Hon Deputy Speaker, the report that I am going to be presenting is almost similar to what I have already said, both in terms of content and subject. Nonetheless, let me just focus, most importantly, on the recommendations of the report.
We have, as a committee, observed the importance of what National Treasury has proposed in terms of a shift in the spending path in the government, particularly with regard to the issue of ensuring that we increase more on the side of capital expenditure rather than the current expenditure, as well as observing the developments in the international and global economy so that we can ascertain projections and stability in that regard.
Having considered the 2010-11 Medium-Term Budget Policy Statement and conducted the hearing on the same subject, the Standing Committee on Finance will then recommend the following: Firstly, National Treasury should present a detailed plan to the committee on how it plans to change spending patterns from current consumption expenditure to productive spending.
Secondly, the National Treasury should present a detailed plan to the committee on the steps to be taken to reduce leakages from the public financial systems.
Thirdly, the National Treasury should also provide the committee with a contingency plan in the event that the outcome of microeconomic variables is not as expected in the revised fiscal framework. The National Treasury, and the Reserve Bank in particular, also should, as another point of importance, ensure that the inflation targeting within the range of three to six percent should be observed within the next financial years.
We as a committee also said that it would be important for National Treasury to take all necessary steps to encourage and ensure that the percentage of the state wage bill is brought back from 40%, in terms not of the gross domestic product, GDP, as reflected in the report, but in terms of the government total expenditure.
Lastly, we as a committee also said that National Treasury should provide the committee with detailed plans on the following areas: Intergenerational Equity Policy; Countercyclical Policy in terms of the Fiscal Policy Framework; and Debt Management Policy. The House is encouraged to accept the 2010-11 Medium-Term Budget Policy Statement. Thank you. [Applause.]
Deputy Speaker, in February this year the DA said that we would not support the fiscal framework and revenue proposals as set out in the national Budget. We do not support the economic policies underlying the numbers, because they do not address the problems of unemployment and poverty that prevent our people from reaching their full potential to become everything that they are capable of being. Our position on fiscal policy is clear. Government must intervene when economic circumstances require its intervention and the intervention must focus on stimulating job-creating economic activity. Our alternative budget applied this principle of countercyclicality and relaxed the deficit to 5,99% of gross domestic product, GDP, that we consider to be nearing the outer limit at this point in our economic development. Our alternative set out increased government spending on the productive side of our economy.
We were hoping for bold action from the national government to demonstrate its political will to tackle the jobs haemorrhage. It could do this by implementing the promised wage subsidy; offering meaningful incentives to entrepreneurs and small and medium businesses, the net job creators in our economy; encouraging domestic savings through improved tax relief on interest and on savings; improving the efficiency of the state-owned enterprises to reduce their drain on the people's money; and crucially, ensuring that confidence in our economy remains intact and is strengthened.
We welcome the Minister's focus on job creation and his sincere determination to attend to the leakage from the public financial system that is nothing other than shameful theft from the most vulnerable members of our society who will never walk along a pathway out of poverty while national government remains disinterested in its construction. The Medium-Term Budget Policy Statement highlights our deteriorating macroeconomic circumstances. Revenue estimates are down on the back of declining corporate activity and the deficit has increased from 5,3% to 5,5% of GDP. The only significant upward trend is in the Public Sector Wage Bill that reflects government's position as the largest so-called job creator in our economy.
The DA sees absolutely no problem in offering appropriate compensation to members of the public service who add value to our people through their service delivery efforts at schools, hospitals, police stations and other delivery sites. However, we are vigorously opposed to the people's money being wasted on grossly overpaid deployed cadres in a bloated bureaucracy that adds no value to the upliftment of our people and only serves the self- interests of the national governing party. Million rand plus salaries for cadres of the National Youth Development Agency, NYDA, cadres is only one example.
Before the Medium-Term Budget Policy Statement was tabled, the DA set out our expectations for government to cut unnecessary expenditure by disbanding pointless state entities, cutting indulgent expenditure on Ministers and officials and improving financial management. The Medium-Term Budget Policy Statement presented an opportunity for government to signal its budget priorities for 2012 on measures to stimulate job creation; future focused investments in education; health; infrastructure and growth enabling projects; support for entrepreneurs and small business; incentives for manufacturing; clarification of the implications of national health insurance; and bold action to eliminate wastage and leakage from the public financial system.
