Hansard: NA: Budget Speech

House: National Assembly

Date of Meeting: 26 Feb 2014

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Minutes

UNREVISED HANSARD

NATIONAL ASSEMBLY

Wednesday, 26 February 2014 Take: 81

WEDNESDAY, 26 FEBRUARY 2014

PROCEEDINGS OF THE NATIONAL ASSEMBLY

___________________

The House met at 14:02.

The Speaker took the Chair and requested members to observe a moment of silence for prayers or meditation.

WELCOME

UNREVISED HANSARD

NATIONAL ASSEMBLY

Wednesday, 26 February 2014 Take: 81

Start of Day

WELCOME OF DELEGATION FROM NORWEGIAN PARLIAMENT

The SPEAKER: Order! Hon members, I wish to acknowledge in the gallery the delegation of the Norwegian Parliament, led by His Excellency Mr Olemic Thommessen, President of the Storting of the Kingdom of Norway. Hon members, welcome to our Parliament. [Applause.] Thank you.

THE MINISTER OF FINANCE

UNREVISED HANSARD

NATIONAL ASSEMBLY

Wednesday, 26 February 2014 Take: 81

THE SPEAKER

APPROPRIATION BILL

(Introduction)

DIVISION OF REVENUE BILL

(Tabling)

The MINISTER OF FINANCE: Hon Speaker, Mr President, Mr Deputy President, Cabinet colleagues, Governor Marcus and Deputy Governors of the SA Reserve Bank, the MECs of Finance, members of the diplomatic corps and our special guests from Norway, retired Constitutional Court Judge Yakoob and retired Judge President Ngoepe, I have the honour of presenting the fifth and last Budget of President Zuma's first administration.

In just over two months, we will again exercise our most fundamental expression of freedom – our right to vote for a new government. Political emancipation is, however, just the beginning of our journey towards justice and equality. In exercising the responsibilities that flow from democratic participation, we have the opportunity to create a better future for all. As Madiba wrote on his prison calendar in 1979, "The purpose of freedom is to create it for others."

At the outset, I want to thank all South Africans for their support, co-operation and encouragement to all of us.

LANG CHANGES 14:02:24

Ngiyabonga, ndia livhuwa, enkosi, ke a leboga ...

English:

We have achieved much over the past five years in a very difficult post­recession climate, but there is more to do ahead, more to build, more to put right, more to learn and more to implement. We can only do this together.

Fellow South Africans, let me be frank with you. The world economy is still in difficulty. The global institutions are struggling to find their way.

In South Africa, we stabilised our economy after the 2008 crisis. We have achieved a recovery in growth and jobs. Yet we need to do more, together with labour, business and all stakeholders, to lead our economy in a new, bold direction for higher growth, decent work and greater equality.

Mister President, as you said in your reply to the state of the nation debate:

Twenty years of freedom and democracy have changed the face of our country. The last five years have further advanced change and a better life for all, especially the poor and the working class.

[Applause.]

An agenda for transformation

An agenda for transformation would include our plans for the period ahead, which are focused on the transformation imperatives that will accelerate growth, create work opportunities and build a more equal society.

This Budget lays the foundation for the structural reforms envisaged over the next term of this government. It sets out the resource plan for an intensified implementation of our National Development Plan, NDP. It is tabled in the knowledge that all South Africans will gain from our economic transformation, just as we all share in a new pride and identity under our constitutional democracy.

So, the new economic order we seek cannot just be a pact amongst elites, a coalition amongst stakeholders with vested interests. Nor can it be built on populist slogans or unrealistic promises. [Applause.] Our history tells us that progress has to be built on a vision and strategy shared by leaders and the people – a vision founded on realism and evidence.

We have to work together to radically change our economy. This means working with our major businesses so that they sparkle across the globe. It means working with black entrepreneurs to grow their companies across South Africa and beyond, working with small and large businesses to build value chain linkages that support dynamic export-orientated, competitive enterprises. It means bringing those who are marginalised into the mainstream of opportunity and activity. It means a better standard of living for all our people.

Whether you are employed or unemployed; a young person caring for a family, yet still going to school; someone looking for experience in order to move to a better job; looking for skills or needing further education opportunities; working in a government employment programme or on a temporary construction project; whether you are an unskilled worker or a young professional looking for opportunities to develop specialist experience, we can, together, move forward towards a better life for all.

It is time for a bold vision of our future as set out in the National Development Plan. It is time for action and implementation. It is time to move South Africa forward to the next stage of our historic journey to more rapid growth, jobs and development. It is time to leave behind poverty, joblessness and inequality!

Overview of our 2014 Budget

The Overview of our 2014 Budget indicates the following.

The economy

As far as the economy is concerned:

· The global economic outlook remains unsteady – some advanced economies have returned to some growth, others continue to lag. The slowdown in quantitative easing by the Federal Reserve of the US has caused further uncertainty to financial markets, currency volatility and capital outflows from emerging markets.

· South Africa's economy has continued to grow, but more slowly than projected a year ago. We expect growth of 2,7% this year.

· A weaker exchange rate is a risk to the inflation outlook, but it supports exporters. Sustained improvements in competitiveness require further investment in infrastructure and a range of microeconomic reforms.

The budget framework

As far as the budget framework is concerned:

Despite slower economic growth, the 2013-14 budget deficit is projected to be 4% of gross domestic product, GDP, lower than projected in October. The deficit will narrow to 2,8% of GDP over the medium term, and the net debt will stabilise at about 45% of GDP in 2016-17. Consolidated noninterest spending will amount to R1,1 trillion in 2014-15, growing to R1,3 trillion in 2016-17, increasing by about 2% in real terms over the medium term. National government departments are allocated approximately 48% of available funds; provinces, 43%; and municipalities, 9%. Capital spending is the fastest-growing component of expenditure, and is set to exceed inflation by over 4% a year.

This is a very important fact, ladies and gentlemen – we have now turned the Budget around to the point where we are not just spending on consumption, we are also spending on capital investments. [Applause.]

Benefits to households

What are the benefits to households?

The Budget provides R9,3 billion in income tax relief to households, which includes you, of course. [Applause.] We'll come back to whether there are tax increases or not a little bit later. [Laughter.] Government will expand its employment programmes over the next three years and continue to support job creation by the private sector. We will build 216 000 houses and connect 905 000 households to electricity over this three-year Medium-Term Expenditure Framework, MTEF, period. [Applause.] The number of children receiving the child support grant will increase to 11,4 million. 433 schools will be built.

Support for businesses

As far as support for businesses is concerned:

Increased support and tax relief for entrepreneurs and small businesses is proposed. Incentives for industry are strengthened, including funding for special economic zones. Nearly 500 000 subsistence and smallholder farmers will receive training and financial support from the Budget.

Financial security

An important step for individuals in South Africa is the new financial security that we are attempting to create for them:

Further steps will be taken to make sure that each of us, including our public, has a secure income in retirement. Unnecessary costs in the system will be cut. [Applause.]

Global crisis and response

Your administration, Mister President, started out with an economy that, in rugby terms – and I must confess I don't play rugby – might be called a "hospital pass". We experienced a once-in-70-year economic earthquake – something that, five years later, we all seem to have a sudden amnesia about – 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, with:

Growth of 5% a year between 2003 and 2008; A steady expansion in employment; and A budget surplus for the first time in 50 years, with Mr Manuel's hard work.

