Mr Speaker, hon Minister of Finance, Ministers and Deputy Ministers present, hon members and distinguished guests, let me add mine to the many voices of South Africans congratulating the Minister and his team for tabling a credible, broadly balanced and confidence-building Budget statement in this House. It has indeed given clear policy direction that is certain, predictable and coherent.
In his state of the nation address the President of the Republic reminded us, and I quote:
The work done last year indicates that if we continue to grow reasonably well, we will begin to write a new story about South Africa - the story of how, by working together, we drove back unemployment and reduced economic inequality and poverty.
The President also said:
Our shared commitment is to put South Africans to work. They must find work in the 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. 2012 must be the year of job creation.
The Budget, as presented in this House by the Minister of Finance, consists of the objectives stated above as it continues to open up a range of new possibilities for growth and development in line with the President's call and invitation to the nation to join his government in the industrialisation programme of our country through the infrastructure development drive. Hon Minister, you are indeed very correct when you said, and I quote:
It is a story that must be written by all of us ... not just by government ... not just by unions ... South Africans from all corners of this country.
Each one of us must play a role to advance our democracy beyond its second decade of existence. We have just begun a long journey to realise a true and united nonracial, nonsexist, democratic and prosperous South Africa.
It is my pleasure to table the committee report and its recommendation on the 2012-13 fiscal framework and revenue proposals for consideration and adoption by this House, as directed by section 8(3) of the Money Bills Act.
In the main, the economic policy focuses on matters that relate to the national economic outlook and performance and key macroeconomic indicators within the current national, regional and indeed international and global economic environment, while the Fiscal Policy Framework deals with the fiscal stance adopted by government. It will give effect to the macroeconomic policy for the 2012-13 financial year and, among others, includes in the main estimates of all revenue - budgetary and extrabudgetary specified separately - of all expenditure expected to be raised during the financial year; estimates of borrowing for the financial year; and estimates of interest and debt servicing charges.
It is evident and clear that the 2012 Budget, as presented to us as the committee and after extensive consultation with various stakeholders through public hearings and intense interrogation by the committee, gives effect to the stance outlined in the 2011 Medium-Term Budget Policy Statement. It sets out a fiscal framework that will narrow the gap between spending and revenue, support the economy, strengthen capital investment and improve the performance of the Public Service. Spending over the next three years will be shifted from consumption spending towards productive investment, particularly in infrastructure development.
The macroeconomic framework continues to embrace a countercyclical fiscal policy and monetary policies that are underpinned by inflation-targeting measures that support growth and investment to protect the living standards, particularly of working families, the poor and low-income households. The macroeconomic measures alone are not enough. They need to be complemented by trade support, competition policy and active labour market measures.
The Budget, as presented, reaffirms the correctness of the countercyclical fiscal policy stance, which has provided a very strong and solid base in the past few years. These policies have ensured that even under very difficult circumstances due to, among other factors, the virtual collapse of the economies of our major trading partners in developed economies, particularly in Europe, we have succeeded in maintaining a low budget deficit of 4,8% of the gross domestic product, GDP. This is projected to stabilise at around 3% by the year 2014. We also managed to stabilise our debt to GDP at 38% and our tax revenue continues to recover. It is projected to increase from 24,7% to 25,5% of the GDP.
Furthermore, the Budget signals a new impetus in public sector investment, which is a foundation for long-term growth, employment and development through expansionary infrastructure plans. The gains and consolidation of our Budget successes through prudent fiscal management of our resources is cause for celebration and a lesson to be taught not only to emerging economies but also one to be learnt by the developed world. It is our home-grown product to be exported. For this we must pay tribute to the National Treasury and the executive, particularly the Budget committee in the Cabinet.
As the President said in the state of the nation address, it is beginning to look possible and we must not lose this momentum. This Budget continues to give hope to and inspire confidence in millions of South Africans. Under these conditions we can safely say yes, it is possible to pursue and succeed in industrialising our economy, improving our trade performance and maintaining moderation in consumption spending.
The National Planning Commission's proposed National Development Plan recommends several policy options to improve labour market efficiency to speed up job creation. These include placement subsidies to get matric graduates into work, staff retention schemes that offer short-time work during periods of low demand, and a more open approach to skilled immigration to boost the supply of high-skilled workers in the short-term.
The good of any policy is in its implementation and the achievement of its intended objectives. In other words, laws are good to the extent that they make a difference to those they are intended to benefit. I'm raising this precisely because consultation in the implementation of our laws should not lead to paralysis, particularly for the Budget and programmes that this House voted on and passed. The envisaged improvements in labour market efficiency, as espoused in the National Development Plan, should lay a firm basis for constructive discussions to seek agreement on the long- outstanding proposals to facilitate youth employment. The resolution and implementation of such proposals should complement the positive signs of an improved labour market in the previous year, when a significant number of jobs were created in both the formal and private sector.
The economy is projected to add 850 000 new jobs over the following three years. What is even more exciting is that 80% of these will be in the private sector, which will contribute to the lowering of unemployment to about 23% by 2014. Most of these jobs are also likely to be concentrated in the service and construction sectors as a result of steady growth in domestic demand, infrastructure expenditure and the pick-up in residential investment that is expected during the outer years of the budget.
What are the features of the Fiscal Framework? South Africa's period of transition is about building modern infrastructure, a vibrant economy, a decent quality of life for all, reducing poverty and creating decent employment opportunities for our people.