In the debate on Thursday last week, the Minister said that I am in the habit of getting things wrong. I speak on behalf of the DA and we never claimed that R30 billion is stolen from people each year through massive leakage in the public financial system - it was the Special Investigations Unit. We never claimed that fruitless and wasteful expenditure is increasing - it was the Auditor-General. We never claimed that South Africa's recovery from the great recession is markedly slower than in comparable countries - it was the International Monetary Fund, IMF. They presented to the Standing Committee on Finance last week; I was there. They concluded that South Africa's current predicament is partly on account of the severity of exogenous shocks, but that the inefficiency of product and labour markets has likely also exacerbated the impact of these shocks. Simply put, government's economic policy is impeding our growth. The IMF revised their estimate of our GDP growth downward to 3% for this year and 3% for 2012 - both lower than the macroeconomic projections of the National Treasury.
When Parliament enacted the Money Bills Amendment and Related Matters Act in 2009, it made provision for the establishment of a budget office as a resource to committees and Members of Parliament in their process to amend the national and adjustments Budget. No progress has been made on this and, in the meanwhile, our work must go on. The numbers on the fiscal framework reflect government's low growth policy regime, and a budget office would likely confirm this conclusion.
National government's failure to silence what it knows to be a reckless economy-crushing debate on nationalisation and expropriation without compensation; failure to contain the massive leakage from the public financial system; and failure to present a workable plan on how public financial expenditure patterns will be changed from excessive current consumption expenditure to enduring productive spending signals the incoherence and lack of political will in economic policy direction that drives potential investors into the arms of more attractive destinations; erodes the confidence of local participants; and ensures a low growth path that drains the hopes and dreams of our people.
We agree with the Minister that our relatively small open economy is one of the innocent bystanders in a global economic crisis that was not of our making. But we cannot crawl around on our knees to be kicked around by circumstances beyond our control. We must up our game and implement economic policies that work.
The DA is not opposing for the sake of opposition, we are opposing a low growth path to nowhere. Show us the policies, show us the jobs, show us the actual result on the fiscal framework, show us improvement in the lives of the unemployed and people currently trapped in poverty and we will be extremely happy to have been wrong. Thank you very much. [Applause.]
Madam Deputy Speaker, it cannot be easy to be a Minister of Finance in these testing times. In South Africa we are better off than our major trading partners in Europe because of the sound conservative fiscal policies introduced by the former President Mbeki and the hon Trevor Manuel. It created room for the Treasury to adopt a countercyclical stance and to opt for an expansionary fiscal policy when it was necessary.
Unfortunately, during this time we allowed the state wage bill to spiral out of control. Add a few other factors and the perception was created that Treasury's grip on public finance is slipping.
Add to that Moody's wisdom to warn us that we are in for a downgrade mainly because of political arguments and further take cognisance of what Business Day wrote in an editorial, and I quote:
The ruling party and its alliance partners are just not on the same page economically, an ideological division that reaches right to the heart of the Cabinet.
To add to that, government is reluctant to take difficult decisions. Maybe we should pause and rethink. The Moody's announcement is a warning; let's not run away from it but deal with it.
The Minister of Finance and Treasury cannot do their job if the President and the whole of the Cabinet are not supporting him. The perception is that too many Ministers simply do not bother to take care or realise that we need a different stance or don't make it their business to understand how the economy works or they don't tell their departments.
Some of them create a perception that they worry more about business class, motor cars and luxury residences - let alone costly jets. Do they really worry about the trajectory of our rising State Wage Bill or the fact that the deficit should come down? Do they really worry what is going on in Europe, which is still our major trading partner by far?
It's time to be conservative at all levels. President Zuma can set an example by trimming the Cabinet to 24 Ministers and not more than 12 Deputy Ministers. Is it really necessary to have a bigger Cabinet than the United Kingdom, Australia, Norway, Italy, the USA, Japan and Holland?
We do not need 68 Ministers and Deputy Ministers making us the third largest Cabinet in the world. No bronze medal for this achievement. Imagine the signal the President will send to the nation when he is trimming down. It's time to be serious about savings. The fall of the Berlin Wall was unthinkable, a breakup of the eurozone previously unthinkable, but it is now being mentioned. Are we ready for this?
Are we ready for a higher inflation era? Are we ready for a volatile season of the exchange rate posing an upside risk for inflation creating food security problems?
The inability for advanced economies to generate a sustainable higher growth and the fact that a credit crunch is a possibility at a time Europe is heading for another recession, as well as the fiscal tightening in Europe are signs that we, together with them, are in for difficult times.
It's now time to admit any mistakes we have made in the past three years and to restore fiscal discipline at all costs. It is time now to take difficult decisions. It is up to us to prove Moody's wrong. There is no doubt that the Treasury and the Minister are doing their best. If you read the policy statement it is all there. Hon Minister, you must stop being polite, stop talking in coded language and stop the perception that Sars will bail us out next year and that we shall grow more than expected. It is not a hopeless situation, but it is time to show our concern and beat the drum of economic conservatism. Cope supports the statement.
