Hon Chairperson, hon Deputy Minister, hon members of the House and hon special delegates, the Minister of Finance, Minister Mboweni tabled National Annual Budget on 20th February and 21st February, four committees in both Houses finance appropriations received the briefing from the Minister, as well as the senior officials of the National Treasury.
The Parliamentary Budget Office, PBO, made a post Budget analyses where they brief the committee. On 28th February, public hearings were held and on 1st March the National Treasury responded to the inputs made by the twelve stakeholders that appeared before us in the public hearings.
The Minister was very frank on the fiscal position of the fiscus when he tabled the National Budget. Government can't do everything alone. The macroeconomic policy is directed to economic growth and distribution. Organised around the theme "risk, renewal and growth", government has never before been faced with such challenging circumstance to shape a Budget that balances and need to contain expenditure and be reasonably pro-poor and developmental.
The committee believes that the government has managed this reasonably well. In particular, we welcome the fact that pro-poor spending will once again grow in real terms. Sixty eight percent of the Budget goes to social commitments.
We note the Rl,2 trillion for learning and culture, R717 billion for National Health Insurance, NHI and health as a whole and nearly R894 billion for social development over the Medium-Term Expenditure Framework, MTEF.
Yes, in previous Fiscal Framework Reports, while noting the severe budgetary constraints, we called for higher increases in social grants as part of an overall approach to cushion the effects of the one percent increase in VAT. This remains our view. We believe more needs to be done to cushion the effects of the VAT increase on the poor.
Obviously, the Fiscal Framework has to be evaluated in terms of the extent to which it contributes to investment, growth, job creation and the reduction of inequalities.
We welcomed the President's Economic Stimulus and Recovery Plan and called for an implementation plan. We realise that such a plan is
not the responsibility of National Treasury alone, but government as a whole, but recommend that the National Treasury deals with this at its first quarterly briefing of the new Committee in the sixth Parliament.
Yes, we agree as raised in the public hearings, that there are very few if any economic drivers in the fiscal framework. We believe that the government also needs to follow up on the R300 billion pledges at the Investment Conference and see to it that this converts into bricks and mortar and jobs.
The committee agrees with the Treasury that there is an urgent need to ensure sustainable finances by containing the Budget deficit in stabilising public debts.
The committee welcomes the progress being made on growth enhancing reforms including the preparations to allocate the telecommunications spectrum, reform visa requirements and remove barriers to mining investment.
The downward revision of the growth rate forecasts from 1,7% to 1,5% in 2019 in the four months since October 2018 Medium Term Budget Policy Statement, MTBPS, and the possibility that the latest
forecasts may still not be realised given the risks identified. Once again, raises questions about the credibility of forecasts when the committee engage with the Treasury.
The committee notes that the Budget deficit and debt to gross domestic product, GDP, ratio have widened since the 2018 MTBPS. The Committee reiterates its concern about further increases in the public sector borrowing
The committee notes that in the context of the weak economic growth and the need to address the risk posed by Electricity Supply Commission, Eskom, the 2019 Budget proposes large scale expenditure reprioritisation and tax measures that narrow the deficit from 4,5% of GDP in 2019-20 to 4% in 2021- 22
The committee expresses its concern about the upward trajectory of the debt- to-GDP ratio, which is set to reach 60,2% in 2023-2024 and 60,1% the following year.
The committee notes that consumer price index, CPI, inflation is increasing and expected to be 5,2% in 2019 due to rising food inflation and electricity prices. Obviously, the biggest challenge is how to rescue Eskom. We welcome the decision to link the
R23 billion a year support to Eskom to the appointment of a chief reorganisation officer, who will contribute to the implementation of the mandate of the presidential task team on Eskom.
We urge that there be intensive and effective consultation with the trade unions on the restructuring of Eskom. The private sector is also urged to play its full part, both in its self-interest and in the country's interests, in contributing to Eskom's strengthening.
The committee agrees with National Treasury that if state-owned entities, SOEs, require financial support, the state should appoint chief reorganisation officers to work with their boards and management in the same manner that a curator does with private companies in trouble.
