Ahee, buti! Ndza khensa Mutshamaxitulu ku nyika xiviko xa timali eka lembe ximali ra 2020-21. Xiviko lexi i xa Komiti ya swa Timali ta Palemende ya Huvo ya Rixaka.
English:
The Standing Committee on Finance having considered the 2020 Fiscal Framework and Revenue Proposals tabled by the Minister of Finance reports as follows: The Minister of Finance tabled the 2020 proposed Fiscal Framework and Revenue Proposals, the Division of Revenue Bill and the Appropriation Bill on 26 February 2020. He also tabled this in line with section 27 of the Public Finance Management Act, PFMA read with section 7(1) of the Money Bills Amendment Procedure and Related Matters Act as amended.
Budget is an important policy planning and monitoring instrument that can be used by Parliament to oversee the alignment of the proposed expenditure with government policy priorities and more broadly, alignment to the National Development Plan, NDP goals. The budget can also be used as an oversight tool for monitoring the implementation and achievement of priority service delivery outputs towards the realisation of the NDP goals. This report is presented against the background of the global economic growth outlook which is expected to improve marginally from its recent slowdown. Despite the projected recovery of the global economy, significant risks remain. These are stated as follows: the rising geopolitical tensions between USA and Iran could have negative implications for the global economic stability. The Coronavirus disease may serve to dampen China's economic growth which will have implications for the manufacturing sector particularly in respect of metals. Slower metals production will mean lower demand for minerals; all mineral inputs from South Africa.
South Africa's economic growth outlook remains subdued. The real GDP is projected to be 0,9% in 2020, 1,3% in 2021 and 1,6% in 2022. Week growth focus can be attributed to the poor financial health of state-owned enterprises, SOEs. Unreliable power supply loadshedding and the implementation of structural reforms. Negative growth is slightly to stifle job creation, increase unemployment which stand at 29,1%, and youth unemployment in particular which stands at 58,1% in the fourth quarter of 2019.
The Minister joined by the director-general, Sars Commissioner and other officials briefed the Joint Committees on Finance and Appropriations Committees. The committees also received pre and post budget analysis from the Parliamentary Budget Office, PBO and the Financial and Fiscal Commission, FFC. We also held public hearings on 04 March where stakeholders presented their opinions about the budget. The committee also received written submissions and Treasury responded to the submissions from the public hearings.
The 2020 budget is based on the pillars of the economic strategy, i.e., strengthening the macroeconomic framework to deliver certainty, transparency and lower borrowing costs; and focus spending on education, health and social development. Budget 2020 - 21 proposed a total consolidated spending of R1,95 trillion. The largest allocation goes to the departments of education and Department of Arts and Culture at R396,4 billion, Social Development at R309,5 billion and Health at R229,7 billion.
The budget will encourage modernized network industries and restructuring of SOEs; opening markets to trade with the rest of the continent; lowering the cost of doing business and focus on job creating sectors. Going forward, the budget priorities framework and Mandate Paper currently under- review need to be aligned with the Presidential priorities and Medium-Term Strategic Framework to ensure the implementation of the NDP. The consolidated budget also includes the main budget framework and spending by the provinces, municipalities, social security and public entities.
The macroeconomic approach in 2020 Fiscal Framework is focused on the supply side of the economy. The speedy at which an economy can grow depends largely on improving aggregate demand. Governments worldwide now favourably consider fiscal policy to boost demand. The expenditure ceiling Treasury announced cuts of 20% over the medium term starting with 6% in 2020 - 21 and 7% in the outer years. How will this affect spending in particular on the NDP priorities, on the jobs, poverty and equality? So, these are the matters that need to be looked at because the cut-on spending might have negative implications.
The budget deficit is likely to widen further due to increased demands of SOEs. Lower than expected economic growth will lead to lower than projected revenue collection. Concerns over Eskom and demands from other financially distressed SOEs. Another challenge is the contingent liabilities arising from Road Accident Fund, RAF which will increase to R600 billion over medium term. Slow spending on infrastructure. Integrated planning, budgeting, monitoring and evaluation are still a challenge to ensure effective and efficient expenditure.
The budget may have to be adjusted to account for more bailouts. Debt is increasing over the medium term, rising at an annual average rate of 12,3% more than double the average growth rate for total expenditure. The Minister has indicated that there will be reductions in the transfers to the provinces and municipalities. What would be the implications of the reduction of transfers to municipalities and local government?
Xitsonga:
Mutshamaxitulu, ndzi tsakela ku kombisa leswaku tanihi Komiti ya swa Timali hi twananile eka leswi landzelaka ...
English:
We welcome the revenue proposals contained in the 2020 budget, particularly tax relief on households. We welcome the fact that Value Added Tax, Vat was not increased and also welcome the initiative on the state bank. We agree on the increase of tax on excise. Previous committee raised the issues in relation to the following: base erosion; profit shifting and elicit financial flows. These are issues hon Chair that Treasury, financial information system, FIS and SA Reserve Bank had to attend to. The committee also welcome the introduction of the Public Procurement Bill. Sars has to explore mechanisms of taxing the digital business enterprise. Chairperson, I move for the adoption of the report.
Xitsonga:
Inkomu, khanimambo. [Va phokotela.]