Deputy Speaker, the hon Koornhof is correct. Are we ready? No, we are not. This is the time to be fiscally conservative and perhaps just a little bit pessimistic.
The budget policy statement presented by the Minister vindicates the worst concern expressed by the IFP in the past three years. When we predicted that by 2015 our national debt will rise to R1,5 trillion, the Minister mocked us.
We are now confronted with the clear likelihood that by that time the national debt will rise to R1,6 trillion. When we warned the Minister not to rely on improbable signs of an economic recovery and to rather prepare for a prolonged recession, the Minister mocked us as prophets of doom. We are now exactly where we predicted we would be without having taken protective measures.
The state's finances are precarious. Revenues will continue to decrease and we will need to compete to borrow money in an international market where lenders have forced countries to increase interest rates on their bonds and have many choices. This will increase our cost of borrowing and our inflation, and will decrease the capability of our government to manoeuvre. We need to prepare for this. That is the scenario that the hon Koornhof has painted for us.
In the end we will be forced to do what the IFP suggested doing three years ago. That is what the International Monetary Fund, IMF, is forcing Greece to do and is about to force Italy, Spain and Portugal to do. The Minister has hinted to that and has indicated that we have to walk in that direction but has used euphemisms. This detracts from the clear language necessary to ensure that this message sinks into our national psyche and we make the necessary commitment, at both the political and the economic level.
The Minister spoke about moderating expenses which is a euphemism for cutting expenses. That is part of the austerity package that the IMF is recommending to countries which are now where we are moving towards. In addition to cutting expenses, we need to liquidate the many state assets which are not core to the business of government. We need to reduce the state payroll. We cannot put the country's finances in good order for as long as the finances of the state remain in a shambles.
We cannot continue to base politics on providing financial assistance to sectors of our economy which are not viable in international terms. We cannot continue to expand the welfare state, not because we don't want to, but because we don't have the money for it. We must snap out of the illusion that money is unlimited and that, if today's money is limited, we can make up for that limitation by stealing our children's money through borrowing. The situation in Italy and Greece has proven that this cannot work in the long run.
We need to turn the ship around now. The emphasis placed on job creation is necessary and we fully support it. But it is not the only emphasis which our government should pursue. The other important emphasis, which is much more difficult and much more important, is the emphasis on ensuring that the country makes money and that our GDP grows. Thank you.
Deputy Speaker, the Medium-Term Budget Policy Statement can essentially be seen as a signalling exercise, but unfortunately the signals are not looking good for our country. Today was a dark day for our democracy, and let us just hope that we can avoid the dark clouds that are now hovering over our economy.
The eurozone crisis threatens to plunge the world into a double-dip recession if it is not handled appropriately and decisively. This far, however, we have not seen those two elements in the handling of the crisis. The ID therefore believes that we need to have a contingency plan in place for our economy if the market of our major trading partner significantly shrinks.
We should not, however, blame all our economic woes on the poor state of the global economy. There are many emerging economies that are experiencing phenomenal growth at the moment and we need to ask ourselves some difficult questions as to why we are not one of them. Some of these difficult questions have been asked in the National Planning Commission, but it remains to be seen as to whether the political will is there to enact the right answers.
The projections of growth over the next three years are slightly lower and, as a result, deficit projections are higher. The ID does, however, believe that the Minister is sending out the right signals regarding the prioritisation of infrastructure investments over consumption. The infrastructure we invest in, though, must provide good value for money and not lead to massive cost overruns such as what we are seeing in Medupi and Kusile.
We cannot allow ourselves to become economically uncompetitive through poor and expensive investments. In this regard, I would urge the government to thoroughly look into the affordability of the proposed nuclear build programme as this could lead to runaway electricity prices if the wrong decision is made.
Minister, the ID agrees with you alluding to the ballooning wage bill in government and we believe that it is right to be raised as a caution. As to whether these increases can in fact be kept to 5% next year remains to be seen, though. The ID is also disappointed that the Minister did not announce government's position on the youth wage subsidy as this has been an ongoing debate. We are still waiting for finality on this and hope to see a plan of implementation so that we can finally start breaking the backlog of our crippling youth unemployment. Thank you.
Hon Deputy Speaker and hon members, the UDM acknowledges that South Africans are enduring economic hardship and joblessness. We understand how South Africa's economic growth outlook is moderated by a number of global risks. The debt crisis in Europe and the poor economic performance of industrialised countries cause the economic growth outlook to deteriorate significantly. Bearing these issues in mind, we welcome the Finance Minister's Medium-Term Budget Policy Statement.