The committee notes that over the medium term, slower growth in public spending, combined with rising revenue, will substantially strengthen the fiscus. Therefore the key features of the fiscal outlook include the following: real growth in noninterest expenditure averaging 2,6% over the medium term; additional allocations of R55,9 billion over the next three years, including R9,5 billion for an economic support packages; tax revenue levels stabilising at about one-quarter of the GDP; and a shift from consumption to capital spending so that, from 2014/15, new borrowing will support productive investment.
The committee also notes that in the last 10 years structural increases in revenue were supported by healthy economic growth during the mid-2000s, along with improved tax compliance and administration. Audited revenue results show that the tax revenue of R674,2 billion for the 2010-11 fiscal year was an increase of R75,5 billion - 12,6% higher than anticipated in terms of the Medium-Term Budget Policy Statement. We also note the improvement made on personal income tax, dividend withholding tax, capital gains tax and the medical credit tax.
South Africa's critical infrastructure needs are, in part, the outcome of over 40 years of underinvestment and neglect. Public infrastructure spending tailed off from the early 1980s. Prudent fiscal management of the economy has created the much-needed fiscal space for a long-term investment plan. Together with the private sector, we can make a difference. It is now possible to emulate the developed countries, that spend about 25% of their gross domestic product, GDP, on capital investment, which is substantially needed to raise the per capita income of households.
The infrastructure budget, as tabled in this House, is beginning to fall in line with other developing countries whose capital investment is equal to about 25% of their GDP. While infrastructure spending and development is critical for economic growth, we must bear in mind that it should do so to underpin the manufacturing and beneficiation sector in our economy. It should do so to promote primary commodities, local input and the manufacturing sector. In other words, as we welcome the spending plans in respect of improving rail and general transport infrastructure, this should not lead to the promotion of exports of primary commodities without supporting the secondary sector of our economy. It is in this regard that the committee made certain observations and recommendations when it sat on Friday, which I will not spend time on in this presentation. Therefore, I wish to indicate that the committee, after it considered the 2012 fiscal framework and revenue proposals and conducted public hearings, proposes, recommends that the House adopts the 2012 Fiscal Framework and Revenue Proposals. The ANC supports the proposals as tabled. [Applause.]
Mr Speaker, the Minister has now tabled three Budgets in extremely challenging global conditions. That our country remains fiscally resilient is acredit to the millions of South Africans who work to keep this economy going and to our well-managed national accounting system.
The DA welcomes the fact that, within this Fiscal Framework, there is a focus on public infrastructure investment. This was neglected by the former Finance Minister, who oversaw 10 years of inadequate public expenditure on infrastructure between 1996 and 2006. We welcome the stated commitment to fighting corruption and fixing procurement, and we welcome Treasury's new flexibility on tax incentives for special economic zones.
Overall, we support the Minister's vision of building a capable state, but we fear that this vision will continue to be ideologically undermined by Cosatu, compromised by deployed cadres, and eventually drowned in regulation imposed by various Ministers, each eager to intervene in the economy in a totally unco-ordinated way. [Interjections.]
HON MEMBERS: Hear! Hear!
The reduction in the Budget deficit is positive news, although the ratings agency Moody's has pointed out:
This achievement was derived partly from a continuing inability to spend a large share of the investment budget, which is detrimental to the economy's growth potential. This inability to spend is perhaps the reason why, as a percentage of the GDP, infrastructure spending for 2012 will actually be lower than what the Minister forecast this time last year. The Minister should tackle skills shortages in the Public Service, the mountain of regulations that delay projects and ANC cadre deployment before raising hopes that we will be able to spend more to tackle our R1,5 trillion infrastructure backlog identified by the Department of Public Enterprises.
The chairperson of the Portfolio Committee on Finance reminds us that 2011 was meant to be "the year of the job". Yet at the end of that year we had 107 000 more unemployed young people in this country than at the beginning of that year. This is primarily because of Cosatu's opposition to reform and resistance to enlightened policies like the youth wage subsidy. The question is: If 2012 is meant to be "the year of infrastructure", how will we get beyond the capacity constraints in government to build this infrastructure?
One obvious solution to improve project management and fill funding gaps is to mobilise private sector capacity, as promised by the Minister in his Budget Speech. But someone will need to tell the Minister of Public Enterprises, Malusi Gigaba, because he poured ice on this proposal when he said two weeks ago that "the debate on port concessioning has not been settled". They should also talk to Mr Brian Molefe, the chief executive officer of Transnet, who said: "There is no role for the private sector in the main channels of rail infrastructure."
Attitudes like these in government perhaps explain why our use of public- private partnerships is among the lowest in the world, at around 4% of infrastructure spending. It may also explain why we persist in bailing out failing parastatals like our state arms manufacturer, Denel, and our state diamond mine, Alexkor, who together get more than R1 billion in this Budget.
We should send Minister Gigaba and Mr Molefe to Brazil. When they get there, they will land at an airport in So Paolo, which last month sold a 51% stake to investors for the equivalent of R70 billion. This is a quarter of the total amount that South Africa is meant to spend on infrastructure this year. We could certainly use this sort of money.
Last week, Moody's also said that Treasury's debt stabilisation programme relied on compressing the growth in the wage bill, something they did not believe would happen. [Interjections.] They are also concerned about future revenue, considering that the Minister this year ratcheted up dividends tax and capital gains tax - probably the last loads he could add to the taxation scales without tipping South Africans from "heavily taxed" to "totally overtaxed".
New tolls and increases in administered prices are already too much for our economy. Imposing carbon tax and a local business tax and VAT, or payroll or income tax increases to pay for the National Health Insurance will push us over the edge and do serious damage to our culture of taxpaying in South Africa. When that happens, you start to look like Greece.
