Hon Speaker, Hon Deputy President, Ministers and Deputy Ministers present here, hon members, as we introduce the debate on the proposed budget framework for 2013, we do so consciously aware that the global economic environment remains uncertain, with most countries facing a common threat of challenges with specific grievances that differ and vary from country to country.
Most emerging economies today suffer from a common economic deficit and the confluence of external or exogenous factors and internal or domestic economic challenges that are characterised by slow growth, unemployment, poverty and inequality between the rich and the poor.
It is this growing social distance that undermines global social cohesion and that undermines the ability of nations to attain social cohesion and overcome economic barriers. Communities need to be assisted to overcome social and economic barriers in order to achieve this social cohesion that we talk about. Labour needs skills to function in a global economic environment, but it also needs leadership to champion and protect their interests on the factory floor. Governments, the world over, need policies to combat the triple challenge of an economic system that continues to produce youth unemployment, poverty and inequality.
While we understand the extent that the external challenges impose on many developing nations, resulting in the failure of developed economies particularly in the USA and Europe, the challenges are underpinned by our unique circumstances, in our case the confluence of both exogenous and endogenous factors.
The recently released 2011 Census results aptly depict or capture the challenges we have to grapple with and respond to in this Medium-Term Budget Policy Framework. The Census results tell us a story - a journey we have traversed and travelled as a people to advance the nation for it to have a just, fair and equitable economic system in order to create a nonracial, democratic and prosperous society.
Census 2011, again, tells us a story of an economic system that is less efficient in the redistribution of wealth, an economic system that has failed the majority of our people ...
Hon Mufamadi, would you take a seat for a moment please. Members, there is much too much noise in the House. One can't even hear what the speaker is saying. Could you please tone it down on both sides of the House? Thank you.
Chairperson, it took me half a night to prepare this speech for these hon members. So, I agree with you that I need to have their ears.
Census 2011 also tells us a story of an economic system that is less efficient in the redistribution of wealth; an economic system that has failed the majority of our people, blacks in general and Africans in particular; most dangerously, an economic system that increasingly gives fewer job prospects to young people.
Therefore, the Census results implore us to imagine new economic solutions for a better future. They also oblige all of us to realise the importance of sustainable economic growth over a longer period for wealth creation, and, most importantly, which will then ensure job creation as a fundamental base for wealth distribution.
It is highly critical that the Medium-Term Budget Policy Statement deliberations take full cognisance of the challenges and successes we have had in the past two decades, as revealed by the 2011 Census results. The Census results are not just about population growth. They also reveal startling information on how far we have come in creating a society that has become so highly unequal. Equally, the results tell us a story of resounding successes, particularly in education and health. They tell us of an economic system that has entrenched income inequalities or disparities between black and white - a story of "We have never had it so good like this before." Indeed, it is a story for others that says:
Dit is lekker my kind, ja dit is lekker vir julle mense. Dit is hoekom julle ons maar kan vloek. Dit is hoekom die lede van die opposisie party, veral mev Helen Zille, sonder 'n uitnodiging by die President van die Republiek van Suid-Afrika se private woning kan gaan toyi-toyi, en niks gebeur nie. Dit is lekker vir julle mense, dit is lekker! [Tussenwerpsels.] (Translation of Afrikaans paragraph follows.)
[It is nice, my child, yes it is nice for you people. That is why you may curse us. That is why the members of the opposition party, especially Mrs Helen Zille, can toyi-toyi without an invitation at the private home of the President of the Republic of South Africa, and nothing happens. It is nice for you people, it is nice! [Interjections.]]
Yes, it has been so nice for you. It has been so nice for you.
In our comfort and discomfort, the key question confronting us is what the price will be to reverse the inequalities in our society and its unintended consequences.
History has taught us that there are moments in life when people rise to remind their leaders that something is not right, that something has gone wrong and that change is needed. Change in the world economic system is needed, for it has failed the majority of the world's citizens. It has eroded the very fabric of the universal fairness of equality and the redistribution of wealth. Every citizen has the right to participate in the economic system and earn a living.
Today we are called upon to conclude the cycle which we began in February when the Minister of Finance tabled the 2012-13 Budget. Fiscal policy guides government's decisions about revenue, spending and borrowing. South Africa's fiscal policy enables government to deliver on its developmental mandate by providing resources in a manner that is sustainable and that reinforces the stability of our economy.
As we all know, the budget is a function of economic growth that underpins sustainable developmental goals of governments. Therefore, this Medium-Term Budget Policy Statement has based its proposals on the assumption of how the economy might perform globally and locally. Let me use this opportunity to remind ourselves where we started. We said in the fiscal framework and revenue proposals debate on 6 March 2012, that the budget is about growth, job creation, infrastructure investment, education, health care, and better service delivery. In that debate we outlined that growth is not just about the pursuit of faster growth in development, but about the creation of a more equitable future, through investing in the economic and social infrastructure.
As a committee we have had the opportunity during the public hearings to listen to and engage on the proposed revised fiscal framework for 2012-13 as well as for the next three financial years' Medium-Term Expenditure Framework period, and on the assumptions underpinning the fiscal framework within the context of the global and domestic economy with various stakeholders, such as Business Unity SA, the Financial and Fiscal Commission, and many others.
The domestic economic outlook reflects that growth for this year has been revised downwards from the budget forecast of 2,7% to 2,5%. In addition, our budget deficit has been revised upwards to 4,8% of GDP, largely due to lower tax revenues. This, in itself, is not particularly high, given the developmental challenges we face. The real growth in expenditure averages at 2,9% over the MTEF period.
The counterbalance is that public-sector infrastructure investment and the activation of new electricity-generating capacity are likely to see medium- term growth. The obstacles to faster and more inclusive economic growth are primarily to be found in the structure of our economy. These are the challenges in the labour market, the real costs of energy, delivery inefficiencies, skills mismatching, the demands of industrialisation, and the need for a larger and greater emphasis on beneficiation as opposed to export extraction.
The revised fiscal framework is contextualised by cushioning the domestic economy from the global crisis as a key objective. Fiscal discipline is encouraged, and growth in real noninterest expenditure will average at 2,9% a year over the next three years, as I have already said.
This approach is brought about by declining revenue generation ...
Hon member, your time has expired.
Hon Chairperson, the ANC supports the 2012 Medium-Term Budget Policy Statement. I thank you. [Applause.]
House Chairperson, the DA welcomes the "spending freeze" in the Medium-Term Budget Policy Statement. This means that for the first time since 1998 government will not increase overall spending in October. This is the main reason why we support the statement. The Minister gets sensitive when I refer to "fiscal gymnastics", but I have to point out again that this reduction depends not only on savings, but also on the R3,5-billion in underspending by departments and the full use of the contingency reserve of R5,7 billion. Nevertheless, however one gets to it, reduced spending was urgently required because our expanded budget deficit is now 4,8% of GDP, much higher than the emerging market average of 1,9%.
The deficit has been pushed higher by a reduction in tax revenue, plus an additional R5,5 billion required to settle the public sector wage bill. This is because that settlement breached the 5% cap imposed by the Finance Minister in February. Therefore, we note that the statement claims that "Government will take a more deliberate approach to managing overall employment and curtail growth in personnel numbers." We look forward to more detail on how this will happen.
Deficits drive government debt, and our debt has tripled in the past five years. Alarmingly, it continues to increase in this Medium-Term Budget Policy Statement right up to 43% of GDP at the end of the Medium-Term Expenditure Framework period. As far as we project in this budget, our debt will be increasing.
