Hon Chairperson, hon Minister, Deputy Minister, Members of Parliament and members from the provincial legislatures present, we congratulate the Minister of Finance and his team for tabling a credible, broadly balanced and confidence-building Budget statement.
The Budget is about people. The President outlined the action plan for government and South Africa in the state of the nation address of 2012 when he referred to investment and infrastructure; working for a vibrant economy; decent employment; reducing poverty, and a decent quality of life for all.
In 2011, the President said, and I quote:
Our shared commitment is to put South Africans to work. They must find work in fields and factories, in repairing roads and building houses.
We have to ask ourselves what kind of economy we want in 20 years' time. The National Development Plan is a step in the process of charting a new path for South Africa wherein all citizens will have the capabilities to grasp the ever-broadening opportunities available and to focus on capabilities. The capabilities that each person needs to live the life that they desire differ, but must include education, skills, decent accommodation, nutrition, safe communities, social security, job opportunities and transport. It includes a capable and developmental state demanding leadership from all of us sitting in this House.
This Budget allocates the money to the action plan for the Medium-Term Expenditure Framework, MTEF, period. If there is one aspect of governance that the ANC-led government has got consistently right since 1994, it is macroeconomic planning and management. The basic economic principles that underpin the vision for the future came into focus and the vision is credible, and can be achieved. It needs a commitment from all of us to work better and to do things differently.
We want to get South Africa working, growing and moving. The 2012 Budget of R1,1 trillion was tabled as the global economy is very volatile. The 2012 Budget gives effect to the stance outlined in the 2011 Medium-Term Budget Policy Statement, MTBPS, setting out a financial framework that will narrow the gap between spending and revenue supporting the economy, strengthen capital investment and improve the performance of the Public Service.
Improving financial management implies rooting out corruption in the public sector. We are serious about that. At the core of the macroeconomic framework is the countercyclical fiscal and monetary stance that supports growth and investment. Stable and low inflation protects living standards, particularly of working families and low-income households. Macroeconomic measures are not always enough and need to be complemented by trade support, competition policy and active labour market measures. We look forward to the report from National Treasury on the long-term dynamics that will inform fiscal choices beyond the three-year period.
Since the 2011 MTBPS, the world economic outlook has weakened. The International Monetary Fund, IMF, expects global growth to decline from an estimated 3,8% in 2011 to 3,3% in 2012, down from the previous forecast of 4%. The global environment poses considerable risks to the world economy and to the outlook of our own economy. The picture is of lower growth and higher risk. However, there is a two-speed differentiation between developed and developing countries, with the latter doing much better than the former.
In 2011 Brazil overtook the United Kingdom to become the sixth-largest economy in the world. The Chinese economy is likely to expand by 7,5% in 2012. There are also opportunities, especially in Africa and the developing economies. Sub-Saharan Africa is expected to grow at an average of 5,4% over the next five years, making it one of the fastest-growing regions in the world.
Our membership to the Brazil, Russia, India, China and South Africa, Brics, countries is crucial to us. South Africa has achieved a fourfold increase in exports to fellow members in the Brics group of countries, while imports from them have doubled. A partnership with countries in the Middle East will support our export markets. The next three months will be crucial for the Eurozone to see whether recent positive decisions on the way forward for the European Union will change market perceptions for the better.
The developments in Iran are not good news for South Africa, for they will impact on higher oil prices, leading to higher fuel and food prices, having an effect on the consumer. We will have to have a plan B if the situation in Iran gets worse.
We congratulate the Minister of Finance on the paper submitted to the G20 Summit in Mexico, jointly with the Deputy Prime Minister of Australia, as also printed in today's Business Day. What is it about? That is what the Budget is all about. It is about jobs. Jobs give you dignity, independence and freedom.
If we look at the domestic outlook, South Africa's financial institutions and public finances are sound and serve as a foundation for higher growth over the medium term, despite ratings that Moody's gives us. There is much on the budget to suggest that the Moody's statement on South Africa may have been premature.
Economic growth accelerated to 3,2% in the fourth quarter of 2011 on the seasonally adjusted and annualised basis compared with an upwardly revised 1,7% rise in the third quarter. National Treasury reported that real growth in the gross domestic product, GDP, is expected to average 2,7% in 2012. It is clear that the estimated right of economic growth remains inadequate to the South African socioeconomic performance in the years ahead. We will have to strive to get to 5% and more.
The year 2012 must be the year for implementation. Prudent financial management at all levels is the mantra. It is important to note where we come from, since 1994. In 1994 the total revenue for this country was a mere R112,4 billion. The expenditure was R157 billion and debt services cost R24,1 billion - 48% of the GDP.
It is evident that in the past 18 years the ANC-led government has succeeded in rebuilding the economy - if you look at where we were in 1993- 94. This has increased a revenue base from a mere R112,4 billion to R1,1 trillion over the MTEF period. Healthy household consumption expenditure, improved business compliance and investment, rising exports and improved public sector infrastructure spending are expected to boost the economic growth to 3,6% in 2013 and 4,2% in 2014. Over the medium term imports are projected to grow quicker than exports in response to the strong domestic demands. In line with the countercyclical fiscal stance, the budget deficit remains at 4,6% of GDP in 2012-13, but narrows to 3% in the outer years as economic activity grows.
It is clear from the Budget that high public debt is likely to remain a feature of the South African economy for some time in future because of government's accelerated infrastructure programme. Government will have to closely monitor debt levels and ensure that they are aligned to fiscal sustainability and objectives. Therefore, it is the responsibility of the Select Committees on Finance and Appropriations and other committees in this Parliament. Therefore, broadening South Africa's social and economic development in the future requires a sustainable fiscal framework.
Features of the fiscal framework are as follows: We note that over the medium term slower growth in public spending combined with rising revenue will strengthen the sustainability of the fiscus.
The key features of the fiscal outlook also include real growth in noninterest expenditure averaging 2,6% over the medium term, bringing spending in line with the long-term revenue trends; additional allocations of R55,9 billion over the next three years, including R9,5 billion for an economic support package; revenue levels stabilising at about one quarter of GDP; a reduction in the budget deficit from 4,8% in 2011-12 to 3% in 2014-15, and a shift in consumption to capital spending so that from 2014- 15 new borrowing will support productive investment.
If we look at employment, although there was an improvement in job creation in 2011, employment has not yet returned to its 2008 peak and the unemployment rate remains high at 23,9%. It is crucial to make infrastructure investment work in order to get employment on track. We have to hold people accountable for the implementation of action plans and the spending of money. The role of the public-private partnerships is important in job creation and economic growth as well as in getting better service delivery. We must have a delivery state which is capable, with a professional Public Service.
Tax revenue has been recovering since the 2010-11 financial year and is projected to increase from 24,7% to 25,5% of GDP. We welcome the tax proposals referring to individuals as outlined in the Budget Review personal income tax relief of R9,5 billion. It is crucial to get our people to save money to improve their lives. The reforms to the medical scheme contributions and retirement saving deductions and tax relief for micro and small business and proposals to increase revenue are welcomed.
In the Budget Review and in the Budget Speech, the National Health Insurance, NHI, and social assistance are addressed. The Green Paper on the NHI sets out the principles and the directions of proposed reforms.
The pilot route taken is a sensible way of going about such a reform, with far-reaching consequences for sustainability of the fiscal frameworks. We have no other choice but to improve the lives of our people in a healthy way. The social assistance programme is the most direct means of combating poverty. About R104,9 billion in the 2012-13 financial year will assist vulnerable members of society - mainly the young, the old and the disabled. [Time expired.] [Applause.]