Instead of speculating on what new taxes to impose, this Budget should have boosted potential tax revenue by doing more to drive growth in South Africa. If we accelerate growth from the anaemic 2,7% forecast for this year to the 8% targeted by the DA, we would double the size of our economy and our tax revenue in 10 years. But to start down this path, the Minister should have provided a real growth narrative in this Budget. For example, his counterpart in India, Minister Mukherjee, recently called GDP growth of 6,9% in India "disappointing" and said that his budget would provide "a roadmap for achieving a higher growth trajectory". In Brazil, Finance Minister Mantega said in his budget speech that "Brazil has the ability to grow faster. The budget we are implementing will make vigorous growth in Brazil possible."
Where were these sentiments in our Budget? What we needed was a detailed plan to drive faster growth by building a stakeholder economy - a South Africa where ordinary job seekers, workers and small business owners get a fair stake in our economy and a real shot at making it in a well-regulated market.
In the DA's alternative budget, released just before the Budget Speech, we tabled proposals for tax breaks for small businesses to help with their cash-flow problems. We also tabled more generous tax provisions for employee share-ownership schemes. Most importantly, to help give 3,2 million young job seekers a stake in the labour market, we called on Treasury not to yield to Cosatu on the youth wage subsidy. The President announced this policy two years ago. It had R5 billion allocated to it by the Minister of Finance last year and it had an implementation date of 1 April this year. The fact that Cosatu has managed to block it at the National Economic Development and Labour Council, Nedlac, since May 2011 is a national disgrace.
Hear! Hear!
It raises serious questions about the Minister's influence in government and undermines his intention to build a capable state and start rolling back unemployment in South Africa.
The DA supports this fiscal framework because of the Budget's stated commitment to rebuilding the infrastructure of this country. However, if future budgets introduce huge new taxes, fail to target higher growth and continue to marginalise young job seekers, we will be unable to support them. [Applause.]
Mr Speaker, the Treasury and the Minister stuck to their previously announced intentions to proceed with the consolidation of state finances and we have seen a major shift in the composition of spending this year. The focus of the Budget is in the right place. This Treasury, under the guidance of the new director-general and the Minister, needs all the support they can get. Cope shall support the fiscal framework.
We are at a crossroads in terms of our state finances. That's why we have seen a call in the Budget Speech by the Minister for a bit more patriotism. It's a call to each one of us - the Public Service, unions, farmers and business - to do our little bit to secure the consolidation of state finances. The Minister got cum laude reports from most economists, but that does not mean we do not have some criticism.
I do not have time to dwell on the fuel levy, on the timing and short notice of the dividend and capital gains taxes, and on the insecurity of debt guarantees. With my remaining time, I want to address the behaviour of Cosatu and the dilemma of the increasing state wage bill. Hearing of Cosatu's threats and demands, the assumption by the Treasury that they will keep the increase of the wage bill to around 5% becomes a very debatable issue. If this goes wrong, it can boomerang very negatively on all of us. Michael Lewis just published a book entitled Boomerang. If you want to know how a nation lost its financial mind, read this book. Everybody in this House should read this book, especially Cosatu. It tells the story of how Icelanders wanted to stop fishing and become investment bankers. The Greeks wanted to turn their country into a piata stuffed with cash and allow many citizens to take a whack. The Irish wanted to stop being Irish, and the Germans to be even more German. [Interjections.] If we are not careful, in the second edition of his book, Michael Lewis will add a new chapter on how South Africans blew their GDP on a state wage bill.
Mr Speaker, when you throw a boomerang, you do not want it to change shape, colour, weight and direction in midair. This is what is happening in South Africa. The government constantly throws its boomerang, loaded with luxurious cars, flights, hotels, mismanagement and corruption, to the public and to Cosatu. The President carries on to employ the third-largest Cabinet in the world, with all the costs and perceptions that go with it. That is the wrong signal to give and because of that it is easy for Cosatu to take control of the boomerang in midair and return it as an unguided missile in the form of strikes and demands.
The government and the Treasury should concentrate on changing this message that they send to the public and the unions and be sure that they buy into this new message. The President should make his Cabinet smaller - that would send a strong message to Cosatu. The Cabinet should freeze all increases in the salaries of Ministers, Deputy Ministers and their directors-general for the next three years. They did it in the UK. It will shrink the gap between the MPs and Ministers. Government must stop filling vacancies in the Public Service that do not contribute to better service delivery - haircuts, haircuts, haircuts, hon Minister! If we fail to send a strong message, all the good intentions of this Budget will boomerang on all of us.
Mike Schussler reminded us all that we could save 10% of our GDP if we paid the Public Service the same salaries as the private sector. Due to Cosatu strikes against this government, more manpower days were lost in 2011 than during the hey day of apartheid. [Time expired.]
Madam Deputy Speaker, I speak through you to the Minister. In previous debates, Minister, when I, on behalf of my party, expressed relevant concerns, you saw fit not to respond and to dismiss them on the basis of two grounds: on account of my nationality and on account of "ideological differences" between my party, or myself, and the ANC. On this occasion, Minister, I would like to point out how erroneous it is to refer to nationality. We would surely not do so in respect of your ethnicity when discussing matters of this nature. As for ideological differences, it sort of concerns us because, on our side, we have no ideology. We are pragmatists. In that statement, Minister, you suggest that you do have an ideology. That begs the question of what your ideology is. Perhaps this is what one may try to discern through the words and proposals of your Budget.
We are not opposing this Budget, because it is moving in a better direction. We appreciate the greater emphasis on and the greater allocations to capital expenditure at the expense of current expenditures. However, that takes place in an environment in which further growth is heavily subsidised by government. In a context in which we are expecting government-funded growth, this Budget begins to mark the merger between fiscal policy and industrial policy. Industrial policy is conceived and implemented within a strictly national context, to the exclusion of foreign competition or the real potential of international competitiveness. The Broad-based Black Economic Empowerment Bill will have such an effect, as will the special preferential procurement proceedings.