The Minister enjoys comparing South Africa's debt to that of the European economies that are currently in fiscal crisis, but the more accurate comparison should be between us and other emerging markets whose debt now averages at only 35%. Clearly, we are out of step there too.
But we are also out of step in terms of economic growth. Our growth in 2012 will be 2,5% according to Treasury's forecast. On average, emerging markets will all manage twice, thus 5,3%. This rising debt and slow growth show that the Minister had very little choice but to embark on budget tightening.
These factors also highlight the damage that the adoption of populist policies at Mangaung could cause for our economy. The damage is just as likely to be caused if sensible policies continue to be blocked by the Congress of South African Trade Unions, Cosatu, on ideological grounds, or by the capacity of the ANC government to implement them.
For example, there is still no sign of the implementation of the youth wage subsidy announced by Treasury two and half years ago. Even though they acknowledge that one million people have given up looking for work in the past three years, the National Treasury seems to have run out of ideas on how to create jobs. In the statement the focus is mainly on the Commission for Conciliation, Mediation and Arbitration, the CCMA, and on the Expanded Public Works Programme.
But there is one small silver lining in the cloud of ideological deadlock in this government, and this is the commitment to the National Development Plan in this statement. Minister Manuel will be pleased to note that the plan is mentioned 14 times in the statement, with a general commitment to implementing its programmes and policies. We think that this is a serious snub for the Minister of Economic Development, Ebrahim Patel, and his New Growth Path, which is mentioned only twice and only in passing.
In the statement Treasury has chosen sides. This is something that we welcome. But, unfortunately, while the statement shows that Treasury is in charge of finances, it may not be in charge of economic policy. Active labour-market policies like the youth wage subsidy, reducing the cost of regulatory compliance, and removing trade barriers are in the statement. But unless Treasury sees them implemented, then 2012 will remain another year when they kept a firm hand on the finances, but were unable to turn their policy proposals into action. I thank you. [Applause.]
House Chair, it has not been an easy three years for the hon Minister of Finance since he delivered his Medium-Term Budget Policy Statement for the first time in 2009. We were at that time officially in a recession. He was passed the ball with the assistance of the President by the former Minister of Finance at a very difficult time. Matthew Lester said: "He has received a hospital pass." In rugby terms that is when you refer to passing of the ball, usually from the flyhalf to the inside centre, when the flyhalf tries to avoids a tackle but sets up the guy he is passing to be tackled with the ball.
From 2006 until 2009, we have seen alarming growth in the state wage bill, now consuming 40% of our national budget. This is something the hon Minister inherited from his predecessor to deal with now in recent budgets. Owing to tight fiscal policy by his predecessor, enough space was created to deal with the recession, but he was left with a huge backlog in infrastructure development for Eskom.
The Reserve Bank faces a difficult time regarding the balance of payments and to convince international investors that South Africa is the place to be. So, was it a hospital pass? If it was, the whole team suffers when your midfield attacker is hard-tackled with the ball. It is all about regrouping: trying to secure the ball and planning your next move, but it becomes a team effort, and playing conditions beyond your control start to affect your game plan.
Outside conditions like those in Europe come into play. The chief economists of the Bank of Austria and of the Bank of Singapore think Europe will be better off towards the end of 2013 if it can survive the current political crisis. Last week we saw for the first time combined strikes against austerity across Europe. France was yesterday stripped by Moody's of its coveted AAA credit rating.
Sir Mervyn King of England warned that Europe must get used to no growth or very slow growth. Greece's GDP is now 17% lower than in 2008. Youth unemployment is at 53% in Greece and Spain, and at 34% in Italy. In Greece, you bring your own food and sheets when you go to a state hospital. In Greece, wages have gone down by 11% and so too in Portugal and Ireland. Austerity is not well received in Europe, and doom and gloom remain part of daily reporting.
With President Barack Obama determined to deal with and avoid the fiscal cliff, all eyes are on China - how China will do under new leadership. South Africa cannot ignore all these factors. We are not the new Greece; we are not railing helplessly against austerity measures because of reckless overspending; we are not marching towards a fiscal cliff. But we cannot avoid what is happening elsewhere. It is time to be conservative, and time for all of us to take joint responsibility.
We are not in a debt trap, but ratings agencies have felt that our key economic and political indicators are now pointing in the wrong direction. We should deal with that; all of us. The reassurance by the hon Minister that our fiscal trajectory is sustainable and realistic is good, but we are faced with two big unknowns, both out of Treasury's control: they are the international economic situation and the state of leadership in South Africa. We are not acting as a team any more.
Certain departments are not doing their jobs. The Standing Committee on Appropriations engaged with these departments regarding their budgets' performances. We remain concerned that most departments lack capacity to implement government's priority programmes. The committee remained worried when seeing critical department failure to draw up workable plans over the Medium-Term Expenditure Framework period to utilise appropriate budget towards improved service delivery.
The Departments of Water and Environmental Affairs, Public Works, Human Settlements and Communications failed the test. We want to register our unhappiness at how the Department of Public Works' lack of capacity to budget resulted in overexpenditure in auxiliary services. Such departments are not assisting in regrouping our economy. Minister, even if you hang on to the ball after the tackle, you cannot keep it without support. You will be penalised. Let us avoid that and deal with failing Ministries; failing departments; failure and overexpenditure in state-owned enterprises; and provinces not doing their jobs.
The lack of implementation and the recent strikes in the mining and farming industries have focused the need for reform in labour relations in South Africa. The signs of institutional failure are evident in these events. We can no longer avoid the fundamental reconsideration of our labour relations. The hon Minister has hit the brakes at the right time on expenditure. Cope shall support both the fiscal framework and the Adjustments Appropriation Bill. [Applause.]
Hon Chairperson, Deputy President, Minister of Finance, Deputy Minister of Finance, hon members, guests, director-general and the team, the central objective of this debate is to politically engage with and articulate the strategic socioeconomic and policy issues that arise from the Medium-Term Budget Policy Statement, the MTBPS. It is not a budget but rather a financial operation policy plan to give effect to existing policies. It is an indicator of how fiscal revenue and expenditure over the next year will evolve. Our debate must analyse what the MTBPS must respond to - public spending and what informs public spending priorities.
The Medium-Term Expenditure Framework is instructive on how revenue shall be divided between the spheres of government, with an emphasis on strengthening capacity and efficiency, particularly in implementing reforms in provincial and municipal infrastructure planning and delivery. The overall test for economic policy and public spending remains the commitment to fighting poverty, reducing unemployment, and bringing about a more equitable society.
The MTBPS provides a number of indicators for change to the Medium-Term Expenditure Framework and these changes are guided by the Medium-Term Strategic Framework itself. These policy directives are naturally informed by the ANC's medium-term strategic framework priorities within the MTBPS. These priorities are inclusive economic growth and transformation of the economy to create decent work and sustainable livelihoods; a massive programme of economic and social infrastructure that will ensure an efficient and responsive economic infrastructure network; a comprehensive rural development strategy that will ensure equitable and sustainable rural communities and food security for all; improving the equality and quality of basic education; a skilled and capable workforce to support inclusive growth; improving health and life expectancy; intensifying the fight against crime and corruption, protection, safety and security; a responsible, accountable, effective and efficient local government system; pursuing the advancement of the African agenda and international co- operation for a better South Africa, a better and safer Africa and the world at large; and, building a developmental state, a developmental- oriented public service for improved public services and inclusive citizenship.
