Hansard: NCOP: Consideration of Report of Select Committee on Finance –2015 Fiscal Framework and Revenue Proposals
House: National Council of Provinces
Date of Meeting: 10 Mar 2015
Summary
No summary available.
Minutes
START OF DAY
UNREVISED HANSARD
NATIONAL COUNCIL OF PROVINCE
Tuesday, 10 March 2015 Take:
Tuesday, 10 MARCH 2015
PROCEEDINGS OF THE NATIONAL COUNCIL OF PROVINCES
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The Council met at 15:04
The Deputy Chairperson took the Chair and requested members to observe a moment of silence for prayers or meditation.
Announcement
Start of Day
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PETITIONS RECEIVED BY COUNCIL
(Announcement)
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Hon members, I would like to announce that in terms of Rule 233, the Council has received the following petitions:
Petition seeking NCOP’s assistance in fulfilling commitments made by various Ministers in 2012, during the Taking Parliament to the People programme;
Petition calling upon the NCOP’s assistance in resolving the issue of land ownership in Alexandra Township, Gauteng province;
Petition calling upon the NCOP’s assistance on the rejection of Mr Wandile Laurence Daku’s application for a special pension by the Special Pension Appeal Board; and
Petition calling upon the NCOP’s assistance on the alleged illegal occupation of Reconstruction and Development Programme, RDP, house belonging to Mr Pumlani Tolbati in the township of Mdantsane, Eastern Cape province.
I therefore refer all these petitions to the committee for consideration.
NOTICES OF MOTION
Announcement
NOTICES OF MOTION
Mr H B GROENEWALD: Deputy Chairperson, on behalf of the DA I hereby give notice that on the next sitting day of the Council I shall move:
That the Council—
- notes that the DA welcomes the reviewing of funding of the two Universities in the Eastern Cape, Walter Sisulu University and the University of Fort Hare, these two universities were amongst historically disadvantaged institutions; and
- further notes the DA also wants to see that the two universities meet the required criteria which include submitting a business plan, outlining systems to ensure financial sustainability and reducing overheads and personnel costs.
Mr M RAYI: Deputy Chair, on a point of order. I thought that you were saying notices of motion and not motions without notice. I think the hon member is moving a motion without notice, in my understanding.
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Was it a notice of motion or motion without notice?
Mr H B GROENEWALD: Chairperson, it’s a notice of motion.
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): It was a notice of a motion.
Mr C F B SMIT
Mr H B GROENEWALD
Mr C F B SMIT: Deputy Chairperson, on behalf of the DA I hereby give notice that on the next sitting day of the Council I shall move:
That the Council—
- debates the potential of freshwater aquaculture in South Africa as a rural development tool to stimulate the rural economy;
- notes that freshwater aquaculture is underexplored and a huge market exists within our inland rural communities; and
- further notes that freshwater aquaculture can contribute to the alleviation of poverty and unemployment through the creation of primary as well as secondary job opportunities.
The DEPUTY CHAIRPERSON OF THE NCOP: I take it that those were the only two notices of motion. We will then proceed to motions without notice.
MOTIONS WITHOUT NOTICE
NOTICES OF MOTION
DEATH OF SABA “ZAWU ZAWU” Mbixane
(Draft Resolution)
Mr M RAYI: Deputy Chairperson, I hereby move without notice on behalf of the ANC:
That the Council –
(1) conveys heartfelt sympathy on the passing on of Mr Saba Mbixane, a Radio Umhlobo Wenene broadcaster, who died in a motorbike accident;
(2) also notes that Zawu Zawu, as he was affectionately known by listeners, was not just a SA Traditional Music Award winner, Satma winner, an entertainer, a Maskhandi singer and an advocate but also groomed and co-ordinated multiples of different traditional music groups and competitions;
(3) further notes that he championed the respect and instilled self-respect of culture among the diverse population groups of South Africa;
(4) also notes that through his taxi and farming businesses, he demonstrated and promoted self-sufficiency and sustenance amongst our people; and
(5) sends our deepest condolences to his mother and family; rest in peace Zawa, DJ Ntozabantwana, DJ Manapukeni, the nation will always miss you.
Agreed to.
Ms E C VAN LINGEN
Mr M RAYI
COMPLAINT REGARDING IRREGULAR PROGRAMME CHANGES IN THE NCOP
(Draft Resolution)
Ms E C VAN LINGEN: Deputy Chairperson, I hereby move without notice on behalf of the DA:
That the Council –
(1) notes the recent irregular programme changes in the NCOP;
(2) condemns the last-minute programme change which was made to include the debate on the fiscal framework policy in today’s plenary without the approval of the programming committee;
(3) recognises that this is in total conflict with today’s Order Paper;
(4) detests the manner in which this was communicated to us via a Short Message Service, SMS, yesterday;
(5) realises the fact that the various attempts from the hon chairperson of the programming committee and the hon Chief Whip only elicited as a response that there was a breakdown in communication with a feeble apology;
(6) further recognises that the DA is strongly opposed to the ad hoc manner in which the programme is changed at the last minute in contravention with how decisions are made in the Programming Committee; and
(7) acknowledges that there should not be a debate today as we should follow the programme as approved on 19 February 2015, where the report will be tabled for 10 minutes, which the provinces will vote on and possible declarations can be made.
The CHAIRPERSON OF THE NCOP (Mr R J Tau): If there are no objections to the motion, I put the motion.
AN HON MEMBER: We object.
The CHAIRPERSON OF THE NCOP (Mr R J Tau): There is an objection, therefore this motion becomes a notice of motion.
Mr M KHAWULA
Ms E C VAN LINGEN
THE DEATH OF MR BALTASAR XOLANI SKHAKHANE
(Draft Resolution)
Mr M KHAWULA: Deputy Chairperson, I hereby move without notice on behalf of the IFP:
That the Council –
(1) extends its deepest condolences on the untimely death of Mr Baltasar Mbhasobheni Xolani Skhakhane, who passed away on Friday, 6 March 2015, at the age of 44;
(2) further extends condolences to his family, especially his wife and children, his union and the community he served with dedication;
(3) also notes that Mr Skhakhane was born in Bulwer of the late Mr M M and Mrs MaDlamini Skhakhane;
(4) also notes that for his primary education he attended Emangwaneni Primary School, proceeded to Ixopo Seminary where he matriculated, and obtained his teaching diploma and degree at the University of Zululand;
(5) further notes that he taught at Umsinga High School and became principal of Usizo High School in Umsinga;
(6) also notes that he became the National Teachers’ Union secretary, Natu, secretary, of the Umtshezi Branch and the secretary of Escort Region;
(7) further notes that he became a member of Natu Central Executive Board as a vice president in 2009, and served in this capacity until his passing;
(8) notes that Mr Skhakhane was a dedicated Christian under the Roman Catholic Church in Umshwathi; and
(9) finally notes that on 10 January 2015 he was ordained by Cardinal Wilfred Napier as the Reverend Deacon in Umshwathi.
Agreed to.
Ms L C DLAMINI
Mr M KHAWULA
INTERNATIONAL WOMEN’S DAY
(Draft Resolution))
Ms L C DLAMINI: Deputy Chairperson, I hereby move without notice on behalf of the ANC:
That the Council –
(1) notes that March 8 2015 is International Women’s Day, which is used to reflect on the progress made, to call for change and to celebrate acts of courage and determination by ordinary women who have played an extraordinary role in the history of their countries and communities;
(2) further notes that this year’s theme, Empowering Women – Empowering Humanity: Picture it! envisions a world where each woman and girl can exercise her choices, such as participating in politics, getting educated, having an income and living in a society free from violence and discrimination;
(3) further notes that this year’s International Women’s Day will highlight the Beijing Declaration and Platform for Action, a historic roadmap signed by 189 governments 20 years ago that set the agenda for realising women’s rights; and
(4) congratulates the South African government and the community at large on their progressive agenda of empowering women and asks government to put mechanisms in place to address the many gaps that still remain.
Agreed to.
Mr J J LONDT
Ms L C DLAMINI
FIRES IN WESTERN CAPE PENINSULA
(Draft Resolution)
Mr J J LONDT: Deputy Chairperson, I hereby move without notice on behalf of the DA:
That the Council-
(1) notes the recent fire that raged through the Western Cape Peninsula; and
- commends:
(a) the national, provincial and local governments that worked together to manage this disaster;
(b) the provinces that dispatched 250 firefighters to the Western Cape to contain the fire;
(c) the 2 000 ordinary people who took part in fighting the fire; and
(d) each South African who donated food, water and cold drinks to exhausted firefighters.
Agreed to.
Ms T G MPAMBO-SIBHUKWANA
Mr J J LONDT
NCOP DEVIATES FROM PROGRAMME FOR OVERSIGHT VISIT TO MYCITI BUS ROUTES
(Draft Resolution)
Ms T G MPAMBO-SIBHUKWANA: Deputy Chairperson, I hereby move without notice on behalf of the DA:
That the Council -
(1) notes that the NCOP deviated from the programme during the oversight visit to MyCiTi Bus routes in Cape Town;
(2) further notes that the oversight programme did not include an address by the City of Cape Town Mayoral Committee member, Brett Herron, to the 26 families who are affected by MyCiTi bus route in Plumstead;
(3) acknowledges that the families are being consulted by the Mayor and the City of Cape Town;
(4) recognise that the oversight was specifically meant for Mayoral Committee member, Brett Herron, to address the NCOP on the MyCiTi bus route and not call for a public meeting in Plumstead; and
(5) concludes that the ANC used the NCOP programme to canvas for votes instead of fulfilling their scheduled obligation to receive a full briefing on the routes and operation of the MyCiTi bus system from Khayelitsha to Plumstead.
The CHAIRPERSON OF THE NCOP (Mr R J Tau): If there are no objections to the motion, I put the motion.
HON MEMBERS: We object.
The CHAIRPERSON OF THE NCOP (Mr R J Tau): There is an objection, therefore this motion becomes a notice of motion.
Ms E PRINS
Ms T G MPAMBO-SIBHUKWANA
FRANSCHHOEK RUGBY CLUB PLAYERS AND SUPPORTERS IN TRAGIC BUS ACCIDENT
(Draft Resolution)
Ms E PRINS: Deputy Chairperson, I hereby move without notice on behalf of the ANC:
That the Council –
(1) notes that the Franschhoek Rugby Club was involved in a tragic bus accident in the Franschhoek Pass on Saturday morning, 7 March 2015;
(2) further notes that 26 people were injured, and three people, including two players and a spectator, sadly lost their lives in the accident;
(3) conveys its deepest condolences to the families, friends and colleagues of the affected; and
(4) commends the Western Province Rugby-Football Union for establishing the Franschhoek Rugby Disaster Relief Fund to help those affected.
