Thank you for the words, hon Speaker. Hon Speaker, hon Deputy President, hon Ministers, particularly hon Minister Gordhan, Deputy Minister Nene, hon members, comrades and compatriots, and colleagues on my left, the Minister's 2014 Budget Speech has drawn the most enthusiastic commentary of respected economists, who lined up to give their views and interpretation of the Budget in relation to the country's fiscal wellbeing.
Most political and economic analysts concurred that this is once again a balanced Budget, others calling it a disciplined Budget, with some going as far as saying that politicians - particularly the ANC - will be disappointed because it is definitely not your typical election year Budget. It is indeed not an election Budget, because the ANC-led government services communities on an ongoing basis, informed by the mandate received from the electorate in terms of our manifesto - commitments in particular, not promises.
In the Reconstruction and Development Programme we said:
The first priority is to begin to meet the basic needs of people - jobs, land, housing, water, electricity, telecommunications, transport, a clean and healthy environment, nutrition, health care and social welfare.
Indeed, great strides have been made in addressing these challenges in the past twenty years. Significant progress has been registered, and yet we are the first to admit and acknowledge that much more still needs to be done. Working together with all South Africans, we will be able to take South Africa forward.
Some political commentators have made comments and assertions that seek to reduce the work of a capable collective under the wisdom of the President of the Republic of South Africa, Jacob Zuma, and the collective committee of Ministers in the Cabinet, and seek to alienate the Minister of Finance from this collective. We have categorically refused this destructive thinking.
It is with this in mind that we wish to recognise and commend the collective efforts of the hon Minister of Finance and the Ministers' Committee on the Budget. We also commend the invaluable input of Cabinet colleagues and their consistent and sterling work in putting together a credible Budget for the Republic and the people of South Africa in general.
Through this Budget we remain true to our commitment. We continue to be guided by the Reconstruction and Development Programme. For the past half decade the Fiscal Framework has been an evident narrative of consistency, stability, debt management, economic growth, job creation and fiscal prudence, the foundation of which was laid in 1994 under the first democratically elected President and our world icon, Ntate Nelson Mandela.
The fiscal path over the last 20 years of our democracy has been a tool of assurance that the South Africa we have built since 1994 is indeed today a better place to live in and continues to inspire hope in millions of South Africans of an even better tomorrow.
From the submissions of interested parties during the public hearings the Select Committee on Finance has agreed that the 2014 Budget is underpinned by the following key principles.
The global economic environment outlook remains a festering sore, particularly for developed economies, whilst the developing world will continue to be the main pillar of the global economic recovery.
Domestically, the South African economy has registered a lower economic growth than projected due to lower commodity prices and labour instability, particularly in the mining industry.
The domestic currency remains volatile due to, amongst others, the quantitative easing measures introduced by the Federal Reserve Bank in the United States.
The budget deficit is now 4% lower than the projections, despite lower economic growth. This will narrow the deficit to 2,8% of the GDP over the medium-term expenditure period.
Consolidated noninterest spending will increase by only 2% over the medium term. This is a remarkable achievement.
In line with the Medium-Term Budget Policy Statement, we welcome the implementation of the expenditure ceiling in order to force government departments to reprioritise without undermining social security and service delivery programmes.
In regard to benefits to households, the committee acknowledges that the Budget will also support income tax relief to households; job creation in the private sector; infrastructure, particularly in the renewable energy supply; and an increment of child support grants, which will take care of over 16 million people in the Medium-Term Expenditure Framework period period.
On support for business, there will be increased support and tax relief to promote entrepreneur development, as well as financial support and subsistence for mainstream industries, ie agriculture. And on financial security, steps have already been taken to ensure the protection and security of income tax, particularly retirement benefits, in a prescribed assets environment.
Therefore, it is our view as the Select Committee on Finance that the 2014 Fiscal Framework which has been presented should support a developmental programme to promote youth employment and protect the most vulnerable people in our society - the aged, women and children.
Furthermore, this Budget re-emphasises three fundamental aspects of the National Development Plan. It seeks to foster partnerships; achieve fiscal prudence by capping the budget and management of contingency grants; support transformational imperatives, particularly land redistribution programmes, entrepreneurship, SMME development and budget management; and focus on managing public debt and reducing the fiscal deficit over the next three years.