We are particularly pleased that the Minister has acknowledged the need to provide more support to rural municipalities. Since its inception, the UDM has consistently called for more resources to be channelled to rural areas to help prop up the collapsing infrastructure in these long-neglected areas.
The billions of rands government has earmarked for investment to improve the lives of South Africans in informal settlements is a step in the right direction. The UDM has long advocated the concept of "government must do more", and it is heartening to hear that our calls have been heeded, albeit under difficult economic circumstances. However, it is concerning to note that infrastructure investment is lagging behind budget allocations. This is one area where government could reinforce infrastructure investment growth to help reduce the bottlenecks in our economy and stimulate private sector investment.
We call on the Minister to walk the tough talk in the fight against wasteful expenditure in all spheres of government. The UDM supports the Bill. Thank you.
Hon House Chair, hon Deputy President, hon members and guests in the gallery, sceptics and pundits are in agreement that our country, as part of the global village, is not insulated from the effects of the mishaps that continue to hamstring the eurozone economy, in particular, Greece and Italy. Indeed, we make history under conditions which are not of our own choosing.
However, the issue is not whether we choose the material conditions of our history or not. It is whether we make history according to our own ideas and for the purpose which we determine. No matter how chilling the blizzards on our economy, our resolve to fight against extreme poverty, high unemployment and escalating inequalities remains unshaken.
Die fiskale raamwerk is 'n politieke en finansile instrument om te verseker dat beleidsprogramme, deur die toewysing van finansile bronne aan die onderskeie regeringsvlakke, uitgevoer word. Die Polokwane-resolusie is die grondslag van die ANC se mediumtermynprioriteite, wat die vertrekpunt is by die bepaling van die 2012-begrotingstoewysing. (Translation of Afrikaans paragraph follows.)
[The fiscal framework is a political and financial mechanism for ensuring that policy programmes are executed by allocating financial resources to the various spheres of government. The Polokwane Resolution is the foundation of the ANC's medium-term priorities, which is the starting point for determining the 2012 budget allocation.]
Let me remind the hon members that we are building a developmental state, the mandate of which is to decisively intervene to protect the vulnerable. It was the fathers and mothers of our democratic dispensation who, in section 9(2) of the Constitution, provided that, in order to promote the achievement of equality, the state may take appropriate measures designed to protect persons disadvantaged by unfair discrimination.
The recognition that human rights and the basic social conditions in which people live are fundamentally interconnected resulted in increased inclusion of socioeconomic rights in our Constitution. The state has the obligation to take reasonable measures within its available resources to achieve progressive realisation of socioeconomic rights. Section 29(1)(a) provides for children's rights to basic education. Sections 26 and 27 entrench the right of everyone to have access to adequate housing, health care services, food and water, and social security. It is in keeping with these constitutional imperatives which reflect the values of the ANC that our ANC-led government has prioritised education, health and human settlements, amongst others.
According to the National Planning Commission's diagnostic overview -
Efforts to raise the quality of education for poor children have largely failed ... Literacy and numeracy test scores are low by African and global standards, despite the fact that government spends about 6% of GDP on education.
It is therefore appropriate to increase spending on education and skills development over the Medium-Term Expenditure Framework, MTEF, period by 6,7% to reach about R231,7 billion by 2014-15. To address the literacy and numeracy challenges, annual assessments and numeracy will, according to the Medium-Term Budget Policy Statement, MTBPS, be extended to grade 9 in 2011- 12. Further Education and Training, FET, colleges will be supported with tuition, machinery and equipment, and more funding will be provided to expand postgraduate programmes and academic centres of excellence. Education is a means of promoting good citizenship and preparing for the needs of a democratic society and modern economy. It remains one of the best weapons with which to fight poverty and inequality.
South Africa's health system continues to be dualistic, with a poorly- resourced public health care system which caters for the majority without medical aid and the well-resourced and highly subsidised private health care system. In our country, health has been commercialised and commodified. As a consequence, the poor are unable to access a similar quality of health care to that of the more opulent. However, according to the MTBPS, the Aids mortality rate has levelled off, there has been a rapid scaling up of the antiretroviral, ARV, treatment programme, and the national mother-to-child HIV transmission rate has fallen from 8,5% to 3,5%.
The ANC is committed to equalising the value of all South African lives and ensuring that all who need health care receive it, irrespective of their economic and social status. National Health Insurance, NHI, is our ANC-led government's vehicle of choice in realising the goal of universal equality in access to health care. The NHI pilot projects will therefore take place in 10 districts to address challenges of inadequate infrastructure, weak hospital management and the shortage of skilled health workers.
