Hon House Chair, hon Ministers, Deputy Ministers and hon members, the Minister of Finance tabled the Division of Revenue Bill on 25 February 2015 as required by section 214(1) of the Constitution, which stipulates that every year a Division of Revenue Act should determine the equitable division of nationally raised revenue among the three spheres of government. The Division of Revenue Bill is also tabled in line with the requirement of section 271 of the Public Finance Management Act, Act 1 of 1999, which requires that the Minister of Finance tables the annual Budget before the start of the financial year.
As part of the budget process, section 91 of the Money Bills Amendment Procedure and Related Matters Act, Act 9 of 2009, requires that the Standing Committee on Appropriations from the National Assembly considers reports on the Bill immediately after the adoption of the fiscal framework. In addition to the National Treasury's input, a number of submissions were received by the committee from various stakeholders, namely the SA Local Government Association and the Financial and Fiscal Commission, as well as the Parliamentary Budget Office. These inputs were also considered in the processing of the Bill.
It is for this reason that I would like to take this opportunity to table the report of the Standing Committee on Appropriations on the Division of Revenue Bill, 2015. Let me indicate at the outset that the report was unanimously adopted by the committee and it is available in the Announcements, Tablings and Committee Reports of Parliament for members' perusal. I will therefore not read the report. I should also indicate that while the report was unanimously adopted, the DA did indicate that they reserved the right to decide in the House whether they would support it or not.
Furthermore, I would like to make a few remarks on the Division of Revenue Bill, 2015. The overall 2015 Division of Revenue Bill makes available an amount of R1,2 trillion, which is an increase of R86 billion, or 7,6%, for the current financial year compared to the previous financial year. The Medium-Term Expenditure Framework budget allocation is also expected to increase up to R1,4 trillion by 2017-18 at an average of 7,8%.
Hon members should appreciate that this budget growth takes place at a time of sluggish economic growth in South Africa. Economic projections have been revised downwards to 2% for 2014 to 2016 and forecasted to increase marginally to below 2,5% by 2016-17. Despite these challenges, government has ensured that adequate resources are allocated over the MTEF and that service delivery will not be compromised.
The allocations in the Division of Revenue Bill, 2015 are in line with the nine national strategic priorities outlined by the President in the state of the nation address in February of this year, namely resolving the energy challenge; revitalising agriculture and agroprocessing; adding more value to mineral wealth; enhancing the Industrial Policy Action Plan; reducing work conflict; unlocking the potential of small business; boosting infrastructure investment and supporting the implementation of the NDP.
Although there has been a downward revision and reprioritisation of some provincial grants, this has been done in a manner that cushions key basic service delivery areas and infrastructure provision. As a result, these changes affect, in the main, noncore service delivery areas.
We note the increase in funding of indirect conditional grants to allow the national government to spend on behalf of other spheres to ensure that service delivery is not compromised. However, we still need to enhance and intensify the impact of capacity building and skills transfer programmes to ensure that all spheres of government have adequate capacity of their own.
We acknowledged the use of incentive grants to improve planning and spending performance in provinces, but it will be important to ensure that adequate support is also provided to provinces that did not qualify for incentive grants on education and health last year to ensure better planning across the country.
We have noted that the lifespan of some important conditional grants is coming to an end in 2015-16, namely the Bucket Eradication Programme Grant and Rural Household Infrastructure Grant. Most importantly, we should always ensure that most of the objectives of such grants are met before the grant is terminated.
We support the additional clause in the Division of Revenue Bill which emphasises performance monitoring of grants, as well as the substantial requirements that need to be met by a transferring officer on withdrawal or stopping of conditional grants. Most importantly, the withdrawal or stopping of conditional grants should not be an impediment to service delivery.
The fiscal rebalancing, which includes cost-containment measures and an intensified effort to improve efficiency in the expenditure of our budget, is welcomed. We welcome the need to maintain fiscal consolidation as a means to achieve economic sustainability without compromising the poor and infrastructure. This is why the capital budget remains the fastest-growing item for the noninterest spending over the medium-term period.
The first Deputy Managing Director of the International Monetary Fund, Mr David Lipton, agreed with our approach when he was speaking at the University of Cape Town early in March this year. He acknowledged the progress made by our government and had this to say, and I quote:
The country has made tremendous progress in reducing poverty but the levels of income inequality remain significant.
Cuts should not be used with a one-size-fits-all approach in order to maintain the expenditure ceiling across the board, but the focus should be on poorly spending programmes or nonperformance.
The new clause 14 in the Division of Revenue Bill, which aims to institutionalise the Built Environment Performance Plan as a tool for changing the spatial development pattern of our cities, is welcomed.
This development initiative also aims to give direct expression to other important intentions of the Division of Revenue Bill, such as furthering municipal financial capacity, certainty and accountability. It should also foster better integration.
The provincial equitable share has been affected by a number of issues, including function shifts. It has declined by R2,3 billion as a result of the following function shifts: further education and training, National Health Laboratory Services, Port Health Services and the SA National Roads Agency Limited, Sanral.
An amount of R149 million has been reprioritised from the Provincial Roads Maintenance Grant to Sanral, for the delivery of the Moloto Road infrastructure project to help reduce road fatalities.
We have noted that the local government equitable share allocation has experienced positive real growth of 5,6%, above the 4,3% inflation growth over the MTEF, as the main instrument for funding basic services. We have noted the potential reduction of expenditure with a special focus on noncore goods and services and the establishment of an e-tender portal, a price-referencing system and the expansion of Treasury's Instruction Note as part of the pillars to entrench cost-containment measures. We believe the 2015 Division of Revenue Bill ushers our country into the second phase of our ongoing transition from colonialism to a national democratic society that is truly nonracial, nonsexist, united, democratic and prosperous. It is in this phase of our transition that government is called on to accelerate the pace of social and economic transformation by implementing radical programmes that will place our country on a different development path. Therefore, this Division of Revenue Bill lays the basis for the implementation of such radical changes over the MTEF period and beyond.
Our icon, Dr Nelson Mandela, once said the following, and I quote: "It always seems impossible until it's done." Martin Luther King Jr had this to say, and I quote:
If you can't fly then run, if you can't run then walk, if you can't walk then crawl, but whatever you do you have to keep moving forward.