We were set back by the crisis, as well:

A collapse in commodity prices, sharp declines in international trade and a crisis in financial markets. The South African economy contracted by 1,5% in 2009, nearly a million jobs were lost; and Government revenue in 2009-10, when this administration came into office, fell short of the budget target by R61 billion.

We stabilised this economy, and ensured a recovery:

Our response was to implement an aggressive countercyclical fiscal adjustment. When global trade went into reverse, we took the steps to improve competitiveness of businesses within the framework of the Industrial Policy Action Plan, Ipap. We accelerated infrastructure investment and we expanded financial assistance to businesses in distress at that time. We expanded the Community Work Programmes. Unemployment insurance and our expanding social grants programme provided increased income support to the most vulnerable in our society.

Our response to the global crisis was founded on a collectively agreed framework for working together - government, business, labour and communities - facilitated by the National Economic Development and Labour Council, or Nedlac, as we now know it.

So, although the great waves of financial turbulence and the slow growth in developed economies have constrained our economic recovery, we have recorded positive growth since 2010. We have more than recovered the jobs that were lost. We have also initiated a co-ordinated infrastructure investment programme. It is organised into seventeen Strategic Integrated Projects, or Sips, to catalyse opportunities in mining, industry, agriculture and services across the country. We have saved this country from the worst impact of the great recession, and all of us, as South Africans, should be congratulated on that! [Applause.]

What is to be done?

However, having done well, what is next? Our task never stops.

Mr President, in 1987, ANC President Oliver Tambo said:

South Africa today is a country of immense inequalities. The bedrock of our perspective is our commitment to the establishment of democracy in a South Africa that belongs to all who live in it, black and white. In keeping with this commitment to our people, our policy positions enshrined in the Freedom Charter have been formulated with the fullest participation of our people.

Fellow South Africans, I can share with you that both government and the ruling party, the ANC, have reviewed the successes of the past 20 years, understanding, frankly, our weaknesses and strengths, and reflecting on how best we can lead this country and all of our people to a better and more dynamic future. No one in this House can deny that South Africa is a different country from the one this House and this government inherited in 1994. [Applause.]

We have made immense strides in rebuilding a fragmented society and in opening opportunities for all South Africans. Yet we still have an immense set of tasks and challenges facing us. We cannot just muddle through the next decade. That is our challenge.

In fulfilling our aspirations in the Freedom Charter, we have a clear and comprehensive vision for South Africa in 2030, a plan for higher growth, decent work and greater equality, in the National Development Plan. As the first phase of implementing that vision, we have a five-year plan and a Medium-Term Budget Framework, so that step by step we can make a difference in the lives of all South Africans.

On these two foundations, we are able to offer bold and forthright leadership. The next government will set out the details of its plans to deliver on the NDP after it takes office later in May.

Let me first explain what I mean.

The National Development Plan

As I already indicated, this administration has prepared a National Development Plan, under the leadership of President Zuma, drawing on expertise and advice from South Africans of all walks of life. The NDP reflects the priorities underpinning this Budget, and prepares the ground for the next phase of our economic and social transformation.

Central to the NDP is our commitment to partnership - to a social compact to reduce poverty and inequality, and raise employment and investment. As I have said on many occasions from this platform, none of us can do it alone. To make more rapid progress in creating jobs and reducing poverty, we have to grow our economy at 5% a year or more, and I think all of us acknowledge that.

To achieve this, and to establish a growth path that is inclusive and rapidly promotes black economic development, a wide range of initiatives is under way:

The accelerated public infrastructure investment I mentioned earlier. New spatial plans for cities, in order that we don't continue to build on the apartheid city framework, improved public transport and upgrading of informal settlements. Support for special economic zones and manufacturing incentives in the Ipap I referred to earlier, as well. A tax incentive to encourage youth employment and more general employment in the special economic zones, SEZs. Further expansion of Public Works programmes. A renewed focus on accountability and quality in education. Phasing in of the National Health Insurance Scheme. Further investment in renewable energy and support for the transition to a low-carbon economy, as we have committed to ourselves and the world. Steps to professionalise the Public Service and overhaul procurement and supply chain management in government.

Yet, colleagues, I need to caution that success in implementing these plans depends on discipline, hard work, co-operation and sustained improvements in productivity, both in the public and in the private sectors. Our present circumstances oblige us to live and spend modestly and keep a careful balance between social expenditure and support for growth. It is not an either/or question.

So, in framing the 2014 Budget, we have reprioritised expenditure within the overall ceiling set in the October Medium-Term Budget Policy Statement. The budget deficit will steadily decline over the period ahead.

Mister President, the next administration will inherit sound public finances, a platform for implementation of the NDP and a framework for collaboration with all stakeholders in driving social and economic transformation forward.

Government expenditure programmes

What are some of our government expenditure programmes? Let me indicate some of them by way of example.

Government has spent more than R100 billion on employment programmes over the past five years, including municipal and provincial spending. More than 4 billion job opportunities were funded over this time. Allocations will continue to grow strongly, and 6 million job opportunities will be created over the next five years. We have spent R115 billion on higher education over the past five years, including R18,6 billion on the National Student Financial Aid Scheme, NSFAS. Allocations to NSFAS amount to R19,4 billion over the next three years, and will assist over 500 000 students a year. [Applause.] We have spent R41 billion on HIV and Aids programmes over the past five years, and R43,5 billion is budgeted over the next three years. We have spent R39 billion on 1 879 hospital and other health facility projects, and R26 billion is allocated over the medium-term period ahead. Spending on social assistance has risen from R75 billion in 2008-09 to R118 billion this year. The number of grant recipients has increased from 13,1 million in 2009 to 15,8 million today. Spending on the Police Service will increase from R74 billion this year to R88 billion by 2016-17. The Police Service will be more accessible through infrastructure development. Rural safety strategies will be implemented and the Family Violence, Child Protection and Sexual Offences unit will be strengthened. Spending on infrastructure amounted to R1 trillion over the past five years and will be R847 billion over the next three years. Spending on human settlement programmes amounted to R70 billion over the past five years, contributing to 590 000 houses being built, and 850 000 households were connected to electricity over this period. Spending on industrial incentives amounted to R22 billion over the past five years, and R21,8 billion is budgeted for in this MTEF period. A total of 128 projects have been approved under the Automotive Investment Scheme, and more than 460 companies have benefited from the Clothing and Textile Competitiveness Programme.

The spending plans contained in the 2014 Budget build on this administration's progress since 2009. Reprioritisation of resources aims to give greater impetus to programmes with the greatest developmental impact and proven implementation capacity. So, where implementation is slow, we will take that money and use it where implementation is fast.

The Estimates of National Expenditure provide detailed information on government's spending plans over the year ahead.

Job creation

Hon members know that job creation is a central priority of the National Development Plan, and, indeed, for all of us.

isiXhosa:

Bantu bakuthi masibambisane sakhe amathuba emisebenzi

English:

Fellow South Africans, let us work together to create opportunities for employment.

