, 12 years into our democracy, owes much to the tough decisions we had taken earlier with regard to the management of our economy while at the same time addressing the legacy of social inequities in our society.
We can indeed repeat the words of President Mbeki in this year's state of address that today is better than yesterday. Indeed, our yesterdays are a myriad of challenges that we had to contend with, both as government, this Parliament, as well as our people. Central to these challenges has been the building of a nonracial, nonsexist democratic South Africa, an ideal espoused by our people in 1955 in Kliptown when they drafted the Freedom Charter. It also has been about building a caring society.
The 2006 Budget is, once again, a reminder that we are indeed on the path of building a caring society. Our social wage, as reflected in many aspects of this budget, in particular the social security system, which is the largest expenditure item in this budget, is an indication that the poor are at the centre of our development. It is against this background that I support the growth and income support to vulnerable households while at the same time ensuring that our communities are not overly dependent on state support, but seek employment opportunities, as well as access other government programmes, such as the food production support grants available through our provincial departments of agriculture within the context of the Integrated Food Security and Nutrition Programme.
The mobilisation of the poor and vulnerable through the self-help programmes and co-operatives seeks to ensure that our social security system, as an intervention, creates an enabling environment while it assists people to engage in programmes that can improve their capacity to provide incomes for themselves.
The continuous support to learners from a poor background, particularly with regard to bursary allocation as is reflected in the National School Financial Aid Scheme, is another intervention that seeks to support those who are vulnerable in our society, as well as ensuring that it can contribute to the building of skills - a capacity which all agree we need in this country.
The allocation of the conditional grants to provinces as a way of improving mass participation in sport and recreation again affirms our commitment to building a caring society and a healthy society too. The Minister of Health's initiative, which is a campaign known as Vuka South Africa, would also ensure that we as citizens play our part in improving our own health while at the same time we partner with government in improving our capacity to deal with the challenges that are there in terms of our health situation. The budget also reflects our commitment to support delivery at local government. This is an area all of us would agree is where we are able to access the impact of our policies and programmes. The support given towards continuing with Project Consolidate, which, as we know, was an intervention to ensure that we can support those municipalities that are ailing, is again a way in which we can, in a meaningful way, show a need for integrated government. All of us who have been engaged in the campaigns at local government have realised that this area of our work is an important indicator of an integrated and co-ordinated government.
I hope that the amounts that are reflected in the budget, as tabled by the Minister in February, towards the support to political parties will ensure that, as the members of this Parliament, in doing our work in the constituencies we will be able to lend support to the local government at municipal level. It is also necessary that we are able to induct and work with the newly elected representatives so that they themselves can fully appreciate the work that they have to do in order to improve the capacity of our people in making their lives better.
In order for our government to work as a collective, we would like to lend our support to the work that the Presidency is doing through the Presidential Co-ordinating Committee, as well as the resources, financially, that have been provided by the Minister of Finance in this budget. We have seen improvements particularly from last year July to this year January where alignment in having the lekgotla between national government and provincial government enabled us to bring synergy to our work.
It is also necessary for me to point to the work that is being done by the Premiers through their Premier's Co-ordinating Forum, which also brings together the district mayors to ensure that both in the planning and the execution of our development programmes we can deliver quality service to our people. Indeed, Ben Okri, as the Minister of Finance reminded us, indicates that there would always be challenges that lie ahead of us as long as we live. Hence, as we climb the mountains, we are mindful of the frontiers ahead.
I am mindful of the challenges of spending in the area of conditional grants. Some of these are clearly evident when one examines the spending in the Comprehensive Agricultural Support Programme by various provincial departments of agriculture. In itself, the essence of the grant cannot be dismissed as being unimportant. However, our responsibility is to deal with the challenges on spending that are there.
It is therefore comforting that the national departments affected by conditional grants - not just the Department of Agriculture, but other departments at national level - have devised mechanisms to work in support of the provinces so that they can improve the quality of spending. This would also mean, as the Minister of Finance articulated in the presentation of the budget, that we might have to review the criteria that we have set to ensure that indeed they themselves don't become an impediment for spending by the provinces.
What we have seen in the weeks after the tabling of the budget by Parliament was engaging with the various departments, looking at where we need to improve, alerting us to what the challenges are that we need to continue to deal with. Therefore what we have seen today, Minister of Finance, is actually an indication of the work that has been done over these weeks by members of this Parliament to ensure that as the executive, as well as the administration, as we discharge our duty we are mindful of those frontiers that lie ahead of us that we need to conquer.
I'm sure as Parliament we will play our oversight role so that, as the departments as well as the executive continue with their work we are able not only to monitor and evaluate the impact of the programme but also to lend a helping hand. I thank you, House Chairperson. [Applause.]
Agb mevrou die Voorsitter, die agb Minister van Finansies verdien 'n pluimpie vir weer eens 'n goeie begroting. Die kroonjuweel in die agb minister Manuel se kroon is die Suid-Afrikaanse Inkomstediens wat 'n oorskot van meer as R40 miljard daargestel het, hoofsaaklik as gevolg van die oorverhaling van inkomstebelasting en die surplus op belasting op toegevoegde waarde. Wat 'n voorreg om te beplan en te begroot met so 'n geweldige voorsprong, terwyl die begrote tekort van die vorige jaar feitlik uitgewis is deur onderbesteding. Die Minister se grootste probleem is onskynlik wat om met al die surplusgeld in sy koffers te doen.
Die IVP is 'n sterk ondersteuner van effektiwiteit en finansile dissipline, en veral dat klem gel word op ekonomiese groei. Groter of versnelde ekonomiese groei lei tot groter maatskappywinste en kapitale uitbreidings, wat op hul beurt meer inkomstebelasting vir die staat beteken n, veral kumulatief, meer belasting op toegevoegde waarde. Wanneer die staat dan sy surplus en lenings terugploeg in massiewe kapitaalprojekte, soos met die miljarde aan Transnet en Eskom, is die tafel gedek vir verdere ekonomiese groei waarbinne die sogenaamde "multiplier effect" [vermenigvuldigereffek] definitief gaan inskop. Die vermenigvuldigereffek beteken dat die oorspronklike kapitaalbesteding tot tienvoudig gehersirkuleer kan word en 'n ware inspuiting vir die ekonomie en werkverskaffing kan beteken.