The MTBPS is part of an integrated strategy designed to address poverty, inequality and unemployment and to ensure a better life for all. Within this context, the MTBPS speaks to the New Growth Path, the National Development Plan and the Industrial Policy Action Plan. The Minister of Finance, in both the Budget speech and in the delivery of the MTBPS, drew a relationship between these respective policy instruments.
The National Development Plan critically examines the vexed question of the underlying cause of the main and contradictory challenges facing the nation. Its approach is typically and correctly a research methodological approach, scientifically extrapolating the base of the contradictions and not the superstructure. The National Development Plan emphasises cause and effect in its approach and that such an overview would, of necessity, have multiple dimensions. It deals with the essence of the contradiction and not the form. The plan's approach, therefore, becomes a dialectical approach. Although domestic structural constraints and imbalances are the main obstacles to faster growth, the implementation of the National Development Plan will begin to address these challenges.
The approach of the 2012 MTBPS is no different. It confronts the challenges to development in what the United Nations Development Programme describes as a highly unequal society. The fiscal framework that it puts forward seeks to concretely address the promotion of growth and development. It responds to the National Development Plan's critical challenges by ensuring fiscal and revenue proposals, thus strengthening financial arrangement planning and co-operation between the spheres of government.
The relationship of the MTBPS with the industrialisation strategy is demonstrated in the provisions that allow for the state to increase its role in facilitating growth in sectors that are able to create employment on a large scale. The financial support for the advanced sectors of our industries is vital to sustain long-term growth.
The New Growth Path identifies key areas in which jobs can be created, and the MTBPS provides this framework of support. The key structural challenges in the economy that the New Growth Path identifies are taken up in the MTBPS and, like the New Growth Path, the MTBPS cautions that this will only be achieved if social partners and government work together. It is evident that government will definitely not be able to address the challenges on its own. Therefore, the aim of the New Growth Path ensures that that becomes a possibility.
In conclusion, there is no denying the fact that far more rapid growth is needed to draw large numbers of unemployed South Africans, youth in particular, into economic activity. The NDP outlines an approach to eliminate poverty and reduce inequality by raising levels of unemployment, productivity and earnings.
Government needs to step up its efforts in combating waste, inefficiency and corruption. We need reforms that will focus on procurement systems that prioritise value for money and strengthen the anticorruption systems as a whole.
With regard to intergenerational debt, hon Minister, it is important for us to move towards investment. However, we need to ensure that the intergenerational debt that the new generation is going to incur in the longer term becomes beneficial in its current form, so that they see the benefits as and when they happen. That is quite important.
I would like to thank the Whip, Van Rooyen, and the chairperson of the committee, the hon Mufamadi, for providing leadership and ensuring that there is stability within the committee itself around the debates. Let me also thank the Minister and the Deputy Minister of Finance for this Medium- Term Budget Policy Statement in terms of issues around policy and the direction that we take. It is indeed not an easy task for them to ensure that there is stability, be it in the market or in reforms. It is a daunting task.
It is good and well, hon Koornhof, that you made the observation around what the Minister inherited from the apartheid system as far as issues of financing are concerned. It is not an easy task, and I would like to thank you for making that observation. However, hon Harris, it is not easy to live under the shadow of a human being. It is even worse becoming a shadow yourself. So, I can imagine what you go through every time you have to shadow someone. I would like you to make the time - find the time - to get educated about financial and public management. The hon Koornhof and the hon Ross make tangible efforts as far as the committee is concerned, instead of coming here and, as usual, grandstanding and not paying attention to the issues we are dealing with. You are quite correct in that Mangaung is going to drive the policy of this country. It has always done that and is going to continue to do that. Thank you so much. [Time expired.] [Applause.]
Hon Chairperson and hon members, I will start by stressing that the UDM supports this Bill. We are fully cognisant of the fact that the Medium-Term Budget Policy Statement was delivered at a time when South Africa's economic growth outlook was moderated by a number of global risks. The eurozone crisis and its impact on our current account due to the falling demand for our exports and the economic hardships confronting the industrialised countries, all taken together, caused the economic growth outlook to deteriorate significantly, thereby negatively affecting government revenue.
Government is operating in an environment in which there are declining revenues and ever-increasing demands for government not only to spend the economy out of recession, as the Keynesians maintain, but also to meet its unsustainable expenditure on social security.
These issues put an increasing amount of pressure on the Finance Minister to walk the talk in the fight against corruption and maladministration, and in improving overall government efficiency. Giving citizens value for their money must be foremost in everyone's mind.
While we sometimes scream in ululation when the Minister manages to keep a healthy fiscal framework under very challenging economic circumstances, our excitement is usually interrupted by reports that unauthorised, fruitless and wasteful expenditure runs into millions of rand every year. It is also cut short by reports that government departments wastefully spent over R5 billion on catering and entertainment in the past year. It is also rudely disrupted by the ever-ballooning public sector wage bill, as the hon Koornhof said, which continues to skyrocket, and by the fact that this remuneration is not commensurate with the public sector workers' responsibilities.
Bizarrely, this public sector wage bill continues to increase rapidly while service delivery is at an all-time low. We, however, welcome the establishment of the Municipal Support Infrastructure Agency, which should help struggling municipalities, especially those in rural areas, to improve the quality of their infrastructure service delivery, and therefore the quality of life of previously disadvantaged communities.
We also welcome government's renewed focus on trade in Africa, considering the eurozone crisis. South Africa has played an important role in exporting the principles of peace and good governance to Africa, but has not always taken full advantage of the economic opportunities on the continent. We once more call on the Minister to root out corruption and wasteful expenditure in every sphere of government. Thank you, hon Chairperson. [Time expired.]
Hon Chairperson, it is well recorded that the hon Minister of Finance feels very unhappy about the downgrading of South Africa by commentators and ratings agencies. I want to say to the hon Minister that he reminds me of a mother who attended the passing-out parade of soldiers. When the soldiers marched in front of the public, her son was the only one out of step, but she proudly turned around to the other mothers and said, "Look, my son is the only one who is in step."
Hon Minister, whether you like it or not I can understand that you feel like a mother when it comes to the economy of South Africa, but if you are out of step on certain matters, you must, at some stage, recognise the realities of South Africa.
Agb Voorsitter, as 'n mens na die internasionale televisie gaan kyk, wat moet graderingsagentskappe dink as hulle sien hoe mense met pangas en spiese in hul hande staak? Hoe kan 'n mens hierdie graderingsagentskappe kwalik neem as hulle op die internasionale media kan sien hoe fabrieke se kratte aan die brand gesteek word en hoe daar deur die werkers in Suid- Afrika geplunder word? Wat kan 'n mens verwag as daar internasionaal gesien word dat die polisie moet ingryp, insake werkers wat buitengewone ho eise aan lone stel, om wet en orde te handhaaf? Dink u regtig dat - as ons in terme van die produktiwiteit in Suid-Afrika en die eise van daardie lone moet gaan kyk - graderingsagentskappe vir die wreld moet s, "Kom bel in Suid-Afrika want dit is veilig."? (Translation of Afrikaans paragraph follows.)
[Hon Chairperson, upon watching international television, what must the rating agencies be thinking when they see how people with pangas and spears in hand are striking? How can one blame these rating agencies when they are watching the international media and can see crates at factories being set alight and plundering taking place by the workers in South Africa? What can one expect when it can be seen internationally how the police have to intervene, regarding workers who are demanding exceptionally high wages, in order to maintain law and order? Do you really think - if we are to regard those wage demands in terms of productivity in South Africa - that rating agencies should be telling the world, "Come and invest in South Africa, because it is safe."?]