I believe, hon House Chair, that this Division of Revenue Bill, 2015, is indeed moving South Africa forward. I therefore move that the Division of Revenue Bill, 2015, be supported by this House without amendments. I take this opportunity to thank all the members of the committee for their hard work. I thank you, hon members.
Hon House Chair, the Division of Revenue Bill is possibly the most significant money Bill that comes before Parliament, as it concerns the revenue raised nationally among the national, provincial and local spheres of government for the financial year, and also ensures that money raised is appropriately spent by those spheres of government.
Principally, there are two concerns in this regard, namely, how revenue is divided and how revenue is spent. On the issue of how revenue is divided, one thing is clear: There is less money for government to spend, as we did not generate enough revenue to satisfy the needs of the country. The 2015 Budget amounts to approximately R1,2 trillion. After making provision for debt service costs, the total revenue available for the 2015 year amounts to roughly R1,1 trillion. A slowdown in spending growth has been proposed, with the expenditure ceiling being reduced by R10 billion in the 2015-16 financial year and R15 billion in the 2016-17 financial year. There will also be reductions of R11 billion in the allocations for provinces and an almost R2 billion deduction in allocations to local government over the next two fiscal years.
The revenue allocations to the three spheres of government, particularly those for provinces and local government, will grow at a slower rate than in previous years. The impact this will have on service delivery cannot be overstated.
President Zuma proudly boasts about government's Back to Basics local government revitalisation programme. However, with insufficient funds and maladministration at local government level, it seems the government is turning its back on basics: basic service delivery and basic infrastructure growth.
Local municipalities and local government are at the coalface of service delivery and economic growth as city-led infrastructure growth paves the way for job creation, yet only 9% of the national revenue is allocated to local government.
The Minister of Finance says that local government received a smaller share in the division of revenue because municipalities have significant revenue- raising powers, which include property rates and service charges. What the Minister is effectively saying is: For local government to function effectively, the funding will not come from the national government but from the pockets of the people. The reality is that South Africans are being made to pay for an ailing economy that cannot grow at a healthy pace in order for the revenue to increase.
The outlook for the domestic economy is bleak. The forecast for economic growth is 2%. This is far below the 5,4% target of the NDP in order to create 11 million jobs. The direct effect of low GDP growth is that output and domestic trade will shrink. There is a further adverse effect on investor and consumer confidence.
It is useful to note that economic growth has been revised down for the fifth consecutive year. Slow growth means that the economy does not raise the revenue to balance the budget. So, in order to balance the budget, it has to be funded by increasing debt, which is currently at R1 584 billion. The net debt has grown from 21,8% of GDP in 2009, when Zuma became President, to 48% in the 2014-15 financial year. Debt servicing costs for the 2014-15 financial year are estimated to be R115 billion. Added to this, more than one third of the country is without a job. As the broad unemployment rate persists at 36%, the high unemployment rate results in lower than expected tax revenue.
The Finance Minister has decided to place a further burden on taxpayers by increasing the personal tax rate. The poor will also be negatively affected, as fuel levies and electricity tariffs are to increase. The Road Accident Fund levy will also increase, bringing the total fuel levy to 80,5 cents a litre. This is not taking into account any depreciation of the rand and an increase in the price of crude oil. This will further increase the price of fuel. There is no good story to tell here.
On the issue of how it will be spent, whenever the words, "money" and "government", are used in the same sentence, the alarm bells start to sound. Whether it is tender corruption, government's wasteful spending, the bloated Cabinet, the public sector wage bill, the nuclear deal with Russia, or Nkandla, the ANC's track record does not inspire confidence.
According to the Corruption Perceptions Index 2009, when Jacob Zuma became President South Africa was ranked at number 55. We are currently ranked at number 67.
Hon Jacob Zuma. We are currently ranked at number 67.
While the President believes corruption is a "Western concept", that does not detract from its far-reaching effects. It is widely accepted that South Africa loses at least R30 billion a year to corruption. Add to this the uncertainty about land reform and property rights following last month's state of the nation address, and then investor confidence hits rock bottom. As a result, investors begin to look elsewhere, and this is further aggravated by the likelihood of the United States of America increasing interest rates, which will result in emerging markets becoming even less attractive for investors.
An additional risk is one of further credit rating downgrades. Economists expect South Africa's sovereign credit rating to be downgraded to junk status if the country does not address its economic weaknesses.
More money must be spent on infrastructure to reach the NDP's target of 10% of the national budget. Moreover, spending aimed at supporting and growing small businesses should be intensified, as small businesses are the chief creators of jobs. I thank you. [Applause.]
Hon Chairperson, the EFF will not vote in favour of the Division of Revenue Bill. Fundamentally, we do not believe in the way government's Budget is structured, because it will not respond to the poverty, underdevelopment and inequality of our people. The very fact that the most important sphere of government, which is local government, is receiving less than 10% of the Budget is a problem on its own. This simply means that government is not interested in solving the problems, or bringing services to our people on the ground. The way local government is funded is not the solution.
The South African government still does not have adequate political and technical capacity to spend the money at its disposal. Just recently we saw reports of state departments using the services of consultants to the value of over R30 billion. The government has no adequate plan to deal with the mismanagement of funds by government departments and punishing the guilty parties.
South Africa is facing an economic and social crisis unprecedented in recent history, as a result of bad policy choices made by this very government, coupled with rampant corruption from the highest office in the land to multinational companies operating as if they were in a mafia country. Our revenue base cannot take the load of social pressure emanating from the desires of our people to see the fruits of freedom.
The state is incapable of collecting revenue, especially from the private sector. The move by the government to increase taxes on the already constrained tax-paying citizens, while allowing multinational companies to freely loot our resources through base erosion and profit shifting, is an indication that the ANC has no clue about what needs to be done.
According to the 2014 report by the Alternative Information and Development Centre, Lonmin, a company in which the Deputy President has a vested interest, defrauded our country of funds to the value of R2,3 billion. What a shame! [Interjections.] The government has no plan to deal with the scourge of base erosion and profit shifting, and this is because senior politicians are directly benefiting from the stealing of resources by multinational corporations ... [Interjections.] ... by the looks of the noise they are making here.
