Chairperson, the National Treasury is the custodian of the people's money and is located at the centre of the public financial system. It must ensure that our public finances are efficiently and effectively managed and, according to its strategic plan, must promote economic development, good governance, social progress and rising living standards and endeavour to advance economic growth, broad-based empowerment, the progressive realisation of human rights and the elimination of poverty.
There is no doubt that the National Treasury's job is difficult. It is difficult because government has forgotten that it doesn't have any money of its own. All the money belongs to the people and the people expect their money to deliver tangible results that will have a meaningful impact on their lives.
It is difficult because government's economic policy is not coherent and permits uncertainty over the possibility of nationalisation of mines, banks and other industries, expropriation without compensation and so-called broad-based economic empowerment that made billionaires out of a few and left the vast majority behind. Hon Mufamadi mentioned this perversity. In a closed, crony society, economic liberation is only for the very well- connected few.
The Democratic Alliance believes that economic liberation is for everyone and that an open-opportunity society can be achieved. To do this we must redress the structural defects inherited from the apartheid economy. The DA believes that we can build a path out of poverty and that government intervention is required to carve that pathway through the barriers to economic growth and development that constrain our hopes and the dreams of our people.
There is much debate about the lessons that have been learned from the great recession from which our economy is slowing recovering. Bob Garratt, who wrote The Fish Rots from the Head, suggests that one of the positives from the crisis is:
The final awakening in the public's mind that there is a strong possibility that those elected or selected to guide our organisations in the private and public sectors may not be very good at their job.
Our National Treasury is considered to be one of the best fiscal units in the world. This did not happen by accident. The previous Minister of Finance, Trevor Manuel, was a primary architect in building the institution as it exists today. It is therefore unthinkable that our government has not endorsed him as a candidate for Managing Director of the International Monetary Fund. South Africa has an opportunity right now to exercise its muscle as a new member of the Brazil, Russia, India and China, and South Africa grouping, Brics, to test the stated commitment of the International Monetary Fund, IMF, to reform and the commitment of the other Brics countries to issues concerning Africa.
An African appointment to the IMF can contribute significantly to our international financial relations and deepen our role in regional and international economic integration. There is no secret about the disjointed economic policy positions of the partners in the tripartite alliance.
The R16 million work of the International Panel on Growth is now a distant memory and we await output from the National Planning Commission and wonder how, or if, it will interface with the so-called New Growth Path. It has been suggested that our economy needs tighter fiscal policy and looser monetary policy. Government appears not to know what it wants and it is unclear whether the National Treasury inputs to economic policy are taken seriously, as evidenced by the youth wage subsidy that remains merely a proposal. The fastest-growing expenditure item in the national budget is on the public sector wage bill. This was responsible for the higher than expected deficit. Government's policy to directly create jobs itself is not sustainable.
The DA believes that government's excessive focus on the consumption side of the balance sheet crowds out opportunities to improve our productive capacity and constrains our future economic growth potential. The net result of the DA's alternative budget was a larger deficit than that of the national budget and we believe that an overly conservative stance in the budget process should be avoided, especially under global circumstances where economic recovery remains precarious and a double-dip recession remains possible in several developed economies.
One of the primary lessons of the great recession is that markets do not always self-correct and that asymmetrical information can have devastating consequences. We support the proposed shift to a twin-peaks approach to regulation that separates prudential and market conduct regulators and agree that the Reserve Bank is best placed to play the role of macroprudential supervisor.
We understand that the former Director-General of the National Treasury, Lesetja Kganyago, will be tasked with this function in his new position as Deputy Governor of the Reserve Bank. The DA wishes him great success in his new role and would like to thank him for his outstanding performance at the National Treasury. We have no doubt that his successor, Lungisa Fuzile, will make us equally proud and we look forward to working with him.
The DA welcomes tender reform and the news that the tender default register is finally being updated so that tenderpreneurs who don't deliver can be excluded from the process and prevented from stealing more of the people's money. Steps should be taken to recover what has already been stolen.