Agreed to.
Mr C F B SMIT
Ms E PRINS
WATER POLLUTION CRISIS IN MOGOPONG, LIMPOPO
(Draft Resolution)
Mr C F B SMIT: Deputy Chairperson, I hereby move without notice on behalf of the DA:
That the Council –
(1) notes that the town of Mogopong in Limpopo has a serious water crisis due to dilapidated asbestos pipewater infrastructure;
(2) reckons that the pipes are very old and burst on a weekly basis;
(3) further notes that the pipes are made of asbestos, and while crumbling, this is poisoning the entire community of Mogopong with asbestos;
(4) realises that there is clear indication that stomach and throat cancer cases in Mogopong are drastically on the increase and that these pipes might be the cause of this; and
(5) therefore calls on the Minister of Water and Sanitation to immediately investigate this issue and present the relevant select committee with the report by her department on how the intervention is going to be administered.
The CHAIRPERSON OF THE NCOP (Mr R J Tau): If there are no objections to the motion, I put the motion.
AN HON MEMBER: We object.
The CHAIRPERSON OF THE NCOP (Mr R J Tau): There is an objection, therefore this motion becomes a notice of motion.
Mr F ESSACK
Mr C F B SMIT
BACKLOG CHALLENGES AT CLARION HIGH SCHOOL IN EMALAHLENI
(Draft Resolution)
Mr F ESSACK: Deputy Chairperson, I hereby move without notice on behalf of the DA:
That the Council –
(1) takes note that Clarinet High School in Emalahleni, in Mpumalanga, took 18 months longer to build than originally planned;
(2) also notes that the school has operated since January 2014 without electricity;
(3) further notes that in 2014, no budget was allocated to this school, resulting in the school having to incur debt to operate in 2014, and use the 2015 budget to pay off the debts of 2014;
(4) regrets that this very school has until today not received any textbooks for this year, 2015;
(5) highlights that the school has a library without books, a science laboratory without equipment and a computer laboratory without computers;
(6) should not pretend that the ANC is doing a sterling job; and
(7) calls on the ANC to admit that as an organisation, it has failed to deliver services to the people of Emalahleni.
The CHAIRPERSON OF THE NCOP (Mr R J Tau): If there are no objections to the motion, I put the motion.
AN HON MEMBER: We object.
The CHAIRPERSON OF THE NCOP (Mr R J Tau): There is an objection, therefore this motion becomes a notice of motion.
Mr J W W JULIUS
Mr F ESSACK
UNCALLED-FOR REPRIMAND BY CHAIRPERSON OF THE NCOP
(Draft Resolution)
Mr J W W JULIUS: Deputy Chairperson, I hereby move without notice on behalf of the DA:
That the Council –
(1) acknowledges that the reprimand by the Chairperson of the NCOP, hon Thandi Modise, to NCOP members when presiding over the Joint Sitting of Parliament on 12 February 2015 during the state of the nation address was uncalled for;
(2) regrets that the Chairperson of the NCOP, whilst presiding over all Members of Parliament, called only on NCOP members to sit down, saying, “Members of the NCOP, sit down!”
(3) realises that the only person out of order that time was hon Cathy Dlamini and she was only reprimanded after the Chairperson shouted at NCOP delegates twice;
(4) considers Section 45(2) of the Constitution of South Africa which provides for all Members of Parliament in Joint Sittings of Parliament to have the same privileges and immunities;
(5) recognises that this reprimand was comparable to that of a Grade 1 teacher calling order on Grade 1 learners;
(6) also recognises that this reprimand further potentially amplifies the attitude that NCOP members are not important as NA members in Parliament; and
(7) calls on the Chairperson of the NCOP to refrain from such behaviour in future and withdraw this, “Sit down” reprimand unconditionally.
The CHAIRPERSON OF THE NCOP (Mr R J Tau): If there are no objections to the motion, I put the motion.
AN HON MEMBER: We object.
The CHAIRPERSON OF THE NCOP (Mr R J Tau): There is an objection, therefore this motion becomes a notice of motion.
Ms L L ZWANE
Mr J W W JULIUS
DEATH OF RAPPER “FLABBA” NKULULEKO HABEDI
(Draft Resolution)
Ms L L ZWANE: Deputy Chairperson, I hereby move without notice on behalf of the ANC:
That the Council –
(1) notes with sadness, the passing on of Nkululeko Habedi, known as Flabba, in Alexandra, Johannesburg, in the morning of Monday, 9 March 2015;
(2) notes that Flabba, as he was affectionately known, was the lead rapper of Skwatta Kamp, a hip pop music group;
(3) further notes that he was not only a rapper, but also a music producer and he last produced the album with the famous song, Nayi inkinga, last year in December 2014; and
(4) conveys its condolences to his family and friends, and may his soul rest in eternal peace.
Agreed to.
Mr C J De Beer
Ms L L ZWANE
NEW power station NEAR POFADDER IN northern cape IS LARGEST IN SOUTHERN HEMISPHERE
(Draft Resolution)
Mr C J DE BEER: Deputy Chairperson, I hereby move without notice:
That the Council –
- notes that a new 100 MW concentrated solar power, CSP, station was opened near Pofadder in the Namakwa region of the Northern Cape, on 2 March 2015 by Minister Patel;
- also notes that it is the largest CSP plant in the Southern Hemisphere;
- further notes that the plant is generating energy equivalent to the household consumption of 80 000 families or 400 000 energy users;
- further notes that South Africa now has the largest green economy programme on the African continent;
- further notes that Northern Cape is the renewable energy hub of South Africa; and
- thanks the Independent Development Corporation, IDP, for the funding in the development of the green economy as a jobs driver in the New Growth Path, NGP.
Agreed to.
The CHIEF WHIP OF THE NATIONAL COUNCIL OF PROVINCES
MOTIONS WITHOUT NOTICE
Platform for consideration of issues in the Western Cape
(Draft Resolution)
The CHIEF WHIP OF THE COUNCIL: Deputy Chairperson, I move the Draft Resolution printed in my name on the Order Paper as follows:
That, in terms of Rule 21(2) and, in the interest of enhancing public participation, conducting oversight and providing a platform for consideration of issues affecting provinces as provided for in section 42(4) and 72(1) of the Constitution of the Republic of South Africa, 1996 –
- the Council resolves to, from 13 to 17 April 2015, conduct public hearings, hold meetings, conduct oversight visits and sit in plenary in the province of the Western Cape on 17 April 2015, at 09:00, until the conclusion of business on that day; and
- the Council notes that the estimated cost of effecting the change in venue and maintaining it for the specified period will be approximately R10 000 000.
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): As there is no speakers’ list I shall now put the question.
Question put: That the motion be agreed to.
In favour: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.
Motion accordingly agreed to in accordance with section 65 of the Constitution.
Consideration of Report Select Committee on Finance
Mr C J De BEER
The DEPUTY CHAIRPERSON OF THE NCOP
CONSIDERATION OF REPORT OF SELECT COMMITTEE ON FINANCE –
2015 FISCAL FRAMEWORK AND REVENUE PROPOSALS
Mr C J DE BEER: Hon Deputy Chairperson, hon Deputy Minister ...
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Just hold on, hon member. Take your seat.
Ms E C VAN LINGEN: Deputy Chairperson, on a point of order: In terms of Rules 144 and 145, the decision of the programming committee of 19 February stands. This is not a debate and is merely the tabling of a report.
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Two things: Firstly, I must admit that in terms of the Rules, in the first place I should have ruled on the motion that was passed earlier as being out of order because it was in anticipation of a debate. However, I allowed it. Now the member is applying a Rule to the very same motion that she moved in the House that was rejected as a motion without notice.
Secondly, this is a matter for the committee, and one which should have been dealt with at committee level. The committee should have decided whether this was going to be a statement or a debate.
Ordinarily, any matter that is agreed to at committee level must be debated once it comes to the House. However, the committee will take a decision as to whether they shall proceed with this to the House as a statement.
Therefore, I will rule that the application and the point of order should not be sustained. I am not going to sustain it precisely because the House cannot now be subjected to matters that should have been dealt with at committee level. Therefore, I ask hon De Beer to introduce the debate. [Applause.]
Mr C J DE BEER: Hon Deputy Chairperson, hon Deputy Minister, hon members, yes ...
Mr W F FABER: Hon Chair, on a point of order: I would just like to have some clarity from you as Chairperson. Are you saying that you do not adhere to the Rule that hon Van Lingen has just stated? I would like to have that recorded as well.
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Hon member, I have made a ruling on the matter by saying that it does not apply in this instance. Can you continue with the debate, hon De Beer?
Mr C J DE BEER: Let’s try again. Hon Chairperson, hon Deputy Minister and hon members, on 2 December 2014, the committee programme was approved, indicating a debate for today. That committee programme was circulated to every member and official member in that committee, and confirmed. I just want to clarify that.
Chairperson, the focus of Budget 2015 is to consolidate public finances in the context of slower growth and rising debt. A towering leader of our movement, the hon Comrade Walter Sisulu, wrote:
The story of our struggle is a story of problems arising and problems being overcome. The solutions we adopt are the solutions we ourselves have to implement.
The Budget refers to that good advice. Through Budget 2015, the economy is being rebalanced for growth, shifting from a growth path reliant on consumption to one led by investment. We are experiencing tough times and have to take responsible decisions. We must get quality expenditure and better value for money.
The Minister of Finance tabled the 2015 national Budget before Parliament on 25 February 2015. After the tabling of the Budget and the subsequent engagement with the Minister of Finance on 26 February 2015, the Standing and Select Committees on Finance received inputs from the Parliamentary Budget Office on 3 March 2015, and on 4 March 2015 we held public hearings where nine stakeholders appeared before us. We commend the participants in the public hearings for their contributions.
The 2015 Budget is the toughest since the advent of democracy. What does the economic environment like look that we operate in? If we look at it globally, in the four months since the tabling of the 2014 Medium-Term Budget Policy Statement, MTBPS, the global economy outlook has weakened. The world output has been revised downwards by 0,3% in 2016. World output growth is projected at 3,5% in 2015 and 3,7% in 2016.
If we look domestically, a gross domestic product, GDP, growth of 2% is projected for 2015, rising to 2,6% in 2016 and 3% in 2017. The immediate priorities are framed by the nine-point plan as stated in the state of the nation address to boost growth and create jobs. This entails: resolving the energy challenge; revitalising agriculture and agroprocessing; adding more value to mineral wealth; implementing the Industrial Policy Action Plan, Ipap; encouraging private investment; moderating workplace conflict; unlocking small business potential; boosting the role of state companies; and Operation Phakisa.