Die IVP het gepleit vir die afskaffing van belasting op pensioenfondse en die Minister het ons halfpad ontmoet. Ons vertrou dat dit vir die Minister moontlik sal wees om volgende jaar met die oorblywende 9% belasting op pensioenfondse weg te doen.
Ons is verder ten gunste van die geleidelike infasering van 'n basiese inkomstetoelaag in ooreenstemming met die Taylor-verslag en daarom het ons vrouegroepe ondersteun wat gepleit het om die verhoging in die ouderdomsperk tot 18-jariges vir die kindertoelaag. Dink net daaraan, dan word daardie meisies wat op skool bly en presteer ook beloon pleks van diegene wat babas kry voor hul agtiende verjaarsdag.
Soortgelyk kan die middeletoets aangepas en mettertyd afgeskaf word met betrekking tot ouderdomspensioene van ons senior burgers. Op hierdie wyse kan die basiese inkomstetoelaag geleidelik ingestel word, sonder om die stelsel oornag ryp te druk. Volgende jaar is nog 'n jaar en, wie weet, miskien kan die Minister soos in die verlede met die amnestiewetgewing met Inkatha saamwerk, of ons raad aanvaar. (Translation of Afrikaans paragraphs follows.)
[Mr H J BEKKER: Hon Madam Chairperson, the hon Minister of Finance once again deserves to be complimented for an excellent budget. The crown jewel in the hon Minister Manuel's crown is the South African Revenue Service that accomplished a surplus of more than R40 billion largely as a result of the over recovery of income tax and the surplus of taxation on value-added tax. What a privilege to be able to plan and budget with such a great advantage, while the budgeted shortcoming of last year has practically been wiped out as a result of underspending. The Minister's biggest problem is apparently what to do with the surplus money in his coffers. The IFP is a strong supporter of efficiency and financial discipline, and in particular that emphasis be placed on economic growth. Greater or accelerated economic growth leads to greater company profits and capital expansion, which again lead to more income tax for the state, and especially accumatively, more value-added tax. When the state then reinvests its surplus and loans into massive capital projects, such as the billions to Transnet and Telkom, the table is set for further economic growth in which the so-called "multiplier effect" will definitely kick in. The multiplier effect means that the original capital expenditure can be recirculated tenfold and can be a real injection for the economy and employment opportunities.
The IFP pleaded for the abolition of taxation on pension funds and the Minister met us halfway. We trust that it will be possible for the Minister to do away with the remaining 9% on pension funds in the next year.
We are furthermore in favour of the gradual phasing-in of a basic income allowance in accordance with the Taylor report and therefore we supported women groups who pleaded for an increase in the age limit to include 18- year-olds for the children's grant. Just think about it, then those girls who stay at school and perform are also rewarded instead of those who have babies before their eighteenth birthday.
Similarly the resources test can be modified and later abolished with regard to old age pensions for our senior citizens. In this manner the basic income grant can be introduced slowly, without having to force the system to ripen overnight. Next year is another year and, who knows, the Minister could perhaps, as he did in the past with the amnesty legislation, collaborate with Inkatha or accept our advice.]
For several years the IFP has highlighted the importance of Richards Bay and that it could become the gateway to Africa whilst opening up the slumbering provinces of Mpumalanga and Limpopo via the underutilised rail track from Richards Bay to the Mpumalanga coalfields. Government has now bought into the idea and we thank them.
For industrial development and cheaper electricity there are no better regions than Mpumalanga and northern KwaZulu-Natal, which are both also in close proximity to Cahora Bassa. Cross-boundary negotiations have been opened by the government and I can even foresee gas and oil pipelines connecting the South African development region. Imagine what it can mean for Southern Africa if we were to be linked by pipeline to the oilfields in Cabinda, Angola.
We applaud government's efforts to accelerate economic growth and recent statements on developing the manufacturing base of South Africa. Together with the modernisation and technological innovation of industries you simply have to realise the importance of the principle of competitive advantage. Let's face it, in certain categories it will be impossible for South Africa to compete internationally and particularly against the Asian and East blocs.
Handicaps with regard to region, provincial bias and price-fixing must be addressed. The IFP supports the Department of Trade and Industry in its criticism of Mittal Steel with regard to their price-fixing aimed at South African steel manufacturers by selling steel at the London international export price. South African manufacturers should at least have the benefit of the international price, less the freight cost of that exported steel.
Telkom is another example of abuse of a privileged monopolistic situation, whilst Eskom is boasting cheap electricity tariffs, but at a single outgoing price regardless of where the industrial hubs are situated. It simply does not make sense that industries relocate to Cape Town and the Eastern Cape, driven by false economies of scale in terms of which electricity tariffs are kept artificially the same as in Mpumalanga and the Tugela Basin of KwaZulu-Natal. Why not lower the tariffs or increase them according to the real cost factor of power generated by Eskom? Industries will then locate to the most economical and advantageous region.
We are also in favour of the gas-fired turbine power station envisaged for and linked to Mossel Bay and the pebble bed modular reactor in order to level the playing fields and to generate the most sought-after scarcity of electricity in the Western Cape. Spectators at the last evening rugby match at Newlands must have seen the poster of the Koeberg Supporters Club: "Enjoy rugby by candlelight."
Feit is egter, mnr die Minister, dat die Kaap van "Stormers" nog steeds nie voldoende krag het nie. Al slaan jy jou o op na Tafelberg sien jy nog steeds nie waar jou krag vandaan kom nie, en dis waarom die nuutste statussimbool in die Kaap nou is om jou eie generator te kan besit.
Ten slotte, 'n vraag aan die agb Minister en sy kollega van Openbare Ondernemings: Het julle nou al die moer gekry wat Koeberg gesaboteer het? Sterkte en krag vir julle almal. (Translation of Afrikaans paragraphs follows.)
[The fact, however, Minister, is that the Cape of "Stormers" still does not have sufficient electricity. Even if you cast your eyes up to Table Mountain, you will still not see where your electricity will be coming from, and that is why the latest status symbol in Cape Town is to own your own generator.