Hon Chairperson, the purpose of sensible economic policy is to ensure that our economy grows over time and that government provides services to the people irrespective of where we find ourselves in the business cycle.
As activity in our economy ebbs and flows, the objective is to ensure that tax revenue reductions in the lean years are offset by abundant tax revenue in the more fruitful years.
The Minister referred to the mounting debt mountain where debt servicing cost is the fastest growing expenditure item and now absorbs 15.2% of the main budget revenue per annum. This the result of an unsustainably high budget deficit, now 6.8% of South Africa's Gross Domestic Product. Servicing this ever-widening deficit is already crowding out service delivery and reducing provincial budget allocations. Despite these cuts, the DA government, Western Cape has avoided reductions to service delivery budgets in health, education and social development.
Our focus remains on facilitating job creation and reducing poverty and inequality. The DA has also proposed a Fiscal Responsibility Bill that will prevent a national debt spiral and hold government to account for how it overspends the people's money.
Over the past week, stock markets have crumbled, the oil price has plummeted and the value of our currency has depreciated significantly. This the initial result of panic now sweeping across the world in the wake of the highly contagious new Covid-19 for which there is not yet any cure, that originated from China, our largest trading partner.
We can't yet predict the impact this will have on our already fragile economy. Our economy is unlikely to grow under these conditions and more likely to recede. Our contingency reserve of R5 Billion per year is already hopelessly inadequate and this outbreak may well completely deplete it, leaving us unable to attend to other disasters that will inevitably arise.
The unproductive millionaire managers, beneficiaries of political patronage under a failed cadre deployment system can be removed from the public sector payroll without any impact on service delivery and replaced by front line service personnel in our police service, hospitals and schools. There is just no political appetite.
In the absence of growth and the increase in tax revenue that this would have generated, government has run out of options. That is why it has now turned its attention to raiding the pension funds of hard working South Africans. The intention is not to somehow stimulate our economy and thus provide some future benefit in the form of investment returns. Instead, the intention is to bail out a hopelessly bankrupt South African Airways, SAA, and to throw billions more into the bottomless pit at Eskom, that has consistently demonstrated that it is not capable of correction and unable to provide electricity to millions of hard working South Africans who have already paid for the service, over and over again. Taxpayers should receive a rebate on the installation of solar panels and tax incentives to stimulate small business development and entrepreneurs. This is the sector where any future economic growth and job creation will be generated.
The people of South Africa deserve to be liberated from the zombie State Owned Enterprises. The DA governed Western Cape will lead the way to a future free from the strangle hold of Eskom and the darkness it brings to our lives.
Not satisfied with the pace at which the broken State Owned Enterprises haemorrhage the people's money into the pockets of thieves, the proposed state owned commercial bank will achieve this a lot quicker. In its establishment, government must ask itself how this proposed bank will be any different to the spectacular failure of the corporatisation model upon which the other entities are built.
A sovereign wealth fund can be beneficial only if it is wisely invested and not riddled with corruption. Government has proved that it can't manage the people's money wisely and without sticky fingers. How will this be any different? Wastage and corruption have reached such proportions that the Minister calls for head-on confrontation. There is no confrontation, nor will there ever be under the current government. It cannot survive if it rips out its rotten core.
It also can't end the failed experiment that, under the guise of empowerment, produced billionaires, including the President, while everyone else got left behind. Black economic empowerment was the biggest post- apartheid intervention by government in our economy. It started with the noble ideal of benefits trickling down to everyone and failed spectacularly in implementation.
The vast majority of our people remain in poverty and making the politically connected few even richer will not lead to growth and will continue to drive much needed skills from our economy. Redress does not need to be a zero sum game to the benefit of a few politically connected insiders and to the detriment of everyone else.
To achieve a developmental state, government needs to be competent and not corrupt. To provide a comprehensive social security net for the most vulnerable members of society, government needs to care about what it does with the people's money and punish those who steal it.
Positive sentiment is one of the most powerful economic stimulators and costs nothing. Sentiment towards our economy is poor because nobody believes that government will do anything about corruption or tackle its debt spiral. Moody's holding the last investment grade rating for South Africa expects lower growth than projected in the budget and will decide this month on whether to downgrade us to junk status in line with every other rating agency. That prospect appears likely.
Government knows that the fiscal cliff is fast approaching and the current global environment isn't helping. Economic policy must change. If government doesn't do it voluntarily, its hand will be forced. We do not support the framework.
Chair, when the Minister delivered the Budget Speech on 26 February 2020, he said amongst other things that as a major step towards fiscas sustainability, today we announce a net-downward adjustment to money interest expenditure of R151.1 billion over the next three years relative to the 2019 budget projection. He further said that this reduction in terms of government expenditure will apply mainly to conditional grants for provinces and municipalities. Specifically he said that there's going to be reduction of R14.6 billion in terms of the human settlements budget in the medium term expenditure framework which could have provided more than 100 000 houses.
A R2.6 billion reduction in the municipal infrastructural grant, which is happening despite the huge infrastructure back log in municipalities.
