Hon Ministers present here, Minister and Deputy Minister of Finance, comrades and distinguished guests, South Africa has earned its reputation for sound fiscal management over the past 16 years. Progressively, it has claimed its rightful place among developing and developed nations of the world through fiscal discipline and a prudent regulatory regime in the financial market.
Therefore, the sound management of government finances is not alien to us. Fiscal prudence is the foundation upon which the reconstruction and development of our country is built. If there is any doubt, may I refer hon members to the preamble to the White Paper on the Reconstruction and Development Programme, RDP? In that preamble, President Nelson Mandela wrote that government was committed to the gradual reduction of the fiscal deficit, thereby avoiding the debt trap; increased capital expenditure, and the reduction of government dissaving over time.
These principles are as true today as they were in November 1994, when Mandela wrote about them. As our track record will show, we have remained true to these commitments throughout the 16 years of our democracy. We will not deviate from the path laid by President Nelson Mandela.
Therefore, it should not be surprising that we are now rated number one internationally in terms of our Budget transparency. As a result, in the past 16 years of democracy we have achieved the following: brought down our budget deficit; kept the inflation rate within the targeted 3%-6% band; and the balance of payments of the current account is within moderate limits.
Our fiscal and budgetary reforms have always been informed by the space we occupy in the global economy and the challenges confronted by our people all the time. In his state of the nation address, President Jacob Zuma outlined the challenges ahead of us and directed that all South Africans must rally and unite behind one common objective in 2011, and I quote:
Our shared commitment is to put South Africans to work. They must find work in fields and factories, in repairing roads and building houses, in caring for children and protecting the environment. We must create jobs in every possible way that we can. 2011 must be a year of action.
This was a direct injunction to South African citizens and their government, to business as well as labour, and the entire civil society to respond directly to the clarion call made by the masses of our people, as captured in our Reconstruction and Development Programme, which laid the foundation for an integrated and coherent social economic policy framework that seeks to mobilise all our people and country's resources towards the final eradication of the apartheid legacy.
Indeed, it was a response to the questions raised 16 years ago through the people's forums in the villages and townships, on farms by farmworkers and in the cities through the length and breadth of our country. This is what they asked: How will the ANC create jobs? When will you build houses? Will you give proper health care? What about education? When will we have a fair and effective police force? What about pensions? Those questions were as relevant then as they are today. The Reconstruction and Development Programme was not drafted by experts, but by the very people who became part of its implementation in the 16 years of our democracy. These questions remain as relevant today as they were then, and they still stand to be responded to.
Let me take this opportunity to remind our people what we have done to address their concerns in the past 16 years of ANC rule. Because the Reconstruction and Development Programme gave them hope and confidence, it was, to them, the end of one process and the beginning of another. To them, it was the beginning of the rebuilding of a new South African society based on the principles of nonracialism, nonsexism, democracy and prosperity. To them, it was the beginning of building better, safer and integrated communities.
The fiscal framework presented makes it possible and also sustainable for the ANC to address these challenges as we get our mandate renewed every five years. The quick question that we need to respond to is how we responded to those challenges, despite the fact that in 1994 the ANC government inherited an economy that was characterised by the following: It was a shrinking economy, with declining revenue and a very high budget deficit.
In short, the economic outlook at the time was as follows: The total revenue was a mere R112,4 billion; the total expenditure projected at the time was R137 billion; and the debt service cost was R24,1 billion - almost 5% of gross domestic product, GDP.
Fiscal policy must be seen and judged for what it is and not for what it is not. It is evident that in the past 16 years the ANC government has succeeded in rebuilding the economy, which will have increased its revenue base from a mere R112 billion to R926 billion at the end of the next Medium- Term Expenditure Framework, MTEF, period. [Applause.]
Colleagues on my left should start thinking about whether they will be able to comprehend and write the trillion rand figure, because they never imagined that the economy of this country could grow this much in their lifetime. [Applause.]
As the ANC, we should concede at some point that we had to adapt to the fiscal stance which led to the reduction of spending in some sectors to stimulate investment and regain some lost ground. Doing so was necessary to create a fiscal space without compromising the social security net, like the introduction of the child support grant in 1996 and the continuation of supporting the old age pensioners.
Through progressive fiscal and budgetary reforms adopted in the past 17 years, as the ANC we can safely say, without fear of contradicting ourselves, that our policies have succeeded in impacting positively in some areas, and that more still needs to be done to create a prosperous nation.
In terms of housing, more than 2,5 million houses have been built. About 10 million people have permanent homes and roofs over their heads. More than 80 000 mixed-income houses will be built in the coming year. More than 400 000 houses are going to be upgraded in informal settlements in the coming three to four years.
In terms of basic services, in 1994 36% of households were electrified and today the figure is standing at 84%. In 1994, 62% of households had access to clean water and today the number has risen to 93%. In terms of sanitation, we have moved from 50% to 77%.
With regard to the question of having safer communities, even in its dying years apartheid unleashed a vicious wave of violence. Thousands of our people were brutally murdered and forced from their homes, particularly in the East Rand, Gauteng and KwaZulu-Natal. During that time security forces were accused not only of failing to protect but that they were active participants in fuelling and perpetuating violence. Today many South Africans have confidence in the security cluster. They have a sense of security, both in person and in property.
The fiscal framework proposed will ensure that the budget tabled gives meaning to the building of a national democratic society that is based on the ANC's vision of a united, nonracial, nonsexist, democratic and prosperous society.
The challenges addressed by the 2011 Budget are complex and substantial. Of critical importance to this House, and to hon members, is to understand fully the central challenges which the 2011 Budget has to address. These are deep-rooted structural problems. Economic transformation and the creation of decent work and sustainable livelihoods should be central to what we seek to achieve in the coming three years.
Therefore the six priority areas of job creation have to be addressed in this Budget. Those are: infrastructure development; agriculture; mining and beneficiation; manufacturing; the green economy; and tourism. The fiscal framework recognises that the building of South Africa is a multidecade project that must drive our capacity for a new and inclusive growth path. Therefore, as the ANC, we reaffirm that countercyclical fiscal policy is the most appropriate policy to address the challenges we are facing currently. It is precisely because of this stance, which we adopted in 2005, that we were able to sustain our social and economic infrastructure programmes during the recent financial market crisis - a global economic crisis, eventually.
During the public hearings on the fiscal framework and revenue proposals, several key issues were raised. Some of the questions raised were: What is the correct level for a budget deficit? Can the Budget sustain our current welfare programmes? The projected economic growth path over the next Medium- Term Expenditure Framework, MTEF, period is not sufficient to create the five million jobs we envisaged.
The budget deficit should not impact negatively on the pace of delivery, but the cost of servicing debt is the fastest-growing expenditure item in the MTEF period. There is a need for greater debate regarding the level of deficit that we should run with over the MTEF. There are different perspectives and they were articulated in our public hearings. What the ANC government has to ensure is that the budget deficit does not grow disproportionately to our ability to finance the debt.
The New Growth Path is underpinned by this fiscal framework and the framework supports key elements that were envisaged in the industrial policy action plan, Ipap 1 and Ipap 2. The South African economy is experiencing mass joblessness, poverty and inequality. The framework sets out the areas where jobs can be created through the restructuring of the economy. These follow the terms of the New Growth Path and are: infrastructure development; the green economy; industry, especially the trade-goods sector; the rural agricultural and agro-processing sector; public sector growth; regional economies; knowledge economy; social economy development; social capital; and tourism. This raises the relationship between macro- and microeconomic policy going forward. The following are critical and must be addressed: the role of industrial policy and its impact; competitiveness and competition policy; industrial financing and access to capital; enterprise development; the small, medium and micro enterprise, SMME, sector; skills enhancement and training; labour market issues; trade policies; and the exchange rate.
The main indicators of our success will be the number and quality of jobs that we are going to create through the fiscal framework that governs the Budget that we are going to have for the coming financial year.