In conclusion, a question to the hon Minister and his colleague from Public Enterprises: Have you found the bolt which sabotaged Koeberg? Power and strength to everyone.]
Power to the people! [Time expired.]
Hon Speaker, hon members of this House, comrades and colleagues, "In the midst of winter I found in me an invincible summer." Inspiring words that echo through the decades and which, for me, so aptly recall one of our greatest heroes, Bhambatha, and the revolt he led. Indeed the Bhambatha Rebellion signifies the beginning of umzabalazo, the end of the wars of resistance and the beginning of the struggle for freedom, and the culture for human rights, which we celebrated yesterday throughout the country, began.
Indeed, the beginning of the 20th century was a time of rapid and radical change, when Africans were dispossessed of their land, their cattle and their agrarian industry and enterprise. It was a time when an unholy alliance, which was struck between the government of the day and the mining magnates, who, through the poll taxes, forced black Africans - referred to as natives - over the age of 18, to work on the mines.
Diamonds were discovered. How many of us don't wear them today and forget how it all happened! Mine bosses wanted large numbers of black people to work for them in the mines. Laws and taxes were designed to force people to leave their land. The most severe law was the 1913 Land Act, which prevented Africans from buying, renting or using land, except in the reserves.
This Act was the beginning of many such pieces of legislation that broke up families and unsuccessfully tried to crush the spirit of the majority of our people. Unwittingly, it created a proletariat and in many ways expedited the liberation struggle. It was during these tumultuous times that the ANC was born in 1912 - the oldest liberation movement. Since then, it has continued the struggle for liberation.
As a liberation movement, the ANC has fought against Bantu education, and for the right to vote for a government of our choice. And we have just all been through local government elections. It is only through an ANC government that we have democratic elections in this country. Say thank you to the ANC. This history is about our struggle for freedom and justice.
There is a strong message of hope, ushered in by the President earlier on this year, spelt out in Asgisa and, once again, mapped out in the budget, by the Minister of Finance. The policies of our current taxation reflect this commitment to address the daunting challenges we face in our country.
Just as Pixley ka Isaka Seme, in 1911, called on Africans to forget the differences of the past and unite together in one national organisation, today we are called upon to work together within the framework of Asgisa. Who in this House does not want to be in harness to eradicate poverty? Indeed, it is through Asgisa that we can address these daunting challenges of poverty.
In 1920 the ANC supported the militant strike of the mineworkers when, for the first time, workers became the motivating force of the national democratic struggle. Interesting enough, just in passing, I want to mention that the SACP then took an active role. It was, of course, among the first nonracial political organisations in the country.
Over the past 10 years we have implemented major tax reforms to broaden the tax base and to introduce equity and fairness. We have reduced marginal taxes and improved the administration of tax collection. The support for accelerated and shared growth in South Africa is supported by taxation measures over the medium term.
Regarding personal taxes, bracket creep has been directly and substantially addressed by 30% and 33% respectively for personal income tax. The middle- income earners have not been forgotten, with the top marginal tax rate now starting at R400 000 a year. When one looks at this figure of R400 000 a year, one is reminded very much that the ANC government now has done everything it can to foster and further the implementation of tax relief. In fact, we are looking at something along the lines of R13,5 billion, which really indicates that we put people first.
By raising the tax threshold on personal income tax to R400 000, the government has in one swift move exempted many low-income earners from income tax. It has also addressed the plight of our people who wish to own their own homes by drastically reducing the transfer duty. This has cut the costs of property transactions.
I want to refer to someone mentioned by one of my esteemed colleagues - a man I have the greatest respect for. I also want to refer to someone who enjoys just the edge of that respect - Prof Katz. All of us listened with great interest to Prof Katz's inputs. I know we all did. We didn't agree with everything that he put forward. In fact, some of us were debating the research and development as at 150, not just over the top, as it were. But let's leave that as it were, and we will come to some debate on it. Let's look at the companies. My heart bleeds for these companies. In 1994 the tax rate was 40%, and then it came down to 35%. We did this as a sign of good faith to try and reassure them. That was not sufficient and, of course, we brought it down to 29%. Having brought it right down to 29% and so on, I look at this and I am not an authority on tax but Prof Katz said ... [Interjections.] ... No, no, you are quite right, but I now listen to the authorities. May I suggest something like what Ben Okri said, "Turn on the light". Read his poem. It was drafted for the millennium, but, of course, it is very relevant today. Katz said, and I quote:
I support the decision not to reduce basic corporate tax. A further reduction of corporate rates unaccompanied by a reduction in the maximum marginal rate of individual tax would result in a very unhealthy tax arbitrage.
As a matter of fact, hon Davidson, you were concurring there. It is not an appropriate time to reduce maximum marginal rates of individual tax. That is not a Fubbs statement; it comes from an esteemed, respected tax authority called Katz.
Now I want to tackle the secondary tax on companies, STC. Here is another thing, I don't claim to have the edge on maths but I know how to count though. That's very useful when you come to STC. If you look at the STC, the ANC government said, "Look, of course, we are going to reduce this. We can't reduce it by that much, but at the very least we can take it down from 25% to 12,5%." That was not enough and I didn't even hear a thank you at the time.
But on top of that, because there were no thank yous, there was a further sweetener. They said: "Now, look guys, take out your calculators and we will tell you what you can do. You have all these dividends coming from other companies. You are all in this together. Before you declare your dividends, have a little discussion on your golf course, and work out as to whether this is the right time to declare your dividends, or whether you should withhold it for a moment and offset it against losses. You can take that decision. It leaves that in your own hands."
Then it was said, "Deduct what you want to pay as a dividend to what you are receiving." Of course, they do this long before you see it in writing. And then, "Maybe you want to offset the losses next year, only if what you are paying exceeds this will you then have to dip into that little resource of yours at the bank." Now, I have never heard of such a hand-out.
The Americans are looking at us and saying, "Hey, you give it to them on a plate!" They are looking at us with envy. But, never mind because we have taken a decision to develop and shape our own tax policy. As I said this morning, complex as tax legislation may appear to be, it doesn't take truckloads of policy before you can take a decision like you would have to do in the United States or the United Kingdom.
