National Assembly - 23 February 2005



The House met at 14:00.

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


                         APPROPRIATION BILL


The MINISTER OF FINANCE: Madam Speaker, Mr President, Deputy President, my Cabinet colleagues, the Governor of the Reserve Bank, MECs, hon members, ambassadors and high commissioners, ladies and gentlemen, our friends at work and at home, I remind you of these words:

  We assert that our country, as a united nation, has never in its
  entire history enjoyed such a confluence of encouraging
  possibilities. On behalf of our government, we commend our
  programme to the country, confident that its implementation will help
  to place us on the high road towards ensuring that we
  become a winning nation and that we play our role towards the
  renewal of Africa and the creation of a better world.

  Acting together, we do have the capacity to realise these
  objectives. And sparing neither effort nor strength, we can and
  shall build a South Africa that truly belongs to all who live in it,
  united in our diversity!

Those were the words that President Mbeki used to place his state of the nation address before us on 11 February.

We have recently celebrated the international success of Ladysmith Black Mambazo’s new album Lift Your Spirits Higher. I had hoped to lift the spirits of Madam Speaker by getting some music in the hall here today. [Laughter.] I failed. But this past weekend the world- acclaimed version of the popular opera Carmen, U-Carmen eKhayelitsha, sung in isiXhosa and filmed right here in Khayelitsha, won the Golden Bear award as the best film at the Berlin Film Festival. [Applause.]

Hon members will find a prerelease copy of the CD on their desks. [Applause.] We need to listen to that music and be inspired by it, because it is entirely fitting that this new season of hope and rising confidence of our nation, in this second decade of democracy, should be proclaimed in this way, in music and in theatre.

We also celebrate this year the pledge of the Congress of the People 50 years ago, namely that we would strive together, side by side, to win equal rights and opportunities for all South Africans, black and white. Even as we enjoy the fruits of the progress made in our first decade, we know that our work is not complete until all our people have achieved freedom from want, freedom from fear, freedom from prejudice and freedom from injustice.

In order to complete this liberation, the most vulnerable among us must see their rights to development being realised with each passing year, through progressive advances in access to land, education, training, health care and economic opportunity. This is achieved, as President Mbeki has reminded us, through the Programme of Action of a government that cares for its people, that makes socially just choices and that is committed to service delivery in the spirit of Batho Pele.

In this context, and with the President’s permission, I would like to convey the best wishes of our government and all South Africans to the delegates who are now convening at the United Nations in New York to undertake a 10-year review of the Beijing commitments, relating to the critically important issue of the emancipation of the women of the world. [Applause.] What we will say today is also focused on ensuring that we achieve further advances in our own pursuit of this central aspect of the society we are working to create.

We have noted with concern the recent violent demonstrations in some areas, including in a few local communities in the Free State and at a number of our institutions of higher learning. As our President has said, the government must act firmly against those who break the law and destroy public property or attack the police. Nonetheless, we understand the impatience that motivates some of those who are drawn into these demonstrations.

Part of our task as public representatives, regardless of where in this House we sit, is to continue to explain, even as we celebrate our progress, that just as Rome was not built in a day, neither will the new South Africa be liberated from its painful past in a day.

Thokola themba, amathunzi ayewukela. [Ihlombe.][Relax, the dream is about to come true.[Applause]]

The 2005 Budget seeks to contribute to the season of hope of which we have spoken, through reinforcing the momentum of our social and economic progress. In framing the Budget, it is this vision that has been our practical guide – a vision rooted in the actual, lived experience and struggles of ordinary people.

Thousands of South Africans have again taken the time and trouble to provide me with advice in the form of “Tips for Trevor”. As always, it has been both a humbling and an inspiring experience to share in some of the many ways in which the public finances impact on people’s daily lives.

Education and skills development, quite rightly, feature strongly. Tshepiso Mathabatha writes:

  We should invest more in education, because people need the
  skill and knowledge to be able to compete in a job market with
  relevant experience.

Then there were interesting proposals on financing new priorities. Anesce Stapelberg of the Hoërskool Wonderboom suggested a special bond issue to finance infrastructure for the 2010 World Cup. She writes:

  With the money brought in, we can build stadiums, roads or
  whatever is needed. Then use the profit made from the soccer
  games to pay the bondholders back, and that way the whole of
  South Africa can be a part of the journey towards building a better

And from a remote rural village, Lutendo Nethononda captures the feelings of many South Africans when she writes:

  It has become necessary that we shift our priorities to
  infrastructural development. This is important, because even the old
  lady of Maliboho requires a taxi or bus to move from the mountains to
  the nearest shop to buy mealie meal … Infrastructural development will
  create jobs, improve the rural economy, improve accessibility, and
  alleviate poverty …

Lutendo goes on to remind us of the social dimensions of our tax policies:

  Sin taxes should be increased. Alcohol and smoking are major
  causes of trouble in our country.

[Applause.] I don’t know why Lutendo gets such a small round of applause in this House, but perhaps it’s because not everyone agrees with that.

Mthetheleli Baqwa has a different view. He writes:

  We cannot live without entertainment, and if you always increase the
  price of beer and brandy then the culture of entertainment will die,
  which will be unfair for human nature …

[Laughter.] [Applause.] I now understand why Lutendo got such a small round of applause. [Laughter.]

There was also the advice from someone whose name I should perhaps not disclose, but I will need to ask you, baba uShenge, for some advice on this, because this individual writes that lobola money should be a tax- deductible expense. [Laughter.] [Applause.] In his words, he says “as it is a social responsibility put on one’s shoulder unwillingly”. [Laughter.] Now I don’t know how frequently or how heavily this social responsibility has been put on his shoulder, but there you have it.

All of this illustrates that you simply can’t keep everybody happy all of the time. But the messages I have received, and the voices we have heard at our izimbizo, convince me that South Africans, black and white, urban and rural, are overwhelmingly in agreement on the key values that should underpin our budgetary policies.

We agree that we need more rapid growth of our economy. We agree on a development strategy that is broad-based and invests in our people. We agree on the need to reduce inequality and fight poverty.

Agb lede, as ons hande vat en saamspan, is dit natuurlik in ons vermoë om die wa deur die drif te trek, en ons mikpunte te bereik. [Hon members, if we join hands and unite, it is naturally within our means to get the job done and achieve our goals.]

