Chairperson, today, in the absence of the former Minister of Finance, Trevor Manuel, I would like to pay tribute to him. He made us all proud of the manner in which he conducted his duties as Minister of Finance and will go down as one of the most successful in our history. We wish him well and hope he will offer his heart and expertise to all those who are in need of it in government.
To the new hon Minister, you are taking over at a very challenging time, and we wish you all the best. Let me comfort you with a quote from Madiba: "A good head and a good heart are always a formidable combination." I think you have both. [Applause.]
Mr Chair, all indications are that we are building up a huge overdraft as the current recession is undermining Sars' ability to hold on to the projected revenue collection targets. In a recent Nedbank analysis, it is forecast that the budget deficit will grow between 5% and 6% of GDP - almost double the figure predicted earlier this year.
What is the possible reaction by a government to such a scenario? Hamish McRae, in an article published in The Independent, offered two possible reactions: One is, according to him, a horror story reaction, with sharp increases in taxation and sharp cuts on spending programmes - no nice-to-do spending anymore. The other possibility is to approach the deficit problem as an opportunity and to reshape government and do a better job.
There is a clear attempt by the new government to try to do a better job. It is, however, sad that it was necessary to increase the size of government to almost the second largest in the world, in an effort to do better. In COPE we believe that a leaner government with a strong professional Public Service would have been a better option. If government is not successful in better managing the Public Service at all three levels in future, we are back at the horror story option, and that does not augur well for the future.
Nonperformance means higher taxes or huge cuts in the spending programme. The COPE will support the Treasury in its efforts to make sure that government is getting better value for the money it spends. It is not business as usual in a recession, and that includes government business. So even the smallest gesture from government that it is serious about saving taxpayers money will assist to create the right attitude amongst South Africans that we are together in this financial crisis.
The public is suffering; domestic spending patterns are falling; jobs are being lost; poverty is growing. The public would like to see a government also addressing spending patterns. Even the smallest cuts will help the psychology of this recession. So it would have been good public relations to cut the luxury cars. Just one notch down, hon Minister, would have done the trick, or maybe smaller delegations to travel overseas and to Cape Town for briefings, or, perhaps, fewer cocktail parties. It is all part of managing the psychology of the recession. Look after the pennies, and the pounds will look after themselves. Pick 'n Pay has just cut meeting expenses by 23% by using television conference facilities instead of flying to meetings.
It is important that all South Africans understand that we are together in this crisis, and everyone should contribute to get us out of it. Working together, we can save more. [Applause.] By joining this gesture of savings, government will build credibility amongst taxpayers to show that they are serious about spending less with more impact.
Sars has, over the years, built a good, reliable image as a well-oiled government agency with integrity. That is what tax-collecting agencies need if they want to be successful at collecting taxes. The recession has changed the ball game. It will be tougher now for Sars to collect. Maybe they should embark on a public relations exercise to convince taxpayers to pay their taxes on time and with a generous attitude.
It is beneficial to the economy to pay taxes to avoid any surprises of tax increases in future. We must always remember that the goal of tax policy is to maximise economic growth, not to maximise tax revenues. The way Sars and the Treasury are going to manage the fall-out from this recession will be vital in how we will perform after this recession.
Voorsitter, in moeilike ekonomiese tye begin die ekonomie die waarde en die afhanklikheid van die primre sektore besef. 'n Belangrike primre sektor is die landbou. Nou is die tyd om na daardie sektor te kyk. Belastingbeleid ten opsigte van landbou moet 'n ondersteunende rol speel om ekonomiese groei te bevorder en seker te maak dat die landbou daarin slaag om al Suid- Afrika se kos self te produseer sodat dit nie nodig is om in te voer nie.
Miskien moet die agb Minister dit oorweeg om indringend met landbouleiers te gaan sit om te sien waar die nodige belastingaanpassings gemaak kan word om die sektor vir eens en altyd op die wenpad te plaas. (Translation of Afrikaans paragraphs follows.)
[Chairperson, in difficult economic times the economy begins to realise the value of and dependency on the primary sectors. An important primary sector is agriculture. This is the time to look at that sector. Taxation policy in respect of agriculture should play a supportive role so as to facilitate economic growth ensure that agriculture succeeds in producing all of South Africa's food on its own, which will obviate food imports.
Maybe the Minister should consider an incisive discussion with agricultural leaders in order to determine where the necessary tax adjustments can be made, thereby once and for all placing this sector on the road to success.]
Chairperson, households currently hold debt worth about 76% of disposable income. It is shockingly high. This debt burden is hitting the core of society, functional families, very hard. Government should take the initiative to make sure that the reaction by banks will not destroy families and the social fibre of our country. We all know how handling debt can break up marriages and, eventually, families.
South Africa is going to need a different approach from the banks to assist us to come out of this recession. The banks have definitely played their part, contributing to this recession. The irresponsible credit offerings, before the implementation of the National Credit Act, were greedy and wrong by anyone's standards. Now we see draconian credit requirements bringing the property and car sales markets to a complete standstill and hitting those who have been lured to accept cheap credit hard.
Can I propose to the hon Minister that they sit down with the banks to work out a programme in an effort to save our debt-ridden families from falling apart. We will need these families to assist us to turn the tide on the recession. The recession has pushed many previously financially sound individuals into poverty, contributing to the devastating spiral of poverty. Let's unite to fight poverty. Former President Nelson Mandela reminds us so beautifully, and I quote:
Overcoming poverty is not a gesture of charity. It is an act of justice. It is the protection of a fundamental human right: the right to dignity and a decent life.
The Cope will support this Budget Vote. [Applause.]