Chairperson and hon members, on the occasion of the tabling of the Medium-Term Budget Policy Statement of 2007, the Minister of Finance reminded us that the statement was intended to encourage parliamentary and public debate on how South Africa would meet the social and economic challenges ahead. The statement was, accordingly, referred to the Portfolio Committee on Finance and the Joint Budget Committee in terms of our respective mandates.
The Portfolio Committee on Finance undertook this engagement in two phases. In the first phase we had a briefing by the department, led by the Minister in his capacity as executive authority in terms of the PFMA and the Director-General as the accounting officer in terms of the same legislation. In the second phase we engaged with economists on the macroeconomic outlook, reflecting on the implications of the Medium-Term Budget Policy Statement.
Focusing on government's strategic framework that seeks to enhance the social, cultural and economic welfare of all South Africans, the statement deals with the following. Firstly, it deals with the acceleration of economic growth and the state of investment; secondly, it deals with employment creation; thirdly, it deals with investment in community services and growing the social wage; fourthly, it deals with the improvement of the effectiveness of the state; and, lastly, it deals with the building of regional and international partnerships for growth and development.
Government is seeking to achieve the intended objectives within a very volatile and unpredictable global economic climate. Whilst the economy has posted reasonable growth since 2004, it is not entirely immune to the challenges that obtain in the major economies at a global level. The most obvious challenge the economy faces is that of a persistent current account deficit, which some economists attribute to a country living beyond its means.
To put it in the Director-General's words to the committee, and I quote:
We are spending more that we earn and rely on the international community to finance our spending.
He estimated that at present we are spending about R2 billion a week. He went on to say:
This results in the current accounts and inflation imbalances that are not sustainable.
Savings and investment imbalances were also identified as the key constraints to faster growth. One of the key challenges has been the CPIX, which has been outside the target range since April 2007, influenced by supply-side pressures, including the high global prices of agricultural commodities and low domestic production, oil prices that were at record high levels and the average wage settlements that were above 8%.
Statistics SA has also identified food and energy prices as major contributors to the CPIX inflation, to the extent that if the two were excluded, CPIX would be within the target range. Even though the full impact of the interest rate increases has not yet been realised owing to the time lags, domestic consumption has moderated somewhat. Part of the moderation is attributed to the effects of the National Credit Act, which came into effect at the beginning of June this year.
The National Treasury, in the presentation to the committee, alluded to the greater risk of a global economic slowdown that arises from the slowing growth in the United States, coupled with the unravelling of the subprime mortgage crisis, as well as steps to curb inflation in China being likely to slow growth in that region.
The statement proposes some innovative means to mitigate the impending risks and fiscal policy is at the centre of this master plan. The structural budget balance is introduced in order to adjust fiscal balance for three issues: One, the cyclical deviations in the rate of economic growth; two, the cyclical changes in the composition of growth; and three, the changes to our terms of trade or to commodity prices.
This proposed structural budget balance is meant to be a contribution to a more systematic and consistent adaptation of the fiscal stance to cyclical factors. The statement simplifies this concept as follows, and I quote:
When economic conditions are good as they are now, we must invest and save in a manner that allows us to maintain public spending and societal welfare when economic conditions turn less favourable, as they inevitably will.
The ANC government will not relent in its endeavour to create sustainable livelihoods through the state machinery that is geared towards the eradication of poverty and meeting the basic needs of the vast majority of South Africans. It is in this context that it becomes crucial to allocate more resources to those programmes with the highest rate of social return, or which have the greatest impact on reducing poverty and unemployment.
Sihlalo, uhlobo lombuso inhlangano kaKhongolose ekholelwa kulo yilolo olugxile kakhulu ekuthuthukisweni komnotho nokwabelana ngokulingeneyo kwabantu bonke ngaphandle kokubandlulula. Uma sibheka lesi sitatimende senqubomgomo singaphawula ngokungangabazi ukuthi, yize sibhekene nezinselelo ezinkulu, ikakhulukazi ezingeni lomhlaba, umnotho waleli ezwe uyaqhubeka nokubhekela isizwe sonke ngenxa kahulumeni ozibophezele ekwenzeni ngcono izimpilo zabantu bonke.
Lesi sitatimende sigcizelela ukwehliswa kobubha ngokuqinisa izakhiwo nokusebenza kukahulumeni, ukuqiniswa kohlelo lokwakha izingqalazizinda, ukuthuthukiswa kwemiphakathi nokulethwa kwezidingongqangi kubantu bonke. Lokhu kwethulwa kwalesi sitatimende kuhloswe ngakho ukugqugquzela isiko lengxoxompikiswano kule Ndlu yesishayamthetho nasemphakathini ukuze wonke umuntu abe nezwi ekutheni zizohlangatshezwa kanjani izidingo zomnotho nezenhlalakahle zesizwe. Lolu hlelo luhambisana kakhulu nesiqubulo saleli Phalamende esithi "Masijule ngengxoxo Mzansi". Kuphela nje sidinga isikhathi esanele nezinsiza ezifanele ukwenza lokho. (Translation of isiZulu paragraphs follows.)
[Chairperson, the kind of government that the ANC believes in is that which emphasises the development of the economy and in which people share equally without being discriminated against. If we look at this policy statement, we can undoubtedly notice that, although we are faced with many challenges, globally in particular, the economy of this country continues to sustain the whole country because of the government that is committed to improving the lives of all.
This statement puts emphasis on the alleviation of poverty by strengthening government's structures and work, consolidation of the infrastructure building programme and the development of communities and service delivery. The introduction of this statement is aimed at encouraging the debate in this legislative House and amongst communities so that everyone has a say as to how the economic and social needs of the country are met. This programme goes hand in hand with this Parliament's slogan "Masijule ngengxoxo Mzansi" which means that we must intensively engage in talks. All we need is enough time and appropriate resources to do that.]
The committee is of the view that the time allocated for the engagement with the Medium-Term Budget Policy Statement is not adequate for Parliament to make a meaningful contribution, neither is there adequate capacity within the institution to fulfil this. We trust that the Joint Budget Committee will make the necessary proposals, as enjoined by its terms of reference in order to address this situation.
The Medium-Term Budget Policy Statement deals with matters that cut across virtually all departments and that would require all portfolio committees to engage with the statement in relation to their respective mandates. This would afford departments and portfolio committees an opportunity to review their adherence to government policy overseen by Parliament immediately after the tabling of their annual reports and audited financial statements.
It is processes like these that place South Africa way ahead of other developing countries in terms of transparency and accountability. It is, therefore, incumbent upon us that, within the time constraints and limited resources, further compounded by the asymmetry of information, we engage with effective oversight of policy implementation.
The committee supports the MTBPS and trusts that the other committees will take the debate forward with their respective departments, with the information being of value during the tabling of the strategic plans and budgets next year. Thank you, Chairperson. [Applause.]