As the President said, acting together we have the capacity to realise these objectives.

Over the past decade we have laid the macroeconomic and fiscal foundations on which increased investment and a stable business environment rest. In the years ahead we must see more rapid expansion in the productive capacity of our businesses, creating jobs for workseekers, while also growing the revenue base that makes it possible to have an expanded envelope of public services to citizens.

Over the past decade we have invested in meeting basic needs, expanded investment in municipal infrastructure and extended social grants to children and others in need. In the decade ahead, we must invest in improving the quality of education, housing and health services. These elements of the social wage contribute over time to skills and productive opportunities, so that dependence can give way to self-reliance.

Over the past decade we have transformed social policy and service delivery based on principles of nonracialism and nonsexism. In the years ahead we must make more rapid progress in building a society founded on solidarity, in which we give practical expression to our shared interest in addressing the needs of the most vulnerable.

Thokola themba, amathunzi ayewukela. [Ihlombe.] [Let us rejoice, for we are almost there. [Applause.]]

We can face the new season of hope with eyes of pride, acting together to realise a shared vision.

Let me comment briefly on our economic progress over the past decade and the policy framework for the years ahead. Growth of the South African economy averaged 3,2% a year over the past four years. We expect a continued expansion of between 4% and 4,5% over the next three years, signalling a significant step-change in the pace of economic growth.

At the same time, we have seen consumer price inflation fall to 4,3% for the year to December 2004, and it is expected to remain comfortably within the 3% to 6% target range over the period ahead. This is a marked improvement on the position we were in a decade ago. It is the fruit of sound macroeconomic performance and monetary management, improved competitiveness of our economy, structural reform and a fiscal policy framework designed to underpin sustainable growth and investment.

Real income per person over the past decade has increased by 15%. With average growth projected at over 4% a year over the period ahead, real per capita income will rise by at least 30% in the second decade of freedom. We surely need to target growth of at least this order of magnitude if we are to see the progress we desire in making hunger history, in facing the season of hope with pride and vision.

We must also confront the challenge of making our growth pro-poor. Four aspects of our development policy for the decade ahead are particularly critical.

Firstly, as we step up the pace of investment in modern transport, communication, water and energy networks, we need to ensure that we build a more efficient economic landscape, that we contribute to more balanced development between suburbs and townships, between urban and rural areas and between the first and second economies. We need to press more urgently on the labour-absorbing potential of infrastructure and building programmes. Secondly, we also seek to strengthen the links between further education and training, and workplace requirements. This means we need to modernise our colleges, bring industry and commerce more actively into the governance of education and training, and ensure that funds set aside for skills development are more effectively used.

Thirdly, we must address the barriers to small business development and job creation that arise from cumbersome municipal planning and approval procedures, or from overly burdensome administration of the tax laws, environmental regulations or labour-market controls.

Fourthly, we need to mobilise, with a greater sense of partnership directed at long-term development, both our capacity to save and the accumulated capital under the stewardship of our financial institutions and corporations. Although there is still work to do, I am encouraged by the progress of and commitments that have emerged from the Financial Sector Charter process.

I believe we have a shared understanding that will lead to public and private-sector funding of infrastructure, housing, empowerment and business development that will rapidly grow over the decade ahead, giving practical expression, appropriate for our times, to a pledge made 50 years ago that the national wealth of our country is the heritage of all South Africans. There are aspects of these economic challenges to which I will return shortly in dealing with our tax and spending proposals.

More rapid growth makes greater progress in social development possible and, in turn, well-targeted investments in human capabilities contribute to rising productivity and sustained growth.

Die afgelope dekade het ons bestendige vooruitgang gemaak om die gedeelte van besteding aan maatskaplike dienste vir die armste 40% van ons mense te laat toeneem.

Welsyn en maatskaplike bystand, onderwys, grondhervorming en behuising het tot sterk herverdeling van bestedingsprogramme ontvou. Die gemiddelde waarde van dienste, of dan die sogenaamde “social wage” wat na die armste 40% van huishoudings gaan, is tot om en by R956 per maand verhoog. Bestaansbeveiligheidsprogramme bestaan nou uit 14% van die gekonsolideerde nie-rente uitgawe, ’n toename vanaf 9,5% sedert vyf jaar gelede. (Translation of Afrikaans paragraphs follows.)

[The past decade we have made steady progress in increasing the social services part of expenditure to the poorest 40% of our people.

Welfare and social support, education, land reform and housing have developed into strong redistribution of expenditure programmes. The average value of services, or the so-called social wage, which goes to the poorest 40% of households, has been increased to about R956 per month. Social security programmes now constitute 14% of the consolidated non-interest expenditure, up from 9,5% five years ago.]

What we have said, hon members - and I know that you have heard this through your earpieces – is that over the past decade we have made steady progress in raising the proportion of spending on social services that goes to the poorest 40% of our people. Welfare and social assistance, education, land restitution and housing have evolved into strongly redistributive expenditure programmes, bringing the average value of services, or the social wage, that went to the poorest 40% of households three years ago to an estimated R956 a month. Social security programmes now account for 14% of consolidated noninterest expenditure, up from 9,5% just five years ago.

Over the decade ahead there will be other priorities in our social development strategy. There is, for example, the imperative to provide every child with education opportunities that meet both the knowledge requirements and social challenges of the future, and to ensure that a caring and competently managed health service is available in every community. There is the complementary challenge of transforming the desolate landscape of townships and new housing settlements into sustainable and viable communities, whose riches speak for themselves, whose streets carry sounds of laughter, whose character reflects our season of hope.

In this Budget we recognise the need to give greater impetus to investments in housing, in community infrastructure, in municipal services and in local economic development, not just as projects of government departments or municipalities but as constructive partnerships that mobilise local enterprise, private capital and indigenous creativity.

Then there are the rural development challenges to address. We will propose allocations to the Department of Land Affairs today that will enable the land restitution programme to complete its work over the next three years. [Applause.] We have put in place a comprehensive agricultural support programme for emerging and resource-poor producers, and the Minister of Agriculture will introduce this year a new credit scheme for small-scale farmers. [Applause.]