Furthermore, to show how lenient we are, we don't make taxation proposals law with immediate effect, but maybe one or two years later. In Britain, just the opposite applies. I think it was in 1913 when they said, "You guys hang on to everything. As soon as the chancellor of the exchequer pronounces, my friends, the guillotine has fallen." We are not like that, because we are equitable and fair.
If I am trying to make this sound as if tax is just a numbers game, it is not. It's all about equity and expanding our minds and contributing to human capital. Look at Tsotsi, the Oscar-winning film, which was in fact made possible to a degree, you could argue, because of the tax rebates. So there we have an ANC government that says, "It's not just a matter of number crunching. Let's promote the film and production industry, and develop our labour-intensive areas in the industry." Really, all I want to say to members who disagree with me is: "Switch on the light, because once you do, you are going to see a lot better and understand a lot better." The ANC government supports this budget. I thank you. [Time expired.][Applause.]
Chairperson, hon members, the UDM supports the budget again, Mr Manuel. The national Budget, as reflected in this Appropriation Bill, is a balancing act. Overall it is a good reflection on the strength of our economy.
Much of this year's budget's success is built on the better-than-expected economic growth and revenue collection. A number of problematic areas remain, however, when it comes to expenditure. The failure to spend allocated funds bedevils the best of intentions to deliver.
At provincial and local level, shortages of skills and capacity as well as mismanagement nullify increasing budgets and shares of revenue.
On the social front the Appropriation Bill allocates significant funding towards education, health and social grants. Education remains one of the most fundamental long-term social and economic investments that we can make in our country. Therefore the no-fee school system is to be welcomed. But is the growth in higher-education allocations keeping pace with the real needs and demands being placed upon higher-education institutions?
The real growth of social grants cannot be said to adequately address the real cost of living of the recipients. The Minister argues that social grants should not become disincentives for employment. But, be that as it may, people depending solely on these grants are specifically or essentially becoming poorer each day.
Another social matter the UDM would have liked the Minister to address emphatically in his Budget Speech is the HIV/Aids pandemic, which constitutes one of the single biggest threats to the future success of the country when you compare the amount of people requiring antiretroviral treatment with the target the government has set.
There are two macro factors that will affect our society profoundly, economically and socially. These are energy and water. The increasing incidence of power failures and persistent droughts are exposing a severe lack of infrastructure, investment and maintenance.
We are looking towards a water and energy-scarce future, even if these problems are addressed. What this requires is long-term investment in research and development of alternative sources of water and energy. We again say, Mr Manuel, that we support your budget. [Applause.]
Hon Chairperson and hon members, we meet at a time when there is broad agreement across the political spectrum that the South African economy continues to improve its performance in many important areas. A cursory look at the facts also reveals that the past 11 years of democracy have indeed been very good to big business.
For the ANC the key challenge remains to ensure that the growing economy benefits all, with special reference to workers, the economically marginalised, the unemployed and the poor. It is in this context that the ANC sees Asgisa as an important stimulant to drive the economy to a higher rate of growth that will optimise broad-based impact.
The ANC further supports the Asgisa programme of targeted interventions, and its aim to halve unemployment and poverty by the year 2014. In order to meet the 2014 objectives, it will be important for the interdepartmental economic cluster programme to focus on the joint implementation of strategic high-impact Asgisa projects so that government firstly, moves faster to address the challenges of poverty, underdevelopment and marginalisation confronting those caught in the margins of the economy to ensure that the poor share in our country's growing prosperity. Secondly, we need to make the necessary interventions with regard to the economy to accelerate progress towards the achievement of higher levels of economic growth and development of at least 6% per year. Thirdly, we need to sustain and improve the effectiveness of social development programmes targeted at providing support to those most exposed to the threat of abject poverty.
It is, however, important to bear in mind that Asgisa is not intended to cover all elements of a comprehensive developmental plan. It rather consists of a limited set of interventions that are intended to serve as building blocks to accelerated and shared growth and development. It is in this context that the Asgisa objectives confirm the need to expand the small, medium and micro enterprise sector, and the need to pay particular attention to broad-based black economic empowerment, and the development of women and the youth.
It will thus be necessary to ensure the effectiveness of measures and programmes such as the Apex microcredit fund; the Micro-Agricultural Financial Institutions of South Africa for agricultural development; Seda, the Small Enterprise Development Agency; Khula; the Umsobomvu Youth Fund, the IDC Small Business Initiative; and others.
On the other hand, manufacturing remains the engine of our economy. As a major sector, it has substantial linkages to primary and tertiary sectors. Industrial policy must, however, be increasingly broader than manufacturing to include particular activities in services and agriculture.
It is appropriate that the DTI will be finalising the National Industrial Policy Framework that will include a regional development strategy and focus on strengthening competition regulation. The policy will focus on unlocking South African industrial development in a sustainable manner through identifying strategic industrial interventions.
In this context, it is also important that state-owned enterprises, such as Transnet, Eskom and Telkom, amongst others, also facilitate public expenditure-led growth.
Finally, it will be crucial that the economic cluster, in co-ordinating an effective implementation strategy, ensures that it mobilises all relevant social partners to contribute to the process of economic growth in a manner that all South Africans can take pride in. The ANC supports the Appropriation Bill. I thank you. [Applause.]
Chairperson, hon Ministers, Deputy Ministers, fellow members, comrades and colleagues, the ANC has been the party for and of the poor - and still is. Most of us, as we are seated here, have grown up in townships. We have learned our politics on the streets, and today we sit here, having been elected largely by the poor. They have voted for us so that we can deliver to them water, electricity, jobs, services and, most critically, safer communities.
The ANC welcomes the 2006 Budget as a firm indication and commitment that is focused on the needs and aspirations of the poor. It is truly a people's budget, as it seeks to balance economic growth and social development. Our people look to us to tip the scales in their favour with substantial investment in their communities, which will alleviate poverty and significantly contribute to their development.
If we look at Budget 2006, what we see is that the Minister of Finance and his team have produced a very even-handed and well-balanced budget. Their major task was always to provide for the needs of the poor, as well as to create the conditions for capital to grow, and thereby grow the economy and create jobs that our people so badly crave.
