Chairperson, hon members, I present the National Treasury's Budget Vote for the consideration of the House. In doing so I ask that we take stock of an increasingly dangerous global environment and the economic challenges we face on our journey to a more inclusive growth path.
The global turmoil of the past four years has reminded us not just of the risks associated with credit-based booms and the importance of rigorous financial regulation, but also of the interconnectedness of financial and fiscal systems. Breakdowns in banking lead to budgetary interventions; budget failures require banking intermediation.
But the issues confronting Europe and other parts of the world are not just about the economy but more broadly about the political economy of policy- making in complex and challenging times. When I use the word "dangerous" I do not use it lightly. I quote from an article by Martin Wolf in yesterday's Financial Times, where he talks about "A permanent precedent". One scenario he pens is this, and I quote:
As explained earlier in this series...
It is a series on the Greek exit, if that is going to take place -
As explained earlier in this series, a cessation of external official funding could trigger a disorderly collapse. The government would default. The European Central Bank would argue that Greek banks no longer possess good collateral which would prevent it from operating as a lender of last resort. There would be comprehensive bank runs. Athens would impose exchange controls, introduce a new currency, redenominate domesticate contracts and default on external contracts denominated in euros.
That gives you just one idea of the possibilities that lie ahead of us in the next few weeks.
Much of the work of the National Treasury is focused on understanding these dynamics and ensuring that we as South Africa don't step over the critical solvency and sustainability frontiers.
But financial and fiscal health is not enough. We also need a vigorous enterprise economy, we need prosperous mines and factories, we need our schools and hospitals to function well, and we need to enhance competitiveness and improve productivity, both in government services and in the private sector. These are not just outcomes of sound budgets and sustainable financing arrangements; they also depend very importantly on effective implementation of policies and programmes.
Global economic growth has remained weak this year, as we anticipated at the time of the Budget in February. Growth in output in our own economy is uneven and slow, while consumption spending remains buoyant, although the last numbers don't look that good.
But the challenge we face is not just growth; it is a more broad-based transformation - not just development, but structural change that will extend opportunities to the unemployed, and unshackle the enterprise potential of our people.
What are the trends in our economic performance? The domestic economy is showing some signs of moderate growth, but the external environment remains weak and risks are high, as I have pointed out.
The most recent data from the SA Reserve Bank, for the last quarter of 2011, showed that household consumption and investment were still growing robustly. Consumption grew by 4,6% in the quarter, investment by 7,2% and government consumption grew by 7,3%. The National Treasury forecasts that household consumption and investment will continue to grow robustly in 2012, and government spending will also support growth.
But output growth in the first quarter of this year was slower than we forecast at Budget time, mainly due to the effect of the Impala Platinum strike on mining production. Retail sales, as I have indicated, have also slowed somewhat, and manufacturing production was disappointing, falling by 4,3%.
Monthly figures are, of course, volatile, but it is clear that investment is still being held back by both global and domestic uncertainties. Leading indicators, such as the Kagiso Purchasing Managers Index and the Reserve Bank's Composite Leading Business Cycle Indicator, point to continued growth - so there is no reason for gloom yet - but at a moderate rate. Despite high oil prices and a weaker exchange rate, inflationary pressures have remained relatively subdued. The main risks to the economy remain external. Political developments in the Eurozone, as I have pointed out, have heightened the risk that Greece will exit the single currency within the next year, though there is little clarity on how this would be achieved and what its impacts could be. Martin Wolf and company are, of course, speculating on that.
The United States should post subdued but positive growth in 2012, at a pace similar to the 2,2% expansion in the first quarter of this year. There are also risks to Chinese growth, due to slowing exports to the Eurozone area and a deflating domestic housing bubble, although some say there is no bubble.
Several economies in Africa and the developing world continue to grow more quickly than the main developed economies. Trade and investment patterns are shifting rapidly, as we know. Both our international relations and our trade and industry policies have to adapt to this rapidly changing global environment. We need to join our African partners in boosting industrialisation in Africa, developing regional value chains, and increasing intra-African trade.
We need to take stock of where we are in the light of the financial crisis. For us, as it is becoming for the rest of the world as well, growth is an imperative if we are to reduce poverty and inequality in our society. Much of Europe is currently grappling with the tension between growth and structural reforms and, of course, fiscal consolidation on the one hand, and the need to reduce debt and financial imbalances on the other. Our choices may not seem so stark, and perhaps our challenges are more about institution-building and adjustment to new global trade opportunities.
But let me emphasise that it is not governments that trade; it is businesses that trade. It is businesses that need to become enterprising. It is business leaders who need to understand what this gloom might mean, what our own constraints are, and what their contributions need to be in order to change our economic prospects and therefore the prospects of their own enterprises as well.
In this respect the work of the National Treasury and its associated institutions - the Development Bank of Southern Africa, the Public Investment Corporation, the Financial Services Board, the SA Revenue Service, and the Financial Intelligence Centre, amongst others - is highly dependent not only on our own policies and programmes, but also on those of my fellow Ministers, other departments and our provinces and municipalities. The Deputy Minister will deal with some of these entities when he addresses you. The Treasury has several specific responsibilities in this challenge. These are outlined in the strategic and business plans for the period ahead, and I outlined some of them in the House.
Our countercyclical fiscal stance, reflected in the budget framework tabled in February this year, remains correct. It requires continuous monitoring of economic and public finance trends and analysis of long-term prospects for our economy. Work is in progress on a long-term fiscal report and fiscal guidelines, as requested by Parliament.
The Presidential Infrastructure Co-ordinating Commission, PICC, has made excellent progress in the planning and assessment of strategic infrastructure programmes required as the foundations of faster long-term growth and more inclusive development. The financing and financial management of these projects are critical for their successful implementation. The Treasury has stepped up its capacity to assess and support major infrastructure programmes, and will continue to strengthen work in this area so that we have a sustainable infrastructure programme. We recognise that accelerating infrastructure investment and maintenance will require further shifts in the composition of expenditure in future years.
Alongside the emphasis on transparency and performance measures in our budget process, we continue to work intensively on better value for money in government expenditure, combating corruption, and improving procurement and supply chain management processes.
Faster economic growth depends in part on improving our national savings effort. An initial discussion document on savings and retirement reform has recently been published, and social security proposals will shortly be released. We look forward to public consultation and engagement, both with this House and with the public.
You will be aware that government has established a Jobs Fund in support of faster employment creation. It has allocated R1,8 billion to 34 projects to date, which will be matched by project sponsor contributions of about R1,7 billion. Once they get off the ground, these projects are expected to generate about 102 000 new jobs, and over 50 000 placement and training opportunities. A second call for proposals has also been issued.
Our cities and towns play an important role in economic development. In addition, our townships are, and must increasingly be turned into, centres of economic vibrancy, and should not just remain marginalised areas. Two programmes will promote this perspective and ambition. The first is the Neighbourhood Development Partnership Grant, which will see about 85 projects under construction by the end of this year. Work is already in progress on a broader framework for township regeneration and improved integration of urban landscapes. A new cities support initiative will get under way this year, beginning with needs assessments and identification of pilot interventions to support improved infrastructure planning, management of the built environment and economic development of major urban areas. The Treasury has also assisted in the Renewable Energy Procurement Process being overseen by the Minister of Energy, which is currently assessing the second round of proposals by independent power producers and will in due course lead to multibillion rand investments in harnessing wind and solar power as part of our national electricity network.
Better financial management requires investment in financial skills and capacity. The Treasury continues to work in the areas of financial management, internal audit, municipal finance, supply chain management and government accounting. We must, of course, recognise that this is a multidecade task that lies ahead of us.
These are some of the Treasury's activities. In the flurry of debate around issues of the day we are inclined to forget the ordinary business of planning and monitoring; consultation with departments and government agencies; negotiations around budgets; analysis of financial trends, impacts and risks; revenue collection; loan management; and financial supervision - it is a long list of tasks that the Treasury performs on behalf of South Africa.
On the question of employment, data from the Quarterly Labour Force Survey shows overall employment decreased by 75 000 in the first quarter of 2012. Employment losses fell across all age groups, with job shedding most severe among those aged from 25 to 34, with 31 000 job losses quarter to quarter. For those from 35 to 45 years - that excludes most of us in this room - there were 22 000 job losses quarter to quarter; and for those from 55 to 64 years, with some exemptions- which includes most in this room- there were 21 000 job losses quarter to quarter. Employment for all age groups, except those aged 35 to 44, remains below pre-crisis level, although young people aged 15 to 24 continue to be worst affected amongst all the population groups.
A broad range of measures is needed if we are to make progress in expanding employment and alleviating the special problem of youth unemployment. These include measures aimed at stronger investment and growth through our infrastructure building programme and economic support packages, and addressing skills constraints in the economy through measures to improve access to and the quality of basic, further and higher education.
Now, wait for it! Tailored employment policies, including the Community Work Programme - I just learnt about this one as well, please - environmental sector Public Works programmes and the National Rural Youth Service Corps, received additional allocations in February's Budget and will help boost youth and overall employment in the short term.
A number of concerns have been raised in connection with the proposed youth employment incentive. The discussions with social partners are aimed at mitigating these concerns, and they are real concerns. The rules governing, design and monitoring of a youth employment incentive need to ensure that it does not have negative unintended consequences, including potential displacement. We would like to see these issues addressed fully in discussions between social partners at the National Economic Development and Labour Council, Nedlac, but with urgency, as the challenge of creating jobs for young people cannot be deferred indefinitely.
One appeal I must make to all of us is: Don't make youth employment a political football. These are real people. [Applause.] These are young people who have aspirations for themselves and for their families. Let us not make them the target of cheap political shots by anybody.
In our supporting the work of the Ministers' Committee on the Budget, several programmes and reform initiatives of government ... [Interjections.] ... will come under review to establish whether they are value for money, and their effectiveness and impact. Now, just in case you have not heard this, let me repeat it, since you have been getting excited about other issues. Programmes and reform initiatives of government will be reviewed to establish whether they are value for money, and their effectiveness and actual impact.
These include Public Service remuneration trends; school education expenditure; costing and financing of the national health insurance; options for improvement in the human settlement development grant; introduction of the mortgage indemnity scheme; water sector expenditure and pricing, and the acid mine drainage problems; agriculture and rural development programmes; implications of the Defence Review; and budgeting and financing of major infrastructure capital projects.
Hon Minister, you have five minutes left.
