Chairperson, hon Minister, hon members, and distinguished guests in absentia ... [Laughter.] ... let me say that it is always important to restate what we normally consider to be obvious when we debate matters of this nature. That is to say, a budget is both a political and a financial instrument used to ensure that the policies and programmes of government are brought into effect through the allocation of financial resources in all three spheres of government. Therefore, the prosperity of the 2010 Budget lies in addressing the key priorities as outlined in the ANC election manifesto and the state of the nation address.
It is important to note that several changes have occurred in the world economy since the tabling of the Budget early in the year. The volatility of the markets is but an indication of unstable and unsustainable economic policies, particularly from the developed countries.
These rampant changes have brought about a great deal of unpredictability in the whole world economic system. However, for us the key issue is not just to understand and characterise the phenomena behind the ongoing economic challenges, whose end none of us seem to be in a position to predict, but of primary concern to us is to measure their impact on the pace and sequence of our delivery programmes so that we can take bold decisions to ameliorate or mitigate the negative consequences this will have on ordinary citizens.
It is now a known fact and universally accepted that the unfettered so- called free market economic system has failed dismally to address and respond to social and economic inequalities that continue to ravage poor nations. It is from this experience that we must forge a new economic growth path that is inclusive and state-led, because the invisible hand has forever remained illusive and a dangerous path to follow, the consequences of which only the poor and the working people can better explain to some of us who live in comfort.
Clearly, the need for active state participation in the economy is beyond debate. No government in the world today can afford the luxury of relegating itself and limiting its role to that of a regulator and only become active when it is time for bailouts of failing policies. It is not just important but critical that the prosperity of Budget Vote No 9 pertaining to the National Treasury should enhance the following: It must engender the social ownership of the country's wealth, not as a face-saving formula but as a well-reasoned economic strategy to address the imbalances of the past that continue to bedevil our people.
There is a need to foster a thriving and integrated economy, which draws on the creativity and skills that South Africans can offer and builds on the South African economy endowments to create decent work for all as well as eliminate poverty. It must increase social equality and a growing economy, which reinforce each other and constitute a positive cycle of development that improves the quality of life of all people.
It should also contribute to and advance national prosperity through a mixed economy path where the state, private capital, co-operative and other forms of social ownership complement each other in an integrated way to eliminate poverty and foster shared economic growth. It must ensure national prosperity through rising productivity brought about by innovation and cutting edge technology, labour absorbing industries, growth, competitive markets and thriving small businesses and co-operative sectors.
In the regulatory environment, the current ongoing economic crisis is, to a very large extent, due to ineffective regulatory institutions that have been neglecting their responsibilities, either due to lack of capacity or because they do not share common objectives that constitute the national priorities of our government. It, therefore, requires serious attention from the National Treasury to pay specific attention to financial institutions and regulatory entities such as the Financial Services Board, FSB, the Public Investment Corporation, PIC, and the Government Employees Pension Fund, GEPF.
Equal priority should be given to all these institutions so that the necessary capacities are developed to execute their mandates just like the SA Revenue Service and a few others have managed to do. The strategic goal of economic transformation is the material response to the clarion call of the Freedom Charter that "the people shall share in the country's wealth".
In recognising our successes since 1994, in responding to this call, we are deeply mindful of three fundamental challenges, which remain as hurdles along the road to substantive economic transformation. These are unemployment, poverty and inequality. Economic transformation in our country must ensure that a national democratic society characterised by a thriving and integrated economy, an increasing social equality, national prosperity, socioeconomic rights and a mixed and sustainable economy is achieved.
For this to happen, the state must play a central role by directing investment in underdeveloped areas and directing private sector investment in the area of productive sectors. An undertaking is a mandate to halve the unemployment rate and poverty from the 2004 levels and to substantially reduce social and economic inequalities. Binding constraints to meaningful economic transformation, inter alia, skewed patterns of ownership, production, dualism and marginalisation, were identified as needing decisive action for their elimination.
We have to deal with monopoly domination of the economy as this is seen as an obstacle to the goals of economic transformation, growth and development, and as such needs to be addressed. The understanding of a developmental state is that it is located at the centre of a mixed economy as a state that leads and guides that economy, which intervenes in the interest of the people as a whole.
The key questions that need to be asked when considering the Budget Vote of the National Treasury are the following: Does the appropriated Vote before us respond to the respective programmes that seek to improve the quality of life and the socioeconomic conditions of the marginalised people? Does it support poverty alleviation and job creation? In answering these questions, we need to trace the development of the ANC Medium-Term Policy Priorities in 2008, which influenced the manifesto policy framework, and what relationship this had with the Medium-Term Budget Policy Statement of October 2009.
The Medium-Term Budget Policy Statement clearly indicates that a substantial adjustment would have to be made in order to meet the medium- term policy directives of the ANC for the five-year period, which started in 2009. The 2009 Medium-Term Budget Policy Statement indicates that the greatest dangers are to be found in the effects of a shrinking manufacturing base resulting in a negative impact on the domestic economy.
The 2010 Budget was delivered in the midst of an ongoing global economic crisis where millions of jobs had been lost domestically. In 2009 about 870 000 jobs were lost, and as we speak right now, we are saying almost one million jobs have been lost mainly in the manufacturing sector. Whilst there have been initial signs domestically that those might be bottoming out and indicators which reflect growth in the last quarter of 2009, for the first time since 2008, this recovery will be slow. The loss of jobs and growing levels of inequality and indebtedness do not suggest that because of the growth recorded in the last quarter this will automatically have an immediate knock-on effect on job creation.
This in turn has an impact on revenue income, and early thoughts that we may be officially out of recession were dealt a blow when the first quarter of 2010 unemployment figures from Statistics SA reflected a further 171 000 job losses. The current European crisis generated by Greece's economy, which has now impacted on one of the top five trading partners in the UK, must clearly and continuously remain under the radar of the National Treasury and ourselves as Parliament.
The lessons we have to learn are that South Africa has been at the forefront of this and that the global financial architecture has to be rapidly reformed. The ANC-led government has actively been at the forefront of this for many years, and will continue to strive for the necessary radical reform of the Bretton Woods institutions, because the International Monetary Fund, IMF, and the World Bank and their subsidiaries cannot continue to claim that the festival of reconstructing the economy is a festival of rich nations.
The actions and economic policies of developed nations, underpinned by their narrow and selfish interests, have proved to be more detrimental and negative to the poor nations, particularly Africa as a continent. Developing countries were affected by the collapse of the financial institutions and have been badly hurt, both economically and socially, in spite of their prudent economic policies. We have noted that the crisis is associated with inadequate regulation and supervision of banks and other financial institutions, as I have already mentioned.
In conclusion, we need to say that we, as the ANC, support this Budget. This is based on the fact that this Budget will be used to monitor the programmes of government in its entirety, and Parliament will support that so that all government departments have the necessary capacity to keep regular and honest account of the public purse. It would be in the interest of government as a whole to manage the resources of the state in a manner that it would tolerate no corruption and no laziness, as the President of the Republic has said. Thank you. [Applause.]