This is not necessary to downgrading South Africa.
The biggest threat in any crisis is when the responsible Minister is in a state of denial with regard to the facts. I want to ask you to reconsider and to look at that matter.
Aan die ander, positiewe, kant verwelkom die VF Plus die beperkinge wat die agb Minister in terme van die mediumtermynbegroting aangekondig het. Maar ek wil ook vir hom s dat dit net suksesvol gaan wees as hy bevoegde amptenare in daardie posisies aanstel om toe te sien dat die belastingbetaler se geld effektief en produktief aangewend word tot voordeel van al die belastingbetalers en mense in Suid-Afrika, en nie net vir sommige kaders wat hul eie sakke, deur korrupsie, daarmee volmaak nie. Dan gaan hy nie slaag nie. [Tyd verstreke.] [Tussenwerpsels.] (Translation of Afrikaans paragraph follows.)
[On the other, positive, side the FF Plus welcomes the restrictions announced by the Minister in terms of the medium term budget. But I also want to tell him that these will only succeed if he appoints competent officials in those positions to see to it that the taxpayer's money is appropriated effectively and productively for the benefit of all taxpayers and the people of South Africa, and not just for some cadres to line their own pockets with through corruption. Then he won't succeed. [Time expired.].[Interjections.]]
Hon Chairperson, Deputy President of the Republic of South Africa, Ministers, Deputy Ministers and august members of this House, I stand here on behalf of the ANC in a bid to clarify certain issues that other people do not understand, like the speaker just before me. I am tempted to clarify the fact that the role of opposition parties these days has turned to being a misleading kind of informer who sensationalises issues and overstates the reality of things. I want to put it very clearly, hon Minister of Finance, that whatever is being said by the opposition must not weaken you but strengthen you, because it is not justified, and it is factually incorrect. Given that we are dealing with the Medium-Term Budget Policy Statement, the MTBPS, the economic outlook is an obvious concern in the inputs. Here the majority of inputs received paid great attention to forecasting and used various assumptive models on both the external and internal factors affecting the economy. These spoke to the Medium-Term Expenditure Framework, the MTEF, period and largely reflected the view that in 2013 an improving global economy was likely to support stronger growth in domestic exports, while implementation of key economic infrastructure should bring about faster growth.
Similarly, inputs predict that the economy will remain vulnerable to slow global recovery and domestic factors such as the recent labour unrest, a point which was raised sharply by the Financial Fiscal Commission, the FFC. In the absence of positive shocks, the commission predicted that GDP growth was not likely to recover.
Inflation was another area that all submissions paid attention to. Most submissions agreed that inflation is expected to remain within the target band of 3% to 6% over the next three years, averaging at 4,9% in 2015. The greater concern that the committee noted, something which is not a new matter, is food prices and, in particular, administered prices which will together be responsible for keeping the consumer price index, CPI, towards the upper end of the inflation target band.
Specifically on administered prices and in particular on Eskom's electricity costs, the majority of submissions raised serious cause for concern both in terms of billing and in administrative inefficiencies. It was recorded that Eskom increased electricity prices significantly between 2000 and 2010, while other emerging countries have experienced a decrease in costs. The manufacturing sector further expressed the concern that higher interest rates increased the cost of capital to internationally uncompetitive levels. There were major concerns raised in submissions that domestic supply constraints, including electricity rationing in manufacturing and disruptions to mining outputs, have exacerbated the pressure on exports, leading to weaker global demand and that the weaker rand has provided little support for manufacturing growth.
In addition, the importance of mining and the manufacturing sector to the export sector and labour absorption was raised. Also, in particular, the FFC was of the view that the government should closely monitor these sectors. This concern was expressed for two reasons: one is the contribution of these sectors to the GDP and the negative impact on GDP growth, as these sectors shrink in size; the other is the jobs targets that have been set nationally and the impact of both the manufacturing and mining sectors further shrinking over the medium term.
Most submissions touched on the impact of illegal strikes and stoppages in the mining sector and drew a strong connection between the mining industry and the manufacturing sector in terms of exports and employment. Submissions applauded National Treasury's approach in campaigning to combat waste, inefficiency and corruption, including procurement reform. The addressing of shortcomings in planning, procurement and contract management and the focusing of departments towards prioritised spending and identified savings, which amount to R40 billion over the next three years, was widely welcomed.
On government financing and debt, in line with the fiscal policy objectives of stabilising debt, submissions broadly reflected support for subdued growth in noninterest expenditure towards the last year of the MTEF period.
Within 90 days of adoption of this report by the House, the ANC hereby requests the hon Minister and the National Treasury to report back to the House on government's approach to managing overall employment and moderating expenditure on compensation of employees. The National Treasury should also develop and provide the House with a contingency plan in the event that macroeconomic projections do not result, as expected, in the proposed fiscal framework, and should report back to the Standing Committee on Finance.
The ANC supports this MTEF. We are a responsible organisation that is in charge, and we are in charge and responsible, and we will never point fingers at the opposition for any failure ... [Interjections.] ... but this reminds everyone that in this country of South Africa, democracy has actually afforded an opportunity to those who are not supported out there to have a say. Unfortunately, their say is not assisting anybody in this country, especially those who are considerate enough to prioritise the poor.
Major concerns were raised in submissions in that domestic supply constraints, including electricity, were an issue. We must not say, knowing for a fact that it is not correct, that the hon Minister is in denial. Those are blue lies. That is something that we cannot accept as the ANC, but we are saying, in addition to what the chairperson has said here, that this is a multiparty committee. [Interjections.] These hon members have a responsibility to participate in the committee, but they choose to go wayward, and we will not be derailed by them.
Siza kwenza umsebenzi wethu apha, asoze silahlekiswe nini ningazazi ukuba nifuna ntoni na. Enkosi. [We will perform our duties here, and we are not going to be misled by the people who do not know what they want. Thank you.]
Chairperson, Deputy President and hon Minister, the ACDP supports the Medium-Term Budget Policy Statement. In our view, the Minister of Finance has not departed from a prudent, countercyclical fiscal policy, this notwithstanding the uncertain global economic outlook, as well as domestic challenges arising, inter alia, from the recent illegal strike action in the mining sector. This, we believe, sends a clear message to reassure investors and credit rating agencies that National Treasury will not deviate from its trademark fiscal conservatism, notwithstanding political pressure from various quarters. The challenge will obviously be implementation amidst opposition from other quarters.
It is clear, however, that economic growth is not near the levels required to address widespread unemployment. This we are all in agreement with. In this regard, the policy statement must be closely aligned to the National Development Plan which identified constraints to economic growth. We are pleased that there were 14 references in the policy statement to the National Development Plan.
It is also commendable that government will keep expenditure at the February 2012 budget-baseline positions. New activities have to be funded through savings, reprioritisation and a reduction in wasteful expenditure. This, clearly, the ACDP supports. The short-term need for fiscal stimulus, through, inter alia, the infrastructure development programme, must be balanced with the medium-term need to consolidate the fiscal position, as the economy improves.
We all agree that the primary risk to the fiscal outlook remains lower-than- expected GDP growth. The weaker global economic outlook, together with the fallout from the illegal strikes in the mining sector, has had a negative impact on our domestic economic growth forecasts, with growth being revised downwards to 2,5% from an earlier forecast of 2,7%. Clearly, that means lower tax revenues, with Sars expected to be hard-pressed to meet its target, which has already been decreased by R5 billion. This, again, raises important questions as to the sustainability of the government's present fiscal path over the medium term.