I have the clock in front of me, Chairperson. Thank you.
Our support for provincial budgeting and expenditure control has already brought excellent results in both better budgeting and more effective financial management, and it will continue this year.
I am pleased to be able to report on the outcome of our interventions in Limpopo since December 2011. The provincial finances are under control and the cash position has improved, with a positive year-end balance due to cash management controls that have been put in place since the start of the intervention. Whilst the cash position has improved and payment and procurement systems in departments have stabilised, further work still needs to be done.
Allow me to comment also on the next exciting issue, namely the steps Cabinet has agreed to in respect of the financing of the Gauteng Freeway Improvement Project. Major improvements have been effected to Gauteng freeways under this programme, which have brought about substantial improvement in the flow of traffic and benefits to road users. This investment has been made, not out of general revenue, but through debt which has to be repaid. Cabinet has reiterated its commitment to the e-toll system as an efficient and appropriate mechanism of partial cost recovery from road users. However, we are also mindful that more rapid progress needs to be made in improving complementary and alternative roads in the Gauteng region and elsewhere in extending and improving public transport services. Cabinet has also decided that mechanisms need to be found to support the SA National Roads Agency, Sanral, during this period when no revenue is being collected, and a revenue loss of R200 million a month is being incurred.
Our financial sector proved exceptionally resilient during the global financial crisis. However, we should not be complacent about the impact of the crisis. As you know, I announced reforms in February to further strengthen our regulatory system, and to announce our intention to shift towards a twin peaks approach. Good progress has been made between the Reserve Bank, the Financial Services Board and the oversight committee that has been established with the Governor and me at the head of that process.
Similarly, earlier this week we released an overview paper entitled, "Strengthening Retirement Savings: An Overview of Proposals Announced in the 2012 Budget". This paper will be followed by a series of detailed discussion or policy proposal papers and we look forward to discussions with the unions, industry, employers, you and the general public on how South Africans can save more.
There is work that has been done and will soon be completed in laying the foundation for the creation of a chief procurement officer and supporting capacity, with overall responsibility for monitoring procurement across government, and we will soon have in place the necessary infrastructure to support that.
The Development Bank of Southern Africa, DBSA, has outlined an extended development drive with a sharp focus on promoting the implementation of national and regional infrastructure investment plans. The bank has established firm partnerships with several national departments and continues to strengthen its role in provincial and municipal infrastructure development. The DBSA plans to expand its role in the rest of Africa and deepen its partnership with other institutions involved in its mission to enhance and deepen development on the African continent.
The Land and Agricultural Development Bank of South Africa has done phenomenal work in recovering from its past status. Please read my speech to see the details of what has been done. We are happy to see that the Land Bank is helping to grow the economy, while creating work opportunities in agriculture and contributing to food security. As the bank reaches another big milestone in 2012 - turning 100 years old - it has outlined a five-year plan, captured in its 2016 corporate landscape.
I repeat: These are dangerous times! We have formidable challenges ahead arising from both the dismal situation in Europe and the structure of our own economy and society. This is not the time for expedient politics and short-sighted actions. It is not the time for opportunism, and emotive and ill-considered utterances. Let us become problem solvers, not problem creators. If we really want to serve our people, if we are really serious about employment creation and poverty eradication, then we must all demonstrate a new kind of leadership that creates hope and confidence in and about our country. Even with our differences we must display the generosity and magnanimity that will genuinely promote consensus-building and the national interest. Thank you, Chairperson. [Applause.]
Hon Minister, I am glad that you are conscious of the clock next to you. Most of your colleagues are not. [Laughter.] Hence, we resort to these reminders.
Chairperson, unlike the Minister, I'll put the clock in my pocket so as to rely on you to remind me!
Hon members, Minister, Deputy Minister, Director-General Lungiso Fuzile - and I've noted the presence of the Commissioner of the SA Revenue Service, Sars, Mr Magashule - we approach the discussions and the debate on Vote 10 today guided by the need to create decent employment, eradicate poverty and deal decisively with the extreme inequalities in our society.
An important part of our vision is to build an economy in which the state, the private sector, and co-operative and other forms of social ownership complement one another in an integrated way to eliminate poverty and foster economic growth.
Hon Minister, as I said to the Deputy Minister this morning, part of the challenges we have with Vote 10 is that all that is supposed to have been said has already been said. What remains is the implementation.
Now, this Budget is about ensuring that the SA Revenue Service continues to meet its targets. I must congratulate Commissioner Magashule and his team in Sars for making it possible for us as a country to continue to meet our obligations, and for at times even exceeding the targets they have set for themselves under very difficult circumstances.
Hon Minister, I cannot agree more that this Budget is not only about the administrative capacity but also about ensuring that the Department of Public Service and Administration, DPSA, plays an important role in regard to infrastructure development in this country.
The Land Bank continues to support the agricultural sector, as it has been proved and demonstrated by recent statistics that it is in this sector where more jobs can be created in the future.
This Budget is also about ensuring that the mandate of the SA Reserve Bank is adhered to, beyond just inflation targeting, as you have already instructed in your early days in office. It is also about retirement reforms and making sure that the savings of our old-age pensioners and those who work realise maximum returns so that their future is secured.
The budget is about ensuring that the Financial Services Board, together with the Reserve Bank in terms of the twin peaks strategy, will, in the face of predacious market conduct, form the basis of what will make our economic resilience more important in the global economy. But, most importantly in the global arena, the budget is about the integration of South African interests in the national, continental and global interests, irrespective of whose interests, as South Africans, are going to be served in terms of ideological positioning.
Much has been said about the global economy. It is common knowledge that in 2008-09 we spoke about the subprime lending in the US that led to the financial crisis and the banking instability. In 2010-11 we evolved and understood the difficulties to be different, in that we now speak about sovereign debt.
But, the key question we have to ask ourselves is: Are we getting the right answers to these challenges, in the West, in Europe, and on this continent? I think much has been said, done and written, but we still have more questions than answers about the world economy. As South Africans, what we have said remains constant and it is something that we can rely on, because we have demonstrated that despite these challenges in the global economy we can hold our own without fear of contradicting ourselves, because we know what we are doing.
The subprime lending and the sovereign debt, at least in the past two to three years, have led to no less than 12 regime changes in the world. Now the question is: Are the austerity measures working? Let us look at Europe today, at what is commonly known as the Eurozone. In the West we saw the lowering of taxes and stimulus packages being put forward, which led, in our case as developing nations, to capital inflows, which, to a certain extent, could also lead, from time to time, to the volatility of our own currency.
But, as we speak right now, the unemployment level is a national and international phenomenon that leads to xenophobic tendencies throughout the world because it is natural that when the resources are scarce, people tend to defend whatever they have. Therefore, the issue of unemployment is not a problem for South Africa only.
The manufacturing sector continues to pose a serious threat to the stability and fiscus of many nations. The key question again is: As South Africans, what aspect of our history do we wish to be celebrated, irrespective of where we stand ideologically?
Let me talk about the issue of unemployment and the youth programme. The ANC has, as always, provided a policy option for how we should handle this particular matter. Therefore, as we have done from the inception of the ANC in 1912 - today, 100 years later - we always say we want to create a nonracial, nonsexist, prosperous and democratic South Africa in which all South Africans will have the right to work, to have shelter and to have their languages respected. As the ones who have provided the solution and a policy option in dealing with youth unemployment, it cannot happen, like it is at the moment, that as we celebrate and commemorate Human Rights Day, some amongst us will opportunistically hijack the solution proposed by the ANC and its government.
With this proposal before us, as we have done in the past, we are where we are - you are sitting on our left and on my right - precisely because of the negotiations that took place at Codesa. In 2008-09 when we first experienced the financial crisis, it was Nedlac that came with a comprehensive framework response. Let us not break what works. We must allow those who are supposed to buy into this project to buy in so that the implementation becomes much easier. I speak of the private sector, the trade union movement, civil society and government in general at the level of Nedlac.
It is very important that we also understand the role of the trade union movement. The first priority of the trade union movement is to defend the rights of those who are employed. However, we live in different conditions and circumstances and we have to balance the rights of the employed and the expectations of those who are seeking jobs. I think this is where the tailoring is, actually, in regard to Nedlac. [Applause.]
We must not use an emotive issue such as this one to land our people in a very difficult situation where you may actually even exacerbate racial tensions in South Africa. This is something that we have to walk away from and it is critical to do so. [Interjections.]
Order, hon members!
Let me also speak about the Infrastructure Building Programme. Hon Minister, we agree with and support the initiatives and strategies that you have put in place in regard to how to resolve the current impasse in the Gauteng Freeway Improvement Project. That is precisely because we understand that we still have R845 billion's worth of infrastructure building programmes that need to be handled with care. Therefore, the rating of our own state-owned entities, SOEs, and development finance institutions, DFIs, remains critical because it is going to be behind the balance sheets of these institutions. This will enable us to meet the infrastructure needs and provide what the country is yearning for. For us to achieve 6% or 7% growth in our economy, our energy programmes and infrastructure should be up to scratch. How we respond to the challenges of a R20 billion project vis--vis R845 billion is still in the pipeline.
It is very important that we manage ourselves as Parliament because we have the responsibility to let the truth come out and to let the public know. We must do it in a responsible way.
The last point I would like to raise is on ... [Interjections.] Chair, can I be protected? [Laughter.] This Budget Vote is also about fiscal sustainability, and making sure that both provincial and local governments, as well as SOEs, do not contribute to the fiscal destabilisation of our country. Therefore, the intervention by National Treasury in provinces where there are problems is not about anything other than strengthening the fiscus of those governments and ensuring that we as a country do not land in a similar situation to Greece.
There are differences today in Europe. France has just had its elections and Germany has its Chancellor, Angela Merkel. What Holland and Merkel are saying is something that we have to worry about, because if there are disagreements at that level, the sustainability of the Eurozone will continue to pose a very serious and dangerous threat to us as a country. Thank you, hon Chairperson. [Applause.]
Hon Chairperson, unlike the dedicated officials of the department who are here today, I'm going to be a clock-watcher for this speech.
Chair, I appreciate the Minister's focus on the responsibilities of business, but I would like to remind him that businesses in South Africa are playing on a field where government makes most of the rules. If we want our economy to grow, I would suggest we need to announce a plan to free up those businesses to hire more workers and scale up their output.