So, it is a Bill that extends the welfare state to industrialists, in the hope that they may employ people and one day may grow independent of the protections from international competition and the subsidies. In that sense, the Budget is a nationalist Budget and a socialist Budget. It is socialist because it extends the welfare state beyond the 18 million people already dependent on it to industrialists and all those employed by such industrialists, in conditions of noneconomic viability. That is the ideological concern that emerges. [Time expired.]
Deputy Speaker and hon members, budgeting and its underlying fiscal framework is a difficult balancing act. As the expression goes, "Human desires are like the world of the dead - there is always room for more". The unlimited needs and wants of the country must be accommodated in a limited budget. This constraint makes the process of budgeting particularly difficult. Accordingly, a careful thought process ought to go into what should constitute our nation's priorities. In this regard, we are encouraged by the government's seemingly renewed focus on infrastructure development. Infrastructure development is one of the many ways in which government can stimulate economic activity, create jobs and thus free our people from the yoke of poverty.
Disappointingly, many of government's grand plans and bold visions have fallen dreadfully short of expectations, due to a poor or complete lack of implementation. According to government estimates in the 2010-11 fiscal year, only R178 billion was spent out of R260 billion set aside for infrastructure development. That is only 68%. Once again, this points to a glaring lack of government capacity to plan and implement the infrastructure development programme. The service delivery protests over the last few years are symptomatic of government's failure to translate its grand plans and budget allocations into meaningful service delivery, putting further emphasis on the importance of aligning the fiscal framework with the needs of our people.
The UDM is concerned that motor vehicle owners who are reeling from the pressure of high crude oil prices face a 20c increase in the fuel levy on 1 April 2012. This taxation increases inflation in South Africa. The only justification for the fuel levy should be the need to maintain infrastructure - roads in particular. However, since government does not only use the fuel levy for road maintenance, it now also deems it fit to defend the indefensible conversion of the public into cash cows by introducing the e-tolling system in Gauteng to maintain the road infrastructure. [Time expired.]
Deputy Speaker, hon Minister, hon Deputy Minister, hon members, distinguished guests, we who are gathered here are beneficiaries of the freedom to which Mama Winkie Direko dedicated her life. We are the relay team to which she has handed the torch that she carried for so long. The race will continue until we have achieved a better life for all our people.
The legacy of apartheid policies in South Africa has created large disparities between racial groups in terms of socioeconomic status, occupation, education, housing and health. These policies have created a fragmented health system, which has resulted in inequitable access to health care. The inequities in health are reflected in the health status of the most vulnerable groups.
Hon Speaker, we are committed to a service delivery culture that puts every elected official and public servant to work for our people and ensure accountability to them and the democratically elected government. We remain in touch with our people and listen to their needs as reflected in the Bill of Rights in the Constitution.
The current global economic context is characterised by high levels of uncertainty. Against this background, South Africa's development depends largely on government improving its level and quality of service delivery in support of the inclusive and equitable economic policy framework in the New Growth Path.
Let me emphasise the fact that, despite limited fiscal resources, the ANC- led government provides a safety net for nearly one-third of the population through the social grants programme. Contributory social security reforms and the rolling out of the National Health Insurance programme are measures to boost job creation, living conditions, the working environment and a broader social wage for our people.
An important aspect of a successful developmental state is investment in public sector workers and, in turn, our people expect public sector workers to execute the task which they have been entrusted with. This means that adequate numbers of personnel should be placed in the correct positions and where it is not the case, government should have the capacity to implement corrective measures, either through training or redeployment, if warranted.
The ANC-led government has taken the decision that we should do more to grow the country's economy in order to eradicate the problems of unemployment, poverty and inequality in South Africa. The commitment of this administration to social security is a living reality of this. Social security is an essential constitutional right if we are to build a society which is cohesive, more equal and values human dignity.
South Africa is faced with the triple challenge of unemployment, poverty and inequality. Africans, women and the youth continue to suffer most because of these challenges. The ANC-led government remains committed to fighting the triple scourge of unemployment, poverty and inequality.
Hezwo ndi zwithu zwine ra ?o sedzana nazwo thwii, nga hoyu ?waha na mi?waha i?aho. [These are the things we will be focusing on directly this year and in the years to come.]
Decent work provides dignity; it provides security for a family and allows people to contribute towards the social protection system. The state prepares an enabling environment for economic growth and the development of state, private and social capital sectors by providing enablers and removing obstacles. The ANC-led government has alleviated poverty on a short-term basis through the Expanded Public Works Programme, which provides short-term jobs and skills. It has also supported about 15 million South Africans, of whom 10 million are children, through social grants.
We have an effective social security system. Many households would have no food if it were not for the social grants. We are improving the economic situation and continue to work towards building bridges between the transition from social security to meaningful and decent work.
The social assistance programme is the ANC-led government's most direct means of combating poverty. By the end of 2011, nearly 15,3 million people were eligible for social grants, from 2,5 million in 1998. Although grants are targeted to assist potentially vulnerable members of society - the young, old and disabled - more than half of households benefit from social assistance.
The social grant system has been expanded by extending the age limit for child grants to the child's 18th birthday. The elderly, like other vulnerable groups, have been neglected by an uncaring apartheid governing system. Elderly Africans, particularly those in rural areas, continue to suffer even more. A higher old-age grant for those over 75 was introduced in 2011, and the means test threshold for the old-age grant and disability grant was increased significantly in the same year. In 2012-13, R104,9 billion is allocated to social assistance, rising to R122 billion in 2014-15. The number of grant recipients is set to rise from 15,6 million in 2011-12 to 16,8 million in 2014-15.