In conclusion, if it were in my power I would commission a standing ovation in recognition of not only the evidence of effort employed, but the undying spirit of patriotism that still shines as brightly as it did the first day when many men and women, heroes and heroines, past and present, set themselves on a journey to bring about the democracy that we are enjoying today.
The ANC supports the fiscal framework here proposed, because it is in support of the principles of intergenerational equity that ensure that the wellbeing of our children and grandchildren is not compromised by our short- term interests. I thank you.
Thank you, hon Speaker. The fiscal framework details the impact of fiscal policy on the economy over the medium term.
In my address to this House in March last year, I said that the DA would support the fiscal framework and the revenue proposals for 2010-11, but that we would monitor very closely the direction of the numbers and the policies that influence them. In October, my budget tip for the Minister was that government intervention was required to increase economic activity, rather than the size and influence of government and its associated cronies.
The DA has set out the choices that South Africans can make. We can choose a society centred on the so-called developmental state that pursues economic activity along a supposedly New Growth Path. As an alternative, we can choose a society centred on people, where the state facilitates economic activity to achieve job-rich growth, promote competition and competitiveness, attract investment and lift our people out of poverty along a path of increasing prosperity over successive generations. Effectively designed fiscal policy can contribute significantly to this open opportunity society that enables all of the people to become everything they are capable of being.
Mixed signals from government on economic policy continue to harm our growth potential and drive jobs out of our economy. In its annual survey on the attractiveness of government mining policies, the Fraser Institute has steadily dropped our ranking from 49 in 2008 to 67 today - only four places above Zimbabwe.
It is clear that noise about nationalisation and incoherent policy statements drown out investor confidence and certainty and make South Africa a less attractive investment destination. Our economic growth rate will not nearly match our potential as we emerge from the recession. This is a result of the regulatory failure of a government making poor policy choices that get in the way of job creation and perpetuate the consequent grinding poverty that drains hope while it shatters lives and dreams.
In crafting our alternative budget for 2011-12, the DA considered how to address poverty. The answer is not simple, requires creative thought, will take time and effort, and points to the need for bold and decisive government action. Consequently, our key policy priorities are: creating jobs and growing the economy; education and skills development; social security and fighting poverty; housing and land reform; increasing savings; preventing and fighting crime and corruption; promoting efficiency and eliminating wasteful and unnecessary expenditure; and developing a greener economy.
Given current macroeconomic conditions and our support for countercyclical fiscal policy, the DA believes that the fiscal policy must stimulate economic activity now. Increased economic activity will generate jobs, and more people in employment will increase revenue and decrease dependence on social security. Increased revenue will mitigate the need for tax and levy increases, reduce the deficit and relieve pressure on interest payments for debt.
The fundamental difference between the DA's alternative and the ANC Budget is the role of the state. The DA has proposed a series of interventions designed to stimulate private-sector employment through a wage subsidy for newly created full-time employment, export promotion, support for small enterprise development, tax exemptions for newly established small-scale enterprises, opportunity vouchers for enterprise development, and strengthening the Competition Commission.
The ANC's focus for job creation relies on public-sector employment, inefficient state-owned enterprises, failed Setas, a nebulous jobs fund, further expansion of the Public Works programme and, under a programme that neither the Minister of Finance nor the Minister of Economic Development can explain, more than a billion rand for employment activation by the so- called National Youth Development Agency that recently spent R100 million on a party.
It is therefore not surprising that the National Treasury has revised its GDP growth estimates downward to 3,4% for 2011-12. The ANC Budget does not stimulate labour-absorbing growth and will not realise our upward growth potential. The DA believes that our alternative budget interventions will stimulate economic growth to at least 3,75%.
The DA welcomes the personal income tax adjustments to compensate for fiscal drag and the increase in tax-free interest income. Our alternative budget proposed several interventions to encourage higher domestic savings so that South Africa can be less dependent on the ongoing influx of foreign capital and less vulnerable to the long-term risks associated with a sustained current account deficit. Fringe benefit taxation on employer contributions to retirement funds contradicts the development of a savings culture. A tax reduction on interest on deposits of 12 months or longer would be far more beneficial to our economy.
Immediately after the Budget announcement, the DA welcomed the Minister's focus on creating jobs, and we still do. However, we believe that the ANC's delivery mechanism won't work and that there is insufficient progress on the implementation of the promised wage subsidy. At the committee meeting on the day after the Budget speech, the Minister declared that tax policy is an executive prerogative. This implies that a wage subsidy could be implemented if the executive wanted it - we can only conclude that it doesn't.
We cannot consider the numbers in the fiscal framework in isolation, particularly those for revenue and expenditure, because they are derived from numbers attached to policy choices. The DA's alternative budget generates revenue of 28,34% of GDP and expenditure of 34,33% of GDP, with a deficit of 5,99% of GDP. The ANC budget generates revenue of 28,3% and expenditure of 33,6%, with a deficit of 5,3%.
In expanding our deficit from 5,2% last year, the DA has adopted an expansionary fiscal stance. This is aimed at productive spending on the supply side to accelerate economic activity as we emerge from recession. The ANC's expansionary fiscal stance, as reflected in its higher-than- expected deficit, arises for the wrong reason - to fund unproductive and inflationary increased expenditure on the demand side, including the public sector wage bill, which, according to the Minister, has doubled in five years, without service delivery improvements. This is the result of too many overpaid and unproductive deployed cadres in unnecessary jobs.
The DA's Every Rand Counts campaign has revealed that the Zuma administration has misspent R3,8 billion on unnecessary and self-indulgent expenditure. We commend the Minister for his commitment to counter wasteful spending and corruption. He needs to go further and deliver on the promise to review the financial model applicable to the state-owned enterprises. The DA proposes that a 10% stake in Eskom, SAA, SABC and Denel should be offered to private investment. This will improve efficiency and the proceeds can be invested in a sovereign wealth fund to provide venture capital for entrepreneurial job-creating activity, especially in the emergent green economy. Our social security spend continues to increase on the back of rising unemployment. The DA believes that the problem with our social security net is not that it is generous but that there are too many recipients. As our alternative economic policy lifts more people into employment, it will be possible to consider the implementation of a working tax credit for individuals who earn below a particular threshold, as well as income support for the unemployed. The ANC's unsustainable social security model alleviates rather than reduces poverty to ensure that individuals remain dependent on the state and loyal to the party.
The DA welcomes the additional spending on infrastructure, but not enough is available for road maintenance, improving water treatment, addressing acid mine drainage and disaster management support. The DA's investment in additional expenditure in these areas will yield significant economic rewards over time.
During the committee hearings, a concern was raised over the increasing tax burden through stealth taxes and levy increases. The DA is focused on the future and our alternative budget has demonstrated that economic activity can be accelerated without tax and levy increases if the people's money is more efficiently and effectively managed and allocated. Closing unnecessary departments in the bloated Cabinet and superfluous district municipalities would be a useful place to start. Levy increases drive up inflation and impact most heavily on the poor. The DA's projected increase in GDP will mitigate the cost of a larger deficit that must return to surplus as the pace of economic activity accelerates. The Minister has clearly signalled a pending increase in taxation to fund the National Health Insurance.
We agree with the Director-General of the National Treasury that there is no fiscal space for additional taxation. Government should first fix the broken health care system and efficiently apply the people's money already available in the public health system before it demands more, especially more of the regressive value-added tax, which impacts disproportionately on the poor.
Given that we do not support tax and levy increases at this point of our economic recovery or the fiscal policy structure of a low growth path that underlies the numbers, the DA will not support the fiscal framework or the revenue proposals as tabled.
Madam Deputy Speaker, there were approximately four opportunities for business, labour and other organisations to participate in public hearings on the Budget and the Medium-Term Budget Policy Statement. We had some interesting contributions, but the consistency in the below-average contribution from Cosatu now stands out.