The imperative to push back the frontiers of poverty has led to spending on social services. In this regard, the MTBPS calls for the size of the social services budget to be weighed against success in service delivery. We should also note that social welfare grants now support about 15,2 million South Africans, up from 2,5 million in 1998. This has led to government spend on social expenditure being 10,9% of its total budget. Many South Africans continue to live below the poverty line, and while we should be wary of extending social grants at the expense of development and empowerment, we must not fail to comply with our obligation to protect vulnerable South Africans from falling victim to all forms of harsh living conditions.
The majority of poor South Africans live in informal settlements. Our ANC- led government continues to be committed to building human settlements for our people as a means of not only empowering them, but also restoring their dignity and building a better life for all. Spending on local government and human settlements has increased. With about 1,2 million households living in informal settlements, the medium-term priority, according to the MTBPS, is to upgrade informal settlements in 45 large cities and towns, providing poor households with improved living conditions in areas where they are able to access economic opportunities.
Die President het die jaar 2011 verklaar as die jaar van werkskepping wat in ooreenstemming is met die noodsaaklikheid om werk te skep om die ho werkloosheidkoerse om te keer. Oor die medium tot lang termyn beoog die regering die samestelling van besteding om hor vlakke van infrastruktuuronderhoud en kapitaalbesteding te ondersteun. Sodanige investering sal ekonomiese groei en werkskepping bevorder en 'n gunstige klimaat skep vir verdere investering deur die privaatsektor.
Bykomend tot Eskom se groot kragprojek sal die fokus ten opsigte van energie op elektrifisering in informele vestigings en kapasiteit vir die hernubare energiesektor val. Die nasionale elektrifiseringsprogram beoog om teen 2014 elektrisiteitsverbindings aan alle huishoudings te voorsien. (Translation of Afrikaans paragraphs follows.)
[The President declared 2011 to be the year of job creation, which is in line with the necessity to create jobs in order to reverse the high unemployment rates. Over the medium to long term, government envisages the composition of spending to support higher levels of infrastructure maintenance and capital spending. Such investment will promote economic growth and job creation, and will create a favourable climate for further investment by the private sector.
In addition to Eskom's large power project, the focus in respect of energy will be placed on electrification in informal settlements and on capacity for the renewable energy sector. The national electrification programme aims to provide electricity connections to all households by 2014.]
In conclusion, the ANC is committed to pushing back the frontiers of poverty and fighting against inequality and unemployment. There has been progress in the facilitating of access to socioeconomic rights. However, more remains to be done. We need to build the developmental state and strengthen its strategic and technical capacities to ensure that development is accompanied by skills development and job creation. We need to strengthen the social security network while empowering our people to be involved in their own development.
Yes, the international economic environment is inimical to the ideals of our country, yet - and yes - the internal financial resource demands exceed our revenue base. In addition, our national debt is bound to rise before falling and stabilising, and our economic growth projections have to be adjusted downwards. However, we have to take our people out of extreme poverty. We have to educate our children. We have to build shelter for the vulnerable. We have to put equal value to all lives. We have to reduce the gap between the rich and the poor.
The ANC is not only a political party, but remains a liberation movement to liberate our people from the legacy of unfair discrimination. We shall not relent, but will increase our resolve towards a truly equal and free national, democratic society, based on human dignity and ubuntu values. I thank you. [Applause.]
Chairperson, the ACDP broadly supports this important Medium- Term Budget Policy Statement which gives an indication of government income and expenditure over the next few years.
The Minister of Finance has not departed from a prudent and counter- cyclical fiscal policy, notwithstanding the uncertainty prevailing in the US and sovereign debt fears in eurozone countries. This is what Moody's should actually be focusing on.
Fears about out of control government spending in the US and eurozone swept across financial markets again yesterday with stocks and bonds sharply down.
The weaker global economic outlook will undoubtedly negatively impact South Africa's domestic economic growth, especially in the export of our commodities. Domestic economic growth has been revised downwards to 3,1% from the earlier forecasts. Obviously slower growth means lower tax revenues, with Sars expected to be hard-pressed to meet its target. This raises important questions as to the sustainability of the government's present fiscal path.
We as the ACDP, together with all other parties, have previously expressed our concern about the budget deficit, projected state debt stock and spiralling debt service costs. The debt service costs have increased to R76,9 billion and are estimated to rise to R115 billion in the year 2014-15 to service a net loan debt of R1,3 trillion. 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, which crowds out spending on developmental priorities.
On the other hand the ACDP understands the need to stimulate economic growth in the short term to create an environment for more sustainable jobs and for additional spending on social welfare, health, education and fighting crime.