Although corporate balance sheets indicate cash balances of more than R600 billion, private sector growth remains weak. We need a long-term investment commitment by private sector funds.
Looking to the fiscal policy, the countercyclical approach has reached its limits. The 2015 Budget implements the commitment to narrow the Budget deficit, stabilise debt and begin to rebuild fiscal space.
There are three risks to the fiscal outlook over the medium term: firstly, weaker-than-expected economic growth and electricity shortages; secondly, a public sector wage settlement significantly above the consumer price index, CPI, and inflation; and finally, the provision of additional direct fiscal support and equity injections or guarantees to public entities.
We have to improve the quality of expenditure and get value for money. All hands have to be on deck. We have to crack down on wasteful, irregular and fruitless expenditure and enhance compliance by all departments with the Public Finance Management Act, PFMA, and by municipalities with the Municipal Finance Management Act, MFMA.
As far as revenue is concerned, taxes will be increased by R16,8 billion in the 2015-16 financial year. The details appear in the Budget Review document. The World Bank Group’s report of 5 February 2015 indicates that for the fiscal instruments they examined, they noted the South African fiscal system lifted 3,6 million individuals out of poverty. This is remarkable.
The results of their research show that South Africa uses its fiscal instruments to effectively reduce market income poverty through progressive social spending. This is also in compliance with the Freedom Charter. That’s the World Bank’s report.
The committees believe that the Budget should be more clearly located in terms of the National Development Plan, NDP, and Medium-Term Strategic Framework.
The framework for the Budget was provided during the state of the nation address. The committees need to monitor the implementation of key aspects of the Budget in terms of the state of the nation address. A key focus should be the nine-point plan to ignite the economy and create jobs.
In the context of the weak global economic outlook and the major economic growth and financial constraints that the country faces, the National Treasury has managed to shape a balanced Budget, mainly in favour of the poor. I will go straight to the recommendations.
In the first instance, the National Treasury should, within a month of the adoption of this report by the House, respond to the submissions made by the nine stakeholders that appeared before us during the public hearings.
In the second instance, the quality and composition of government spending needs to change. National Treasury needs to be effective in this regard and the committees will monitor this more closely.
In the third instance, while the committees acknowledge National Treasury’s good work in improving the quality of spending at local government level, more needs to be done in this regard in co-operation with the national and provincial departments of Co-operative Governance and Traditional Affairs and the provincial treasuries.
In the fourth instance, National Treasury should do more to ensure that its proposals on cost containment and efficiency gains are effectively implemented and should report to the committees on a regular basis.
In the fifth instance, the committees noted that the state is creating more jobs than the private sector, and believe that the state should do more to encourage the private sector to invest in growth and create more jobs.
In the sixth instance, National Treasury also needs to ensure that the employment tax incentive scheme does not lead to the displacement of established workers.
In the seventh instance, while the committees welcome government’s many incentives and other forms of funding to private companies to advance the country’s economic growth and job creation goals, they feel there should be more careful evaluation of the numbers of jobs created through this funding support. National Treasury, preferably together with the Department of Trade and Industry, should brief the committees on the overall success of these support programmes, with a particular emphasis on job creation.
In the eighth instance, the Treasury, through the Presidential Infrastructure Co-ordinating Commission, PICC, and together with other departments, needs to contribute more to the speedier and more effective implementation of the National Infrastructure Plan.
In the ninth instance, the committee also welcomes the new fiscal package for cities and urges Treasury to ensure that the funds are effectively used for the correct purpose.
In the tenth instance, Treasury also needs to provide more information on the assumptions on which the revenue proposals are based and their impact, as well as more information on the impact of the Budget on the poor.
In the eleventh instance, Treasury needs to periodically brief the committees on the progress of the Dais Tax Committee’s work.
In the twelfth instance, while recognising the complexities of the issues, the committees believe that the National Treasury and the SA Revenue Service, Sars, should do more to tackle base erosion and transfer pricing, and the committees will engage with them on this on a regular basis.
In the thirteenth instance, the committees noted PricewaterhouseCoopers’ concern that, in the Southern African Customs Union, Sacu, South Africa received 70% from the revenue sharing pool in the 2013-14 financial year, instead of at least 80% that it was entitled to. While recognising South Africa’s responsibilities to its neighbouring countries, the committees believe that consideration needs to be given to reviewing the revenue sharing formula.
In the fourteenth instance, with reference to the World Bank’s 2014 report on South Africa entitled, Fiscal Policy and Redistribution in an Unequal Society, National Treasury, together with government as a whole, needs to look into ways of linking social grants to forms of self-employment and skills development, and over time wean people off the grant system and onto sustainable livelihoods.
In the fifteenth instance, the committees noted that Eskom is to receive a capital injection of R23 billion, to be paid in three instalments, with the first transfer to be made in June 2015, and that the Minister of Finance will table an Appropriation Bill in Parliament to this effect. While recognising the complexities and sensitivities related to the sale of nonstrategic assets, the committees recommend that the Minister should introduce this Bill by early May.
In the sixteenth instance, development finance institutions, DFIs, need to do more to support small businesses and co-operatives.
In the seventeenth instance, National Treasury should also do more to assist the Department of Small Business Development, given the importance of small, medium and micro enterprises, smmes.
In the eighteenth instance, National Treasury and the Chief Procurement Office should provide the committees with more information on how the office will work and how the centralised supply chain management process will be implemented, including how the practical and logistical difficulties will be dealt with. The committees welcome the proposals for centralised procurement, including school textbooks from January 2016. The proposal to centralise school construction and decentralise their maintenance is also welcomed.
Finally, while the committees understand the need for Eskom to charge cost-reflective tariffs, they feel that this should be done in ways that do not disadvantage the poor and needy.
It is our responsibility as Members of Parliament, MPs, to take this Budget to our people in our communities and to explain it to them — what does it mean and where do they fit into this whole picture?
It is our responsibility, not that of an official in the department. Why? It is because we, as members, vote on the Budget, not the officials. It also applies to municipalities when they explain the municipal budgets to their communities.
I hereby move that the House adopts the Fiscal Framework and Revenue Proposals for 2015. Thank you. [Applause.]
Mr F ESSACK
Mr C J DE BEER
Mr F ESSACK: Hon Chairperson and colleagues, good afternoon and thank you for the opportunity to speak in this debate. It is an absolute pleasure to be here and it is expected that we will be heckled by people in trouble.
Chairperson, last week Minister Nene tabled the Finance Budget for South Africa. As South Africa, we eagerly awaited reforms that would deal with our most pressing issues, real issues, such as the rise of unemployment and cutting wasteful expenditure and corruption, but all we heard about was tax increases.
These tax increases will come at the expense of every South African who will have to pay for our government’s failures and being unable to steer our economy on a growth path that will one day take South Africans out of poverty and give them the ability to provide for their families.
Today, we debate the fiscal framework. This is determined by the Minister’s decisions during the Budget Speech and will inform how our economy performs under our economic policies.
Chairperson, it is therefore simple. If there are big tax increases, people will, of course, spend less money, lowering demand for goods and services and ultimately costing South Africans their jobs.
To quantify this, the Minister announced an increase of 1% for every taxpayer earning more than R181 900 per annum. This will affect approximately 3,5 million South Africans. To add to this, the Minister announced that the fuel levy will increase by 80,5c per litre, which is a further burden on every South African personally and on the growth of small businesses.
It is robbing South Africans of the relief that the drop in the international oil price has brought, in case hon Cathy Dlamini is not up to speed with the newspapers. [Laughter.]
Every South African will feel this effect due to the increased transport costs, which will place a further burden on small businesses — the main vehicle for job creation. This will impact on businesses disproportionately resulting in a dampening effect on their capacity to create more jobs.
The Minister might then say that there is tax relief for small businesses with a turnover below R335 000 a year. But the increase of the fuel levy, directly counteracts this, which will bring little to no relief to the primary job creators in our economy.
It is an insult that the Minister announced during his Medium Term Budget Policy Statement, MTBPS, that he will not balance the Budget on the backs of the poor, yet the current tax increases will only create an environment for more job losses, an increase in unemployment and the further suffering of our most vulnerable South Africans.
What the Minister should have done was to implement a short-term solution to avoid tax increases by cutting the public-sector wage bill which in 2015 to 2016, will stand at a staggering R479,5 billion.
Chairperson, the crippling issues of corruption and maladministration, together with millions of rands being lost through wasteful expenditure, should have been prioritised in addressing the current fiscal framework.
Today our economy is at a bigger risk than was the case previously. Our economy needs to focus on small businesses and entrepreneurs. They, in turn, will employ more people which will widen our tax base and allow government to draw from a larger revenue base instead of raising taxes.
Chairperson, the DA in its alternative budget, mentioned that it will spend R9,3 billion to stimulate and empower small businesses in 2015 alone. Minister Nene allocated only R3,5 billion over three years to focus on mentoring, training and supporting small businesses.
The National Development Plan, NDP, foresees small, medium and micro-sized enterprises, SMMEs, creating 90% of the jobs required to meet its objective of 11 million jobs by 2030. Today, an allocation of just over R1 billion a year to support SMMEs is thus not good enough. This could have benefited thousands, if not millions, of the 35% unemployed South Africans.
In regard to the bloated public sector wage bill, the DA’s alternative budget commits to reducing this wage bill by a further R4,3 billion through key interventions such as in the inflation of salary increases, cutting back on salaries to superfluous departments and linking salaries to performance. Again, sadly, the Minister completely missed this opportunity.
Today, estimated revenue has declined by R11 billion between October 2014 and February 2015 — five months! Yet expenditure has increased by R7 billion with our budget deficit growing to R162 billion. Our economy and the ANC’s economic policy is in a critical condition and Minister Nene has shown no indication that he has the will to resuscitate it.
The DA has a better model in our alternative budget. We expressed ourselves on the matter and told the Minister that he must focus on immediate improvements to manage the people’s money better and that long-term measures should be set to stimulate and accelerate economic growth.
The DA is focusing on accelerating small business, addressing youth unemployment and boosting trade and infrastructure development. The ANC is sadly countering it by taking more money away from the poor, in effect.
The ANC-led government through the Budget Speech and the determination of our fiscal framework has shown the uncertainty of its economic policy and that it is unable to lead our growth on a prosperous growth path. With this dismal growth of 1,4% in 2014, slashed from a projected rate of 2,7%, the DA is the only party that has shown that it can create jobs so that every South African can live the life he or she desires. Chairperson, I thank you.