This year, the late arrival of Zwelinzima Vavi added some substance to the delegation, but not to the content. Mr Vavi quoted statistics, some not very recent. However, he was still convincing, saying that we have a crisis when it comes to the inequalities in our economy, poverty, the crisis in education and the high levels of unemployment among Africans. He is right. We should all be concerned about this.
Moeletsi Mbeki warns that government will be forced to cut expenditure in future, that it will start cutting the social grant budget, and therefore what happened in Tunisia remains a possibility in South Africa. I differ from him. I do not share his view that government will target the social grant budget first before they have addressed debt-servicing costs and the state wage bill.
So, between the projections of Vavi and Mbeki lie the performance of the Treasury and its ability to stick to sound fiscal and monetary policies. Their job is not an easy one, however. The world economy is split 50-50 between emerging markets and the developed world. The developed world economies remain fragile. With the return of higher oil prices, some might slip back into a recession, and we are influenced by that.
Added to that, in South Africa, only 41% of all adults are employed. This means that 19 million adults are not working. The fact that our active labour force is declining might influence personal income tax revenues negatively in future. Furthermore, if we take government wages as a percentage of the gross domestic product, GDP, South Africa is in the sixth highest position in the world, behind Denmark, Sweden, Iceland, Finland and France. In addition, the formal employment costs of the total public sector in South Africa are the third highest in the world, behind Sweden and France. Mr Minister, that is ridiculous!
It is very strange that Mr Vavi is not pointing out that this is a crisis. The reality is that salaries in certain categories in the Public Service, excluding those of the police and teachers, are simply too high. Add to that wrong appointments that do not assist service delivery and the state wage bill becomes the Treasury's single most important challenge. If we fail to shrink it, we shall fail South Africa.
The Treasury foresees a 6,5% increase in the wage bill in the next three years. For the past three years, it was more than 15%. If they do not manage this, and given the possibility of an increase in interest rates, which will put upward pressure on debt-servicing costs, the balancing act by the Treasury becomes very tricky in the next three years.
The concern is that the Medium-Term Expenditure Framework is not going to be as smooth as expected. Therefore the proposed fiscal guidelines must be welcomed and supported. We need a stable and strong Treasury, one that does not bow before the populist pressures of certain forces that do not understand the importance of agreeing now on the set of guidelines according to which state finances must be handled.
We cannot ignore this. Let us at least unite around it. The hon Minister needs all the support he can get now, and therefore Cope will support this fiscal framework. [Applause.]
Madam Deputy Speaker, one element of this policy framework is perhaps more salient than many others. We have a welfare state, and we share the dream of creating a developmental state from it. Yet the industrial policy financed by this Budget and its relevant policy framework merely extends welfare to industry. This is to maintain the viability of industries that would not be viable but for the huge amount of direct and indirect subsidies, tariff and import protection, and cartel protection they receive. There is no real programme to create industries that can survive only on the strength of their products or services being internationally competitive and sought after.
A welfare state is a comforting and benign idea, but has a few drawbacks. It does not work in the long run and is not sustainable. It creates dependency and generates more of what it subsidises, including nonviable and parasitical industry. Plus, it takes more money from the less rich to be financed than it takes from the rich, as it ends up relying on indirect and hidden taxation, such as our cars costing twice the international market price. The extension of the welfare state into the industrial sector has an additional perversion. We are imposing a broad range of social responsibility obligations on companies across the board. These are handled by companies as a cost of doing business, which is passed on to consumers without affecting profit margins. It therefore operates as an indirect, regressive tax by which the poor pay more than the rich do when purchasing basic goods, such as telecommunications, at inflated prices compared to international prices.
Last year we said here that the Minister was not realistic in his deficit and national debt projections. We have been proven correct. They both seem to be out of control. By 2015, we are going to have in excess of R1,5 trillion's worth of national debt, which is worth about R300 000 per taxpayer, with not even a hint of a plan for its repayment. Furthermore, it is not something that we are not passing on to future generations. We are, because all these expenses are indeed operational expenses, to the extent that such a concept is applicable in today's world, where everything is amortised over no more than 40 years. On the contrary - the Minister tells us that the debt will increase steadily after 2015.
Behind it all there is a huge, hidden, skyrocketing municipal debt, which the Minister does not speak about or quantify and this Parliament continues to ignore, as if it will one day be paid by Santa Claus.
It does not help to carry state debt as a percentage of the gross domestic product, GDP. It is quite deceiving. That would be like me carrying my personal debt as a percentage of Anglo American's gross turnover. GDP belongs to the country, not to the state, and its income is already burdened by its own composite industrial, company and family debt, as well as an asset base that is much thinner than that of developed countries, where wealth has been accumulated over centuries. Therefore the long-term outlook is that of a downward spiral.
South Africans would have liked fewer taxes, especially the many indirect and regressive forms of tax which penalise the poor more than the rich. It is unconscionable to increase the fuel levy when common sense demands that it be abolished completely. It does not help to blame the recent increases in prices at the pump on the madness of the Butcher of Tripoli. It is our own madness that sucks economic life out of the most vulnerable segments of our economically active population.
If the citizen is to pay taxes on his gambling winnings, should he not be entitled to a deduction on his gambling losses? Have we really scraped the bottom of the barrel to get the last drop out of the taxpayers? Thank you, Madam Deputy Speaker. [Time expired.]
I would like to greet the hon Madam Deputy Speaker, hon members in this august House, the few guests in the gallery and the executives. Sanibonani. [I greet you all.]
Steadily, as the dark night of the white minority political domination recedes into the distant past, our vision becomes more enhanced as we behold the shape, form and content of the legacy bequeathed us by that ignoble system. The ANC is proud of the past 16 years of democracy and service delivery, and confident of our future, for the seed of the future is in the present and today is but tomorrow in its embryonic form.
Equality and human dignity are the most fundamental yet most fragile of our constitutional values. Equality is so important in the ANC's context, not because it is a nice-to-have, but because it is the antithesis of our treacherous past. The ANC believes that equality should therefore be an equality that seeks to heal the divisions of the past. It is true to say that equality is the equal treatment of equals; the corollary being that equality is the unequal treatment of unequals.
The two-tier health care system that exists in our country perpetuates health care inequalities. The private sector uses 60% of our financial and medical personnel resources but provides only 14% of our population with health services. Our public facilities shoulder an overwhelming burden while they are underfunded. The ANC strongly believes that this contradiction greatly contributes to the inequality of access, because access depends on affordability. If you do not have a medical aid or you're not sitting at the right salary notch, you cannot afford quality health care.
The ANC assures the people of this country that while it leads and lives, every life matters, regardless of race, sex, colour or creed. All people should enjoy quality health care. In 2002, in Stellenbosch, the ANC stated that:
With regard to health care, we should act to strengthen primary health care, especially in rural areas.
As a result of this commitment by the ANC, the policy was formed, and that policy was one of a community-based service that ensured that every individual, even in rural areas, received a proper health care service.
In the 2011-12 Budget, R1,4 billion was allocated for improving district- based maternal and child health services. An amount of R2,9 billion was allocated to improve public health facilities. Therefore, it is surprising and very disappointing to know that there are those within the House who still strongly believe that the ANC is dismally failing to deliver on its promises. The allocation of R1,2 billion over a three-year period is one of a number of initiatives that will lay the foundation for the National Health Insurance, NHI.
The ANC-led government introduced the new family health care teams, currently known as community health care workers. These workers will understand the disease profile of each district in the country for they will go door to door, seeking information from each and every family. This will create uniformity for family-based health care. I therefore plead with the hon Dion George to ensure that when he does his research on health care provided by the ANC, he should do so accurately and efficiently.
