Speaker, hon members, ladies and gentlemen, let me thank you for the opportunity afforded me to address this august House on this important Bill, the Appropriation Bill, B3 of 2010.
Recognising that this is the climax of a long, democratic process in which a lot of debate has taken place and Budget Votes have been subjected to thorough scrutiny, it is important to reflect on why this is being done. In doing so, there is a need to have an appreciation of the constitutional and legal requirements, as well as the economic and political context that informs it.
From a constitutional perspective, this fulfils the requirements of section 213(2) of the Constitution of the Republic of South Africa and section 26 of the Public Finance Management Act. These sections provide that money may be withdrawn from the National Revenue Fund only in terms of an appropriation by an Act of Parliament, and that Parliament must appropriate money for each financial year for the requirements of the state.
Through this process, the provisions of section 10 of the Money Bills Amendment Procedure and Related Matters Act have been fulfilled, as no committee has proposed any amendments thus far. Notwithstanding this, Parliament needs to act with speed to ensure full implementation of the Act, including establishing a parliamentary budget office.
The economic context is both positive and negative. On the positive side, according to a National Treasury assessment earlier this year, there was an expected economic growth, though moderate, but rising gradually; better inflation outcomes within the target range; an increase in global demand for goods and trade volumes; sectoral growth outcomes and employment stabilising; expectation of a moderating current account deficit this year as compared to 2008; a lower than originally forecasted budget deficit due to a target overshoot in the revenue collection; and sustained infrastructure investment over the Medium-Term Expenditure Framework, MTEF.
Should this positive focus materialise and continue as envisaged, it provides a degree of comfort in the adoption of the Appropriation Bill before us. On the negative side, the country is still faced with massive challenges of high unemployment estimated at around 24%. As a result of poverty and inequality our Gini coefficient is said to be the highest in the world.
Some of the risks to the economy, as identified by National Treasury, are wage pressures; high oil prices; challenges associated with the implementation of mass infrastructure investment; expected moderate investment due to unused capacity; sluggish net job creation; a sizeable budget deficit remaining as a result of a slow global economic recovery; and rising debt service costs which would eat into our fiscal resources.
When debating this Bill, it is incumbent upon us, as we exercise our oversight role, to monitor the potential impact of these risks on the Budget. Of particular importance will be the need to keep a close watch on issues relating to wasteful expenditure and inefficient management of finances by departments.
From a political point of view, this is about enabling the state to meet the needs of the people as expressed in the Constitution and through the 2009 elections, which the ANC won by an overwhelming majority. The political context in which this appropriation debate is taking place is that of implementing an ANC agenda, as was mandated by the majority of South Africans.
What informs the budget-making process and the appropriation debate though, takes into account the views of all Members of Parliament and public representatives with regard to fulfilling their constitutional role of oversight and holding the executive to account.
In the past few weeks, following the state of the nation address and the Budget Speech by the Minister of Finance, all Ministers have presented their departmental strategic plans and Budget Votes. These have been debated and subjected to scrutiny in order to assess whether the money being asked for by Parliament will indeed meet the requirements of the state in the 2010-11 financial year.
Complementary to this was a thorough process by Parliament calling departments to come and account for how they used the funds appropriated for the past financial year. This is important, not only for accountability, but also to assess the extent to which the state has the capacity to effectively, efficiently and economically spend the money for the purpose it was appropriated.
That assessment gives Parliament a sense of how the funds being sought for appropriation this financial year are likely to be used, and that it will be accounted for in terms of section 32 of the Public Finance Management Act. We always need to be mindful of the fact that these are public funds, and as public representatives we are acting in the best interest of the public. In playing our oversight role - that of ensuring that the executive is accountable - we must, in the same vein, commend the signing of performance agreements between the President and Cabinet Ministers. This is indeed innovative and historical in the South African context, as it has not been done before. The signing of performance agreements will help strengthen the whole value chain of monitoring, evaluation and accountability in the implementation of our laws, especially in relation to spending public funds.
It has to be understood that the ANC, as an elected governing party, gives a mandate to government to implement its electoral mandate. This mandate is well reflected in the following government priorities: improving the quality of education; enhancing the health system; making communities safer; fostering rural development; creating jobs; and investing in local government and human settlements.
The Appropriation Bill is about how we implement these things within the framework of government programmes, and whether it can be done within the constraints of available financial resources. It is about whether the executive arm of government will use the funds appropriated for their purpose, cost-effectively and accountably.
In assessing these things, this paper will focus on three critical priority areas as articulated in our manifesto, namely job creation, infrastructure and human settlements. They are all embedded in the manifesto's plans of more jobs, decent work and sustainable livelihoods, and building cohesive and sustainable communities.
Today, the country is faced with the challenge of high unemployment. In 2009, unemployment was estimated at over 24,3% of the working-age population in the country. According to National Treasury estimates, only 44% of the working-age population had a job compared with an international rate of about 60%.
The key factor behind this is the structure of the economy that the country has inherited, commonly identified as two economies in one country - the first economy and second economy. These do not only define class divisions, but also racial and gender divisions in our society.
The first economy is characterised by a high degree of economic formalisation based on modern technology; capital intensive sectors which require highly skilled labour; unionisation and a formal labour relations system that allows for bargaining between employers and labour.