Social solidarity also encompasses the work of reducing crime and insecurity, investing resources in more effective policing and a robust justice system. We have set ourselves daunting targets for reducing the incidence of serious crime. We are also called upon to play a part in promoting peace and security elsewhere in Africa.

In all these, and many other dimensions of social development, there is an unavoidable tension between the magnitude of the challenge and the limits of our capacity. The Budget is, as always, the practical resolution, we’d like to believe, of this tension in so far as the period ahead can be planned and programmed. But its implementation is the real expression of our social intent, and this relies on the shared efforts and energies of public servants, workers, businesspeople, citizens, all our people, who embrace the future with hope and with eyes of pride.

Bagata-mmogo ke maja-mmogo. [People who work together get the same reward.]

Acting together, hon members, we do have the capacity to realise these objectives.

Equity and redistribution

This social intent also embodies our commitment to building a more just, more equal society, in which steady progress is made in reducing the gulfs that divide rich and poor, black and white, men and women, rural and urban.

On some dimensions, there have been notable advances. Real wage improvements and public expenditure on services have contributed to rising living standards of many people. A recent research report indicates rapid growth in the numbers of black households entering middle-income bands, associated in part with higher demand for skilled and professional labour.

Empowerment targets and transformation initiatives in education, in employment and in procurement are contributing to better racial and gender representivity. Corporate restructuring and equity participation schemes have brought changes to the ownership, management and strategic direction of many companies.

Yet our income distribution remains highly unequal. We are gaining a deeper understanding of the role of public policy in shaping the distribution of income and opportunities. Today sees the release of the results of a study of the shifts since 1995 in the distribution of government expenditure on education, health, welfare services and housing.

This research shows that whereas aggregate social spending increased in real terms by 14% per person between 1995 and 2000, spending on the poorer 40% of households increased by 25% per person – signalling a steady increase in the redistributive social wage.

Go na le tšhono ya go tokafatsa maemo a ditirelo le tsamaiso e e lolameng mo mananeong a Puso. [Legofi.] [There is an opportunity to improve the services and establish the proper administration of government programmes. [Applause.]]

There is, nonetheless, room for further improvements in the quality and targeting of services, and the management and effectiveness of government programmes. So, for example, we have directed attention this year at the costs and complexity for small businesses of the tax code, because there is compelling evidence that simplified arrangements can assist significantly in creating an environment conducive to enterprise development.

Under the leadership of the Ministry of Education, we have developed proposals for improving the targeting of funding for schools and the regulations governing school fee exemptions, because this is such an important vulnerability for poor households.

Mindful of the difficulties many young people find in breaking into the job market, we have worked with the Ministry of Labour in promoting learnerships, backed by tax deductions for participating companies, and we will learn more about options for skills development and work initiatives from the projects of the Umsobomvu Youth Fund and the expansion of Public Works programmes this year. The National Empowerment Fund receives further funding this year, and we are certain that it will make a growing contribution to broadening the reach of business empowerment and transformation. Through government’s procurement framework, an increasing proportion of contracts are going to small businesses and to black-owned or women-owned businesses. The Minister of Trade and Industry has taken the lead in developing both improved support for small and new businesses, and common codes to guide the design of empowerment projects.

Two further distributional aspects of public policy receive attention in today’s Budget. As announced last year, there will be changes to the way in which travel allowances are taxed, as these deductions have created unwarranted benefits for higher income earners. There will be a change, also, in the tax treatment of medical scheme contributions, which will have the effect of reducing the cost of medical scheme membership to lower-income families. [Applause.]

Expanding medical scheme membership and ensuring that our public hospitals provide an accredited, cost-effective service to both uninsured patients and medical scheme members are critical hurdles to be overcome before a more inclusive social health insurance arrangement can be implemented.

Members of this House will appreciate that the measurement of inequality and the impact of public services on relative disparities in standards of living is difficult, and needs to be the subject of further work. Several commentators have suggested that social policy would be assisted by our adoption of an official poverty measure, as is done in many countries. I believe this proposal has merit and will seek further advice this year on the design of a poverty line for South Africa.

Economic outlook

Madam Speaker, let me return briefly to the outlook for the economy, before detailing this year’s spending plans and tax proposals.

Global economy

Growth in the global economy accelerated to nearly 4% last year - from 2,4% in 2003. China and developing Asian economies are continuing to industrialise and deepen their services sectors rapidly, on the strength of high savings rates, broad skills pools and competitive export sectors. Growth has also recovered strongly in the United States, but its sustainability is threatened by huge imbalances in both the fiscal accounts and the balance of payments.

Economic growth on the African continent has averaged about 4% per year over the past three years, with encouraging signs of an improved trade response in several countries to the global expansion. However, the pace of economic development in Africa remains somewhat tenuous. Far more needs to be done to attract investment, to intensify education and training, to deepen financial markets, to open up trade relations and to harmonise regulatory and legal environments.

We will continue to give support to initiatives of Nepad directed at these challenges, and we note that the Commission for Africa has given impetus to the new international response to the trade and finance issues facing our continent.

These are reforms that cannot take root in a context of war, or constitutional uncertainty, or, indeed, in environments of political opportunism. And so all of us, all of Africa, and all who recognise Africa as part of a shared humanity, owe an immeasurable debt of gratitude to those who are working tirelessly for peace and overcoming the fractures that trouble our continent. So we want to say thank you to President Mbeki, Deputy President Zuma, Minister Lekota, Minister Dlamini-Zuma – in her absence – and Minister Mufamadi, amongst others, who take on this responsibility as tirelessly as they do. [Applause.]

Global expansion is expected to continue in 2005, with further moderation in 2006. High oil prices and the overhang of the US deficits are likely to hold back growth – and some commentators anticipate an extended slowdown as a result of international trade and financial imbalances. Although our economy remains vulnerable to this uncertainty, our trade and financial links are increasingly diversified and our growth has a robust domestic impetus – both sources of strength in an uncertain world.

South Africa has experienced strong growth in commodity exports in 2004, but has also seen rising imports in response to domestic demand and the strength of the rand. Expenditure on maritime vessels, new aircraft and, in the third quarter, oil, added significantly to the import trend in 2004. This resulted in a widening of the current account deficit to an estimated 2,3% of GDP, and it is expected to continue to widen moderately over the next three years.

For this reason, it is important that we should continue to attract foreign investment and portfolio inflows, providing the external capital required to finance the shortfall between our export earnings and our import costs.