Since the low point of the 2009 recession, employment has increased by approximately 1,3 million, as recorded in the Quarterly Labour Force Survey. However, unemployment of 24% of the work force is still far too high. One of our respondents, or suppliers of a tip, is Tshepo Sechele, a student at the Vaal University of Technology, who quite rightly advises that "government should have clear strategies for youth development and employment for the next five to 20 years."

Indeed we have such a strategy. It includes, amongst others:

Stepped up implementation of the Expanded Public Works Programme. Implementation of the Community Work Programme in every municipality by 2017. Introduction this year of the youth employment tax incentive, which, in its first month alone, has recorded 56 000 beneficiaries. [Applause.] Establishment of special economic zones, industrial incentives, and support for agriculture and labour-intensive sectors. Ramping-up of skills development and further education and training programmes. Housing investment, support for small and medium enterprises and the Jobs Fund partnerships with the private and public sector development agencies.

Billions of rand have been allocated to these programmes, and to support those who lose their jobs in difficult times, Minister Oliphant has introduced proposals to extend unemployment benefits from 238 days to 365 days, on condition that claimants are actively seeking work.

So, some of the statistics that we are giving, Mr President, are actually proving in numbers and actual money that, over the last five years of this administration's term of office, tremendous work was done that can be proved with numbers by this administration. [Applause.]

Social assistance grants

The number of people eligible for grants is due to reach 16,5 million by 2016-17. The recent reregistration of grant recipients and the introduction of a new payment system have lowered the cost of administration, and I am sure we can lower it even further. One million invalid beneficiaries were removed from the system, thanks to Minister Dlamini and her team. [Applause.] Social grants are meant for those who need them most, so, we don't need passengers on this train.

Grant recipients will receive the following increases this year. This is something that our older people are certainly looking forward to:

The old age and disability grants will increase in April from R1 270 a month to R1 350 a month. [Interjections.] [Applause.] The foster care grant will increase from R800 to R830, and The child support grant will increase from R300 to R310 in April and to R320 in October. [Applause.]

National Health Insurance

This administration has also launched a far-reaching reform to make quality health care affordable to all South Africans, and Minister Motsoaledi, of course, is our singular champion. The Department of Health's White Paper on the National Health Insurance, NHI, and a financing paper by the National Treasury have been completed and will be tabled in Cabinet shortly.

The unfolding of NHI is premised on two pillars being put in place. On the one hand, improvements have to be made in the public sector health delivery, and on the other hand, the high cost of private health care has to be reduced. This approach is supported by the World Health Organisation.

National Health Insurance pilot districts have been established in every province, supported by funding for NHI as a conditional grant. In addition to hospital and clinic building and refurbishing programmes, R1,2 billion has been allocated for piloting general practitioners' contracts. An Office of Health Standards Compliance has been established to ensure that public health care provision meets the required standards. A new funding framework for the National Health Laboratory Services and associated research activities has also been agreed upon.

However, the improvements to this country's health system over the past five years are best seen in our rising life expectancy, as the President pointed out, the reduction in infant, child and maternal mortality and the changed lives of 2,5 million people who now have access to anti-retroviral treatment. I think we should applaud all the health care workers in our country. [Applause.] Over the period ahead, enrolment in HIV treatment programmes will expand by about 500 000 a year.

Education

What about education? We have also made strides in improving access to education over the past five years.

In 2007, 5 million learners had access to free education. This year, the number increased to 8,8 million. Grade R enrolment has increased from 544 000 in 2009 to 779 000 this year. [Applause.] The National School Nutrition Programme now feeds 8,7 million children in our country. The Funza Lushaka Bursary Scheme supported 3 950 graduates qualifying for placement as teachers in 2013.

Through the National Education Collaboration Trust, government, business, labour and civil society will pool resources and work together to restore schools and improve education outcomes in the period ahead.

The allocation to the National Student Financial Aid Scheme increases from R5,1 billion last year to R6,6 billion in 2016-17. I know Minister Nzimande wants a bit more – we are working on it! This will increase the number of Further Education and Training, FET, college bursaries to 292 000 and will assist over 236 000 students to attend university by 2016-17. [Applause.]

As is emphasised in the NDP, improvements in education are critical. Dashen Shivambu – this is the other Shivambu – from Polokwane was one of many who wrote to me in support of Minister Nzimande's plans, and said: "I would like you to put more money on the table for Higher Education, as more funding is required." I am not sure if Minister Nzimande paid him a fee for that! So, the 2014 Budget again gives special priority to education.

Infrastructure investment

As far as infrastructure investment is concerned, Mister President, under your leadership of the Presidential Infrastructure Co-ordinating Commission, co-ordinated by Minister Patel's department, we are now making progress in overcoming infrastructure backlogs and investing for more inclusive growth and development. Public infrastructure investment will amount to R847 billion over the next three years. [Applause.]

The first unit of the Medupi power station is expected to be completed towards the end of this year. Transnet has increased capacity on its coal line. Plans are in place to further expand the coal, iron ore and manganese lines. The Passenger Rail Agency of South Africa refurbished 500 Metrorail coaches last year, and its new rolling stock procurement programme will get under way this year. I will come back to this a little later. Spending on social infrastructure - which includes health, education and community facilities - will increase from R30 billion in 2012-13 to R43 billion in 2016-17. Priority will be given to programmes to eradicate school infrastructure backlogs and to refurbish clinics and hospitals. A programme to rehabilitate 35 dams has been completed, and work is in progress on the country's five large water transfer schemes. In 2014-15, a total of R40 billion in infrastructure grants will be transferred to local governments for their water, sanitation, energy and environmental functions. [Applause.]

Go ahead, do it properly! [Laughter.] [Applause.] We need to wake each other up a little bit, you see. [Interjections.]

The private sector is also making an increasing contribution to infrastructure investment. Contracts for 47 renewable energy projects were concluded in 2012 and 2013, many of which are already under construction. These will add 2 460 megawatts of power capacity, and an investment of R70 billion, which excludes a further R45 billion in investment that will still be contracted this year.

Unlocking city development and municipal service delivery

Unlocking city development and municipal service delivery is another priority. Our development plans also focus on overcoming the spatial fragmentation of South Africa's built environment – the places where our people live – improved public transport and accelerated investment in human settlements.

An integrated city development grant has been introduced to strengthen long-term city planning and encourage private investment in urban development. It will amount to R814 million over the medium term.

The assignment this year of the human settlements function to metropolitan municipalities, via Minister September, is a vital intervention in accelerating housing investment and integrated urban development. Over the next three years, national government will allocate R105 billion to municipalities for free basic water, sanitation, electricity and refuse removal services, and their improvement. [Applause.]

In rural districts, Minister Nkwinti's development initiatives are gaining momentum and water supply and sanitation programmes are in progress.

An amount of R3,9 billion has been allocated to capacity-building programmes over the MTEF, targeted at small towns and rural municipalities. Billions of rand are allocated for special initiatives, and these include:

Conditional grants to municipalities. Support for the Municipal Infrastructure Support Agency. Human Settlements's Upgrading Support Programme in 53 municipalities that are struggling. Managing the human settlements' function. Settlement upgrading in mining towns, which is quite an important task that we have.

