Hon Ministers present here, Minister and Deputy Minister of Finance, comrades and distinguished guests, South Africa has earned its reputation for sound fiscal management over the past 16 years. Progressively, it has claimed its rightful place among developing and developed nations of the world through fiscal discipline and a prudent regulatory regime in the financial market.
Therefore, the sound management of government finances is not alien to us. Fiscal prudence is the foundation upon which the reconstruction and development of our country is built. If there is any doubt, may I refer hon members to the preamble to the White Paper on the Reconstruction and Development Programme, RDP? In that preamble, President Nelson Mandela wrote that government was committed to the gradual reduction of the fiscal deficit, thereby avoiding the debt trap; increased capital expenditure, and the reduction of government dissaving over time.
These principles are as true today as they were in November 1994, when Mandela wrote about them. As our track record will show, we have remained true to these commitments throughout the 16 years of our democracy. We will not deviate from the path laid by President Nelson Mandela.
Therefore, it should not be surprising that we are now rated number one internationally in terms of our Budget transparency. As a result, in the past 16 years of democracy we have achieved the following: brought down our budget deficit; kept the inflation rate within the targeted 3%-6% band; and the balance of payments of the current account is within moderate limits.
Our fiscal and budgetary reforms have always been informed by the space we occupy in the global economy and the challenges confronted by our people all the time. In his state of the nation address, President Jacob Zuma outlined the challenges ahead of us and directed that all South Africans must rally and unite behind one common objective in 2011, 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, in caring for children and protecting the environment. We must create jobs in every possible way that we can. 2011 must be a year of action.
This was a direct injunction to South African citizens and their government, to business as well as labour, and the entire civil society to respond directly to the clarion call made by the masses of our people, as captured in our Reconstruction and Development Programme, which laid the foundation for an integrated and coherent social economic policy framework that seeks to mobilise all our people and country's resources towards the final eradication of the apartheid legacy.
Indeed, it was a response to the questions raised 16 years ago through the people's forums in the villages and townships, on farms by farmworkers and in the cities through the length and breadth of our country. This is what they asked: How will the ANC create jobs? When will you build houses? Will you give proper health care? What about education? When will we have a fair and effective police force? What about pensions? Those questions were as relevant then as they are today. The Reconstruction and Development Programme was not drafted by experts, but by the very people who became part of its implementation in the 16 years of our democracy. These questions remain as relevant today as they were then, and they still stand to be responded to.
Let me take this opportunity to remind our people what we have done to address their concerns in the past 16 years of ANC rule. Because the Reconstruction and Development Programme gave them hope and confidence, it was, to them, the end of one process and the beginning of another. To them, it was the beginning of the rebuilding of a new South African society based on the principles of nonracialism, nonsexism, democracy and prosperity. To them, it was the beginning of building better, safer and integrated communities.
The fiscal framework presented makes it possible and also sustainable for the ANC to address these challenges as we get our mandate renewed every five years. The quick question that we need to respond to is how we responded to those challenges, despite the fact that in 1994 the ANC government inherited an economy that was characterised by the following: It was a shrinking economy, with declining revenue and a very high budget deficit.
In short, the economic outlook at the time was as follows: The total revenue was a mere R112,4 billion; the total expenditure projected at the time was R137 billion; and the debt service cost was R24,1 billion - almost 5% of gross domestic product, GDP.
Fiscal policy must be seen and judged for what it is and not for what it is not. It is evident that in the past 16 years the ANC government has succeeded in rebuilding the economy, which will have increased its revenue base from a mere R112 billion to R926 billion at the end of the next Medium- Term Expenditure Framework, MTEF, period. [Applause.]
Colleagues on my left should start thinking about whether they will be able to comprehend and write the trillion rand figure, because they never imagined that the economy of this country could grow this much in their lifetime. [Applause.]
As the ANC, we should concede at some point that we had to adapt to the fiscal stance which led to the reduction of spending in some sectors to stimulate investment and regain some lost ground. Doing so was necessary to create a fiscal space without compromising the social security net, like the introduction of the child support grant in 1996 and the continuation of supporting the old age pensioners.