Achieving an appropriate level of funding for the National Health Insurance is necessary to ensure that the tax structure remains supportive of economic growth, job creation and savings. The National Health Insurance will be phased in over a 14-year period, beginning in 2012-13.
The new system will provide equitable health coverage for and accessibility to all South Africans. Over time, the new system will require funding over and above current budget allocations to public health. It is expected that an additional revenue source amounting to R6 billion will be needed in the year 2014-15, which is not currently budgeted for in the Medium-Term Expenditure Framework.
Employment is the most effective route out of poverty and boosting long- term job creation remains an overriding objective of economic policy. Over the short-term period, the ANC-led government has provided temporary work through the Expanded Public Works Programme and related initiatives.
Public employment services help job seekers to find jobs and training. Further education and skills development programmes are intended to bolster higher employment and productivity. Job creation has to be complemented by a well-designed social insurance framework, both as protection against unemployment and income vulnerability, as part of the broader social wage.
Reforming social security and health care and the way these are financed presents an opportunity to improve the scope and fairness of social expenditure. As in the envisaged design of social security arrangements, the principle of social solidarity lies at the heart of health reform and the national health insurance will extend to everyone.
I would like to draw the attention of this House to the relationship between social security and the broader global crises, specifically the European sovereign debt crisis. In times of economic crisis, priorities normally shift and countries move to defend their own economies from the fall-out.
The economic and financial crisis has placed social insurance systems under pressure. The crisis also challenges the financing of social security systems. However, financial pressure is stronger on systems that rely heavily on contributions and not taxes, thus generating new debates on how best to finance social security systems.
The Freedom Charter commits us to a preventive health scheme run by the state, free medical care and hospitalisation provided for all, with special care for mothers and young children. There have been achievements in improving access to health care. However, much more needs to be done in terms of the quality of care, making services available to all South Africans and ensuring better health care outcomes. The ANC-led government has seriously embarked on the reduction of inequalities in our health system, improving the quality of care in public facilities, boosting the capacity of our human resources and stepping up the fight against HIV and Aids and other diseases. Health reforms involve the mobilisation of available resources in both the private and public health sectors to ensure improved health outcomes for all South Africans.
In this, the centenary year of the ANC, the President of the Republic, President Jacob Zuma, is honouring the legacy of the liberation movement by ensuring that we are on the path towards economic and social justice, where all will be free from the indignity of poverty. Our goal is very clear: we want to have a country where millions more South Africans have decent work, greater employment opportunities, modern infrastructure and a vibrant economy in which the quality of life is high. Together we have the responsibility to work hard to make this a reality. Government alone cannot solve the challenges faced by the country, but working together, solutions are possible. We know well that if we work alone, none of us can achieve any success. We must, therefore, act together as a united people.
Yo fhedza khomba ya Madzinga. ?ala dza vhathu. Aa! [U fhululedza.] [I have finished. Thank you. Salute! [Applause.]]
Madam Deputy Speaker, the ACDP wishes to commend the Minister and National Treasury on a Budget that was broadly well received by most sectors of society. We fully support its main thrust, which is about galvanising society behind a national effort to place the country on an investment-led growth path. This major shift from consumption spending to spending on the production side of the economy is significant and is to be welcomed.
At the same time, the Minister has remained committed to fiscal sustainability. We were pleasantly surprised at the decreasing Budget deficit, both for the current year and the next financial year. One wonders, hon Minister, what more one is required to do to satisfy certain ratings agencies.
The projected fiscal framework depends of course on a rise in revenue, coupled with economic growth as well as restrained government expenditure. As you can see, hon Minister, I have had my haircut. We share your view that departments are expected to do the same to achieve the forecast savings of R27 billion over the medium term. The ACDP also raised concerns during discussions about the 32% capital underspending by provinces and municipalities. Considering the massive infrastructure roll-out, how will we ensure, hon Minister, that, to quote you, "infrastructure will be delivered on time and on budget"? Close co- operation with the private sector is clearly very necessary and required. It is also essential to root out wasteful and irregular expenditure and corruption, considering that government expenditure will, for the first time, breach the R1 trillion mark.
The Gauteng freeway tolling system remains a bitter pill to swallow, notwithstanding the reduction in the toll fee from 66c to 30c per kilometre, and the monthly capping. This is on top of the 20c increase in the fuel levy. Opposition is not so much about the price, but the principle of tolling suburban routes. However, in conclusion, the ACDP will support this report.
Madam Deputy Speaker, in his state of the nation address the hon President said that the vulnerable and the poor should be given preference. In view of the global economic turmoil and domestic challenges, the MF will be watching whether all of the Budget's reforms reach the man in the street and the matriculants who did not get access to universities because of budget constraints, and whether it deals precisely with high food costs and the devastating impact on the poor, particularly the pensioners.
The key is job creation. Minister Gordhan is correct that in order to achieve the target of 5 million jobs, we must have a growth rate of 7,5%. Currently we are just on half. We must be reminded that the United States has come out of a recession through the creation of small, medium and micro enterprises, SMMEs, and the informal sector. Therefore more funding must be directed towards this area, to vulnerable groups and, particularly, to minority communities.
The high fuel cost will serve as a negative impediment in the advancement of our economy.
We welcome the infrastructure programme but cherish the hope that it does not open up gaps for corruption. The MF will support the report.
Deputy Speaker, if we are to embark on an historic infrastructure expansion project, then let us reflect for a moment on the fiscal challenges posed by this project.
