Speaker, hon Deputy President, Ministers, Deputy Ministers, hon members, our guests, and the Director-General of the National Treasury, our debate on the Medium-Term Budget Policy Statement coincides with the release of the 20-year report by the US Bank Goldman Sachs on the state of South Africa. This report is titled: "Two decades of freedom: What South Africa is doing with it, and what now needs to be done". The report analyses both empirically and structurally how South Africa has changed in the past 20 years. It also looks into the challenges for the next two decades.
The relevance of the report to our work is that it independently reaffirms the correctness of our economic policies since 1994. Indeed, we have made bold and correct decisions in order to restore economic growth and maintain sustainable fiscal policy.
Yet there is still more to be done to improve the quality of life of millions of South Africans who are still yearning to be part of our young democracy and to benefit from it. Despite these outstanding socioeconomic deficits, we as South Africans have reason to celebrate the achievements of the last 19 years of our democracy under the leadership of the ANC. Indeed, the South Africa of today is far better for all, black and white, than the one we inherited in 1994.
The Goldman Sachs report concurs with what was said by the Minister of Finance in this House on 23 October. Let me remind South Africans and hon members of what the hon Minister said to South Africans about the 19 years of democracy. He said that our economy had indeed tripled and we had increased the economic base of South Africa. The national income per capita had increased by 40% in real terms. A total employment number of 3,5 million job opportunities had been created.
More than 16,1 million people were now eligible for social grants up from the 2,4 million people who received grants in 1994.
Seo se ra gore mphiwafela, e lego t?helete ya go thu?a bana, bakgekolo le bakgalabje, e oket?egile, eup?a gwa oket?ega le batho bao ba tsenego mo lenaneong la mphiwafela. (Translation of Sepedi paragraph follows.)
[This means that the child support grants and the old age grants have been increased. The number of social grant beneficiaries has increased as well.]
We have built more than three million homes, providing shelter to over 15 million people. I mention this so that we don't underestimate our own achievements. Fifteen million people now have proper shelter, shelter that the Freedom Charter anticipated and envisaged, stating, "There shall be houses, security and comfort" for all. Millions of our people also have access to electricity, water and sanitation.
In regard to transforming our economy, over the last 19 years we have seen over R600 billions worth of black economic empowerment transactions take place. In the last decade there was a dramatic rise in the middle class, the numbers of whom have risen from 4,5 million to 10 million people.
These are indeed the successes that we have realised in the last 19 years. We have not succeeded in solving all the problems, but we have made progress.
In regard to our inflation-targeting policy, we have reduced inflation from the 14% that there was between 1980 and 1994 to 6% to date, something that is very sustainable. Fixed investment has increased from 15% of gross domestic product in 1993 to over 20% over the past five years, despite the fact that we have not seen serious foreign direct investment taking place at the rate that we had anticipated over the years.
The observations that we made through the Medium-Term Budget Policy Statement are the following. The global economy remains subdued, though positive signs of potential and sluggish growth are visible. Due to political antics, the US annual debt ceiling poses a major risk for long- term world economic recovery. The debt ceiling debate has morphed into more than just a short-term political fight in the US Congress. Increasingly analysts are saying that the battle over the debt ceiling reflects a deeper constitutional struggle between Congress and the President in the United States of America. These are two of the issues that we have to take into consideration for our own economic planning as we look into the future. Domestically we must also acknowledge that we have seen slow economic growth, which has resulted in the tax revenue being revised down by R3 billion. We have seen high levels of unemployment, particularly among the youth. Government expenditure continues to exceed revenue, which we need to attend to. There is the challenge of low savings, which has impacted on our ability to invest in economic infrastructure. We have also observed overindebtedness of households and ...
... re re go magage?o, emi?ang ka dikoloto. [... we are appealing to you to stop getting into debt.]
Take it easy; don't rush!
We also acknowledge through this Medium-Term Budget Policy Statement that we have a high current account deficit, as well as high debt service level costs that we need to attend to. We also acknowledge and realise that in regard to the contingency grant we have started from a very low base, but over the next years, we will make sure that the contingency grant grows. The volatility of our currency also remains a point of concern.
What then do we need to do from here on, hon members? Countercyclical fiscal policy remains a central pillar of our revised Medium-Term Budget Policy Statement which seeks to: consolidate fiscal sustainability to support inclusive economic growth; maintain the expenditure ceiling to finance, and sustain social and economic infrastructure programmes through savings in the existing budget; shift expenditure from consumption to investment whilst ensuring that the principles of intergenerational equity are not sacrificed, so that future generations do not have to pay debts for our comfort today without our guaranteeing them a better future too; support job creation and promote manufacturing, particularly in the special economic zones; and support youth employment and skills development through the youth employment tax incentive programme. In line with the National Development Plan, the Goldman Sachs report suggests that in the next 20- year period the country should aim to raise its annual growth rate by more than 5%.
In summary, our countercyclical fiscal policy has responded positively and continues to reaffirm the principles of long-term sustainability and fiscal consolidation to support inclusive economic growth, in order to ensure service delivery. Over the medium term the Revised Fiscal Framework will ensure that government is able to do the following: meet the 2013-14 fiscal deficit target of 4,2%, as advised in the new format presented in the 2013 Budget Review; continue financing real increases in spending that enhance the social wage under a clear and explicit expenditure ceiling; reduce the deficit substantially to level off the public debt trajectory; and ensure that the government wage bill remains sustainable.
We also note through this Budget Policy Statement that the fastest growing expenditure item in the consolidated framework remains interest payments, reflecting a substantial increase in government debt stock in recent years. By 2016-17 more than R140 billion will be required to service public liabilities, an amount that exceeds current spending on health care. However, the recent International Monetary Fund Article IV report indicates that our debt level in relation to GDP is sustainable. Economic growth has been weaker and less than what we originally anticipated. As a result, tax revenue collection, as I have already said, has been revised down by R3 billion to R895 billion.
In conclusion, the committee's view is that global economic output remains uncertain and that domestic economic growth is expected to remain moderate, with recovery in economic growth in the outer years to create jobs, boost revenue and eventually reduce debt levels and budget deficits.
The pathway to economic transformation necessitates a coherent and effective approach, working together in partnership in order to free our people from poverty and unemployment. We need a major upscaling of our efforts towards economic transformation, consistent with our vision of a better life for all. We have to consolidate economic transformation and put it at the centre of development, recognising that we cannot achieve social cohesion and sustained economic development unless we create an economy that provides opportunities for more South Africans to engage in the productive sector of our economy.
The ANC supports the 2013 Medium-Term Budget Policy Statement. I thank you. [Applause.]