The chairperson of the committee, the hon Carrim, will introduce the report.
Chairperson, comrades and friends, I am going to give an overview of the report that we adopted in the committee. Much of what I am about to say is literally the text of the report. However, it is observed, in the first instance, that there seemed to be reasonable degree of consensus about the challenges ...
Hon members, there is too much noise in the House, really! Let's give a fair opportunity to the speaker at the podium to be heard. That applies to everyone.
So, as I was saying, there was a reasonable degree of consensus around the broad challenges identified by National Treasury: economic growth and development objectives or goals. What the committee felt, however, is that, understandably, this is the MTBPS - or Medium-Term Budget Policy Statement - so it is the general propositions or directions suggested by National Treasury.
Our committee will be clearer about exactly what we feel about the proposals when the Minister comes to this House to present his Budget Speech in February next year and we look more carefully at the documents that fortify what he says. And so, in a sense, if you like, you can see this report as the first of a two-phase treatment of the current MTBPS.
We feel - and I am sure the Minister agrees - that the 2015-16 budget will have to more clearly set out how National Treasury will seek to ensure that the assumptions on which the MTBPS is based are actually fulfilled, and that the risks they point to are mitigated. Obviously, the committee will engage more concertedly with them shortly after the budget is presented to this House and the processes unfold that normally do in regard to the budget.
We agreed that there are significant global constraints hindering South Africa's economic growth - we note this in our report - over which the country has limited control. But there are also major domestic constraints that can and must be addressed, including, as we well know, badly managed labour relations; energy and transport challenges, including, as the hon Mr David Ross of the DA would remind us, the possible increase in tariffs in electricity; skills shortages, no doubt; and also some policy uncertainties.
We noted that beyond this, the current account and fiscal deficits, combined with the low-growth prospects, are also hindering our investment.
The National Treasury, we feel as a committee, needs to be clearer - I'm sure they also will agree - about how government is going to manage these many challenges. No doubt, this is not the task of National Treasury alone. Government, as a whole, has to deal with these issues. But as we engage with National Treasury around these issues, we hope to get some more specific direction on how government is going to manage these many tasks that we consensually agreed to that have to be addressed.
There was a very nice input made to us members and I hope that other people outside our committee will get a chance to see it. In it the very compelling argument was presented that if you look at growth rates in our country since 1994 - there was a wonderful chart done that was showing this - it is interesting to note that when we had higher foreign direct investment, it didn't necessarily fulfil our economic growth, development or job-creation targets. Often, of course, because that investment - even if it is direct investment and not speculative - was in creating factories and industries, it didn't necessarily create many jobs.
Actually, where we had domestic investment, there was a huge spike in growth rates and so on. So, we think there needs to be more careful consideration by National Treasury on finding the right balance between foreign direct investment and domestic investment.
We also noted in the committee that - and we did this, in fact, in our budget report - that the committee believes that it is not sustainable for National Treasury to keep rescuing challenged state-owned companies that fail to improve their performance despite constant support.
The committee accepts that there may be a need to sell nonstrategic assets, but is interested to know what criteria will be used to determine what those nonstrategic assets are and on what terms they will be sold.
Our concern, of course, is that there should be a clear attempt to avoid unintended consequences coming to fruition, especially in terms of job losses and if we are not very strategic about this, it could actually undermine our economic growth and developmental goals. So, we look forward to National Treasury coming up with concrete proposals in that regard and we will engage with them.
We are also aware, and I am sure the Minister is too, that, in fact, by the time you sell your noncore or nonstrategic assets - and that will be contested by the unions and the sections of the leading alliance, let alone outside it - it is going to take a while. There may be some quick nonstrategic assets you can sell. What we would like is for National Treasury to let us know in the meanwhile - certainly in February - what they are going to do in the meanwhile. For example, we want more information about how they are going to separate the commercial and developmental aspects of the state-owned entities' roles, and other measures to assist state-owned companies in the meanwhile. We accept the government's need for cost-containment proposals - we want to see more of what exactly is entailed here - and stress the need that these contribute to the country's ... We should choose such cost-containment proposals that actually contribute to the government's economic growth, job- creation and developmental goals.
We noted that the Financial and Fiscal Commission or FFC had various proposals in our public hearings in regard to that, supporting the current broad, general proposals from National Treasury.
The National Treasury will also have to, through a variety of ways, we feel, monitor what is happening in the provinces and in municipalities in regard to those cost-containment proposals that are actually tenable and make sense. The committee would want to be briefed periodically not just on cost containment in the national sphere, but also in the provincial and local spheres.
We noted that most of the FFC's proposals to National Treasury, which were presented in the early quarter of this year, were accepted and are reflected in some or other measure in the MTBPS. We noted that Treasury is allocated R561,1 million for employment-creation facilitation, but we also want more active monitoring by Treasury of the spending in the Jobs Fund's allocation programme.
