House Chair - my apologies for not being here earlier, I got the time wrong today - hon Deputy President, Ministers, Deputy Ministers, hon members of the House, it is my privilege to make a few remarks this morning as I table before this House a report on the 2014-15 Appropriation Bill, [B4-2014], on behalf of the Standing Committee on Appropriations.
The 2014-15 Budget ushers our country into the second phase of our ongoing transition from colonialism to a national democratic society that is truly united, nonracial, nonsexist, democratic and prosperous. During this phase of our transition, government is called upon to accelerate the pace of social and economic transformation by implementing radical programmes that will place our country on a qualitatively different development path.
This path is clearly articulated in the National Development Plan, NDP, Vision 2030. This budget therefore lays the basis for the implementation of the radical programme of social and economic transformation for the next five years and beyond. Equally, the Budget seeks to deepen and expand the gains we have made since the 1994 democratic breakthrough. It will also help move our country forward as we, together, advance towards the kind of society envisaged in the Freedom Charter, that seminal document of our people upon which our Constitution of today was founded.
The 2014-15 budget must also take us closer towards meeting the bold commitments outlined in the manifesto of the ruling party, the ANC. This Budget will ensure that government continues to build an inclusive economy that creates jobs; transforms our rural areas for the better; ensures decent living conditions and sustainable human settlements; improves and expands access to education and training; ensures quality health care for all; provides social security; fights crime and corruption; and promotes national unity and social cohesion.
In addition, the policy priorities contained in the National Development Plan and which are funded and supported in the 2014-15 budget framework, include building on formal social accords and consultations in areas related to the mineral sector; partnerships in education involving teachers, parents and learners; allocations for the building, refurbishment and maintenance of health infrastructure; the roll-out of the community works programmes in every municipality; the new bus rapid transit system to be constructed in nine cities, with existing networks expanded; as well as increased support for small, medium and micro enterprises, SMMEs.
Indeed, this Budget is a major step towards achieving the priorities of the National Development Plan, which, amongst others, are the following: Uniting South Africans around a common programme to achieve prosperity and equity; promoting an active citizenry to strengthen development, democracy and accountability; bringing about faster economic growth, higher investment and greater labour absorption, focusing on key capabilities of people and state; building a capable developmental state; and encouraging strong leadership throughout society to work together to solve problems.
The Budget is anchored in the principle of fiscal sustainability, allocative efficiency and value for money. It places priorities on the need to ensure quality spending and the imperative of doing more with less. The Budget also gives practical meaning to government's commitments to the principles of counter cyclicality, debt sustainability and intergenerational fairness.
Allow me to reflect briefly on the overview of the South African economy and its implications on revenue. The Fiscal Framework and Division of Revenue Bill, which was adopted at the beginning of the year, presented government's outlook for revenue, expenditure and borrowing over the 2014 Medium-Term Expenditure Framework, MTEF. However, South Africa's economic outlook has changed since the 2014 fiscal framework was passed by Parliament early this year.
Following modest growth of 1,8% in 2013, South Africa's economy experienced its first contraction since the global financial and economic crisis. The South African economy shrank by 0,61% on a seasonally adjusted and annualised rate when compared to the last quarter of 2013, when growth of 3,8% was recorded. This was primarily due to a contraction in mining and manufacturing output. The strike in the platinum belt saw mining output contract by 24,7% compared to the previous quarter. Manufacturing on the other hand - the output thereof - also declined by 4,4% over the same quarter, in part to due to spill-over effects from the platinum sector strike and the depressed demand for gold. The first quarter also saw real consumption spending by households moderating. The first quarter of this year was also marked by slower growth in some of our major trading partners such as Europe, the United States and the rest of Africa and China.
The committee is mindful that recent economic developments, locally and globally, have implications for the 2014 fiscal framework, specifically with regard to current and estimated revenue growth, expenditure, the budget deficit and government borrowing.