A R13.2 billion reduction in the transport spending, mainly Prasa. Prasa is mostly servicing working class and poor households and workers and it includes the reduction [Inaudible 18:30:30.] suspension of the expenditure which was supposed to happen in the integrated public transport networks and Buffalo City, Mbombela and Msunduzi municipality.
There is also a cut in terms of education infrastructure which has been reduced by R5.2 billion, meaning that [Inaudible 18:30:46]; the pit latrine toilets are not going to be eradicated in the foreseeable future. There's also a cut in terms of health care services of R3.9 billion which is happening amidst a pandemic that is threatening the whole world, Covid- 19.
There's cut in terms of the expenditure in the Medium-Term Expenditure Framework, MTEF, on public expenditure. There had been a proposed expenditure cut in terms of the Wage Bill of R160 billion.
Now, in basic economy dictum and understanding, all these reductions amount to an austerity measure. Anyone who denies that what was presented here as an austerity measure is either a fool, disingenuous or both. Because, what we have here is an austerity budget and the budget justice coalition correctly identified these on damming the submission to the Standing Committee on Finance that this is a policy framework that is defined by government spending which is not increasing in line with sectoral cost drivers or the Consumer Price Index, CPI. It is defined by regressive tax policies; it is defined by the reprioritisation of funds away from the investments in the public sector. That is what government has basically presented. Now, the other issue which is basic logic is that a reduction in government expenditure, the price, the country of an increased Gross Domestic Product, GDP, so when government draws back in terms of expenditure of more resources, it is going to have recessionary consequences. Meaning that the economy is not going to grow, unemployment is going to be higher. It means that the revenue base is going to shrink, meaning that the debt to GDP ratio is going to increase.
So, instead of achieving what you think you are going to achieve with reduction and expenditure, you are going to achieve the opposite in terms of all those issues. It is basic economic logic; it is not sloganeering as you tried to claim when we debated the budget.
I want to call Dr David Masondo's attention to a book by Mark Blinth that speaks about austerity called the history of a very dangerous idea. Also, go and listen to Greece's former Minister of Finance, Ioannis Varoufakis who resisted austerity until he was kicked out of office.
The austerity measures in Greece were introduced at the same time with Portugal and Portugal bailed out of the austerity measures and implemented a contrary economic policy model and Portugal's economy grew far much faster than the problem and the crisis that Greece was found in due to austerity measures.
So, to ever think that we can survive the economic crisis that is going to be worsened by the fact that COvid-19 is disrupting globalisation, we are not going to get out of the economic crisis due to your austerity budget.
Instead, we are guaranteed to face a recession. Even that 0.9% economic growth is not going to happen with the kind of budget that you have proposed here. There are a few issues that you must deal with in terms of some of the low hanging fruits that can be harvested.
One is to change the procurement the procurement legislation, not just the Public Procurement Bill that has been proposed now. You should change the Municipal Finance Management Act, MFMA and the Public Finance Management Act PFMA to insist that all the goods and services that the state procures must be locally manufactured and manoeuvre the value chain.
We are currently trying to roll out this poorly conceptualised renewable energy strategy, why isn't that the solar panels are not all being manufactured here in South Africa? It was going to generate much more economic activity that is going to boost economic growth and development in South Africa. The other issue I want to speak to is that African bench reformed nuclear of the state bank has got the infrastructure and the expertise to put the bank that deals with all of these issues.
Three areas that you must maximally collect taxes on are e- commerce, multinational corporations, almost all of whom are involved [Interjections.] and then the component will be informal traders, villages, townships and cities and in that way you can the treat these things differently.
Hon Member, your time has now expired!
Thank you, hon House Chair and the big thank you also to the IFP for allowing me to swap with their place due to a section 25 meeting that I have to get to. Hon House Chairperson, the ACDP understands that the fiscal framework and revenue proposals for 2020 gives effect to our macroeconomic policy and includes, estimates of all revenue expenditure and of borrowing for that financial year; estimates of interest and debt servicing in charges; and indication of the contingency reserves necessary for an appropriate response to emergencies or other temporary needs, and other factors based on similar objective criteria.
In 2020-21, revenue estimates projected to be R1,58 trillion, with the expenditure of R1,95 trillion, leaving us with a consolidated budget deficit of R370,5 billion or some 6,8% of our GDP and climbing.
Our GDP for 2020-21 is estimated to be at some R5,4 trillion, and of great concern to the ACDP is that our gross national debt is projected to be at R3,56 trillion, or 65,6% of GDP by 2020-21. That been said, it is very clear that we are operating under a constrained financial environment.
Our economy has entered into a technical recession after a poor performance in the fourth quarter of 2019, caused by Eskom's outages. Real GDP is expected to grow by only 0,9% in 2020. Weak growth has translated to a record unemployment of 29,1% and climbing.
There has been a downward revision to estimates of tax revenue of R63,3 billion. Over the three years, we are expected to see budget reductions of R261 billion, which includes a R160,2 billion reduction in the Wage Bill. An amount of R60 billion has been set aside for Eskom and SA Airways, SAA, another bailout at the expense of the taxpayer. Our fastest growing expenditure item is our debt service costs of some R229 billion interests alone.
Clearly, our economy is in trouble. After years of looting and unparalleled corruption, with little or no consequence management, we are teetering at the edge of a junk status cliff.