We note, however, that the budget deficit of 4,8% is only slightly higher than the forecast of 4,6% in February and that this trend continues over the medium term. This is understandable, given the slower economic growth, and we can be grateful that the deficit is not much higher. Any drastic deviation from the fiscal consolidation path could spark another credit rating downgrade.
We did express our concerns about the budget deficit, the projected state debt stock and spiralling debt service costs. Compared to developed countries, we are in a better position but, as has been pointed out, as far as emerging nations are concerned, we are not in as positive a position as we should be. The ACDP will support this policy statement. I thank you. [Time expired.] [Applause.]
Chair, as set out in the Medium-Term Budget Policy Statement, there will be no upward adjustment of spending projections in the Medium- Term Expenditure Framework period over the first two years of the MTEF period and only moderate growth in the outer year. This is both prudent and welcome, given the current tough economic environment.
Government's concern is that additional budget allocations do not result in commensurate improvements in service delivery because of the poor quality of spending, as well as the composition of such spending on consumption rather than on capital investment, which is real and requires corrective action.
The reprioritisation by government departments away from programmes that are not meeting performance requirements is therefore welcomed and has made it possible to effect savings of some R40 billion over the next three years. The R40 billion saved made it possible for government to fund the revisions of national expenditure for 2012-13.
There is a question, however, as to how many other amounts of R40 billion are lying around in the system, which have not been recouped but, if recouped, could have greatly contributed not only to better achieve the priorities of government, but would also have assisted in reducing the current projected 4,8% of GDP budget deficit much quicker.
Where then can government search for some amounts of R40 billion lying around? The first option is to take money away from government departments that are consistently underspending against budget, such as Public Works, or departments that have spent everything but failed to come even close to attaining their predetermined targets and objectives. The Department of Justice and Constitutional Development, for instance, spent 99,9% of its budget but only attained 33% of its predetermined objectives. Total underexpenditure by government departments during the 2011-12 financial year amounted to R11,4 billion. In monetary terms, this figure has been growing steeply over the past few years.
Another option is to stop paying exorbitant amounts for consultants and implementing agents doing work for departments that should have been done by employees themselves, which employees lack the required skills and experience, because they were appointed on the basis of who they know and not on what they know. Appointments must be competency-based so as to build capacity.
Another option is to stop spending on items where there is no clear distinction made between party and state, such as the R238 million spent on the President's house in Nkandla and on the centenary festivals of the ANC. [Interjections.]
The fourth option is to stop paying performance bonuses to staff where the predetermined objectives of the department have not been met or where the department received unqualified with findings reports or qualified audit reports.
Another option is to close unnecessary institutions, such as the National Youth Development Agency which has advanced loans to young people without doing credit checks and which, according to the Auditor-General, is likely to have to write off R166 million as a result. In addition, it incurred irregular expenditure of R133 million during the 2011-12 financial year.
Another option is to stop funding defunct government departments, such as the Department of Women, Children and People with Disabilities. This department's budget, which includes a Minister as well as a Deputy Minister, will exceed R190 million this year. One could also rationalise state-owned enterprises.
The sixth option is to start fighting corruption with real intent and include Members of Parliament who are guilty, some of whom still sit here. On the anticorruption hotline, for instance, only 6% of government and provincial departments have a closure rate in excess of 80%. At the same time, action steps must be taken to curb and avoid fruitless and wasteful expenditure, irregular expenditure, and unauthorised expenditure which totalled R6,67 billion in the past financial year.
Another option is to prohibit government officials and public representatives from contracting with the state. Only 48% of senior managers in national and provincial departments declared their registrable interests, as required, timeously. No wonder corruption by government officials, according to the Public Service Commission, amounted to nearly R1 billion in the past financial year. In virtually 75% of these cases, no action was taken against the perpetrators.
One could also institute proper controls to ensure effective spending of monies transferred to provinces and municipalities. Also, one could dismiss and replace incompetent government employees in all three spheres of government, and also in state institutions such as Denel that has to fork out another R118,3 million for contractual penalties in respect of the A400M aircraft contracts. One could also fill only those vacancies that are crucial for effective service delivery.
Another option is to strengthen the function and independence of internal audit committees, and ensure that salary increases for government employees are related to increases in performance and higher productivity. Lastly, one could substantially reduce the number of Deputy Ministers, most of whom were appointed merely as a reward for backing President Zuma at Polokwane.
I have outlined just a few areas in which billions of rand are wasted, lost or could be saved. Only with a concerted effort to curb wastage and corruption will government be able to recoup the billions of rand required to fulfil its service delivery function, eradicate poverty, create jobs, redress the injustices of the past, ensure reconciliation in our diverse society, and create an environment in which economic growth is ensured.
Ons doen dit in DA-beheerde regeringsaanstellings. Probeer dit gerus en smaak ook sukses. Ek dank u. [Applous.] [We do it with DA-controlled government appointments. Dare to try it and also taste success. I thank you. [Applause.]]
Thank you, hon member. I call the hon Mfulo. She will be making her maiden speech. [Applause.]
Hon Chairperson, hon Deputy President, hon members, comrades and friends, let me take this opportunity to thank this House for giving me the chance to speak in the debate on the Adjustments Appropriation Bill for 2012-13. I will make particular reference to certain points. I must say, at the outset, that as the ANC we support the adjustments made to the 2012-13 Budget and encourage the department to effectively use funds to deliver services to the people. After all, the Budget is not about funds, or about numbers, but about the people.
Having said that, I would like to draw the attention of the House to the following key areas that need improvement in order for there to be better budgeting and service delivery. The first area is shifts and virements. The ANC supports the need for flexibility in the budget process in order to keep up with changes in the projects, targets and indicators of the departments. However, it is the ANC's observation and view that certain shifts and virements made by the departments are as a result of a lack of planning. There will be shifting but when done at the last moment, it creates a lot of confusion, especially when it comes to the Public Finance Management Act. There are also shifts that are said to be due to incorrect classifications of budget items, and this is an issue of planning again. It is even more concerning when budgets are shifted away from infrastructure- and job-creating projects in the departments.
It is further noted that what is declared as savings actually emanates from underspending and, because of that, it is a serious concern. This underspending results in no jobs being created, infrastructure taking a long time to be created, and the interchangeable use of savings and underspending, which is in the Public Finance Management Act, creates undue confusion, and this could potentially encourage unsatisfactory spending and performance by the departments.
So, the departments do that, because they can shift, or they can take the money and not use it or shift it from one area to another. In terms of that, again it will be called savings, and how do you save if you are underspending? We need to have a clear distinction regarding that.
The other concern is about the filling of vacant positions. There is a budget for vacant positions, but during the year we do not fill those positions, and again we shift the money. This is serious cause for concern, and it impacts negatively on service delivery to the people. Secondly, it negatively affects the quality and reliability of the departments' budget and planning. Thirdly, it hinders progress on the government's top priority of job creation and the filling of vacant positions across government.
Now, there is a gap between expenditure and performance outcomes. That gap is widening a lot about the expenditure outcomes and the achievement performance targets of the departments at the end of the financial year. It is our duty, as the ANC, to see that this gap is narrowed and to make sure that it doesn't happen again. We need to make sure that there is a co- ordinated and meaningful integration of all plans which are linked to the abovementioned activities.
