Mr Speaker, hon President of the Republic, hon Deputy President, hon Minister of Finance, hon members, distinguished guests, it is my honour and privilege to present the committee report on the 2013 Fiscal Framework and Revenue Proposals for debate and adoption by this honourable House.
This report and its recommendations are informed by interaction with various stakeholders and the broader public including, amongst others, organised business, organised labour, tax practitioners and the Finance and Fiscal Commission, to name but a few.
We are also informed by the strategic objectives of the National Development Plan, NDP, the economic outlook, the fiscal framework, revenue trends, tax proposals, the Minister's Budget Speech and overall we are also informed by the Budget Review of 2013.
The NDP enjoins all South Africans, government, business, civil society and other stakeholders to rally behind one common vision to create a true nonracial, nonsexist, democratic and prosperous South Africa in which all shall benefit from the wealth of their country of birth. This is a dream we should all live to cherish and achieve. We should be inspired to achieve this dream, in spite of our limited resources as a country.
The Standing Committee on Finance wishes to highlight that, with the exception of one, all stakeholders who participated in the public hearings not only gave their unqualified support for the National Development Plan, but also expressed and emphasised the great sense of urgency in the need to start focusing on its implementation. While the National Planning Commission has warned in their report that the road will be long and uneven, they have also outlined measurable objectives and targets which should give direction and assist with deliverables.
Prof Raymond Parsons of Business Unity SA said, and I paraphrase: Let us not be preoccupied with pre-NDP discussions and disagreements, because what is now important is to accept that we are in the post-NDP negotiations. Let us move and pay attention to practice.
I fully concur with this sentiment. We can only perfect that which we have tried to practice or have implemented. As the saying goes, practice makes perfect. Otherwise everything remains theory: well-written and documented, but with no measurable outcomes.
The budget proposals before this House are underpinned by a clear vision espoused by the NDP. The fundamental tenet of the plan is the recognition that the key to solving the country's social and economic challenges lies in addressing structural constraints, which include unemployment, a narrow skills base, inequalities, resource bias and skewed spatial legacy.
The issue of the private sector's character of responding to incentive changes which encourage investment is an area to which we have to pay attention. There is a need to increase the capacity of the state infrastructure build programmes with specific focus on planning and project execution.
There is a need to improve the investment climate to support the crowding- in of private sector investment.
There is a need to align policies relating to the promotion of SMMEs and entrepreneurship development, and, lastly, there is a need for a collective, national effort to eliminate wastage in the fiscus, as well as intensify the fight against corruption.
Hon Minister, in your 2012 Medium-term Budget Policy Statement, MTBPS, you forewarned this honourable House of the possible consequences of the persistent negative global economic environment. You said, and I quote:
If the economic environment were to deteriorate, realising government's fiscal objectives would require a reconsideration in spending and revenue plans.
Hon Minister, you have indeed responded timeously to ensure that the budget deficit is narrowed and that the fiscus continues to move towards debt stabilisation by trimming its medium-term spending plans by R10,4 billion on contingency grants. Therefore the context within which the Fiscal Framework Proposal was adopted during the MTBPS remains valid, notwithstanding the revenue decline as a result of labour unrest, particularly in the mining sector, and other global factors.
Whilst both the global and domestic economy display slow but positive signs of recovery, there are still disturbing signs in the US economy. Indeed, one can conclude that the global economic crisis is a mutating problem that started in 2008 in the US with Lehman Brothers and was characterised as a sub-prime lending or unsecured debt problem. It is what George Soros termed "ninja loans" - no income, no job, no assets, but access to resources.
Later on, in 2009-10, it became even more severe as it mutated itself into a sovereign debt problem in the eurozone, and now the US economy has to find a solution to its fiscal cliff or sequestration problem which, in simple terms, is a choice for its Congress between budget cuts and tax increases. Whichever way it goes, this will have an impact on the US economy and will consequently impact negatively on global economic growth.
Economists have issued stern warnings in The Financial Times at the beginning of this month that the automatic budget cuts could shave more than 0,5 percentage points off US growth this year, which may result in 1 million federal workers being put on unpaid leave from April this year. This is a serious development.
If we are to remain on top of our game, as it is displayed in the medium- term spending plans, it will be critical for National Treasury to continue to monitor these developments in the US and eurozone economies.