Measures to promote economic growth

Measures to promote economic growth include some of the following. Our policy is one of inclusive growth, not of excluding the majority in our country - in the words of the NDP, to strengthen the "virtuous cycle of growth and development." Over the medium term, several spending plans and tax measures are aimed at addressing structural economic challenges and promoting the stronger and more inclusive growth envisaged in the NDP:

Manufacturing development incentives are allocated R10,3 billion over the next three years, in addition to tax relief offered through various incentive programmes. The economic competitiveness and support programmes will provide R15,2 billion to businesses to upgrade machinery and increase productivity over the MTEF period. Special economic zones are allocated R3,6 billion to promote value-added exports and generate jobs in economically disadvantaged parts of the country. In support of the digital broadcast migration programme, R620 million will be allocated in the adjustments appropriation this year, from funds to be surrendered to the National Revenue Fund by Sentech. Government is developing an agricultural policy action plan to support the NDP's target of creating 1 million jobs in agriculture and land reform by 2030. Over R7 billion will be spent on conditional grants to provinces to support about 435 000 subsistence and 54 500 smallholder farmers, and to improve extension services. These are concrete bits of help to all small farmers in South Africa. [Applause.] To boost domestic food production and reduce reliance on imports, the Fetsa Tlala Integrated Food Production Initiative aims to bring an additional 1 million hectares into cultivation by 2019, creating 300 000 jobs. Meanwhile, the Comprehensive Agricultural Support Programme grant, which receives R1,6 billion per year over the medium term, aims to increase farm output, especially for the beneficiaries of land reform.

Small businesses and entrepreneurship

Small businesses and entrepreneurship is the next area we cover. Mister President, you have rightly reminded us that employment creation is mainly the responsibility of the private sector. Of course, the public sector plays an important part in supporting this and sometimes replacing this.

I have again received many tips on the challenges faced by small and medium-sized businesses. Sharon Bosii, from Pretoria, suggests that government "must offer incentives ... to help small businesses". We certainly agree with Sharon. This Budget allocates R6,5 billion over three years to support small and medium enterprises in South Africa. [Applause.]

We have also accepted two recommendations of the Judge Davis Tax Review Committee which we established, and which will ease the compliance burden of small businesses:

The turnover tax regime will be amended to further reduce the tax burden on micro enterprises; and Consideration is being given to replacing the graduated tax structure for small business corporations with a refundable tax compliance credit.

Amendments will be made to the venture capital company tax regime, and the rules related to access to foreign capital will be eased to enhance support for entrepreneurial development.

Subject to appropriate tax treatment, amendments will be made to the Intellectual Property Rules as part of this reform.

In further support of entrepreneurial development, we propose to provide tax relief to organisations involved in small enterprise development through grant-making. As a complementary measure, grants received by small and medium-sized enterprises will be tax exempt, regardless of the source of their funds. [Applause.]

All of this we do in South Africa, in a particular global context, and a context that, as I indicated earlier, is pretty volatile and pretty fast changing. So, let me illustrate a few of those phenomena that are going on.

Global situation

Ultimately, it is the state of the global economy and the dynamism and agility of the South African economy that shapes inclusive growth, job creation and development.

The global economy, with which SA is connected, is not yet on a path of sustained recovery. In the words of the G20 communique issued after the meeting this past weekend, "the global economy remains far from achieving strong, sustained and balanced growth".

Global growth gathered momentum in 2013, however, led by a recovery in some of the advanced economies. This recovery is expected to continue into 2014, to an expected 3,9% in 2015.

The recovery in the United States has prompted the US Federal Reserve to taper its quantitative easing programme. We have already seen considerable swings in capital flows in South Africa and indeed, in other emerging markets, as well.

Interest rates are likely to rise. Currencies will be weaker and more volatile. Growth in Europe, which is a major trading partner, remains subdued. Doubts about its banking system still remain.

However, China still grows at a dynamic 7,5%, although it is not the 10% and 11% of the past, and India is expected to record 5,4% this year. Brazil remains fairly flat at 2,3%. The African continent, however, is expected to grow at around 6% a year over the next two years.

The G20, new global turbulence and emerging markets

As far as the G20 is concerned, the new global turbulence and emerging markets have created an interesting topic for debate this past weekend. The world will be a better place if the G20 goes back to its original mission in 2008-09, when it was established at a head of state, head of government level. That mission was about all of us, developing and developed, co-operating whenever either is in trouble, in order to lift the prospects for global growth.

If there was a greater understanding of the power of co-operative action, we would have had better results over the last three years. We welcome the constructive tone emerging from the G20 meeting last weekend. We welcome the commitment to increase global output by $2 trillion and to increase jobs across the globe.

Nonetheless, as a developing country, we remain concerned about the self-justifying narrative from certain quarters in the developed world. This is the idea that emerging markets are

the "problem", that they must "get their houses in order", and that global co-operation for a more humane and sustainable future is a project for another day. For some reason, for the last six months or so, we have resorted suddenly to a deflection and blaming game from certain quarters.

Now, interestingly, these are voices from precisely those places where huge regulatory failures led to the financial earthquake we have experienced in South Africa and elsewhere in the world. Geopolitical gamesmanship is the order of the day. Collaboration in addressing global challenges is deferred and global statesmanship is certainly in retreat.

As Africa, however, with rising prospects, building democratic institutions, expanding infrastructure and growing trade and employment, the central priority will remain overcoming poverty and inequality through initiatives that shape our own growth path, and partnerships that create our own destiny.

South Africa's economic outlook

South Africa's economic outlook is the following. As global economic growth recovers, there will be opportunities and risks for our economy, as well. These developments have the potential to increase our exports.

Among our emerging market partners, growth remains strong, as I indicated, but demand for mineral products –

which total 50% of our exports – has moderated and is unlikely to pick up soon. The prices of our largest sources of foreign earnings remain depressed. In other words, we earn a lot of our money, as South Africa, by exporting our commodities.

However, the rand remains an effective shock absorber against global volatility. Recent movements of the currency have been supportive of export growth while reducing the country's reliance on capital inflows.

We must ensure that our fiscal and monetary choices keep inflation low and maintain the recent gains in competitiveness. While we have made significant progress in accumulating reserves, there is scope for further improvement in the years ahead. This will support the stability of our currency.

We project growth to increase, as I indicated earlier, from 2,7% this year to 3,5% in 2016. Investment is forecast to increase by about 5% a year and the current account deficit will average 5,8% of GDP over the medium term, while consumer price inflation will return to levels within the target band between 2015 and 2016.

So, we must confess that that current account balance is not the right number. More needs to be done, either to earn foreign income or to export more, to lower the current account deficit.

Potential domestic risks to the outlook include further delays to the introduction of new infrastructure, particularly additional electricity capacity, higher inflation due to the weaknesses of the rand, and protracted labour disputes which could depress consumer and business confidence.

Boosting growth

The challenge all of us, as South Africa, face is how we boost growth within this kind of climate. The next phase of growth is about the dynamism, as I said earlier, and agility of the private sector and the synergies that we can create between the private sector and government and labour. Government will continue to provide an enabling environment for businesses to grow and create employment.