The majority of the people are trapped within the second economy, which is survivalist in nature, and is characterised by an informal and unskilled work force and poverty wages.
The first economy is also undergoing changes that are contributing to the rising unemployment rates. The combination of factors that have contributed to the worsening of high levels of unemployment are retrenchments as a result of the recession; the introduction of highly developed and sophisticated technology which requires fewer but highly skilled workers; and the move away from a traditional labour-intensive economy towards a service-oriented economy. Companies have embraced these forms of production to maximise their profits.
The danger is that the majority of those who are unemployed are the youth and people with low skills not required by the economy. High unemployment rates and relatively low wage employment are contributory factors to inequality, low levels of human development, social polarisation, poverty and high levels of crime.
In the short and medium term, unemployment and low wages lead to an increase in the demand for social security by the majority of the people and a low tax base which, in turn, adversely affect economic growth in the long term.
It is for these reasons that the ANC government has prioritised job creation and decent work as one of the most important programmes for this financial year and in the medium-term budget plans. The importance of this has been correctly articulated in the 2010 Budget Review document that states: To build a more inclusive society, South Africa needs a marked expansion in employment. This is not only an economic objective; putting more people to work will contribute to human development, income redistribution and social cohesion. Broadening economic participation assists in curbing dependence, countering crime and reducing poverty, illness, alienation, mental stress and social exclusion.
Funds that are being requested in the Appropriation Bill have to be used to address these critical challenges that the country is faced with today.
Initiatives contained in this Bill to address this challenge must be supported. These initiatives include, amongst other things, programmes such as the Expanded Public Works Programme, EPWP; skills development; improvements in public employment services; and the implementation of various strategies that are likely to promote job creation and are embedded in most departmental budgets such as those of the Department of Labour, Trade and Industry, etc.
Since the majority of poor people reside in the rural areas, the implementation of a comprehensive rural development strategy would have to be given the highest priority in our funding plans. Some of the identified interventions prioritised for funding in promoting job creation include programmes that will advance industries and services with the potential for job creation; increasing the pace and upping the content of the Expanded Public Works Programme; increasing investment in further education and training; implementing new measures to promote youth employment; and putting in place programmes and strategies that will encourage the development of co-operatives, small and medium enterprises and the spirit of entrepreneurship in general.
The implementation of some of these priority programmes identified in the Industrial Policy Action Plan 2, Ipap 2, embedded in the Department of Trade and Industry's funding plans, will assist in speeding up job-creation measures. When looked at holistically, the budget being sought through the Appropriation Bill is necessary for this work.
As part of its strategies to reduce the high rate of unemployment and create more jobs and decent work, the ANC government has identified infrastructure development as one of the key priority programmes for funding. In the Minister of Finance's Budget Speech in February, an announcement was made that, over the next three years, the public sector aims to spend R846 billion on infrastructure programmes.
It is expected that a large part of this spending would be in this year's budget requirement needs. Some of the additional funding on infrastructure as identified in the Budget Review are the R2,5 billion to increase labour intensity in public works and the R1,8 billion for the clothing and textile industries. The implementation of these programmes will have a huge impact on the taking off of the country's new economic growth path and increase the potential to reduce the current rates of unemployment and poverty.
The ANC government is committed to building cohesive and sustainable communities to advance the Freedom Charter's call that there shall be houses and security for all.
This is also enshrined in the Constitution of the Republic as a human right in the Bill of Rights. The ANC manifesto stipulated that, through programmes for housing, social security, as well as sports and recreation, the aim is to build a better life for all.
The ANC government has put a priority on increasing access to security and decent housing for all. It is also committed to strengthening local government as a crucial sphere of government where the majority of the population has frequent and direct contact with government. It is recognised that local government is critical for service delivery in the country.
In their Budget Vote, the Department of Human Settlements prioritised the acceleration of the delivery of houses, access to basic services and more efficient land utilisation as their core programmes needing funding.
The Department of Co-operative Governance and Traditional Affairs has prioritised building an accountable and efficient local government. Their focus on funding plans is to meet community needs; provision of clean, responsive and accountable administration; improving performance and professionalism; and support for municipalities, given the importance of local government in service delivery and the fact that a lot of problems relating to the capacity of municipalities to deliver services have been identified in the past.
In conclusion, this Bill had to be assessed against the priorities of the ANC government and its funding priorities. The budget requirements, as stated in various government departmental Votes proposed for appropriation in this Bill, are important and urgent. The release of these funds will advance the implementation of the plans for change.
As the ANC, we need to ensure that this Budget is used effectively and efficiently to achieve the mandate to pursue transformation, which has been given to us by the people. In adopting this Bill, we are going to intensify our oversight role in Parliament. We must vigorously ensure consistent monitoring and evaluation of the implementation of the programmes funded through the appropriation. As legislators, we must ensure that all the laws that we have put in place, such as the Money Bills Amendment Procedure and Related Matters Act and others, are indeed enablers of a developmental state to achieve the goals of speedy service delivery and development.
For these reasons, the ANC supports the passing of the Appropriation Bill. Thank you. [Applause.]