It is a difficult balance to strike. It is also imperative for government, if it wants real growth, to create an environment to make South Africa more competitive, efficient and sustainable. The ACDP supports this Medium-Term Budget Policy Statement. I thank you.
Chairperson, "pikswart" following the "swart gevaar". In his Medium-Term Budget Policy Statement the Minister of Finance stressed the need for job creation. He outlined various measures by which jobs can be created. Greater emphasis on infrastructural development, for instance, is one such measure and budgetary allowances are made accordingly. We welcome these steps, but they are not enough. Unemployment remains a major crisis. More than a million jobs have been lost between 2009 and the second quarter of 2011, with the youth being the most affected.
The Medium-Term Budget Policy Statement, MTBPS, foresees a gross domestic product, GDP, growth rate of only 4,3% by 2014. Yet a GDP growth rate in excess of 8% must be achieved on a sustainable basis if government's target of an additional 5 million new jobs by 2020 is to be reached. These jobs should be created mainly in the private sector as the state wage bill of government is already excessive and funded partly by borrowings.
In reply to questions in the House, the hon President admitted that government's target for jobs to be created by 2020 will not be met. He advanced the worldwide recession as the main reason for government's inability to reach the targets. The President conveniently forgets that countries such as Brazil, China and India achieved high GDP growth rates conducive to sustainable job creation despite the recession.
The difference is simply that the economic growth is placed on the forefront in these countries and not politics. The latest growth plans tabled by the National Planning Commission will also achieve nothing if a major shift in leadership attitude and political will does not become evident.
What then needs to be done? Eliminate wasteful and unnecessary expenditure; eliminate corruption; introduce a youth wage subsidy; direct more funds to infrastructural development; eliminate red tape for new businesses to be formed; encourage overseas investments, do not Walmart them; stop talking about nationalisation; overhaul the educational system with emphasis on skills development; curb wage demands and increase productivity; review stringent labour legislation; create effective industrial development zones, particularly in rural areas; reduce staff levels in government and unnecessary state entities; scrap cadre deployment; keep inflation under control; improve security; guarantee property rights; give preference to labour-intensive contracts; and ensure freedom of the press.
Introduction of these measures will create an open opportunity environment for economic growth and therefore job creation. Carrying on as it is now will not yield results. I thank you. [Applause.]
Hon members, the noise level in the House is high. Can we just keep it down, please?
Hon Chairperson, hon Deputy President, hon members, I want to dedicate my speech to the late president of the ANC, Comrade Oliver Reginald Tambo.
Ingqungqumbana engqukuva njengesheleni, umde ngeentonga, inkunzi abayikhuza ukuhlaba ingekahlabi, uMachi, uGoba, uMbusi, uVezi. [The one who is stout built, the valiant one regardless of his height, the one who strikes fear in opponents' hearts even when he is not aggressive, Machi, Goba, Mbusi, Vezi.]
As we all know, the Medium-Term Budget Policy Statement, MTBPS, was presented in this House in October, the month in which the late Comrade O R Tambo was born. Comrade O R Tambo was a warm and generous human being. He had courage, modesty, sensitivity and, above all, dedication to a revolutionary cause. He was, and remains, a hero of our people, an architect of our national unity, a freedom fighter, an upholder of justice and a revolutionary.
He was a gentle intellectual giant who never flinched, never relented in the fight for the liberation of the poor and the oppressed. He was highly disciplined, never lived above others and never defied his organisation and the people.
Comrade O R was a man of his people. He was living in the future of a united people in the struggle against social ills. The Medium-Term Budget Policy Statement we are debating today responds directly to that and consolidates the issues that he pursued during his fight, his struggles and his long journey that he travelled. He left us a glorious legacy.
Hon Chairperson, as you know Comrade O R was loved and admired throughout the movement. He combined the best qualities of a revolutionary patriot and dynamic international person. Because of his clear understanding of the factors underlying national oppression of the South African masses, he was able, in his own unassuming manner, to guide, unite and inspire others to commit themselves fully to the struggle for the noble ideals of freedom, democracy and a just social order.
During his leadership of the movement he was involved in the front ranks of our struggle, inspiring everyone around him and those inside the country, young and older generations. He was first amongst the volunteers in situations that threatened life, arrests, torture and imprisonment. He was never found wanting whenever there was a struggle to be waged. Most important of all, he led by example, led from the front.
The allocation in the MTBPS carries forward his vision of a developmental, united, nonracial and nonsexist South Africa. In the context of the MTBPS, government's cyclical fiscal stance is maintained. Expenditure continued to grow in real terms, encouraging a stronger recovery with an economic support package, which measures bolster job creation and continued public investment in infrastructure. The budget deficit rises to 5,5% in the 2011- 12 financial year as a result of the lower than projected revenue, though moderating towards 3% by 2014-15.