The committee also believes that there are needs to be far more progress on the sale of the noncore assets of SOEs. The committee will pay keen attention to how the Select committee on appropriations processes issues related to the public sector wage bill.
The revenue shortfall has now increased to R42,8 billion compared to the R27,4 billion initial revenue shortfall for 2018-19. The
National Treasury has attributed the shortfall to persistent weak economic activity in corporate income tax; CIT. Clearing of VAT refunds backlog will also reduce the net revenue collection
However, we note the improvements in SA Revenue Services, Sars, in these past few months. We look forward to the appointment of the new sars Commissioner and welcome the formation of a new Illicit Economy Unit; the strengthening of the Sars information technology, IT, system; the revival of the Large Business Unit; and the appointment of Judge Dennis Davis to assess the amount of revenue not being collected by Sars.
Given that billions of rands are lost each year through Illicit Financial Flows, IFFs and the urgent need for revenue, Sars needs, in cooperation with other state agencies, as we have repeatedly said to do far more and far more quickly to reduce IFFs. The committee will continue to pursue this matter vigorously with Sars and the other relevant agencies.
We also believe that there has to be more progress on the National Treasury deciding on the Davis Tax Committee recommendations on curbing tax evasion and avoidance.
We agree with the proposal in the public hearings that National Treasury should be more effectively exploring boosting revenue by taxing income and profits from the digital economy.
We note the concerns that the commitments made in the National Economic Development and Labour Council, Nedlac, by National Treasury and other government departments about reducing job losses related to the implementation of the Health Promotion Levy or sugar beverages taxes are not being fulfilled. The same issues may arise in regard to the implementation of carbon tax.
Progress on these Nedlac commitments need to be reported regularly to the committee, in the sixth Parliament and this will be done and that will be in our legacy report on the quarterly basis.
The committee agrees with the proposal in the public hearings that that the Office of the Tax Ombud should have more powers to investigate without asking for Ministerial approval and should be actively involved in amendments to the Tax Administration Act, 28 of 2011.
The committee welcomes the recommendations of the Nugent Commission of Inquiry on Sars Tax Administration and Governance and urges
National Treasury to introduce amendments to the legislation reasonably soon.
We also welcome the R526 billion for infrastructure over the medium term.
The Employment Tax Incentive Scheme has been very successful with 1,1 million young people being beneficiaries and we welcome the decision to extend it for another 10 years.
There are thirty recommendations and I am not going to deal with every one of them, but very important the committee will also refer the submission of the Pietermaritzburg Pensioners Forum. They came all the way from Pietermaritzburg to Parliament and the South African Insurance Association, SAIA, to the Select Committee on Appropriation to process further as they deal with appropriations issues. It is about inquest intentions.
The committee reiterates its views that government alone cannot ensure the necessary economic growth. Parliament, the private sector, the trade unions, other sections of civil society and the public all have a role to play. However, government has to lead in
this regard. We welcome the progress so far and would like to see more.
A word of appreciation, this is the last report on the Fiscal Framework and Revenue Proposals of the fifth Parliament and the word of appreciation to the support staff of this Select Committee for Finance. I worked with some of them for nine and a half years, others, others little bit shorter. Keep it up. With the finger in front of your chest and say, I want to be the best. You are doing well. The DA reserves its right on this report. I hereby table this report for consideration by House. Thank you.
Deputy Chairperson, this is a declaration on the 2019 fiscal framework and revenue proposals. For 25 years, government's fiscal framework has failed.
Deputy Chairperson, on a point of order: I rise to state that, sitting here as a delegate, I am leading the delegation from the Free State. The man doesn't have any mandate. He is not a leader of the delegation.
Read your Rules, chief! Ask your Chief Whip!
Deputy Chairperson, on a point of order: I think the hon Parkies is not aware that the hon Chabangu went to the province and then, as a member of the finance committee, he was indeed given the mandate to declare ... [Laughter.] [Interjections.] ... by the committee from the legislature. You can laugh because I am whipping him. I know what is happening in terms of the reports. [Interjections.] Yes, I am his whip. Yes.