The problem of low state revenues can only be solved by introducing strict taxation mechanisms and harsh punishment for companies engaging in illicit financial flows.
With the proper local beneficiation of our own mineral resources, the country can raise enough revenue to make possible free quality education and free quality health services for all of our people.
In the state of the nation address, President Zuma highlighted nine strategic priorities for 2015, but these can never be achieved within the NDP policy framework. The ANC has no clue about how to lead in order to take our country forward.
Minister, ek is bly dat u vandag hier is. Ons moet regtig waar harder werk om skuldige werkers in hierdie departemente, wat letterlik van die armes steel, tronk toe te stuur. Dankie. (Translation of Afrikaans paragraph follows.)
[Minister, I am glad that you are here today. We must really work harder at sending guilty workers in these departments, who are literally stealing from the poor, to jail. Thank you.]
Chairperson, the intergovernmental process of dividing revenue equitably among all spheres of government in order for them to provide basic services and perform their mandate, duties and functions is one that is fraught with dangers and difficulties. In today's slow economic growth period, rising budget deficit, burgeoning public services, high unemployment rate and helter-skelter government spending, there is little margin for error on the side of National Treasury when allocating budgets.
We are underperforming when compared socioeconomically with our emerging market peers and this should give us cause for great concern, as our peers seem to be continuously outpacing us on all fronts in terms of their recovery from the 2008 global financial crisis.
Government largely has itself to blame for our slow economic growth. Through continued reckless and inefficient spending and the increased Public Service wage bill, our Public Service is fast becoming a dependant and a noncontributor to our economic recovery.
Treasury must be fair but ruthless in the allocation of funding and any sign of recklessness or impropriety in spending must immediately be investigated and stemmed. Government spending on consultants, excessive travel and advertising must be curtailed, as stated by our Minister of Finance. In short, the burden of government must be reduced.
The Division Of Revenue Bill must also not only distribute revenue equitably, but do so with the aim of reducing and resolving our many socioeconomic issues, while also addressing the legacy of the predemocratic dispensation of apartheid. Areas in which basic services are deficient and below acceptable standards must receive our greatest priority and attention. The sooner we redress the imbalances in basic service provision, the faster our holistic socioeconomic recovery will be.
In conclusion, we call on government to spend efficiently, as inefficient expenditure only lowers the government multipliers and retards economic growth. Parastatal bailouts only compound this problem and other avenues must be found in which these entities can be recapitalised without squeezing the already stretched taxpayers.
Government must embark on the path of austere, sustainable and efficient spending. Anything less and we will see ourselves moving along a trajectory to greater microeconomic instability from which it will be difficult to recover. I thank you.
Chairperson, hon Ministers and Deputy Ministers, today we are here to debate and table in this House the Division of Revenue Bill in connection with the budget delivered by the Minister of Finance on 25 February 2015.
We are all aware of the fact that the 2015 Division of Revenue Bill comes against the backdrop of a tight economic environment. It is in this context that we acknowledge and welcome the fiscal consolidation effort to try to steer our economy on the right course. We are cognisant of the many efforts aimed at cushioning social spending and service delivery against the effect of fiscal consolidation.
Hon Chairperson, I have been listening and it appears that many members are saying, "Service delivery, service delivery, service delivery!" I have been to many parts of this country personally, and I can assure you that I have seen water being delivered in areas where nobody ever thought it would happen. I have seen electricity, I have seen houses, and I have seen service delivery. [Applause]. So, we can come here, hon Chairperson, and oppose this, but if we have the interests of the people of this country at heart, we will not oppose this but be proactive in going out there and working together to deliver. [Interjections.]
Having said that, I think it is high time that we injected practical meaning into the words, "value for money" and "efficiency". [Interjections.]
Thank you, hon Chairperson. If you do not tell people what they want to hear, they are always going to make a noise. [Interjections.]
Having said that, I think it is high time that we inject practical meaning into the words "value for money" and "efficiency". Value for money and efficiency cannot continue to be used as mere notions that we use during the disbursement of funds to government departments, municipalities and state institutions. Hon members, I agree that we have used these noble terms many times in our respective speeches, but I wish I could say the same when it comes to their practical application during the implementation of budgets in the course of the financial year.
Local government, being the sphere at the coalface of service delivery, should apply the notion of "value for money" with the utmost seriousness. For me, this cannot happen unless there are clear consequences for wrongdoing, mismanagement and the misappropriation of funds.
We welcome the fact that infrastructure financing across government, including state-owned companies and other public entities, is estimated to amount to R274 billion in the 2015-16 financial year alone. However, success in the building of infrastructure will not and cannot be a success as long as there is poor co-ordination among state-owned companies and national, provincial and local government. The delivery of infrastructure should find clear expression in the integrated development plans across all municipalities and such co-ordination must be strictly enforced by the Presidential Infrastructure Co-ordinating Commission.
Hon Chairperson, it is high time that municipalities collect what is owed to them, because if they continue to write off millions in debt, they will not be in a position to find sustainable revenue and will burden the state even further.
We support the Division of Revenue Bill. Thank you. [Applause.] [Time expired.]
Okokuqala, masithi, umzekelo, ... [Firstly, let us say, for example, ...]
... we understand the purpose and the rationale behind these indirect grants, but the question ...
... ekufanele ukuba siyibuze yeyokuba ... [... we ought to ask is, ...]
... do we leave it open-ended if we are talking about building capacity ...
... ukuze ... [... so that ...]
... at some stage these municipalities ...
... bakwazi ukuzimela. [... are able to perform independently.]
Do we leave it open-ended or should we be asking ourselves until when we are going to do that.
That also includes the issue where we talk about municipalities that have limited revenue-raising capacity. Yes, we acknowledge it is a problem, but what are we doing about it? Do we help them? You know ...
[... when you go to the Eastern Cape, at Keiskamahoek, Nkonkobe, for example, there are many municipalities there but they are underperforming. You will find that they have the capacity, but they need assistance so that they can generate an income. However, we are not assisting them. You will also find that others perform as if they are playing a children's game or hide-and-seek ...] to the point where I actually made a commitment to myself that next time ...