Sorry, hon Ross. This is the hon Ross's maiden speech. I have just been told. [Applause.]
Thank you, Deputy Speaker. The greatest part of the burden will be carried by our state-owned entities and the development finance institutions. But most importantly, the private sector will have to contribute significantly to the success of this project, both in terms of capacity and, of course, in terms of funding. Private-sector role-players will therefore have to be included not only in the Presidential Infrastructure Summit, but also in the Presidential Infrastructure Co- ordinating Committee. Nonetheless, we all acknowledge that the role of state-owned entities will be vital to the infrastructure project.
This brings the important issue - and I think this is a thorny issue, hon Minister - of administered prices to the fore. The current approach, whereby ordinary citizens pay for the construction of new infrastructure investments in the form of high price increases, la Eskom, is certainly unacceptable. It places pressure on the most vulnerable in our society and does remarkable economic damage to our country. We need to find a new financing solution, where assets pay for themselves over time. Citizens should not be forced to pay for new assets up front but rather later, when utilising these assets. It is just a fact to know that consumers must pay for consumption and not for capital expenditure. That should be the primary departure point.
We need to find partners that can help fund the construction of these projects now, so that we can pay them off over time and public-private partnerships, via our development finance institutions, could co-finance our build plan.
Expecting the state to go it alone now, on the back of massive price and tax increases for ordinary South Africans, is not realistic. If we consider financing infrastructure expenditure through a combination of fiscal allocations, borrower and user fees, the accumulative effect of excessive rises in prices will negatively impact on the economic performance of business and also of industry.
User fees and the principle of "user pays" should be implemented with caution and tariffs should be inflation-related. We need to price infrastructure in a way that makes us competitive and plan our prices better in advance. Hon Minister, South Africa has declined in terms of relative competitiveness and ease of doing business. However, the good news is that if we find the right private-sector partners, with the right know- how and deep enough pockets, especially in funding the construction phases of the infrastructure expansion, we can responsibly finance this project. Then this project will not only aid in modernising our country but also help to reduce poverty, create work and expand employment opportunities to more and more South Africans.
Undeniably the key challenge is in attracting the right partners and striking the right deals to achieve our goals in terms of debt sustainability. I think we have done well so far in our goals. But to do this, we need to invite the private sector to join the Presidential Infrastructure Co-ordinating Commission. [Applause.]
Sekela-somlomo, zihandiba, nezinxiba-mxhaka ezikhoyo kule Ndlu, ndivumeleni ukuba ndibethe koomofu, okokuqala ... [Deputy Speaker, esteemed honourable guests in this House, allow me to be brief. Firstly ...
... let me, on behalf of the ANC, express our sincere condolences to the Deputy Minister, whose mother passed away and was laid to rest this past Saturday.
Sithi ke singumbutho wesizwe, ungakhali ngathi awunathemba, ndoda yakuthi; sikho sonke. [As the ANC, we say, you must not lose hope, my brother; we are all with you.]
Judging by the overwhelmingly positive response from almost all sectors of our society, this year's Budget has indeed been a ground-breaking one. What drives this response is the public acceptance of the fundamentals of our policies to transform the social and economic landscape of this country. Within the economic transformation trajectory, the Budget had to deal, in the short and medium-term, with the five key priorities of the ruling party.
Given the constraints of our mixed economic system, the success of the funding and resourcing of these priorities will require a creative balance in our fiscal, revenue and tax policies. These policies have to be geared towards supporting the key focus areas of our economic transformation agenda, identified in the New economic Growth Path strategy, which seeks to alter the structure of our economy. It specifically puts forward a developmental approach that is based on the enhancement of inclusive growth and improving sustainability. This approach should serve as the criterion by which we should assess the soundness of our fiscal, revenue and tax policies, as they are critical levers in funding our priority programmes.
According to the New Growth Path, the core measures for sustainable growth are an improved balance on current accounts, combined with a greater reliance on domestic resourcing of investment. Some of the strategies proposed to achieve this include, among others, tax measures to stabilise capital inflows and outflows, measures to encourage the redirection of domestic funds towards developmental investment, supporting company investment in the local economy, and by targeted utilisation of financial savings. These measures can be achieved through a well-balanced regime of fiscal, revenue and progressive tax policies.
The New Growth Path's emphasis is on expansion of public spending, balancing it with an appropriate and progressive fiscal, revenue and tax policy regime and improving economic efficiencies. Its main thrust is spending on production-based, state-led investment, as opposed to a predominantly consumption-based approach.
Viewed against this model, the fiscal policy addresses some of the pertinent concerns going forward, such as stabilisation of public debt and how we focus on a qualitative shift in our spending patterns in the manner that is proposed in the New Growth Path. The fundamental qualitative shift is a strategic focus away from predominantly consumption spending towards a more production-based one. We welcome the Minister's announcement that this year, in due course, we will have a long-term fiscal trends report that will form the basis for a sustainable fiscal framework.
The tax proposals, as contained in the 2012 Budget Review, are equally consistent with our broad economic transformation agenda, identified in our New Growth Path. Those proposals that are most consistent are relief for micro and small businesses; an increase in effective capital gains tax rates; reforms to tax treatment of contribution to retirement savings and further reforms of the tax treatment of medical scheme contributions.
As is the case with the fiscal policy study, we equally welcome the announcement of the tax policy research projects to be undertaken during the 2012-13 financial year.
Umbutho wesizwe [The ANC] is encouraged by the overwhelming support these policies have received from the majority of South Africans, most of whom constitute the unemployed and the poor. We believe that these policies are indeed the correct ones to answer the challenges of unemployment and poverty faced by our people. The fiscal, revenue and tax policies outlined in this Budget will go a long way in supporting our economic transformation and development plan through, among others, expanding public spending on infrastructure investment to achieve exclusive and sustainable growth.
