Mr Chairman, hon Minister, hon members, the DA welcomes the broad set of tax breaks announced in the budget. In particular, we welcome the reduction of the tax on retirement funds from 18% to 9%. This move has long been called for by the DA, and will positively affect retirement funding and increase the present low savings rate.
In my speech I will refer to the retirement industry and the second economy. Despite the impact of Aids, increasing longevity pushes up the need for postretirement income. It is generally accepted that pensioners should be self-supporting as much as possible and not be dependent upon the state or, in the end, the taxpayer.
The South African retirement industry is fairly sophisticated and the South Africans that belong to a registered pension fund can consider themselves fortunate. However, millions of South Africans do not belong to pension funds. They traditionally rely on extended family support and subsistence in the so-called second economy.
The plight of the pensioners, especially in the so-called retirement communities, with life membership is also something of grave concern, and I believe that the hon Minister and the Department of Finance are investigating this plight.
The hon Minister, in his Budget Speech, made mention of the fact that social grants contribute to more than half of the income of the poorest 20% of households. In a recent study of the bureau for market research at Stellenbosch university it was estimated that roughly two million people are employed in the informal sector. Lower-skilled and less-educated South Africans have no alternative to escape from unemployment and poverty and are often forced to participate in the second economy.
It is estimated that on its own the second economy employs about 1,72 million people and contributes only 2,1% of GDP. This comprises about 750 individual outlets with an average turnover of R68 000 per month, each employing between two or three individuals on average. Average remuneration per employee is around R1 000 per month, half the minimum required to sustain the average household in an urban community.
Armoede, werkloosheid en lae vaardigheidsvlakke is veranderlikes wat werklike, rele, ekonomiese groei inhibeer. Die Suid-Afrikaanse bevolking, soos talle ander, is besig om snel te verouder. Die openbare en private sektors sal toenemend moet saamwerk om volhoubare ekonomiese groei van tussen 5% en 6% te laat realiseer.
Dit sal gewis nie maklik wees nie, aangesien die feit dat groot gedeeltes van die Suid-Afrikaanse bevolking wat hul in die sogenaamde tweede of informele ekonomie bevind, in die verlede uiters beperkte toegang tot die formele ekonomie gehad het. Dit is dus gebiedend noodsaaklik dat die formele sektor deur middel van mentorskappe die hand na die agtergeblewe informele sakesektor uitsteek.
Lande wat die afgelope drie dekades ekonomies vooruitgegaan het, was aantreklike beleggingsbestemmings vir beleggers. Internasionaal aanvaarde ekonomiese norme is geerbiedig, soos byvoorbeeld vrywillige koper en verkoper. Korrupsie in geen vorm is geduld nie, met 'n onafhanklike regbank waar daar geen staatsinmenging van enige aard rakende die administrasie of regspleging plaasgevind het nie. Die DA versoek dat daar indringend na wyses gekyk word om die pensioenbedryf in die algemeen uit te bou, met dien verstande dat meer Suid- Afrikaners daaraan kan behoort, en dat die informele sektor van die ekonomie deur middel van aanvaarde internasionale riglyne en sakepraktyke uitgebou word, sodat ook hier aanvaarbare wins- en groeimarge sal realiseer wat tot volhoubare ekonomiese groei en welvaart die bre bevolking sal lei. (Translation of Afrikaans paragraphs follows.)
[Poverty, unemployment, and lower skills levels are variables that hamper actual, real economic growth. Like many others, the South African population is aging rapidly. The public and private sectors will have to increase their collaboration in order to achieve sustainable economic growth of between 5% and 6% percent.
This will certainly not be easy, given the fact that the greater part of the South African population which participates in the so-called second or informal economy has had extremely limited access to the formal economy in the past. Therefore it is vital that the formal sector should reach out to the disadvantaged informal business sector by means of mentorship programmes.
Countries that have prospered economically in the past three decades have been attractive investment destinations for investors. Internationally acceptable economic standards such as willing-buyer, willing-seller were maintained. Corruption was not tolerated in any form, with an independent judiciary where there was no interference from the state whatsoever regarding the administration of justice.
The DA requests an in-depth consideration of ways to expand the retirement industry in general, providing that more South Africans will be able to join, and that the informal sector of the economy will be expanded by means of accepted international guidelines and business practices in order to achieve acceptable profit and growth margins here as well that will lead to the sustainable economic growth and prosperity of the population as a whole.]
We face a number of formidable obstacles. At present our tax base is relatively small; approximately 4,3 million out of a population of 44 million people pay income tax. Unemployment is more than 30%. Our domestic consumer market is small. Our geographic location is not close to the EU, North America or the East. This contributes to additional transport costs for our exports.
Furthermore, some of our neighbouring countries, particularly Zimbabwe, experience an unacceptable inflation rate that runs into the 100 percentiles. The DA, therefore, calls upon government and the private sector to leave no stone unturned in generating a favourable economic climate, an essential prerequisite for future sustained economic growth. The DA supports this budget. I thank you, Mr Chairman. [Applause.]