What are needed are more men and women with intestinal fortitude to stand against those, intent on destroying our economy, ethical men and women of integrity. We need a fit for purpose education system that will match the skills needed by business. We need to reduce the barriers of entry to business, creating an environment which is conducive to the business sector. We must inculcate an environment of policy and political certainty, and not threaten business with expropriation without compensation. I thank you.
Hon Chair, the budget speech delivered by the Minister was honest and straightforward. The Minister sketched a very grim economic outlook which in turn means that our future is not secured. Our economy he said, is failing to even meet GDP growth of 1%, thus the masses of unemployed will remain on the jobless benches. Therefore, news of our country slipping into a technical recession came with no surprise and is indicative of what is yet to come with regards to credit ratings.
IsiZulu:
Okubuhlungu kakhulu Ngqongqoshe ohloniphekileyo lolu swebhu luzothwansula abantu abangafanele abangenacala kuzo zonke izinkinga izwe lethu elibhekene nazo. Uma ungabheka nje Ngqongqoshe ohloniphekileyo ukucosula kwakho imali esabelweni sezokuHlaliswa Kwabantu loku ungakulokotha kanjani sazi kahle ukuthi izigidi zabantu bakithi azinawo amakhaya zihlala emjondolo.
Ukucosula kwakho esabelweni somasipala lokhu kusho ukuthi abantu bakithi abahlala emakhaya abangenayo imigwaqo yibona abazosokola kakhulu.
English:
The truth is, economic salvation promised by political freedom three decades ago has not yet materialised despite all promises and all the talk shops and all resources which have been dumped into the hands of the few and not the many. We can grow our economy, hon Chair, and develop the local market, when we place our resources and strengthen our efforts in building capacity in the hands of the people who reside in townships and in our rural areas.
Because as the IFP, we believe that local development of our economy will impact more lives and lift more people out of despair than narrowing our focus on only attracting foreign direct investment.
We welcome the Minister's commitment to fight the real enemies of our people. Our people continue to suffer because of rampant corruption, lack of consequences for wrongdoing and poor administration and financial control by those who are elected or appointed in our local, provincial and national departments and government.
Honourable Chair, the IFP maintains that it is not a time for us to panic as a country in a time of recession or now that we are facing more challenges such as the rising oil prices, the outbreak of coronavirus or markets plummeting as stocks fall and fear rises. It is time now that we save less and spend more in investing in our economy as government, private sector and ordinary citizens; because if we save too much, we will place strain on the economy, at a time that we should actually be circulating our rand.
We believe that it is a time in which all South Africans works together to turn this tide and that the government effectively stimulate the economy by ensuring that it supports industries which have shown poor growth figures and by pushing real rigorous reforms in the management of our SOEs and furthermore to focus our attention on other key sectors which are unable to get off the ground.
We need to grow our local small, micro and medium enterprises within our economy if we want to affect real meaningful economic justice for all our people. The IFP supports the report. Thank you. [Applause.]
Hon House Chair, as a result of the ANC government mismanagement, looting and corruption, we find ourselves in an economic crisis. Due to limited job opportunities, insignificant economic growth, the tax base is small and the social expenditure great. This together with the exorbitant Wage Bill leads to excessive government debt along with the interest on this debt pushing the country closer and closer to the fiscal cliff.
We welcome, hon Chairperson, the tax relieves provided to personal income tax payers, but South Africans, Chairperson, remain overtaxed and underwhelmed.
This government only collect tax but does not earn tax. The government must earn its revenue. Lets me take for example, the Road Accident Fund, citizens contribute to the Road Accident Fund but when they have a claim, when they are victims over Road Accident, they cant claim, it takes years and years to payout. Citizens pay rates and taxes but yet they find sewerage running in their streets, parks are also dry along and no infrastructure maintenance or development.
When a citizen who pays tax in some form or another is sick, they find substandard healthcare and hospitals will become more hoax rather than places which actually contributes to healing them. When they contribute to Unemployment Insurance Fund, UIF, and they are unemployed, it takes months to payout and it does not actually benefit them. They are not even to speak about the compensation fund.
We had policy uncertainty in South Africa which create an environment where no investor will actually invest and can be sure of return on his investment.
The government is kept ransom by their own alliance partners and their own ideology. Will Congress of SA Union, Cosatu, and their affiliates allow the necessary wage cuts and the restructuring of SOC's like Eskom and the SA Airways, SAA? I think not.
We need a conducive environment for the private sector to invest, grow and create jobs. That means get rid of restrictive legislation and policy directions creating investor uncertainty. Stop the policy of expropriation without compensation. [Interjections.] You see hon Chairperson, the ruling party uses redress as a disguise for cadre deployment and corruption. Under the disguise of redress, the elite got richer and the poor poorer. The elite got richer and the poor poorer. The masses out there are still poor and you're political connected and your cadres got richer.
Stop allowing the exploitation of government; say we are not going to fly business class anymore, it's not the solution because an economic class ticket bought by or procured by the department caused more than a business class ticket procured by no more citizens, why, because you allow entrepreneurs to exploit the government. That's what necessary.
We need public service appointments on merit and people that will actually do the job. Stop performance bonuses to officials that are not performing and then we can save the economy. But the government should start earning tax and not only collecting it. Give return to the citizens of South Africa. The people are tired of funding your corruption and you're looting. I thank you. [Applause.]