The cumulative surplus on the financial account was over R60 billion in the first nine months of 2004, partly attributable to the resurgence of foreign investment in shares on the Johannesburg Securities Exchange. We have seen further upgrades in the rating of government’s domestic and external debt, which also signals foreign capital market confidence in the South African economy.

Prospects for the domestic economy

Several fundamental strengths lead us to project further upward momentum in our economic growth performance over the next three years.

Moderation of inflation and the sound and consistent management of monetary policy by Governor Mboweni and the Reserve Bank have brought interest rates down to their lowest levels in 24 years. So we say thank you to you, Governor Mboweni. You don’t have to look that sheepish or coy about this matter. [Applause.]

Gross fixed capital formation increased by 9% in 2003 and by an estimated 7,5% in 2004, contributing to a broader and deeper platform for growth and productivity advances in future.

Following several years of decline, South African mining production expanded by over 4% a year in both 2003 and 2004. The output of gold mines has continued to decline, but platinum, coal, diamonds and other minerals are benefiting from a growth in demand and prices on international commodity markets.

Value added in the construction sector grew by over 6% last year. There is strong growth in the residential property market. Director-General Kganyago says that when you walk around the suburbs you get the smell of mortar, which he says is different from the smell of mortar in Baghdad. I don’t know why. Further impetus will be given to building and construction growth by innercity refurbishment, encouraged by our urban renewal tax incentive, accelerated investment in low-income housing and municipal infrastructure and several large economic infrastructure projects over the decade ahead.

Official foreign exchange reserves have increased to over US$15 billion, which is more than four times the current short-term debt level. Reserves held by the private banking sector have also increased strongly, contributing to a marked improvement in the nation’s overall balance sheet and reduced vulnerability to the inherent volatility of international financial flows.

There are also encouraging signs of progress in broadening participation and greater resilience of small enterprises across many areas of economic activity. The official labour force survey suggests that nonagricultural employment has increased by about 280 000 jobs a year since 2000. Small and medium-sized contractors are competing increasingly successfully for government roads and public works projects. Microenterprises offering cellphone services, catering, accommodation, entertainment, household and personal services are both a growing feature of the economic landscape and at least to some extent a bridge to further opportunities and more formal business formation. The notable growth of 18% in the VAT revenue base this year is just one indicator of the steady expansion in the numbers of registered, viable business enterprises.

Taking into account the anticipated global slowdown and the continued relative strength of the rand, our expectation is that the South African economy will grow by 4,3% this year and an average of 4,2% over the next three years. Gross fixed-capital formation growth is projected to average 7% a year, with exports rising by about 4,5% a year. We expect CPIX inflation to average 4% in 2005, rising to between 5% and 5,5% in 2006 and 2007.

It is pleasing to note that we have revised upward the growth estimates for 2004 and 2005 tabled before this House in February last year. Changes in the economic outlook arise partly from changes in the global or domestic market environment. But at least two critical areas of economic performance are firmly within the scope of our influence and responsibility. I refer to the need to accelerate the pace and quality of infrastructure investment, partly a responsibility of government departments and partly of our major parastatals, and to the need to address deficiencies in municipal planning and service delivery, and in the regulatory and administrative environment that impede business development and job creation. These were rightly amongst the urgent priorities articulated by President Mbeki in the state of the nation address on 11 February.

Budget framework

The fiscal policy considerations and broad outline of a proposed framework for the 2005 Budget were set out in the Medium-Term Budget Policy Statement tabled in October last year. We outlined a framework for accelerated growth and broad-based development, focused on five policy priorities: firstly, increasing the rate of growth and productive investment; secondly, encouraging employment and development of the second economy; thirdly, social development and mobilising human resources; fourthly, improving the state’s capacity to promote growth, broaden development and combat crime; and, fifthly, strengthening international relations for growth and development.

Due to the strength of the economy and the excellent work of Commissioner Gordhan and his tax and customs team, we are now projecting to raise R11 billion more this year than we budgeted for. [Applause.] Our noninterest spending is R5,2 billion higher than the original estimate, with the largest adjustments being for social grants, drought relief and municipal rates and taxes. Our deficit for this year should come in at 2,3% of GDP, and debt service costs will be 3,5% of GDP. Members of the House will recall that debt service accounted for 5,6% of GDP six years ago, and I know that you’ll share my firm intent not to reverse this progress. [Applause.]

Our budget framework for the next three years sees revenue as a share of GDP averaging at around 24,2%. We anticipate a deficit of 3,1% of GDP next year, falling to 2,7% by 2007-08. Total expenditure, excluding interest costs and a contingency reserve, rises from R363 billion in 2005-06 to R428 billion by the end of the MTEF period.

These projections allow an additional R74,4 billion to be added to the baseline allocations of national departments, provinces and municipalities over the next three years. Consolidated real noninterest expenditure will grow at 7,5% next year, and an average of 5% over the MTEF period ahead.

In framing these projections, we have been mindful that infrastructure spending by municipalities and public enterprises is expected to grow strongly over the years ahead, complemented by rising spending on public assets through public-private partnerships of various kinds.

Significant projects include the completion of the Port of Ngqura; the Berg River Water Scheme in the Western Cape and further development of the Olifants River and Groot Letaba River dam systems in Mpumalanga; the recommissioning of the Camden, Komati and Grootvlei power plants and the upgrading of the Matimba plant; the construction of a hydroelectric pumped storage scheme at Braamhoek and two coastal gas turbine plants; investment of some R27 billion in electricity transmission and distribution networks over the next five years; the building of a demonstration plant by the Pebble Bed Modular Reactor company; Transnet’s R4,9 billion locomotive and wagon fleet renewal and modernisation programme; the upgrading of the Coallink line to Richards Bay and the Sishen-Saldanha link; a new container terminal for Durban and port capacity expansions in Cape Town, Richards Bay and Saldanha; and the building of a new multipurpose Durban-Johannesburg-Pretoria fuel product pipeline.

The contingency reserve and unallocated funds for transport infrastructure in the MTEF proposals for the next three years allow for additional allocations to critical infrastructure investment projects in the Adjustments Budget, where project planning is well advanced and business plans have been approved. Thokola themba, amathunzi ayewukela. [Ihlombe.] [Do not lose hope, things will get better. [Applause.]]