Mr T C MOTLASHUPING
Mr F ESSACK
Setswana:
Rre T C MOTLASHUPING: Motlatsamodulasetilo wa Khansele ya Bosetšhaba ya Diporofense, Motlatsatonakgolo, moloko a a tlotlegang a Ntlo e, baeng ba rona ba ba tlotlegang ba ba leng teng mo lefelo theetsong.
English:
The ANC remains guided by and committed to the ideals of the Freedom Charter as we work towards building a national democratic society. In this regard we are enjoined by the Freedom Charter to build a society in which South Africa belongs to all who live in it, black and white; and to declare that only a democratic state based on the will of the people can secure for all their birthright without the distinction of colour, race, sex or belief.
At the Mangaung conference the ANC resolved that we must work towards the implementation of the recommendations of the 2030 National Development Plan, NDP, as a long-term vision which would serve as the basis for partnerships across society to attain the South Africa of our dreams. As eloquently articulated in the Constitution, among other key priorities of the NDP is spending on infrastructure as a driver for economic growth and job creation.
The NDP further puts the emphasis on inclusive growth through integrated plans. The nine-point plan as highlighted by His Excellency the President of the Republic of South Africa, Comrade Jacob Zuma, in his state of the nation address, further alludes to the vital role of infrastructure in growing the economy. I am tempted ...
Setswana:
... gore ke tlogele kgang e ke e baakantseng go le go nnye, gore ke bolelele setšhaba sa Aforikaborwa gore mokgatlo wa ANC o ikaelela go tokafatsa ekonomi ya Aforikaborwa jang.
English:
You see, hon Essack comes to this august House and says that ANC is putting more suffering on the most vulnerable. He further says that the ANC is taking money away from the poor. He says all that he heard in the Budget Speech was tax increases. He is very economical with the truth.
Setswana:
A ke tlhalosetse leloko se se diriwang ke puso ya ANC. Go tloga ka ngwaga wa 1994, fa ngwana a tsalwa mo Aforikaborwa, mokgatlo wa ANC o abela ngwana oo madi a kotlo ya bana. Bana ba bangwe ba katlaatlelo ba fiwa madi mahala. Fa ngwana a tshwara dingwaga tsa go ya kwa sekolong, re mo fa gape dijo le dibuka tsa go bala. Se, ke sesupo sa gore o tsena sekolo mahala. Le fa a le kwa sekolong se se kwa godimo o fiwa dibuka tsa go bala. Mokgatlo wa ANC o thusa batlhoki ka go ba baankanyetsa mo tekanyetsokabong e.
Ga re felele foo. Fa go fitlhelela gore ngwana yoo a ye kwa Yunibesithi, o thusiwa ka NFSAS; gape go na le diporofensi tse ke itsing gore mo dikantorong tsa Ditonakgolo tsa tsona ba fana ka dibasari. Ke a itse gore kwa Mamusa, kwa Schweizer-Reneke, fa bana ba tshwanetse go ya kwa sekolong mme ba tlhoka, ba thusiwa ka madi a go ikwadisa. Seo se raya gore ba tsena sekolo mahala.
Ga re felele foo ka go tlhokomela batho ba ba tlhokang, mokgatlo wa ANC ga o ba latlhe gonne ANC ke bošwa jo batho ba bofilweng ke Modimo go tswa legodimong. Fa ngwana a fetsa kwa Yunibesithing, le teng ga re mo latlhe, re tswelela pele le ena gonne a feditse, e le lekau ebile a itekanetse. [Tsenoganong.]
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Is that a point of order, hon member?
Mr W F FABER: Hon Deputy Chair, I would like to know if ... [Interjections.]
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): No! Is that a point of order, hon member?
Mr W F FABER: ... this hon member prepared to take a question?
Mr T C MOTLASHUPING: I am not prepared to take a question. I will take it later when I am finished with you.
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Just before you continue. Hon members, when you stand up you are saying I should pay attention to you, and as I am paying attention to you then address me and not the member at the podium. I asked the hon member whether he is standing up on a point of order, but then he rather addressed the member at the podium, which is totally out of order. May we please refrain from doing that.
Mr T C MOTLASHUPING: This is a propoor budget.
Setswana:
Fa ngwana yoo kgotsa lekau leo ...
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): On what point are you rising, hon member?
Mr W F FABER: Hon Deputy Chair, I just need to say that you asked me if it’s a point of order and I was not addressing the member, but you. I was looking straight at you. I was going to ask if you could allow me to ask a question, and the question that I wanted to ask is whether the hon member will take a question.
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): No, I asked you two times whether it was a point of order.
Mr W F FABER: But Chair, how do you want me to ... [Interjections.]
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): You could have! All you had to do was to say that it was not a point of order, but you want to check whether the member is prepared to take a question.
Mr W F FABER: I will do exactly what you ask next time, Deputy Chair.
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Please!
Mr W F FABER: One hundred percent!
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Thank you very much.
Setswana:
Rre T C MOTLASHUPING: Ke a itumela Motlatsamodulasetilo, gonne go ne go se na kgalemo. Fa ngwana yoo, kgotsa lekau le lekgarebe leo le fetsa kwa Yunibesithing ga re mo latlhe. Re mo fa dikgono le madi a go duela ditlhoko tsa gagwe go mo baankanyetsa go tsena mo tirong. A se ga se lenaneo le le ntle le re ka buang ka lona? Se re se dirang gape go lekanyetsa batlhoki ke gore fa motho a tsofala, ga re mo latlhe, re mo fa madi a phenšene e e lekanang le ya batho ba ba šweu. Batho botlhe ba fiwa phenšene e e lekanag ke mokgatlo wa ANC. Se ke buang ka sona se, se teng mo tekanyetsokabong, motl Essack, ke kopa gore o e bale. A mokgatlo wa ANC ga o tlhokomele batlhoki? O a ba tlhokomela.
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Let’s just hold it there, hon member. Is that a point of order, hon Gaehler?
Mr L B GAEHLER: No, no! Deputy Chair, there is something that the hon member has forgotten, and I just want to remind him. Hon Carrim said that we must laugh for five minutes. When is he going to laugh? [Interjections.] [Laughter.]
The DEPUTY CHAIRPERSON OF THE NCOP ((Mr R J Tau)): Hon member, that is not a point of order. Please proceed, hon member.
Setswana:
Rre T C MOTLASHUPING: Ke ne ke tlhalosa fela gore tekanyetsokabo e e leng mo pele ga rona ya 2015-16 ...
English:
... is propoor and it is because of the ANC. The ANC’s economic vision rests on the Freedom Charter’s call that the people shall share South Africa’s wealth.
Through economic transformation we intend to build an equitable society in which there is decent work for all. That is why the government continues to prioritise infrastructure and job creation among its key areas. Government expenditure is projected to be R1,3 trillion in 2015-16 with an estimated average annual Medium Term Expenditure Framework, MTEF, growth rate of 7,9%.
Through expenditure, government is directing resources to NDP objectives and the nine-point plan while also stabilising the deficit. Over the medium term, government expenditure will, amongst other things, be R647 billion on basic education, including R36,7 billion on school infrastructure; and R364 billion on local development and social infrastructure, including R145,5 billion on municipal infrastructure.
The budget further provides R498 billion for social protection, R197 billion for postschool education and training and R18 billion for providing free meals to over 9 million learners, hon Essack.
Let me come to the issue of the energy supply. Public sector infrastructure has received a budgeted amount of R813 billion for the current Medium-Term Expenditure Framework, MTEF, to stimulate infrastructure development.
In 2015, Budget spending will be focused on infrastructure development such as economic, water and sanitation, electricity, roads and transport. Through this core-infrastructure spending government aims to expand power generation to address the energy issue the country is currently faced with …
AN HON MEMBER: And why?
Mr T C MOTLASHUPING: ... and to sustain and improve transport networks for faster and effective trade and improved water and sanitation.
One of the 15 pillars of the ANC’s 52nd Polokwane conference resolutions was to ensure energy security and promote clean and renewable sources of energy supply. [Interjections.]
Expenditure dedicated to energy infrastructure will be R166 billion for the current MTEF period. Eskom has been allocated R138 billion over the MTEF period to accelerate the completion of power stations and other related energy-related projects. Government support to Eskom is aimed ... [Laughter.] ... to both financial sustainability and ensure ... [Interjection.]
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Just hold on, hon member. There is a difference between conversing loudly and heckling. In Parliament heckling is allowed, but let’s not converse to a point where you distract or even obstruct the member at the podium. I know it is good to have a lively debate and so forth, but let’s not disturb the member at podium, please because he ends up laughing now instead on concentrating on his speech. [Laughter.]
Mr T C MOTLASHUPING: Deputy Chairperson, as mentioned by the President of the Republic of South Africa in the state of the nation address of 2015, there are still 3,4 million households in the country without electricity. Against this background the 2015 Budget provides funding through the integrated national electrification programme grant. With this conditional grant allocation ... [Interjections.]
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Hon member, your time is up.
Mr T C MOTLASHUPING: In conclusion, the ANC-led government has also established the presidential infrastructure ...
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): No, hon member, your time is up.
Mr V E MTILENI
Mr T C MOTLASHUPING
Mr V E MTILENI: Deputy Chair, avuxeni hinkwenu [good morning]. the Budget is obsessed with foreign direct investment which has never worked in terms of addressing the fundamental challenges of our economy.
The Budget does not have the capacity to address the socioeconomic challenges South Africans are faced with such as property, inequality and unemployment. The Budget is indeed not responding to the principles of the Freedom Charter adopted 60 years ago because mineral wealth is still in the hands of white monopoly capital and our poor masses are still excluded from the mainstream economy.
Transfer pricing and profit shifting continue to weaken our economy and deny our people the opportunities to get the basic services they so desperately need.
In regard to the level of unemployment, the current fiscal framework does not respond to the challenges of unemployment, especially for the youth who are qualified in various fields of study. I mention qualifications such as engineering; Bachelor of Commerce, B Com; Bachelor of Science, B Sc; and Bachelor of Commerce, B Com in Finance just to mention a few.
They are still loitering in the streets without jobs and I think this is a case in point. All of us will attest to this. This includes the 2,5 million youth who are still without jobs after having qualified from the further education and training colleges, FETs, around the country. [Interjections.]
AN HON MEMBER: Are you in the right debate?
Mr V E MTILENI: Yes, I am in the right debate. Of course! [Laughter.] Maybe you are lost. [Laughter.]