It is apt to recall the President's exhortation to write a new South African story about how, working together, we are driving back unemployment and reducing economic inequality and poverty. The incontrovertible truth is that our infrastructure continues to tell an old and ominous story of how an illegitimate oligarchy intentionally created high unemployment, deep poverty and extreme inequality. History is now presenting us with an opportunity to redress the imbalances of the past.
An infrastructure build of the magnitude confronting us compels a strong developmental state. Planning and monitoring have to be consolidated to ensure the effective implementation of concrete plans. The state must demonstrate that it achieves what it sets out to and its entities and departments have to discharge their mandate fully compliant with legal prescripts.
Fiscal expenditure must at all times be regular and in accordance with generally accepted accounting principles and in compliance with Treasury regulations and other relevant regulatory measures. Of supreme importance is the broadening of the skills base, with particular emphasis on scarce skills within the public sector, to ensure the requisite capacity to drive socioeconomic imperatives and accelerate transformation.
We welcome the R844,5 billion budgeted and approved for public sector projects. We agree to the rigorous assessment of all projects to determine the feasibility thereof. We have noted, as Treasury has, that public-sector capacity to implement projects is currently inadequate. However, we conceptualise the inadequacy referred to as a manifestation of a continuing skills deficit. Our earnest call goes to those private companies that either import or poach skills to engage in skills development of the currently unskilled and to extend training for newly qualified graduates.
We call on state-owned enterprises to prioritise skills development and mentorship to produce the requisite skills for the economy. We are also convinced that, properly handled, the public infrastructure build that was announced in the Budget offers a golden opportunity for artisan training. Our plea therefore is that these projects should not just offer employment for the skilled and unskilled but also ensure that the unskilled become skilled.
It is encouraging to note that Medupi and Kusile coal-fired plants are expected to start operating in 2014 and the Ingula Pumped Storage Scheme is on track to assist with peak capacity supply from 2014. Of considerable importance are the Republic's plans to provide 25% of generation capacity from renewable sources by 2030, in compliance with the Kyoto Protocol and the Durban Accord.
We agree with the hon President that we need an electricity price plan that will ensure that Eskom and the industry remain financially viable and sustainable, but which remains affordable, especially for the poorest of the poor. We will therefore await with keen interest Eskom's proposals on tariff management as our interests are always with the poor and the economically marginalised.
We are pleased with the recent completion and commissioning of phase 1 of Transnet's R23,4 billion new multiproduct pipeline. The pipeline is to increase capacity to meet inland demand and moderate road congestion by reducing the number of fuel tankers travelling between Johannesburg and Durban.
According to the SA Institute of Civil Engineers, municipal infrastructure is deteriorating in many places. Bulk water facilities, particularly in small towns and rural areas, sanitation in many municipalities and provinces, as well as rural roads are particular areas of concern. It is therefore important that we focus our efforts on the renewal of such infrastructure, because the dignity and general health of our people may be compromised.
We need to make use of project management expertise gained and lessons learnt in preparing for the 2010 Soccer World Cup to support infrastructure development. As noted in the World Cup experience, the inclusion of experienced engineers and other delivery experts will ensure better planning, assessment and implementation of projects.
The issue of fraud and corruption cannot be left unattended as it continues to hamstring service delivery efforts. We support Treasury in taking further steps to combat fraud and corruption, including strengthening the national procurement architecture, but we should go further and set up a procurement office. Vetting of all procurement officers is greatly welcomed as part of our campaign, as is developing a national price reference system.
We again call on South Africans, including those in the opposition benches, to heed the President's call to write a new story. May I remind the opposition that obligations freely assumed must always be observed and that oppositionism is reneging on a binding oath to promote the spirit and purport of the Constitution.
In conclusion, working together, we will do more to build infrastructure to drive economic growth and employment. Yes, the writing of the new story must begin in earnest. We therefore commend the political leader of the department and urge him to continue the splendid work he is doing. We are very proud of him, his team and the entire department. We are very sure that our funds, our finances and the infrastructure that we are talking about are spearheaded by hands that are committed and fully committed under the ANC and the ANC alone.
Deputy Speaker, hon members and colleagues from the Cabinet, let me firstly thank all the parties for their reasonably enthusiastic and unanimous support for our first R1 trillion Budget. Thank you very much. [Applause.] It's fine, you can clap. We need to applaud everybody. [Applause.] Let me also extend our appreciation to the chair of the standing committee, Mr Mufamadi and his team, and also the NCOP committee and its chairperson, Mr De Beer, for the excellent recommendations they made as a result of their deliberations.
We want to reiterate our three key fiscal guidelines which underpin this fiscal framework. The first guideline is countercyclicality, which means that when the economy is not doing well, the state must play a supportive role, and when it is doing well, the state should withdraw its supportive role and build up its resources. The second guideline is intergenerational equity, which means to manage your finances today so that you don't impose too much of a burden on future generations. The third guideline is debt sustainability, which says manage your debt in such a way that we don't end up where the boomerang might go, Mr Koornhof. I think all of us would say that the Treasury team and the Ministers' Committee on the Budget have done extremely well in presenting this fiscal framework to South Africa. In addition, we have managed to carefully balance support for economic growth and job creation - however modest it might be - together with a medium-term fiscal consolidation approach, so that we don't make the mistakes that Europe, belatedly, is beginning to realise it had made. Today, a key European commissioner responsible for social security is having reservations about the extreme emphasis on austerity and the impact that it actually has on ordinary people.