... xa ndisiya kwabaya masipala ingakumbi abazimelayo abadlala undize, ndiza kuxela laa mdlalo wabantwana ndithi: Ndize, ndize, baze nabo bathi, hoyi, hoyi. [... when I went to those municipalities, especially those that play hide-and seek, I would mimick that children's game and say, "Can I come? Can I come?", and they would respond by saying, "Not yet! Not yet!"]
This is so that I can go looking for them in order for them to start doing their jobs properly.
The other issue is that of the salary bill in the public sector. In general, almost 60% - I think it is 59,9% - of the allocation to the provinces ...
... iya ekuhlawuleni abantu abangasebenziyo; ingengabo bonke ke phofu, kuba kukho abo baphangelayo. [... goes towards paying the salaries of employees who are inefficient; not all of them are inefficient though, because there are those who are efficient.] But the bottom line is, if we are not getting value for money, ...
... kucacile ukuba likhona iqhele elivuzayo elifuna ukulungiswa. [... it is obvious that all is not well and something needs to be fixed.]
Now, the other very important issue that the chairperson of the committee highlighted when he introduced the report was the issue that we get parastatals ...
... ukuba nazo zithi oomasipala baqale bahlawule amatyala kwiiparastatals neeparastatals nazo zihlawule oomasipala ... [... that say that municipalities should first pay debts owed to them before they can do likewise ...]
... because it is a problem. At some stage, the hon Minister will recall, there was a report in the media that municipalities owed Eskom about R10 billion. I am not sure if we have addressed that, but that could, to a large extent, address some of the problems that Eskom experiences, and vice versa. [Interjections.]
I am much obliged to you. The UDM supports the Division of Revenue Bill. Thank you very much.
According to the speaker's list, the next speaker should be the hon Lekota. Are you participating in this debate, hon member? [Interjections.] All right. May I ask the Table staff just to synchronise the screen with the list that is in front of us, please? The hon Shope-Sithole, proceed. My apologies, hon Lekota.
This day takes me back to 1991 and that is why I dedicate my speech to the late uTata Walter Sisulu and uTata Nkobi. It was 1991, we were newly elected treasurers of the ANC, and we went for a workshop. We were told that we were going to attend a donors conference in Arusha, Tanzania. What went on in my mind was that I did not know what we were going to do. I did not even understand what it was to be a treasurer. UBaba Sisulu said to me, "You will sit next to us - me and Nkobi - so that uBaba Nkobi can teach you what it means to be a treasurer of the ANC." I was looking forward to a very long lecture, but uBaba Nkobi said to me, "You know, Sheila, what it means is that when everybody else says, 'Viva ANC!', you don't do that. You look at the money." [Laughter.] So that is what I am going to do in this Parliament. When everybody says, "Viva ANC!", I will be looking at the money of the state.
You know, comrades and friends at home, the Division of Revenue Bill is about the division of money among the spheres of government so that services can be delivered to the people. But what happens is that people who do not care about the welfare of the people will not support this Division of Revenue Bill. [Applause.] We are talking about ... [Interjections.]
On a point of order: The member is misleading the House, as she is saying that members who do not agree with this Bill do not care about the wellbeing of the people. We do care about their wellbeing, and that is why we are saying it is not equally distributed. She cannot say that.
Agb Voorsitter, ek is besig met baie ernstige sake van die staat, van die Republiek van Suid-Afrika. Ek het geen tyd vir kinderspeletjies hierso nie. [Gelag.] [Applous.] [Hon Chairperson, I am busy with important matters of the state, of the Republic of South Africa. I have no time for child's play here. [Laughter.] [Applause.]]
The Division of Revenue Bill is underpinned primarily by policy imperatives of the governing party and the constitutional obligations to achieve an inclusive ... [Interjections.]
Chairperson, on a point of order: It was ruled, the day before yesterday, in this House, that we would not bring ages in here. The speaker there has just said that she did not have time for children who are playing. We are not children!
Hon members, let us stick to recognising each other as hon members and desist from referring to one another in other terms, although I did not hear the member referring in that way to anyone directly. Continue, hon Sithole.
In what has been correctly described as the second phase of the radical economic transformation, the ANC views the Division of Revenue Bill as a strategic opportunity to finance our policies while taking stock of both global and domestic considerations.
The measurable objectives of the Division of Revenue Bill are to promote economic growth, social development and poverty reduction through the effective, efficient and appropriate allocation of public funds.
The Division of Revenue Bill is a financial instrument to ensure that policy programmes are brought into effect through the provisioning of the necessary financial resources across the three spheres of government. This is intended to foster transparency and ensure smooth intergovernmental relations.
Local government is an important sphere of government when it comes to the delivery of basic services that directly affect communities. Services such as clean drinking water, electricity, shelter, waste removal and roads are basic human rights, and they are essential components of the right to dignity, as enshrined in our Constitution and the Bill of Rights.
The 2015 budget maintains the baseline allocation for the local government equitable share, improving access to basic services is a central policy priority, and the local government equitable share formula is structured to ensure that the cost of providing free basic services to indigent households is updated to account for above-inflation increases in the cost of electricity and bulk water supply.
The allocations to basic services provided by municipalities have been prioritised, despite the constraints of the budget framework. A new approach is proposed for cities to support growth and restructuring and to strengthen infrastructure investment. Over the longer term, progress in municipalities requires local economic growth, property development and revenue capacity, alongside national support. These are some of the key elements in the Back to Basics municipal development strategy.
National allocations to municipalities continue to be equitably allocated and aligned to the Back to Basics strategy. We are pleased to note that the local government equitable share was protected from baseline reductions to ensure that service delivery to the poor is prioritised. Allocations for water, sanitation and electricity in rural municipalities have been increased substantially. About R4,3 billion will be spent over the next three years to build capacity and strengthen systems for financial management and infrastructure delivery.
The ANC recognises that urgent action must be taken to make local government deliver more efficiently on basic services, including water and sanitation, electricity, human settlements and roads. In his state of the nation address, His Excellency President Zuma presented the nine-point plan to boost the economy, which includes the creation of townships and rural enterprises and the building of water, sanitation and transport infrastructure.
In line with the Medium-Term Strategic Framework and the National Development Plan, the 2015 budget prioritises spending on economic infrastructure such as roads and transport, electricity, water and sanitation.