Statistics published by Statistics SA confirms that the youth are still vulnerable to high levels of unemployment. The EFF remains concerned at the level of dropouts at tertiary institutions as a results of lack of bursaries and support from the Department of Education because all they get are loans in the name of the National Student Financial Aid Scheme, NSfas, and not bursaries.
As much as we understand socioeconomic challenges and pressures to increase revenue, the EFF is concerned that the proposed tax increases are centred mainly on individuals and not the business sector.
The business sector must also contribute sufficient tax to the growth of the economy. It cannot be that individuals in South Africa are forced to bail out the private sector, yet the private sector is the largest sector in South Africa and remains virtually unpoliced.
If we look at the ratio of debt to gross domestic product, GDP, the level of competition and the wasteful expenditure, one critical issue is that government has to root out corruption in both national and provincial departments as well as municipalities.
The National Department of Public Works also needs to account to fellow South Africans as to what informed them to fund Nkandla even though the President now refuses to pay back the money. The President does not want to pay back the money even though the Public Protector said he should pay back the money. To us this means that the President still undermines the Public Protector as one of the institutions of this country. Human settlements ... [Interjections.]
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Is it a point of order? Just hold on, hon member, there is a point of order. Is it a point of order?
Mr T C MOTLASHUPING: No, it is not a point of order, Chair, but I just want to ask the hon member, through you, if he is prepared to take a question.
Mr V E MTILENI: No, I am not prepared to — maybe when we are at Acacia Park, but not now.
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Hon member, are you prepared to take a question?
Mr V E MTILENI: No, I am not, Chair, he is just wasting my time. The country is experiencing ... [Interjections.]
Ms M F TLAKE: Hon Deputy Chairperson, on a point of order: The member is misleading the public when he utters the statement that the President is refusing to pay back the money. There is no court that has decided that the President has to pay back the money. So please withdraw the statement and don’t deceive the public.
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): No, no, no! I didn’t hear the part about refusing to pay back the money. Allow me an opportunity to check with Hansard and make a ruling in the next sitting. It is important to make the correct ruling. [Interjections.] [Applause.]
No, no, I don’t know what the excitement is about. What I heard was that the issue is the recommendation by the Public Protector for the President to pay. So allow me that opportunity to look at Hansard. You may proceed, hon member.
Mr V E MTILENI: Chair, allow me also to clear it up for the member because there is a recommendation which says that the President should pay back the Nkandla money because he unduly benefited. If you are not sure of your statement, then you had better put your hand down.
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Let us not allow dialogue. Continue please.
Mr V E MTILENI: Yes, please. We will talk outside hon, don’t worry. [Laughter.]
AN HON MEMBER: Keep on talking inside. You are wasting your own time.
Mr V E MTILENI: Under Human Settlements the country has experienced a huge backlog in the provision of houses. [Interjections.]
Ms L L ZWANE: Chair, I would like to know if the member is prepared to take a question.
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Hon member, are you prepared to take a question?
Mr V E MTILENI: I think they are just wasting my time.
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): I am asking: Are you prepared to take a question?
Mr V E MTILENI: Like I am saying, they are wasting my time and I am not prepared to answer a question.
The DEPUTY CHAIRPERSON OF NCOP (Mr R J Tau): Hon member, I am asking you.
Mr V E MTILENI: I am not prepared to, Deputy Chair.
The DEPUTY CHAIRPERSON OF THE NCOP: The member is not prepared to take your question. [Laughter.]
Mr V E MTILENI: They are just wasting my time. Why do you waste my precious time? [Laughter.] I was saying that the country has experienced a huge backlog in providing houses for the poor. This is why we still have millions of people living in squatter camps and shacks without water, sanitation or other essential services.
How can we call South Africa a free country when 21 years down the line our so-called freedom is only benefiting the few instead of benefiting the majority of South Africans?
It also came out in the public hearing on the fiscal framework that both Ministers and Deputy Ministers are not sure about their mandates and this has reduced them to mere cheque collectors.
Professor Jannie Rossouw, head of the School of Economics and Business Sciences at Wits University said:
South Africa suffers investment hesitation owing to power supply and policy uncertainty that is impacting negatively on the economic growth. A lower growth rate will change these assumptions considerably as it erodes growth in the tax base, with the fiscal cliff moving closer.
Before dealing with lack of investment from the private sector, we must first acknowledge that the economy is not owned by the majority of South Africans and is at its base level an unequal economic structure. To have our economy opened to more private investment will not change this basic reality.
With regard to transfer pricing, the EFF calls for a review on transfer pricing and how much the economy suffered has because of it. The National Union of Metalworkers of South Africa, Numsa, quoted the Deputy Minister Jeremy Cronin who said, “Lots of dividends have been paid to the UK” ... [Time expired.]
Mr L B GAEHLER
Mr V E MTILENI
Mr L B GAEHLER: Hon Chairperson, Deputy Minister, uphilile? [are you well?]
English:
The UDM supports the report of the select committee. We further welcome the focus on the oceans economy and hope that the relevant department will move with great speed in resolving issues related to licensing and other administrative processes and procedures.
Indeed, the prioritisation of the mining sector and further placing it as part of the Phakisa programme is also welcome. However, we do emphasise the need to ensure that the Phakisa programme is clean of any potential or alleged corrupt activities.
The centralisation of procurement must be speedily done, while taking into consideration all the weaknesses in the system that was registered before. We hope that indeed it will deliver the intended objectives instead of the past centralisation for a few. Details of how this will be done are urgently needed.
The state owned enterprises, SOEs, must be made to be accountable about their finances, as is the case with any other public institution. The tendency to treat them as being outside the Public Service is not helping the House to hold them accountable through the executive.
The allocation of a formula budget to provinces and local government is informed by a process that is not perfect, namely the census. It does not consider historical imbalances particularly in respect of the former Transkei, Bophuthatswana, Venda and Ciskei, TBVC, states and rural communities.
The increase in personal income tax is hitting the middle class hard and it needs to be understood in the context that it will hold problems for the future growth of the economy. One would suggest that this system does not directly deal with the structural imbalances of our economy.
IsiXhosa:
Into esiyithethayo apha, Sekela Mphathiswa, kukuba umsantsa phakathi kwabantu abatyebileyo nabahluphekileyo uyanda. Le nto iyafuna ukushukuxwa. Nawe uyayazi kakuhle ukuba ukhona lo msantsa. Ngethamsanqa uphuma kweli phondo lethu.
English:
If you remember pre-1994 ...
IsiXhosa:
... ititshala yomlungu ibikwazi ukuthenga indlu edolophini, kodwa namhlanje ayikwazi kwenzeka loo nto.
English:
Let us be factual.
IsiXhosa:
Ukuba uhamba ngaselwandle izindlu neendawo ezininzi abantu bethu abakwazi kuzifumana. Ngoko ke, kufuneka siyishukuxe le miba kuba iza kusibetha ekugqibeleni. Okokugqibela, xa sithetha ngala maphandle ayinxalenye yelizwe lethu, ukuba uya ngaphaya kooLusikisiki nooPort St Johns, iindawo eziyimimandla yabakhenkethi, uye ufumanise ukuba iindlela zonakele kakhulu.
English:
Yes, we have inherited these problems, but we need to address them.
IsiXhosa:
Ufika kukho amatyotyombe phakathi edolophini.
English:
Those issues can only be addressed through the budget. Therefore, we need to address these issues.
IsiXhosa:
Okokugqibela, Sihlalo, ingxelo ayiphelelanga kwaye ...
... hon De Beer, I’m really not happy. Hon Carrim, the joint chairperson, I’ve been phoned by people saying that you must also report that we must laugh for five minutes. I haven’t seen you laughing. Even the people complain that they have not seen you laughing on television. Can you just laugh for five minutes, please? Thank you. [Laughter.] [Applause.]
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): That is another matter for the committee.
Ms T MOTARA
MR L B GAEHLER
Ms T MOTARA: Hon Deputy Chairperson of the Council; Minister of Finance, hon Nhlanhla Nene, in absentia; Deputy Minister of Finance hon Jonas; Chief Whip of Council; hon members of the NCOP; guests; ladies and gentlemen, on 25 February this year, 2015, Minister Nene tabled his first Budget.
This was done at a time when the global economic recovery remained subdued as many high-income countries continued to struggle with the legacies of the global financial crisis and the emerging market economies were less dynamic than in the past.
Noting that we are not an island, and thus with the dawn of democracy and post apartheid, we consciously entered the global economic arena. We are now, more than ever before, affected by external as well as internal factors.
Allow me, hon Deputy Chairperson, to congratulate the Minister on a job well done, a commendable effort and one that I personally do not envy one bit. To get the balance right is not only difficult given current internal and external conditions, but to a certain extent it becomes near impossible. Regardless, well done, Minister — keep it up!
The ANC manifesto priorities in 2014, resulted in 62% electoral support. In this manifesto the ANC prioritised five key areas, as we had done in 2009.
Those priorities were: first, decent work, sustainable livelihoods and to create more jobs; second, rural development, land reform and food security; third, education; fourth, health; and the fifth is to fight crime and corruption.
We went further to include a sixth priority which is to prioritise and promote social cohesion and nation-building and thus contribute to creating a better Africa and a just world.
We have adopted the National Development Plan, NDP, as the foundation for long-term planning towards implementing a radical socioeconomic agenda over the next 20 years. Within the NDP vision, critical policy instruments will continue to drive government’s policy agenda.
These include the New Growth Path, NGP, which shifts the trajectory of economic development; the National Infrastructure Plan, which guides the roll-out of infrastructure to improve peoples’ lives; and the Industrial Policy Action Plan, Ipap, which supports the reindustrialisation of the economy.
As the NCOP we want to congratulate the Minister and his team for using recommendations made by the NCOP select committee in relation to the Matlosana Local Municipality disaster allocations, funding for the Moloto Road in Mpumalanga and a conditional grant for municipalities affected by redemarcation. There are other areas that have been raised by the select committee and we look forward to them finding expression in future revenue and fiscal proposals.
One of the most important aspects of the NDP is that of education. In this important aspect of education, we need to ensure that all South Africans have access to quality education and qualified teachers as well as it being accessible to all.
Scholar transport will be provided to many parts of South Africa. It is currently funded by the Department of Education.
The provision of transport has remained one of the key challenges confronting government in the postapartheid era. This is largely as a result not only of the apartheid practices that ensured that the majority of members of society was placed in areas which were largely inaccessible, but also because of the complexity of the current transport needs resulting from increased economic activity.
The NDP and governments’ 2014-19 Medium-Term Strategic Framework, MTSF, envisages that by 2030, South Africans should have access to education and training of the highest quality, which will lead to significantly improved learning outcomes.