In the safety and security cluster our role in bringing social stability and economic sustainability to our communities is taken very seriously. Measures announced in the budget will better provide resources for the criminal justice system as a whole, and will therefore assist in making our communities safer.
The President, in his state of the nation address, stated quite clearly that government would continue to focus its efforts on the critical challenges faced by our criminal justice system. For this cluster, we look forward to measures that will further reduce illegal firearms through stringent new licensing procedures; reduce drug trafficking and substance abuse; and implement social crime prevention measures.
Due to the high incidence of crime in our communities, government departments and particularly Justice are struggling to cope with the caseloads in the courts, and will be given extra financial capacity to deal with this matter. For Correctional Services, in particular, this has a direct impact on the awaiting-trial detainees languishing in our facilities.
Overcrowding is the single biggest challenge and, critically, it is a challenge that can only be addressed by the Justice, Crime Prevention and Security Cluster, JCPS, as a whole. Three areas were specifically highlighted for Correctional Services by the President in his state of the nation address: firstly, the building of new correctional centres; secondly, the reduction of the numbers of children in correctional facilities or centres; and thirdly, the implementation of the recommendations of the Jali Commission.
Priority number one, regarding the construction of new centres, we do recognise that they will alleviate overcrowding and contribute to economic growth through infrastructure development and job creation. As members might know, the major constraint in projects of this nature is that neither the department nor the Minister is in control of the multiplicity of processes involved between the declaration of intent and the completion of construction. Members should therefore rest assured that this issue is receiving the full attention of senior management in the Department of Correctional Services, as well as the Minister, Treasury and Public Works.
Secondly, as the ANC, we have always proclaimed that the correctional facility or centre is not the place for any child. In this regard, I have a scheduled meeting with my counterpart in social development, Deputy Minister Benjamin, where we will take forward previous discussions between her and my predecessor on this matter.
The Department is also fully committed to removing children from our correctional centres, and we will continue working with our partners in the JCPS and social clusters to ensure that there is delivery on this matter. The Department of Social Development, at the moment, does not have the necessary financial and human resources to manage children or juveniles convicted of crimes or awaiting trial.
We are also aware that the continued detention of children at these centres, which were meant for sentenced adults, constitutes a violation of some of the provisions of the Children Bill, as well as the children's charter. At our last national general council of the ANC, which was in June 2005, we resolved to continue lobbying government to pay attention to the establishment of places of safety for children in conflict with the law.
I am also glad to note that this matter is one of the priorities within the social cluster, as well as the JCPS cluster.
With regard to the Jali Commission's report and its recommendations, the report is now before the Minister. We will refer it to Parliament once we have digested its contents and have articulated a way forward regarding the recommendations contained therein.
With regard to Asgisa, spearheaded and led by our Deputy President, it is expected that all government departments will, in addition to the reporting systems relating to the legislative and policy mandates, produce short-, medium- and long-term plans, and reports on how they will contribute specifically to this project.
The envisaged contribution of the Department of Correctional Services to Asgisa creates an opportunity for the department to develop a coherent strategy for alignment of its core business of rehabilitation and correction with wider national objectives, such as poverty alleviation, job creation, growth and economic development.
The intersectoral nature of Asgisa implies that the Department of Correctional Services will have to build and strengthen its relationship with NGOs, business, labour, communities, professional bodies, statutory bodies, and all strategic partners. Regional commissioners, area commissioners and heads of centres should therefore direct their energies at strengthening relations with the spheres of government in which they operate with a view to realising these objectives within Asgisa.
The Department of Correctional Services, I am also glad to note, has prioritised its engagement with local government during the course of this financial year. Senior management has been tasked with developing a list of standard issues that should constitute a programme of engagement between the department and the municipalities.
Lastly, we, as the ANC, are of the view that to achieve our objectives of the second decade of freedom, we need stronger partnerships among all South Africans, a people's contract for a better South Africa. The ANC commits itself to working within communities and within government to play its role in forging a people's contract for a better South Africa.
Inspired by its commitment to democratic consultation, mass participation, and volunteerism, the ANC has, over the decades of its existence, focused, amongst other things, on safe and crime-free communities. We therefore want to call on all sectors of society to make their contribution to creating a crime-free South Africa. Our people have voted for peace, safety and prosperity. Let's make the age of hope a living reality for all. And, once more, the ANC supports the Appropriation Bill. Thank you. [Applause.]
Chairperson, hon Minister, congratulations on delivering your 10th Budget Vote; you correctly painted a rosy picture of the economy with the economic growth forecast revised to 4,2% of GDP from the forecast of 3,8%. The revenue authorities are also to be commended for collecting R41 billion more than last year's projected target.
The balance, hon Minister, that must be struck, is to use the fiscal space created by the revenue overruns and savings on debt service costs to give something back to the economy, and in so doing, to address poverty and unemployment.
The ACDP trusts that personal tax relief granted will result in higher levels of domestic savings. The national savings ratio has steadily declined to 13,5% for 2005, bringing the savings ratio to a level previously seen in 1949. We also trust that the welcome reduction in the tax on retirement funds, halved from 18% to 9%, will result in greater domestic savings.
The ACDP is also on record as supporting a reduction in corporate tax rates. However, the removal of the RSC levy will result in substantial savings for business, bringing effective tax relief of about R7 billion a year. According to the Business Law Review of March 2006, the fact that the RSC levy is not replaced can, for all practical purposes, be equated to a 2% cut in the corporate tax rate.
The ACDP encourages small businesses that are not tax compliant to make use of the tax amnesty granted by SARS. Clearly, the larger the net, the lower the rate of tax will be for all of us. With the core priority of the budget to strengthen education, public health services and social welfare services, we welcome the additional R30,9 billion to the provincial equitable share over the next three years.
We also welcome the increases in the social welfare grants, which, though modest, will go some way to alleviate the plight of the poorest of the poor.
