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.]
Babe Sihlalo [Chairperson], much has already been said since the Minister announced his Budget and there has been considerable critique of the fiscal framework that has been proposed. There are both positive and not so good aspects to this framework. Whilst there is an encouraging reduction and a predicted deficit of 4,6%, one of the consequences of this is the predicted growth rate of a mere 2,7% as compared to other similar economies where 6,9% is considered poor.
The allocation of R845 billion for the infrastructure build is certainly impressive. The tax incentives for special economic zones are welcomed and have been called for for a long time by the DA.
Unfortunately, the current performance of many Ministries indicates that many of these worthy spends, especially the desperately needed infrastructure spend, are unlikely to be achieved unless there is a radical change in the way business is done.
The past and current performance of Ministries clearly indicates that the good intentions of the Minister of Finance are by and large discounted by the ANC and its alliance partners, particularly Cosatu - we hear very little from the communists, who appear to be more intent on occupying lucrative positions in Parliament and in Cabinet than they are on promoting the mandate of the party. [Interjections.] I digress. We must also include in this category the other Cabinet Ministers and, I dare say it, even the President. This observation is probably best supported by the callous abandonment of the 3,2 million unemployed youths who have been and are being condemned to a life of no opportunities by the nonimplementation of the DA-supported youth wage subsidy. This subsidy was announced by the President some two years ago, but has not been implemented due to the undue influence of Cosatu, who seem to only represent the employed South Africans and from whose hard-earned pay they extract money to invest in new lavish offices, fancy cars and state-of-the-art computers for themselves.
Much of the poverty facing our people can be laid fairly and squarely at the door of generations of colonial and apartheid misrule. However, what is required for South Africa to overcome the enormous challenges of unemployment, and thus of poverty amongst millions of our people, is not to provide a welfare state, but to provide a welfare safety net with our concentration being on the creation of more and more opportunities for all South Africans to enable them to take their destiny into their own hands. To me, it is self-evident that we should be focusing on providing opportunities through the provision of top-quality health care, education and infrastructure, amongst others. It is these opportunities that will enable our people to work themselves out of poverty and become the best they can be.
Of course, we cannot forget the desperate need to deal swiftly and robustly with inefficient and corrupt officials, politicians and other South Africans. The scourge of the ANC's cadre deployment policy has condemned millions of our people to lives of poverty and hardship.
The DA has an alternative for all South Africans that will give them opportunities that they deserve. The cornerstone of this alternative is the achievement of economic growth of no less than 8%. This is possible, and we have the policy that will achieve this growth. Our shadow Minister of finance, the hon Tim Harris, a former member of this House, has released the DA's alternative budget and we will release the DA's 8% growth policy later this year.
Through you to the hon Minister of Finance, we say that, given the government that you find yourself in, we extend our thanks for the effort you made to maintain our fiscal stability. We will support your fiscal framework, but be warned that we will reserve the right to hold you and the Cabinet accountable to all our people if your Cabinet colleagues such as the hon Lindiwe Sisulu, the Minister of Defence and Military Veterans, who snubbed Parliament by failing to appear before this House to answer questions in yesterday's sitting, fail to perform as is required to achieve the outcomes contained in the framework.
Inkosi ibusise i-Afrika. [May the Lord bless Africa.]
Hon Chairperson, members of the NCOP, let me start by saying that, as a province, we are generally in support of the fiscal framework and the revenue proposals. Hon members of the NCOP, the basis of any fiscal architecture involves taxation, borrowing and public spending. In the case of South Africa, we have centralised taxation to Sars, which is working quite effectively and efficiently. We have centralised borrowing to Treasury, which is also working efficiently and effectively.
Our public spending is, on the other hand, decentralised. We must accept that it is decentralised to organs of the state, which in some instances lack capacity. To correct this, we need delivery capacity and budgetary controls working in tandem and effected at points of delivery.
As the provincial government of the Eastern Cape, our approach to constrained fiscal context, which was outlined in the Minister's speech, has been fourfold: Firstly, we believe that we are tightening fiscal controls and ensuring greater efficiency in our spend. Secondly, we are aggressively addressing underspending on grants and infrastructure. Thirdly, we are reprioritising our departmental baselines to ensure that a higher proportion of spend is on investment and service delivery. Fourthly, we are undertaking the serious process of ensuring that there is greater capital investment by national state-owned enterprises in the province, in order to improve our logistics platform and therefore grow the economy.
I want to make two comments about the fiscal formula, because I think it is important for us to raise some of the issues. The first question is: Is the equitable share really equitable? I would not want to get into a long discussion on the matter. Suffice it to say the following: The fact that the equitable share formula is almost wholly demographically based reinforces patterns of uneven development. The costs of service delivery are higher in poor provinces and municipalities while their ability to generate revenue is negligible.
We believe that the equitable formula should be more redistributive and developmental. Per capita income should comprise a much higher proportion of the fiscal formula. Currently, the socioeconomic status only comprises 4% of the weighting. We think that we must look at the matter, moving forward. If it is addressed, we think that we will have greater equity.
The second issue we want to raise, and probably the last in this regard, is whether the vertical split of the equitable share in the three spheres of government is appropriate. Our view as the provincial government is that municipalities in the province are underfunded and this issue needs to be addressed. Again, we think that municipalities should carry out a greater share of service delivery.
We agree that the levels of capacity and value for money are suboptimal at the moment, but this should not, over the medium term, detract from the need to develop this sphere as the key point of service delivery. We need to rethink our local government model, the two-tier system and number of municipalities. We think that at some point we will have to revisit the number of municipalities to ensure sustainable development and aggressive service delivery.