The collaborative review of local government infrastructure grants will give special attention to the maintenance of infrastructure. National departments of government must provide infrastructure support to local government through transfers, primarily the municipal infrastructure grants. The Minister of Finance, hon Nene, announced a R46,9 billion allocation to the grant over the next three years.
Over the next three years, slower growth in conditional grants and above- inflation increases in bulk water and electricity costs will mean that municipalities will have to reduce spending on noncore items and review their focus on delivering basic services.
Government is aiming to build 1,5 million houses by 2019 and has allocated R33,3 billion to metropolitan cities over the next three years.
Ndzi lava ku bulanyana na n'wina hi timhaka leti humelelaka haleno Palemende. Inkomu. [Nkarhi wu herile.] [Va phokotela.] [I would like to have a small talk with you about issues that are happening here in Parliament. I thank you. [Time expired.] [Applause.]]
Chairperson, Cope welcomes the reduction in expenditure ceilings by R25 billion this year. There must be no relaxation on this score. It is time to exert optimal fiscal discipline, and we are happy that R65 billion has been set aside as a contingency fund. While organised labour is agitating against this, the Minister must hold firm. Half of South Africa has experienced the serious drought and money needs to be available for unforeseen expenditure and emergencies.
We accept that local government must have funds to address the spatial transformation of our cities, consistent with our Constitution. We, however, insist that the Municipal Finance Management Act is strictly applied and no deviations are allowed. The tender processes must be fully transparent and whistle-blowing must be encouraged. The Office of the Auditor-General has for many years pleaded for serious consequences for officials in municipalities who ignore the strictures of the Municipal Finance Management Act and those ignoring the Public Finance Management Act.
There has been no political will to deal decisively with transgressors. Now Standard & Poor's has given our government two years to mend the economy and enforce the strictest financial controls. There is no time to lose; otherwise we will be where Greece and Venezuela are today. This is really the last warning and chance for our government.
On the issue of funding the creation of viable and dynamic economic hubs in all our urban townships, large as well as small, we agree. Indeed, we want to see investments being made where people live so that that is also where they can find work.
Another issue we want to take up is that of improving forward planning and the efficiency of spending. Why do we always speak through the mouth of government about this, yet do nothing about it?
Finally, the allocation of R1,1 billion over the Medium-Term Expenditure Framework period for improving broadband is also a small start. South Africa needs cheaper and faster broadband. At present, as the Institute of Race Relations has recently shown, broadband is 10 times more expensive in our country, but much slower than in the United Kingdom. We need to correct this speedily and therefore set aside a bigger budget. The speed of our economic growth will be in direct proportion to the speed and affordability of broadband. I thank you.
Chairperson, hon members, it is well known that the financial resources available in our country are insufficient to satisfy all human needs and wants. This clearly shows, therefore, that when distributing these resources, the state should focus on the main challenges of our country: unemployment, poverty, education, health systems and the evils of the past.
Corruption is always a problem and special attention is needed to deal with it. While this problem persists, the budget allocations to different departments will never sufficiently serve the purpose, which is to better the lives of our people.
The issue of labour brokers is one of many that contribute to the slow growth of our economy. This system makes the rich richer and the poor poorer.
To address the challenge of unemployment, people must be trained under the Expanded Public Works Programme so that they become employable and can then be encouraged to start their own businesses. The verification of the number of people reported to have job opportunities under these programmes should be made available.
The 9,1% that has been allocated to municipalities may not be enough, hon Chairperson. This is where service delivery is supposed to happen, especially in rural areas.
However, we do appreciate the fact that the Department of Basic Education received the lion's share in the budget, which is where the nation is supposed to invest. It cannot be right to build so many new schools while closing down others. Therefore, there should be a good balance between the building of new schools and rationalisation. We believe that the already existing schools should be improved in regard to libraries, laboratories and infrastructure. We hope that with this big budget that has been allocated to the Department of Basic Education, the low salaries that are being paid to teachers will be reconsidered, because the teaching profession is the mother of all professions. It is therefore not good that those people are paid such low salaries.
The energy crisis should also be looked into, because it impacts badly on our businesses and on the growth of our economy. [Time expired.] [Applause.]
Hon House Chair, on 19 February 2015 the hon President informed this House that South Africa's problems started on 6 April 1652, when Jan van Riebeeck landed here in the Cape. He was no doubt referring to the fact that Europeans and European culture had arrived on the shores of Southern Africa. [Interjections.]
From an economist's point of view, hon President, I would entirely disagree with you. This country's economic woes started on 27 April 1994, when the ANC became the ruling party in South Africa. Why do I say that? Well, on that date the US dollar cost ... [Interjections.]
On that date the US dollar could be purchased for R3,15. When the hon President assumed office on 9 May 2009, one US dollar cost R8,64, while today a US dollar will cost you R12,28.
This is significant for a number of reasons: Firstly, the value of any country's currency could be described as the value of that country's shares, as if rands were shares and the market was the stock exchange. A company's share price is determined by factors such as the value of its assets, its past performance and, most importantly, the public's perception of how the company will perform in the future. The value of a country's currency is determined in much the same way.
On this basis, it is clear that offshore investors are losing confidence in South Africa as an investment destination. Our fundamentals are sound: We have better than average natural resources, availability of labour and a sound banking system. This can only mean that it is the political climate that causes the perception of our future performance to be so low - a political climate set and maintained by the ANC.
Secondly, it means that our currency has lost value in comparison with other countries' currencies. The exchange rate of the British pound against the US dollar, for example, has not changed at all since 1994, while the Japanese yen has actually improved in value against the US dollar in that period. If the rand had maintained its value, it would mean that a car currently costing R250 000 would only cost R64 103. Would you not agree that the average South African would be overjoyed if his or her R20 note could still purchase the equivalent of R78 today? What good news that would be for our poor people, if the few rands they do have actually had some value.
Thirdly, this would mean that our current budget total of R1,222 trillion could be covered by R313 billion.
Fourthly, the effect on savings is devastating. If we as a nation would save money, we could generate our own investment capital and reduce our dependence on foreign loans. This alone could reverse the poverty spiral. However, in order to encourage savings, one needs to provide an incentive. If I had invested R100 in 1994 at 5% interest, compounded annually, I would today have a total of R278,60. Very nice! But if I factor in the devaluation of the currency over the period, my original R100 plus accrued interest would be worth only R71,44 - and this does not take into account bank charges or taxes. This is certainly no incentive to save money.