Serious cause of concern is that we are running our largest current account deficit in history, currently at R73 billion or 4,7% of GDP. Can we continually rely on a sufficient surplus on the financial account to cover the deficits on the current account? A further constraint to economic growth is clearly the capacity of Eskom to deliver power. Certain issues have been raised in the Financial Mail, which I would like to quote from the 3 March 2006 edition. Whilst Eskom itself has certain plans in place, the Financial Mail quote says that "whilst we can blame Eskom for the blackouts, the biggest folly is that of economic planners, government itself". Clearly this is an aspect that needs to be looked at.
Whilst there is a huge demand for social security as indicated by substantial increases in the budget, government must shift from welfare towards development - and this, hon Minister, you have stated already - in order to address poverty and unemployment in the long term. At the end of the day we will be judged on the degree to which the economic boom translates into more jobs to address the poverty experienced in our country. This is the ultimate challenge.
Thank you, hon Minister, and congratulations to the Treasury and Ministry for the exceptional job done with this Budget.
Chairperson, hon members, Ministers and Deputy Ministers, the Treasury team, comrades and friends, as always, it brings joy for one to address this august House on matters of national importance, matters that mean life and death to the vast, destitute majority out there.
Indeed, it becomes an honour and privilege for anyone of us to stand here and speak, not only to a few of us here, but to the poor and rich, to the young and old, to the black and white, to the literate and the illiterate, to the South Africans, the Africans in Africa and in diaspora.
Appropriation of monies from the National Revenue Fund for requirements of state in the 2006-07 financial year becomes a vital component of our democracy as we continually seek to entrench it. This we do consistent with the constitutional requirements of section 213(2) that stipulates that -
Money may be withdrawn from the National Revenue Fund only - a) in terms of an appropriation by an Act of Parliament; ...
Furthermore, the Public Finance Management Act of 1999 provides that Parliament must appropriate money for each financial year for requirements of state.
For the progressives led by the ANC, we contribute in this debate in fulfilment of the Freedom Charter's slogan that stipulates that, "The people shall govern." More importantly, this governance must and can only and mostly be felt at local government level where the coalface of delivery is to be seen and felt.
Our debate takes place against the backdrop of 21 March, officially declared as Human Rights Day on our calendar. Lest we forget, an official figure of 69 of those peaceful marchers shot dead was recorded at Sharpeville.
Human rights are people's rights, people's rights to basic services. They are people's rights to govern their lives through ward committees and other spheres of government. These are human rights to live a better life. These are people's rights that stipulate that for you to talk of human rights, you must have shelter, a job and food.
Those living perpetrators who engaged in such callous acts need to go back to those communities and publicly apologise for their actions that caused so much misery to the dear ones of the deceased and the living, maimed both physically and spiritually.
Yes, the truth and reconciliation term came and is indeed gone forever, but reconciliation is a process that involves forgiveness. President Mbeki said: "Today is indeed better than yesterday, and tomorrow will certainly be better than today."
Part of this act that we are engaged in seeks to make local government work better for you and your communities. Having identified the constraints and the gaps, we build on reconstruction and development, and the human resource development strategy by focusing on capacity-building through the Accelerated and Shared Growth Initiative for South Africa, Asgisa, as it is popularly known. Together with the RDP, Asgisa is continually to build on a sound economic basis that is aimed at bringing about a better life for all.
This initiative is also intended to enhance Project Consolidate, an intervention that seeks to bring a working system to the ailing municipalities in order to have effective and efficient local government. Minister Manuel's proposals on zero-rating municipal property rates will go a long way to simplify the accounting tax records of municipalities. We have inherited a complex structure of municipal systems that must be made people-friendly and must talk to the daily experiences of our people.
Once again, skilling at this level of governance ensures the extent of capacity-building in our local government. Capacity-building must be supported by a strong learnership programme, thanks to the extension of this programme to 2011. This then calls on the private sector to join government in supporting these programmes that will ensure young people enter into training and gain experience and jobs.
Local government, through the Joint Initiative for Priority Skills Acquisition initiative, Jipsa, must call on the skilled and the newly skilled audit in order to enhance the skills base that seeks to bring about a better life for all. The ANC supports this budget, a budget that talks to the building of capacity within our municipalities, the coalface of delivery. I thank you. [Applause.]
Agb Voorsitter, ek het oor die jare heen al na baie begrotings in di Raad geluister. Dis min dat 'n Minister so kan geld uitdeel aan departemente en aan maatskaplike toelaes sonder om ingrypend aan die ander kant belastings hoef te verhoog. Tog het die agb Minister met di begroting dit reggekry.
Ek het dit dus in mediareaksie dan ook as 'n goeienuus-begroting beskryf. Die Minister was in 'n posisie om verskeie toegewings te maak, wat ek glo in die langer termyn bewys sal lewer en sal wys dat dit goed was vir die ekonomie. Verskeie jare reeds argumenteer die VF Plus aangaande die belasting op aftreefondse en ons verwelkom dit dat die Minister wel die belasting op aftreefondse verlaag het. Die 9% gaan die staat R2,4 miljard kos.
Die vraag is of met so 'n klein verlies aan die staat se kant, die Minister nie maar die belasting kon afgeskaf het nie. Dieselfde geld vir boedelbelasting. As gevolg van die styging in huispryse loop 'n middelklasfamilie nou die risiko dat die waardasie van hul huis so gestyg het dat hulle die huis sal moet verkoop vir boedelbelasting sou die broodwinner skielik sterf. Dit was tog sekerlik nooit die bedoeling met boedelbelasting gewees nie. Hierdie saak sal jaarliks dopgehou moet word om te voorkom dat ons weer in so 'n situasie beland. Die Minister weet dat die landbousektor tans groot ekonomiese probleme ondervind. Hul gevoel is dat di regering nie werklik begrip of simpatie met hul situasie het nie, en dat die begroting - met soveel geld beskikbaar - dit vir hulle makliker kon gemaak het. Kom ek gee vir u een voorbeeld: ons raak gewoond aan die jaarlikse verhoging van die sogenaamde sondebelasting, dis dinge soos tabak en alkoholiese drank; die persentasies is meestal meer as inflasie. Volgens ons berekeninge kry die regering tans meer inkomste uit 'n bottel wyn as wat die boer as produsent kry.