The ANC therefore requests the national Treasury, in partnership with the Department of Health and the Department of Performance Monitoring and Evaluation, to design an effective monitoring tool to ensure that an efficient oversight function is rendered by all finance committees. The ANC believes that this approach to primary health care, if implemented well, is the most cost-effective, makes better use of limited human resources and will also create new jobs.
The time has come and the time is now to build the foundation of the NHI, whether the DA approves or not. [Applause.] The ANC calls on all sectors of society to support this initiative to extend health services to all our people. We call on public health centres to strengthen their health services. We also call ... [Interjections.]
Order, hon members.
... on nurses and doctors in these centres to treat everyone equally, irrespective of social or economic standing. We make a special plea to the private sector, unlike the DA, which does not see itself as part and parcel of, or partaking in, our efforts to ensure that our services are good. We therefore make this plea to the private sector to ensure that they maintain and provide human dignity, a dignity that is inherent in all of us.
The ANC again calls on the private sector to partner with the ANC-led government to build a healthy society. [Interjections.] When people don't have party headquarters, they tend to scream about things they know nothing about. They even quote the ANC Polokwane resolutions because, firstly, they fail to conduct their own conferences; secondly, they don't know the definition of a resolution; and lastly, they don't know what needs to be done at the conference except discussing the ANC. That is why they have a lot of information. [Applause.]
To build a healthy society, the ANC believes that health is not and can never be a commodity - and this if for your attention, DA - for commercialisation. Together, and this includes the DA, we can help our people to change their habits and live long. The ANC supports the 2011-12 fiscal framework and revenue proposals. It would be much better for the poor if in this august House we were level-headed and able to understand the policies of the ANC.
But your time is up, unfortunately.
I thank you. [Applause.]
Deputy Speaker, I will try to be level-headed. The ID recognises the enormous economic challenges facing us as a country and the constraints that the Minister of Finance has to contend with in drawing up this fiscal framework. Coupled with the ever-persistent challenges of poverty, unemployment and inequality is the added problem of a global economy that is struggling to recover from a major recession. In addition, over the past decade we as a country have underinvested in our built infrastructure to the tune of R1,5 trillion, which we now urgently have to find ways of funding.
All of these factors require a massive stimulatory response from the Treasury, which will necessarily involve us running a large budget deficit. As the ID, we can therefore accept the need for a large deficit at this time, but only if the money is spent on investments that will yield a far higher growth rate in the future.
This is where we differ from the finance Minister, for we believe that some of the budget allocations will not yield the high growth rates or job creation levels that we require. In particular, we have a problem with the over R1 billion that is being allocated to the National Youth Development Agency, NYDA, over the next three years. We believe the only employment they will activate is for their elite in the ANC Youth League.
Finally, the ID is also opposed to the increase in fuel levies, as we believe it will have a massive inflationary effect on our economy, particularly given the fact that global food and oil prices look set to continue rising to crippling levels. To our mind, oil seems to operate as the trip switch for the global economy and we have to be alive to the threat of a U$150 price level plunging the world into a double-dip recession.
The only way around this is to ultimately wean our economy off hydrocarbons, but we cannot do that with the paltry amount of resources that have been allocated in this Budget to the green economy. It is time for our resources to follow the rhetoric in this regard. I thank you. [Applause.]
Madam Deputy Speaker, hon members, we are always cognisant of the fact that budgeting, and the underlying fiscal framework that drives it, is a balancing act. The infinite needs and wants of a country must be met within the limitations of a limited or finite budget. These constraints make the process of budgeting challenging, particularly in light of our economy's weak recovery from the effects of the past financial crisis.
Therefore, we are duty bound to think carefully about what should constitute our nation's priority list. The sharp increase in service delivery protests over the past few years could be attributed to nothing other than the failure to translate these budget allocations into meaningful service delivery to our people. This puts further emphasis on the importance of aligning the fiscal framework with the needs of the people.
The UDM welcomes the Minister of Finance's announcement about government's intention to make timely interventions in the economy, by making use of a countercyclical fiscal policy stance to manage fluctuations in the business cycles. The UDM has always advocated for government to do more and to help stimulate economic activity.
The UDM also welcomes government's renewed focus on job creation. However, it is regrettable that job creation is only receiving due attention now, 17 years after the dawn of our democratic dispensation.
It is bothersome to see that 15 million people depend on the social security safety net for their living. This points to the glaring failure of government's employment creation strategies. We must build a developmental state rather than an unsustainable welfare state.
The UDM is concerned that motor vehicle owners, still reeling from the pressure of high crude oil prices, face an increase of 10 cents in the fuel levy, coupled with an increase of 8 cents in the Road Accident Fund levy by 6 April 2011. This taxation increases inflation and exacerbates the disproportionately high fuel price in South Africa. Often, the justification of ... The UDM supports this fiscal framework. Thank you. [Time expired.]
Sekela-Somlomo, ngenxa yokunqongophala kwexesha, ndivumele ukuba ndithi kuzo zonke izinxiba-mxhaka ezikhoyo apha, ngqanga nentsiba zayo! [Deputy Speaker, because of time constraints, allow me just to say I greet all the distinguished guests!]
Hon Speaker, Deputy Speaker, that this fiscal policy framework prioritises education with a 21% noninterest allocation testifies to our commitment to sustaining long-term growth, increasing employment and reducing inequality. Our overarching vision for education remains "people's education for people's power".
We stand by what we committed ourselves to in the RDP document in 1994, namely to develop an integrated system of education and training that provides equal opportunities to all, irrespective of race, colour, sex, class, language, age, religion and geographic location. That system of education must address the development of knowledge and skills that can be used to produce high-quality goods and services in a way that enables us to develop our cultures, society and economy.
We are still faced with the challenges of backlogs in school infrastructure, low levels of achievement in literacy, mathematics and science, an insufficient number of qualified teachers, and low enrolment and high failure rates in universities and further education and training colleges.
We welcome the R8,2 billion to address backlogs in school infrastructure through the school infrastructure backlog indirect grant. This amount was set aside to fund the replacement of the 3 627 identified informal and unsafe school structures, and to contribute to the provision of water, sanitation and electricity at all schools.
At our 52nd national conference, we committed ourselves to building new schools to replace mud schools and to ensuring that all schools have access to basic infrastructure such as water and electricity by 2014. It is our intention that no child should have to learn in a mud school or under a tree. The right to education does not only include the right to be taught, but the right to be taught under conditions conducive to effective learning. The unitary nature of the South African state should evince itself in the same education experience for all learners irrespective of the geographic location of their schools.
Hon Speaker, you shall recall that in his state of the nation address, His Excellency the President said:
The focus in basic education this year is "triple T": teachers, textbooks and time. We will continue investing in teacher training, especially in mathematics and science.
The R2 billion allocation for Funza Lushaka bursaries will therefore ensure skills upgrading to equip teachers to be more effective and efficient in performing their duties. This amount is meant to increase the number of prospective teachers receiving bursaries in subjects such as mathematics and science.
Society at large was concerned about declining matriculation results. However, the class of 2010, with its 67,8% pass rate, has been a harbinger of quality success. At 34%, Gauteng registered the highest number of learners who achieved admission to a bachelor's degree, which is a four percent increase from 2008. However, the Western Cape experienced a decline of 2% from 2008 in this category.
What is of concern, though, is a fallacy that a minority of commentators have sought to present to the nation as fact. We want to indicate to all South Africans, and to the class of 2010 in particular, that their achievement is qualitative and of a regular standard. The "slippery slope" argument advanced by certain self-appointed leaders of thought is based on the following: More means less or more means worse. This argument assumes that quality cannot rise with quantity. The dominant view is that quality demonstrates itself in less output and therefore, according to this way of thinking, there is an inherent inverse proportionality between pass rate and quality outcomes.
The January 8 Statement of the ANC national executive committee states:
In line with the vision of the Freedom Charter, and the resolution of our 52nd national conference, we are committed to progressively introducing free education up to undergraduate level.