On that note, transfers for universities will increase by 6,3% over the medium term to reach a projected budget of R29 billion by 2017-18. These transfers include spending on infrastructure in newly established universities of Mpumalanga and Sol Plaatje University in the Northern Cape.
In addition to access to universities, the NDP also recognises the need to expand access to occupationally directed programmes to increase the availability of intermediate-level skills in the economy, in particular artisan skills.
The 2015 Budget provides a projected expenditure for the sector education and training authority’s, Seta’s, national skills fund — an amount of R17,4 billion by 2017-18 — which shows an increase of R13,2 billion from 2014 to 2015.
We note that a postmatric education is necessary for any individual to acquire the skills and capabilities to participate in the economy and contribute meaningfully as a citizen.
Over the past years, historically disadvantaged South Africans have been denied access to tertiary institutions as a result of funding requirements. The increasing enrolment of students at university and colleges necessitates funding requirements for the historically disadvantaged South Africans.
It must mean that we are doing something correct if there is an increase in student enrolment to tertiary institutions!
On that note, because of the projected increase in enrolments at universities, and technical and vocational education and training colleges, the National Student Financial Aid Scheme, NSFAS, is expected to receive R19,9 billion over the medium term in transfers from the Department of Higher Education and Training for university loans and bursaries and college bursaries. The National Student Financial Aid Scheme is projected to support 711 355 students in higher education institutions over the medium term.
Expanded access to higher education for the poor and disadvantaged remains a key priority for the ANC-led government. According to research conducted by the HSRC, NSFAS has been successful in terms of student graduation, and in comparison to non NSFAS students, NSFAS students increasingly obtain degrees rather than diplomas or certificates. The ANC therefore remains committed to transform South Africa for the better.
Hon Deputy Minister, in my humble opinion, no matter what tax increases you proposed, these proposals would have been shot down by the opposition. In true opposition character and style, had you increased VAT by any amount, this would have been the worst decision you could possibly have made.
Now that you haven’t increased the VAT rate, which by the way would have affected all South Africans whether they earn R190 000 per annum or less or more, this is what we are told should have been done — the proposals made instead.
A budget therefore is not just a collection of numbers, but an expression of our values and aspirations. Those who do not share our values and aspirations, as the ANC, will not support these budget proposals. Thank you.
Ms E C VAN LINGEN
Ms T MOTARA
Ms E C VAN LINGEN: Hon Chairperson, ...
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Is that a point of order, hon Njambi? [Interjections.] Can you take your seat, hon member?
Mr A J NYAMBI: It is a point of order, Deputy Chair. I am asking whether it is parliamentary to oppose a debate and then come back to participate in that debate.
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): No, there is nothing unparliamentary about that. You may continue with the debate, hon member.
Ms E C VAN LINGEN: Hon Chairperson, when Minister Nene had the opportunity to bring austerity to the South African government’s spending, he wilfully allowed the ANC to put the burden on all South Africans by increasing taxes as part of our current fiscal framework.
The tell-tale signs ... [Interjections.] ... you won’t know anything about finances, madam, because the way you ran your municipality into the ground is a disgrace. [Laughter.] The tell-tale sign of this did not end here, but manifested through the other announcements Minister Nene made.
The national revenue, expenditure and projected gross domestic product, GDP, have been revised from 2,5% down to 2%. The debt-to-GDP ratio over the medium-term is something to be alarmed about. It is at 41% now — growing to 44% in the next financial year. If the contingent liabilities are included, it will increase to 57,3% at R2,8 trillion, and soon it will be at 61%, which is not a comfortable place for South Africa to be in.
Minister Nene had the opportunity to speak about corruption and cutting government expenses but he let it pass. The message was clear - in an ANC government, you will always be looked after, even if it is at the expense of the taxpayers in South Africa.
But the Minister should have listened to the DA’s alternative budget, which widely recognises that the only long-term solution to South Africa’s economic woes is real economic growth.
What the DA can deliver on is that we can stimulate the economy and create the job opportunities this country so desperately needs. Hon De Beer talks about 3,6 million people whom have been lifted out of poverty, but with an increasing expanded unemployment rate of 36% the country is in a downward spiral. The state is not there to be the major employer in South Africa, but to create ...
The CHAIRPERSON OF THE NCOP (Mr R J Tau): Is that a point of order? [Interjections.] Can you take your seat, hon Van Lingen.
Mr C J DE BEER: Hon Chair, will the hon member take a question?
The CHAIRPERSON of the NCOP (Mr R J Tau): Hon member, are you prepared to take a question?
Ms E C VAN LINGEN: No thank you. Not now, I will do so later.
The CHAIRPERSON OF THE NCOP (Mr R J Tau): No, she is not prepared to take a question.
Mr C J DE BEER: She is misleading the House [Interjections.]
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Hon members, please, if you want to seek my attention, please stand up. If you raise your hand I will not know whether o a ingapa gotsa ... [you are scratching yourself or ... ] Just rise so that I can recognise you. Hon member, you may proceed.
Ms E C VAN LINGEN: Hon Deputy Chairperson, the state must not be the major employer, but it must create the environment for business and investment to thrive. Having said this, I note my colleague pointed out how increasing taxes is not only bad for business, but bad for society and bad for our country.
One of the biggest strains on the public purse, in terms of expenditure, is the litany of woes of the state-owned enterprises, SOEs, and their financial ruin.
The Minister was silent on his commitment in his Medium-Term Budget Policy Statement, MTBPS, to sell R20 billion worth of nonstrategic assets to fund certain SOEs. When will the bail-outs stop?
The Minister’s message is clear, the state will continue to fund dysfunctional SOEs and the public will have pay. Eskom has guarantees that are at R350 billion, but has only borrowed against R224,9 billion.
Over six years South Africans had to face above-inflation electricity increases; and now we are facing another application to the National Energy Regulator of South Africa, Nersa, to increase electricity tariffs which will further fund the inefficiencies of Eskom — and with a reduced electricity supply.
To add fuel to the fire – and unfortunately the fire doesn’t produce electricity, but disgrace and poverty. The temporary increase in the electricity levy was announced to assist demand management. Eskom plays a key role in our economy. Electricity shortages threaten economic survival.
The DA government would break up the Eskom monopoly by
dividing it into separate generation and transmission units. The national grid must be accessible to independent power producers who should compete alongside Eskom. This will open up our economy.
Whilst the ANC government fails to lead our economy, South Africans pay the highest price. South Africans want to have the right to have a dignified life and decent jobs. They do not want to be dependent on the state, they want to be part of the South African economy.
This Budget is not doing anything for the poor. There is no value for money and there is no bang for the buck of the taxpayers because it is a failing budget that is failing the country. I thank you. [Interjections.]
Mr M KHAWULA
MS E C VAN LINGEN
Mr M KHAWULA: Hon Deputy Chairperson, the 2015 Budget provided little hope that South Africa is on track to alleviating the plight of the poor and it instead pushed underpaid and overtaxed taxpayers into a corner, leaving citizens with more questions than answers.
The increase in petrol tax and the increase in Road Accident Fund, Raf, levy saw petrol going up by 80,5c, with routine monthly petrol increases in the offing over the foreseeable future.
An increase in petrol will in no doubt give impetus to the increase in food prices and transport costs, placing an added burden on the poor, the underpaid, the overtaxed taxpayers and needy students commuting to schools and universities — with the economy said to grow by less than 2%.
The IFP welcomes the increases in social grants as they seek to ease the socioeconomic conditions of the poor who are struggling daily to make ends meet and bear the brutal brunt of poverty and suffering. However, greater emphasis must be focused on the creation of jobs and we must pioneer the ideals of self-help and self-reliance. We must admit that in the light of studded economic growth and snail-paced economic development, South Africa has fast become a dependency state.
The IFP remains concerned that the government continues to throw financial solutions at nonfinancial problems. It is grossly unfair for the taxpayer to be expected to fund incompetence and corruption. [Interjections.]
Education receives the greatest share of the budget, but we have very little to show for this heavy investment. The allocation to education borders on wasteful expenditure. How do we reconcile the fact that the National Students Financial Aid Scheme, Nsfas, is allocated R6,49 billion, with the reality that thousands of deserving and needy students are left in the cold because of lack of funding? The money is there, but Nsfas is characterised by corruption and poor planning.
The SA Airways, SAA, and Eskom are all virtually on their knees, not because they need money but because they lack leadership and the requisite will to plan properly. These state-owned entities, SOEs, are a burden on the taxpayer with endless bailouts and guarantees. Where will the money come from to stabilise the parastatals?
The Minister said the allocation of R23 billion made in October for Eskom would be paid in three instalments, but did not make it clear where that money is to be found. Similarly, he was quiet on the R14,4 billion guarantees for SAA.
The energy crisis - more of a crisis than a challenge — has in many respects arisen because government has been poor in its planning and relaxed about punishing failure. The failure to maintain infrastructure and the dismal failure to complete the Medupi and Kusile power stations on time must not go by unpunished because they has overshot their budget and paralysed the economy.
The 2c temporary increase in the electricity levy to 5,5c per kilowatt hour will work out to be a big number and every consumer who pays for electricity will pay that; although this may well work out to be a further subsidy for industrial users paid by residential users — and the Minister did not indicate whether this levy will be charged across the board.
The lack of compliance, across the government spectrum, with the Public Finance Management Act, the Municipal Finance Management Act, Treasury Regulations and supply chain management, SCM, Regulations must be dealt with harshly, because it is in this realm that corruption is bred at the expense of an underpaid and overstretched taxpayer and to the detriment of service delivery.
In conclusion, the Budget Speech was punctuated by fancy niceties about fighting corruption, and the IFP will support the initiatives of the Minister in this regard. The ball is now in his court and he must start walking his talk. I thank you.
Mr S J MOHAI
Mr M KHAWULA
Mr S J MOHAI: Hon Chairperson, Deputy Minister of Finance, Mr Jonas, and hon members, the market fundamentalism of the DA should be defeated.
In an ideological struggle, the state cannot be passive; it has to be active through its fiscal policy, monetary policy, regulation, industrial policy and social policy. We cannot privatise Eskom and leave the fate of millions of South African people who are still without electricity to the vulgarities of the profit-driven market forces.
We, as the ANC, shall, as a response to the challenges reflected by the Minister of Finance, choose to engage in rational debates on the fiscal framework of our country.
The ANC welcomes the Budget tabled by the Minister of Finance. The Budget tabled does confirm that indeed these are difficult times, laden with difficult choices and trade-offs. Some of these choices are not desirable but are unfortunately unavoidable. The macroeconomic conditions, including the business cycle have remained largely antigrowth. South Africa is not alone in this predicament, as the economic outlook in all the regions of the globe remains in the prerecession period.