Over the past five years, we have supported businesses by relaxing exchange control regulations, to support those who wanted to invest in the African continent. We provided tax incentives for manufacturing businesses to expand operations, improve competitiveness and acquire new machinery. We also opened up opportunities for the private sector to build and run our renewable energy plants, and introduced the employment tax incentive. The result was an increase in job creation. Now, this effort has to be scaled up on a much bigger scale to make a much bigger impact on growth, jobs and development.

Removing constraints

Part of our approach is how we remove constraints on the economy. Over the medium term, we will do the following:

Add to electricity supply to improve the balance between available energy and the amounts required by businesses and households to thrive. Increase investment in economic infrastructure, including rail, water, roads and ports. Pursue the exploration of shale gas to provide an additional energy source for our economy. Provide business support programmes and special economic zones that encourage industrialisation and improve local competitiveness.

Regulatory improvements

Government has also been engaging in the question of regulatory impediments, and has been engaging with business on specific steps that can be taken to make it easier to do business in our country. Arising out of that process, we will now streamline regulatory and licensing approvals for environmental impact assessments, water licences and mining licences. As announced by President Zuma, Parliament is finalising amendments to give effect to this very positive development, which will cut the time it takes to start a mine from application to final approval to under 300 days, under Minister Shabangu's guidance.

There is further work in progress on lowering the cost structure of the economy, for example, through improved efficiencies in freight logistics. Minister Carrim has published a new policy on broadband, which, in due course, will lead to modernisation of our communications capabilities, and, of course, reduce costs, as well. Several cities are bringing Wi-Fi connectivity to their environs.

The SA Revenue Service, Sars, is also taking further steps to lower the cost of tax compliance in South Africa.

Africa

Africa, hon colleagues, also offers interesting opportunities. Investment into Africa has reached R36 billion a year, in a range of industries. South Africa is the second largest developing country investor on the continent. In 2013, 29% of our exports were destined for Africa. In 2012, 12% of our dividends came from Africa, up from just 2% a decade earlier. Increasing these inflows will be crucial, as I said earlier, for closing the current account deficit.

Foreign assets owned by South African firms are an important source of income, and reduce our vulnerability to future economic downturns. In addition, 18 large African firms now have debt and equity listings on the Johannesburg Stock Exchange. So, we are getting an exchange of business, if one likes, between African firms and South African firms. [Applause.]

Today, further steps to simplify trade and investment with Africa are announced. The HoldCo regime, as it is called, for African and offshore operations will be extended to unlisted companies, and the limits for listed companies will be increased. This regime creates a simplified tax and foreign exchange framework for companies that trade with our fellow African countries.

South Africa is an important centre for financial services, such as fund and asset management. We propose new, so-called Foreign Member Funds, which will simplify the foreign exposure rules. These funds will support South Africa as a hub for African fund management and provide a domestically-regulated channel for investors to obtain foreign exposure.

Promoting Investment

An equally important question for us, as South Africans, is how we promote more investment in our economy and in our country. Increased investment in the economy by both the private and public sectors is at the heart of creating jobs and growth.

Government is committed to providing policy certainty for domestic and foreign investors. Working together with Minister Davies and the Department of Trade and Industry, a holistic framework for investment is being finalised. The framework flows from the National Development Plan, which places investment at the centre of our economic growth plan.

We have a number of incentives in place, which have provided substantial benefits to both foreign and domestic investors. Moreover, under the guidance of Minister Davies, a new Promotion and Protection of Investment Bill has been released for public comment. This entrenches the rights of all investors, ensuring that property rights are protected, in line with our Constitution. [Interjections.]

The fiscal framework and long-term sustainability

The fiscal framework and long-term sustainability are, of course, our next challenge. In last year's Medium-Term Budget Policy Statement, we targeted revenue of 28,6% of GDP, consolidated spending of R1,2 trillion and a deficit of 4,1% in 2014-15.

Since then, the rand has weakened and inflation has picked up. Long-term interest rates have continued to rise modestly, and the Reserve Bank has increased the repo rate by 50 basis points. These trends reinforce the need to moderate public expenditure and, more importantly, get better value for money from public expenditure; lower the budget deficit; and ensure that public sector debt stabilises relative to GDP.

A key pillar of the current framework remains the main budget expenditure ceiling. Just to remind all of us: we agreed in Cabinet and as government that we will establish a ceiling for expenditure. Any new idea, any new project, any new undertaking must happen within the framework of the money that is available below this ceiling.

Noninterest expenditure plans are unchanged over the medium term, resulting in real expenditure growth of about 2% per annum. Within the expenditure envelope, the composition begins to shift from consumption spending towards infrastructure investment. The unallocated contingency reserve amounts to R3 billion, R6 billion and R18 billion over the next three years.

Over the last decade, government spending has doubled in real terms, funding a large expansion of the social wage, which now stands at 57% of consolidated expenditure. This progress must be sustained. Our Constitution requires government to devote increasing resources to a rising floor of social and economic rights.

In a period of weak economic growth, the sustainability of public finances is inevitably tested. Over the last five years, government has borrowed more than R1 trillion. Rising global interest rates make it increasingly costly for government to borrow.

Lower commodity prices dampen the growth of revenues. A weak rand raises the price of capital goods that government needs for its investment programme, while inflation raises the amount that we must pay for goods, services and wages. These are important developments and they are likely to last and to stay with us for some time to come. However, that does not mean, of course, that we get paralysed. We have an answer to all of that.

Our debt portfolio is well structured, with foreign currency denominated debt limited to about 10% of the total. Our debt markets remain highly liquid and competitive, and, sometimes, even the envy of many parts of the world. This means that the impact of short-term swings in capital markets can be absorbed over time.

Our first sukuk, or Islamic bond, will be launched this year. This is a momentous occasion, inviting new types of investors in our debt. [Applause.]

Broader public-sector sustainability is supported by a large social security fund surplus, a fully-funded government employee pension system, and the improving balance sheets of state-owned companies.

With these pressures in mind, government has adopted a balanced fiscal stance that continues to provide support for the economy, but charts a stronger course towards fiscal consolidation.

Now for the moments you've been waiting for.

Tax policy, savings and small business support

In 1996, the RDP White Paper stated: "the expansion of the South African economy will raise state revenues by expanding the tax base." Over the last 20 years, we have achieved exactly that.

In 1994, tax revenue amounted to R114 billion. Revenue collected next year will exceed R1 trillion – ten times more ... [Applause.] ... thanks, of course, to your tax compliance and a very efficient SA Revenue Service. This is nearly a tenfold increase in nominal terms. This was achieved while reducing the tax rate for companies from 40% in 1994 to 28% and the top marginal rate for individuals from 45% in 1995 to 40%. [Applause.] I can see you're hesitant because you don't know what's coming next! [Laughter.]

During this period, the contribution of corporate income tax as a proportion to total revenue has nearly doubled, through better compliance and better service to corporates. We have also improved the fairness of the tax system by taxing residents on their worldwide income and taxing capital gains. These changes have brought the South African tax system more in line with international principles, and have substantially broadened our tax base.

Despite moderate economic growth, tax revenues have remained buoyant over the past year. Let me repeat that, because there were lots of doomsayers over these past few days. Despite moderate economic growth, tax revenues have remained buoyant over the past year. What that means, in simple English, is that we will collect what we targeted. [Applause.]