As part of the recommendations, we said that the critical posts such as that of chief financial officer are filled with immediate effect. All the departments must ensure that all funded vacant posts are filled because that is creating a lot of challenges, and that is why people will be standing up and accusing us of mismanagement, of what the DA is saying, because those things are not happening. Originally, what is budgeted for should be used for that, and there must be a clear distinction between savings and underspending. Maybe I do not know the English, but I believe if you had R10 and used R8, then you would have saved R2. However, if I did not use the money and called that savings, it is a serious challenge. We need to relook at that and ensure that there is a clear distinction.
Each department should stick to its core functions. If my role is to build roads, I must build roads. If my role is to educate, I must educate. If my role is in health, then I must deal with health issues, so that we can know that if my role is in education and I want to build schools, it becomes a challenge. However, if we leave it to the Department of Public Works - that is the example that I am making - and say as the Department of Basic Education that we need to have five schools, they must build those five schools. It is not the Department of Basic Education's core function. So those are some of the examples that I am making to say let us do that. We also have slow spending. Maybe in terms of our budget, it must go according to the plan and the implementation plan so that we cannot be slow in spending. Before I close, Chairperson, I just want to challenge the DA and say that it is very funny that they sit in committees and debate but when they come here, they tell a different story. Maybe we pay them for mahala. [Interjections.] They must go, because they cannot take a decision in the committee and then afterwards come to the House and deny that they were part of the decision. That can never be correct. So if they were not part of the decisions in committees, they should not come here and stand up. They must just go, because they get money for mahala. They don't know what their role is. [Interjections.]
Madam Chairperson, may I address you on a point of order? It is a convention in a maiden speech that the person making the speech should not be provocative. [Laughter.] I submit that the member is being deliberately provocative. [Interjections.]
Hon Chairperson, on a point of order: The hon member is just telling the truth. There is nothing provocative in what she said. [Interjections.]
Thank you, my Chairperson!
All this is a matter of conjecture.
Agb Voorsitter ... [Hon Chairperson ...]
I am not taking any points of order on this. [Interjections.] These are now points of conjecture ...
Voorsitter, dit is 'n punt van orde. Dit is op hierdie punt, Voorsitter. [Hon Chairperson, it is a point of order. It is on this matter, Chairperson.] [Interjections.]
[Inaudible.]... she is saying, and what she is saying, and what whom is saying. Could you please carry on and finish your speech?
Agb Voorsitter, mag ek u toespreek oor die aangeleentheid? Ek vra net billikheid en regverdigheid. [Hon Chairperson, may I address you on this matter? I only ask for you to be fair.]
To be fair, may I address you on this issue, please?
What is your point of order, hon Groenewald?
My point of order is this, hon Chair, that if we say that we have a maiden speech, the other members respect that hon member to deliver her maiden speech without making interjections or anything of that kind, but at least then it should be vice versa. Let us make the rule or else, Chairperson, if anybody is making a maiden speech, then they must accept that we will make interjections.
That was not a point of order, and for your information, the member from the DA said exactly the same thing, and there was absolutely no need to repeat that. Are you finished, hon Mfulo?
Let me finish, hon Chairperson.
Thank you, very much.
Thank you, Chairperson.
I now call upon the hon Ross.
No! [Interjections.] No, Chair, I am just finishing my last sentence. May I? [Interjections.]
Bly stil! [Be quiet!]
Oh, goodness! All right, you have exactly one minute to finish.
Thank you, Chairperson. The ANC supports this Budget and the proposed adjustments. [Interjections.]
Ek het gepraat. Dankie. [I have spoken. Thank you.]
Hon House Chairperson and hon Minister, previous speakers have indicated that the South African economy has demonstrated resilience in the face of strong global headwinds. We therefore welcome the commitment by the Finance Minister to slam the brakes on state spending and for there to be no additional allocations to departments in the Medium-Term Budget Policy Statement. This is also the first time since 1998 that this has happened. It is quite amazing that we could stop the state's spending in this regard.
Important primary obstacles to foster more inclusive growth are, however, rooted in our domestic economy. We find striking activity in the mining and other sectors, low electricity reserve margins, high and unaffordable electricity prices, infrastructure bottlenecks, and weak business confidence which are serious obstacles to a positive domestic economic outlook.
The impact of administered prices on South Africa's economic outlook is devastating. The South African economy is heading for stagflation, which is the triplet of high inflation, high unemployment and slow growth even as interest rates drop. It is indeed problematic that administered prices of electricity in particular, Minister, are effectively killing South Africa's mining and manufacturing capacity, causing us to forfeit the export opportunities that a weak currency offers.
A triple inflation-price trajectory by Eskom scares off the large businesses, and it is unaffordable to small businesses and, of course, to ordinary consumers. Eskom is using consumers to fund its capital expansion programme. Eskom abuses the formula for administered prices, and I will tell you why, Minister. It includes the government's expected return on assets stipulated now at 8,16%. Previously it was 0,9%. It is considered by many South Africans to be a double taxation as this is not ring-fenced for the electricity industry; it goes back to the fiscus. Perhaps we should discuss this and see if the government can stand back on the expected 8,16%.
This is a ludicrous return for government to expect, as it is not a shareholder in the real sense of the word. We need to know that Eskom is not operating under market conditions and requires perpetual guarantees from government. Eskom's inclusion also in the cost of replacement of assets is highly problematic, and it inflates the Eskom model in terms of pricing. Re-evaluated assets of Eskom have increased from R1 billion to R700 billion. This makes a huge difference in terms of the calculation to get to the pricing, and we would like to ask Eskom to reconsider their application and the National Energy Regulator of SA, Nersa, to reject this application from Eskom.
The DA would like to urge Nersa, therefore, seriously to reject the Eskom application of electricity increases of 16% yearly for the next five years. It is unaffordable for consumers and businesses and very negative for economic growth.
Regarding cost-reflective tariffs - and we all agree with cost-reflective tariffs; they need to be there - it is how they are built into the formula that is the problem, and this inflates the Eskom pricing formula.
What do we propose, Minister? We propose that the shareholder, government, should accept a smaller return on assets, and Eskom's cost of replacement of asset valuation needs to be revised with regard to Eskom's revenue requirement. The revenue requirement in this regard is 34% after total package in terms of the pricing. It needs serious reconsideration. Thank you very much, hon Chairperson. [Time expired.] [Applause.]
Order! I now give the floor to the hon Sogoni, who is not making his maiden speech.
Hon Chairperson, hon Deputy President, hon members, the ANC's expenditure trajectory and focus have always been on eliminating apartheid inequalities. The ANC welcomes the 2012 Adjustments Appropriation Bill, B32-2012, which this year did not necessarily add more money but reallocated declared savings to areas requiring these resources.
We are pleased to know that the Bill's thrust underscores the ANC's historic view, which asserts that expenditure should be directed at systematically addressing the apartheid legacies of inequality and underdevelopment in all their manifestations. In this regard, we are guided by the document Ready to Govern, which declares, amongst other things, that, I quote: "The ANC will direct government expenditure on housing, infrastructure, education, health and social welfare to ensure equality for all South Africans, especially the rural people."
As a result of this statement, the ANC has, amongst other things, introduced programmes like the rural household infrastructure programme and the Expanded Public Works Programme, EPWP, to ensure that rural people also have access to work opportunities.