Many speakers correctly pointed out our emphasis on changing the composition of expenditure. Let me caution that these sorts of changes in composition don't happen overnight. What we are going to require is a conscious, multiyear effort to ensure that consumption on the one hand, the wage bill on the other hand and the interest bill on the third hand all change in order to achieve and in favour of the investment part of our Budget being increased far more than we have increased it up to this point in time.
Linked to this - as many hon members have pointed out - is our commitment to present a draft, long-term fiscal framework later this year, so that this constant apprehension that is brought to the fore - will we cope with National Health Insurance, NHI; will we cope with social security changes; will we manage this infrastructure expenditure? - is answered within the context of a sustainable framework that will continue to reflect the kind of balances that we have committed to through the fiscal guidelines. As the chairperson of the committee has indicated, the moderation of consumption spending - on which a lot more needs to be done than the small haircuts that we are talking about at present - is the kind of direction we want to take and a commitment that we actually want to sustain.
Similarly, although we as a country are not doing extremely well on the jobs front, we can certainly record the fact that hundreds of thousands of jobs were created in the last year. As the chairperson pointed out, some 850 000 jobs could be created over the next three years, even at a modest level of growth. If we are able to ignite growth further within the South African context and get the enthusiasm - as Mr Swart was saying - of all South Africans to start employing more people and creating more enterprises, that number could increase quite formidably.
Several hon members have raised the question of infrastructure funding, which was more than adequately dealt with in both the Budget Review and the Budget Speech. Let me repeat that infrastructure funding is a combination of funding - from the fiscus, from debt, from state-owned enterprises, SOEs, from development finance institutions, DFIs, and from the private sector, where their contribution is appropriate and cost-effective at the end of the day. As we said in the Budget Speech, no good project will not be funded. The real challenge that all of us must acknowledge, and have acknowledged, is the challenge of putting together an implementation machinery, both within and outside of the state, that can effectively deliver on the infrastructure projects that we are putting together.
I am very confident that, under the guidance of the President, we will be marshalling all of our forces, which will include broader elements of our society, over the next few months so that we can put together this capacity that will enable us to get a far more effective machinery in place.
Several hon members made reference to administered prices and their impact. I am told a study was undertaken a few years ago by the National Treasury. We are going to take the dust covers off that study, take another look at administered prices in South Africa and the impact both on our economy and on individual citizens and promote, within government, a more co-ordinated approach on this question so that we don't impose an unmanageable burden on South African citizens. We will come back to Parliament on some of those questions.
I congratulate the hon Harris on his maiden speech as the spokesperson for finance for the Official Opposition and thank him for his support for the broad thrust of the Budget. However, let me assure him that building a capable state is part of our mission. However, hon Harris, building capable states doesn't happen overnight. States are built over thousands of years. The Greek state has been there for many thousands of years and you can see the condition that they find themselves in today.
So, what we have and what we need from all of us is the commitment to build the capability of a developmental state. We need to build the skill and capacity within this state that we are talking about and not be cynical - and I'm not saying that you are - about the mission to create a capable state. A capable state is what we require in order for it to play the developmental role that we actually require it to play.
The hon Harris knows that in the committee we talked about the word "cadre". I want to repeat to him that the word "cadre" comes from a long and proud tradition, meaning the best informed, the most committed, the most highly skilled, the most conscious, the most socially aware and the most socially committed. That is a cadre! [Applause.] What we have come to call "cadre deployment" is a mistaken notion. Where we would agree with every South African is that political office bearers and senior managers within the state must do better at appointing capable people in the right jobs, and the hon Tshabalala actually repeated that for us. [Interjections.]
I want to assure both the hon Koornhof and hon Harris that we are nowhere near Greece and we will never get there, whether we have a boomerang or not, hon Koornhof.
Hon Ambrosini, I must say that your resorting to concepts of nationality and ethnicity to defend your particular view of life is a rather regrettable and unfortunate way of managing a debate. [Interjections.] People like me have been nonracialists for many, many decades. Equally so, there are people on this side of the House who have a deep and profound commitment to nonracialism, who would never, never have used ethnicity as the basis for a political attack. You really need to change your speechwriter now. [Applause.]
The hon Ntapane, as well as several commentators both outside and inside the House, have made reference to these notions of the fuel levy, roads, who pays for the roads and so on. Let's look at some of the numbers. The fuel levy brings in R42,8 billion, excluding what goes to the Road Accident Fund. Of that approximately R43 billion, R9 billion goes to the metros as a way of financing them after the regional services councils' levies have been withdrawn. On the other hand, government expenditure on roads is R61,4 billion. Of this, R15 billion goes to the South African National Roads Agency Limited, Sanral; R12,6 billion goes to provincial roads; R13,8 billion goes to municipal roads and some R20 billion goes to rail and bus subsidies. Generally, a lot more is spent on roads and transport, more generally within the government system, than what we collect through the fuel levy.
Let me congratulate the hon Tshabalala on her maiden speech and her very neat balance between social security, on the one hand, and the necessity to create decent jobs in South Africa as the key way to work ourselves out of poverty, on the other.
To the other hon members, I don't have the time to address all of your issues, but thank you very much for your contributions and, once again, thanks to the committee for the excellent work it has done. [Applause.]
Deputy Speaker, on behalf of the Chief Whip of the Majority Party, I move:
That the Fiscal Framework and Revenue Proposals, and the report of the Standing Committee on Finance on the Fiscal Framework be adopted.
Motion agreed to.
The Fiscal Framework and Revenue Proposals, and the Report of Standing Committee on Finance on the Fiscal Framework accordingly adopted.