The finance ministers in Brazil and India, Chair, framed their entire budgets for this year as ambitious plans to drive growth. It's unfortunate that growth was relegated to one of the bullets on the first page of our Budget. I think what South Africa is looking for is an ambitious comprehensive plan in the Budget to achieve our growth objectives.
Nevertheless, as far as global rankings go, the members of this House will have become used to our country's appearing at the top of the tables in areas like financial regulation, national accounts and equity markets. In the 2011 World Economic Forum global competitiveness rankings, we ranked number one for the regulation of security exchanges and strength of auditing and reporting standards. Our budget process won first place in the 2010 Open Budget Survey.
Members will also have become used to South Africa's appearing towards the bottom of rankings where education, labour market flexibility, productivity and crime are concerned. In these World Economic Forum, WEF, competitiveness rankings, of 142 countries we ranked fourth last in the quality of maths and science education, and flexibility of wage determination, and third last in hiring and firing practices. In the World Bank's businesses rankings we came 144th out of 183 countries for trading across borders. Chairperson, it's not hard to see why we ranked so low on these last sets of measures. The ANC-led government has failed to hold teachers accountable, reform the labour market and engage properly with Africa.
Perhaps the more interesting question is why a medium-sized, middle-income country on the bottom tip of the least developed continent ranked so high on the first set? The answer is, I think, primarily because National Treasury has done a decade and a half of hard work in drawing down the apartheid era debts and introducing a world-class national budgeting system and strong regulatory structures for our economy. That is how, on Monday this week, the rating agency Moody's could commend National Treasury for a macroeconomic policy framework that has been stable and coherent for more than a decade.
On the flip side, where South Africa is failing it is often because key reforms, advocated or supported by National Treasury, have had their implementation blocked. Members will recall the piece of the Finance Minister, published in March this year, where he argued that labour market reforms can directly improve employment by providing flexibility and the right incentives to work, hire workers, develop skills and become more productive.
This is not a radical proposal - it's simply joining the dots! Our country regularly ranks amongst the worst in the world for labour market flexibility and hiring and firing practices, but for as long as anyone can remember, we've had the highest unemployment rate out of 58 countries tracked weekly by The Economist. Chairperson Mufamadi, unemployment is a global phenomenon, but we are still number one on that list. The link between those two facts is clear and indisputable.
Members will also recall, unfortunately, the response from Cosatu General Secretary Zwelinzima Vavi to the Finance Minister's proposals. He said that he hoped President Zuma would give the Minister a call to tell him to stop sending out these messages about labour flexibility." So much for that idea.
Chairperson, the blocking of critical reforms by Cosatu and the elements of the ANC aligned with them is not a new thing. Our populist friends love to talk about how the Growth, Employment and Redistribution, Gear, strategy of 1996 failed. The truth is that those reforms proposed in the Gear strategy that were implemented were a resounding success. Budget reform, consistent monetary policy and fiscal deficit reduction, amongst others, helped us get to the top world rankings on all of those key financial measures.
We often forget, however, that Gear also proposed flexibility in collective bargaining, the restructuring of state assets, a massive infrastructure programme and a relaxation of exchange controls. These reforms were all blocked, either by Cosatu or other leftist elements or by the widespread incapacity of the state.
While the former Finance Minister Trevor Manuel was no stranger to key policies being blocked, this Finance Minister, Pravin Gordhan, is in a situation that is significantly worse. Where Minister Manuel had the odd policy impeded, he got his way nine times out of ten. Minister Gordhan finds almost all of his new proposals politically railroaded by a rampant Cosatu.
The union federation's influence began to rise in 2009 when President Zuma carved up critical parts of the responsibility for economic policy and government and handed them over to a key Cosatu leader, Ebrahim Patel, in exchange for their support at Polokwane. It is still on the rise today because the President finds himself having to trade political concessions to his unelected alliance partners for their support at Mangaung. Alarmingly, it now appears that Cosatu's rising bargaining power right at the top of government has begun to erode the hard work done by Treasury to establish that stable and coherent macroeconomic framework.
The union federation negotiated double-digit increases ... [Interjections.]
Order! Order, hon members!
... at twice the rates of inflation in state wage bill in 2008, 2009 and 2010. Chairperson, this put serious pressure on the fiscus even as South Africa entered a bruising recession. This was almost certainly a contributing factor to last year's change in our country's sovereign risk rating outlook from stable to negative by Moody's and Fitch.
Order, please! Order!
Earlier this year, Standard and Poor's followed suit.
Commenting on the budget in February, Moody's noted that a rise of 110% of R630 billion in direct government debt since the end of December 2007 means the debt, serviced at 12% per annum, is the fastest growing line item in the budget, which at the margin is squeezing out the remaining resources for development spending.
To mitigate this trend, the rating agencies are looking for a consolidation in South Africa's debt and contingent liabilities. This will prevent a downgrade that will have a significant negative effect on our country and all South Africans in respect of increased borrowing costs.
Chairperson, the National Treasury budget before us today unfortunately does not provide much reassurance in this regard. On the table of performance indicators on p 5 we see that the debt service costs as a percentage of gross domestic product, GDP, rose from 2,6% last year to 2,7% this year, and will increase to 2,9% in 2013 and 2014. The fact that they do not decline in the medium term is particularly alarming when we listen to the Minister's warning on p 9 of his Budget Speech that the public sector borrowing requirement will rise rapidly after 2014, as the infrastructure programme of government accelerates. Mr Chairperson, I would like to ask the Minister: In what year does he forecast government debt will peak, because it's not obvious in the numbers before us today?
Of course, serious concerns about the sustainability of our fiscal stance are a relatively recent phenomenon in South Africa. They point to warning signs rather than all-out political travesties. If we are looking for political travesties, we need to dig deeper into the analysis of the rating agencies, which identifies increasing political risk linked to a competing ideological interest routine within the governing alliance.
These interests, which shift, depending on which candidates happen to be seeking high office, create a policy logjam at the highest level of government. They lead to the publication of conflicting economic policy documents by different factions in Cabinet and they compromise government's ability to tackle slow growth and our unemployment crisis.
Most disturbing are two recent examples where Treasury's efforts to tackle problems at the heart of our economy have been blocked by Cosatu's political manoeuvring. The first section of the saga is the youth wage subsidy. In 2011 the President declared that the year would be the year of the job. So National Treasury duly tabled a R5 billion youth wage subsidy in that year's budget, only to have it bogged down in Nedlac, where Cosatu refuses to debate it. Chairperson Mufamadi, you talked about balance, but I have it on reliable authority that Cosatu is refusing even to discuss the policy; that's not balance, sir!
This means that for the first time in a democratic South Africa a policy has been announced by the President, budgeted for in the national budget, given an implementation date, and then blocked by a trade union federation on narrow self-interest grounds. The policy remains at Nedlac two years later, even as up to 60% of young South Africans are unemployed or have given up looking for work.
Research shows, as the Minister knows, because it's his research, that if they are simply given a chance to get work experience, they are three times more likely to find a job. Hence the youth wage subsidy, a policy that National Treasury estimated would benefit over 400 000 young people and create 133 000 sustainable new jobs in three years. Importantly, Chairperson, it would create these jobs without altering labour laws or conditions of employment, meaning that the substitution of all the workers by new, younger workers would be minimised. Minister, your own document shows how the design of the policy would mitigate significant displacement. So, I don't feel there are genuine concerns there.
It's a national tragedy, however, that Cosatu's cosy political arrangement with the ANC has torpedoed the one plan to tackle youth unemployment from National Treasury that has brought support from the entire opposition, economists across the ideological spectrum and South Africa's second largest trade union federation, the Federation of Unions of South Africa, Fedusa.
So, it's back to the drawing board for the National Treasury, who last week told the Standing Committee on Finance that they would complete the redesign of the policy by the end of June and hand it over to Ebrahim Patel to be implemented as part of the broader youth employment strategy. So, we will have a Minister with almost no track record of delivering, whose last job was a senior position in Cosatu, being charged with implementing a policy flatly opposed by Cosatu.
A reply to a parliamentary question by the President this week indicates that part of the redesign will mean that young job seekers will require union or bargaining council approval for participation in the scheme. What's more, firms may be limited to creating one new job for every five people they employ. Minister, if this goes ahead, it will water the policy down to such an extent that it will create almost no new jobs.
The second example of Cosatu's flexing its muscle at Treasury's expense is with the recent e-tolling debacle. Regardless of how you feel about the e- tolling model, you have to see the absurdity in the National Treasury's arguing in court that a halt in e-tolling would have a devastating effect on our fiscus, even as the ruling party is striking a backroom deal with Cosatu to halt the project - a significant betrayal.
Unfortunately this leaves us with numerous unanswered questions about the R16,5 billion of the SA National Roads Agency's debt that is unguaranteed, including R8 billion of government pensioners' money. It also raises concerns about the creditworthiness of state-owned enterprises and whether all contingent liability should be added to government's debt. Fundamentally, it raises questions about how Treasury will pay for an expanded infrastructure programme. It also represents another example of how Treasury is increasingly being undermined by Cosatu and finds itself unable to generate the political capital required to implement is policies and plans.
Chairperson, the more the National Treasury's efforts in these key areas are undermined by Cosatu's political manoeuvring, the more this government's efforts to drive economic growth and tackle unemployment will be compromised. It is time that the President gives National Treasury the support it needs in the face of the unelected Cosatu's blatant self- interest. I thank you. [Applause.]
Hon Harris, you are indeed a clock- watcher. That was on the dot.
Chairperson, I will also try to watch the clock! I must say that we have listened to some good speeches this morning. There is a liveliness in this Treasury debate, which should be the most important debate on the calendar. However, for some or other reason people are not so interested in it.
There was a general consensus around the time of the Budget that South Africa's headline fiscal ratios appeared to be healthy, but there were vulnerabilities. There is doubt as to whether we will be able to keep recurrent state expenditure under control and the developments in Europe are not assisting us. A higher oil price and a volatile rand could easily push the percentage of gross debt to gross domestic product, GDP, to a danger limit of 50%. At these levels, Business SA is concerned that a debt trap becomes a significant risk and development goals could be in jeopardy.
Against this background, the former World Bank Chief Economist, Joseph Stiglitz, remarked that South Africa would have to intervene to manage its exchange rate if it were to avoid the risk inherent in the unstable world economy. This does not make sense. Even hon Rob Davies is being reported as being on this bandwagon. He is calling for an intervention to manipulate the rand. Even his deputy director-general is comparing us to China and calling for an intervention. The most dangerous thing that can hit this economy now is a volatile currency, which would result in even higher fuel and food prices. This is bad news for the poor.