Hon members, order! It is not the first time this situation occurs, and we have ruled on a number of occasions, as presiding officers, on this matter. Firstly, I made mention - and I am making a ruling here - and said that in accordance with Rule 71, I shall therefore allow provinces to make a declaration of vote if they so wish. [Interjections.] No, no. That is in accordance with Rule 71. What does Rule 71 say? It says that a delegate or whoever will then rise on behalf of a province must have the mandate and the authority of the province to do so. [Applause.] [Interjections.]
No, I don't know what that is for. The leader of the delegation from the Free State ...
He is not here.
... stands up to say that, to his knowledge, the member who rose on behalf of the Free State does not have a mandate. [Interjections.] Hon Mokwele, please take your seat. So, my ruling therefore, based on Rule 71, is that I shall request that the member, on the basis of him not standing on the mandate of the province, not proceed with the declaration. [Applause.]
On a point of order, Deputy Chair ...
Hon Mokwele, I have made a ruling, and I am not going to allow a debate on this matter. If the ruling ...
Setswana:
...ema pele, ema pele ... [... wait, wait ...]
... is out of order in terms of Rule 71, you shall have every right to then contest the ruling.
Deputy Chair, I am not contesting the ruling. I am standing on a point of privilege.
Hon Julius, you are on your feet, and I have not recognised you. [Laughter.]
Deputy Chair, with due respect, I think we need to close this Fifth Parliament's term knowing and understanding our roles and responsibilities. I have been raising this thing to make the House aware that the Rules are being flouted. The hon Chabangu is from the Free State. There is no discussion from the delegation of the Free State that allowed the hon Parkies to lead the delegation. It doesn't mean when the ANC is the ruling party, it automatically happens that a person who comes from the ANC will be the leader of the delegation whilst the leader is absent. [Interjections.] That issue needs to be communicated to all delegates. The hon Chabangu is from the Free State. He is not even aware that the hon Parkies is the leader of the delegation today. I am just citing that to you. Deep down, you know that I am right!
Thank you very much. Just bend your finger, please.
Alright. That is how I speak, unfortunately.
No, don't do that.
Yes, let me put it at the back.
I think I heard your point. I heard the point.
So, my point is very clear. We must lead by example.
It is very clear. I heard it.
So, the hon Parkies is not aware that the committee has given the hon Chabangu the mandate.
Hon Mokwele, I have heard your point.
I am just giving you ... you are dealing with this.
No, you are repeating yourself. Alright. Fine.
Please allow him. We have made our point.
No, I have not disallowed you.
No, I am saying "him"!
It is quite painful, but I listen to you. Hon members, I am not going to repeat my ruling. However, the only thing I would do for the purpose of this House and its delegates, whether they will be coming back or not, but at least we will have this peace, is to quote Rule 71 so that we don't leave here with a misunderstanding. Rule 71 ...
With due respect, sir, we understand.
You are listening to yourself. Take your seat, hon member. [Interjections.] Hon member, take your seat. Rule 71(b) reads as follows:
... the presiding officer -
(b) on request, may allow each province, in a speech not exceeding three minutes by the delegation head or another member authorised by the delegation head, to state the reasons why the province is in favour of or against the question.
Hon Chabangu, please take your seat. [Interjections.] Hon Chabangu, please take your seat.
Deputy Chairperson, just on a point of order: Perhaps this might help. Coming from the Free State, I am not quite sure the hon Chabangu, because of the way the EFF and ANC are working together these days, was not perhaps mandated by the ANC.
That doesn't help. You are not helping us with anything, hon Michalakis. Hon members, I have ruled on this matter. [Interjections.] Are you standing on the same matter?
On a point of order, Deputy Chairperson: I stood up a long time ago.
Is it on the same matter?
Yes, it is but a long time ago.
No, I am asking whether it is on the same matter.
Yes.
Is it on the same matter I ruled on?
Deputy Chairperson, it is on the same matter. I just want to ...
No, then I am not going to allow you, hon Julius. I have ruled.
You are responsible for the chaos ...
Thank you very much for not having been listened to. [Laughter.] Does any other province wish to make a declaration of vote? Is clarity needed, hon Essack?
Yes. Thank you for the opportunity, Deputy Chairperson. I just wanted to clarify, through you ... [Interjections.]