We are of the opinion that there is too much delivery capacity and resources at the national level, which should be more effectively and evenly distributed across the three spheres, in line with service delivery needs. We also need a rethink on bulk infrastructure funding for municipalities given the inadequacy of the municipal infrastructure grant, MIG, to finance bulk infrastructure and the limited borrowing power of poor municipalities.
Therefore, we must acknowledge that a fiscal space has been created. As a province, we have adopted a fiscal strategy that is comprised of the following points in summary. The first is strengthening fiscal discipline. The key here is rooting out financial mismanagement in the province, addressing overspending on cost of equity, and addressing underspending on infrastructure and conditional grants. To improve delivery capacity, we have set up a new infrastructure delivery unit to improve monitoring and control systems. We are also ensuring a close correlation between planned and real expenditure, initiating a chief finance officer support programme in education and health, supporting section 100(b) as has been adopted by the national Department of Basic Education, and implementing a fiscal recovery plan.
The whole strategic objective is to incrementally redirect the budget towards investment spending to fight poverty, create jobs, and transform our economy. In this regard, some of the following are issues that we are dealing with. We are halting the encroachment of cost of equity on other forms of expenditure; revisiting budget baselines; revisiting organisational structures to deploy human resources to points of delivery; and using procurement to drive opportunities in government and to ensure economic development in general.
The last point relates to the importance of managing the behaviour of state- owned enterprises. In this regard, we believe that we should be more aggressive as a province to leverage more spending on capital expenditure by most of the state-owned enterprises. In general, I must say that we support the spirit and content of the fiscal framework as well as the revenue proposals. I thank you. [Applause.]
Hon Chairperson, hon Minister of Finance and Deputy Minister, hon members and special delegations, there is no doubt that the current health system in South Africa is discriminatory and harms the poor people of this country. So, no one has more at stake in the political debate over how best to shape the health care reform in this country than the poor people themselves.
After so many years of unequal treatment in this country, the poor people, the majority of whom are black, are forced to continue accepting health care and health outcomes that fall short of the quality and availability of medical services provided to more advantaged groups. So many have been made to suffer for so long, with so little, by so few.
Inequities in health are accompanied by disparities in health insurance coverage. Poor people have the highest rates of insurance. The lack of quality, affordable coverage makes them less likely to receive medical care and more likely to fall into poor health and die early. This is simple logic, and you don't have to be a rocket scientist to come to this conclusion. The medical establishment bears a major share of responsibility for this institutionalised racism, and it is about time our government did something about it. That is the reason we support the government's National Health Insurance, NHI, scheme.
Chairperson and members, health care is a human right. This is a widely accepted international principle. This right should not depend on how rich we are or where we happen to live. The right to obtain health care is written in our Constitution but despite this large numbers of our people continue to die prematurely and to suffer unnecessarily from poor health. Treatable conditions are not being treated on time and preventative diseases are not being prevented. This is in spite of the fact that government has tried its utmost since 1994 to ensure that everyone in this country has equitable access to necessary health care services.
There are still serious challenges, mainly caused by a skewed health care financing system. Without the NHI, the burden of diseases in this country will not be reduced because the majority of the population and the section suffering the greatest ill health will not access good quality health care. We must think of those people who still go and scratch around the dumping areas, and the food that they eat is contributing to their death. Even if we travel to other countries, we have never actually taken the time to go to the most rural areas where people still dig around the rivers to try and get whatever they can put down their throats to eat.
Chairperson, allow me to clarify the distortion that is often made with regard to how the NHI scheme will work. There are a few people who confuse many with assertions that the NHI is all about destroying the private sector and that private care providers will be forced to contract with the NHI. Of course this is not true. Government does not intend to abolish private medical schemes if individual members wish to keep them. Also, participation in the NHI is solely a matter of choice for the individual health care provider.
There is also confusion perpetrated by these few with regard to how people will participate in the NHI. We need to make a distinction between a citizen participating in the NHI as a contributor and a citizen participating in the NHI as a patient. If you earn above a certain income, you will be required by law to make a contribution to the NHI fund. It will not be possible to opt out of this responsibility; however, as a patient, if you wish to make use of the services of a health care provider who is not accredited and/or who chooses not to contract to the NHI, you will have to pay the provider directly or else maintain medical scheme cover in addition to making NHI contributions.
Chairperson, the deplorable health conditions that so many of our people find themselves in should be viewed within the context of the bigger picture of social services. Therefore, substantial improvements in health and life expectancy will have to be achieved by addressing the social determinants of health, including a clean environment, occupational safety, safe neighbourhoods and access to nutritious food. Therefore, we should see the NHI as but one of many interventions that we must still make. A high- performing health system must deliver quality care to everyone, regardless of race, ethnicity, sex, income, or any other demographic characteristic. This is what is expected by our Constitution.
A lack of health insurance disproportionately hurts the poor and low-income families because health insurance in South Africa remains linked to employment. Higher-paying jobs tend to offer more comprehensive medical coverage, while lower-paying jobs, disproportionately occupied by many black people, tend to offer limited, if any, health benefits. Even when low- paying jobs do offer benefits, they are often accompanied by expensive cost- sharing arrangements with employees.
The discriminatory health services in South Africa have gender elements too, because twice as many women as men rely on their spouses for health coverage. Women increasingly find themselves uninsured, underinsured, or with unstable coverage. Given that women generally use more health services than men, women are more likely to delay necessary care, because it is unaffordable or difficult to find, and that leaves them vulnerable to greater medical debt than men.
The other vulnerable section is the people in the rural areas. These people are also burdened by structural barriers that, lead to poorer health outcomes. Levels of poverty in these areas combine with the scarcity of medical services to create worse outcomes than in urban areas. Therefore, rural residents have higher rates of infant mortality, pulmonary diseases, chronic disease, cardiac disease and trauma deaths, etc. The same challenges, if not more, are faced by people who live in the informal settlements.