Through progressive fiscal and budgetary reforms adopted in the past 17 years, as the ANC we can safely say, without fear of contradicting ourselves, that our policies have succeeded in impacting positively in some areas, and that more still needs to be done to create a prosperous nation.
In terms of housing, more than 2,5 million houses have been built. About 10 million people have permanent homes and roofs over their heads. More than 80 000 mixed-income houses will be built in the coming year. More than 400 000 houses are going to be upgraded in informal settlements in the coming three to four years.
In terms of basic services, in 1994 36% of households were electrified and today the figure is standing at 84%. In 1994, 62% of households had access to clean water and today the number has risen to 93%. In terms of sanitation, we have moved from 50% to 77%.
With regard to the question of having safer communities, even in its dying years apartheid unleashed a vicious wave of violence. Thousands of our people were brutally murdered and forced from their homes, particularly in the East Rand, Gauteng and KwaZulu-Natal. During that time security forces were accused not only of failing to protect but that they were active participants in fuelling and perpetuating violence. Today many South Africans have confidence in the security cluster. They have a sense of security, both in person and in property.
The fiscal framework proposed will ensure that the budget tabled gives meaning to the building of a national democratic society that is based on the ANC's vision of a united, nonracial, nonsexist, democratic and prosperous society.
The challenges addressed by the 2011 Budget are complex and substantial. Of critical importance to this House, and to hon members, is to understand fully the central challenges which the 2011 Budget has to address. These are deep-rooted structural problems. Economic transformation and the creation of decent work and sustainable livelihoods should be central to what we seek to achieve in the coming three years.
Therefore the six priority areas of job creation have to be addressed in this Budget. Those are: infrastructure development; agriculture; mining and beneficiation; manufacturing; the green economy; and tourism. The fiscal framework recognises that the building of South Africa is a multidecade project that must drive our capacity for a new and inclusive growth path. Therefore, as the ANC, we reaffirm that countercyclical fiscal policy is the most appropriate policy to address the challenges we are facing currently. It is precisely because of this stance, which we adopted in 2005, that we were able to sustain our social and economic infrastructure programmes during the recent financial market crisis - a global economic crisis, eventually.
During the public hearings on the fiscal framework and revenue proposals, several key issues were raised. Some of the questions raised were: What is the correct level for a budget deficit? Can the Budget sustain our current welfare programmes? The projected economic growth path over the next Medium- Term Expenditure Framework, MTEF, period is not sufficient to create the five million jobs we envisaged.
The budget deficit should not impact negatively on the pace of delivery, but the cost of servicing debt is the fastest-growing expenditure item in the MTEF period. There is a need for greater debate regarding the level of deficit that we should run with over the MTEF. There are different perspectives and they were articulated in our public hearings. What the ANC government has to ensure is that the budget deficit does not grow disproportionately to our ability to finance the debt.
The New Growth Path is underpinned by this fiscal framework and the framework supports key elements that were envisaged in the industrial policy action plan, Ipap 1 and Ipap 2. The South African economy is experiencing mass joblessness, poverty and inequality. The framework sets out the areas where jobs can be created through the restructuring of the economy. These follow the terms of the New Growth Path and are: infrastructure development; the green economy; industry, especially the trade-goods sector; the rural agricultural and agro-processing sector; public sector growth; regional economies; knowledge economy; social economy development; social capital; and tourism. This raises the relationship between macro- and microeconomic policy going forward. The following are critical and must be addressed: the role of industrial policy and its impact; competitiveness and competition policy; industrial financing and access to capital; enterprise development; the small, medium and micro enterprise, SMME, sector; skills enhancement and training; labour market issues; trade policies; and the exchange rate.
The main indicators of our success will be the number and quality of jobs that we are going to create through the fiscal framework that governs the Budget that we are going to have for the coming financial year.
In conclusion, if it were in my power I would commission a standing ovation in recognition of not only the evidence of effort employed, but the undying spirit of patriotism that still shines as brightly as it did the first day when many men and women, heroes and heroines, past and present, set themselves on a journey to bring about the democracy that we are enjoying today.
The ANC supports the fiscal framework here proposed, because it is in support of the principles of intergenerational equity that ensure that the wellbeing of our children and grandchildren is not compromised by our short- term interests. I thank you.