Die deurlopende ho verhoging van di belasting kan hierdie bedryf in byvoorbeeld die Noord-Kaap, waarvan ek kennis het, permanente skade aanrig. Elke jaar word na die agb leier, mnr Buthelezi gekyk - di kant toe - en dan word daar aangekondig dat tradisionele bier uitgelaat word en geen verhoging sal kry nie. Ek dink die Minister skuld die wynbedryf een jaar ook so 'n kyk om hulle dan ook 'n jaar vry te skeld.
Omdat dienslewering dikwels op provinsiale en plaaslike vlak vashaak, hoor ek regeringsgeluide om die probleme op te los deur van hierdie magte nasionaal te sentraliseer. Dis 'n normale reaksie om te s, "Kom ons beheer dit, dit word nie dr goed gedoen nie." Ongelukkig het ek nie in my toespraak tyd om volledig daaroor te argumenteer nie, maar die VF Plus glo regtig dis 'n fout om as gevolg van huidige probleme die hele beginsel van die afwenteling van mag na sentrale mag te vernietig. Tussentydse oplossings is moontlik om probleme, waar daar gesentreer is, aan te spreek. (Translation of Afrikaans paragraphs follows.)
[Dr P W A MULDER: Hon Chairperson, I have listened to many budgets in this Council over the years. It is seldom that a Minister can distribute money to departments and in the form of social grants in this manner without having to increase taxation drastically on the other hand. Nonetheless, the hon Minister has managed to do so with this budget.
In my response to the media, I accordingly described it as a good-news budget. The Minister was in a position to make various concessions, which I believe will prove and will show that they were good for the economy in the longer term. The FF Plus has been arguing for many years already about the taxation on retirement funds and we welcome the fact that the Minister has indeed decreased the taxation on retirement funds. The 9% is going to cost the state R2,4 billion.
The question is whether, with such a small loss on the side of the state, the Minister could not just have abolished the tax. The same applies to estate duty. As a result of the increase in house prices a middle-class family now runs the risk that the valuation of their house might have increased to such an extent that they would have to sell the house for the purposes of estate duty if the breadwinner were to die suddenly. That is surely not what was intended by estate duty. This matter will have to be monitored annually to prevent us from finding ourselves in such a situation again.
The Minister knows that the agricultural sector is experiencing serious economic problems at present. They feel that this government does not really have an understanding of or sympathy with their situation, and that the budget - with so much money available - could have made it easier for them. Let me give you one example: we are getting used to the annual increase of the so-called "sin tax", namely things such as tobacco and alcoholic beverages; the percentages are, more often than not, higher than inflation. According to our calculations the government is at present getting more revenue from a bottle of wine than the farmer as producer receives.
The continuous high increase in this taxation can cause permanent damage to this industry in, for example, the Northern Cape, of which I have knowledge. Every year a glance is directed the hon leader, Mr Buthelezi - in this direction - and then an announcement is made that traditional beer is to be exempted and will not be subject to an increase. I think that the Minister owes it to the wine industry to look at it in the same way one year and then also to exempt it for a year.
Because service delivery is often problematic at provincial and local level, I can hear sounds from the government's side to the effect that the problems can be solved by centralising these powers nationally. It is a normal reaction to say, "Let us control this, it is not being done well there". Unfortunately, I do not have time in my speech to elaborate on this in full, but the FF Plus truly believes that it is a mistake to destroy the whole principle of the devolution of power and resort to central power and as a result of present problems. Interim solutions are possible to address problems where centralisation has taken place.]
The irony is that government must still have the voting power behind it, but the question is: How much doing power does it have? A well-known political analyst put it in this way:
The lack of capabilities is not restricted to one or two sectors of the Public Service, but impacts on most of the government departments. The Department of Finance and SARS are among the very few where an efficient job is still being done.
And that is a compliment for the Minister.
So, the question is, as government functions decline the private sector is taking over these functions and we have the privatisation of government functions, is that good or bad? Let me give you one example. By the end of 2005, there were 300 000 private security guards in comparison to 148 police officers. Do we want to see this trend continuing? Is that the best way or not? I would like to think that we can debate that as well as the centralisation of more power. I thank you.
Chairperson, colleagues and South Africans, I send you revolutionary greetings and want to say that we must all take part in reconstructing and developing our country for greater economic development and growth.
The growing awareness and interest of South Africans in the affairs that impact on their lives pose a serious challenge to legislatures and government to be more efficient in service delivery.
Simultaneously, the legislatures need to strengthen their oversight role over of government and the executive to ensure that the programmes and strategic plans are implemented with the desired diligence and passion towards the achievement of a better life for all.
There is an increasing demand for the oversight function of the legislatures, in particular Parliament, to insist on government departments achieving and producing the outcomes as indicated in their strategic plans. Thus the pace of service delivery must be increased during this decade of our democracy to reduce by poverty by half in 2014. There is no reason not to achieve this aim, because we have good policies and we only need commitment for better implementation, because as we have financial resources at our disposal.
The reduction of poverty levels by half in 2014 is achievable, as I have indicated, because we have the required financial resources. I hope that the Minister of Finance will double his efforts to produce more in the coming years.
I want to add a word of caution: having the required financial resources is not a guarantee at all for the achievement of the expected outcomes or results. The allocation of financial resources or money by the National Treasury in the past few years is not matched by the results the departments produce at the end of the financial year.
The departments always have reasons or excuses about why they have not achieved their objectives, whereas they ask for budgets as per their strategic plans, which need commitment and passion, as I indicated, to be implemented.
Therefore, this is an indirect call by departments for Parliament to strengthen its oversight role to ensure that the budget is implemented as per those strategic plans, without any unnecessary deviations.
Many South Africans are always keen to know what government has in its trolley on Budget day, because they want to know more about the financial resources that government allocates towards the achievement of a better life for all.
However, it is unfair and at the same time oppressive on for our people when the departments do not make the realisation of a better life for all a reality, but instead make it look like a donkey cart that moves slowly and does not match the financial resources that are at the disposal of the department. Thus, this is an indirect removal of the hope of our people, rather than strengthening that hope.
To cite an example, the announcement in the previous budget about the building of four new correctional centres gave many people confidence that this would assist greatly in addressing overcrowding in prisons, whereas strategic plans and budget estimates done prior to the allocation made it possible to realise these objectives.
