Mr Speaker, hon Minister of Finance, Ministers and Deputy Ministers present, hon members and distinguished guests, let me add mine to the many voices of South Africans congratulating the Minister and his team for tabling a credible, broadly balanced and confidence-building Budget statement in this House. It has indeed given clear policy direction that is certain, predictable and coherent.
In his state of the nation address the President of the Republic reminded us, and I quote:
The work done last year indicates that if we continue to grow reasonably well, we will begin to write a new story about South Africa - the story of how, by working together, we drove back unemployment and reduced economic inequality and poverty.
The President also said:
Our shared commitment is to put South Africans to work. They must find work in the fields and factories, in repairing roads and building houses, in caring for children and protecting the environment. We must create jobs in every possible way that we can. 2012 must be the year of job creation.
The Budget, as presented in this House by the Minister of Finance, consists of the objectives stated above as it continues to open up a range of new possibilities for growth and development in line with the President's call and invitation to the nation to join his government in the industrialisation programme of our country through the infrastructure development drive. Hon Minister, you are indeed very correct when you said, and I quote:
It is a story that must be written by all of us ... not just by government ... not just by unions ... South Africans from all corners of this country.
Each one of us must play a role to advance our democracy beyond its second decade of existence. We have just begun a long journey to realise a true and united nonracial, nonsexist, democratic and prosperous South Africa.
It is my pleasure to table the committee report and its recommendation on the 2012-13 fiscal framework and revenue proposals for consideration and adoption by this House, as directed by section 8(3) of the Money Bills Act.
In the main, the economic policy focuses on matters that relate to the national economic outlook and performance and key macroeconomic indicators within the current national, regional and indeed international and global economic environment, while the Fiscal Policy Framework deals with the fiscal stance adopted by government. It will give effect to the macroeconomic policy for the 2012-13 financial year and, among others, includes in the main estimates of all revenue - budgetary and extrabudgetary specified separately - of all expenditure expected to be raised during the financial year; estimates of borrowing for the financial year; and estimates of interest and debt servicing charges.
It is evident and clear that the 2012 Budget, as presented to us as the committee and after extensive consultation with various stakeholders through public hearings and intense interrogation by the committee, gives effect to the stance outlined in the 2011 Medium-Term Budget Policy Statement. It sets out a fiscal framework that will narrow the gap between spending and revenue, support the economy, strengthen capital investment and improve the performance of the Public Service. Spending over the next three years will be shifted from consumption spending towards productive investment, particularly in infrastructure development.
The macroeconomic framework continues to embrace a countercyclical fiscal policy and monetary policies that are underpinned by inflation-targeting measures that support growth and investment to protect the living standards, particularly of working families, the poor and low-income households. The macroeconomic measures alone are not enough. They need to be complemented by trade support, competition policy and active labour market measures.
The Budget, as presented, reaffirms the correctness of the countercyclical fiscal policy stance, which has provided a very strong and solid base in the past few years. These policies have ensured that even under very difficult circumstances due to, among other factors, the virtual collapse of the economies of our major trading partners in developed economies, particularly in Europe, we have succeeded in maintaining a low budget deficit of 4,8% of the gross domestic product, GDP. This is projected to stabilise at around 3% by the year 2014. We also managed to stabilise our debt to GDP at 38% and our tax revenue continues to recover. It is projected to increase from 24,7% to 25,5% of the GDP.
Furthermore, the Budget signals a new impetus in public sector investment, which is a foundation for long-term growth, employment and development through expansionary infrastructure plans. The gains and consolidation of our Budget successes through prudent fiscal management of our resources is cause for celebration and a lesson to be taught not only to emerging economies but also one to be learnt by the developed world. It is our home-grown product to be exported. For this we must pay tribute to the National Treasury and the executive, particularly the Budget committee in the Cabinet.