Hon House Chair, let me just give you some statistics quickly. The bottom 90% of the population which is 31,8 million people only control 14% of the wealth in South Africa, 50% or 17,7 million people have a negative net worth of minus R16 000 in South Africa and 1% own or control 55% of all wealth in South Africa. That is why socioeconomic transformation in South Africa will remain a distant dream. Now, let me just tell you why I say this.
The automotive trade is being captured in South Africa, the financial sector is captured in South Africa, the mining sector is captured in South Africa and the food sector is captured in South Africa, we've heard today how the health sector is captured in South Africa, the retail sector is captured in South Africa, the media is captured in South Africa, and yes indeed, almost all the municipalities are captured in South Africa. That is why we lose R240 billion a year, Minister. Yes, the initiative of a transparent open system for tenders will help if we can introduce it immediately.
But, what are some of our problems? Economic growth is down, businesses are closing, corruption is rife, state-owned entities, SOEs, are in a crisis because of corruption and interference, and not forgetting Coleman Andrews who came and sold you an entire fleet and leases it from himself again. Yet, we did little or nothing of it. Okay, I want to give you a good example, I had an opportunity of meeting somebody else, the Minister Patel is present, but I see that he's not here now. How an organisation in Atlantis was able to successfully deal with issues of energy and Eskom up to 2012, and at that stage we didn't have crisis?
Secondly, they are able to produce the wheels of the trains, but they are not getting that opportunity. Right now, they can create 400 jobs in Atlantis, which is one of the poorest areas in the Western Cape. Let me tell you what you are going to be doing next week Tuesday. You are going to auction all the industrial machinery in parks, rather than creating an avenue for them to create those jobs and those businesses. Nobody wants to help them. These are the problems.
The manufacturing industry is down. We continuously import, and we say that we are going to give them incentives, but it is too expensive to do business in South Africa. There needs to be a balance, Minister. You can't win that because, while the unions are calling for high labour costs, you want it to be down in order to be able to be competitive. So, the challenges are immense.
We need a holistic approach where all the roleplayers and political parties must come together so that we can find a common solution which will take South Africa forward. Thank you. [Time expired.]
Hon House Chair, over the past 26 years, our people have continued to firmly place their confidence and trust in the hands of the ANC, a national liberation movement with an unblemished record of struggle dedicated towards fundamentally altering the circumstances under which our people live, the majority of whom are poor, black and women.
This debate occurs at a critical moment of history, when the economy of this country, akin to many global economies is facing headwinds. Once more, the movement of the people has been tasked by our people through an electoral mandate, to do what the course of struggle would have inevitably imposed on the ANC, to usher a phase which must ultimately culminate in the transfer of economic power to the majority of the South African people.
From it s very inception, the ANC has known better not to take the overwhelming confidence and unwavering support of our people for granted. Even when there are weaknesses of leadership in the organisation and our public institutions, the ANC would have been the first to admit that some amongst us have veered off course, and this is because we have a deeper appreciation of the enormity of the responsibility of leading this country. [Applause.] The ANC welcomes the broad thrust of the 2020 fiscal framework and revenue proposals presented by the Minister of Finance. We understand that these proposals were made under unfavourable economic conditions. Despite these challenges, the ANC is encouraged by the forward looking and innovative approach adopted by the Minister and his National Treasury team. The 2020 budget is consistent with the efforts of the ANC government to rid our country of the cancer of corruption and wastage in the state.
In order to overcome multiple challenges we face, South Africans across class lines must unite around a social compact to renew and rebuild our economy. The Minister of Finance made a strong and substantiated argument that, even in these tough times, government spending in social services, a sector which protects the most vulnerable in our society, continues to increase in the medium-term. This must be welcomed by all of us. [Applause.]
The Minister also made a fundamental observation, that if we do not address the issue of efficiency and quality of expenditure, government will not realise the outcomes we desire regardless of how much money is allocated. The reality is that low growth and rising unemployment means that South Africa's economic trajectory is unsustainable. The two phenomena are mutually reinforcing.
The ANC calls on government to implement growth measures that promote economic transformation, support labour-intensive growth, and create a globally competitive economy. In this regard, the ANC supports government's plan to focus on the five broad growth interventions. These are the following:
Modernising network industries at the centre of which is fixing Eskom so that it delivers reliable electricity at reason able prices, fixing public transport so that workers and students are able to travel safely and efficiently, ensuring that water services are modernised and accessible, and increasing fixed broadband penetration to lower the costs of communication.
Secondly, lowering barriers to entry and addressing distorted patterns of ownership through increased competition and small business growth. Thirdly, prioritising labour-intensive growth in sectors such as agriculture and services, including tourism. Fourthly, implementing well-coordinated industrial and trade policy, working together with African state, in the African Continental Free Trade Area; and fifthly, promoting export competitiveness.
While we welcome the fiscal framework and revenue proposals broadly, we are gravely concerned with the rising levels of unemployment in our country. The racial and gender, as well as the rural and urban characteristics of unemployment, poverty and inequality are not exclusively South African phenomena. However, as a consequence of the apartheid and colonial past which contributed to the high levels of inequality, our country is severely impacted by this phenomenon.