The MTBPS recognises the need to shift the composition of spending towards the creation of long-term public assets through infrastructure investments, a precondition for economic recovery.
The House has adopted the indicative allocations as presented by the Minister of Finance. The issue now is ensuring the effective, efficient and economic usage of these resources. The MTBPS counsels that available resources are not unlimited. This requires this legislature to continue to undermine any corrupt perceptions in government.
This MTBPS introduces universal access to health care services through the piloting of the national health insurance. This is the cornerstone of the liberation as envisaged in the Constitution and the Bill of Rights.
The liberals oppose this noble cause and expose their true colours of being antipoor. That party does not want the majority, who do not have access to medical aid, to have access to health care services. O R Tambo stood for universal access to health, education and other public services for the poor, otherwise the struggle would have been in vain.
The difference between the ANC and the DA is that the ANC wants ordinary people to have access to all public health services rendered by government. Frantz Fanon in The Wretched of the Earth says the liberals want to maintain the status quo, where only certain services are a preserve of the elite.
In line with the priorities of government led by the ANC, the MTBPS increases allocation to the rural people by strengthening allocation to the Department of Agriculture, Forestry and Fisheries and to the rural development, so that lending to smallholding farmers by the Land Bank is improved and supports establishment of food gardens for purposes of food security. Also welcome is the launch of the zero campaign by the President.
The MTBPS raises concern about the pace at which the wage bill is growing, but takes solace in the fact that engagement is taking place at Nedlac. However, the issue that needs to be attended to, hon Minister of Finance, seems to be the occupation specific dispensation, OSD, which in many cases has not been implemented in line with the policy.
I would like to take this opportunity to express my sincere gratitude to the members of the committee, the staff and my secretary who worked beyond the call of duty to ensure that the report is produced on time.
The Hon George raised the matter of the parliamentary budget office. However, I wish to remind him that though he did not take part in the study tour, he does know that study tours were taken to countries to learn about the parliamentary budget process. The workshops, thereafter, were held in order to ascertain exactly the type of the parliamentary budget office that this Parliament would want.
The ANC supports the MTPBS and the Adjustments Appropriation Bill. Thank you.
Hon Chairperson, hon members, firstly, let me thank the chairpersons of the two committees, hon Mufamadi and hon Sogoni, and their respective teams for the excellent work that they have done, both on the Medium-Term Budget Policy Statement, MTBPS, and the Appropriation Bills.
Hon members from different parties have raised questions about the economic outlook. We cannot wish away nor will away the fact that, since we last spoke in this Chamber, the outlook on the European side is increasingly getting gloomier and more technocratic governments are taking the place of democratically elected governments.
However, more problematic is the fact that, as of last night, the United States also found itself in a political gridlock and is unable to resolve a way forward in terms of reducing its debt levels. Both these situations are creating a rather unfortunate dark cloud, not only over Africa and South Africa, but, indeed, amongst most of the fast-growing emerging economies.
As many members have said, we have begun to prepare, and we have prepared. We do have a plan to ensure that South Africa can sustain itself. The hon Ambrosini should remember that we are not in a prolonged recession, because we are still going to grow at 3%. We are in a prolonged recovery, which itself is in a crisis as a result of some of these developments.
So, what did we say in the MTBPS? We said that we need to do three things in the near future or over the next three years. On the one hand, as Mr Sogoni has said, we must ensure that we keep our real expenditure and growth above the zero level, which we have done at 2,3%. Secondly, we have said that we need a credible fiscal consolidation plan, which we have delivered upon as well. Thirdly, we are saying that we should watch our expenditure. We need to change the composition of expenditure so that more money is found for investment in infrastructure and maintenance of infrastructure than on consumption. As we prepare the Budget for February next year, this is what we will be looking at.
Many hon members have raised concerns about the question of debt and the level of debt. Our debt is in a manageable situation and, given the current circumstances, the countercyclical approach, which the hon Koornhof talked about earlier on, is one that we are still pursuing. As a result of dropping revenue, we have actually increased our borrowing marginally. However, we will still be just above the 40% mark over a three-year period and then we will level off.
Yes, there are rather regrettable consequences as a result of our actions, but these are unavoidable. We need to avoid these consequences because we do not want austerity in South Africa. We do not want to cut social spending. We do not want to cut our spending on infrastructure. We do want to cut our spending on wastefulness. We do want to discourage leakages from our system. We do want to fight corruption. However, we all need to do a lot more than just talk in order to achieve this.