I quote from the estimates of the national expenditure to 2006:
Four new correctional centres with the original target date for completion set for the 2006-07 financial year were included in the Budget. After the Department of Public Works' tendering process, the cost per project had virtually doubled compared to initial projections. Then the department appointed independent quantity surveyors to investigate, resulting in the delivery date being revised to 2008-09.
The heart of the matter is: Were the initial projections realisable? Whzy did it take so long to implement those plans that were presented, because money was made available as requested? How much will be spent before the actual construction comes into operation? Will it be business as usual for people who have failed and delayed the implementation of the initial plans? What must Parliament do in this instance as part of its oversight function?
Mmega dikgang wa City Press e leng Mpumelelo Mkhabela o fetsa a e nametsa thaba kgomo e tlhotsang ena a re ... [A City Press reporter, Mpumelelo Mkhabela has eventually put the frying pan into the fire by saying that ...]
... information that the departments had rechannelled was never presented to Parliament in its documents.
Fela o bowa a tswella a re ... [However, Mpumelelo continued by saying ...]
... National Treasury has told Parliament that -
... with an allocation of R1 billion in its three-year budget cycle, the Department of Correctional Services should have been able to start and complete four prisons, even though the costs were increased.
This scenario emphasises the importance of Parliament's oversight role in the budget. It poses a big challenge to Parliament to ensure that the Joint Budget Committee is given the necessary resources that it requires in order to complement the work of the portfolio committees and the Standing Committee on Public Accounts, and for Parliament itself to carry out its oversight function, as stated in the Constitution.
The 51st national conference of the ANC noted that there is -
... need for all legislatures to exercise oversight responsibility comprehensively by holding government departments and organs of state accountable for both non-financial service delivery and financial performance.
The conference resolved that it supported the need for all legislatures to improve their capacity to exercise their constitutional oversight role and assess the performance of all organs of state, and be provided with the necessary and sufficient resources to carry out this role effectively. Therefore Parliament needs to speed up the process of legislating how its oversight function over the budget should operate.
Taking note of the points I have raised earlier on in my speech, the underlying questions are: Is the time not ripe for Parliament to have powers to amend the budget? If not, how will it ascertain that departments are effective and efficient in the implementation of the plans in relation to their budgets, as presented to Parliament? How will Parliament ensure that financial resources that are allocated to various departments and organs of state improve the lives of the poor? If the status quo is maintained, how will Parliament ensure that the increasing budget allocations bring about drastic changes in the lives of the majority of our people, and promote sharing and greater participation by previously disadvantaged people in the growth of our communities?
How can our budget ensure that these people participate more, rather than having only those who have been advantaged continuing to participate, or those who are at the top continuing to participate rather than increasing the participation of more people in accessing economic benefits?
I want to indicate clearly to members of this House, and I want to challenge members of this House, to engage in the discussion or in the debate on what the effective oversight of Parliament over the budget means in relation to poverty eradication. What does it imply about us in the portfolio committees having to ensure that the financial resources that are made possible by National Treasury are utilised efficiently so that departments can achieve what they intended to achieve in that particular year? How do we make these departments accountable, rather than, from time to time, having departments spending towards the end of the financial year? Why should that be the case? Why can't they redesign their plans to ensure that whatever they have planned for will be achieved in that particular year? I repeat: I challenge those of us in portfolio committees to ensure that, for those budgets where departments come and plead with us to convince us that they will be able to deliver on their targets, we pin them down to delivering on those targets as per their strategic plans.
Unfortunately, it is the burden of the Standing Committee on Public Accounts, at the end of the financial year, when everything has been done and people have presented their excuses - or perhaps don't even present their excuses - to the portfolio committees for why they did not implement the budget as planned, to interrogate why money was not utilised effectively. That is the challenge I leave with you. Thank you, Chairperson. [Applause.]
Chairperson, over the last 10 years, revenue collections have increased on average by a remarkable 10% a year, and this is the single biggest contribution to the country's improving fiscal fortunes, and more than anything else, is the means through which the Minister has been able to strategically promote both demand and supply sides of the economy.
Lowering taxes, increasing social spending, reducing the national debt and stimulating economic growth has been the type of opportunities he has capitalised on in order to improve the country's economic and socio- economic situations.
It stands to reason, however, that sooner or later, there will few or no new taxes to introduce, and there will be less and less efficiency gains to be made at the SA Revenue Service. Annual revenue increases will then struggle to keep up with inflation and other demands on the expenditure side.
As such, the Minister will not have the range of bBudget options he has had in recent years. That is, of course, unless government is able to achieve far greater savings on the expenditure side. I want to argue that such savings are to be had if financial management across all departments begins to achieve the particular objectives of the Public Finance Management Act.
There is a strong and growing body of international evidence, covering both private and public sectors, which proves that substantial gains in economies and efficiencies are to be had if modern performance budgeting and spending management methods are properly employed.
My contention is that the PFMA is not being adequately used. It was implemented in a rather mechanical way, and is now being applied in a rather mechanical way. Old bureaucratic attitudes of ``"Let's live by the book'' book" and ``"Let's only do what we have to do to keep out of trouble'' trouble" remain. The Minister's intentions at the time of the PFMA's introduction such as ``"We must now move away from a rules-bound regime and must let managers manage'' manage" and ``"It's now all about performance and managerial initiative'' initiative" have not been properly realised.
The performance idiom of the PFMA is not evident enough, and a value-for- money culture is not being fully instilled. Sure, there are now strategic plans and more extensive reporting, but this has quickly become just another part of the administrative routine rather than a part of the dynamic that drives higher performance.
The pre-determined performance objectives are generally too vague, and are mostly not measurable in the required way and, at the end of the day, outputs and outcomes remain modest, and the potential expenditure savings remain out of reach.
It is clear that there is something lacking in how departments are being orientated and educated regarding modern, performance-related, financial management. Perhaps Treasury itself does not have the particular experience and knowledge to impart the necessary attitudes, and perhaps the SA Management Development Institute doesn't either.
The situation requires that we go far beyond just teaching a new set of rules and procedures to how managers must think, take initiative, seek and achieve new goals, and feed success with success. [Applause.]