We want to know not just the numbers of jobs created, but the quality of the jobs - how sustainable they are and how they link up with our growth and development goals.
We support National Treasury's commitment to ensuring that fraud and corruption are more decisively and actively combated, but we want more concrete proposals in that regard. No doubt, Treasury will confer with the other departments and bring these proposals to us in the first quarter of next year, as we have requested.
We noted that the government's anticorruption task team has been investigating 169 criminal cases involving 945 individuals. These investigations have led, we observed, to 54 convictions, with R1,8 million in assets frozen and R105 million in assets forfeited.
We feel that we must engage Treasury on this in the first quarter of 2015. If government is more effective in reducing corruption, there will be significant savings and the National Treasury will be in a better position to more carefully decide on the tax increases it means to present to this House next year.
The 2015-16 budget report further notes that there needs to be clearer alignment with the NDP and the Medium-Term Strategic Framework, and the committee will engage with National Treasury on this when reviewing the 2015-16 budget.
In view of the lack of investor and public confidence in the prospects of economic growth, the committee feels that National Treasury needs to be far more actively communicating its programmes and activities through public media and its own media and through a variety of other ways.
Now, to better prepare the committee to take these issues forward, based on these recommendations - as raised in our budget report and confirmed by the committee this time round - we feel that we should engage with the Public Enterprises portfolio committee. The chair sits two seats away from me, so I have already done that on the performance of state-owned entities and other related matters. What we are seeking to do between the state-owned entities committee, the Public Enterprises committee and ourselves is to request the Parliamentary Budget Office to undertake research on the financial aspects of the SOEs and other related issues following consultations with the Public Enterprises committee and to present a research report in the first quarter of next year.
The Parliamentary Budget Office, PBO, also raised the possibility that there could be some implications in reducing the public sector wage bill as it could lead to a "destimulation" of the economy. So we should be careful about that.
In some countries, reducing the public sector wage bill has done precisely that. In other countries, doing that advanced developmental and growth targets. So we need to find for ourselves, as a committee, a better sense of what the issues are.
We had public hearings, and largely all that the entities that appeared before us dealt with was: "This is the MTBPS," which, of course, we knew by then - our research unit had helped us to get a better understanding - "and these are the implications", without any concrete proposals from their side on what they think of the National Treasury's proposals, such as they are, in the clear sense that they will emerge next year, but also in terms of the alternatives they have. We feel that as a committee we must engage with the parliamentary authorities about having more creative ways of drawing in civil-society organisations, because it is really in terms of the MTBPS process that civil society should provide guidance to the Cabinet on what it feels the next budget should be.
The Money Bills Act now provides for scope for parliamentary committees to change Money Bills and aspects of the budget, so you would imagine that civil-society structures would be more actively engaged now to influence the Minister's finalisation of the budget for 2015-16. None of the civil- society structures we thought would appear appeared before us.
We brought in the Money Bills Act precisely for that reason. So, we are saying, "No, that is not good enough." We advertise very widely. The committee secretaries, and I monitored them, engaged with civil-society actors, but they all said they would come next year. This astonishes us because, in fact, this is partly done to ensure that they have a say - I'm sure the Minister would welcome it - on the MTBPS to prepare for the budget for next year.
So, we will engage with the parliamentary authorities on what we can do to more actively encourage active community participation, as indeed was meant to happen with the Money Bills Act. Thank you. [Time expired.] [Applause.]
There was no debate.
Chairperson, I move:
That the report be adopted.
Declarations of vote:
The confusion about the Development Bank of Southern Africa, DBSA, is not on this side of the House. We had confirmation today that the DBSA is way outside of its mandate. Also we should be debating the fiscal framework in far greater detail than we are dealing with it today. Our economy is significantly worse off than it was in February this year. Whilst other economies are slowly yet steadily emerging from the great recession, ours is not and our government dithers.
The fiscal framework is basically our country's balance sheet over the next three years. The numbers are heavily impacted by the expected gross domestic product, GDP, growth rate, especially income protection.
The estimated growth rate of 1,4% is half of that estimated in February and unlikely to be achieved if the meltdown at Eskom continues. Yet income is expected to increase over the next three years. This can only be on the back of tax increases that the Minister has already stated will be necessary.
Expenditure remains on the increase despite the Minister's promises of a fiscal course adjustment. Net loan debt increases to over R2,1 trillion in 2017-18. Even on the back of significant tax increases this number accelerates unusually fast and does not tail off as a percentage of GDP.
Minister, your numbers are not a good story to tell. They tell a story of a government that has run out of money and enthusiasm to implement measures for economic growth and will now be squeezing the people to pay for its mismanagement of our economy and its wasteful spending. The DA will not support this fiscal framework. Thank you.