Division of revenue

Nationally collected revenue is divided equitably between national departments, provinces and local government, as required by the Constitution. The resulting allocations, and details of various conditional grants to provinces and municipalities, are set out in the Division of Revenue Bill tabled before this House today. National departments account for 37% of the allocations and provinces for almost 58%. Grants to municipalities total 5% of available resources, growing by 13,3% a year, which is the fastest growing component of the Budget.

The intended consolidation of social grants administration in a single national agency, reporting to the Minister of Social Development, results in a significant change to the Budget framework. Social grants and associated administrative expenditure are now fully budgeted for in the national Social Development Vote, as conditional grants to provinces. These funds will be ring-fenced and separately managed by provinces, as an interim step towards establishing the new Social Security Agency. But the risk is a national risk, so we had better understand the administration of this in some detail. In 2005-06, R135 billion will be distributed between provinces in terms of the equitable share formula, and R75 billion will be allocated as conditional grants from national departments.

Provinces and municipalities are at the frontline in providing the many services required by our people. The last decade saw their establishment, and steady increases in the resources transferred for basic services.

For the decade ahead, the intergovernmental framework will see significant changes. Firstly, new allocation formulas are being phased in for both the provincial and local government equitable shares. Secondly, conditional grants are under review, and will be reformed to reflect more appropriately their role in giving effect to national policy objectives for concurrent functions. Thirdly, the Regional Services Council levies will be eliminated next year. Fourthly, metropolitan and selected urban municipalities will play an increasing role in the delivery of housing and related services.

The government’s programme of action rightly highlights the importance of addressing those weaknesses in governance systems or financial administration that hold back Public Service delivery, both in provincial departments and municipalities. Our season of hope rests in considerable degree on the pride and vision with which provincial officials, local councillors and municipal staff take up this challenge. Acting together, we do have the capacity to overcome the administrative weaknesses.

Bagata-mmogo ke maja-mmogo. [Legofi.] [People who work together get the same reward. [Applause.]]

Miskien moet ek dit in Afrikaans sê. [Tussenwerpsels.] Ons sal saamspan om die wa deur die drif te trek, om ons doelwitte te bereik. [Perhaps I should say it in Afrikaans. [Interjections.] We will co-operate to get the work done, to achieve our objectives.]

Medium-term expenditure allocations

2005 Budget priorities

We indicated in the Medium-Term Budget Policy Statement that significant additional allocations for social grants would be made in today’s Budget, that land restitution would be a priority and that community and social infrastructure investment would be accelerated.

We have already noted the immense contribution of our social grant system to the income security of the most vulnerable, and in particular to the support of children under the age of 14. This expansion in the redistributive thrust of the Budget carries a cost. Of the R74 billion in additional allocations over the MTEF, a total of 30% is added to the social grant programmes, bringing aggregate social security spending to R55,4 billion next year and 12,7% of consolidated spending in 2007-08.

In addition to providing for rising beneficiary numbers, the MTEF allocations provide for inflation-related adjustments to social grants.

Ukusuka ngo-April 2005 impesheni yabadala nabakhubazekile izokhushulwa ngama-R40, ibe ngama-R780 ngenyanga. [Ihlombe.] Imali yesondlo sezintandane izokukhuphuka ngama-R30, ibengama-R560. Imali yesondlo sabantwana izokhuphuka nge-R10, ibe ngama-R180. [Ihlombe.] (Translation of IsiZulu paragraph follows.)

[Old age pensions and disability grants will be increased by R40 to R780 per month. [Applause.] The social grants for orphans will be increased by R30 to R560. The social grant will be increased by R10 to R180. [Applause.]]

With effect from April this year, the maximum old age, disability and care dependency grants will rise by R40 to R780 a month, foster care grants will increase by R30 to R560 and the child support grant goes up by R10 to R180 a month.

The 2005 Budget provides for several other significant spending adjustments: R2 billion for the new comprehensive housing strategy and R1,7 billion for municipal and sanitation infrastructure; R6 billion to complete the land restitution programme; R3 billion for public transport infrastructure and services; R1 billion for improved buildings and equipment for further education colleges, and an additional R776 million for the National Student Financial Aid Scheme; R6,9 billion to contribute to improved salaries for teachers and R4,4 billion for pay progression in the SA Police Service; and R1,4 billion to support our African development agenda, including peacekeeping operations, institutions of the African Union and the Pan- African Parliament. [Applause.]

Economic development and investment

Our developmental objectives require a careful balance between direct income support, improved public services such as education, health and municipal services, and investing in social infrastructure such as housing, water, sanitation, roads and public transport. Some of these priorities are exclusively or mainly the responsibility of government. But in other areas, such as economic development and investment in productive capacity, we seek to complement or reinforce private-sector growth and initiative.

We are particularly mindful of the need to improve the alignment between public infrastructure and investment plans and business development opportunities.

Increased investment in transport infrastructure and systems accordingly features strongly in the 2005 Budget proposals. These are shared responsibilities of national, provincial and local government, and details of the additional R3 billion to be allocated will be tabled in the Adjustments Appropriation later this year. Projects related to the requirements of hosting the 2010 Soccer World Cup will receive early priority.

Other economic development initiatives for the MTEF period ahead include the following.

A new Micro Agricultural Finance Scheme is proposed to complement the Comprehensive Agricultural Support Programme and provide further assistance to emerging farmers and land reform beneficiaries. An amount of R1 billion is available for this initiative, of which R600 million is expected to be allocated over the next three years – the R1 billion is available. [Applause.]

An amount of R400 million a year is allocated to the Trade and Industry Vote for the National Empowerment Fund; and R885 million over the next three years goes to the taxi recapitalisation programme, together with additional resources on the Transport Vote for improved traffic law enforcement. [Applause.] We want to ensure that the Minister of Transport can catch those who speed on the roads in this country. [Interjections.] An amount of R400 million is proposed on the Communications Vote to contribute to investment by the SA Broadcasting Corporation in the modernisation of its equipment and technology. [Applause.]

Social services

As in the past, additional allocations for social service functions mainly go to provinces. In addition to substantial adjustments to social grants, this year’s Budget provides for improved salaries for educators and social workers, a new conditional grant for further education colleges, funds to enable provinces to fulfil their responsibilities for primary health services formerly provided by nonmetropolitan municipalities, and an additional R180 million a year for tertiary health services.