During the apartheid era, the youth of our country bore the brunt of apartheid brutality more than any population cohort. Today, 26 years later, following the advent of democracy, the youth of this country bear the brunt of poverty, inequality and unemployment more than any population cohort. Hon members, President Ramaphosa has correctly characterised youth unemployment as a shame on our conscience, and it is indeed a shame on all of us. Accordingly, the reduction of unemployment levels must become a preoccupation of this Sixth Administration. President O R Tambo profoundly reminded us that, "the children of any nation are its future. A country, a movement, a person that does not value its youth and children does not deserve its future." [Applause.]
We owe it to the current generation of young people and those who perished in struggle, to ensure that young people occupy their rightful place as active participants in the economy. We therefore fully support the presidential youth employment intervention. Our people have welcomed the announcement in the budget speech that there would be no increase in taxes so as not to slow down the already sluggish economy. National Treasury argues that substantial tax increases may obstruct short-term recovery.
Over the past five years, government has increased rates of personal income tax, capital gains tax and value-added tax, VAT, while raising the fuel levy and excise duties on alcohol and tobacco. Tax revenue is projected to grow by 4,9%. Our People have also welcomed the R14 billion given to individual taxpayers and the R2 billion through the adjustment of tax brackets by more than the inflation rate. The President's call to South Africans to forge compacts in which business, organised labour and civil society actively participate in the social and economic renewal of our country has been heeded by some of the progressive and farsighted organisations like Congress of SA Trade Unions, Cosatu, which has made proposals, with clear conditions, about supporting the re vitalisation and restructuring of state-owned enterprises, SOEs.
True to their character, those with vested interests in seeing these state- owned enterprises destroyed so that they could be sold off to the highest bidder, have come out against Cosatu's proposals while also seeking to scare workers against acting in their own self-interest. In order for social compacts to be sustainable, we need to build a state that is developmental, ethical and capable.
We need a state that can be trusted by all the social partners so that it cannot be captured by private interests and repurposed for the benefit of the few. The ANC supports this framework. I thank you. [Applause.]
I've just come quickly to the podium so that I benefit from your clapping of hands. [Laughter.] [Applause.] Chairperson, The fiscal allocations and revenue proposals tabled by the National Treasury coincides with a surging low fiscal growth and the global fiscal threats such as the coronavirus outbreak which threatens the financial markets.
The downward revision of revenue estimates by R63,3 billion in 2019-2020 as a result of low growth has further deepened our economic woes.
The trade unions are our biggest economic threat. This is not to say workers must not be represented; South Africa has ratified the Freedom of Association Convention of International Labour Organization, which is a blueprint for our acclaimed labour regime.
Our main proposition is as follows: firstly, when the budget deficit of a country is expected to increase to 6,8% of Gross domestic Product, GDP, in 2020-21.
Secondly, when its public wage bill is set to crowd out its investment in education, health and social service; what role should the trade unions play as sectorial partners to manage a fiscal cliff? Hon Chairperson, the projected 0,2% economic outlook and a 15,2% of debt service costs, which will come from the main budget revenue, ought to rally trade unions around governments fiscal framework.
In the early 70s to the 80s, the Amandla slogans and chants would have been desirable. In the millennium, there is no plausible reason why a democratic government must be held in perpetual captivity by the left-wing, the so- called pseudo Marxist radicals.
Hon Chairperson, the hypocrisy of the trade unions is telling. When big mergers and joint-ventures are authorized by the Competition Commission, jobs are often shed with no opposition from unions. The same trade unions ratify these ventures, motivated largely by narrow personal gains. During the state capture, for example, loud-mouthed unions were silently grieving. They allowed the plunder to continue.
However, we urge the President and the National Treasury to act in the best interest of the South Africans. We appreciate the support that is also given to small businesses and the so- called small-scale farmers. This should not be discontinued.
The businesses that are run by the foreign nationals must be made to pay tax so that we add to our GDP. We can't afford letting these people not paying tax, rather running business in our country.
We support the report. Thank you very much. [Applause.]
House Chair, I think this fiscal framework is a very sobering assessment because it demonstrates that the ANC has completely given up on fiscal responsibility and that they happily want to lead South Africa down the fiscal abyss. And I have a lot of sympathy for the Finance Minister because imagine having to tell your Cabinet colleagues, meeting after meeting, no you can't; only to be overridden time after time again; and being forced to throw money down bottomless pits.
In the last year the deficit was blown from a projected 4% to 6,3% to pay for state-owned enterprises that the ANC themselves have looted, mismanaged and brought to the brink of collapse. [Applause.] What is worse is that the moneys transferred to Eskom R23 billion, initially last year, and then a further R26 billion, was transferred without any preconditions. Only now has National Treasury produced draft conditions for how this money should be spent. It doesn't matter; you've created moral hazards by giving it over to Eskom; so it doesn't matter how badly how you manage or mismanage things, you have some money.
So, basically, the ANC has decided that their decade of rampant theft must have no consequences and the message the ANC is sending by blowing the deficit is this: the citizens, not the state capturers, will pay. And this does not surprise me considering the looters and capturers are all members of the ANC as well.
