Hon Chairperson, hon Minister, members, hon MECs present here from the provinces and other special delegates, the Minister of Finance tabled the 2011 Budget before Parliament on 23 February 2011 and met his obligations in terms of section 27 of the Public Finance Management Act, the PFMA, and section 7(1) of the Money Bills Amendment Procedure and Related Matters Act.
We can put the question: What is the kind of South Africa we want? To quote the late Comrade Chris Hani:
We want to build a nation free from hunger, disease and poverty, free from ignorance, homelessness and humiliation, a country in which there is peace, security and jobs.
I believe we all agree on this.
President Mandela sacrificed 27 years of his life in prison to lead the new South Africa based on democratic values, as outlined in the Freedom Charter and the Constitution. President Zuma outlined the programme of action in the state of the nation address, and I quote:
We want to have a country where millions more South Africans have decent employment opportunities, which has a modern infrastructure and a vibrant economy and where the quality of life is high.
I believe we agree on this as well.
Under the ANC-led government this action plan has run through like a golden thread since 1994. It started with the Reconstruction and Development Programme, RDP, laying a foundation for an integrated socioeconomic policy framework and eradicating the legacy of apartheid. It was a process; it is not completed yet.
It must be said that we cannot deliver in 17 years what was not done in the previous 100 years. It is impossible. Not one country in the world has achieved that. The present structure of the economy is more than 100 years old, and you do not change it overnight.
What has happened over the last 17 years as a result of current fiscal policies? The budget deficit was brought down. The inflation rate was targeted at 3% to 6%. The balance of payments of the current account is within moderate limits.
The fiscal framework, revenue proposals and the division of revenue, as tabled by the Minister, form the basis of the construction of a developmental state. There are challenges facing the 2011 Budget: deep- rooted structural problems; poverty, unemployment and inequality; bottlenecks and backlogs; the spatial geography of the legacy of apartheid - just look at Griekwastad in the Northern Cape; shortages of skills to support growth and development; economic transformation; job creation and the creation of sustainable livelihoods.
The New Growth Path and the Budget constitute a nation-building programme. Through the New Growth Path the objective is to create jobs for our people and make them less dependent on social grants. Again, it is a process. We have to give our people the conditions for a decent life and dignity within a South African society, based on the principles of nonracialism, nonsexism, democracy and prosperity, creating safer communities. I believe we agree on this as well.
The Medium-Term Budget Policy Statement of 2010 provided the policy basis on which the 2011-2012 and Medium-Term Expenditure Framework for the financial years of 2011-2014 would be funded. We agreed on this in November 2010 in this House.
The World Economic Outlook of the International Monetary Fund, IMF, shows steady but fragile global economic growth. The IMF forecast a global growth of 4,4% in 2011 and 4,5% in 2012. The IMF, however, lowered its projection for South Africa's economic growth in 2011 by 0,1% to 3,4%, citing the slower pace of recovery due to lower world trade and high chronic unemployment rates.
South Africa forms an integral part of the world economy and is affected by what happens on the global market. South African participation in the Brazil, Russia, India, China and South Africa bloc, Brics, will give local firms expanded access to fast-growing markets and investment opportunities.
Fiscal policy is the management of revenue expenditure and debt in the context of a dynamic economic environment. We are grateful for the government's response of adopting a countercyclical fiscal stance two years ago, ahead of the recent economic crisis. The overall structuring of the fiscal framework and monetary policy setting is conducive to the macroeconomic stability and the fiscal sustainability of this economy. South Africa is rated number one internationally in terms of our Budget transparency.
The economic downturn resulted in approximately 1 million people losing their jobs. As a household consists of about three dependants, on average, it affected 4 million people directly. What do you do as a government? Do you close your eyes, shut your ears and say, "I did not see it and I did not hear it"? No. You act. A total of 15 million people are dependent on social grants. This situation cannot carry on forever. In addition to other job creation initiatives, we welcome government's programme to create 5 million jobs over 10 years.
The challenge is to get the youth between 18 and 25 years of age employed. Economic growth is the principal driver of employment creation. We support government's employment programme, especially for the youth to be at the centre of economic development. We are in this together. This includes organised business and everyone seated here today.
Sustainable growth depends on improved industrial and trade performance, strengthening those sections in which South Africa has competitive potential in global markets. We need to improve on our competitiveness and become an exporter of commodities. A more stable and competitive currency can enhance industrial competitiveness. Skills development, technology modernisation and effective investments are the building blocks of sectional growth in industry and exports. We have to work to be the best, be more committed to our work. We have to get better performance. The depreciation of the rand to a sustainable, more competitive level and inflation remaining in check will lead to a stronger recovery in the South African industry and exports.
Tax revenue forms the basis of government's income. If revenue does not cover expenditure, borrowing is a short-term solution. Higher government expenditure as a share of the gross domestic product, GDP, ultimately requires a growing tax base or higher taxes. We all want to avoid paying higher taxes. I think we agree on this as well! A growing economy will result in a growing tax base.
An increase in government borrowing to cover expenditure will give rise to debt and debt service costs, thus borrowing has to be managed very carefully. Under the leadership of the hon Minister, this is happening. A higher wage bill in conjunction with a rising interest bill will result in reduction of spending on maintenance, capital investment and Public Service employment growth.
Revenue collected has to be spent wisely on the set priorities to improve the lives of our poor people. We welcome the tax expenditure statement that was published and thank the Minister for his responses to the committee on pages 134 to 138 in the Budget Review of this year.
The Select Committee on Finance conducted joint public hearings with the Standing Committee on Finance, complying with the requirements of involving the public. Thirteen organisations made submissions to the committee on the fiscal framework and revenue proposals. The committee recommends as follows.
Firstly, National Treasury should analyse the progress that has been made with regard to the set performance indicators before funds are allocated. Secondly, National Treasury should ensure that before funds are allocated to development finance institutions and the youth development subsidy, a measurable programme with a defined monitoring and evaluation tool is developed by the relevant stakeholders. Thirdly, revitalisation of further education and training, FET, colleges should be prioritised by the Department of Higher Education and Training, as this will help to improve skills development. Fourthly, government should co-ordinate the New Growth Path and the social security network system in order to reduce the number of people on social grants. Fifthly, the information system on the government database should give a clear indication of how many jobs have been created and how many people have exited the social grant system. This should be done through the Department of Social Development.
Sixthly, the tax regime and incentive schemes should not only be targeting the older generation but should also provide an environment that will encourage the youth to start saving. Seventhly, the provincial wage bill should be made service-orientated, and National Treasury should monitor spending on wages. Proper research should be done on the size of the wage bill compared to the number of employees. Eighthly, government and its provinces should concentrate on the filling of service delivery posts and not only filling posts for the sake of it. Ninthly, National Treasury should present a programme that will instil a culture of saving and investment in South Africa. Lastly, the House should support the fiscal framework and revenue proposals and adopt the report.
I thank you.