Recognising the critical role of technical skills in a growing economy, R1 billion will be invested over the next three years in improved facilities, equipment and support in further education and training colleges. [Applause.] Through strengthened ties with the skills development programme, sector education and training authorities and employers, colleges have to take their rightful place at the forefront of industrial progress and technology change.

Additional allocations go to the Arts and Culture Vote for management of the Robben Island Museum as a World Heritage Site and for hosting the 29th session of the World Heritage Committee this year. [Applause.]

In addition to supplementary resources for the National Student Financial Aid Scheme, which assisted about 100 000 students in 2004, the national Department of Education receives funding for an education management information system to integrate the flow of information from schools and colleges. We’d like to believe that this will enable government more speedily to know what is happening in every school, that the school is built, that the textbooks have been delivered, that there is water, electricity, sports facilities. [Applause.] We need a management system to tell us this.

The Department of Labour receives additional allocations for an integrated call centre and improved inspectorate services. Its oversight of the national skills development strategy remains a central priority, as the flow of funds to sectoral education and training authorities and the National Skills Fund will amount to about R5 billion in 2005-06, rising to R6 billion by the third year of the MTEF. Housing and community development

Let me turn to the challenge of building houses, security and comfort for all.

Mr President, hon members, we cannot, in good conscience, build dormitory suburbs characterised by neglect, settlements that have no sports facilities, entertainment, business opportunities, social or policing infrastructure. [Applause.]

If Sophiatown, in the midst of its destruction 50 years ago, could give birth to the rhythms of kwela, the patha-patha jive, the musical genius of Miriam Makeba and Kippie Moeketsi’s Shantytown Sextet, and the talents of Todd Matshikiza, Can Themba and Walter Nhlapo – how much more will be possible as the shadows come to life in District Six, Marabastad and Cato Manor … [Applause.] … and as the new spirit of U-Carmen eKhayelithsa emerges in Botshabelo, Mitchells Plain, Motherwell and Chatsworth?

Let me just tell members about getting the CDs. These are prerelease CDs, Mr President. The release of the movie will take place in a few weeks’ time, but the wonderful people at the company Dimpho Di Kopane were prepared to move heaven and earth to ensure that the first in the country to get the CDs were the members of Parliament. [Applause.] Now, of course, to get people to behave like this …

An HON MEMBER: Must we declare it?

The MINISTER OF FINANCE: Yes, you’ll have to declare it. [Laughter.] To get these good people to respond to this appeal, I had to make a pledge for all of the members here. I had to pledge that we would all listen to the CD to remind us of this season of hope. And I had to pledge that despite having the CD, we wouldn’t not go to the movie and wouldn’t not buy the CD on its release. We will continue to support the arts in South Africa. [Applause.] So I do hope that hon members will be as honourable as their title suggests and will live out that commitment. [Laughter.]

On the strength of a new Plan for the Development of Sustainable Human Settlements, the period ahead will see a shift of direction and greater impetus given to investments in housing and the development of residential communities.

The central aim is to replace or upgrade all informal settlements, which currently house some 1,4 million households, by 2014. [Applause.] You know I need to applaud that as well. I’m just a housing activist on long-term deployment to government. [Applause.] In this practical way, we seek to give further expression to the vision President Mbeki has reminded us of: that South Africa belongs to all who live in it.

Municipal allocations, through which free basic services and investment in infrastructure for low-income communities are supported, increase by a total of R5,4 billion over the MTEF baseline amounts.

Justice, crime prevention and security

Within the justice, crime prevention and security cluster, additional allocations are made to the Safety and Security Vote to continue the expansion of police numbers and improve remuneration, to Correctional Services to increase the capacity of prisons and establish a seven-day working week, and to Justice and Constitutional Development to improve court administration and continue to modernise information systems and strengthen court security. [Applause.]

Government plans to increase the number of police officers from 139 000 in 2003 to 165 850 by 2008. [Applause.] The Department of Justice plans to appoint 40 new magistrates over the new year, and 1 000 vacancies will be filled at courts to support prosecutorial services. Over the next three years, accommodation capacity in Correctional Services facilities will increase by 12 000 bed spaces. Governance and administration

Members of this House are well aware of our responsibility to ensure that we have a capable state, one that is able to give effect to its administrative duties and responds effectively to meeting the needs of the poor. We are conscious of many shortcomings in our present system of administration. Better governance and administration must remain a central focus of both the executive and our legislatures.

The services rendered by the Department of Home Affairs are critical to providing citizens with access to basic benefits and other government services. Additional allocations of R800 million over the MTEF period are recommended for strengthening the capacity of that department and the implementation of its transformation strategy. [Applause.] The Independent Electoral Commission also receives supplementary funding, primarily for the forthcoming local government elections.

Other revisions to core administrative functions include: R1,6 billion for the Public Works Vote to address shortfalls in municipal rates and service payments on government buildings, to upgrade buildings at land ports of entry and to address maintenance backlogs at government buildings. [Applause.] I thought Ministers would applaud, because we really need those maintenance upgrades.

There is also the replacement of the preliminary allocations on the Statistics SA Vote for a census in 2006, with allocations for a new community survey and improvements in the quality of various economic and social statistical series; and an additional R250 million for Parliament’s MTEF, to improve both internal governance and services to committees. [Applause.]

Madam Speaker, it seems as though the members of this House are not too keen on a larger budget for Parliament. [Interjections.] [Applause.]

International relations, peace and security

Lastly, let me refer to the contribution of the fiscus to our international relations, peace and security commitments. The 2005 Budget will again reflect our rising contribution to a season of hope for the African continent, and to putting the concerns of the poor on the agenda of world opinion.

Additional allocations amounting to R350 million over the MTEF period are proposed for the Foreign Affairs Vote, contributing to the costs of hosting the Pan-African Parliament, expanding representation in Africa and elsewhere, contributing to the African Union’s peacekeeping programme and modernising the department’s information systems. On the Defence Vote, further amounts of R300 million a year are allocated for peace-support operations in the Democratic Republic of Congo, Burundi and the Sudan. Now, don’t grow this too much, Minister Lekota.