Hon members, I want to hear the hon Essack. Please give me an opportunity. [Interjections.] Hon Mokwele, may I please listen to the hon Essack?
Chairperson, because it also concerns me as a member of the Select Committee on Finance, I just, through you, would like to know the following: Next week, members of this committee go out to brief the provinces on final mandates regarding this very Bill. What is the situation then? If a member is not allowed to make a declaration on behalf of a province, is that member then also expected to do the briefing to the province? I just want clarity from you. Thank you.
No, hon members. Order! That is a matter that belongs to the committee because it falls within the cycle of passing of legislation in the ... hon Mokwele! Hon Mokwele, we have a responsibility! Hon Chabangu and hon Motara! I think you seem to be enjoying this. You are really enjoying something that should really not be enjoyed. [Interjections.]
Problems in the coalition!
Hon members, I am now allowing provinces to make a declaration of vote if they so wish. [Interjections.]
Declaration(s) of vote:
Deputy Chairperson, Deputy Minister of Finance and hon members, the ANC welcomes the 2019 fiscal framework and revenue proposals as presented by the Minister of Finance. We believe that this very outright budget which carefully and sensitively balances the need to stimulate economic growth, reduce wasteful expenditure, deal with corruption ... [Interjections.]
Just hold, hon member. Hon Smit, on what point are you rising?
Hon Deputy Chair, on a point of order: The hon member was asked to speak on behalf of Limpopo and he is now speaking on behalf of the ANC. If you listened, he said "on behalf of the ANC". So, is he speaking on behalf of the party or the province?
We still have a sitting next week. I will familiarise myself with that and whether it is out of order. Hon member?
... deal with corruption ... [Interjections.]
On a point of order, Chair.
Just take your seat hon member.
On a point of order, Chair. You are going to collapse this House, Chair. The reason I'm saying that is because you should have made that ruling when hon Chabangu was giving a declaration to find out whether Chabangu has been given a mandate or not. Now that it is a member of the ANC from Limpopo you allow him. You are not consistent, Chair, and you are going to collapse this House. I am appealing with you. I am appealing with you, Chair. Why don't you make the ... [Inaudible.]
Hon Mokwele, before you collapse yourself, may I request some of the members to be in order because now it no longer points of orders, it is just one thing to be disruptive. Hon members ... hon Labuschagne, on what point are you rising?
Deputy Chairperson, I rise on point of order that this House is becoming very disruptive and there is really no point of order. We are in the process of declarations from provinces. The public out there don't want to see us at the end of a five year term that people in this House don't know the rules.
We all know that the Premier appoints the head of a delegation who carries vote in this House. I can't see why we are debating that and I can't see why this was allowed. Can we please continue?
Hon members, point of order taken. Hon member, can you continue with the declaration of Limpopo?
Despite loose spending pressures and reductions, the budget remains strongly redistributive and we note and support that about 68% of consolidated expenditure goes towards social commitments including education, health, social grants and basic services.
These services and transfers, provided by all spheres of government, will enable South Africans to access socioeconomic opportunities and reclaim their dignity which the apartheid system eroded over the years and centuries.
We welcome the fact that since the launch of the sanitation appropriate for education, SAFE, Initiative in August 2018, 699 schools have been provided with safe sanitation facilities and a further 1 150 schools are due to receive similar safe sanitation
facilities. We look forward to a complete eradication of unsafe and inappropriate sanitation facilities in the next three years.
The budget also provides for the National Health Insurance, NHI, which remains a priority of government. The National Health Insurance will enable South Africans to receive free services at a point of care in public and private quality accredited health facilities. By applying the principle of social solidarity and cross subsidisation, the NHI will reduce the inequality in access to healthcare.
This major policy intervention is inline with our Constitution which calls for access to health for all. Government social protection system has assisted greatly in reducing poverty and inequality by providing social grants and welfare services for vulnerable groups. We note that in this current economic climate there are some families who survive on these much needed social grants. We therefore acknowledge the submission by all stakeholders including the one by the Pietermaritzburg Pensioners Forum. We expect the relevant committee in this House to follow up on the issues raised by the pensioners forum.