So, what has all this got to do with the Division of Revenue Bill? Simply this, I find not a single rand of the 2015-16 budget being allocated to improving the perception of our country's future performance in the outside world. For all the negative sentiment expressed in this House against so- called white monopoly capital, it is after all that very same capital that we so desperately want invested in our country. When foreign capital flows into the country, the value of the rand goes up because when the perception is good, the demand improves and drives up the price.
Hon Minister Nene, it is my belief that you should follow the example of your brother Minister, the hon Pravin Gordhan, and get back to basics as far as South Africa's economy and the division of revenue are concerned.
While I am on the subject, hon House Chair, I take umbrage when hon Minister Gordhan refers to the rich tax evaders, while indicating those seated in the opposition benches. As far as I know, there are no Ministers seated on the left side of the House and Ministers earn considerably more than ordinary Members of Parliament. [Laughter.] I also know of no opposition members who own R246 million homes or who have received gifts of R25 millions worth of shares from mining companies. I could go on, but I think the point is made.
Equally, when hon Tobias says that the DA has no interest in the poor but is only concerned with big business, I feel compelled to correct her. Of course the DA is interested in big business because it is the big businesses that pay the big taxes that would enable a DA government to provide for the needs of the poor while creating opportunities for personal advancement of those same poor people, very possibly within those same big businesses where such opportunities could easily be created, especially if our currency had a better purchasing power.
Hon Mdakane told the House on Tuesday evening that there is no harm in merging municipalities - no harm to the people. I do hope that he will be on hand to explain this to the 66 councillors, at least 50 of whom are ANC councillors, in Sedibeng who will be out of work if the Gauteng merger becomes a reality. And does he believe that all the councillors in Mangaung were unharmed when they all took a dive in salary on becoming a metro because they failed to take into account that the merged municipality qualified at a lower grade than it had previously?
Hon Minister Nene, the budget as read together with the Division of Revenue Bill reminds me of the woman who received a call from her bank manager, advising her that her account was overdrawn. She replied by saying, "It can't possibly be overdrawn! After all, there are still cheques in my cheque book."
Minister Nene, I plead with you to be realistic in your budgetary projections. You do not want to reply to your grandchildren one day when they ask if you enjoyed your time in Parliament with the words, "Yes, thank you, but that's all I enjoyed." [Time expired.] [Applause.]
Hon Chairperson, hon Ministers and Deputy Ministers, and hon members, the DA, as represented by hon Figg, alleges that there is not going to be service delivery. Yet the Division of Revenue Bill points out clearly that the allocation to infrastructure and maintenance thereof is aimed especially at delivering new services to our people and maintaining the social and economic infrastructure that already exists. The division of revenue expresses quite clearly that service delivery shall not be compromised - quite the contrary to what hon Figg was saying.
Well, the least said about hon McLoughlin the better, because what he says about 1652 and 1994 clearly shows that he and his DA gang, having benefited from the proceeds of colonial and apartheid oppression and exploitation, and land dispossession of the black majority from 1652 to 1994, now decry the defeat of colonialism and apartheid and expose the DA policies that seek to take this country and take it back to apartheid and colonial times. Well, let it be clear: The DA will not be able to reverse this country back to colonialism and apartheid. [Applause.] [Interjections.]
[... what you are saying to our people and to those who support you is that you don't want them to receive houses, water and electricity. You don't want to see the economy growing, and for small businesses and co-operatives to receive assistance from government.]
That is what you are saying to the people of this country. [Interjections.] I do not know why they should continue voting for you.
Hon Kwankwa, we appreciate your support and that of all those members who are supporting the Division of Revenue Bill. I do want to draw your attention to something though, because you mentioned a number of areas in the Eastern Cape that have not received service delivery. I want to draw your attention to the R7 billion, for instance, for emerging farmers; to the R80 billion targeted for water and sanitation and local roads projects; and to the R105 billion allocated to housing and associated infrastructure projects. We would do well to watch, together with yourselves, whether those areas that you mentioned are going to benefit from these allocations. These are just a few examples.
The Standing Committee on Appropriations presents the 2015-16 Division of Revenue Bill in conditions of a weak global and domestic economic outlook. The International Monetary Fund World Economic Outlook, for instance, estimates that the economic growth in the eurozone, which is still South Africa's largest trading partner, will be 1,2% in 2015. The United States' growth is estimated at 3,6% for the same financial year. This suggests that the demand for South Africa's export goods to the eurozone remains low and therefore corporate income tax and foreign currency earnings coming into the country have declined.
National Treasury forecasts our economic growth at 2% and this means that we must double our efforts. Indeed, it will happen. We will even achieve 5% by 2019. This means that we must double our efforts to grow our economy, create more decent work and increase our tax revenue base.
Notwithstanding the reduction in spending by R10 billion in the 2015-16 financial year and R15 billion in the 2016-17 financial year, government spending increases by 2,1% in real terms over the Medium-Term Expenditure Framework period.
The ANC-led government is determined to sustain spending on the priorities as pronounced in the ANC election manifesto in 2014. These are the creation of more jobs, decent work and sustainable livelihoods; rural development, land reform and food security; education and training; health; human settlements and basic services; and fighting corruption and crime.
This year, 2015, being the year of the Freedom Charter, the ANC recommits itself to the implementation of the Freedom Charter to pursue the goals of creating a national democratic society and delivering to our people a better life for all.
The equitable division of revenue across the national, provincial and local spheres of government emphasises the need for efficient spending of public funds and value for money, especially in building the social and economic infrastructure. Therefore, there must be efficiency in building housing, water and sanitation, electricity, schools and health care infrastructure, as well as infrastructure in the construction of roads, rail, ports, and information and communications technology. This proposed division of revenue also allocates funds for the maintenance of all infrastructure. The ANC is keen to see efficiency in public spending. Our people expect efficiency and value for money in the services we deliver to them.
During the state of the nation address His Excellency, President Zuma, announced the nine-point plan to boost economic growth as part of the process of radically transforming the economy in a manner that changes the patterns of ownership of the means of production for the attainment of inclusive growth. I shall not reiterate the nine-point plan. The chairperson, Comrade Paul Mashatile, has already referred to the plan specifically.