As the hon Mufamadi has said, the committee wants a contingency plan. Certainly, that is something that we need to work with, both as the Treasury and the Reserve Bank, in the event that the circumstances around us become even worse. As innocent bystanders, we can be affected to a greater extent. Hon Sogoni is right to invoke the spirit and thoughts of this great leader, Oliver Tambo. One of the things that Oliver Tambo taught us is that you must evaluate and understand the material conditions in which you find yourselves in order to adopt the appropriate methods to respond to those conditions. Therefore, we cannot dream about things that we are unable to do, given the current economic climate around the world. I believe that the MTBPS certainly produces a very credible story regarding where we want to go, both in terms of growth on the one hand, and fiscal management on the other hand.
The hon George reiterates his point that he does not think that we have a credible fiscal framework. Well, I have not seen a better one emerging from my left yet. On the last occasion, the hon George talked about more incentives, more taxing, a greater deficit and then when we try to manage our deficit he says that this is not a credible way forward. So, hon George, let's have a chat. If you want to offer me a free cup of tea, you are welcome. Let's talk on a more reasonable basis about what is it that we need to do under the constrained environment in which we find ourselves and ensure that as a country we move forward.
We have many incentives for business in South Africa that go into tens of billions of rands every year. The question is not whether we have enough incentives. The question is whether they are adequately targeted and appropriate in the current climate, as well as whether businesses are actually using them as they should. Chairperson, I'm sure all of the parties in this House will agree that we need to induce and introduce more confidence in the economy. The Deputy President has been speaking on this question on a number of occasions. However, all of us should contribute towards making less unconstructive political noises which discourage investment in this country. Whether you are in party A, or party B, or party D, as might be the case on my left, we all need to be careful about the way in which we articulate political views and other views and not to endanger the little bit of growth that we have in our economy. Again, as parties, I think we need to make this an apolitical issue so that we can indeed induce more confidence in our economy.
The government has indeed, hon George, been a job creator in our economy. If it had not been, we wouldn't have the numbers that we have actually seen. However, I want to reassure him and other hon members that government cannot and will never be the major job creator in our economy. The private sector in South Africa, in all its different forms - the informal businesses, small businesses and larger businesses - is the prime creator of jobs in the South African situation.
The budget office, as Mr Sogoni has pointed out, is not the concern of the Ministry but that of Parliament. I thought the hon George, with his experience, will actually appreciate that and not raise that kind of question. The hon Koornhof is absolutely correct that we have tried to practice and have indeed practised countercyclicality in terms of our approach. He is also correct that all of us need to contribute towards creating the right kind of political climate in South Africa so that we can inspire the kind of confidence that we actually require.
We should be worried about Europe. One of the lessons from Europe, hon Mario Ambrosini, is to ensure that we do not place ourselves in the same position as your homeland has done. [Applause.] We believe we have a credible plan to do so. We do not owe more than one trillion euros to anybody. Our debt levels are not the same as some of the countries in the European situation. Therefore, let us not unnecessarily create panic in our environment about a situation that is, in fact, very credible and well managed in our instance.
The hon Koornhof talks about the breaking up of the eurozone. That, certainly, is a possibility. We shouldn't want that to happen and we hope that many people around the world feel the same. We also hope that European leaders will not engage in anymore brinkmanship and take the substantial political decisions that need to be taken with the European Central Bank in order to remove even the greater levels of uncertainty that are beginning to enter the economic equation.
The hon Greyling is right. We cannot only blame the global situation for the fact that we have unemployment levels as we do. None of us has actually done that in government. As hon Adams has said, we are prepared to confront the challenges of poverty and unemployment. We recognise that much more needs to be done, but that does not mean that we are not doing anything at this stage. The hon Adams is absolutely right that we have got to be careful as a society to watch the rich and poor gap, both in our own country and around the world. Clearly more needs to be done in this particular regard.
Both of the hon Swarts have made valuable contributions. The hon Steve Swart of the ACDP talks about South Africa being more competitive. We certainly agree with that. The hon Swart from the DA says that jobs will be created mainly in the private sector and we agree with that as well. If we can sit down with you, hon Swart, we will demonstrate to you that most of the things that you talk about are, in fact, work in progress and are areas that we have acted quite assertively on as well.
In conclusion, we recommend the MTBPS to the National Assembly. We believe that it has the right combination of measures, both fiscally speaking and in terms of managing our expenditure the right way. There is no doubt that much more work needs to be done, but much thereof also lies in the hands of parliamentary committees and we look forward to co-operating with you in this regard. Thank you very much. [Applause.]
Debate concluded.
Bill read a first time (Democratic Alliance dissenting).