In supporting the allocation for the piloting of the NHI, we are not saying that this is enough. We are saying that, understanding the limited resources that we have, this little will go a long way in helping so many to access the health system. This will not only help the poor socially but economically as well. As the ANC, we fully support the allocation for the NHI. I thank you. [Applause.]
Chairperson, hon members, Minister and Deputy Minister, first of all, we do appreciate the opportunity to discuss this very important matter of the fiscal framework and revenue proposals and we will use this opportunity to reflect on some of the issues that pertain to the provinces.
In the next three months the NCOP will turn 15 years old. In this regard, we should therefore draw inspiration from the 100 years of the premier liberation movement of our people, the ANC, to take stock of whether the NCOP has fulfilled its strategic mandate of being the voice of the provinces in the national sphere of government.
We make this assertion because of our deep conviction that the greatest test of any democratic institution resides not in how it views itself, but in its unquestionable ability to inspire the confidence of the masses of the people by changing their material conditions of life for the better.
As a unique political construct, located at the intersection of our multisphere system of constitutional governance, the NCOP is better positioned than any other House in our country to act as a final arbiter in ensuring equitable distribution of our country's resources to provinces.
We would all agree that the fiscal envelope of our country has continued to shrink since the 2009 world economic meltdown, whilst the needs of our people continue to grow. This calls for hard and difficult choices on the part of policy-makers to prioritise spending in line with the needs our people, as articulated in the ruling party's 2009 election manifesto.
We start by accepting the National Treasury's analysis that as a government we should always attempt to do more within limited available resources.
Sporadic uprising in some municipalities continues to remind us that despite the shrinking fiscal envelope more still needs to be done in pursuit of our mandate of a better life for all. Perhaps one of the best solutions we could come up with may relate to budgeting systems, processes and practices, which I believe may need to be revised. We may perhaps also need to create new, innovative ways to better respond to service delivery needs and backlogs.
The provincial budget must respond to challenges on the ground, which to us is one important consideration of a credible budget. This alone, without sound planning, will not produce desirable outcomes.
There is a need for the distribution of financial resources in the country to go beyond the equitable share formula because of the unique realities that exist in different provinces, but more so because of geoeconomic inequalities that have been created by the legacy of apartheid spatial development planning.
Some provinces abound with industries and modern, world-class infrastructure, whilst others are defined by a high level of underdevelopment and a lack of infrastructure. Using the Free State province as an example, it is bedevilled by a small economy and has one of the lowest growth rates, compounded by a small private sector and an arguably overextended public sector.
Furthermore, the above challenge is coupled with the high unemployment rate of more than 50% of a labour force categorised as low skilled, 40% of whom are new entrants, youth, into the labour market. Other factors like high levels of income inequality and negative externalities related to neighbouring countries should be taken into account when funds are distributed between the different provinces.
This means that, as a province, through our budget, we also need to intervene or directly influence certain sections of the provincial economy, where it may not be the case with so-called big provinces because of the level of participation by the private sector.
Due to the above-mentioned thought process, for the Free State and other small provinces, the public sector remains a source of hope for the people of the province and economic growth. This implies that the responsibility placed on provincial budgets or smaller provinces has a bigger and more critical role and it is an important tool to effect socioeconomic transformation in provinces.
It is only fair or perhaps correct to agree that the distribution of resources regarding infrastructure has been favouring bigger provinces for decades to the detriment of smaller ones like ours. For a province like the Free State, the department of public works, roads and transport budget received from national government did not depict the level of responsibility that the Free State carries in terms of the total road network in South Africa.
It is important that I remind this House that the Free State is basically at the heart of the road network in South Africa and it has been badly under pressure from all major freight and transport movements in the country.
If, as a country, we do not change our current approach in terms of how we generally distribute infrastructure resources, we are going to see big cities becoming bigger, migration to big cities increasing and more ghost towns emerging.
The implication of this for the Free State is that poor and deteriorating infrastructure restricts it from benefiting from its strategic geographic location.
Another important aspect that needs urgent attention is the unfunded mandates from national departments to the provincial government. Up until now, unfunded mandates had negatively contributed to the tight fiscal framework realised by provinces, and as a country we should ensure that we disband this practice.
Disbanding the practice will create sustainability, credibility and discipline in our budgets. Unfunded mandates also affect other projects in the context that funds are reprioritised from existing budgeted projects to fund them. In other words, national government should ensure that all new mandates that have financial implications are fully funded. In conclusion, there is a lack of flexibility regarding the infrastructure grant to provinces, or IGP. Provincial governments should be able to better respond to their provincial priorities through this grant. A shift towards increasing the flexibility of the IGP will boost the ability of provinces to also respond better to the tight and difficult times ahead.
Other than the IGP, the provinces' discretion regarding funds from national government is diminishing due to increased earmarked funds, and the conditional grants budget is growing faster than the equitable share funds.
If the above-mentioned trend continues, provinces are going to find themselves under extreme pressure and alternately table budgets that are extremely ambitious or overcommitted.
The last point relates to the capacity of low-grade municipalities, which do not even have a revenue base. As we lead the struggle for memory against forgetfulness, we should do so by recalling that the current configuration of municipal boundaries is our own policy choice.
The fundamental question is therefore what special dispensation we put in place in our funding systems for local government to target specifically the needs of these low-grade municipalities. To the extent that we delay in responding to this question, we are in a situation that needs to be addressed urgently.
For instance, in the province, some municipalities can hardly afford to attend to some of the urgent tasks like paying, in some instances. The province has been intervening in this regard, but for how long will we sustain this situation?