The Division of Revenue Bill proposes the funding of the nine-point plan over the MTEF period in order to develop and grow the economy in pursuit of creating decent work, eradicating poverty and inequality, and achieving 5% gross domestic product growth by 2019.
[The ANC would like to mention that this budget allows for an increase in funds that will go to local governments for the building of new infrastructure, and maintaining existing infrastructure in good condition. Therefore, we urge our people to take extra care of the existing infrastructure and the infrastructure that is still going to be built, and also to protect it.
Another important thing about the budget that's before this august House is that the government grants for the elderly, for children, and for people living with disabilities have increased. The same goes for the money for feeding schemes at schools; it has been kept at a very high amount. All this is being done by the government because the ANC is concerned about the lives of the elderly, children and people living with disabilities, and that learners are not being put in danger and also for it to improve at all times.]
Through the 2015-16 division of revenue the ANC-led government is reaffirming its commitment to implementing the National Development Plan in pursuit of a nonracial, nonsexist, prosperous and democratic society.
The ANC supports the Division of Revenue Bill and recommends that this Parliament passes it. I thank you. [Applause.]
Deputy Speaker and members of the House, can I take the opportunity to thank you for providing me with the opportunity to participate in this very important debate? We have taken note of the comments made by the committees - the Standing Committee on Appropriations, as well as the Select Committee on Appropriations. We have also taken note of the comments made by the political parties here today. We have listened attentively to some of the more constructive points made by various political parties and individuals who stood here today.
I must make the point, though, that the process leading up to the drafting of the Division of Revenue Bill and the Budget is quite an onerous one. It is a process that is based on both research and serious inputs from experts. That is why the Minister, in the Budget Speech, implored members to go through the Budget Review. I say this because some of the points raised here reflect fundamentally that some of the members did not take the time to look at the Budget Review.
However, there is something more disturbing about the discussion today, one aspect of which is that some of the comments made raise questions about the intentions and beliefs of some of the political parties in this House. [Applause.] I raise the first point as an example. Hon McLoughlin stands here and says that the problems in South Africa started when Madiba became the President. [Interjections.]
Now, any seriously thinking South African will agree with me when I say that that view is fundamentally and fatally flawed, if not backward. [Applause.] [Interjections.] Of course, the other implication it has is that when black people in this country were liberated, the problems started. [Applause.] So, I am just saying that this is a fundamental problem with some of those inputs. [Interjections.]
I want to talk briefly about the Budget and the Division of Revenue. I will start off by saying that a Division of Revenue Bill and the Budget are informed by four overarching objectives and priorities of government. Firstly, there is the priority of regaining fiscal space, narrowing the budget deficit and stabilising debt through stricter management of the fiscus and tighter expenditure ceilings, as well as increasing revenue tax measures.
Secondly, there is sustaining the social gains of democracy and making sure that the tough economic times we find ourselves in do not arrest the progress we have made over the past couple of years. This also ensures that we continue with our programme to improve the lives of the poor, as well as ensuring that the poorest and the most vulnerable in society are protected.
Thirdly, it also ensures that we grow and transform the economy in partnership with the private sector, as well as key sectors of society. Key to this will be unlocking new sources of growth and dealing with major supply-side constraints such as electricity. It will also require us to tackle inequality more deliberately. This is a very important point because all the research shows that we have been able to dent poverty over the past 20 years. However, research also shows that there are still huge challenges when it comes to inequality.
The fourth overarching objective and priority of the Division of Revenue is to reinforce government's efforts to transform the public sector towards a more capable state.
Hon Deputy Speaker, allow me to talk briefly on all these points. The first is about regaining fiscal space. The Minister has already mentioned that the gross tax collections for the first half of the 2014-15 financial year were R5,2 billion less than the 2014 budget estimates, due to lower gdp growth. Lower than expected GDP growth and consequent lower than expected tax revenues over the next few years have led us to shave our planned total government expenditure budgets.
However, having made this point, it is important to note that shaving or trimming still leaves us with a main budget expenditure estimate of R1,3 trillion in 2015-16, which is 7,6% higher than the revised estimate for 2014-15.
Another important point to make, though, is that we continue with our countercyclical fiscal stance to mitigate the impacts of the weak global economy. But as we do that, we need at the same time to take control of the amount government is spending and borrowing. If we do not do that, South African government debt will be viewed as increasingly risky, and the cost of borrowing increases. This seriously compromises our investment-led growth strategy and in particular our substantial infrastructure investment pipeline.
If you look at our Budget Review, you will notice that debt-service costs will take 12% of our revenue. We believe that this has to be managed and stabilised moving forward. If we do not rein in government spending, then this proportion of our expenditure will rise, thereby squeezing our noninterest budget allocations that are needed to finance the implementation of the key priorities of the NDP, as expressed in the Medium- Term Strategic Framework.
We are pleased to note that we have been able to craft a national budget in such a way that, realistically, the fiscal deficit and national debt are stabilized, while at the same time the real value allocations to health, education, social grants and small business support are protected.
The important message that we probably need to give and that is contained in the national budget is that government spending ceilings will remain very firm in the coming period. As government, we are stating categorically that we will not allow any breaches of the government spending programmes. We believe that if we do, that would amount to being reckless and it would compromise the path that we have chosen.
As government, we always try to be realistic. We realise that in a globalised and competitive world, growing the productive economy is not only difficult but also complex. It also takes time.
So, over the past decade and more we have been building the social wage to improve the lives of our people. Sometimes we do not realise how big a component this is, because sometimes the debate about the social wage only focuses on social grants. The social wage incorporates a number of other instruments, which include free primary health care; no-fee schools; state- subsidised housing; free basic services - water, electricity and sanitation; employment programmes, such as the epwp and cwp; and subsidised transport.
The point has been made here that allocations to these services have dropped. Again, I would encourage hon members to go back to the Budget Review, because then they will realise that allocations to key services, such water and sanitation and electricity infrastructure, have grown substantially. The municipal water infrastructure grant grows by an average of 52% over the MTEF period. On the other hand, by the way, provinces continue to provide key social services which generate no revenue, such as basic education, health, etc.