Europe, our major trading partner, is in absolute turmoil and it is just getting worse by the hour. Good trade prospects, even with the weaker rand, are slim with our major trading partner, Europe. No trade, no jobs. To think that we have the capacity to start a currency war is an absolute pipe dream. Hon Davies and company are irresponsible and one-track minded.
Government must make up its mind and decide on what it wants around this issue. Hon Minister, you are on record as saying that we cannot afford to enter a currency war. While Brazil and China will use heavy artillery and bazookas in this war, we can hardly fire a gun. Can the Minister confirm that the Treasury, and I quote him, "wants a stable and competitive exchange rate, (and) it has said it won't seek to influence the level at which the currency trades"?
Gill Marcus was correct when she warned that tightened currency and trade controls could lead only to the intensification of trade and currency wars. She wants to see a reduction in exchange rate volatility and the rand floating freely. She is right and it is time to back her up.
We all know that we are entering a very unstable time in Europe and to some extent in the United States of America in the run-up to elections. The capital markets will be exposed. How can Stiglitz compare us with China and advise us to print rands? I quote him:
One thing that South Africa can produce a lot of cheaply is rand. If people want to buy rand, then selling rands and buying dollars will have the effect of depreciating the currency. Printing presses don't cost that much.
I am astonished and I would like to hear the Minister's views on this.
The Financial and Fiscal Commission has not fulfilled its task. If you compare it to other Chapter 9 institutions, you find you can hardly take it seriously anymore. Do we really need the Financial and Fiscal Commission, FFC, to carry on in its current form?
In 2010, Parliament requested the FFC to investigate the merits of fiscal rules and, in a brief report back to us, they expressed their reservations about the desirability of fiscal rules. They put forward a very interesting proposal that the establishment of a South African fiscal policy could be considered.
In his economic commentary this week, Jac Laubscher was asking whether we needed a fiscal policy council. Three leading rating agencies, and Jac Laubscher himself, have expressed the view that our credibility around fiscal policy has been impaired. Jac Laubscher said:
Recent events have shown that concern about SA public finances is not without grounds. Three matters stand out: the e-tolling saga; confirmation that the current wage negotiations in the public sector implies exceeding the budget; and government's plans to go on an infrastructure drive after the fiscal space has been used up by an increase in current expenditure.
Why is a set of fiscal rules combined with the creation of a statutory fiscal body that plays an independent evaluative and directional role in fiscal policy so attractive? The reason is that such rules can play a valuable role during times of upward pressure on government spending. Maybe it is time we ask the question as to whether the lack of fiscal rules allowed the state wage bill to spiral out of control.
Maybe it is time for Treasury to think afresh about whether a fiscal council comprising independent experts working in conjunction with Treasury is not the way forward. Is it not possible to incorporate this into the fiscal guidelines to be announced later this year? This is not a foreign idea and it already exists in some or other format in the rest of the world. Maybe we should trade the FFC in for a new fiscal council.
In conclusion, I cannot sit down without saying something about the SA National Roads Agency Limited, Sanral, debacle. On 7 May the National Treasury issued a statement announcing to the world that they would not discuss Sanral with our committee on 8 May. They said it would be neither possible nor prudent for the National Treasury to speak to the committee. For the Treasury to issue that statement was wrong and not well thought out. That morning all went wrong. Eventually they did reply to the questions. However, the director-general gave us far more information than we thought was prudent for the situation.
The Treasury came to this meeting unprepared, deepened the crisis, and added more insecurities. They missed your leadership and it was a pity that you were overseas. The National Treasury missed a golden opportunity to come to the committee well prepared, calm the market down and give the reassurance that the Treasury would protect the integrity of our bonds when it was necessary to do so. I thank you. [Applause.]
Chairperson, the clock has already started here. I hope you will give me some injury time!
Hon Minister and Deputy Minister, I think the hon chairperson of this portfolio committee and members will know that I did not personally attend any of the meetings where the strategic plan was presented, but I understand that hon Oriani-Ambrosini did attend. He is speaking in the other debate in the Old Assembly Chamber. I also understand that he has sent an open letter - which I have with me - to the chairperson of the committee and I will not address that matter. I am sure the chairperson will respond at an appropriate time.
Having said that, let me say, in the words of the hon Minister, that we are living in "dangerous times" and we need a new kind of leadership. The kind of leadership that we need is the kind of leadership that was shown by Dr Franz Tomasek, Mr Themba Maphalala, the regional manager of KwaZulu-Natal SA Revenue Service, Sars, Mr Pragasen Govender and Mr Nivesh Laljith from Sars. The hon chairperson of the committee has spoken about the importance of Sars.
Sars is the institute that collects most of the income that we spend. No money, no spending! I would also like to compliment Sars on the way they do their work, even though I read from the report that the number of staff will be reduced by 100 or 200 in the coming year. I think it is a good sign that, even with less staff, we can still continue with the kind of work that we are doing.
Hon Minister, the following incident concerns some pensioners in the Chatsworth area who contacted us. They received letters stating that they were going to be penalised by Sars. We know that pensioners are encouraged to open bank accounts to put their pensions in. When they open their bank accounts, they derive some interest. Because there is a double income, they are required to complete the tax form. We have heard that there were gentlemen who went there and assisted them. They have assured us that the department is now withdrawing the need for pensioners to complete those forms. This process puts a lot of stress and trauma on them and I trust that the Minister will confirm that that is going to be the case as we move forward.
Chairperson, we certainly do not need the kind of leadership that a report of the Public Service Commission, presented at the Standing Committee on Appropriations, showed. One of the objectives of Treasury is to improve value derived from public funds spent and we agree with that. Inasmuch as the taxpayers pay through direct and indirect taxes, they will be assured that there is value for money in regard to expenditure. This report suggests that many departments have spent almost 100% of their budgets at the end of the year. In regard to performance, however, which is rated against their own predetermined objectives, they fall way behind. Just by way of example, the Department of Labour spent 99,5% of its budget but its performance was 43,4%. Agriculture spent 97,4% of its budget, but its performance was 35%. This leaves a lot to be desired and, in fact, emphasises the challenge that National Treasury has. One of the objectives of the National Treasury is to ensure that it promotes an efficient, effective and development-oriented public service. We need an assurance from the Public Service and its officials that they are going to spend the taxpayer's money wisely.
Having said that, let say that in November last year I sent a copy of a letter to the Minister which I had addressed to the former Minister of Co- operative Governance and Traditional Affairs, Cogta, with regard to conditional grants. This referred to ...
Hon member, you have one minute left.
Chairperson, I haven't received any response to this letter as yet. There are allegations that when these conditional grants of R119 million were received by Ndoni, a road was constructed. The cost could have been R4 million or R5 million, but they spent something like R40 million on that road. These are areas where we need forensic investigation to ensure that there is value for money in that regard.
Lastly, in the 20 seconds that I have left, let me say that we in the IFP support the user-pay principle. However, what we need to know and be sure about is this. If an item costs R5 and the taxpayer needs to pay R5, let's not ask the taxpayer for R10 because the collection of R5 is going to cost an additional R5. This is what is happening!
As we move forward with the infrastructure grant, we need to be assured that ab initio there is transparency in all these projects. At the end of the day the user may have to pay increased costs in electricity or whatever, but we, together with Treasury, have to make sure that from the beginning of this project there is absolute transparency about this. We will support the Budget Vote. Thank you. [Applause.]
Hon member, I didn't only give you injury time; I also gave you first aid time so somebody can bandage you! [Laughter.] Hon members, before I call on the next speaker, I am going to request that speakers use this podium here. It seems there are problems with the interpretation out there. This one is better.
Again, before I call on the Deputy Minister of Finance, let me say there is information that is going to be distributed, and the Deputy Minister is going to refer to that information. There is also a device that the Deputy Minister wants to display, which goes along with his information. Permission has been granted for that distribution and also the use or display of that device. I now call upon the hon Deputy Minister of Finance.
Chairperson, I am not too sure about the timing of making sure that all members speak from the podium. Thanks for agreeing to the request for the display of the two, and that is none of what the hon Harris thinks it should be.
Chairperson and hon members, the Ministry of Finance oversees a number of institutions that are affectionately referred to as the "finance family". These are the SA Revenue Service, Sars, the Public Investment Corporation, PIC, the Financial Intelligence Centre, FIC, the Financial Services Board, FSB, and the Government Pensions Administration Agency, GPAA. I mention these because they are the ones I am going to talk about.
These institutions play critical roles in our political economy. Sars makes it possible for government to fund its programmes; the FIC ensures the integrity of the country's financial system; the FSB regulates all nonbanking financial institutions; and the Government Pensions Administration Agency, which is the youngest member of the finance family, ensures that the men and women who dedicate their lives to serving their fellow citizens are well looked after, particularly in times of need, at retirement and when they pass on.
The Public Investment Corporation, on the other hand, has up to now ensured that the Government Employees Pension Fund, GEPF, has had no need to call upon the state to dip into its pockets to meet its obligations as the guarantor of the retirement benefits of the GEPF members. This means that GEPF has sufficient assets to cover its actuarial liabilities, thanks to the performance of the Public Investment Corporation, which manages GEPF assets.
The sovereign debt crisis which continues to play out in Europe is a stark reminder of the importance of fiscal stability and sustainability. Our prudent fiscal policies over the past decade have been supported by an ever- growing tax base and culture of compliance. As a result we are well-placed to stimulate and further encourage economic growth and recovery through our counter-cyclical investment in infrastructure over the coming Medium-Term Expenditure Framework, MTEF, period.
In the past financial year the many millions of taxpayers in our country have again provided us with the means to implement this ambitious investment programme, which, in a virtuous cycle, will stimulate growth, job creation and higher future revenue. We owe them our deep gratitude and the commitment to spend this money wisely, honestly and efficiently. I agree with you, Mr Singh.
By the end of March this year, the SA Revenue Service had collected R742,7 billion in tax revenues, which was R4 billion more than the revised projection made during the Budget in February and 10% higher than the previous year's collection. [Applause.] Hon members, it is worth reiterating that almost every single South African makes some contribution to this revenue. They make this through tax on income and earnings; VAT on purchases of goods and services; directly and indirectly through the fuel levy and the electricity levy; and a range of other tax instruments designed to share our obligations fairly, sustainably and progressively. We owe the socioeconomic gains that we as a nation have made since the birth of our democracy 18 years ago to these patriotic South Africans. Total tax revenue has increased from R114 billion at the advent of our democracy in 1994 to the more than R742,7 billion, which I spoke of, this year - a more than fivefold increase.