Chairperson, there cannot be any better time for all of us to act, rather than to grapple with these matters that are raised. However, the province does support the broad framework of the fiscal framework and revenue proposals. Thank you. [Applause.]
Chairperson, hon Minister and Deputy Minister, I wish to open this debate by borrowing the words of the former South African President, Thabo Mbeki, in his recent paper, When Europe Sneezes, Africa Catches a Cold:
We must follow closely the evolution of the Eurozone crisis, knowing that if it worsens, perhaps leading to the demise of the euro, this would have an immensely negative impact on the global economy, with a similarly negative impact on our economies, which might very well create great social instability in our countries.
Be warned. Corruption is like rubbing salt in the wounds of the poor. To imagine that R20 billion was lost last year through futile and fruitless expenditure and Parliament, led by the majority party, failed to react or raise alarm to stop it is a visible and powerful sign that shows what type of country we are going to end up with.
Chair, many First World nations like Greece, Portugal ...
Order, Mr Plaatjie.
Chairperson, I just wanted to check whether the member is prepared to take a question.
Are you prepared to take a question, hon Plaatjie?
No, Chair.
He will not take the question. [Interjections.]
Chair, to continue ... [Interjections.] Many First World nations like Greece, Portugal and Ireland are facing bankruptcy. If we really want to escape that predicament, we must act fast and with vigilance to stabilise our GDP.
We cannot want to generate the country's revenue by unscrupulous means. The e-tolling is one of the worst examples. The emerging inflationary pressures, such as interest rates, fuel price volatility and high electricity prices, all create a very claustrophobic economic environment.
In 2001, as much as 40% of the South African government's revenue went to meeting government salaries. This country's Budget, as announced by the Minister of Finance, has already gone over a trillion rand in the government expenditure plan.
The Minister of Finance wants greater citizen activism to achieve maximum service delivery, something Cope has been calling for. Cope further believes that the financial and administrative fallouts that happened in Limpopo, Gauteng and the Eastern Cape are a direct result of not being vigilant and poor citizen activism.
Municipalities around the country are in crisis. Since 2005, when national government declared that 136 out of 284 municipalities were unable to fulfil their basic functions, this trend has not changed. In fact, it has gotten worse since then. Local government has become virtually synonymous with illegal tendering practices, unauthorised loans to councillors and, in some cases, outright looting. A number of municipalities have been placed under administration in recent years for poor performance.
Municipalities and provinces generally spend more than 30% of their budgets on salaries; the other 70% should go to infrastructure and service delivery. However, the total amount paid in salaries to mayors, councillors and municipal officials outstrips spending on services by billions.
President Zuma observed that:
The last 15 years have exposed serious gaps in intergovernmental co- ordination. Too often we have observed different spheres of government acting in a manner that is sometimes contradictory.
Duplication of work and payments are common cause in this regard. While we go about our business as usual, the poor are getting poorer and their hopes are fading. For how long will government avoid addressing these issues head- on? A lack of attention will therefore pose a long-term fiscal risk to the country.
The South African government adopted the United Nations Millennium Declaration to increase economic growth and employment, focusing on redistribution. When are we going to get a report to indicate to what level poverty and inequality have been reduced? I thank you, Chair. [Time expired.]
Chairperson, Deputy Chairperson, hon Minister and Deputy Minister, members of the NCOP, and distinguished guests, it is correct that South Africa has progressively earned a reputation for sound fiscal management since it attained democracy and earned its place amongst developing and developed nations through fiscal discipline and a prudent regulatory regime in the financial market. It is also correct that we are now rated number one internationally in terms of our Budget transparency. [Applause.]
From the ANC's perspective, tax is a foundational building block for a developmental state, an expression of a collective effort in terms of the value system of ubuntu. It is the most critical source of revenue for a developmental state to be effective in meeting social challenges and redirecting economic growth. The triple challenge of unemployment, poverty and inequality, as outlined by the President in his state of the nation address and also alluded to by the Minister during the tabling of the Budget, will require immediate and massive state intervention in this financial year and the years that follow.
The ANC-led government has committed itself to the creation of jobs to reduce unemployment, promoting the principles of decent work so that the quality of life for workers can be improved, promoting rural development and sustainable livelihoods through measures that empower communities with land and other appropriate resources, improving the quality of our education system and providing health care services for all citizens, irrespective of their economic status, as well as fighting crime and corruption.
During his state of the nation address, President Jacob Zuma indicated that government remains steadfast in addressing the challenges of creating jobs, reducing poverty, building infrastructure and expanding our economy. As a developmental state, we will require that education, health and social assistance remain the largest categories of expenditure, sustaining and expanding the social wage over the Medium-Term Expenditure Framework period ahead. Investment in people is at the centre of our growth and development strategy. Our government will expand infrastructure investment over the period ahead. We have to see business investing in our future as well. Government has expanded social assistance to households over the past decade, but employment and economic activity are to be the main future drivers of economic growth and poverty reduction.
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.
Motl Modulasetilo, puso ya ANC e supile gore e dira ka fa dikgatlegong tsa baagi ba rona. MaAforika Borwa ka bophara, ba amogela matsapa a puso ya bone e fetolang matshelo a bone ka kakaretso. Baagi ba Bokone Bophirima, ba itumelela maitlhomo a puso ya boset?haba a go tlhabolola mafaratlhatlha a ditsela kwa porofenseng ya borona. (Translation of Setswana paragraph follows.)
[Deputy Chairperson, the ANC government has demonstrated that it works according to the interests of its people. South Africans in general acknowledge government's effort in generally improving their lives. The people of the North West province are pleased with national government's aim of developing the roads infrastructure in our province.]