The committee noted the reduction in the percentage of aggregate revenue collected, from 20,92% of GDP in 2013-14 to 29% of GDP in 2014-15. Meanwhile, aggregate expenditure has increased from R1,1 trillion in 2013- 14 to R1,2 trillion in 2014-15. Current estimations are that the budget deficit will moderate from 4% to 2,8% of GDP over the 2014 MTEF period. The committee supports the National Treasury's intention to target a reduction in the budget deficit through a decrease in noninterest expenditure. This work will be monitored to ensure that it yields the projected outcomes.
Despite the contraction in the domestic economy and the challenges brought about by the global economic situation, the 2014-15 budget makes available an additional total allocation of R38 billion over the next three years. So, hon Mcloughlin, we are not going to go bankrupt.
The committee welcomes the cost-cutting measures introduced by Cabinet to limit expenditure on conferences, travel, entertainment and other nonessential items. The committee undertakes to monitor the implementation of these cost-cutting containment measures.
The committee also noted that the continued tight fiscal environment will necessitate trade-offs between various funded priorities in order to balance fiscal sustainability and the need to accelerate socioeconomic development. Whilst the committee welcomes the work of the Chief Procurement Officer to put in place national systems for the purchase of high-value goods, it cautions that such procurement reforms should not negatively affect small businesses.
The committee is of the view that government departments need to significantly improve on their work of ensuring that suppliers who do business with government are paid within 30 days of the receipt of an invoice. The committee views the nonpayment of suppliers by government departments as having adverse effects on the economy, especially in realtion to the operation of small, medium and micro enterprises. Whilst the committee supports the strengthening and enhancement of the work aimed at ensuring that contracts are fair and transparent, it also supports the work that is under way by the Accountant-General to investigate fraud, corruption and maladministration relating to state contracts. The committee deems this to be a positive initiative and will monitor its implementations.
Whilst the committee acknowledges improvements in the overall budget expenditure at national level, it remains concerned about the low levels of expenditure on a number of programmes that are important drivers for job creation and economic development. Whilst the committee supports the reprioritisation strategy of aligning allocation of school infrastructure backlog grants and the education infrastructure grant with spending capacity, it cautions that alignment should not compromise school infrastructure delivery to provinces.
The committee is of the view that there is a need for the Department of Basic Education to strengthen its support, particularly in the Eastern Cape, where some challenges were pronounced. I know that there are members who are concerned about this grant, but the committee has agreed that this grant will be strengthened in going forward.
Whilst the committee noted the funding allocated for further education and training, it's of the view that systems need to be put in place to monitor the financial health of further education and training, FET, colleges. The committee welcomes additions by the National Treasury to the 2014 grant framework for specific indirect grants that set explicit requirements for skills transfer and capacity-building, which will set out how this capacity will be provided by national departments to provinces and municipalities.
There was concern that some of the grants that have been sent to provinces were not implemented and we agreed with National Treasury that the latter will assist with skills and capacity when those grants are sent to provinces so that we can accelerate service delivery.
So, the committee supports these measures that have been taken by the National Treasury. The committee also supports efforts by the National Treasury to encourage domestic savings.
In conclusion, the committee notes that this Bill, initially tabled on 26 February 2014, did not take into account the new departments announced by the President of the Republic on 17 June 2014. In this regard the committee supports the technical corrections presented by the National Treasury in terms of section 14 of the Money Bills Amendment Procedure and Related Matters Act.
I therefore take this opportunity to thank all members of the committee for the diligent manner in which they worked on this Bill.
Notwithstanding the recommendations of the committee, and due to the fact that no formal submission or amendments were proposed by other Parliamentary committees, we recommend that this House adopts the 2014-15 Appropriation Bill without amendments. [Applause.]
I would therefore like to conclude by reminding members that resources have now been made available. Let's all work together to move South Africa forward. Let us ensure that we can achieve radical socioeconomic transformation and bring about a better life for all our people.
Ndza khensa, inkomo. [I thank you.] [Time expired.] [Applause.]