Hon members who serve on the committee on finance have missed a golden opportunity during the lock-up session, where all documents were presented and all of us were required to do one thing and that was to read and appreciate the factual information presented to us. However, some chose to ignore the facts and engaged in sideshows when debating the fiscal framework.
The structural problems ranging from stagnation, deflation and stagflation to weak aggregate demand, falling rates of profit and chronic sovereign debt have remained prevalent within the world economies, resulting in continued slow growth rates and unfavourable macroeconomic conditions that tend to resemble what most economists call a secular stagnation.
This is the economic context in the world today, within which we are deliberating this 2015 national Budget today.
Our domestic economy is also not immune to these challenges, including both cyclical and structural challenges, which of course continue to make our options difficult in this national Budget. The significant rise in the level of national debt has now caused challenges for rebalancing the Budget, in order to manage the debt by reducing the Budget deficit and the main Budget expenditure ceiling.
This resulted from Budget deficits that were employed as part of the countercyclical measures at the onset of the great recession in 2009. These cyclical challenges only add to the persistent structural problems of unemployment, poverty and inequality. This was not only discovered yesterday by a new formation that does not understand its role. [Interjections.]
These problems result from the skewed economic structures in the production system, value chain and trade and express themselves in terms of a lack of diversity, competitiveness and local investment.
We also welcome the tax proposals in the 2015 Budget that will result in raising income tax by one percentage point. We will continue on the redistributive trajectory of taxing the high-income earners more, while protecting and benefiting the poor, through government spending on social grants, electricity, education, health, housing and other basic needs. Opposition parties chose not to raise this fact.
The progressive character of our tax system came alive in the Minister’s Budget two weeks ago. Those who earn more will pay more, while those who earn less, will pay less. Personal income tax constitutes 34% of the total tax revenue collected by Sars.
A joint report by Sars and National Treasury suggests that there were 15,4 million registered taxpayers in 2012, and that 5,9 million people were active and liable for tax, and out of that, only 5,1 million were actually assessed for tax.
The report indicates that more than 50% of the taxpayers earned between R120 000 and R500 000 and were responsible for more than 47% of the income tax revenue, while 6,6% of taxpayers earned more than R500 000 and were responsible for 49% of the income tax revenue. This means about 57% of taxpayers are responsible for 97% of the total income tax revenue collected.
A sizable portion of them will still be exempted from the new tax increase, considering that it will only affect those earning more than R181 900.
Whilst the distribution of tax liability across taxable income and income groups paint a picture of acute inequalities in our society, the progressive character of our tax system is still consistently laid bare. So, the more than 43% poor people will be exempted and protected from the one percentage point.
I must say I agree with a point earlier made by my colleague, hon Motara, that VAT has not been increased because as a flat-rate tax, it means the poor would be most severely affected. In other words, VAT is regressive rather than progressive.
Yes, the consumer spending, which is needed for stimulating the aggregate demand in the economy, is likely to be affected by the increase in taxes, amounting to R17 billion. However, that will be countered by the government’s infrastructure spending and other relief measures that have been introduced for middle-income earners with regard to duty-free transfers on the sale of property that has been increased to start at R750 000.
The tax relief and incentives for small businesses, arising from the Davis Commission, that are going to be implemented, are indeed commendable. These recommendations limit the compliance burden and paperwork for microbusinesses, with an annual turnover of R1 million.
The expansion of the small, medium and micro enterprise, SMME, sector, through active state policy instruments, will help break the monopoly structures in the economy and help build efficiencies and equity. More people will have gainful economic participation, not fronting as some do, in corners, using their skills to undermine the ongoing transformation agenda in our country.
We must also commend government for providing significant tax relief and incentives to business, including depreciation allowances that seek to support investment in order to expand production.
Tax expenditure or revenue are estimated at R120 billion or 15% of the gross tax revenue, in order to support social or industrial policy objectives. The expansion of production through industrialisation on a large scale is the most essential programme for creating sustainable, decent jobs on a large scale.
The ANC does have plan. We have put forward a programme of industrialisation. Nothing about the current state of the economy will change automatically, other than employing state policy instruments.
To increase the rate of capital investment by local players, both in the public and private sectors, is going to be key in reducing the current account deficit. The historical structural problem with our balance of payments is that the bulk of the goods we import are capital goods.
More than just responding to cyclical problems of declining revenue of exports, we have to address the structural problems in our current account. To increase local investment in capital goods for expanding production should be our starting point.
We must also strive to increase our exports in ways that undermine old trade structures by increasing the value of our production, including beneficiation, agroprocessing and other manufacturing sectors, for our exports.
This adding of value to our products must be accompanied by innovation through technologies, a concerted effort to development skills for our workers and increased productivity in order to be competitive in global markets.
We cannot overemphasise the strategic necessity for an overarching industrial policy, with active state support, to radically transform our productive system from historical structures of monopoly, from extractive production and from a dependent integration into the global economy with no autonomy to negotiate our sovereign growth path.
Our industrial policy action should therefore build a productive system with sustained high growth levels in industrial production and a strengthening capacity for our manufacturing industries to be competitive on a global scale.
Minister Rob Davies put it nicely when he was launching the Industrial Policy Action Plan 2, Ipap2, in 2010. He said and I quote:
As a country, South Africa has no alternative to the course of action we propose. Manufacturing and other productive sectors of the economy are the engines of long-term growth and sustainability.
In conclusion, I want to say that despite a chorus of noise from the opposition benches, ANC-led policy interventions have proven to be resilient, even more than in other countries in the world.
The DA’s proposition is not sustainable. Social security in South Africa is sustainable within the limits of possibilities, not imagination. This is based on empirical evidence.
The DA is silent on capital flight because of the class they represent and they are unable to raise these issues. The ANC has spoken out against corruption and the ANC has established agencies to uncover corruption. [Interjections.]
You must celebrate the culture that we as the ANC have created. We are a constitutional state. The ANC advocates for independence and autonomy in fighting corruption. Issues of processes and outcomes should not be speculative. Hon DA members, you must not raise speculation; distinguish between process and the outcomes of such processes.
Your final arbiter is the courts in South Africa. We are a democratic state, so we will protect our people and forge ahead in transforming our country for the better.
Mr M Jonas
Mr S J MOHAI
The DEPUTY CHAIRPERSON OF THE NCOP (Mr Tau): May I officially welcome the Deputy Minister to the Council and on that basis, I invite him to the podium. [Applause.]
The DEPUTY MINISTER OF FINANCE: Deputy Chair of the NCOP, the Chief Whip of the NCOP, the Chair of the Select Committee on Appropriations and hon members, may I start off by making a general comment that the process towards the budget on 25 February has been very useful in two critical ways.
Firstly, after we tabled the mid-term Budget framework, we have had serious engagement with relevant committees, but we have also had serious engagement and very sober contributions and critiques from a whole range of stakeholders, academics, economics and scientists in different fields, who commented on what we were proposing last year in October 2014. I must also add that after tabling the Budget, we also enjoyed the same level of engagement and the same quality of engagement.
I am saying this because I think the country as a whole is at a crossroads. Part of what will take us beyond this point is serious, qualitative engagement between all stakeholders and society, not point-scoring. As I was listening to what members were saying here, I could actually be pardoned for thinking that there are elections tomorrow.
Secondly, in order to engage with the ANC and government quite substantively and coherently, I would also suggest to members to read the baseline documents. The Budget Speech is just a brief summary.
There is the Budget Review document, which details some of the issues that members raised here. Some of the points that members raised here, I must say, were valuable and useful. However, I must also equally say that some of the points raised were just trivial. I will come to these points as I go through my presentation.
Can I just summarise? It is important to ask: What is the overarching objective of this current Budget that we are debating and the fiscal framework? It is based on four core overarching assumptions, objectives and priorities. I will summarise them because our debate must be moved from that point to a strategic level.
The first overarching priority is narrowing the Budget deficit and stabilising debt through stricter management of the fiscus and tighter expenditure ceilings, as well as increasing revenue through tax.
Can somebody say there is a country that doesn’t tax? I still want that person to rise, mention the country and tell us how successful it is. Public revenue in all modern countries and economies is generated through tax. It is basic — and that’s basic economics.
The second overarching objective is sustaining the social gains of democracy and making sure that the tough economic times do not force us into a situation where we erode social protection of the poor and most vulnerable. So that is a very critical thing. When you look at this Budget, to what extent do we do that?
The third objective that I would suggest we focus on is growing and transforming the economy and addressing what hon Gaehler raised, namely tackling inequality. Inequality is fundamental. We have made so much progress in South Africa on poverty alleviation and I will demonstrate that very soon. We probably have made very little progress when it comes to inequality. It remains core to government’s agenda.
The fourth overarching objective is reinforcing our efforts that we have always been making in regard to transforming the public sector into a more capable developmental state.
Please allow me to just talk very briefly on each of these points, in response to some of the debates that have taken place here. In line with a lower-than-expected gross domestic product, GDP, growth and tax revenue, the Minister’s focus is on constrained fiscal outlook over the medium term.
In spite of raising an additional R16,8 billion in 2015-16 through the increase in personal income tax rates and general fuel levies as well as all the measures that we outlined, we believe that we still face serious challenges, moving forward.
I must emphasise, as we talk about tax again, that the debate about tax policy in South Africa is a continuous debate. Again, if members could take time and read the Budget Review, you would actually realise that we are saying that the Davis Tax Commission is continuing.
Part of the task of the Davis Tax Commission is to avoid sweeping statements that have no basis and to ensure that when we talk about tax, we evaluate the economic basis of taxation and evaluate the impact of taxation on economic growth, employment creation, income distribution and a whole range of things.
That is what the Davis Tax Commission is seized with, and I will encourage hon members who think that we’ve lost it when it comes to taxation, to actually engage that committee more constructively on those substantive issues.
You would actually note that there are different views on taxation in any country. Those who represent the rich would have different views to those who represent the poor and the marginalised, but the ANC government has to reflect the fundamental interest of the country. That is why I think we covered it in the debate that we had on taxation. We had a long debate on value-added tax, VAT. We had a long debate on company income tax. We had a long debate on personal income tax.
It was not an easy decision to raise income tax marginally. It is 1% and it was raised marginally. It was not an easy decision to take. We had a long debate and inputs from professionals and experts on the matter. It was not something where we slept, woke up and suggested it.