In 2013-14, we will probably collect R899 billion. This is R1 billion more than projected last February, and R4 billion above the estimate presented at the time of the 2013 Medium-Term Budget Policy Statement. For the first time since the recession, corporate income tax revenues will exceed the 2008-09 peak of R165 billion. [Applause.]

The main tax proposals for the 2014 Budget are as follows. Your taxes go up! [Interjections.] No, no, no, no, relax. Relax. We don't want any heart attacks here. [Laughter.]

Personal income tax relief amounts to R9,25 billion. So, that is what we are giving back to taxpayers to give relief for inflation. About 40% of this relief goes to South Africans earning below R250 000 per year. There is no increased tax rate for all of you. [Applause.] The tax-free lump sum amount paid out of retirement funds will increase from R315 000 to R500 000, benefiting especially lower income members who did not benefit from deductible contributions. Increases in excise duties – which some of you will be worried about – on alcoholic beverages and tobacco products are proposed, adding 9 cents to the price of a 340ml can of beer and 68 cents to a packet of 20 cigarettes. [Interjections.] [Applause.] For the companies that are listening, this is in line with inflation. For the whisky drinkers in this House, whisky goes up by R4,80 a bottle ... [Interjections.] [Applause.] ... and I'm afraid running out of the House to catch your last tot won't help because these increases take effect immediately. [Laughter.] [Applause.] In recognition of recent increases in the imported cost of fuel, we have also been very careful to keep the fuel levy increases at the level of inflation. The general fuel levy is limited to an inflation-related 12 cents per litre, and will increase on 2 April 2014. The Road Accident Fund levy will increase by 8 cents per litre. So, those are very modest increases.

Legislation to allow for tax-exempt savings accounts will proceed this year, to encourage household savings. Now, this is a very important, new development from financial institutions, which will allow our folk to save money and not pay tax on the interest that they earn. So, we hope that this will be introduced later this year. Of course, there is a limit here – we can't have millionaires contributing to this.

Complementing this tax reform, a new top-up retail savings bond will be introduced by the Treasury this year, allowing for regular deposits into a government retail bond. It will also be accessible to community savings groups, such as stokvels. Options for introducing a sukuk, or Islamic, retail savings bond are also being explored. May I urge that, before we go to elections, every member here buys a retail savings bond to demonstrate that they are lending money to their government? [Applause.]

The Income Tax Act currently requires philanthropic foundations to distribute 75% of the money they generate within a year. This requirement is unduly restrictive and will be relaxed, while ensuring that accumulated capital is distributed to worthy causes within a reasonable period.

Regulatory and other measures have been put in place to address the environmental consequences of acid mine drainage. To complement current efforts and ensure that the mining sector makes its fair contribution towards continuing acid mine drainage expenses, consultations will be initiated on an appropriate funding mechanism.

Following public consultation, the National Treasury and the Department of Environmental Affairs have agreed that a package of measures is needed to address climate change and to reduce emissions. This will include the proposed carbon tax, environmental regulations, renewable energy projects and other targeted support programmes. To allow for further consultation, implementation of the carbon tax is postponed by a year to 2016.

Reforms to the tax treatment of the risk business of long-term insurers are also proposed. Profits from the risk business of a long-term insurer will be taxed in the corporate fund, similar to the way short-term insurers are taxed.

In July last year, I appointed a Tax Review Committee, headed by Judge Dennis Davis, with a broad brief to make recommendations for possible reforms. The committee's first recommendations relate, as I indicated earlier, to small and medium enterprises. These proposals will be taken forward in this Budget.

The committee has also started work on base erosion and profit shifting. What that means is that there are many companies across the globe, and both developed and developing countries are suffering from this phenomenon, where companies move their assumed operations and revenue to a place – let's call it that for now – or a tax haven, where they pay very little or no tax. That undermines the fiscal strength of both developed and developing countries. These are trends that are under scrutiny internationally. During 2014, work will be undertaken on the impact of the tax system on economic growth and job creation, and aspects of VAT, mining taxes and estate duties.

Tax administration

As far as tax administration is concerned, there are still great opportunities for the tax system to work for our people. In the past five years, the tax register of individuals grew from 5,5 million to over 15 million, to include all known economically active individuals. Businesses today supply this information twice a year and Sars has up-to-date information on its database about everybody in formal employment.

Companies on the tax register now stand at more than 2,3 million. The number of employers registered for pay-as-you-earn is nearly 404 000.

In the next fiscal year, Sars will implement the single registration of taxpayers and traders for the main taxes. In other words, you don't have to fill out a multiplicity of forms.

Sars is already working closely with other government agencies to share nonconfidential – that is, nontax – electronic data. Without compromising privacy and confidentiality, this will contribute to reducing identity fraud, lowering administration costs and enhancing compliance. This will take us a long way towards acting as a single government, as far as the public is concerned.

New global tax policies are being devised to counter harmful tax practices, and treaties are being designed to allow for the automatic exchange of information. You might have seen a recent case where Sars acted for the British tax authorities for a British taxpayer based here who owed taxes in Britain. Similar things will be done on our behalf by other tax authorities, as well. So, literally, for the people who are old enough here, there is no place to hide. Hopefully, soon! The SA Revenue Service currently chairs the 121-country Global Forum for the Exchange of Information for Tax Purposes.

Since the Tax Administration Act came into effect, Sars has recognised 11 bodies to which tax practitioners belong, and 15 000 tax practitioners are now registered with them. This formalises this sector. Taxpayers are advised to only use tax practitioners that are recognised by Sars, so that they, themselves, do not become victims of any scam.

Over the last two years the Voluntary Disclosure Programme – this is where you can voluntarily come up to Sars and say, "Sorry, I've been naughty; I owe you x" – has realised almost R5 billion from income that was not previously declared. [Applause.]

Customs administration

As far as customs is concerned, Sars overhauled its customs management system in August 2013. The new system is fully electronic and significantly reduces the administrative burden on importers and exporters, while improving our ability to detect high-risk transactions and goods.

Since its introduction, the system has processed goods to the value of R1,7 trillion. Border management co-operation that started during the 2010 World Cup has also deepened significantly. For example, one of the South African ports of entry is being prepared as a pilot for seamless border management across departments, which will lead to enhanced border control and trade facilitation. The one-stop border post at Lebombo will become operational shortly, once the remaining formalities have been concluded. This will be our first one-stop border post between South Africa and an adjoining country.

During 2013, about R1 billion worth of tobacco and cigarettes was seized from 15 noncompliant entities. Twelve criminal cases are being pursued. During the same period, Sars detained 400 containers holding suspected counterfeit clothing, footwear and textiles. So, this enables us to protect South African firms.

Improving the quality of public services and cutting waste

Improving the quality of public services and cutting waste is an important priority for government.

This is a Budget in which circumstances dictate that we cannot add resources to the overall spending envelope. We, of course, have an expenditure ceiling. The emphasis falls therefore on ensuring, as I said earlier, that expenditure is allocated efficiently, enhancing management, cutting waste and eliminating corruption.