It is important that we dispel some of the myths that have been propagated by some members inside and outside of this House. In that spirit, I wish to reiterate some of the important and valuable information that the Minister shared with us in his Budget Speech:
Your administration started out, Mr President, with an economy that, in rugby terms, might be called a "hospital pass". Furthermore you said:
We experienced a once-in-70-year economic earthquake, the aftershocks of which are not yet over. Today we can report to the South African people, on what we have done in the past five years to respond to this crisis.
We began on a firm footing.
It is important to repeat some of this information, precisely because some amongst us either appear to suffer from amnesia or selective memory or, worse still, will never let facts stand in the way of a political point that they wish to make. Accordingly, we have heard certain leaders claim that South Africa did not have World Bank debt before 2009. The facts are as follows.
Firstly, in the 2008-09 cycle the stock debt of our gross government loan was R626 billion. Adjusted for cash balances, this figure becomes R525 billion, which is a net loan debt in other words. Expressed as a percentage of the GDP, these figures translate into 23,1% and 18,7% respectively.
Secondly, and very importantly, the figures I have referred to above are a far cry from what we inherited from the apartheid government, thanks to the successive ANC-led administrations since 1994. For example, in the 1994-95 cycle, the gross debt was R240 billion or 46,5% of GDP, whilst the net loan debt was 45,2%. While the absolute debt continued to rise to reach the levels I quoted earlier, we can safely say, without fear of contradicting ourselves, that we succeeded in containing debt as a percentage of GDP, thus reducing it by over 20 percentage points. Thirdly, of course, even though our debt has increased, we pride ourselves on the fact that this debt was incurred delivering services to the people. We have built millions of houses, connected many households to water and electricity and built schools and clinics. Amongst other important programmes, we intend to fast-track the redistribution of land through this budget. [Applause.]
Lastly, I need to remind this House that when the 2008-09 financial crisis broke, we had registered a budget surplus for two consecutive years. I am raising this precisely because some among us have forgotten about the global financial crisis of 2008-09. As the Minister of Finance noted in his speech, "We ran one of the biggest countercyclical fiscal stances in the world." Correctly, when revenues fell short by R61 billion, we allowed the deficit to rise, invested in infrastructure, set up competitiveness enhancement packages and expanded our public employment schemes.
Today we know that we were right, because we have regained all the jobs that we lost during the crisis. The recently released Goldman Sachs study, assessing the first two decades of freedom, made the following findings once more:
Government debt costs have trended lower and foreign reserves have risen
Overall cost of capital has declined
Corporate valuations have improved relative to global peers
Per unit labour productivity has improved.
This is despite the challenges that we have in the mining sector.
Simply put, we saw increased economic growth, attracting the appraisal of the world, the International Monetary Fund and the World Economic Forum of the ANC-led government on the competitiveness and regulatory framework, as compare with the best globally. This Budget is characterised by budget reprioritisation and recovery of the contingency reserves of the medium- term period. We are, and will continue, to be a beacon of excellence and an example to many, both in the developed and emerging economies.
In conclusion, I would like to thank members of the Standing Committee on Finance for the good work they did, particularly the chairs and co-chairs of the Finance committees. Hon Charl De Beer has been a pillar of support in regard to the work that we all do. I also thank the hon Sogoni and hon Chaane, the Minister of Finance, Mr Pravin Gordhan, the Deputy Minister of Finance, Mr Nhlanhla Nene, the Director-General of the SA Revenue Service, Lungisa Fuzile and the SA Revenue Service officials.
I must say that the foundation of fiscus stability and revenue collection that was laid by the current Minister of Finance, hon Pravin Gordhan, remains. I wish to say that legacy continues to prevail under the current Acting Commissioner of the SA Revenue Service, Mr Ivan Pillay. With this foundation we have managed to put strategies in place that have become the pillars of our revenue supporting the national purse.
The former SA Revenue Services commissioners also played a very important role in pursuing this goal. Let me also thank the staff in the National Treasury, particularly under the leadership of the director-general, for the work done in the past five years.
The ANC supports the 2014 Fiscal Framework and Revenue Proposals for the 2014 Budget. I submit this report to the House for consideration. Thank you. [Applause.]