As the President said in the state of the nation address, it is beginning to look possible and we must not lose this momentum. This Budget continues to give hope to and inspire confidence in millions of South Africans. Under these conditions we can safely say yes, it is possible to pursue and succeed in industrialising our economy, improving our trade performance and maintaining moderation in consumption spending.
The National Planning Commission's proposed National Development Plan recommends several policy options to improve labour market efficiency to speed up job creation. These include placement subsidies to get matric graduates into work, staff retention schemes that offer short-time work during periods of low demand, and a more open approach to skilled immigration to boost the supply of high-skilled workers in the short-term.
The good of any policy is in its implementation and the achievement of its intended objectives. In other words, laws are good to the extent that they make a difference to those they are intended to benefit. I'm raising this precisely because consultation in the implementation of our laws should not lead to paralysis, particularly for the Budget and programmes that this House voted on and passed. The envisaged improvements in labour market efficiency, as espoused in the National Development Plan, should lay a firm basis for constructive discussions to seek agreement on the long- outstanding proposals to facilitate youth employment. The resolution and implementation of such proposals should complement the positive signs of an improved labour market in the previous year, when a significant number of jobs were created in both the formal and private sector.
The economy is projected to add 850 000 new jobs over the following three years. What is even more exciting is that 80% of these will be in the private sector, which will contribute to the lowering of unemployment to about 23% by 2014. Most of these jobs are also likely to be concentrated in the service and construction sectors as a result of steady growth in domestic demand, infrastructure expenditure and the pick-up in residential investment that is expected during the outer years of the budget.
What are the features of the Fiscal Framework? South Africa's period of transition is about building modern infrastructure, a vibrant economy, a decent quality of life for all, reducing poverty and creating decent employment opportunities for our people.
The committee notes that over the medium term, slower growth in public spending, combined with rising revenue, will substantially strengthen the fiscus. Therefore the key features of the fiscal outlook include the following: real growth in noninterest expenditure averaging 2,6% over the medium term; additional allocations of R55,9 billion over the next three years, including R9,5 billion for an economic support packages; tax revenue levels stabilising at about one-quarter of the GDP; and a shift from consumption to capital spending so that, from 2014/15, new borrowing will support productive investment.
The committee also notes that in the last 10 years structural increases in revenue were supported by healthy economic growth during the mid-2000s, along with improved tax compliance and administration. Audited revenue results show that the tax revenue of R674,2 billion for the 2010-11 fiscal year was an increase of R75,5 billion - 12,6% higher than anticipated in terms of the Medium-Term Budget Policy Statement. We also note the improvement made on personal income tax, dividend withholding tax, capital gains tax and the medical credit tax.
South Africa's critical infrastructure needs are, in part, the outcome of over 40 years of underinvestment and neglect. Public infrastructure spending tailed off from the early 1980s. Prudent fiscal management of the economy has created the much-needed fiscal space for a long-term investment plan. Together with the private sector, we can make a difference. It is now possible to emulate the developed countries, that spend about 25% of their gross domestic product, GDP, on capital investment, which is substantially needed to raise the per capita income of households.
The infrastructure budget, as tabled in this House, is beginning to fall in line with other developing countries whose capital investment is equal to about 25% of their GDP. While infrastructure spending and development is critical for economic growth, we must bear in mind that it should do so to underpin the manufacturing and beneficiation sector in our economy. It should do so to promote primary commodities, local input and the manufacturing sector. In other words, as we welcome the spending plans in respect of improving rail and general transport infrastructure, this should not lead to the promotion of exports of primary commodities without supporting the secondary sector of our economy. It is in this regard that the committee made certain observations and recommendations when it sat on Friday, which I will not spend time on in this presentation. Therefore, I wish to indicate that the committee, after it considered the 2012 fiscal framework and revenue proposals and conducted public hearings, proposes, recommends that the House adopts the 2012 Fiscal Framework and Revenue Proposals. The ANC supports the proposals as tabled. [Applause.]