Social spending has more than doubled in real terms over the past decade. Social grants provide a safety net for the most vulnerable, and contribute to the monthly incomes of more than 16 million people. As government we are determined to defend this social wage from cuts in real terms. Indeed, we aim to increase the real value of the social wage through the progressive improvement of the quality of public health and public education services. Moreover, strong spending growth is proposed in a number of employment creating programmes - the EPWP and CWP. [Time expired.] [Applause.]
Question put: That the Bill be read a second time.
Deputy Speaker, I am sure the hon Motshekga has just come in through the door. Can you just pre-check that he has not voted because he entered the Chamber after the doors had been closed. Actually, he should not have been let in in the first place.
Yes. Hon members, I want to announce the results. The "ayes" have 103 and the "noes" have six. [Interjections.] Yes, I said 183. [Interjections.] Sorry? Is it 123? No, no! I said 183, hon members! [Interjections.] Okay, if I said that I am sorry. It is 183. [Interjections.] Anyway, members, it means that we do not make the 201 that is expected.
AYES - 183: Abrahams, B L; Adams, P E; Adams, F; Basson, J V; Bekwa, S D; Bhengu, P; Bhengu, F; Bhengu, N R; Bilankulu, N K; Bongo, B T; Bonhomme, T J; Booi, M S; Boshielo, S P; Capa, R N; Capa, N; Carrim, Y I; Cele, M A; Chabane, O C; Chikunga, L S; Chiloane, T D; Chohan, F I; Chueu, M P; Coleman, E M; Davies, R H; Didiza, A T; Dirks, M A; Dlakude, D E; Dlamini- Dubazana, Z S; Dlomo, B J; Dunjwa, M L; Esterhuizen, J A; Faku, Z C; Filtane, M L W; Frolick, C T; Galo, M P; Gamede, D D; Gcwabaza, N E; Gigaba, K M N; Gina, N; Goqwana, M B; Gumede, D M; Jeffery, J H; Johnson, M; Jonas, M H; Kalako, M U; Kekana, M D; Kekana, E; Kekana, C D; Kekana, P S; Kenye, T E; Khoarai, L P; Khosa, D H; Khoza, M B; Khoza, T Z M; Khubisa, N M; Khunou, N P; Kilian, J D; Koornhof, G W; Kota-Fredricks, Z A; Landers, L T; Lesoma, R M M; Letsatsi-Duba, D B; Loliwe, F S; Luzipo, S; Maake, J J; Mabasa, X; Mabe, B P; Mabija, L; Mabilo, S P; Madella, A F; Maesela, P; Mafolo, M V; Mafu, N N; Magadzi, D P; Magwanishe, G; Mahambehlala, T; Mahlalela, A F; Mahlangu, J L; Maila, M S A; Majeke, C N; Majola, F Z; Makhubela-Mashele, L S; Makhubele, Z S; Makondo, T; Malgas, H H; Maluleke, J M; Manana, D P; Mantashe, P T; Maphatsoe, E R K; Martins, B A D; Masango, M S A; Masehela, E K M; Maseko, L M; Mashatile, S P; Mashile, B L; Masondo, N A; Masuku, M B; Mathebe, D H; Matlala, M H; Matshoba, M O; Matsimbi, C; Mavunda, R T; Maxegwana, C H M; Mchunu, S; Mdakane, M R; Mfeketo, N C; Mjobo, L N; Mmola, M P; Mmusi, S G; Mncwabe, S C; Mnganga - Gcabashe, L A; Mnguni, P J; Mnguni, D; Mnisi, N A; Mogotsi, V P; Mokoto, N R; Molebatsi, M A; Molewa, B E E; Mosala, I; Mothapo, M R M; Mpontshane, A M; Mpumlwana, L K B; Mthembu, J M; Mthembu, N; Mthethwa, E M; Mudau, A M; Nchabeleng, M E; Ndaba, C N; Ndongeni, N; Nene, N M; Nesi, B A; Ngcobo, B T; Ngwenya-Mabila, P C; Nkadimeng, M F; Nkomo, S J; Nkwinti, G E; Nobanda, G N; November, N T; Ntombela, M L D; Ntshayisa, L M; Nyalungu, R E; Nyambi, H V; Oosthuizen, G C; Patel, E; Phosa, Y N; Pikinini, I A; Pilane-Majake, M C C; Radebe, G S; Radebe, B A; Radebe, J T; Ralegoma, S M; Ramatlakane, L; Ramokhoase, T R J E; Rantho, D Z; Raphuti, D D; September, C C; Shaik Emam, A M; Shelembe, M L; Shope-Sithole, S C N; Sibande, M P; Sisulu, L N; Sithole, K P; Siwela, E K; Sizani, P S; Skosana, J J; Skwatsha, M; Smith, V G; Surty, M E; Tleane, S A; Tobias, T V; Tom, X S; Tongwane, T M A; Tseli, R M; Tshishonga, M M; Tsoleli, S P; v R Koornhof, N J J; Van Rooyen, D D D; Van Schalkwyk, S R; Williams, A J; Xasa, T; Xego-Sovita,S T;Yengeni,L E; Zulu, L D.
NOES - 6: Figg, M J; Kohler, D; McLoughlin, A R; Steenhuisen, J H; Steyn, A; Waters, M.
As the result of the division showed that there was not a majority of the members of the National Assembly present for a vote to be taken on a Bill as required by Rule 25(2)(a), decision of question postponed.
Hon members, I just want to remind you also that members present shall vote. Every member present in the Chamber from when the question is put until the doors are locked shall vote. The previous provisions of subrule (1) do not apply to the President of the Republic, who is not a Member of this House. We just wanted to remind you of that. Hon members, we now move to the ... [Interjections.]
May I rise on a point of order? With your having clarified that, Deputy Speaker, I would like you to please check if hon Kohler did vote. She is in the House and she is required to vote. [Interjections.]
Yes. Thank you, hon Minister. Hon members, please do not address the House when you have not been recognised to do so. [Interjections.] Hon Chief Whip of the Opposition, what did you want to talk about?
Deputy Speaker, thank you. As the hon Kohler's Whip, I can assure you that she did vote. [Interjections.] Sorry, that is a point of order. Secondly, I would like to understand whether Dr Motshekga cast a vote because I saw him walk through the doors after they had been closed.