Insofar as our fiscal policy is concerned, we welcome the fact that government remains committed to funding its priorities within the limited ceiling and, most importantly, has indicated that new policy initiatives will be funded from savings and efficiency gains underpinned by serious and rigorous reprioritisation initiatives in the coming medium-term period.
In brief, despite the fact that growth has been weak and revenue collection has fallen below the projected figures, with the Budget deficit growing to 5,2% in 2012-13, the fiscal policy and its proposals will be underpinned by the contingency reserve being reduced by R23,5 billion over the MTEF period and noninterest expenditure reduced by 0,6%.
Whilst our debt has increased for the 2012-13 fiscal year, it will narrow down and stabilise with growth in the economy.
It becomes important to highlight to this House that, given the predictability, consistency and transparency of our government's budgetary systems over the years, the committee is of the view that these projections and measures will be realised. I declare this knowing that some members of the committee will rise here and seek guarantees from the Minister and ask him to undertake that there will be no deviation from the proposed Fiscal Framework. The only assurance the hon Minister can give is the predictability and consistency of our budgetary systems, which have been proven to be the most reliable in the world to date. [Applause.]
Hon Minister, what has been said before is what has maintained the fiscal stability we still enjoy today. With all due respect, to give guarantees on the US economy or the Eurozone's performance would be completely presumptuous on our part. We would be expecting too much from our own executive.
Asset and liability management is the very backbone of government's strategy to manage its total contingent liabilities, and contributes to fiscal stability. The Budget Review indicates that a total of R377,5 billion of infrastructure roll-out plans in the coming MTEF period will be undertaken and funded from the balance sheet of state-owned companies.
We have also noted that government intends to review some of its investments in these companies, particularly those assets that have not been aligned to service delivery and policy priorities.
Indeed, this is commendable as it is in line with the recommendations of the Presidential Review Commission on SOEs and foreign direct investment, FDI. While we accept that such assets may be disposed of to enhance fiscal stability and revenue generation, we urge government that such disposal processes should be in line with the Public Finance Management Act's provisions to engender the principle of fairness, transparency and cost- effectiveness within state-owned entities.
Secondly, government should satisfy itself that such an asset will indeed not be a necessity for public use in the near future to avoid a recurrence of mistakes of the past where we were tempted to sell an asset only to buy it back later at a higher price.
State-owned companies and their role as outlined earlier require effective management. Therefore, the appointment of senior managers and nonexecutive directors to the boards should be skills-orientated and informed by a common understanding of the challenges that the country is facing today.
It is with great sadness that one is confronted day after day with the reality of the perceived ungovernability of some of government's state- owned enterprises. As Parliament, we cannot only lament this state of affairs but must rise to the occasion. It is this House that appropriates resources to all these institutions. We must rise to the occasion.
On combating corruption, let me start by again quoting the Minister from the Budget Speech. The Minister said:
There are too many people who have a stake in keeping the system the way it is.
The hon Minister further aired his frustration by saying that this matter was not one which could be mitigated by waving a magic wand. The fight against corruption cannot be seen as a one-man battle; it will require a special effort from all of us. All sectors of governance, the private sector, and civil society must be ready to resist corruption from becoming the norm of our life.
Let me borrow from the Chinese philosophy on why old dynasties fell with an almost eerie predictability. Steve Berry, the author of The Emperor's Tomb says the following, and I quote:
Often early leaders are masterful, while later ones are feeble, unmotivated or mere puppets. Inevitably, corruption combines power and money, without the benefit of the law to prevent abuse. In the absence of clear rules, chaos thrives. Government then isolates itself and weakens. The end is never in doubt.
I include this quote because now is not the time for you to give up. There are many men and women out there who believe in you. There are many men and women out there who say, we are sick and tired of corruption; fight it; we are there for you. [Applause.]
On youth unemployment, let me say that we fully support the enhanced policies which seek to broaden job opportunities in the labour market, particularly incentives which seek to strengthen employment and skills acquisition for young people. We are further encouraged by the President's directive to the various constituencies at the National Economic Development and Labour Council, Nedlac, that speedy implementation of the agreements is now long overdue.
In conclusion, allow me to say that the ANC supports the Fiscal Framework and Revenue Proposals as presented. Thank you. [Time expired.] [Applause.]