With effect from this year, 2011, students who are registered at a public university in their final year of study and who qualify for funding from the National Student Financial Aid Scheme will receive a loan equivalent to the full cost of study, which is the full fee and necessary living expenses.
If these students graduate at the end of the year, the loan for the final year will be converted to a full bursary.
To strengthen skills development, R1,4 billion over the Medium-Term Expenditure Framework, MTEF, period will be added to the FET college grant. This is set to increase FET enrolment from about 198 000 in 2010 to 315 000 in 2011. We have to keep expanding the FET sector and make it more visible as it also has a good number of short study programmes and offers opportunities for the 200 000 national curriculum holders who do not have a bachelor's degree pass.
We seek to build a developmental state, premised on people-centred and people-orientated change, and sustained development based on a high growth rate, the restructuring of the economy and socioeconomic inclusion. That is why we deliberately made the choice to follow a New Growth Path that is driven by job creation and skills development.
In this regard, we treat skills development not only as the domain of tertiary education institutions, but as a mandate also of workplaces. Our advantage is that we are a population numerically dominated by young people. However, the irony is that the majority of these energetic young people are unemployed. In fact, more than 28 million people in the age group 18 to 24 are not employed, not in education, and not severely disabled.
We will therefore monitor employers in the implementation of their undertaking to train artisans and technicians in the workplace. In this regard, we also support the restructuring of the sector education and training authority, Seta, landscape. We agreed that there should be a closer relationship between FET colleges, universities of technology and workplaces.
We need to ensure improved access to quality learning programmes, the increased relevance of skills development interventions and the building of strong partnerships between stakeholders and social partners. Our investment in education and training and skills development should be focused on achieving a skilled and capable workforce to support an inclusive economic growth path and social development.
We need to integrate workplace training with theoretical learning, improve skill levels and address the poor work readiness of many young people leaving formal education institutions and entering the labour market for the very first time. We also have to address the continuing skills shortage in the artisanal, technical and professional fields as well as ensure that rural development receives the necessary attention and priority.
As the ANC we therefore welcome the R300 million initial allocation for establishing new universities in Mpumalanga and the Northern Cape. Building these universities will not only ensure that the people of those provinces do not travel to other provinces to acquire a university education, but it also fits into the greater strategy of our New Growth Path. Our role as a country is gaining momentum globally and within the African continent in particular. As a member of the Brics grouping of Brazil, Russia, India and China, and of SADC, we are charged with protecting not only our national interest but that of Africa in general. We are determined to build a knowledge-based economy - our country has to produce intellectuals and skills not only for itself but also for Africa. We have in the past been on the cutting edge of scientific innovations. We built the wonderful Sumbandila satellite centre. We have manufactured our first electric car and we continue to embark on ground-breaking research on health-related and socioeconomic matters. We will export not only skills but knowledge too.
In conclusion, we are a young democracy emerging from the ashes of a brutalising past, but we are gaining strength each day. As each day dawns, we advance to a new order in which race, sex, religion, culture or creed shall not determine a newborn child's destiny and, of course, the background must not be allowed to determine anyone's destiny. As we wait for that day of economic emancipation that will give meaning to our current political freedom, we work to build a united and cohesive society.
We agree with the Minister of Finance that giving every South African the dignity of a job, the security of an income, the prospect of training, the support to launch new businesses, the confidence to be an entrepreneur and the sheer passion and optimism to break the shackles of unemployment is the best legacy this generation can leave and we want to commend you, treasurer of our country. We are very proud of you. The kind of leadership that you provide in this department is one that the ANC will remain proud of. I thank you.
Die VF Plus beskou die fiskale raamwerk en die sentiment daaragter om werkloosheid aan te pak en gevolglik armoede terug te stoot, as 'n stap in die regte rigting. Daar is egter 'n paar tendense wat kommerwekkend is en ons versoek dat die Minister daaraan aandag sal gee.
Eerstens raak die belastingstelsel vir die individu te kompleks en swaar om te dra. Daar is menige nuwe belastings en heffings wat die finansile oorlewing van die belastingbetaler ondraaglik maak, soos die nuwe grondbelasting. Verskeie sluipbelastings, bekend as "stealth taxes", bestaan, waarvan baie belastingbetalers nie bewus is nie, soos die belastings op brandstof. Belastings moet eerder eenvoudig wees, sodat die belastingbetaler kan verstaan wat hy of sy moet betaal en waarvoor dit aangewend gaan word.
Tweedens, die skakel tussen belastinginkomste en die allokasie van daardie fondse tot uitgawe-items is nie duidelik nie. 'n Voorbeeld is die inkomste gegenereer deur die fiskus deur middel van die belasting op brandstof en fooie vir voertuiglisensies. Navorsing wys dat hoogstens 10% van die inkomste terug gaan na die Suid-Afrikaanse Nasionale Padagentskap Bpk, SANPAB, vir opgradering en instandhouding van paaie. Die vraag is: Waarheen gaan die res van die geld? (Translation of Afrikaans paragraphs follows.)
[Adv A D ALBERTS: The FF Plus views the fiscal framework and the sentiment behind it, to address unemployment and in consequence ward off poverty, as a step in the right direction. There are, however, several trends that are worrying and we would like to ask that the Minister address this.
Firstly, the system of taxation is becoming too complicated and a heavy burden for the individual. There are several new taxes and levies that are making the financial survival of the taxpayer unbearable, such as the new land tax. Various other taxes, known as stealth taxes, exist, of which many taxpayers are not aware, such as the levies on fuel. Taxes should rather be uncomplicated, in order for the taxpayer to have an understanding of what he or she has to pay and for what it is going to be used.
Secondly, the connection between tax revenues and the allocation of those funds to expenditure items is not clear. An example of this is the revenue generated by the fiscus by means of the levy on fuel and fees for motor vehicle licences. Research indicates that not more than 10% of the revenue goes back to the South African National Road Agency Ltd, Sanral, for the upgrading and maintenance of roads. The question is: Where is the rest of the money going?] Thirdly, in terms of section 214(1)(a), the Constitution requires that an Act of Parliament must provide for an equitable division of revenue. It is our view that the allocation of R1,2 billion to an entity like the National Youth Development Agency, NYDA, is not equitable, especially in light of the fact that Treasury does not know how the NYDA intends to fulfil its mandate. We therefore request the Minister to reallocate R20 billion from NYDA to the South African National Roads Agency Ltd, Sanral, to pay for the Gauteng Freeway Improvement Project as the road users are clearly not able to foot that bill via unreasonable toll fees. Furthermore, we request that the Minister impose conditions in respect of the NYDA appropriations in terms of section 4(1)(a) of the Appropriation Bill in order to promote and enforce transparency and effective management by the agency.
Lastly, internal efficiencies that can save money must be intensified. The Auditor-General's audit outcomes report for 2009-2010 indicates irregular expenditure for state departments of more than R2 billion and for public entities of more than R1,5 billion. This situation is unacceptable in light of the fact that the taxpayer cannot carry the current burden anymore.
Minister, the average taxpayer is on his last legs. Use their money prudently. I thank you, Deputy Speaker.
Deputy Speaker, hon Minister, last year all parties in the Standing Committee on Finance, including the ACDP, were unanimous in expressing our concerns in the report about the budget deficit and increasing public debt levels.
Notwithstanding these concerns, we note that the budget deficit is 0,7% higher than forecast in October, and that this trend continues over the medium term. While we have been given the assurance that the budget deficit will decrease to between 3% and 4% by 2013, and that this is acceptable when compared to developed countries, in our view, the deficit is high when compared to similar emerging economies.
The Standing Committee on Finance has again this year expressed its concerns in this report regarding the budget deficit, projected state debt cost and spiralling debt service costs. Debt service costs will amount to R77 billion next year, rising to R104 billion in 2013-14. Now remember, a whole budget in 1994 was R112 billion and that is close to what we will be paying as debt service costs by 2013-14. Obviously, the size of the budget deficit at present results in debt service costs rising faster than any other category of spending over the medium term.