The ANC continues to strive for an integrated and meaningful implementation of the five government priority programmes over the Medium-Term Expenditure Framework period, as demonstrated by the Medium-Term Budget Policy Statement, MTBPS. Some of these programmes are the National Health Insurance, whose pilot grant was introduced earlier this year in 10 districts around the country. A new approach to the provincial infrastructure grant intended to institutionalise proper planning, a new formula for local government's equitable share and a new grant for water infrastructure grants will ensure that municipalities deliver clean drinking water directly to households. This grant will be administered by Water Affairs. We hope that this department has started building the required capacity in order to deliver on these grants.
The committee noted the Human Sciences Research Council's concern about the infrastructure deficits in schools. However, we should take solace in the fact that the ANC-led government is aggressively rolling out school infrastructure of over R20 billion between the Accelerated School's Infrastructure Delivery Initiative, Asidi, administered by the national Department of Education and the education infrastructure grants which are administered by the provincial departments to be rolled over the MTEF period.
The challenge in terms of these infrastructure programmes remains the capacity of government to plan and deliver effectively, efficiently and on time. The committee is of the view that infrastructure delivery should be the responsibility of a department, which has the relevant capacity so that departments like Education and Health can focus on their core mandates as the responsibility of delivering infrastructure resides elsewhere.
The ANC welcomes the different programmes promoting education and skills development that have been implemented across the departments whose focus is on job creation for young people. However, there is room for improvement in this area. Already a number of young people have qualified as artisans. The Department of Rural Development and Land Reform will train over 5 000 youth on rural development programmes over the next three years.
The ANC welcomes the achievements that have been realised through strategic appropriations over time, as demonstrated by the shifting of resources from consumption to infrastructure investment. As the ANC, we are the first to admit that we have a long way to go in order to effectively eliminate the apartheid legacy of inequality, poverty and unemployment.
We are, however, encouraged by the significant progress that continues to be made in a number of critical areas of livelihood. Firstly, there has been a considerable increase in the percentage of persons who have completed their higher education from 7% in 1996 to 11,8% in 2011. Secondly, the proportion of households with access to clean running water inside their premises has also increased from 60,7% in 1996 to 73% in 2011. Thirdly, the average annual income for households has doubled from R48 385 in 1996 to over R103 000 in 2011. These figures are drawn from Census 2011.
Census 2011 also reveals huge inequalities between the historically privileged compatriots and their black counterparts. These differences become more evident between the sexes, on the one hand, and between the rural and urban settings, on the other. All spheres of government must work together to deal with the delivery challenges as we confront the issues of social challenges and service delivery, whether they are in education, health care delivery, infrastructure, etc.
Integral to these challenges are section 100 interventions. Currently, these important interventions depend on the co-operation of the other spheres. There needs to be clear legislation that will define, amongst other things, the different roles of all the role-players; the framework for interventions; clear, set timelines; and so forth.
The ANC welcomes the introduction of the central procurement officer so that Parliament and National Treasury can tighten the monitoring and oversight mechanisms on procurement practices in order to boost efficiencies and value for money. The other important issue the national legislature must focus on is the gap between expenditure and predetermined objectives. This, we can monitor by ensuring that the quarterly or section 32 reports, as they are commonly known, of the National Treasury consist of not only financial information but also of nonfinancial information that may include departmental quarterly targets, as they appear on their annual performance plans passed by Parliament during the Adjustments Appropriation Bill.
There has been a lot of discussion in the committee around issues of declared savings, as my colleague the hon Mfulo raised earlier, as some departments felt that they were not properly engaged. But what the departments failed to tell us was that they were, themselves, guilty of underspending. In some instances, the departments seemed to be budgeting for virements. Departments are allowed to shift funds from a nonperforming area to another, but the committee feels this process should not undermine the budgetary process. The process must enhance the credibility of the budget.
The ANC notes that the Public Service Commission, in its endeavours to ensure that its recommendations are implemented introduced legislation that will enforce its recommendations. Whether that action will fall within its jurisdiction will be a point for discussion at another time. The Public Service Commission expressed extreme concern at the failure by senior managers to disclose their business interests. It also found that more managers were doing business with their departments without disclosing their business interests to those departments. The Public Service Commission also raised with the committee the failure by senior managers to sign performance agreements. This is against the law, as this is a requirement. Without performance agreements, it will be difficult to measure the success or the failure of that official. The committee is of the view that the Adjustments Appropriation Bill of 2013 must have a section that will require all departments undertaking infrastructure to submit clear plans to National Treasury by a particular, agreed-to time.
May I take this opportunity to thank the co-operation that we have received from National Treasury during this process of the Medium-Term Budget Policy Statement and the Adjustments Appropriation Bill, and thank the hon members of the committee and the staff for their sacrifices so that this report could be processed on time. I thank you. [Applause.]
Hon Chairperson, Deputy President, chairpersons of the two committees Mr Mufamadi and Mr Sogoni, I say thank you very much to the committees for their contributions and their debates, and congratulate the hon Mfulo on her maiden speech. We will get there. Don't worry about the opposition too much. [Interjections.]
The test of whether we are getting to terms with the levels of crisis we have around the globe - and, indeed, with many of the challenges we face as the South African economy - is whether we have a proper grip on the key issues that confront us. And the test is whether the opposition has a different point of view to advance in a logical, evidence-based way, and whether they have a case to persuade us that their point of view is substantially different and, more importantly, better than what the ANC government has had to offer. On many of these counts, regrettably, the debate before us unfortunately falls very short.
Let me remind all of us what the Medium-Term Budget Policy Statement's key pillars were. The first, as was pointed out by the hon Koornhof and the hon Swart, is that we were practising and using prudent, countercyclical fiscal approaches in order to continue undertaking medium-term fiscal consolidation, on the one hand, and supporting growth in whatever way we can within the limits of our fiscal environment, on the other. We must remember that we still have real growth of just below 3% in the fiscal framework that we have put forward.
In the MTBPS, we said very clearly that the global economy is slowing down, recovery from a deep recession takes several years, the European situation does not inspire confidence and, as the hon Koornhof reminded us, the second biggest economy in Europe, France, was downgraded yesterday by Moody's. All this means that we are still confronted with a very negative global environment from which we are not decoupled or disconnected.
The test, again, for our opposition colleagues is: do they have a different view on this? Do they have something substantial to offer in terms of how we can work our way out of the grip that we find ourselves in as the globe, let alone as South Africa? The second point we made is that economic growth in South Africa has slowed to just 2,5%. Now, apart from bemoaning the fact that we have slow growth, do we have any substantial proposals from the opposition which say: If you follow this path, you will definitely get 5%. There is nothing on the table at the moment, either in the committee or in this forum. [Interjections.]
The third point is that revenue collection is expected to be ... and howling is not going to be as effective as presenting a logical case. Right? [Interjections.] You've had your say; give me my say now. [Interjections.]
Revenue collection is expected to be R5 billion less this year than the February estimate. Do they think they can come to a better figure if they were taking over this government at this point in time? [Interjections.] That's hardly likely. [Interjections.]
Then we said that strong measures are being taken to ensure value for money in public spending, including more effective controls over personnel expenditure. This, we grant, is work in progress, which is going to take us a few years to get on top of. But, again, do they have concrete, specific ideas of how we could do this better, apart from shouting affirmative action and cadre deployment? Can we do a little better than that, and come up with substantial proposals that can make a difference? The hon James seems to think he has some. I will engage with him later with regard to them. [Interjections.] At least, he is a worthwhile person to engage with.