This is why the DA is having to table a Fiscal Responsibility Bill to rain- in these free spenders.
The fiscal framework this year will accelerate the deficit to 6,8% and debt service costs will consume over 15% of all government spending.
By 2022 the government will spend more on debt than it does on healthcare; and this is the same lot that want us to trust them with the National Health Insurance, NHI.
With an imminent ratings downgrade on the card, we can assume that debt servicing costs will continue to soar. And the state has consistently missed its revenue targets year in and year out.
Under the stewardship of President Ramaphosa the economy has registered negative growth in five quarters out of the nine so far that he has been in charge; this is the country's worst economic performance since 1945. And we find ourselves in a technical recession for the second time in less than a year; and our economy is not projected to grow beyond 0.8% in the foreseeable future. Brought to you by the ANC.
Government spending should actually prioritize human development and public services; but instead the budget throws money at failing SOEs such as Eskom, SA Airways, SAA and Passenger Rail Agency of SA, PRASA. So, instead of acting as an economic multiplier, government spending has become a bottomless pit of moral hazards.
The proposals for government to live within its means at the present moment are highly uncertain and they depend on agreements with unions and growth projections that are both not likely to be met.
The realty of our country is simple; the citizens of South Africa cannot afford to keep paying for ANC ideological experiments and populist pipe dreams; we cannot afford their ideology. The citizens of South Africa cannot afford to keep subsidizing the enemies of growth that lurk within the ANC and its allies. The public purse cannot continue to fund enrichment schemes for the ANC elite over the development of ordinary people.
The ANC has a habit of exploring every single economic cul-de- sac instead of choosing the highway of growth; and right now they are going down the dead end road of populism. The time has come for every sensible ANC member to stare down the enemies of growth in their own party and choose the path of economic liberalization.
In the DA they will find a willing partner should they choose this path, should they choose the right thing and should they choose growth. But if they keep putting off the hard choices year after year, they will push 50 million people down the abyss of a populist dystopia. The choice is yours. [Applause.]
Hon Chairperson, let me just give it to the DA speaker that Karl Marx once wrote:
The last capitalist to hang is the one who serves us the rope.
So, do not worry, the people have already chosen. [Interjections.]
IsiXhosa:
Le ngxoxo yezemali yenzeka kule veki yokukhumbula amakhosikazi kwihlabathi lonke kwaye sibulela i-ANC kuba yathabathela kuyo uxanduva lukamakulinganwe ngesini nangobuhlanga. Ngumbutho wesizwe kuphela oza nomkhomba-ndlela onombono nethemba esizweni.
English:We listened to voices of pessimism from opposition parties with no vision, poor analysis and worst still lack of coherent thinking on the challenges facing us. [Interjections.] The state bank, hon Shivambu, as you correctly knew when you were in the ANC, has always been an old aged resolution of the ANC. [Applause.] It is interesting however how the extreme left...
Hon House Chairperson, on a point of order: Which conference of the ANC...
Hon Abraham, please take your seat. Why are you rising, hon member?
I am raising a question because she addressed me and said it has been an old aged resolution. [Interjections.] Which resolution is she talking about and which conference?
So, what is the point of order?
You do not even know your resolutions. [Interjections.]
Hon member that is not a point of order. Please take your seat; that is not a point of order. Order; hon members!
It is interesting hon Chairperson how the extreme left, which is the EFF, argue against nonexistent austerity measures versus the right wing friend of theirs arguing for austerity measures. Yet the two extremes always find one another at the end. For the record the budget has grown from R1,67 trillion to R1,95 trillion. The ANC-led government is simply reprioritising.
FF Plus, it is so easy to find faults. Your oppressive governments cared for a few. The ANC-led government is here to deliver for all including you. [Applause.] The budget does not talk about wage reduction. No person's wage is going to be decreased but we are talking about Wage Bill which is very complex for you to understand. [Laughter.] You are talking about the tax relief which our government provides for that.
Hon George from the DA, you said we have run out of options but you have provided none. You have provided none and complained but came with no proposals. In times of our economic challenges the followers criticise; persons throw their hands in the air while leaders continue to give guidance and propose solutions to complex issues. This is what we have today in this debate. Leaders have no choice but to lead and this is what the ANC is doing. We invite all patriots; all hands on deck.
IsiXhosa:
Zintathu iingxam zohlahlo-lwabiwo-mali lwama- 2020. Eyokuqala, sisidingo sokukhula koqoqosho nophuhliso. Okwesibini, olu hlahlo-lwabiwo-mali kufuneka luzame ukuhlawulela oku kukhula nolu phuhliso. Okwesithathu, kufuneka sizibuze umbuzo othi senza njani ukuqubisana netyala? Okubalulekileyo kokokuba iziphakamiso zethu mazibone kwaye ziqinisekise ukuba abantu bayaxhamla. Sonke simqhwabela izandla uMphathiswa, ebuthathakeni bemeko yezemali kodwa wema wathi urhulumente akasayi kuyinyusa irhafu iVat. Kukhule ingeniso yerhafu nge- 4,9 ekhulwini kunyaka- mali wama-2020-21.