Furthermore, these high deficits lead to rising debt service costs that compete with productive expenditure. The Minister has given us the assurance that steps will be taken to ensure that the growing debt burden does not crowd out spending on development priorities, and that government will stabilise growth in interest costs through a careful, controlled reduction in the deficit, taking into account the health of the economy. There is, however, no guarantee of this, given that the global recovery is risky and fragile and that South Africa's economic growth is inextricably intertwined with the global economy.
Let's look at some of the factors that influence global economic growth figures. These are high personal debt levels, high government debt levels, the slow-down in the Chinese economy, which has driven global economic recovery, and the instability in northern Africa and the Middle East, which is threatening oil supplies and boosting prices.
In the event of a second leg to the global recession, governments would be hard-pressed to stimulate their economies further, given those massive fiscal stimuli during the 2007-08 recession. Such a second leg is not an unlikely event, with the Governor of the Bank of England, Mervyn King, warning last Friday that Britain could face another financial crisis if the banking sector is not reformed.
The budget deficit would be more palatable if government was spending more on the productive supply side of the economy as opposed to the demand side. However, more and more funds are being allocated to current costs such as the public sector salary bill that has doubled over the past five years.
Against this background, the ACDP welcomes the Minister's announcement that the fiscal guidelines will be prepared along certain principles. This should be in addition to the fiscal pact, as proposed last year by the Financial and Fiscal Commission, to clearly establish the level of debt and what the debt can or cannot finance; in other words to ensure that we apply the golden rule that government only borrows to invest in capital and not to fund current consumption spending, and possibly moving towards a current budget surplus.
The ACDP will, however, remain positive and trust that growth forecasts will be higher than estimated, leading to increased revenues and that we will speedily reduce public debt and debt service costs, leading to a better future for all. The ACDP will support the fiscal framework and revenue proposals, subject to the above reservations. Thank you.
Thank you very much, House Chairperson, all protocol observed. Following the Minister's 2011 tax proposal submission to Parliament, which was included in the overall Budget, we have had the benefit of extensive inputs from various stakeholders. As a public representative, my speech will therefore highlight some of the key concerns that were expressed to the parliamentary Standing Committee on Finance and express our beloved organisation, the ANC's proposition on the tax proposals as tabled to this House. In general the inputs from stakeholders were positive and the universal sentiment was that the proposals were balanced.
From the ANC's perspective, tax is a foundational building block for a developmental state and an expression of our collective value system of "botho": we must take care of each other. We believe that tax is the most critical source of revenue for a developmental state to be effective in meeting social challenges and directing economic growth.
The magnitude of the challenges that have been outlined by the President in his state of the nation address and the Minister's Budget Speech, such as high levels of unemployment, extreme poverty and inequalities, will require immediate and massive state interventions in this financial year and years to come. Of course, all these interventions will come with financial implications.
In its term of office, our government has committed itself to the creation of jobs to reduce unemployment; promoting the principles of decent work so that the quality of life for workers can be improved; promoting rural development and sustainable livelihoods through measures that will empower communities with land and other appropriate resources; improving the quality of our education system and providing health for all citizens irrespective of their economic status; and fighting crime and corruption.
Our perspective is that the current tax proposals have to be assessed against the extent to which they will be instrumental in addressing these challenges and are consistent with policies that are geared towards building the capacity of the state to achieve its developmental goals. In addition, the proposals have to be assessed against the extent to which they contribute towards the achievement of the New Growth Path, our government's economic strategy earmarked to reduce the unfortunate inequalities in our society.
The following tax proposals, inter alia, have been tabled and deliberated upon through the Standing Committee on Finance: personal tax relief of R8,1 billion; the introduction of a third rebate for individuals 75 years and older - I'm wondering about the fact that the current and ever- decreasing life expectancy rate is lower than this threshold, and it's my hope and prayer that most of us will live to realise this benefit - and the introduction of dividend tax with effect from 1 April 2012, which, of course, replaces the secondary tax on companies.
As I indicated in my introduction, in the hearings that we held there was general consensus that these tax proposals are broadly balanced and acceptable, subject to the submission of details to the ultimate Budget. A number of concerns have been raised regarding the following issues: VAT within a progressive tax system, and a call for its review so that it does not inadvertently harm the poor; carbon tax and its implications for poor households; different views on the appropriateness and the capacity of government to enforce youth wage subsidies, hence the highly publicised concern of it creating a dual labour market system.
From the ANC's perspective, we welcome the proposals and support them, in particular the following: the proposals on the adjustment of the turnover tax for microbusinesses, the review of their rate structure and ensuring that small businesses are able to register simultaneously for both VAT and turnover tax; and an extension of the learnership tax incentive by a further five years when it expires in September this year. I must indicate that most stakeholders stressed the need to consider turning this incentive into a long-term intervention. It is our collective wish that the current review on the matter will yield the deserved result.
These proposals are consistent with the commitment to an integrated approach to policy, as articulated in the new economic growth path document which the Treasury, working with the DTI and Department of Economic Development, EDD, will explore for ways to disincentivise high personal debt, especially for luxury items and high-end products. The Treasury and EDD will also consider how to incentivise company savings, which we define as resource invested, not paid out as dividends, mostly by enhancing investment opportunities. If we look at these proposals against this New Growth Path approach, we must also place our tax proposals around those areas that would provide incentives around savings, stimulation of investments in labour-absorbing industries, skills and youth development.
In conclusion, having used the New Growth Path as a yardstick for assessing the tax proposals, I must say that they are indeed consistent. In particular, they will contribute towards relief for individuals who are hard-pressed economically, especially as a result of rising food inflation. They will assist in encouraging the culture of saving in society, notwithstanding the limitations, and promoting investment in high labour- absorbing areas, youth and skills development through tax incentive instruments. They bode well for our economy, addressing the critical priority of job creation and putting our country on the path to sustainable, inclusive economic growth.
Ka boripana, Tekanyetsokabo e, e maleba. E sekametse thata mo maitlhomong a rona jaaka mokgatlho wa batho o o rotloetsang botho le go tlhokomela bao ba ba se nang bokgoni. Kwa ntle ga poifo le pelaelo, rona re le ANC, mokgatlho wa go ratwa, re tshegatsa Tekanyetsokabo e. (Translation of Setswana paragraph follows.)
[In short, this Budget is appropriate as it focuses on our objectives. As the party for the people, we encourage humanity and caring for the people without skills. Without any fear and hesitation, we as the ANC, the adored party, support this Budget.]
The fiscal framework shows that the ANC's stance is one of caring for the people. It is morally correct. This is more of an expansionary Budget, dearly needed to alleviate our current developmental challenges, and is therefore wholeheartedly supported by our beloved organisation. We couldn't agree more with the call that this Budget be followed through by an alignment of all state structures and subsidiaries with the same common development agenda.
What we are emphasising here is "follow through". We need to ensure that as various subsidiaries and structures of government we "follow through" so that we share the same common developmental agenda. Following through is always important. Even golfers know that if you don't follow through on a shot, you will not have direction and you won't realise the distance you had in mind. Ultimately, you will miss the target. That is why it is important that we must "follow through" and ensure that all structures and subsidiaries of government have the same common developmental agenda. Thank you. [Applause.]
Hon Chairperson of the House, for years now there has been an outcry from all corners of our society to have or to explore a new economic growth path that will ensure employment, income distribution, income security and developmental trade, ensuring social and environmental sustainability. The message in the state of the nation address has favourably included the concept of inclusive growth, but the Budget itself is not coherent with this message.
The UCDP has no confidence that the projected growth of 3,4% will create the much-needed jobs because we would need at least 4% growth annually in order to meet the employment demands. Nevertheless, a pinch of optimism is injected by the R94,1 billion spend on job creation over the next three years.