Medium-term priorities in health spending include hospital infrastructure, the comprehensive HIV/Aids treatment and prevention programme, and expanding training for health professionals. Progress in these areas will strengthen the public health system, paving the way for the introduction of a national health insurance. This will contribute to job creation.
Chair, our government has progressively built modern financial fiscal institutions and fundamentally reformed its tax system and fiscal framework. Moreover, fiscal outcomes improved markedly in the past years, reflecting rising of prices, strong outputs, growth, and a commitment to restraining spending on the windfall gains, supported by an institutional mechanism to manage resources. Thank you. [Applause.]
Hon Chairperson of the NCOP, hon Minister and Deputy Minister of Finance, hon members and special delegates in the House, delivering his Budget Speech, the hon Minister of Finance made the accurate reflection that every one of the last 100 years has seen our nation overcome obstacles that seemed insurmountable. Some have been beyond our control, for example the result of changes to the environment to which we were compelled to adjust. Some were the result of our failure to act, even when the solutions were known to us. Others were the unintended consequences of our own success.
Indeed, as we write the next chapters of the unfolding South African story, we will continue to be confronted by challenges that, on the face of it, will seem insurmountable, beyond our control or force us to make tactical shifts in approaches as we seek to build on the successes of the past century towards the South Africa envisioned in the Freedom Charter. The 2012 fiscal framework presents further opportunity to accelerate our path towards this prosperous future.
The SA Local Government Association, Salga, is appreciative of the difficult economic situation that the country finds itself in as a result of the global economic climate and the impact on revenue streams of government. In fact, local government revenue is directly affected by the downturn in the economic cycle. We, therefore, welcome the overall sentiment of the 2012 Budget that clearly seeks to protect allocations to local government whilst calling for fiscal restraint, and efficient and effective spending by all spheres of government.
Chairperson, this Budget sets out a tight fiscal framework within which the national revenue is divided among all spheres of government, including local government. We note that in the vertical division of revenue process, local government is allocated R77 billion or 8,8% of the nationally raised revenue in the 2012-13 financial year. This vital source of revenue becomes part of the local government's fiscal framework for the period.
It is common cause that the local government fiscal framework, as defined by the provisions in the Constitution, should ensure viable municipalities that are able to provide basic services and perform the functions allocated to them. It should, therefore, promote improvement of living environments and livelihoods for all constituents by means of providing revenue sources and expand these responsibilities to address these developmental and other needs.
Salga is of the respectful view that the division of revenue for the 2012 Medium-Term Expenditure Framework, MTEF, period does not fully consider some fundamental issues affecting local government at the moment. Firstly, the steep increases in the prices of bulk services such as electricity and water impact on the sustainability of basic service provision by local government, in particular smaller municipalities. If this trend continues, more and more residents will fall outside the affordability net, further compromising the revenue integrity of local government. National allocations to local government should take this into account and increases should be in excess of inflation.
Secondly, the integrity of local government's equitable share calculation is, over a period of time, eroded since the allocations are based on census information that is only updated every 10 years. In practice, this implies that for at least the past four to five years, the equitable share would have not catered for growth in the urban centres as a result of the global trend of an increase in migration to the urban centres.
Lastly, many municipalities continue to carry the burden of unfunded or underfunded mandates for services provided on behalf of the national and provincial governments. In addition, the fiscal impact of national legislation on local government, as well as demarcation processes, is not always fully comprehended. The Administrative Adjudication of Road Traffic Offences Act, Aarto, and the incorporation of the district municipality of Metsweding into the City of Tshwane are cases in point. I would just like to acknowledge that the Minister of Transport has announced the postponement of the implementation of the Aarto Act, which is welcomed by Salga.
The unintended consequences of such an impact come to bear on local government and reflect in its diminishing resource capacity. These matters will require further treatment and urgent resolution. For its part, Salga will continue to raise these issues in the correct fora, having thoroughly applied its mind to appropriate mitigation and all response strategies.
Salga notes a number of changes to the local government conditional grants, such as the creation of the infrastructure skills development grant, which we welcome and support. There are a number of changes made to the baseline allocation of existing conditional grants. They are not adequately explained in the Budget documentation. This matter was quite vigorously debated during the recent public hearings on the 2012-13 Division of Revenue Bill conducted by the Standing Committee on Appropriations.
Salga is of the view that instead of cutting certain grants due to underspending, like the neighbourhood development and partnership grant, there should be greater effort to ensure the implementation of policies and raised awareness of the existence of these grants to different municipalities. Another example in this policy decision is to incorporate the rural household infrastructure grant into the municipal infrastructure grant, MIG. This is going to change the flow of funding from one department to the other, but does not necessarily resolve the underlying problem of the capacity to spend the grant, particularly in the smaller municipalities, once more. Policy decisions are also complicated due to the unavailability of comprehensive reporting by national government on the nonfinancial performance of conditional grants.
We are aware at Salga that, on the part of the National Treasury and the Department for Co-operative Governance and Traditional Affairs, as well as separately by the Finance and Fiscal Commission, the process to review the local government fiscal framework is under way. Salga supports these initiatives, although we advocated in the 2011 Budget Forum for an independent commission to conduct such a review. We do, however, want to see a revised fiscal regime for local government that is, at the very least, based on empirical studies into the actual cost of service delivery for local government to inform decisions about the vertical division of revenue - a revised fiscal regime that considers the differentiated needs of urban and rural municipalities.
Whilst it is important that we engage government on improving the intergovernmental fiscal system, we do acknowledge that municipalities themselves need to exhaust every effort to continue to improve billing and revenue collection, and expand their tax base, as well as explore new revenue sources in order to address service delivery challenges and promote economic growth. As a cautionary note, however, despite these interventions, it does seem apparent that the fiscal gap in the local government revenue collection capacity will remain.