The Auditor-General is a key institution to ensure that the public finances are properly accounted for. During my visit to the Auditor-General earlier this year as a member of the Standing Committee on the Auditor-General, it became clear that the financial model applicable to the Auditor-General doesn't work, and this compromises its ability to function effectively. In January 2011, R63,9 million was outstanding over 120 days in audit fees for municipalities alone. This compromises effective public financial management and the National Treasury should consider amending the funding model to ensure that the Auditor-General receives funds due to it before other appropriations are processed. This will ensure that the Auditor- General remains financially viable and can fulfil its constitutional mandate.
The promised review of the financial model applicable to state-owned enterprises remains outstanding. A private-sector investment into these entities would enhance their efficiency and provide capital for the establishment of a sovereign wealth fund that could be utilised to seed new industries, especially in the green economy.
We also await further detail on the long-awaited retirement fund reform and estimated costs of the proposed national health insurance scheme. We hope to see progress on this in the near future.
Pension funds need assurance that government will not break what is fixed and rather focus on fixing what is broken. Hardworking taxpayers need to know if they will be expected to pay even more for a new health care system when the current system is very expensive and barely functional.
The South African Revenue Service, Sars, perform the vital function of ensuring that government can fund its programmes by collecting tax revenues, ensuring tax compliance and providing a customs service to facilitate trade. Sars has again collected more taxation than was projected. This has been a recurring theme over several years, with one notable exception. Although we are grateful, the question that must come to mind is whether the projections are understated so that the result looks impressive or whether the financial forecasting behind the projections requires improvement. For Sars to accurately determine which revenue flows are temporary and which are permanent within the framework of our countercyclical fiscal policy, we need to understand why revenue collected exceeds expectation.
Although Sars has made significant progress in improving the "way we work", several problems remain. Sars has not been spared the scourge of fraud and corruption and this has resulted in substantial delays in the processing of value-added tax refunds. Although we agree that additional audits are necessary to ensure that fraudulent refunds are not processed, it is unfair to subject law-abiding taxpayers to delays that can place the viability of their business at risk. Sars needs to find a more efficient way of balancing the fraud risk with their obligation to provide quality customer service. I am impressed at the response from Sars in resolving enquiries that I have escalated to them from sometimes desperate taxpayers.
Whistle-blowers at Oliver Tambo International Airport recently highlighted widespread irregularities in the performance of customs inspections, which was either the result of corruption or lack of training. In either event, the situation is not acceptable and needs to be resolved.
The DA believes that access to development finance is a vital component in the construction of a pathway out of poverty in South Africa, in our region and further to the north. The Land Bank appears to have emerged from its near collapse at the hands of the incompetent and dishonest, some of whom, we are pleased to note, have been criminally prosecuted.
A crucial lesson for the Land Bank is that it must develop a more robust model that will support emerging farmers to ensure that our agricultural and rural development is stable and sustainable over the long term. The Development Bank of Southern Africa can play a far wider role in ensuring that regional development can assist in lifting our neighbours out of poverty and into markets for our goods and services. It must not become a cash cow for failing government programmes.
The Government Employees Pension Fund, underwritten by taxpayers, must not be a source of funds for risky so-called empowerment deals. The Public Investment Corporation's loan of billions to AfriSam, where capital and interest is only required to be serviced in 2015 and 2018, is a prime example. We trust that the newly appointed chief executive officer of the Public Investment Corporation, Elias Masilela, will manage the people's money in their best interests and ensure that the money works for them and not for the empowerment of the privileged few.
The DA is focused on the future and, although we do not believe that the national government policy programme will resolve our inherited problems of poverty and unemployment, we do believe that our National Treasury and Sars serve our country well. They have delivered on their mandates and will continue to outperform their counterparts. Thank you, your efforts are greatly appreciated. Thank you, Minister, for restraining the size of your delegation here today. Thank you, Chairperson.