Madam Deputy Speaker, we are all aware that this policy statement by the hon Minister of Finance was made against the backdrop of a very uncertain economic time, compounded by a behind-the- scenes ideological debate regarding the direction of economic policy. The hon Minister has passed this hurdle looking like the boss we expect a Finance Minister to be. His consistent approach, in not diverting from previous policies, has won him Cope's support.
It was 20 years ago that the world was reborn when the Berlin Wall collapsed and the face of the world changed forever. The current debate, fuelled by Cosatu and the SACP on who should be the boss on economic policy, is ironic. Cosatu must realise that the real opposition in South Africa's economy is not us or them, but the financial markets.
Cosatu must be wary not to overplay their hand with the new government and need to pick their battles with government with greater care. Battles should never be personal. Cosatu and the SACP should stop this debate now, support the Treasury under the guidance of the hon Minister and get on with the job to address our serious economic challenges. We do have serious challenges.
Firstly, South Africa will have a hesitant economic recovery. We are going to lag behind the world's economic recovery and some downward risks remain in our economy. Therefore, our growth forecast should be conservative.
Secondly, the uncertain effect of rising energy prices over the next 12 months affects inflation forecasts and creates uncertainty. Until we have sorted out Eskom's capital requirements, the market will remain volatile.
Thirdly, the question remains as to whether our fiscal stimulus package is correct and not too late. So far, this government has relied extensively on public spending increases and not on any tax cuts. This programme is too silent on private sector involvement.
A large portion of this expenditure increase is the growing salary bill, approaching like a swarm of locust throwing a dark cloud over our economy. Government has acknowledged that the increase in the salary bill is not sustainable. Let's now see action to curb it.
Economists have warned that our fiscal deficit increase is one of the highest. It is comparable to that of the United States. Because of that, our public debt will increase dramatically, shifting the burden of this debt to future generations.
Cope would like to see a clear plan, even if it needs to take a longer view, to ensure that we shall be out of this debt. Only a conservative and consistent approach by government to cut the salary bill and to grow the economy will spare our future generations from hardship.
Failure to improve efficiency in government spending will delay our recovery and prolong further borrowing. We need specific investments. We need to speed up access to the Internet. Government does not have the fiscal space to create jobs alone. We need the private sector. We need low inflation targets, high productivity and competitiveness. We need to ensure that the small and medium-sized enterprises, SMEs, become the main engine of job growth by getting the banks to fund them, cut the red tape and make the internet more affordable. It is vital that we focus on expenditure programmes that will improve competitiveness.
It will be the hon Minister's duty to control our soaring debts so as to avoid serious discomfort for our economy. We wish him all the best and Cope will support him in these efforts. [Applause.]