Local government stands poised to be the central point of a developmental state. It must, therefore, be a national imperative to ensure that the sector is strengthened and capacitated to discharge its constitutional and political obligations as we advance towards what the President of the Republic describes as "a new story about South Africa - the story of how, working together, we drove back unemployment and reduced economic inequality and poverty".
One of the outstanding revolutionaries and social scientists of our time, Frantz Fanon, asserts that "each generation must, out of relative obscurity, discover its mission, fulfil it or betray it". It is through our collective effort that we will be able to remove the constraints to improve service delivery in local government and, indeed, rise to our generation's principal mission of reducing unemployment and poverty and addressing the deficits in our human and infrastructure development.
On behalf of the national executive committee of Salga, allow me to place on record our appreciation for the opportunity to address this esteemed House as it applies its mind to the 2012-13 fiscal framework. Thank you. [Applause.]
Chairperson, hon Minister and hon members, in respect of holding the executive to account, Parliament is the ultimate authority and voice of the people of South Africa. The Constitution and other relevant legislation enjoin Parliament to oversee and play an effective oversight role.
Upon the tabling of the national Budget, the Minister of Finance and both the National Council of Provinces and the National Assembly must refer the fiscal framework and revenue proposals to the relevant respective committees of finance.
On this occasion, therefore, we appreciate the massive infrastructure investment our government has made. The budgeted and approved public sector projects constitute a variety of new and upgraded projects including maintenance of existing infrastructure across the country. Megaprojects under consideration for the 2012 to 2020 financial periods are telecommunications infrastructure, water, transport, electricity, human settlements, education, health and other projects.
The estimated total cost is a whopping R3,2 trillion. Of this total, about a quarter is being financed and implemented. The remaining three quarters is under assessment.
I would like to pick up on a few projects - water and sanitation, for instance. Our situation as a water-stressed country adds to our desperate condition. Household water requirements compete with agriculture, mining and electricity generation, which all depend on large volumes of water.
During the oversight committee work in Limpopo and Free State provinces, we discovered that municipalities at the local government level struggle to access water to build houses and distribute water to the households for use. This is so despite rivers flowing near those municipalities. The neighbouring white farmers built private dams to irrigate their farms and to make more water available for their stock. All these farmers refuse to share their dams with their neighbouring communities. A natural resource had become a private entity used as a bargaining tool.
We applaud the R75 billion allocated over the Medium-Term Expenditure Framework period for water infrastructure quality management, resource planning and support to local government. The Olifants River Water Resource Development Project will provide water for domestic use to semiurban and rural communities of Limpopo and will support new mining projects to boost economic development in the area.
The 2010 Fifa World Cup has exposed South Africa's deficiency in skilled personnel. Given the massive investment in infrastructure, can we ensure that the labour - technical and unskilled - that is going to participate in the building of this infrastructure will be derived from within South Africa's borders? Can we rest assured that the Minister of Higher Education and Training has identified the weaknesses that may cause low economic growth now and in the future?
Transport investments account for R262 billion over the next three years. The national Budget as well as provincial budgets include funding for road construction and maintenance. The fiscus also contributes to the capital costs and subsidies of public transport systems such as Metrorail and bus commuter services.
Provinces will spend a projected R25,5 billion to maintain provincial and rural roads. Transnet, on the other hand, will spend R107,7 billion in approved plans over the next three years. These investments focus on the freight rail network and large capacity upgrades on the iron ore and coal export lines. This will boost general freight, mining exports and investment in the Richards Bay port, which will increase bulk export and cargo capacity.
The bus rapid transit system that began to operate in Johannesburg and Cape Town in 2010 continues to expand. The Nelson Mandela Bay Municipality has completed plans for its public transport network and has purchased a fleet of buses for that purpose. On the other hand, Tshwane, Rustenburg and eThekwini are finalising their operational plans for transport.These projects therefore constitute an opportunity and have huge potential for job creation in the economy.
The National Rural Youth Service Corps has been allocated an additional R200 million. This translates to a total of R900 million over the next three years. The objective of this fund is to contribute to job creation in the rural as well as semiurban areas.
A skills audit of municipalities, including certain departments and provinces, leaves much to be desired. The problem of corruption needs to be confronted head-on. We no longer require resolutions, but rather require decisive action to nip it in the bud.
The Midvaal municipality in Gauteng, under a DA administration, has been investigated by the Office of the Public Protector for mismanagement of funds. The report will be out soon.
All municipalities, irrespective of control, and all departments, irrespective of control, should be subjected to investigation. I thank you.
Hon Chairperson, hon members and representatives of provinces and the SA Local Government Association, Salga, thank you very much for your comments and, generally, your support for the fiscal framework. I know that this is the House where you also invite shop stewards from the provinces and municipalities. So, we welcome the comments of the shop stewards. I suppose they have to ensure that they support their own environments in looking at this particular Budget.
However, as several of you have pointed out, let us remind ourselves that this Budget is being framed at a time when there are indeed serious economic difficulties around the globe. Those economic difficulties are not going to be resolved in the near future and many of those difficulties might well persist for some time to come.
It is therefore important, whether we are from municipalities, provinces or national departments, and whether we are in legislatures or holding executive office, that we take serious account of the circumstances in which our fiscus has to be managed, how taxpayers' money has to be spent, and the efficiency and value for money in our expenditure guaranteed both to ourselves and, more importantly, to our people. I don't think that we are there, just as several hon members have in fact pointed out.
You are all, regardless of the party you come from, committed to rooting out corruption. This is not only because the wrong people put money into the wrong pockets, but because, at the end of the day, corruption impacts on and causes a lack of service delivery to the very people we claim to represent - the poor of this country. Corruption actually results in a very small minority benefiting by having money in their own pockets. Corruption happens not only in the Public Service or just in the ANC but is, in fact, widespread, and is practised by people - from various political and social backgrounds - who do business with the state. The commitment to root out corruption - that we see here from everyone concerned - is very important to make.