On the state-owned enterprises we welcome transformative measures that are being put in place to improve governance, strengthen leadership and bring about stability. Parliament will have to vigorously monitor the implementation of ... [Time expired.] We support the report, Chairperson.
Hon Chabangu, on what point are you rising?
I was going to remind you there but on top of that I was going to say I can't hear clearly what the speaker is trying to say because he can't read properly.
That is not a point of order. Is there any other province? In the absence of any then we will proceed with the voting and we will do that ... Western Cape. But then you must be sharp!
Hon Chairperson, hon members and fellow South Africans, the macroeconomic picture for South Africa as set out in the fiscal framework is not positive. It points to an economy in crisis and a government unable to respond effectively. Revenue is down year on year and now projected to be at R1,6 trillion.
Expenditure at R1,8 trillion continues to rise at an unsustainable pace especially into the bottomless pit of the state-owned enterprises. The Minister himself said that we need to ask the question of whether we need these fiscal draining entities. This needs to be done more than just a rhetorical question.
The widening 242 billion deficit requires increasing debt that will completely crowd out service delivery within 25 years. This means that there will be no money for anything other than debt servicing. Our economic growth remains tepid and will not increase above 2,1% in the foreseeable future. This state of affairs was entirely avoidable if the failing ANC-led government had successfully managed our economic woes.
Significantly, government did not act on the corrupt activities of the state owned enterprises and kept bailing them out. Eskom remains our biggest risk to economic growth and its restructure must be top priority. The spiralling Public Sector Wage Bill excessively pays politically connected cronies and not enough to frontline service providers such as our nurses, police and teachers.
Last night, with another fuel price increase, every South African became poorer thanks to this failing ANC-led government. Our older
population has been left completely vulnerable. The Pietermaritzburg Pensioners Forum raised the issue of endless broken promises. So much so that they said that the ANC can not rely on their support for this election. Their hopes have been disappointed by a government that does not care. The Western Cape does not support this unsustainable fiscal framework, especially because it does not promote one South Africa for all. Thank you. [Applause.]
Hon members, may I just remind you. You know, when we started we introduced this innovation of a podium here. If a member wishes to speak from this podium - you are not forced to - so if a member wants to speak from where he or she is seated they can do that. Please, let us avoid a situation of wanting to instruct members to speak from where they are.
Question put: That the Report be adopted.
Voting.
On a point of order, Chair.
Can you take you your seat hon member because I want to conclude this. [Interjections.]
On a point of order. Before you rule ... [Interjections.]
Hon Mokwele, can you take your seat?
I am saying the leader of Northern Cape is here. What do the rules say?
Hon Mokwele, can you take your seat? I am not going to entertain that.
IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West.
AGAINST: Western Cape.
Report accordingly adopted in accordance of section 65 of the Constitution.
On a point of order, Chair.
Hon Mokwele?
Chair, I would request that you become calm.
I am very calm. [Interjections.]
You are not. [Interjections.]
Very calm. [Interjections.]
You are not ... [Interjections.]
Unfortunately you are not a doctor. [Interjections.]
...you are ruling out of emotions. [Interjections.]
So you think. [Interjections.]
I am telling you. [Interjections.]
Hon Mokwele, can you take your seat. [Interjections.]
I am standing, sir, in terms of the leader ... [Interjections]
Hon Mokwele, can I address you please before you destruct us. If you go back on the ruling that I made on the basis of delegated responsibilities ... then it will be out of order. You are extremely out of order. You are out of order!
You are out of order!
Read Rule 71. Hon Mokwele, you are out of order. Please, stop being out of order. [Interjections.] No, I am asking you. Please, stop being out of order. [Interjections.]
Hon members, I can't even hear the Secretary! I can't even hear the Secretary! Hon Mokwele ... Hon Mokwele, I really don't want to ask the ultimate question. [Interjections.] I really don't want that. Please, let us not get to that. Hon Chabangu, on what point are you rising?
Deputy Chair, can we please, with due respect, go and call Mme Modise to come and preside because I can see you are out of order. [Interjections.]
Hon member, you are out of order!