It is with disappointment that we note that local government gets a meagre 9% in equitable public resources, compared to national government's 47% and provincial government's 46%. This is a slap in the face as we believe that local government has been underperforming for many years. They are central to service delivery, but continue to get meagre amounts.
We are puzzled by the allocation on rural development and think that the budget team has taken for granted the vast population of this country living in rural areas and lost sight of the fact that, in the long term, rural development translates to food security.
It is incomprehensible that recipients of foster care grants will be receiving 4,4%, a percentage that is less than that of recipients of all the other grants at 5,5%. We wonder if this stems from the ill-informed misconception that foster care grant recipients are only making money out of it.
The commitment to increase health expenditure comes as no surprise. However, we welcome it as the country really needs to boost and strengthen the public health sector. However, we remain cautious about money being thrown at problems that have nothing to do with money in the first place. The public health problems cannot only be solved by an increase in spending. Access to health for every citizen will only be achieved if health needs are prioritised and aligned to proper budget planning.
We appreciate the acknowledgement that substantial reforms are needed in order to align public and private health sectors, but clarity on what those reforms shall be is still lacking substantially.
The implementation of the money Bills amendment Act has become a priority and is now urgent. It is Parliament's constitutional responsibility to ensure that the manner in which resources are appropriated promotes, protects and fulfils the rights of our people. Unless the money Bills amendment Act is implemented effectively, there shall remain incoherency in how resources are raised and appropriated. The UCDP supports the fiscal framework and revenue proposals. Thank you. [Applause.]
Hon House Chairperson, hon members, comrades and distinguished guests, in debating the 2011 fiscal framework and revenue proposals, it is important to understand how the content of these proposals was arrived at and the source of the mandate that guides any fiscal and monetary debate in this House.
The 52nd national conference of the ANC reasserted that economic transformation should be located within the context of an effective redistribution strategy. The conference resolved that this redistribution strategy must be the foundation of a new and equitable growth path. Therefore, the conference put the question of redistribution in the broader sense, not in a narrow sense of income inequality, at the centre of economic transformation.
In his 2010 political report to the ANC national general council, President Jacob Zuma said, and I quote:
The New Growth Path must start with the recognition that on the one hand, we have had economic growth for a sustained period since the advent of democracy, with particularly high growth since the early 2000s and net job creation. On the other hand, poverty remains high, inequalities have remained the same or even grown worse, while some of the jobs created often brought low wages and poor conditions.
It is with this in mind that the ANC, over a long process of consultation and discussion, put together a New Growth Path Policy Framework. The New Growth Path Policy Framework articulates that, and I quote:
There is growing consensus that creating decent work, reducing inequality and defeating poverty can only happen through a new growth path founded on a restructuring of the South African economy to improve its performance in terms of labour absorption as well as the composition and rate of growth.
It is precisely this restructuring of South Africa's economy that the 2011 fiscal framework and revenue proposals seek to address. The New Growth Path correctly identifies the core challenges that the South African economy must address: mass joblessness, poverty and inequality. The 10 job drivers identified in the New Growth Path, NGP, are sectors with the highest potential to absorb the unemployed in numbers. We have the understanding that every department in government must contribute to employment creation in concrete numbers. The relevant departments are equally expected to engage the sectors in their respective areas of responsibility to commit themselves to this national programme.
The announcement of this programme triggered a new debate on whether those jobs would be decent or not. The debate has since taken centre stage, elevating decent work to almost a condition, rather than a description of the quality of work. We need to ensure that the R9 billion for the job fund to co-finance the employment projects by public and private sectors over the next three years is indeed spent successfully.
The R5 billion that has been allocated for the youth employment subsidy, which the Minister announced in his Budget Speech, needs to be taken forward. This is not a youth wage subsidy, which the DA is opportunistically trying to claim as theirs. Rather, it is an incentive for employers to develop the skills and employability of young people.
In the 2011 Budget, R809 billion has been put aside as investment in infrastructure over the next three years. In addition, investment incentives for manufacturing, with a special focus on job creation, have been introduced. The New Growth Path correctly places infrastructure as the prime job driver. Public investment can create 250 000 jobs per year in energy, transport, water, communications infrastructure and housing through to 2015.
The jobs that have been identified are in four activities: construction of new infrastructure, operation of the new facilities, expanded maintenance, and the manufacture of components for the infrastructure programme. In addition to these four activities, the impact of the massive infrastructure programme on job creation across the economy will be substantial. Further jobs worth R73 billion shall be created in the Expanded Public Works Programme over the next three years, including community-based projects, environmental and social programmes, and maintenance of roads and infrastructure.
The second integrated resource plan for electricity foresees a near doubling of electricity capacity by 2030, with 33% of the new generation coming from renewable sources and 25% from nuclear power.
Greater emphasis will also be placed on the expansion of rail transport with more railway tracks and rolling stock, given the cost and logistics advantages for both commuters and freight transport.
In a water-constrained country, the investment in water infrastructure is an essential step in the strategy to expand agriculture and agro- processing.
This budget framework has to address the objective reality that South Africa is a developmental state. At its 2010 national general council, the ANC endorsed its strategy and tactics perspective that a developmental state is one that is able to deliver effective basic services and has the capacity to direct national development. Thus it should have the following attributes: a commitment to people-centred and people-driven change; the capacity to lead in defining a common national agenda; and the organisational and technical capacity to translate broad objectives into programmes and projects. While determining a clear and consistent path forward, a developmental state must also seek to build consensus on a democratic basis that builds national unity. While acting effectively to promote growth, efficiency and productivity, it must be equally effective in addressing the social conditions of the masses of our people and realising economic progress for the poor.
The developmental state should maintain its strategic role in shaping the key sectors of our economy, including the mineral and energy complex and the national transport and logistics system. While the forms of state interventions would differ, the overriding objective would be to intervene strategically in these sectors to drive the growth, development and transformation of the structure of our economy.
The development finance institutions and the state-owned enterprises, SOEs, must be positioned in such a way that they contribute to employment creation and the revitalisation of training facilities. Our New Growth Path requires the integration, harmonisation and alignment of planning and implementation across all three spheres of government with the development finance institutions and state-owned enterprises, including through the development of coherent inter sectoral plans at a national level and the alignment of local implementation, in terms of the integrated development plans, IDPs, of metros, districts and local municipalities. To this end, the strengthening of the role of state-owned enterprises, and ensuring that SOEs' agencies and utilities respond to a clearly defined public mandate and act in terms of our overarching industrial policy and economic transformation objections, is important. The creation of decent work opportunities must be a primary focus. This central objective should be reflected in the terms of reference of development finance institutions, the terms of public procurement and public incentives, the sequencing of industrial and trade policy reforms and our sustainable macroeconomic policy.
In conclusion, the ANC welcomes the 2011 Budget, which proposes a range of measures to address current socioeconomic challenges facing the country, especially job creation. This Budget seeks to ensure sufficient funding for effective government delivery in key priority areas identified in the ANC 2009 election manifesto and in this year's state of the nation address. The ANC supports the fiscal framework and revenue proposals. I thank you. [Applause.]
Hon Chairperson and hon members, the fiscal framework is the foundation of our Budget and the good management of our government finances. What the Standing Committee on Finance and Standing Committee on Appropriations, led by Mr Mufamadi and Mr Sogoni, have begun to do is to undertake a listening exercise in respect of various stakeholders and the public, but also to apply their own minds to the various questions which arise from the fiscal framework. Is the country moving on a sound fiscal path? Are we overextending ourselves? Is the deficit beyond our means? Are the debt service costs of an extreme nature? Are we moving in a direction where our expenditure is not going in the right kinds of directions?