This is an achievement in which we can all take pride. But it is also an achievement which must be constantly protected and guarded jealously. Sars will do more, not only to protect the tax base, but to expand it. Tax compliance is strongly influenced by the perceived value for money which our citizens receive for their hard-earned contributions.
We must be honest, ladies and gentlemen, that fraud and corruption undermine our tax base. Corruption, wasteful expenditure and inefficient use of resources erode our hard-won culture of compliance and the social compact between the state and the citizens. Each one of us who rely on taxpayers' money - from public servants to officials, politicians, and employees of state-owned enterprises - should ask before spending a cent, as you said, Mr Singh: Is this the best and most efficient use of taxpayers' money? If it were my money, would I pay this price? If it were my money, would I buy these particular goods or services?
Therefore, it is the responsibility of every public representative to protect the integrity of public institutions like Sars. If we want to understand the consequences of what happens if we don't, we should look no further than Greece!
We as public representatives and servants must also work harder to sustain public trust in the state. We must avoid words and deeds that erode that trust. We must ensure that we spend public money wisely. We must cut out unnecessary and expensive travel and hotel functions, even for our Budget Votes. That is why there is no cocktail party after this debate, ladies and gentlemen. The willingness of taxpayers to part with portions of their hard-earned money every year ...
Order, hon members!
... depends on a number of factors. One of these is the perceived equity of the tax system and the knowledge that everyone is paying their fair share.
Sars recently released its inaugural Compliance Programme which will focus on seven key areas of higher risk and generally lower compliance - we dealt with these with the committee last week. The first is the construction industry which has been reported as the least compliant industry, and yet it benefits a great deal from state-state business. Then there are transfer pricing by large businesses; the abuse of trusts by wealthy individuals; illicit goods, particularly cigarettes; undervaluation of imports in the clothing and textile industry - the commissioner did share some examples with the committee when we were with the committee last week; and tax practitioners and intermediaries.
Sars, in collaboration with other government departments, will also focus on the registration for tax purposes of foreign-owned small and micro businesses. This is part of the effort to grow our tax base and ensure fairness in the tax system. After piloting the system, Sars, the Department of Home Affairs, the SA Police Service and the Department of Trade and Industry are rolling out the registration system nationally.
Chair, as you have allowed us to display the machinery, let me say we have brought to this House a mobile unit which uses a specially designed registration kit to capture the relevant details of the business. Can we perhaps display that if members have it? There it is, ladies and gentlemen. This includes personal and biometric details of the owner, such as fingerprints, if necessary, along with GPS coordinates of the location of the business. The mobile unit has been warmly welcomed by all businesses as one of those that will enable people to comply in a user-friendly manner.
May I also remind Members of Parliament that within the precincts of Parliament we have the efficient and professional tax service of the Sars parliamentary unit? I can assure you that these Sars officials will give you the best advice and assistance to complete your annual tax returns. I am told that this is going to be enhanced and automated as we go forward. We will even provide more assistance. This service is available to all Members of Parliament free of charge. Hon members should not go around paying for services that are going to charge them money but still not help them to be compliant. [Applause.]
A second factor in protecting the culture of compliance and the integrity of Sars is administering and enforcing tax and customs laws fairly and without favour. We cannot allow the public to lose out in this area.
I also mentioned the Government Pensions Administration Agency which came before Parliament today. The mandate of GPAA is to make sure that the service we give assists in the administration of pensions for both active and retired members. Working with Sars, GPAA has also automated its service and gives service that we will all be proud of.
I have also mentioned the Public Investment Corporation. Not only did PIC celebrate its centenary last year, but it also celebrated the increase in assets under management to more than R1 trillion. The audited figure, as at 31 March 2012, was R1,17 trillion. But it is not the zeros that matter; it is rather what the PIC does with the money entrusted to it. With the backing of its major client, the GEPF, the PIC is a prominent voice in improving corporate governance practices in its investee companies.
Members are also familiar with the Financial Intelligence Centre, FIC. Members can take it from the speech.
I'm proud to stand here and present the Budget Vote of the National Treasury and its entire family. Thank you very much, Chairperson and hon members. [Applause.]
Hon Chair, hon Minister and hon Deputy Minister ... [Interjections.]
Ngingakaqali ukukhuluma ngihlale phansi? [Do you want me to sit down before I even start talking?]
The finance family, led by hon Fuzile, and the SA Revenue Service, Sars, led by hon Oupa and the deputy commissioner, good morning. The ANC prides itself on deploying the two comrades, the hon Minister and the hon Deputy Minister, here. The reason for my saying this is the performance and the turnaround strategy that we have seen in this department. A few minutes ago, we heard what the Deputy Minister said about the entities that are being monitored and evaluated by this department. Therefore, we in the ANC say that, indeed, the two comrades are equal to the job. [Applause.] When the world was crying about the inflows and the outflows, you came and told us that we should relax because everything was being managed. Indeed, it was being managed. That is why we are where we are today.
This is in contrast to what we saw from the 1970s until the mighty ANC took over, when there were no regulations. However, the ANC put in the regulations that were intimately connected to the project of transforming the deep inequalities that were affecting our country.
We in the ANC want to ensure that our well-regulated Treasury contributes, not just to the financial market, but to the development objectives enshrined in our Freedom Charter, where our people will be endowed with economic freedom, and be freed from the shackles of poverty, inequality, lack of shelter, and various other development challenges that we witness.
It is the ANC's plan to strengthen economic transformation in South Africa so as to reverse the policies of separate development and their deplorable consequences. Today we must be proud that through our National Treasury we have been able to successfully institutionalise an efficient and sustainable public financial system and overall fiscal reform.
As part of the continued fight for fiscal reform and economic development, National Treasury accounts for every cent spent by providing regulations that enforce fiscal discipline in the budget expenditure of national, provincial, and local government. For example, if those on my left do not understand, departments are required to have monitoring and evaluation systems in place for each and every activity so as to align it with the budget.
It is so unfortunate that people don't sit in finance forums and don't even want to be educated about financial issues. The ANC appreciates the fact that it will be difficult to fund our infrastructure projects from the fiscus only. It is for this reason that we always hear the National Treasury calling for effective and efficient participation by the private sector so as to overcome the triple challenges that we are all aware of. Even though there are those in denial, poverty, inequality and unemployment are there. Believe it or not, they are there.
The financial commitment of R300 billion towards infrastructure by the ANC- led government will require stringent oversight from all of us, whether you are on the left or on the right, so as to ensure that the National Treasury achieves its own objectives. The massive infrastructure development drive will be overseen by the Presidential Infrastructure Co-ordinating Commission, PICC, and will be heavily controlled with the guidance of the Treasury.
In terms of the principle of transparency, His Excellency President Jacob Zuma outlined clearly the geographic and financial breakdown of this infrastructure project. It is a manifestation of the vision of the ANC that every cent counts. In its estimate of national expenditure, Treasury outlined exactly how funding of projects will be broken down for health, basic education infrastructure, information and communication technologies, and regional integration.
As parliamentarians we have been delegated the duty to ensure that any allocated funds are spent as planned. Overseeing the performance of our departments includes monitoring the procurement procedures. In this, we need to applaud our National Treasury for putting the Chief Procurement Officer in place. Hon Minister, we really thank you. We as the committee, when looking at the strategic plan given to us by your department, were pleased to hear that something was being done to ensure that fiscal discipline is being achieved.
Fiscal discipline should not be limited to departments, but should also be extended to the role of parliamentarians in monitoring government's activities. In the National Treasury division, during our strategic plan presentations, we heard that there were programmes that were in place, assisting in training the staff in the departments. As committee members, we are also requesting to be involved in or to be given an opportunity to attend meetings on those programmes. We strongly believe that the knowledge and skill in the committee will assist in maintaining effective and efficient oversight. All of this has been done by the department led through its policies by the ANC.
Therefore, I see no problem or why other people should cry when the department provides the strategic plan. You find people crying for the SA National Roads Agency, Sanral, when it is not the topic of the strategic planning. Strategic planning is strategic planning. When you are talking about the strategic planning, you have to talk about strategic planning. When you are talking about Sanral, you have to talk about Sanral. So, you can't push the department to talk about Sanral. Therefore, the director- general was right in giving us the strategic plans so that we would be able to monitor whether they are aligned to the activities. Let me take this opportunity to highlight a few concerns that we in the ANC have noted. We have noted that there are independent tax practitioners who operate within our communities or financial environment. We are proposing to the Minister of Finance that he should introduce measures to regulate the independent tax practitioners. Tax practitioners, like other financial intermediaries, are playing a crucial role in the transformation of our economy. They enable us to retrieve tax monies, which will go towards growing our economy and changing the livelihoods of our people.
The regulation is not a form of constraint on tax practitioners, but of liberating them from using gaps in our policies to engage in malpractice. Such regulations will enable Treasury to uphold its values of financial integrity and transparency. In addition, entities such as Sars, who share clients with practitioners, will have a framework through which to mediate any concerns against internal stakeholders such as tax practitioners. Through regulation, the perception of tax practitioners as an unscrupulous category of service will diminish trust and interest in the services of tax practitioners among the existing client base.
In conclusion, in light of the objectives and principles underpinning the work of National Treasury in this country, particularly those that seek to maintain integrity, accountability and transparency in our policies and budgets, we in the ANC support this Budget Vote. I thank you. [Applause.]
Chairperson and hon Minister, the ADCP firstly wishes to commend the Minister, National Treasury and Sars on their exceptional work in managing state finances, with the Budget being broadly well received earlier this year.
We fully support the main thrust of the Budget, which is galvanising society behind a national effort to place the country on an investment-led growth path. At the same time, the Minister remains committed to fiscus sustainability and controlling government debt levels.
Minister, one of the key challenges will be to control the growth in the public sector wage bill, and we wish you well in your efforts to achieve a social compact with stakeholders in this regard.