I would encourage the hon members - because none of you seem to have made reference to this - to keep reminding ourselves and the South African public about our fiscal guidelines: that, when times are bad, the state must engage in countercyclical policy; when times are good the state must hold back a little and build up its resources because, in the kind of economic environment in which we live, we will have another crisis sooner rather than later.
Secondly, we need to ensure that we have debt sustainability. Hon De Beer, hon Lees and others have made reference to this, and I can assure you that what we have in this Budget is in fact a very sustainable approach to fiscal management.
The third issue, of course, is to ensure that the way in which we undertake our expenditure management and debt management doesn't impose on future generations of South Africans.
It is on the basis of these three guidelines, plus the fact that we are trying to maintain the right kind of balance between fiscal consolidation over the medium term and support for growth through the various programmes that you all have outlined, that we believe we have created a sound platform for the rest of the country to begin to participate in an important process of generating growth and jobs on the one hand and reducing poverty and unemployment on the other hand.
It is also in this context, as hon De Beer pointed out, that the Deputy Prime Minister of Australia and I wrote a paper and a letter to members of the Group of 20, G20, in which we say that joblessness and the challenge of creating jobs, particularly amongst young people, is not a problem unique to South Africa. Today, it is a problem for both developed and developing countries.
We are saying that, in the work of the G20 and in trying to give concrete meaning to a very important concept that was developed in Pittsburgh by our leaders of the G20, the framework was strong, sustainable and offered balanced growth. We need to put jobs and job creation at the centre of that programme. We will continue to remind the world that engaging in technical rebalancing, as they might call it, is not going to be sufficient; that what we require is a social consciousness amongst global leaders; that unless we solve the problem of growth that creates jobs, growth that reduces inequality, and growth that reduces poverty, particularly in developing countries but in developed countries as well, we are creating the wrong kind of recipe for the globe at large.
Hon De Beer correctly took us back to 1994. The amount of R112 billion looks very small. It's less than the education budget today; I think it's half the number, if I'm not mistaken. The tax revenue that we will be working with for the coming year will be R826 billion, and our expenditure, as he correctly pointed out, over a trillion rand. Crucial to what many of the hon members have said is the challenge of changing the composition of spending in South Africa, meaning that, both in terms of consumption spending and the wage bill, more generally, we need to shift resources to investment. So, we are talking about investment in municipalities, investment in provinces, and investment at the national level. One self-criticism that we can all make is that we need to meet this challenge far more aggressively than we have done until now.
On the capital side, municipalities underinvest at the moment. Certainly, in the smaller municipalities too much of the capital expenditure disappears into operational expenditure. Provinces that have adequate resources to invest in infrastructure - whether it is building schools or roads or anything else - underspend. It is anticipated that at the end of this financial year the total fiscus might well have underspent by over R6 billion. We will, of course, only learn the true numbers in about six or eight weeks' time.
But, we can't, on the one hand - with respect, Chairperson - ask for a better formula, a different formula, a better approach to either the vertical slicing or horizontal slicing in respect of the equitable share, and, on the other hand, not spend the money that we have efficiently and not put a stop to glamour projects in our provinces and municipalities, and not take greater care about the types of cars we buy and the kind of expenditure in which we engage. This House, I believe, has an important role to play in ensuring that expenditure of the right type is happening. We can't ask for more money for municipalities when, at the same time, some of our mayors are engaged in purchasing luxury cars when they could have bought a bakkie and made do with it under the current circumstances.
So, on the question of equitable share, I think we must state categorically that the formula that we have currently does take account of changes in demographics, economic profiles and other characteristics of provinces. The formula, as you know, is developed by the Financial and Fiscal Commission, which is an independent commission. Nobody in government dictates to them in terms of what they need to come up with. If there are useful ideas about how that formula can be modified, the MECs of finance attend meetings of the Budget Council several times a year and the Budget Forum also convenes at least twice a year, at which times these contributions can be made and the process taken further.
Hon Lees, of course, says that we have abandoned the unemployed youth. Now, that's not true, hon Lees. We, in fact, have various programmes. One of the most successful ones is run by Minister Nkwinti of the rural development Ministry, in which already 8 000 youth are engaged, employed, trained, and given technical and other skills. More effort needs to be made for this process to move on. We would, certainly, agree with you that in the National Economic, Development and Labour Council, Nedlac, process we need to have greater co-operation and a sense of urgency from our social partners in processing the youth wage subsidy. This would not necessarily be in its current form, because there are clearly concerns from organised labour that we need to take on board which state that this subsidy could result in the displacement of existing workers who are experienced within the work environment. We believe that, if we can get into a constructive discussion, the incentive can be redesigned to accommodate those concerned and still make a serious dent in unemployment in South Africa.
I thought hon Lees, Mr Chairperson, made a fascinating confession and a concession that it is decades of colonial misrule that have brought us to the point where we are in South Africa and given us the South Africa that we inherited in 1994.
Now, what that should tell us is that centuries of misrule by colonial and apartheid powers can't be wiped out in 18 years, nor can a new, developmental, capable state be built in 18 years, given all the legacies of the past. So, state building is an important national project of ours. It's a project which we should not make into a political football. We should all be asking ourselves how we can create a much more efficient, a much more capable, and a much more skilled state which draws on the skills of all South Africans, in order for us to leave behind a legacy for future generations that says that we have, in fact, done our bit to build this state.