A series of initiatives is focused on these concerns. These are not all of them:

Spending reviews are under way to examine programme performance and value for money, conducted by the National Treasury and Minister Chabane's Department of Performance Monitoring and Evaluation, and by provincial treasuries. What this means is that there is a selection of areas, such as education, and so on, where deep audits, if you like, are being done in order that we understand how the R200 billion that goes into education is spent, and how we could spend it better and more effectively. The Office of the Accountant-General has stepped up efforts to strengthen the financial control environment, and has undertaken 27 forensic reviews over the past 12 months, leading to both criminal investigations and internal disciplinary action. As part of efforts to combat waste, cost-containment instructions were issued in January 2014. Budgets for consultants, travel, accommodation and venue hire have been curtailed – and there is proof of that – which will contribute to savings over the next three years. So, those measures that Cabinet took are, in fact, working. Forthcoming regulations will strengthen the National Treasury's oversight of public entities by requiring compliance with reporting requirements for expenditure, revenue, borrowing and performance.

I referred in 2012 to an initiative to be undertaken jointly with Minister Nxesi and his department to review the validity and cost-effectiveness of all government property leases. The exercise has exposed several deficiencies, and these are but a few:

Accommodation that is unoccupied but is being paid for. Accommodation occupied by other entities. Discrepancies between the size of the accommodation occupied and what is actually paid for that accommodation. Marked divergences from market rates per square metre – and we should all send a message to the property industry in South Africa: Why aren't you honest in the deals that you make with government? [Applause.] Why do we have to spend millions of rand through audit firms to discover that you are overcharging government for these facilities? [Interjections.] I think property owners and their organised formations owe the South African public an explanation for extracting undue money for their services. [Interjections.] [Applause.] Procurement through inappropriate and noncompetitive procedures. Missing or invalid lease agreements and unsubstantiated payments to landlords. So, money is leaving departments, but there is no substantiation as to what you are paying for.

The intervention also identified a backlog of more than half of the lease portfolio that has to be reviewed. As a result of this initiative, the Department of Public Works, under the Minister, now has a turnaround strategy that will enable it to regularise the lease portfolio, while ensuring continuity of services to client departments.

Procurement reforms

We now turn to procurement reforms. The Chief Procurement Office has been established, and has made progress on many fronts. It will review high-value and strategic contracts to ensure that value for money is derived and that all contracts adhere to the relevant prescripts of the law. The review will contribute to efforts to ensure that government service delivery objectives are supported by the purchases of goods and services. These will include, for example – and these are examples, so Minister Peters will know about the Passenger Rail Agency of South Africa, Prasa – the review of contracts, such as Prasa's rolling stock tender and government leases and infrastructure projects. We will work with Minister Gigaba and the SAA Board, so that when they get to the stage where they might want to get into fleet procurement, we have a streamlined and proper procurement process that cannot be questioned by anyone.

Progress includes:

Development of standard lease agreement to address defects in government property transactions. Standardisation of infrastructure procurement processes and documentation. Creation of an inspectorate to monitor procurement plans and audit tender documents. So, these are people who will go out to departments, to provinces, to municipalities, to check, on the spot, whether the right documentation is there and whether the right process has been followed. Enhanced processing of vendors' tax clearance certificates to ensure compliance – if you're not paying tax in South Africa, you shouldn't be doing business with government in South Africa. [Applause.] Centralised procurement of health equipment, drugs and medicines to effect savings. The analysis of the business interests of government employees. We still remain with a large number of employees who have a conflict of interest in respect of their position and the fact that they have a share or some interest in a business outside that is also doing business with government. That has to stop! [Interjections.] [Applause.]

We are also mindful of the importance of government procurement in supporting local industry and black economic development. This requires a database of South African products and black-owned businesses so that the system can foster economic empowerment and dynamically contribute to growth. Further, tougher measures are being considered to enforce the rule that small businesses, in particular, must be paid within 30 days. [Applause.]

Indebtedness, savings and retirement reform

This administration has recognised the need to protect and improve the financial wellbeing of households, to make them less vulnerable to a sudden loss of income in bad times. We recognise that households must be encouraged to invest in their future, including investment in homes or productive assets, and saving for retirement or business purposes.

South Africa has made good progress towards achieving the NDP's goal of 90% access to financial services by 2030. Some 79% of adult South Africans were using regulated financial services in 2013. Many more households have access to affordable credit, which is of great benefit when used productively, but bad when used to fund excessive consumption.

Government is concerned about the level of over-indebtedness of households, including those of public servants. Cabinet has therefore approved a number of measures to assist such households to reduce their debt burden, and to stamp out abusive and fraudulent activities of reckless lenders and unscrupulous debt collectors. [Applause.] Working jointly with the Ministers of Trade and Industry and Justice, we will shortly commence actions against abusive and unsustainable practices. This includes the so-called famous garnishing orders.

With regard to retirement, there will be further reforms over the period ahead. Legislation has already been passed by Parliament to improve governance over pension and provident funds, and to align the rules and tax treatment of pension and provident funds, while at the same time protecting vested rights.

We still seek improved coverage and preservation of retirement funds, and lower costs in the system. We are currently consulting within Nedlac on measures to cover the 6 million employed South Africans who do not enjoy access to an employer-sponsored retirement plan. We intend to move progressively towards a mandatory system of retirement savings for all employed workers. In other words, if we can't voluntarily save, then we, as the government, must help people to save by saying, Give 5% of your money and save it for your future. [Applause.]

Importantly, agreement has been reached with a body called the Association of Savings and Investment of South Africa, Asisa, the big insurance and asset managers of South Africa, to reduce the level of charges for retirement savings products. This means that if you have saved x thousand rand, then you must be charged a reasonable fee, and the majority of your savings must come to you when you retire and do not end up in charges. [Applause.]

Conclusion

Mister President, since 1994, there has been substantial progress, I submit, in transforming the lives of South African citizens:

The average income of South Africans has increased by over 30%, and will continue to rise in the years ahead. More than 5 million jobs have been created since 1996. Near-universal school enrolment and the steady increase in average years of education for both men and women have improved the lives and life prospects of millions of South Africans. Access to basic services has grown rapidly across the country. More people than ever have access to housing, education and services. Black participation in the economy has expanded and there has been a transformation in the middle class.

These are considerable achievements, no doubt, but they are not enough. There are still fault lines that run deep in the social fabric of our communities and our country and tendencies in the political landscape, as well.

Black economic participation remains incomplete. The economy must provide many more opportunities and the state and the private sector a lot more support to enterprises and entrepreneurs. The structure of the economy also needs to transform in order to meet the demands of a 21st century global economy and a fast evolving continent.

In some instances, governance has been weak, corruption has taken hold, and Public Service delivery has faltered.

Setswana:

Puso e utlwa dilelo tsa Maaforika Borwa.

Afrikaans:

Ons het gehoor! Korrupsie moet gestop word! {Tussenwerpsels.]

English:

I'm trying! [Applause.] Maaforika Borwa [South Africans] deserves better.

Setswana:

Re tlile go tokafatsa ditirelo tsa puso.

English:

We are saying we have heard your pleas and we will improve our service delivery mechanisms. That is a commitment we are making to our people. [Applause.]

M

ister President, in your state of the nation address you observed that the community protests are a sign that our people want government to quicken the pace of delivery of housing, water, and sanitation, amongst other requirements.