Sars is again to be commended on a remarkable performance, exceeding its adjusted target by some R4 billion. Well done, commissioner! What is of concern, however, is that the commissioner states that unfavourable public and media perception of poor state delivery and corruption poses the largest compliance risk to Sars. Minister, taxpayers are fed up with the abuse and waste of state funds, and this must be addressed. It is essential, therefore, to root out wasteful and irregular expenditure and corruption, considering that government expenditure will, for the first time, breach the R1 trillion mark - a massive pot to deal with and to take money from, steal and act corruptly with.
The Auditor-General has also indicated grave concerns that the lack of response from government departments to adverse audit findings is, as he said, very serious. Things are even more serious than we thought they were. The Public Protector has indicated that we are at the tipping point as far as corruption is concerned, and surely we should focus more time and attention on reducing fraud and corruption and on addressing the estimated R25 billion to R30 billion lost annually to procurement fraud and corruption?
Minister, systemic poverty cannot be eradicated without first eradicating systemic corruption. How can we then have reached this point where highly effective units, such as the Special Investigating Unit, SIU, have severe funding difficulties and have had to reduce staff, when they play such a crucial role in not only stopping fraud and corruption but also recovering misappropriated state funds? This must be addressed. Here, Minister, is a solution. You asked for solutions to problems - here is a solution: Capacitate our crime-fighting agencies. Let's give the SIU more capacity so that they can recover those billions and billions of rands that have been lost.
Minister, previous speakers have alluded to Sanral, and I am interested that we have a pamphlet that I am sure you are going to address. We note that government intends appealing the granting of the interdict. We believe that this will further delay getting to the heart of the matter, which is a review of the decision to toll the roads. At the same time, the Minister of Transport is requesting the contracts. He clearly did not have all the information. This is a great concern of ours. What was the reason for appealing the interim order? Shouldn't we get to the heart of the matter, which is the review application?
We see this Avis e-toll, and if the indication is that the Minister will raise the fact that it is Avis that is promoting this overseas, let us just mention to the Minister that there is broad public opposition to this. It is almost to the degree that while civil disobedience is not something we would promote, this is threatening with the Gauteng e-tolling. I would strongly suggest that government looks very carefully at this issue. Clearly, we need to be very aware and, Minister, the ACDP agrees with you that we need to try to find consensus, and that we need not to be opportunistic. This is a very serious issue.
Minister, we will rise to your challenge about new leadership. We would ask you and the ANC government to similarly rise to new leadership challenges. Will you be able to assert yourself over Cosatu, as other members have indicated? The ACDP will support this Budget Vote. I thank you. [Applause.]
Chairperson, hon Minister, Deputy Minister, hon Members of Parliament, distinguished guests, viewers at home, ... lo okhulumayo uMama uTshabalala inkosikazi kaNathi, Donga lwaMavuso, Mshengu, iNgonini yaseMavanini. [... I am Mrs Tshabalala, the wife of Nathi, Donga lwaMavuso, Mshengu, iNgonini yaseMavanini. [Clan names.]]
The ANC is extremely disturbed, in fact outraged, by the distasteful and indecent manner in which Brett Murray and the Goodman Gallery in Johannesburg are displaying the person of President Jacob Zuma. After all, the President is a husband. He is also a father. He carries the responsibility of being an exemplary role model.
Chairperson, we shoulder the responsibility of building a better South Africa. We have taken on the challenge that the legacy of apartheid has left us, a legacy of disempowerment, landlessness, inequality of opportunity and millions of unemployed young people who cannot see a realistic prospect for a decent life. Confronting these realities is not about blaming the past or denying our shortcomings. Our daily deeds, as ordinary South Africans, must produce an actual South African reality that will reinforce humanity's belief in justice, will strengthen its confidence in the nobility of the human soul and will sustain all hopes for a glorious life for all.
We recommit ourselves to accelerating the commitment made by the ANC in its election manifesto, with a view to ensuring access to quality health care and further ensuring the implementation of a comprehensive health care system.
We call on government to develop and adopt national social compacts that will bind all sectors of our society to the common agenda of developing and building the country.
Such compacts will commit all sectors to ensuring a sustainable wage bill and creating new jobs. They will further help to avoid an unavoidable wage bill for the same number of or fewer employees. This must include government, labour and business in investing in sectors that will create sustainable jobs and a balance between job creation and affordability limits, especially for small business. The widening income gap between the low-income categories and the highest paid executives is unsustainable and contributes to inequality. We want to have a country where millions more South Africans have decent employment opportunities, a country which has a modern infrastructure and vibrant economy and where the quality of life is high.
The Budget sets out a financial framework for implementing this vision, a framework that is sound and sustainable. It recognises that building South Africa is a multidecade project that must be invigorated for our capacity to grow and must include all South Africans in that growth.
The National Development Plan: Vision for 2030 and the New Growth Path identify high unemployment as a key challenge for the South African economy and outline proposals to accelerate growth and employment. Leveraging existing capacity in the public and private sector and cofinancing initiatives that have the potential to create sustainable employment are some of the ways the department has identified for stimulating employment creation. Particular emphasis will be placed on opportunities for young people to acquire skills and improve their long-term employment prospects.
The department will provide oversight over the administration of the Jobs Fund, which uses a competitive and transparent process to select projects that have demonstrable potential for self-sustaining job creation and promoting economic development. The Jobs Fund is expected to create 100 000 job opportunities by 2015. We have taken note that municipalities don't necessarily effectively take advantage of the fund; therefore, we would like to encourage municipalities to apply to and make use of the fund.
In mapping and charting the New Growth Path, which will lead to the rapid creation of jobs, ensure an equitable distribution of benefits, reduce inequality, ignite industrial development and transform rural and urban communities, the ANC-led government is mindful of the specific realities of our circumstances and the changing shape of the global economy. As Comrade Chris Hani so rightly said, and I quote:
We want to build a nation free from hunger, disease and poverty, free from ignorance, homelessness and humiliation, a country in which there is peace, security and jobs.
Chairperson, it is time to celebrate and embrace the potential of our unemployed youth, knowing that they are the future. As a result, investment in them is paramount. No one can dispute that youth unemployment in the country is a significant problem. To drive back unemployment, poverty and inequality in our country, we need to achieve higher levels of economic growth. To grow our economy, we need to produce the necessary skills. Further Education and Training colleges are important players in helping us obtain those skills. Access to higher education, Minister, as you said, for youth coming from indigent households is vital.
Discussion of the youth wage subsidy is now in the economic sector as part of a multipronged strategy to deal with youth unemployment. Stone throwing and marching will not create jobs. [Applause.] The youth wage subsidy ought to be debated on its merits and how it will affect the labour markets. Unemployment and the economy, much like other policy debates, have unfolded in this country. It has been politicised, polarised and locked into thoughtless ideological corners.
Bo mabina go tsholwa, re a tshola batho ba opela ... [They are quick to criticize after all that has been said and done ...]
... those who, out of nowhere, claim ownership of the ANC-initiated policy of the youth wage subsidy. The ANC has no intention of abandoning this policy. It is the ANC that singled out unemployment among young people as a focal challenge and devised interventions, and not only the youth subsidy! The ANC speaks about the National Youth Service, the EPWPs, and about all departments' implementing these for the youth and ensuring that we monitor and evaluate them, because those are the highest. In fact, young people are the majority.
We realise the fact that the ANC needs to implement it and all departments must ensure that young people are employed. If you listen to all the debates, you hear that there is an initiative to create jobs. Therefore, it cannot be correct, as we sit here, that the ANC wants to abandon the youth wage subsidy. We want to clarify that.
To alleviate youth unemployment over the short and long term, let us afford government and other social partners an opportunity to resolve the concerns raised by organised labour at Nedlac. We call on all to allow this process to come to its logical conclusion, and I encourage progress. Agitating young people will not resolve the issue. The point is to encourage and give them hope all the time and in everything that we do. Agitating them, taking them onto the streets and making them feel almost as if this government does not care is not fair to them. We must therefore not put the cart before the horse, correctly so. [Applause.]
Kha ri litshe u rema muri u tshe mu?uku, nahone u sa athu u anwa mitshelo. Kha ri tende zwe ra vhona nga n?ila yavhu?i. [Let's not stifle young people before they can grow and develop. Let's positively believe in what we see.]
A total of R1 billion has been granted by Finance Minister Pravin Gordhan for the Department of Health to carry out the ten National Health Insurance, NHI, pilot projects. The department aims to tackle four main health problems in the country, namely: improve the life expectancy of South Africans; reduce child and maternal mortality; tackle the scourge of HIV/Aids; and improve efficiency in the health care system.
Chairperson, the number of South Africans on antiretrovirals, ARVs, has increased, while the incidence of mother-to-child infections has decreased from 8% in 2008 to 3,5% in 2011, which has saved about 30 000 babies from contracting HIV and Aids.
The phasing in of the National Health Insurance policy requires substantial reforms to address imbalances across the public and private sector and expand health professional training. The financial and organisational implications of these reforms are being jointly addressed by the Department of Health and the Treasury.
Our driving force is the assertion that health is a public good. We will forever work under the guidance of the World Health Organisation, WHO, as declared at Alma-Ata in 1978, that health is not just the absence of disease, but it is the state of good physical, social and mental wellbeing. The attainment of the highest standard of health is a most important worldwide social goal whose realisation needs action from other sectors, economic and social, in addition to the health sector.
There are preconditions for the NHI in South Africa. The quality of health care in the public sector has to improve drastically. It has to be completely overhauled. The pricing in the private health sector has to be regulated to be in line with the Constitution of the country; hence a pricing commission will be established.
To ensure that our spending on schools, hospitals and roads is not crowded out by an ever-rising interest burden, government debt needs to be managed sustainably. We do not want an unmanageable increase in expenditure, nor do we want the severe austerity measures some Western countries have had to adopt.
Our Constitution sets out specific criteria for the sharing of nationally raised revenue between national departments, provinces and municipalities. Proposals for this division are set out in the Division of Revenue Bill.
In conclusion, the ANC-led government's intention is to support economic growth and development, good governance, social progress and rising living standards through the accountable, economical, efficient, equitable and sustainable management of public finances, and the maintenance of macroeconomic and financial sector stability. Effective financial regulation of the economy is also important.
Whoever we may be, whatever our immediate interests, however much baggage we carry from our past, however we have been caught by the fashion of cynicism and loss of faith in the capacity of the people, it would be an error to say that the ANC can be stopped. Nothing stopped it 100 years ago! What makes people think that they can stop it 100 years later, on its own birthday, when the ANC is the one party on the continent that is 100 years old? [Interjections.]