We've gone through his claim that we want to move towards a welfare state; that is not true. This government is absolutely clear that creating jobs for people is the best way to get people out of poverty. It's the best way to give people dignity. It's the best way to give people their independence, and that is the programme to which this government is absolutely committed.
He talks about me finding myself in this government. I mean, finding myself! I've been a member of the ANC for over 40 years; I don't find myself here, hon Lees. [Laughter.]
Hon Jonas, the leading shop steward of the provinces, thank you for your contribution. I think that the thoughts that you've put forward about the initiatives to get greater efficiency going in the Eastern Cape are most welcome. You know you will have to allow us to be a little bit sceptical until we see the evidence that these plans are actually working. The Eastern Cape has massive challenges that it needs to meet, and government at the national level fully supports the attempts to meet these, and each of the things that you have outlined can make a substantial difference towards improving the living conditions of people in the Eastern Cape.
The hon Memela correctly points to deficiencies in the health system and the urgency with which we need to approach the question of transforming the health system and introducing the National Health Insurance, NHI, programme over the next 14 years. At the same time, let us admit that what has been happening within the health system is a decline in morale, a decline in the culture of caring, and a deterioration of the professional ethics with which our hospital and the clinic staff should approach our people. Brick by brick, we will have to build this NHI system, not only in the sense of having a new clinic and having new equipment and having the necessary medication but, above all, in having a new attitude to our people and how we care for them. So, a fundamental change in culture is going to be required.
One of the most regrettable things, Chairperson, that I am fascinated with and greatly disappointed by is the amount of corruption that goes on in the health sector. This is the sector which is meant to care for people, where money - every single cent of it - should be spent optimally, to ensure that the beneficiary is a South African citizen or somebody living in South Africa. Yet, there are officials, there are politicians, there are businesspeople, above all, who are doing the best they can to derive benefits for themselves, rather than ensure that our people benefit at the end of the day. This is a huge disappointment that we are facing.
Hon Mohai has made many observations and I'm sure he's going to raise those in the next Budget Council meeting. It is safe to say that the Free State should be careful about asking for more money for roads, otherwise I might raise certain sensitive issues. [Laughter.]
Hon Plaatjie talks about e-tolling as something that is nasty and ill- intended. I will invite him to take a more patient view on this particular matter and acknowledge that there are toll roads and that there have been toll roads in South Africa for a very long now. I'm sure you happily pay your tolls as you travel interprovincially on all the roads.
Government has done its best on this particular issue: it put in R5,75 billion; it put a cap of R550 to bring down the small vehicles charge to 30 cents and to give discounts of 20% to freight hauliers in nonpeak periods and many other things. But, at the same time, we have had to ensure that we guarantee the sustainability of the SA National Roads Agency Limited, Sanral, and give confidence to the investors that the state is behind this institution, that the state stands by the debt that has been incurred in this process, and that we want everybody to enjoy the roads rather than take the kind of approach that hon Plaatjie has been taking.
He talks about the social wage and that people are getting poorer. He might want to be reminded that 58% of our Budget this year - which, a decade ago, was 49% - goes into a social wage of one kind or another, such as support to schools, school nutrition, or school transport. You can list a whole lot of those. These add up to R3 940 a month per South African citizen. That is a substantial contribution from the state, but, given what hon Lees talked about concerning our legacy and our colonial and apartheid past, that is clearly not adequate to wipe out the couple of hundred years of legacy that we have inherited.
Hon Mothupi makes some very valuable points. I would like to thank him for his articulation of the social wage question as well and the importance of strengthening the public health system.
Hon Pillay, the Salga shop steward, also makes some very useful points and I can fully understand his need to focus on what we can do for municipalities.
The Minister for Co-operative Governance and Traditional Affairs and I have agreed that we will get our officials to begin looking at the smaller municipalities that constantly seem to be in financial distress and come up with a longer-term answer in terms of what we do with such municipalities.
At the same time, provinces and municipalities have a very critical role to play in ensuring efficient delivery of infrastructure. It is true, and he points to the fact that more must be done to improve capacity of municipalities. But, you know, when we ask for more to be done, it's not necessarily always by others. It's also a question of what we can do and what Salga can do as an organisation. Where are its programmes to actually build capacity amongst municipalities? Are we approaching this in a single- minded enough way and with a sufficient degree of urgency to make sure that we overcome some of the incapacity issues faced by municipalities?
Now, the one thing that we need to make absolutely clear is that any appeal that says, do not take away the money we haven't spent, leave it or transfer it somewhere else - given the context that we find ourselves in both globally and fiscally - just won't work. We either spend money efficiently or it will be spent efficiently elsewhere. We either have proper budgeting, proper planning and proper implementation plans and deliver on those implementation plans, or the funds will be transferred elsewhere or to another agency that can deliver to the same population or the same area a lot more effectively than the institutions of government are able to do.
So, we all need to lift our game, raise the bar and ensure that we can improve the conditions in which our people live and, generally speaking, ensure that informal settlements actually become decent places for people to live in. We must ensure that people in rural areas get the services that they deserve. Above all, we must do a lot more than we might be doing at the moment to ensure that there is support for economic activity and entrepreneurship through the work that municipalities and provinces do.
In conclusion, let me thank all the hon members for their contribution and recognise that, whilst we are living in a tough environment at the moment, South Africa, as hon De Beer has pointed out, has a lot going for it through its membership of the Brazil, Russia, India, China and South Africa group, Brics, and through its existence on the African continent. The question that we all need to ask ourselves is how we can use the opportunities that are available to us whilst keeping an eye on the risks that we face in order to raise growth, reduce poverty and create jobs for South Africans. Thank you very much. [Applause.]
Debate concluded.
Question put: That the Report be adopted.
IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.
Report accordingly adopted in accordance with section 65 of the Constitution.