Hon Speaker, hon Ministers and Deputy Ministers present here, in particular the Minister of Finance; hon members; distinguished guests, let me start by congratulating the Minister of Finance and his team, under the leadership of President Jacob Zuma and the executive in its entirety, for putting forward a Medium-Term Budget Policy Statement or proposals under very difficult and trying global economic circumstances. This requires, in the main, that government should realign its policy stance, grounded in a sustainable structure that will promote growth, equity and job creation.
Let me also take this opportunity to congratulate Statistics South Africa under the leadership of the Statistician-General, Mr Pali Lehohla, and the entire management, and particularly the hundreds of enumerators who visited millions of our homes. Most importantly, however, credit must be given to the millions of South Africans who opened their homes and warmly received and embraced the campaign entitled The South Africa I know, The Home I Understand, which underpinned the Census 2011 project.
As for the census outcome, even though it is not the subject for debate today, the results tell us a story - a story of a journey of the South African people in their quest to change their lives, traversed in the past two decades. It is a story that measures the impact of our policies in the betterment of the quality of the lives of ordinary citizens. It is a story of significant success but also of some critical setbacks; a story of income disparities between black and white, rich and poor. In short, it is a story of deepening inequalities and joblessness. It is a story of social and economic injustices for the majority of our people. It is a tale of a river between: between a city, on the one hand, and a village on the other. A river between: a source of life and opportunities for some, and a source of hope and aspirations for all, but only accessible to the city people.
Therefore, this is an injunction for policy and decision-makers such as ourselves to redouble our efforts in pursuance of a vision for all freedom- loving South Africans, to overcome the legacy of inequality and injustice created by apartheid colonialism in a swift, progressive and principled way; to develop a sustainable economic and state infrastructure that will progressively improve the quality of life of all South Africans; to encourage the flourishing of the feeling that South Africa belongs to all who live in it, black and white; and to promote a common loyalty and pride, which is the basis upon which we can build patriotism amongst our people.
The Fiscal Framework, as presented in the Medium-Term Budget Policy Statement, presents Parliament with an opportunity to set out macroeconomic policy objectives that will underpin the economic growth trajectory for the next Medium-Term Expenditure Framework period. The framework has as one of its objectives the aim of providing a cushion against global volatility and declining economic growth internationally. The focus, therefore, of the Fiscal Framework is consistent in expanding the social wage to promote service delivery while maintaining the acceleration of infrastructure investment to promote industrialisation and create sustainable jobs.
The fiscal policy framework is contextualised within the context of declining growth in the international economy, particularly in Europe and the USA. As a consequence, the world economic growth has been revised downwards, which compels us, as South Africa, to focus on promoting trade within or with emerging economies, particularly within the Brazil, Russia, India, China and South Africa, Brics, family and the African continent as a whole. Our gross domestic product, GDP, growth rate has been revised further downwards by 0,2% from 2,7% to 2,5%. Of note, is that our growth rate remains positive, although at a lower level. The revised GDP projections resulted in the revision of revenue projections downwards to the tune of about R5 billion.
Debt service cost reduction remains a priority in the Medium-Term Expenditure Framework projections. The wage bill continues to put pressure on the fiscus - salaries still account for the largest percentage of government expenditure. However, it is important to note that the average wage increases will be less than 3% in the Medium-Term Expenditure Framework.
Let me commend the Minister of Finance for his open and frank admission that we are crafting the Fiscal Framework under circumstances not of our own choosing. I quote from the Medium-Term Budget Policy Statement:
If the economic environment deteriorates, government will need to reconsider current expenditure and revenue growth plans. In a lower growth scenario, an appropriate balance between spending restraint and new revenue initiatives will be necessary.
What the ANC stated in its Strategy and Tactics of 2007 remains relevant and correct today: South Africa's interests in a complex and unpredictable global environment necessitate the building of capacity for strategic as well as rapid response to changes in our region, Africa and the world.
Such responses should be anchored on the development of Africa and the developing world. Therefore, the Fiscal Framework has to respond to fluid economic conditions because it plays a critical role in interacting with other policy objectives in determining economic and social outcomes. In addressing the challenges faced in transforming the economy as a whole, and in specific sectors, it provides for the extension of the social wage in addressing inequality and infrastructure investment.
The revised Fiscal Framework remains consistent with the established position and maintenance of countercyclical policy. In essence, the main thrust of the revised fiscal policy is to ensure a balance between expansion in spending in order to address problems of unemployment and the need to reduce levels of borrowing to militate against the long-term implications of debt service costs.
It therefore suggests to us that it is important to reflect on the delicate balance between what we can do and achieve as a nation, and the necessary caution we need to take into consideration, given the impact of the international economy due to the European and US economic recovery challenges, as this will have an impact upon the South African economy, given the large trade volumes between South Africa and these countries.
The countercyclical policy is designed to steady the economy and to protect core social and economic programmes from undue volatility. In practice, a government pursuing cyclical policies should save revenue or run a surplus during good times in order to spend more when the economy is faltering. This is the position in which we find ourselves to a large extent today.
In terms of the observations of the committee, having considered the 2012 Medium-Term Budget Policy Statement and public submissions, the Standing Committee on Finance has observed that the global economic outlook remains uncertain and domestic economic growth is expected to remain moderate. The following factors have narrowed the fiscal space available to government over the medium term, elevating the level of debt: higher than expected operational costs, particularly on personnel expenditure; and savings from the current Budget baseline allocations. It is very, very important that we recognise that there is no additional cost to the taxpayer in terms of continuing to implement our social and infrastructure programmes. We are borrowing for capital expenditure and not for consumption, and therefore there is value for money in what we are trying to achieve as a country.
In terms of the revised Fiscal Framework, the committee has therefore recommended that the National Treasury should develop mechanisms to increase monitoring, to ensure value for money in terms of proper co- ordination and procurement processes, which will assist the attainment of expenditure within the available budget. We, as the committee, support the Medium-Term Budget Policy Statement, particularly the Fiscal Framework. I thank you. [Time expired.] [Applause.]
There was no debate.