The victory of the ANC-led government is a victory for the people. In the fight for a better life for all, we can build better communities together. One of the greatest African leaders, Thomas Sankara, quoted Amilcar Cabral: "Tell no lies, claim no easy victories." That is what the ANC has always preached. It does not tell lies and it does not claim any easy victories. [Interjections.]
Nga Tshiven?a ri ri u nwa ma?i ndi u tama tshisima! ?ala dza vhathu. [There is a saying in Tshivenda that you choose to work together with those you love! I thank you.]
The ANC supports the Budget Vote. Thank you. [Applause.]
Chairperson, allow me to start off by making a positive remark regarding the Treasury department in saying I believe that departments are generally succeeding in providing a physical framework that supports our development goals.
There are, however, and this is perhaps the bad news, three issues of concern ... [Interjections.] ... that I want to highlight today. These relate to the lack of clarity around the state's debt obligations towards state-owned enterprises, the inefficiency of the Government Pension Administration Agency, GPAA, and then the proposed funding from the Development Bank of Southern Africa, DBSA, to underresourced municipalities, which I think is a very important issue.
With regard to Treasury and the SA National Roads Agency Limited, Sanral, Minister, you indicated that the monthly cost would be R200 million I think that is a huge amount, and I hope that we can find some solutions. People have spoken positively the ANC and about what it can achieve, but mostly in the national interest I think we need to find solutions to financial problems, and that could give us a platform for effective governance.
Cabinet's dealing with it is encouraging, Minister, but even the chairperson admitted to the question that remains: How do we solve this on par with the terms of Sanral? The uncertainty created by the poor management of the e-toll project in Gauteng has created legitimate concerns about bonds issued by the state-owned enterprises, SOEs.
Our first concern related to whether or not savings of the 1,8 million active members and 365 000 beneficiaries of the Government Employee Pension Fund, GEPF, had been put at risk. This is an important issue and I think people out there still do not know whether there is a risk for them in regard to the pension fund or not. With the fact that the GEPF holds 50% of Sanral's issued debt, we know of only R8 billion of GEPF's R15,7 billion in investments in Sanral that have been secured by government.
On Friday, 11 May I met with the chairperson of the board, Arthur Moloto - I do not know if he is present here today - to discuss the potential impact of the financial distress in Sanral on GEPF investments. I was assured that Sanral's debt does not threaten the pension money of government employees, mainly because of the fact that it is an enormous entity with huge assets and the R15 billion held in Sanral bonds makes up only 1,5% of the GEPF total assets.
The state has guaranteed 53,2% of the R15 billion investment in Sanral. It is the largest shareholder in the Johannesburg Stock Exchange, JSE. This is a significant achievement and it is thus not only exposed to SOEs but also, importantly, to section 10. This is what affects us as parliamentarians. The SA National Roads Agency Ltd and National Roads Act has determined in section 10 that only Parliament can enact legislation to liquidate Sanral. I hope I am correct in this, that somebody has made a study of it. I think we should seriously look into this at our next portfolio committee meeting. Or it could be placed under judicial administration.
This effectively implies that the state could be held responsible even for the nonguaranteed portion of Sanral's debt. While this is our concern, it is also important for the pensioners out there. With the implications of the e-tolling debate for the GEPF, it does raise questions around the bigger issue of bonds issued by other state-owned enterprises.
If government is serious about involving the private sector in its planned infrastructure build programme, which will be spearheaded by the state- owned enterprises, SOEs, it will have to act decisively to create certainty around its responsibilities in the bond market and its capacity to service its debt. The Minister indicated this morning the importance of business. He even mentioned that business changes economic prospects, and that it is possible that business will drive and business will lead.
I have written to the National Treasury to request that they quantify the government's debt obligations and the implications of our debt for the gross domestic product, GDP, ratio. This is an important issue and we should have clarity on this.
Businesses and investors can adjust to both good and bad news. I know when the markets go up, people might sell and businesses will take the profit. When the market goes down, they might even take the loss. What they will not take is if we do not respond well because of a lack of policy, or the lack of how specific problems will be solved.
Economists have warned here that the poor management of the e-toll project in Gauteng and the resulting uncertainties around the indebtedness of our SOEs may lead to an adjustment in South Africa's overall credit rating. I think my colleague has alluded to that.
On the issue of the R20 billion, we still do not have concrete answers on how we are going to fund it. I know there is an intention and Cabinet should come up with proposals. I think time is of the essence, Minister.
In regard to the Government Pensions Administration Agency, GPAA, we have a different view and we have discussed it briefly at portfolio committee level. Let me explain our view. It is well known that GPAA provides a pension administration service to the Government Employees Pension Fund, GEPF, and National Treasury. In the 2012-13 financial year the entity was paid R666 million. It is an enormous amount for services, of which 93% is recovered by the GEPF and, I think, 7% by Treasury.
We have to note that GPAA's expenses are recovered from the GEPF using the number of members administered at the base for cost allocation. This methodology is interesting. The GPAA is thus delivering a service to Treasury and the GEPF at a cost of - this is an estimate and I think we have discussed it - an estimated R36 per person. This is an estimation of cost in the market.
It seems that GPAA is experiencing serious challenges regarding the capacity of staff and keeping complete and accurate member data. I think they are still in the founding stages. We hope that, perhaps next year, we will have a better report in this regard. The DA, at this point, can call for outsourcing of the administrative functions of the GEPF to appropriately capacitated, credible, private institutions. What I believe we can save - this is a financial committee, we have to talk about finances, and we will do a presentation to the Minister in this regard - is R178 million per year. Those are the savings that can be achieved in this manner.
Let me just come quickly, before my time runs out, to the Development Bank of Southern Africa and the proposed recapitalisation. The question is: How much will this recapitalisation be? Will it be R110 billion in cash injections from government to address infrastructure backlogs and weak institutional capacity in the 158 underresourced municipalities? Now we realise we need to get to a turnaround strategy in these municipalities and we have to improve the infrastructure in the municipalities. We also have to watch the finances so that we do not just throw money at the problem; that is not the correct thing. We need to have the correct policy to see that everything is in place and that we indeed get value for our money. That is just in conclusion.
In recent years municipalities have distinguished themselves as not being reliable debtors. Just as an example, 84 municipalities are in arrears with Eskom to the tune of R533 million. That does not seem like a good investment, but I know the problem. We have to solve it. I think we have to put our heads together on how the problem will be solved.
Finally, Minister, we need to provide certainty on your obligations with regard to the financial health of the SOEs, and to curb unnecessary expenses on agencies like GPAA. We also need to ensure that institutions tasked with providing development financing, like the Department of Public Service and Administration, DPSA, do not make unsustainable funding allocations at the expense of the South African taxpayer. Thank you. [Applause.]
Sihlalo ohloniphekileyo, Mphathiswa weSebe lezeziMali, uBawo uGordhan, uSekela-Mphathiswa, umfo kaNene, sihlalo wekomiti ejongene nengxowa karhulumente kweli lizwe, umntwana kaMufamadi, isabhokhwe sale komiti, umfo kaVan Rooyen, malungu ahloniphekileyo ekomiti namalungu ale Ndlu, igosa eliyintloko nomlawuli weli sebe, umfo kaFuzile, amagosa onke ela sebe ngokukhokela kwawo, nazo zonke izihandiba, nani nonke ke ndlu emnyama kaPhalo, kaXhosa, nina nindlebe zimyama ngenxa yokuziphandela, ndiyanikhahlela ekuseni.
Ngenxa yokunqaba kweli xesha, mandinxibe ezi zixhobo zabantu abafundileyo, njengelungu lombutho wesizwe ekufuneka linike isikhokelo. (Translation of isiXhosa paragraphs follows.)
[Dr Z LUYENGE: Hon Chairperson, Minister of Finance, Mr Gordhan, Deputy Minister, Mr Nene, chairperson of the Standing Committee on Finance, relating to the National Treasury, Mr Mufamadi, chief whip of this committee, Mr Van Rooyen, hon members of the committee and members of this august House, Director-General of this department, Mr Fuzile, all the members of the department, protocol observed, all the dignitaries, and all Africans at large, I greet you all this morning.
Just because we do not have enough time, let me wear the academic attire, as a member of the ANC which must give direction.]
One of the central challenges that face our economy in the midst of the current global economic environment is the ability of our economy to remain competitive. Our ability to ensure that we have long-term economic stability that will weather global economic booms and busts and ensure that we retain growth and development has led the ANC and its government to put in place a long-term plan to ensure both growth and job creation.
This plan is premised upon the following eight focus areas. Firstly, there is the ability to raise exports, focusing on those areas where we have a comparative advantage, such as mining, construction, mid-skill manufacturing, agriculture and agro-processing, tourism and business services.
Secondly, there is our ability to ensure a far closer working together with the private sector in those sectors consistent with a growth strategy.
Thirdly, it is to improve the functioning of the labour market so as to help the economy absorb more labour.
Fourthly, it is to support small business through better co-ordination activities in small business agencies and development finance institutions.
Fifthly to improve the skills base through better education and vocational training;
Sixthly to increase investment in social and economic infrastructure, raise productivity and bring more people into the mainstream of our economy;
Seventhly to reduce the regulatory burden in sectors where the private sector is the main investor, to achieve greater capacity and output, and
Lastly is to improve the capacity of the state to implement economic policy effectively and efficiently.
The economic drivers of this strategy are our infrastructure build programme and industrialisation through the Industrial Policy Action Plan. How we do this is premised upon the fact that we are creating a more labour- absorbing economy.
Therefore, we see that the restructuring of the economy must ensure broad measures that will result in a more competitive, productive and equitable economy overall. Amongst others, this will be by improving infrastructure and skills development; seeking to achieve a more competitive and stable currency; reducing unnecessary regulatory uncertainty and obstacles to investment; supporting small, medium and micro enterprises, SMMEs, and the co-operatives movement; expanding skills development; and increasing industrial financing. For this to happen, the masses of our people must be mobilised regarding economic programmes through social interaction and acts of solidarity.
Our New Growth Path is confronting those sectors that are necessary for long-term growth and economic diversification, but are often not able to generate employment on a large scale. In this, our interventions are to diversify the economy so as to achieve our aims of both greater growth and job creation.