The EFF does not support the adoption of the revised fiscal framework because it is based on a misdiagnosis of the structural deficiencies that define the South African economy. The South African government is failing to expand revenue base and is now resorting to what appears to be austerity measures and interventions.
Europe, when it was in an economic crisis, decided to expand and expend on many interventions in order to reinvigorate economic activity. Here, it looks like the approach is different. I do not know what the Minister and the ANC seek to achieve. It is altogether a misapplication of wrong remedies to an improperly diagnosed problem of the structural deficiencies that characterise our economy. You do not have an adequate revenue base, because you are not in control, and strategic ownership of the key means of production, the mines, the land and the key factories that should be guided by the state to increase the revenue base.
The other issue which we have obviously raised before is that most of the capital is being stolen here in South Africa by multinational corporations. There is potential of expanded revenue base from the mines and everything, but through transfer pricing and capital flight, you can't have access to that and you are then shifting the blame to those who are supposed to be recipients of government funding. On that basis, we do not agree with the revised fiscal framework because it is a misdiagnosis and wrong application of the remedies. Thank you very much.
The IFP supports the report subject to the following reservations which we would like to be noted.
Our economy continues to perform below its potential. The question is what are we doing about this? The International Money Fund, IMF, recently revised its growth outlook for South Africa downwards to 1,4% and this expert advice could be optimistic.
Even more worrisome is the trend that is emerging where the growth outlook for South Africa is now annually being revised downwards by reports such as the IMF world economic outlook. Why are we consistently underperforming? That is the question.
This continued downward revision by the IMF can only be as a result of domestic constraints in our economic growth, and issues such as disinvestment, noninvestment, the energy crisis and continued labour instability are placing severe constraints on our economic growth and must be addressed.
Foreign investors look for stability in all areas such as the social, economic and even political sphere before they will invest. Some international companies even go as far as to perform a 50-year forecast on a country before investing. Imagine what they are forecasting when they look at the current domestic socioeconomic and political environments in South Africa!
We are marketing ourselves as the gateway to Africa, but what are we doing to create an enabling environment where we are seen as an open and friendly market for foreign direct investments? These are tough questions which require even tougher answers and if we are to place our economy on an upward trajectory we need to address them. I thank you.
The NFP supports this revised fiscal framework. The NFP is of the view that we would agree and accept that there are serious challenges in the country.
The appropriations committee that was formed some five years ago in the previous term is doing what it has to do to ensure that there is implementation and oversight. The Minister has clearly indicated the measures government intends to take to ensure that it fights fraud, corruption and maladministration. To the Minister, I want to say that we accept it, provided there is implementation and action taken to ensure that we alleviate fraud, corruption, maladministration and wasteful expenditure.
I would think that in the best interest of all South Africans in the country the NFP decides to support this and in view of that we believe that it will take us forward instead of rather trying to create more and more challenges that will not be in the interest of the poorest of the poor in this country. I thank you.
Hon Chairperson, in considering and supporting the revised fiscal framework 2014, the ANC has had to draw from its 102 years of navigating through the harsher storms and challenging epochs of each generation and we are, therefore, not detracted by an aspirant government.
We are a government and leader of society, and we are aware that we need to fix the dual-economy landscape amidst constraints of global market forces, extremely difficult domestic market conditions and high unemployment rates coupled with a declining economy.
We also feel strongly that there is a need effectively and soberly to manage credit and liquidity risks, inflation and exchange risks and trade and investment risks, whilst not losing sight of our 2030 vision as well articulated in the National Development Plan, NDP.
Amidst all these divergent tests, building social cohesion remains important to us.
Inevitably these trying times require trade-offs. It is within this context that the ANC supports the revised fiscal framework. The ANC is therefore satisfied that the Minister of Finance and his team are on the correct path to take the country forward. They have sufficiently comprehended and factored in the trying economic times in which this fiscal framework is being considered.
This is indeed consistent with being a leader of society. In backing this fiscal framework and in appreciating the centrality of fiscal prudence, good governance and effective oversight, the ANC hereby gives its unwavering support with the following strong message to all departments and state organs: Curb spending on nonessential items; root out corruption at every level; identify nonstrategic state-owned enterprises, SOEs, and consider their disposal; increase efficiency, productivity and competitiveness at every level of state. Also, tax-increase options must be considered carefully so as not to impact negatively on our already contracting economic trajectory. I thank you.
Question put.
Motion agreed to (Democratic Alliance and Economic Freedom Fighters dissenting).
Report accordingly adopted.
Mr C T Frolick: The last item on the order paper is subject for discussion in the name of Ms D Carter on the ills affecting local government. I have been informed that after consultation amongst the party whips it was agreed that the subject for discussion will stand over.