Ahee, buti! Ndza khensa Mutshamaxitulu ku nyika xiviko xa timali eka lembe ximali ra 2020-21. Xiviko lexi i xa Komiti ya swa Timali ta Palemende ya Huvo ya Rixaka.
English:
The Standing Committee on Finance having considered the 2020 Fiscal Framework and Revenue Proposals tabled by the Minister of Finance reports as follows: The Minister of Finance tabled the 2020 proposed Fiscal Framework and Revenue Proposals, the Division of Revenue Bill and the Appropriation Bill on 26 February 2020. He also tabled this in line with section 27 of the Public Finance Management Act, PFMA read with section 7(1) of the Money Bills Amendment Procedure and Related Matters Act as amended.
Budget is an important policy planning and monitoring instrument that can be used by Parliament to oversee the alignment of the proposed expenditure with government policy priorities and more broadly, alignment to the National Development Plan, NDP goals. The budget can also be used as an oversight tool for monitoring the implementation and achievement of priority service delivery outputs towards the realisation of the NDP goals. This report is presented against the background of the global economic growth outlook which is expected to improve marginally from its recent slowdown. Despite the projected recovery of the global economy, significant risks remain. These are stated as follows: the rising geopolitical tensions between USA and Iran could have negative implications for the global economic stability. The Coronavirus disease may serve to dampen China's economic growth which will have implications for the manufacturing sector particularly in respect of metals. Slower metals production will mean lower demand for minerals; all mineral inputs from South Africa.
South Africa's economic growth outlook remains subdued. The real GDP is projected to be 0,9% in 2020, 1,3% in 2021 and 1,6% in 2022. Week growth focus can be attributed to the poor financial health of state-owned enterprises, SOEs. Unreliable power supply loadshedding and the implementation of structural reforms. Negative growth is slightly to stifle job creation, increase unemployment which stand at 29,1%, and youth unemployment in particular which stands at 58,1% in the fourth quarter of 2019.
The Minister joined by the director-general, Sars Commissioner and other officials briefed the Joint Committees on Finance and Appropriations Committees. The committees also received pre and post budget analysis from the Parliamentary Budget Office, PBO and the Financial and Fiscal Commission, FFC. We also held public hearings on 04 March where stakeholders presented their opinions about the budget. The committee also received written submissions and Treasury responded to the submissions from the public hearings.
The 2020 budget is based on the pillars of the economic strategy, i.e., strengthening the macroeconomic framework to deliver certainty, transparency and lower borrowing costs; and focus spending on education, health and social development. Budget 2020 - 21 proposed a total consolidated spending of R1,95 trillion. The largest allocation goes to the departments of education and Department of Arts and Culture at R396,4 billion, Social Development at R309,5 billion and Health at R229,7 billion.
The budget will encourage modernized network industries and restructuring of SOEs; opening markets to trade with the rest of the continent; lowering the cost of doing business and focus on job creating sectors. Going forward, the budget priorities framework and Mandate Paper currently under- review need to be aligned with the Presidential priorities and Medium-Term Strategic Framework to ensure the implementation of the NDP. The consolidated budget also includes the main budget framework and spending by the provinces, municipalities, social security and public entities.
The macroeconomic approach in 2020 Fiscal Framework is focused on the supply side of the economy. The speedy at which an economy can grow depends largely on improving aggregate demand. Governments worldwide now favourably consider fiscal policy to boost demand. The expenditure ceiling Treasury announced cuts of 20% over the medium term starting with 6% in 2020 - 21 and 7% in the outer years. How will this affect spending in particular on the NDP priorities, on the jobs, poverty and equality? So, these are the matters that need to be looked at because the cut-on spending might have negative implications.
The budget deficit is likely to widen further due to increased demands of SOEs. Lower than expected economic growth will lead to lower than projected revenue collection. Concerns over Eskom and demands from other financially distressed SOEs. Another challenge is the contingent liabilities arising from Road Accident Fund, RAF which will increase to R600 billion over medium term. Slow spending on infrastructure. Integrated planning, budgeting, monitoring and evaluation are still a challenge to ensure effective and efficient expenditure.
The budget may have to be adjusted to account for more bailouts. Debt is increasing over the medium term, rising at an annual average rate of 12,3% more than double the average growth rate for total expenditure. The Minister has indicated that there will be reductions in the transfers to the provinces and municipalities. What would be the implications of the reduction of transfers to municipalities and local government?
Xitsonga:
Mutshamaxitulu, ndzi tsakela ku kombisa leswaku tanihi Komiti ya swa Timali hi twananile eka leswi landzelaka ...
English:
We welcome the revenue proposals contained in the 2020 budget, particularly tax relief on households. We welcome the fact that Value Added Tax, Vat was not increased and also welcome the initiative on the state bank. We agree on the increase of tax on excise. Previous committee raised the issues in relation to the following: base erosion; profit shifting and elicit financial flows. These are issues hon Chair that Treasury, financial information system, FIS and SA Reserve Bank had to attend to. The committee also welcome the introduction of the Public Procurement Bill. Sars has to explore mechanisms of taxing the digital business enterprise. Chairperson, I move for the adoption of the report.
Xitsonga:
Inkomu, khanimambo. [Va phokotela.]