These are all vital questions in a democracy. They are questions which we must collectively answer, as many members have done this afternoon, in order to ensure that we continue to maintain the kind of fiscal path that the ANC government has been maintaining since 1994. I want to express our appreciation to the two committees and their leaders for the excellent work that they have done.
Fiscal sustainability is not just about the numbers. It's about more than just the numbers. It's about economic growth and jobs, the institutions that take decisions and regulate public finances, and our ability to provide future generations with growing opportunities. Ultimately, fiscal sustainability is about developing a caring and inclusive country and economy.
The fiscal framework under discussion today, which we were asked to pass today, takes account of all these issues. While government spending may be slowing, this is following a 10-year period in which spending has more than doubled, even after taking into account the impact of higher prices.
This ensures that the progress we have made in ramping up social grants, expenditure on health and education, equipment, remuneration of public servants and infrastructure can be sustained into the future. Our children will not find themselves, unlike the scepticism our colleagues have voiced, in an environment of shrinking public services, but rather expanding and better-quality public services.
This is the strength of our fiscus. To see this point graphically illustrated we only need to read the newspapers from many countries that are being forced to cut back on pension payments, civil servant wages and capital spending.
Government spending is also increasingly focused on the priorities -as we have demonstrated in this Budget - of this government. We have successfully introduced the social grant network, covering all those who are not able to work, are too young to work or should not be working because they are at school. We have boosted the contribution of the public sector to investment in the country and we seek to continue this trend of rising government infrastructure spending.
Importantly, as the committee chairperson Mr Mufamadi pointed out, this Budget and the fiscal framework are a demonstration of the fact that it's the ANC that has led this country beyond the 1994 creation of democracy and that, over a period of 16 or 17 years, we have rebuilt the finances of this country from the miserable state in which they were found in 1994. Today we know that elections are around the corner and that all political parties will seize whatever opportunities they have to score a few points. It's always important to remember where the leadership, both in terms of thought and in terms of practice, came from in this country. The ANC led, as Mr Mufamadi pointed out when he quoted President Nelson Mandela, in terms of the importance of rebuilding the finances of this country and of fiscal prudence. The ANC led once again in terms of budget transparency, which we celebrate as South Africans today. The ANC led by reducing the 9% or more deficit in 1994 to a surplus slightly before the recession gets us. However many rounds we want to count by whichever political party, it's the ANC government that has led with the idea that once hit by the recession, we cannot waste money, we need to get value for money and we need to engage in what we today call the savings exercise within government itself. [Applause.]
It is the ANC that had the courage to say to itself that if we are serious about our priorities, then let's reprioritise. If we are serious about our priorities, let's cut our budgets so that we can allocate money to those areas that require that money. Cutting 0,3% of the Budget from all my colleagues' individual budgets was a demonstration by this Cabinet that it has the will and indeed the ability to make the tough choices that are required to manage the fiscus of this country in a sound way.
It's the ANC which is asked, through its parliamentary committee of the Treasury, "Tell us how you will sustain this fiscal path", "Tell us what the guidelines are that you will offer" and "Tell us what framework you will offer so that we as South Africans can actually be assured that we are moving in the right direction".
Of course we've put forward three principles: countercyclicality, long-term debt sustainability and intergenerational equity. It is true that in the short term some of the money that we are borrowing is being spent on consumption. That is not our own fault; it's because of the great recession. We have had to take the measures that we have taken to sustain our government programmes, not impose any hardships on our people, as many countries around the world are doing, and still maintain a sound fiscal path and fiscal consolidation processes as well.
I think all of those are important factors to remember, and we should remind ourselves once again that the purpose of the fiscal framework, and I will keep repeating this, is to ensure that those sound fiscal principles are applied on a regular basis and for a sustained period. Secondly, the framework should ensure that we are able to sustain the promises and the delivery commitments that we have made to our people and that we will continue to reprioritise, within government itself and in all of its entities, to ensure that we get the right value for money.
We indeed want to invest in growth, as many hon members have in fact pointed out, and we want to ensure that we work our way out of the great recession. Remember, we didn't want the 7,3% deficit in South Africa. That was forced upon us by factors that are extraneous to us. What we are now doing is working our way out of it. Yes, we are some 0,5% or 0,7% out over the next three years in terms of what we thought the deficit would be. That is not because of irresponsible behaviour, but because revenue is not coming through as we predicted - although we predict that revenue will improve as we go forward.
There is interesting and good news today - a lot of us seem to be focusing on the bad news - that business confidence in South Africa, from the last quarter to the first quarter of this year, increased from 44 to 55. This is an independent study, which again shows that confidence in our economy is growing, investment in our economy will grow and the chances of the revenue picture improving are even better. [Applause.]
Let's turn to some of the contributions that our colleagues from various parties have made. Hon George has several concerns, but he shouldn't worry. The Budget and the fiscal processes are in very sound hands. They are in the ANC's hands. [Applause.]
I really do think, hon George, that we need a constructive debate between the official opposition and government about what a real alternate Budget would look like. Many of your ideas are copy-cat ideas. On the one hand you say, "We have a solution to poverty", then you go on to mention things which we know very well have no simple solutions. We need bold ideas and they take time. We have been telling you that for many years.
You say you want to have a countercyclical approach to fiscal policy, but at the same time you say we must stimulate the economy more and allow the deficit to grow. I think we have a much more credible fiscal path, both in terms of the financial markets and others, than the DA will be able to provide in terms of its so-called alternative area.
You focused on the role of the private sector and export promotion. If I can give a minute to Minister Rob Davies, I'm sure he will tell you what he is doing. You are saying, "Decrease tax on small enterprises". We've had any number of proposals over the years. That alone is not the solution. Decreasing tax is a poor substitute for increasing the number of small enterprises we have in our country. That is the real challenge actually facing us.
You talked about the Competition Commission. Again, if I give a minute to Minister Patel, I'm sure he can tell you a thing or two about the Competition Commission as well. You want to tell us about how every rand counts, but we have demonstrated for the past two years how it does count and how billions of rands have been saved, reprioritised and reallocated by the ANC government, and not by the DA. [Applause.] So, we've got to remind the DA of the ANC slogan that it does in fact lead, not only in practical terms, but in conceptual terms as well.
Several hon members have raised concerns about the National Youth Development Agency, NYDA. You are the Parliament. Ask the NYDA to present itself, to present its plans and question those plans as part of the established democratic process in South Africa. If you are unhappy, say so. Those who are responsible for the NYDA must account to you, like anybody else would account to you as well. Have the courage to raise those questions. Ask them to account to Parliament and use the parliamentary process to actually do so.
Hon Koornhof, I think you make some very good and important contributions. We share your concerns that no single factor in our balancing approach to the Budget must override any other. We thank you for your support for these fiscal guidelines.
Mr Orioni-Ambrosini, Santa Claus comes only on the 25th of December.
Several hon members have addressed the need to restructure the health system. We have been transparent about this process, saying it is going to cost more. There are funds within our system that we need to use better. We need to improve the quality of public health care. Minister Motsoaledi has been repeating this message many times over. All of these things put together will ultimately give us what we call the national health insurance system. It's not merely a question of where the money comes from. We have laid out the options that the country must have a discussion on.
My time is about to run out. Let me also assure Mr Swart that Mervyn King is really worried about banks, because in Europe the banks haven't come clean yet and they are not as safe as they are in South Africa.
In conclusion, we must say to South Africans that we are following a sound fiscal policy and that we are investing in growth. We will maintain the right balances but all departments, provinces, municipalities and agencies must do their bit to ensure that we can walk the sustainable path. Thank you very much. [Applause.]
Debate concluded.
House Chairperson, I move:
That the House adopts the fiscal framework and revenue proposals, and the report of the Standing Committee on Finance on the fiscal framework.
Motion agreed to (Democratic Alliance and Independent Democrats dissenting). Fiscal framework and revenue proposals, and the report of Standing Committee on Finance accordingly adopted.