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.]
Debate concluded.
Question put: That the Bill be read a second time.
Division demanded.
The House divided.