Tax proposals

I turn now to our tax proposals. We have enjoyed the benefit in the past year of strong revenue growth associated with economic recovery, and for the period ahead we can again provide moderate tax relief while continuing to promote certainty, consistency, fairness and a broad-based tax structure. The revenue requirement for the fiscal year that ends on 31 March 2006 is R370 billion, or 9,5% more than the revised estimate of last year, which was R338 billion.

Tax measures are again prominent in “Tips for Trevor”. Nobathembu Dwenga suggests that it is time to abolish the secondary tax on companies. [Laughter.] Marianne Visser proposes that public servants should be exempt from paying personal income tax. [Laughter.] [Applause.] Warren Smith writes again that the tax on retirement savings should be abolished. [Interjections.] [Applause.]

Unfortunately, we cannot do all of these things. But I am pleased to be able to advise Ms Sarah Uys, who has written for the past two years on the question of income tax on pensions, that we are deeply mindful of the difficulties of elderly people who often care for several other family members, and of widows trying to make ends meet without becoming a burden on their children. Further relief to pensioners is part of this year’s tax package.

Personal income tax relief

The proposed revisions to individual income tax rates and brackets for the 2006 tax year provide relief of R6,8 billion for individuals and households. This represents compensation for the effects of inflation and real tax relief in all income groups, with about 62% of the total relief going to those earning below R200 000 a year. Personal income tax relief also benefits many self- employed individuals and microenterprises, providing a further stimulus to small business development.

The income tax threshold, below which no tax is payable, is raised from R32 222 to R35 000 a year. [Applause.] For taxpayers, like Prof Kader Asmal, over the age of 65, the threshold increases from R50 000 to R60 000.

In addition, the interest income exemption for individuals is raised from R11 000 to R15 000, and for those over 65 from R16 000 to R22 000. These adjustments will cost about R310 million, and serve in part to encourage savings further. Tax treatment of health care funding

A reform of the tax treatment of medical scheme membership and health care costs is also proposed. The present allowance for two thirds of a medical scheme contribution to be paid tax-free will be replaced by a capped tax deduction. This will have the effect of limiting the tax loss associated with more expensive medical scheme options, while increasing its monetary benefit to lower-income taxpayers, thereby enabling more people to afford medical aid.

The change will also remove the present disparity between employed and self- employed individuals. Other adjustments to the deductibility of medical expenses will accompany this reform. For administrative reasons, and to allow employers and employees to adapt their remuneration arrangements, the changes will take effect in 2006 and will only lead to a revenue loss in subsequent years.

Motor vehicle allowances

As indicated at the time of the 2004 Budget, a revised approach to the calculation of deemed business travel expenses against a motor vehicle allowance will be introduced this year. The change will lower the tax benefit associated with deemed motor vehicle use calculations, particularly where the vehicle value exceeds R360 000. The broad approach is that if you would like to buy a vehicle costing R5 million, you’re entitled to it but don’t ask taxpayers to subsidise your choice.

From 1 March 2006, the monthly taxable value of the use of a company car is to be increased from the current 1,8% to 2,5%. These changes will yield an additional R1,5 billion a year, but only once the assessments for the fiscal year ending on 31 March 2006 are finalised in the course of next year. Taxpayers are advised to anticipate higher final payments on assessments next year.

Transfer duty

Taking into account the steep rise in property prices over the past two years, it is proposed that the transfer duty exemption threshold should be raised from R150 000 to R190 000, together with an increase in the upper threshold from R320 000 to R330 000. The duty payable on a property of R330 000 or more will fall by R2 300, making houses slightly more affordable. The total revenue loss is estimated to be something in the order of R450 million.

Empowering small business

Both the National Treasury and Sars have focused closely over the past year on aspects of the tax law and its administration that inhibit small business development. We are now able to initiate a series of programmes aimed at making life easier for small businesses, some of which will be implemented immediately and others over the next three years. Following the call of the President in this house two weeks ago, three broad reforms are proposed.

Firstly, tax relief of R1,4 billion is targeted at small business companies to make resources available for growth and investment. This includes the extension of relief to a broader range of service companies, and raising the turnover limit for eligibility from R5 million to R6 million. In addition, the graduated rate structure will be adapted as follows: qualifying small companies will pay no tax on the first R35 000 of taxable income, 10% on income in the range R35 000 to R250 000, and 29% thereafter. Small businesses will also be eligible for a simplified 50:30:20 depreciation write-off rate for nonmanufacturing assets, while manufacturing assets will continue to qualify for 100% write-off.

Secondly, additional relief of R367 million will form part of the streamlining of ongoing filing obligations. This will involve halving the number of VAT payments small businesses make in a year and exempting them from the skills development levy. [Applause.]

Thirdly, a package of administrative interventions by Sars will be implemented to assist small businesses on the ground with their tax and – in an innovative step – their broader business management. Sars will provide community tax helpers, help desks, extended hours and accounting packages, free of charge. [Applause.]

Company tax

The special tax allowances for strategic industrial projects introduced four years ago will lapse in July this year. Since its announcement, a more favourable depreciation regime for manufacturing assets has been introduced and a more direct programme of government investment in critical infrastructure is under way.

The revenue laws this year will also contain measures to facilitate company restructurings, deal with undesirable tax avoidance arrangements in the film industry, and assist public-benefit organisations that rely in part on income from business activities.

Taking into account the overall improvement in our effective rate of tax on companies achieved through base-broadening measures and more effective tax administration, the company tax rate will be reduced from 30% to 29% for the year ahead. [Applause.] This results in a revenue loss of R2 billion.

Removal of transaction taxes on debit entries

Members of the House will share our concern that access to banking services should be kept affordable and efficient. This is largely a matter for the banking sector to address and we welcome the progress made in making low- cost bank services available over the past year. We understand that some 550 000 Mzanzi accounts have already been registered. But government must also play its part, and so we propose to remove the stamp duty on debit entries and instalment credit agreements with effect from 1 March 2005, as these fall disproportionately on lower-income groups and are administratively inefficient. [Applause.] This will cost R350 million a year.

Excise duties

Let me turn then to excise duties, which I shan’t call by the other name. I want to apologise to Mr Baqwa, who is so concerned as “we cannot live without entertainment”, because the Minister increases the price of beer and brandy. So, I apologise to Mr Baqwa for this.