More must be done to improve management and accountability at all levels of government. The labour relations environment needs more stability. The high indebtedness of many vulnerable workers must be addressed.

Going forward, these challenges are the challenges that will give future administrations focus. We know what must be changed to meet the expectations of all South Africans. Service delivery must be enhanced and supported by the necessary infrastructure. Public servants will join us in being accountable and effective. Government is committed to tackling these issues in a transparent manner, with a view to building a more rapid and inclusive growth path.

On his inauguration as South Africa's first democratic President, uTata Nelson Mandela said, "Let there be work, bread, water and salt for all." [Applause.]

This year, nearly 1 million South Africans will celebrate their twentieth birthday. Have you got that? Nearly 1 million South Africans will celebrate their twentieth birthday! These are the first of our sons and daughters to have breathed only the clean air of a new, democratic nation. [Applause.]

These children of our freedom mark the progress we have made. In their diversity; in their dynamism and their enthusiasm; in their nonracialism and in the determination with which they demand the rights of free citizens; in their optimism and fearlessness; in all this, they represent the hope that millions struggled for, and for which so many paid the ultimate price. They are a generation whose future is brighter than their parents could have dreamed. They are better educated, better nourished, stronger and more resilient – but not all of them are.

They also bear the burden of the challenges we have yet to resolve, however. Too many will struggle to find work. Too many live in poverty and want. Like their parents, they can see the fault lines that still divide our society. They can see the gap between rich and poor. For their future, we have an obligation to begin a new and far-reaching phase of our democratic transition; a phase that calls for bold and decisive steps to place the economy on a qualitatively different path to eliminate poverty and unemployment, create sustainable livelihoods and substantially reduce inequality.

The National Development Plan lays the foundation for fundamental transformation. It is a platform on which we need to mobilise our youth, and bring together all South African citizens. Each of us has a role to play. Each of us has an obligation to meet.

In conclusion, Mr President, thank you for your leadership and for the opportunity to serve government and the people of South Africa. Mr Deputy President, thank you for your guidance and support. My colleagues in the Ministers' Committee on the Budget have provided invaluable counsel and make courageous decision in advising Cabinet on our budget priorities. So, thank you very much.

To my Cabinet colleagues who collectively own this Budget and the programmes that they implement, thank you for all the hard work that you do and the co-operation you offer. To Deputy Minister Nene, who has been an invaluable partner in managing huge responsibilities during a challenging term of office, thank you for your invaluable role. [Applause.]

Our thanks and appreciation go Governor Marcus and the Deputy Governors and their team at the Reserve Bank, who have wisely steered monetary policy in a very volatile environment. [Applause.]

Our thanks and appreciation also go to:

The Provincial MECs and municipal mayors who collectively spend over 50% of R1 trillion each year! Director-General Lungisa Fuzile and his wife, Mrs Fuzile, for his dedication to public service, his frank and wise advice, and for continuing to help to build a very capable Treasury for future generations. [Applause.] Senior managers and staff of the National Treasury who have risen to the challenges of a post-recession South Africa and remain committed to excellence in the Public Service. A lot of the hard work that I have announced today is theirs. [Applause.] The acting Commissioner of Sars, Mr Ivan Pillay, whose leadership and solid commitment to institution building has served SA well, including bringing us the money that we require. [Applause.] The senior management and staff of Sars, who keep millions of taxpayers happy with their service, and a few others compliant with the law! The Finance and Fiscal Commission, Nedlac and its constituencies for their contributions and constructive engagement with the Treasury. The Chairpersons, Boards, CEOs and staff of the Development Bank of South Africa, DBSA, Land Bank, the Public Investment Corporation, PIC, Financial Services Board, the Financial Intelligence Centre and the Government Pension Administration Agency for the excellent work that they do. The hon Mr Mufamadi and hon Mr de Beer, who chair the Standing and Select Committees of Finance, and the hon Mr Sogoni and Mr Chaane who chair the Appropriations Committees, for their pivotal role in holding us to account and providing a forum in Parliament for vibrant public participation. [Applause.] Mr Dondo Mogajane, Ministry staff and advisors whose diligence, professionalism and hard work are invaluable – thank you very much. My family for their constant caring and support and for their passion for building a better South Africa. [Applause.]

This is the last Budget of this administration, so thanks go to all of you, hon members, and to the presiding officers of Parliament for your co-operation and support. You may applaud for yourselves! [Applause.]

Once again, I must convey, on your behalf, my gratitude to South Africans from all walks of life, and many friends of South Africa abroad, for their goodwill and constant encouragement. [Applause.]

I hereby table before the House this afternoon this pack of documents, which constitutes the Budget Speech; the Budget Review 2014, with an Erratum appended – there are only six mistakes; the Division of Revenue Bill, tabled in terms of section 10(1) of the Intergovernmental Fiscal Relations Act; the Appropriation Bill, which makes sure that each of the Cabinet members and their departments get the money that they require; and the Estimates of National Expenditure – that's the thickest book in this pile, which gives you all the information you require about where the R1 trillion goes to.

I table this Budget in the hope that, as a nation, we will be able to rise above our sectoral interests, and, as you said, Mr President, prevail with greater maturity, pull together and take this country forward.

Mr President, let us repeat our message to our citizens. Under your leadership, government has succeeded in steering the country through a difficult period of global turbulence – the great recession. [Applause.] We have weathered the storm. Employment and incomes have recovered. The value of the social wage has increased. We have laid the foundation for a faster and more inclusive path of growth in the years ahead.

Real public sector investment increased dramatically – in fact, doubled. Policy innovation, such as the Jobs Fund, the Community Work Programme, the Industrial Policy Action Plan, the special economic zones, the employment tax incentives, and the various infrastructure programmes, have gained traction. We are now ready to ramp them up.

So, as South Africa's economy draws strength from the growth on the African continent, the unlocking of infrastructure constraints and continuing social progress, we have a plan to guide our action and unite our people.

The programme of the next administration is not in doubt. Its task will be to implement the first phase of the National Development Plan. The road ahead will not be smooth. There will be difficult decisions and hard trade-offs that must be confronted, but this Budget provides the resources to support our programme of change. It aligns public finances with the priorities set out in the NDP.

Our task is to transform these resources into a better life for all South Africans. Our challenge is to act together to move South Africa forward. This is a good story to tell! [Applause.]

Let me end with the words of the indomitable elder of our movement, Yusuf Dadoo:

The hour has struck for serious and hard work. The time has come when on this policy we must go forward. That is the only policy which, at the present moment, can meet the dangers which face us in this country ... We have the strength and power in our hands if we act rightly. It may entail suffering and sacrifice and plenty of hard work ... In the present circumstances, either we hang together or we hang separately. That is the question before South Africa.

Thank you. [Applause.]

The SPEAKER: I thank the hon the Minister of Finance very much.

The CHIEF WHIP OF THE MAJORITY PARTY: Hon Speaker, I move that, notwithstanding the relevant provisions of the rules on Money Bills, the Fiscal Framework and Revenue Proposals, as well as the Minister of Finance's speech, be referred to the Standing Committee on Finance for consideration and report.

Agreed to.

The House adjourned at 15:36.

/Robyn/KC (SETSW)


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