English:
The main tax proposals included personal income relief through above inflation adjustments in all brackets along with increases in the fuel and Road Accident Fund, RAF's levies to adjust inflation. What we need to do is to strengthen the progress in the tax system while broadening the tax base and removing exemptions. We welcome the review of tax incentives over the medium term and the repeal or the redesign of those that are inefficient and inequitable. Key to lower than forecasted revenue collection are on the one hand the nature of the 2020-21 proposals but also the problem of low aggregate demand that constrains economic activity; investment and employment creation. This is where we need to say that the limited tax relief and the 0,25% interest cut will support growth in household consumption but given our situation, it is not substantial enough.
IsiXhosa:
Eyona nto ichanekileyo yokwabelana kakuhle ibikunyusa umyinge oya emakhaya. Mhlawumbi isibonelelo sethutyana kumakhaya ahluphekayo.
English:
Globally it has been shown that in times of job losses and increasing poverty, as we experience, short term and immediate stimulus has an immediate effect of stimulating the demand side of the economy, boosting the domestic consumption and growth. Our committee report proposes that Treasury together with the committee go into the entire tax system particularly Value Added Tax, Vat, Corporate Income Tax and Personal Income Tax, specifically to look into the redistributive and just tax changes. That is a progressive tax proposal. Whilst the review of the Corporate Income Tax incentive for efficiency is necessary in itself, it is not enough. A thorough review is required to provide evidence that it cannot be increased. A costs and benefits analysis of increasing Corporate Income Tax should be done. Global research shows that we are the most unequal country on earth with the highest differentials between extreme poverty and wealth.
IsiXhosa:
Ngoko ke kumele ukuba kukhangelwe indlela yokuba ooziswana zibomvana bahlawule ngobutyebi babo ngokuhlawula irhafu ethe xhaxhe.
English:
In addition, work should be carried out on a wealth tax and such a report be tabled before the committee. Whilst we had many in this debate speak to debt levels, their solutions demonstrate a one-eyed-tunnel vision approach to dealing with this question. Such proposals have demonstrated in numerous countries around that there has been social unrest, greater destabilisation but what we actually do not want is to replace one government by the other or if they cannot get that, then coalitions. IsiXhosa:
Iziphakamiso eziza kuphelisa uzinzo azincedisi kuba ekugqibeleni, abantu baphela betsala kanzima kodwa umbutho olawulayo uyabakhathalela...
IsiXhosa:
... unlike some, amongst us.
IsiXhosa:
Umbuzo esizibuza wona njengeANC noMphathiswa wezeMali uwubuzile lo mbuzo wokuba kutheni inzala yethu singuMzantsi Afrika... [Kwaphela ixesha.]
House Chair, hon members and the speakers who spoke here, I stand here to thank the committee for their sterling work and their recommendations and conclusions which will enrich the budget process. So, I thank you very much Chairperson of the committee and you members. [Applause.]
The different contributors to this debate made various valuable contributions, all of you. So I thank you for that, you have indeed enriched the process. So, House Chair, the challenges that we face, is of a slow down in economic growth [Laughter.]...it's an EFF gogo [something scary] [Laughter.] coupled with that, are the risks in the global economy.
Now, against the background of this risk in the global economy and the slow down in the South African economy by that very fact, one should expect revenue growth to slow down. This naturally puts a lot of pressure on the expenditure side of the budgets.
So, it is not very helpful for somebody to say; I can see that revenue is slowing down but I want higher expenditure. It doesn't gel. So, responsible fiscal management needs a basic understanding of what needs to be done. You can't say that you complain about the increasing debt mounting but continue to say expand your budget deficit before borrowing, it makes no technical economic sense [Laughter.] you can't say that we should spend more but then you say no, no don't increase, again the basic fundamentals of economics, don't work. [Applause.] So, therefore, our immediate challenge is to grow the economy; and to that extend, we have put in place measures which support the growth process. Secondly - you did not read the speech - [Laughter.] secondly, we need to contain wastage and remove corruption from the government system.
Thirdly, yes, with raining debt and the debt service cost, we have to have very stringent cost management measures, in order that our fiscals' stance must be supportive of the growth that we require in the economy.
I might have to define what fiscals is to somebody, but let me not doing it, let me not do it today - having said all of that, we have to manage certain tensions within our society very carefully. For example, the manner in which we talk about the Public Wage Bill, we must be very about how we talk about it. And nobody has said we are reducing the number of employees, so let people not go out there and tell lies, we never said that. We said that the challenge we have is the Wage Bill, the two things are not the same and I think it's important to understand that you can have larger Wage Bill with a smaller number of employees or actually you can have a larger number of employees with a reasonably managed Wage Bill. The challenge, if I could say to some people that side, the challenge is to understand the dialectics of the matter [Laughter.] about the relationship between these two.
Having said all of that, Chair of Chairs, I really honestly thank you all for your contributions, I don't want to stand between you and dinner. Thank you very much.
Debate concluded.
moved: That the 2020
Fiscal Framework and Revenue Proposals and the Report of the Standing Committee on Finance thereon be adopted.
Question put: That the motion moved by the Chief Whip of the Majority Party be agreed to.
Division demanded.
The House divided.
[Take in from the minutes]
Motion agreed to. The House adjourned at 19:32. -----------------------