The next point is that we have again put every effort into finding savings, eliminating waste and reprioritising spending towards key social and development objectives. Over the Medium-Term Expenditure Framework period R40 billion in spending has been reprioritised. Regrettably, some of my own colleagues in the ANC are mixing these three categories.
With regard to reprioritisation: I don't think I can actually fully spend my R100 million on Item A. I think I can take R20 million of that amount, and put it into a different programme where I can spend it more effectively and make a meaningful impact in terms of either service delivery, job creation, or whatever the priority is that I have at a particular point in time. That is reprioritisation.
Underspending is where I hold onto the money. I say I will spend all of the R100 million, but it is very evident that by the middle of the year I had spent 10%, by three quarters into the year I had spent 20%, and that the chances of spending 100% towards the end of the year are absolutely nonexistent. And, so we say to you: Give us the money; we can use it better elsewhere.
The third option is where there is a high level of integrity and honesty. You've been given the R100 million, you recognise that things are not moving as they should, and you say, "Look, take this money back and give it to some other priority in government because I am unable to actually fully justify holding onto this money."
That is savings, reprioritisation and underspending. I think it is very important that we understand that each of them are very necessary processes in terms of getting to the bottom of spending our monies in the right kind of way.
Then we went on to say in the MTBPS that further shifts in the composition of expenditure are being made towards infrastructure investment, economic competitiveness, education and health care. We have said repeatedly - and I think all sides of the House agree - that, certainly, in education there is enough money. We need better quality outcomes. And there is any number of proposals that government is looking at, including the issues that my colleague Minister Motshekga is looking at in order to improve the outcomes.
On health care, and in addition to challenges that we face currently, we have said that we have a 14-year plan in terms of delivering the National Health Insurance, NHI. We have 10 districts where piloting is actually going to occur and that process, under Minister Motsoaledi's stewardship, is already beginning to take root. I am sure in the next year or so we will begin to see the results.
On infrastructure investment, there is any amount of rand that is going into investment in social infrastructure, and both from within the fiscus and mainly outside the fiscus there is investment in economic infrastructure. We still have a R25 billion package for economic competitiveness, and I think I gave you the figures that since 2010 some R7 billion have been allocated by the Department of Trade and Industry, steering a committee of other departments as well, in this particular area. Ultimately, it is the private sector that must come to the party and ensure that they use those funds in order to deliver what they need to in terms of competitiveness.
We said that rigorous procurement reforms would be undertaken, and pretty soon I will be able to report on some of these issues as well. We also pointed out that at the presidential summit, commitments were made in terms of strengthening municipal finances, investing in urban infrastructure, ensuring that the Industrial Policy Action Plan is extended even further, and accelerating the creation of youth employment opportunities. These are amongst other things what we need to do.
Against that framework, let us see what the hon members have had to contribute. We have had affirmations from the ruling party in terms of each of these areas, but, clearly, in this new-found alliance in the making between Cope and the DA, I think the hon Koornhof can certainly give the hon Harris very useful lessons about how to understand the economy, appreciate the fact that we have a tight fiscal ship that we are running, and that we are indeed on the right path, looked at from any particular perspective.
To politic around populist policies or that Treasury running out of ideas on jobs is precisely that. It is politicking, and I have said this repeatedly to the hon Harris but I'm not quite getting through just yet: When he has more substantial ideas, let him come along for his cup of tea at the Treasury and we will engage with him.
The hon Koornhof makes some very good points on the situation in Europe and the US fiscal cliff. He is certainly right that there is more optimistic potential, if you like, in terms of the fiscal cliff being resolved, and at least that part of the risk facing the globe is being handled in a different way.
The hon Tshabalala correctly points out that we require - and have been trying to reflect as government - an integrated approach to growth, poverty and job creation. All of the various plans are beginning to connect with each other under the overall umbrella of the National Development Plan, in order to get our implementation right on these matters. Her emphasis on industrialisation is absolutely accurate. She said that her generation - the younger generation - is very worried that this generation doesn't pass on too much debt to them, but she said that she will take care of it. I think she is absolutely right about the hon Harris' grandstanding, but I am sure that she and the hon Harris can sort some of that out. The hon Ntapane says that we need to look at issues of unauthorised and irregular expenditure, and so on. Again, I want to make the appeal, something which I have said before, that Parliament can increasingly play a very powerful role in this regard. I am not sure whether they are adequately doing that.
The hon Groenewald and I have known each other for quite a while, and for him to talk about who is facing reality frontally, and who is in denial is a bit of mischief making that I think he knows he is engaging in. Hon Groenewald, we are not in a state of denial. We have been frank with this country and we have been frank with this House. On every single occasion that we have had the opportunity - not just as the Ministry of Finance but as government - we have said that these are the challenges we face, this is what we are doing well, this is what we are not doing well and these are challenges that we had better overcome if we want to put ourselves on a much better path. Certainly, if my child is out of step in any march, anywhere, I'm not going to pretend that the child is indeed in step.
The hon Luyenge has raised very important points and said that we need to come back with regard to what government is actually doing on employment, on moderation of compensation and on contingency plans if the situations change. I think that is the reality that all of us live in and that we need to become a lot more mindful of. As I said to you, even during the MTBPS, there are shocks a day, if not shocks every few hours in the global system at the moment, and we are going to require calm nerves but also distinct agility if we are going to deal with the situation in front of us. Above all, we are going to require a strong sense of common purpose and not politic on the major issues that affect 50 million people in South Africa.
I'm not sure if the hon Swart refers to himself as the older or the younger Swart, but let's give him the title of younger Swart at the moment. Steve Swart, thank you for your support and although you have raised the issue of debt stock, let me still assure you that our debt is certainly under control, but we all need to keep a watchful eye on this, because the wrong kind of debt stock can certainly impose itself upon us if we are not very careful.
The older Swart makes some very useful contributions as usual. I think he can also share with his colleague on how to become constructive. But thank you for pointing out where we could find another R40 billion. We will do the arithmetic with you one day soon to see whether it actually adds up to R40 billion or not.
The hon Ross certainly correctly points out that we need faster growth, that some of the issues confronting us at the moment are not going to be extremely helpful, and that the issue of business confidence is something that we need to be concerned about. This is a concern not just of government. If you remember at the end of the MTBPS, I said that all of us should take responsibility for not talking down our country. Distinguish between the country and the government, right? Take collective responsibility. [Applause.] We cannot keep pointing fingers at the government and say that it is the sole guardian of what happens to this country. If you want to protect this country's reputation and if you want to enhance its credibility, let us find a way, hon members, for taking collective responsibility for that important function. [Interjections.] [Applause.]
You correctly point out that ...
Order, hon members! You may continue, hon Minister.
Thank you, Chairperson. The administered prices question, I think, is a very valid one, hon Ross, and something that we are beginning to look at. I think your description of South Africa's economy slipping into stagflation might be an overdramatisation, so let's look at the definition together. We are not having no growth and very high inflation. We have reasonable growth and managed inflation in the context we find ourselves in.
We will certainly look at the points that you make on Eskom together with Minister Gigaba and see whether there are issues that he and the Minister of Energy can actually address.
Hon Sogoni, thank you for your contributions, both in managing the committee process and for your references to the predetermined objectives, PDOs, and linking them to expenditure.
Finally, apart from collectively working on building confidence in our country and building the credibility of our country, let us also confront the reality that unless we get implementation right in virtually every part of government, we can have all the money we like, but we are not going to have all the impact that we want at the end of the day. Thank you very much. [Applause.]
Debate concluded.
Bill read a first time.