The other aspect of physical consolidation is addressing the Budget deficit and improving the debt-to-GDP ratio in the country. We have been upfront. You stand here and criticise us about debt and all these things — go and read the document. We are telling you that that’s the reality we have to deal with: maintain expenditure ceilings, improve the quality of expenditure and ensure a sustainable wage bill.
I want to underline the issue of improving the quality of expenditure. We believe, and we have raised it, that we must gradually look at the composition of our Budget and begin to shift it more towards economic development.
The second area is sustaining the social gains of democracy. Over the past 10 years spending per citizen grew by 80%. This is factual; we are not cooking these numbers.
Expenditure on social services has doubled. Social assistance is provided to more than 16 million beneficiaries in the country. In fact, if you read some of the international reports, the argument globally, whilst you are criticising internally, is that South Africa has been able over the last 20 years to build what is probably the most successful social package in the world. [Applause.]
Our poorest citizens now have access to health care, education, state-subsidised housing, subsidised transport and free basic services. These are real social gains. We are not cooking them up.
Extreme poverty has declined dramatically. Comrades who stood here made reference to the World Bank report. Again, I will encourage people to read the report because while you are talking about South Africa struggling to deal with poverty, we are probably amongst the few countries that have been able to use the fiscus to dent extreme poverty in real terms. That’s what all international agencies are acknowledging. I add, though, that we have not done the same with inequality and that is where I think our focus should be in the next couple of years.
This budget therefore, in essence, is an attempt to ensure that we do not erode our social protection package for the poor. And if you read the Budget, it shows very clearly that the social package remains intact.
There is a problem though, because many members tend to look at the social package as grants only. The social package is broader than grants. The social package is about housing, health care and education. All those things represent what we call the social package. It is not just grants. Grants are probably one aspect of the social package, and it is important that you understand that part.
The third issue is growing the productive economy. Again, we want to make this point very clear that the fiscal constraints we currently face are a direct result of the slow growth of the national economy.
Now, I do not want to get into the debate. I think hon Mohai got into the debate to try to explain why we are where we are; and in the Budget Review, we actually go into detail to demonstrate that we are where we are because of certain reasons. I am not going to get into that debate because I know people do know, by the way, but when it’s convenient, we always look the other way and ignore the basic facts.
The President, in his state of the nation address, was actually very strong on the point of effecting radical economic transformation, both as a means to accelerate growth as well as to achieve transformational outcomes, such as a more inclusive and more deracialised economy.
Our economy is still highly racialised and that’s something that we have to confront. I know some other parties will refuse to deal with those issues.
At the moment, we have also accepted another point that electricity, the energy supply, remains a major constraint to growth. We have made that point, but have also gone beyond that point to actually indicate what government is doing and I want to summarise the programme.
In the first instance, our intervention is about stabilising Eskom. Now, to stabilise Eskom is to achieve a couple of things. It is a very important point to make that our generating capacity in the country is probably around 48 000 MW. The demand in the country is about 36 000 MW. So, if you use simple arithmetic, we should be able to meet the demand.
In addition, we have actually created new additional capacity of more than 5 000 MW. So, that means we must meet the demand. However, the problem with the existing capacity in Eskom over the years has been underinvestment in maintenance, and maintenance has been badly managed.
This is what government is seized with at the moment. We have to drive Eskom leadership and management to come up with a very dynamic, more effective and more focused maintenance programme.
The second element of that is dealing across the economy with the challenge of energy inefficiency. You would actually not believe that South Africa is almost close to the UK in terms of levels of energy inefficiency. Those two economies are not of the same size. Clearly, we need to do something to make our country more energy-efficient and those are things that we are currently doing.
The third element is actually introducing some level of capital support or the capitalisation of Eskom, and that is the R23 billion that we are talking about. Again, I will add that in the Budget Review, we demonstrate how that R23 billion will be actualised and I would ask people to go and read it.
In general, we also make the point, which I will raise later, that funding state-owned enterprises, SOEs, moving forward, will change. They will only be funded in a manner that does not increase the deficit, which means their balance sheet will be the basis for their funding, not the fiscus. And that’s something that we are already impacting.
I won’t respond on the guarantees given to the entities because that is amply explained, again, in the Budget Review document.
With regard to driving the economic growth, again, we are actually talking about pursuing reindustrialisation programmes and economic diversification programmes. We go to great lengths to show the incentive programmes in the Department of Trade and Industry, DTI, the interventions in agriculture and our work in broadband infrastructure.
I want to end this part by actually emphasising that those who cared to look at the Budget statement by the Minister would also realise that capital spending continues to grow. And if you are saying we are eroding and we are not responding to growth, I do not understand how you understand capital expenditure.
Our capital expenditure is growing. If you add the pipeline projects by state-owned enterprises to capital expenditure, you will actually realise that South Africa maintains its growth trajectory of the spending in this area. We have expanded investment in economic assets, electricity, ports, rail and pipelines, as part of ensuring that we grow the economy.
In addressing spatial inequality, we have also said that the cities must be the engines for growth, moving forward. That is why we are adopting a new fiscal package for cities to ensure that we change the funding for cities over time, so that we make the grants to cities more flexible. We increased their borrowing capacity, so that they could actually have catalytic projects that drive growth in the cities.
The last point is about transforming the public sector. There are two issues then that are critical in this regard. The first part is about achieving efficiencies. Our people were saying that here we are not taking care of the cost of running government. You must look at the measures that we are introducing in that regard.
The second part is about ensuring that we build the capability of the state to drive economic transformation. The one aspect is about efficiency, ensuring that we lower the cost of running government and the second part is obviously the issue of efficiency.
I just want to run through the some of the packages. We have said we are putting a freeze on personnel head counts, and we go into detail in our Budget Review about what we do around that. We are trying to drive towards the conclusion of multiyear-wage agreements. We continue to reform supply chain management and the Minister was very detailed in dealing with those issues.
We are focusing on improving efficiencies and cost savings of provinces, etc. All of those things are aimed at ensuring that we improve the capability of the state and also lower the cost of running government because we think that those two go together.
I want to end by saying that we do need a genuine debate about economic development. As a country, we do need a serious debate about economic development. We are putting forward the proposals in the National Development Plan, NDP, the proposals in our Medium-Term Expenditure Framework, MTEF, and the proposal in the Budget.
Those are genuine sober proposals. We would require that people engage with them in a very sober way, if they are to contribute towards strengthening the development trajectory in the country.
I know that there is a very strong doomsday contingent, led by some parties, because the country is governed by the ANC — who, by the way, is probably the only party in this Parliament that fought for freedom in this country. [Applause.]
There are those who think certain things. You know, just to make the point, we wrote the Constitution. The ANC drove the process of drafting the Constitution because we believed in what is contained in the Constitution, but there are people who go around trying to show that there is a pending constitutional crisis.
South Africa is one of the few countries in the world where government accepts the reality that when we take cases to court, we can lose them. In other countries, judges would actually fear to rule against government. In this country, judges rule against the ANC and we accept that, and yet people will say there is a constitutional crisis.
By the way, we are one of the few countries in Africa where past Presidents are still operating freely and have social and political programmes without interference. In many countries, you do not have the luxury of having past Presidents. Some of them are in prison, dead or in exile. They are living here with us to demonstrate how vibrant our democracy is. [Applause.]
I am raising these issues solely to say that, until such time that all of us, black and white, irrespective of our political party, realise that the task must be solely to contribute and to criticise when we have to criticise, but to do so constructively. Now I can shut up and sit down! Thank you. [Applause.]
Debate concluded.
Question put.
The House Chairperson (Mr R J Tau): Hon members, that concludes the debate and I shall now put the question. The question is that the report be agreed to. In accordance with Rule 71, I shall first allow provinces to make a declaration of vote if they so wish.
Declaration of vote:
Mr J J LONDT: Deputy Chair, concerning Minister Nene’s Budget Speech last week, the DA would like to record the following declaration.
The DEPUTY CHAIRPERSON OF THE NCOP (Mr R J Tau): Is it the DA or the Western Cape, or what province is it that is making a declaration?
Mr J J LONDT: I apologise, it is the ruling party in the Western Cape. It is the Western Cape, Deputy Chair.
The DEPUTY CHAIRPERSON OF THE NCOP: No, hon member! The question that I put was: Is there any province that wishes to make a declaration of vote? You said yes. Now can we just get clarity on which province is this?
Mr J J LONDT: The Western Cape.
The DEPUTY CHAIRPERSON OF THE NCOP: All right, may you proceed with the declaration of vote.
Mr J J LONDT: Thank you, hon Deputy Chair. Concerning Minister Nene’s Budget Speech last week, I would like to make the following declaration: The Minister had an opportunity to speak about the rise in unemployment, cutting wasteful expenditure and corruption. But what we heard was that the Minister will be increasing taxes.
If there are high tax increases, people will spend less money, slowing the demand for goods and services and ultimately costing South Africans their jobs. To qualify this, the Minister announced an increase of 1% to every taxpayer earning more than R181 900 a year. This will affect approximately 3,5 million South Africans.
What the Minister should have done was to implement a short-term solution to avoid tax increases by cutting the public sector wage bill which will now stand at R479,5 billion. The DA’s alternative budget commits to reducing this wage bill by R4,3 billion through key interventions, such as salary increases according to inflation, cutting back on salaries to superfluous on departments and linking salaries to performance.
It must be emphasised that some of the most wasteful expenditure in the public sector relates to the Cabinet. South Africa has one of the largest Cabinets in the world, comprised of the President, the Deputy President, 35 Ministries and 37 Deputy Ministries. As an example, the Cabinet’s billion rand price tag includes an inexplicable R247 million for official vehicles alone.
The tax increases will come with an expense to every South African who’ll have to pay for the government’s failures of being unable to steer our economy to a growth path that will one day take the South Africans out of poverty and the ability to provide for their families.
Mr E MAKUE: Deputy Chairperson, on a point of order: The hon member is not clear to me, he talks about “our” government and he talks about the DA when he’s supposed to be talking on behalf of the province. I think that the errors that have been made will be recorded wrongly in Hansard. Thank you, Chair.
The DEPUTY CHAIRPERSON OF THE NCOP: I will sustain that point of order. Hon member, stick to the provincial declaration in terms of Rule 71. It’s not a party declaration; it’s not a section 75 Bill that we are dealing with here. I made it very clear from the beginning, hence I want to sustain that point of order as raised by the member. Are you done, hon member?
Mr J J LONDT: Yes.
The DEPUTY CHAIRPERSON OF THE NCOP: All right. Does any other province want to make a declaration? There are none so we will proceed with the voting.
IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West.
Against: Western Cape.
Report accordingly adopted in accordance with section 65 of the Constitution.
The Council adjourned at 17:17.
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