The past inequalities in education, training and experience continue to dog decisions into the future. While improving education and training will certainly support employment creation and equality, they are not sufficient in themselves, and in any case will not deliver soon enough for most of our people. Most workers today have some secondary education, although relatively few have university degrees. We need to expand production so that they can use their skills even as we develop systems to ensure all South Africans have opportunities for lifelong learning.
The Presidential Infrastructure Co-ordinating Commission aims to develop a 10-year pipeline of priority infrastructure investments to ensure that public investment stays close to 10% over the coming years and to increase capacity for infrastructure development at local and provincial level.
Our economic transformation programme seeks to promote a geographically inclusive economy. This will require that infrastructure development should be rolled out in targeted areas in a phased manner, especially in the former Transkei, Bophuthatswana and Venda areas. We must optimise the investments that have already been made in the establishment of industrial development zones through special determinations relating to incentives, and access to adequate and affordable basic inputs, such as electricity and water.
The composition of expenditure should be changed in favour of infrastructure development. It is going to be difficult to finance infrastructure initiatives from the fiscus only. Thus, the question of funding infrastructure and appropriate pricing of infrastructure is key. It will be important for employment creation and for long-term economic growth prospects that infrastructure expenditure is clearly funded through a combination of fiscal allocations, borrowing and user fees. The ANC therefore has this to say. It is Adult Basic Education and Training, Abet, for mahala [for free], especially for the colleagues on my left. Let me make this clarion call to all of us under this roof, especially the member component on my left, that we should lead by example. We should make sure that we are hands-on in regard to launching a vanguard operation in the areas where we live. We should mobilise our people and make sure that the establishment of co-operatives is not their own matter. We must use our expertise and experience and the knowledge that we have in order to lead them, if it comes to the push.
We were members of the communities even before we came here, and we will remain as such. Let us not sit on the fence and carry red pens. We must be involved. Let us be there. It is only the ANC, and the President of the ANC, who always encourage community leaders, political leaders and everybody who is able to lead those communities at the local level to ensure that, even if it comes to the push, they lead those community-based organisations. Lead those co-operatives at the local level!
Singamane sisiza kujikeleza apha sisithi urhulumente we-ANC akenzanga nto. [Let us not come here and do nothing and blame the ANC-led government for not doing anything.]
We must understand that it is also biblical for all of us to behave like Moses, who had to wait for 40 years before his dreams were fulfilled. We must be responsible enough as members of this House to ensure that we are responsible, like the poet Rudyard Kipling says in his poem If:
If you can keep your head when all about you Are losing theirs and blaming it on you; ... you'll be a Man, my son!
Singakhombi kweliya icala sithi bekufanele ukuba kwenziwe oku. [Let us not point fingers at that side and say they should have done this and that.]
We are all earning money for being public representatives.
Masihlanganeni ke zinto zakuthi sise ilizwe loMzantsi Afrika phambili. Siyabulela nto ka-Gordhan ngokuthi esi sikhokelo sikaMsholozi usilandele ngokuqinisekisa ukuba ... [Let us work together and make South Africa a better place. We thank you, Mr Gordhan, for abiding by the President's leadership and making sure that ...]
... the resources are there. I thank you very much. [Applause.]
Chairperson ... [Interjections.] Yes, that is a problem. Can I have an hour extra to respond to everyone? [Laughter.] It would really be fun, Chairperson, if you allowed me an hour.
Let me firstly thank the hon Mufamadi and colleagues on the standing committee from all of the parties for their processing of the plans of the Treasury, Sars and various organisations that respond to us, and for an interesting and vigorous debate. If we had a little less heckling and more concentration on substantive issues, I think it would really help us.
In this regard, hon Harris, I was hoping that, not having seen you for a while, we would have had some progress in regard to substance in what you have to say. I must say I still find the DA, as the official opposition, bankrupt in economic policy.
The real issue in South Africa is that we are facing a recession which occurs once every 70 years. What are the strategic options that we have? The real issue in South Africa is whether we, as the government, managed our fiscus correctly in response to that recession? The answer is yes. Do we have a strategy for growth and to deal with inequality in a context where we are recovering, not only from the recession, but from 300 years of apartheid and colonialism? You do not have an answer. Where is your answer in respect of what everybody is talking about throughout the world today: the gap between the salaries of CEOs and the rest of the workers? No answer. What do we do about structural unemployment? Don't you speak on the youth wage subsidy as a convenient political tool! Do not use it as a tool! What is the answer to structural issues that South Africa faces? Where are the answers in respect of the structural reforms that we, as an 18-year-old democracy, have to undertake to really transform this economy? You do not have an answer.
What do we do about the product market concentration in South Africa that the Organisation for Economic Co-operation and Development, OECD, the International Monetary Fund, IMF, and everybody talks about, and the oligopolies that operate in this country? No answer. How do we create a labour-absorbing economy, as several hon members have pointed out? No answer.
So, what we really have is politicking in this debate. We conveniently look at Cosatu as the bogey organisation and start looking at manufacturing all sorts of things in order to create political debate. If we are really serious, let us put the substantive issues on the agenda of the committee. Let us ask all of us: What is your option on the table? Let us debate the pros and cons of that option. Then we are serious about solving South Africa's problems. Otherwise all we are engaging in is political rhetoric.
Let me congratulate the chairperson on the kind of issues that he raised. Is austerity working in Europe? The answer is no. Today, and particularly over the last month or so, there is suddenly the realisation that fiscal consolidation in itself - although we have got to handle the issues of debt - will not provide the complete answer. Today we are talking in particular about where the growth is coming from. Interestingly, the answer is moving towards saying we should look at infrastructure investment as the way in which we encourage growth.
He correctly points out that we have to watch out for the dangers of extended unemployment, and the tendency towards xenophobia. We saw in the French election campaign how opportunistically - this is what we need to learn from - a desperate person who wants to remain in office chooses immigration and xenophobic tendencies to try to win right-wing votes in order to remain in parliament, and still loses! I hope our colleagues on our left will remember some of those lessons.
He also makes a very important point about the rights of the employed and the expectations of those seeking jobs. That's the balance that we need to get right and that's the balance where, if we just want to start aiming at political victories, we are not going to get anywhere either.
He correctly points out as well that suddenly the truth doesn't matter. That is one of the issues around the whole so-called Gauteng Freeway Improvement Project, GFIP, and the SA National Road Agency Limited, Sanral, and I will come back to that. What matters is how we score political points! What matters is how to smear coats of paint around corruption and all sorts of things in order to discredit them and we opportunistically use a R20 billion project as a political football!
What we need on the table are the facts. Here I am responding to the hon Koornhof. I apologise for not being here. I had to be elsewhere in the world. We will certainly make arrangements with you to put all the facts on the table. We have nothing to hide. These are all public entities. They all have public accounts and perhaps if you spend a little bit more time reading them, you will actually understand what's really going on.
The hon Harris talked about growth and one page. I do not know which speech he read. I think we must introduce him to the National Development Plan, the National Growth Plan, the Levers of Economic Change chapter in the Budget Review, and the Industrial Policy Action Plan, Ipap, programme. What we are saying is that we do have a growth path. We need to think a lot more deeply about some aspects of that growth path. The whole world is grappling with how to create growth in a recessionary environment. What are the strategies that we should employ in order to move in the direction that we are actually wanting to move in?
I heard a number of quotes from different journals, and so on. It is good that you read them and I compliment you on that. I must disappoint you, hon Harris. I have not received that phone call from the President.
He made various points about policy proposals from the Treasury and so on being ignored. I wonder how government runs then, because the Budget is largely prepared by the Treasury on the basis of advice given by the Ministers' Committee on the Budget and then decided on by Cabinet.
The budget is not the Treasury's budget; it is the country's budget. It is the government's budget and the proposals we put forward on fiscal frameworks, on tax policy, on retirement reform are to do with government policies. So I do not know where this imaginary rejection of policies actually comes from. We really need to take what are clearly a whole lot of skills and energies the hon Harris has and redeploy them in the right kind of way.
Excuse me, hon Chairperson. Is the Minister prepared to take a question?
Hon Minister?
No. No, no. You had your opportunity. Ask me the question afterwards; we will talk about it. On the matter of the e-toll, a couple of questions have been put by hon members. Now, on the one hand we say the courts are there to adjudicate crucial constitutional and legal issues. Then on the other we say one should not appeal. However, if we have concerns about some of the judgment calls made in the process of deciding on an urgent interdict, what are we to say - let us leave those judgment calls? Let us leave those legal issues because we have an unpopular set of proposals here? The key is that there are certain crucial legal issues that need to be tested and those involve very important issues within our constitutional framework. We must be given an opportunity to test those issues before a court of law.
I ask all hon members to read the Cabinet statement on this particular matter. In it, amongst other things it says that in delivering the Gauteng Freeway Improvement Project, GFIP, we have borrowed money. We have incurred significant debt. As a country, we need to demonstrate unequivocal commitment to meeting all our contractual obligations, including repaying the debt incurred in the construction of the GFIP. Defaulting on our debt is simply not an option.
So, with regard to all of those concerns that hon members have had about the SA National Roads Agency Limited, Sanral, its financial viability, and the impact on state-owned enterprises, SOEs, all I can say in the short time that I have available is that there is no need for panic. Let us not create unnecessary panic. What we are doing, again, is politicking in a dangerous area, which is the fiscal credibility of this country, not of a political party.
Please do not use debt and debt sustainability, which South Africa has a very, very proud record on, as a political football. There is no danger to any SOE, there is no danger to the Public Investment Corporation, PIC, and there is no danger to the Government Employees Pension Fund, GEPF. There is no danger to Sanral. This government will manage and undertake whatever commitments it has in this regard, whatever it actually takes. So, please, let us relax in that regard and start focusing our energies on issues that matter.
On the currency war, hon Koornhof, I do not think we are ready for any war. We are concerned, like everybody else around the world, that we should not have the kind of volatility in currency flows that we do. On Sanral, I want to give you a commitment, as I said, that we will come back to you with the details.
To the hon Singh, your facts are slightly wrong, but perhaps if I can talk to you later, I will point out to you what they are.
To the hon Swart, yes, taxpayers are fed up with waste and corruption. However, we are also fed up, all right? We are also fed up! We are the ones who have put this issue on the table. It is time that those who are wasting money are called to account, and it is time that the criminal justice system becomes a lot more efficient than it is.
I am afraid I have lost the time allocated to me, but thank you very much to all of you for a great debate. [Time expired.] [Applause.]
Debate concluded.