This year’s changes in excise duties on alcoholic beverages are as follows: Tax on beer is raised by 11 cents per 750 ml bottle or 5 cents per 340 ml can. Tax on fortified wine rises by 23 cents per 750 ml bottle and on natural wine by 80 cents a bottle … [Interjections.] … sorry, 18 cents a bottle. [Laughter.] The hon Van der Merwe nearly fell out of his chair. [Laughter.] Ciders and alcoholic fruit beverages go up by 5 cents per 340 ml can. Duties on spirits are increased by R1,47 per 750 ml bottle. [Interjections.] And, on the pleading of a former colleague, we have not increased the levies or the excises on sorghum beer. [Laughter.]

Duties on tobacco products are increased by between 7% and 15%, maintaining the present 52% total tax burden. A packet of 20 cigarettes will cost 52 cents more. [Applause.] Because of my friendship with the Governor, I won’t tell you by how much I’ve increased excises on cigars. [Laughter.] The increases in alcohol and tobacco products will raise an additional R1,3 billion in revenue.

In keeping with these health-related fiscal measures, we propose also to abolish excise duties on sun protection products, at a cost of R10 million a year.

The Air Passenger Departure levies will be increased by 9% this year, to R60 for travel to SACU countries and R120 for international departures to other destinations.

Fuel levies

The general fuel levy on petrol and diesel will be raised by 5 cents a litre on Wednesday, 6 April, broadly in line with inflation. This increase will raise an additional R950 million. At the same time, the diesel refund concession for primary producers will be raised.

With effect from January 2006, when the octane structure of petrol sold in South Africa will be changed, a supplementary levy on 95 octane unleaded petrol in inland areas will be imposed for demand management reasons. Don’t ask me; ask Minister Mlambo-Ngcuka about this.

The Road Accident Fund levy will again increase by 5 cents a litre, to permit further progress to be made in clearing claims backlogs and stabilising the financial position of the fund.

Proposed use of exchange control amnesty proceeds

Members of the House will recall that in 2003 we announced an exchange control amnesty and accompanying tax measures to allow past transgressors of exchange controls to declare their assets and regularise their financial positions. More than 43 000 applications have been received and total assets disclosed are estimated at R65 billion.

On the strength of the amnesty levy proceeds and the permanent increase in the income tax base associated with foreign asset disclosures, we propose to set aside R3 billion over the next three years for investment in community infrastructure. We are going to take this money and put it into those places where people in poor communities can meet, where they can commune – places like halls and sports facilities and all of the other facilities that poor communities need. [Applause.] This is because we must focus our energy on improving the quality of life in new housing areas, upgraded informal settlements and old townships.

This development challenge - that we may demonstrate visibly that South Africa belongs to all who live in it - has to be a shared project of national and provincial government, municipalities, community organisations and the private sector. We must seek to build partnerships that mobilise our most creative energies in constructing recreational and sports facilities, health and education services, administrative infrastructure, business opportunities and community resource centres.

Bagata-mmogo ke maja-mmogo. [Legofi.] [People who work together get the same reward. [Applause.]]

And so, with eyes of pride and vision, acting together, we can embrace the season of hope ahead. I better say this slowly, Deputy President: “Thokola themba!” [Don’t despair!] I’m going to do it again, and let’s see how many join in: “Thokola themba!” [Don’t despair!] [Interjections.] “Siyabonga”. [Thank you.] [Laughter.] I need to table before this House a number of documents: the speech that I have delivered now, the Estimates of National Revenue, the taxation proposals in respect of income tax, the Division of Revenue Bill, the Budget Review, the Appropriation Bill and the Estimates of National Expenditure.

Let me conclude by returning to the words of former President Mandela who, in his recent appeal to world leaders to make poverty history, said:

  Do not look the other way; do not hesitate. Recognise that the world
  is hungry for action, not words. Act with courage and vision.

In preparing this Budget, we were privileged to have had the very close hand of President Mbeki and his resolute commitment to our programme of action. “Enkosi kakhulu”. [Thank you very much.] [Applause.] I would like to express appreciation also to Deputy President Zuma, to my Cabinet colleagues, and especially to members of the Ministers’ Committee on the Budget for their support and sharing this responsibility. [Applause.]

Deputy Minister Jabu Moleketi brought a fresh and welcome perspective to our deliberations. He comes with vast experience, as somebody said last night: “Ten years MEC for finance, Gauteng, undefeated as a champion.” [Applause.] We have also had the privilege of working with nine new provincial executive council members responsible for finance. They are all sitting over there. They have distinct challenges to face, and I am profoundly grateful for their expertise and energy, and for the commitment and enthusiasm with which they have joined the finance team. [Interjections.] Somebody says you must please stand. We want to see you. [Applause.] Will you stand? [Applause.] There they go. [Applause.]

We continue to enjoy valued support from many others:

  • Governor Tito Mboweni and the staff of the Reserve Bank … [Applause.] Stand. The President said you must please stand, Tito. [Applause.] Governor, the President says you must please stand. He wants to see you. [Laughter.] [Applause.]

  • Statistician-General Pali Lehohla, his staff and members of the Statistics Council … [Applause.]

  • Dr Renosi Mokate and members of the Financial and Fiscal Commission … [Applause.]

  • Convenors and representatives of the business, labour and community constituencies of Nedlac and, of course, its head, Herbert Mkhize …[Applause.]

  • The hon Nhlanhla Nene and the hon Buti Mkhaliphi, co-chairs of the Joint Budget Committee … [Applause.]

  • The hon Tutu Ralane, who chairs the Select Committee on Finance, and the hon Rob Davies, chair of the Portfolio Committee on Finance. [Applause.]

I introduced Lesetja Kganyago, the Director-General of the National Treasury, to the House at this time last year. I am pleased to report that his leadership and dress sense continue to be inspirational. [Laughter.] [Applause.] Pravin Gordhan remains a pillar of strength, and we are deeply indebted to him and the staff of the Revenue Service, the National Treasury and the Ministry of Finance. [Applause.] I also, once again, want to thank my family sitting in the gallery. [Applause.]

Members of the House, fellow South Africans, “Our country, as a united nation”, as President Mbeki has asserted, “has never in its entire history enjoyed such a confluence of encouraging possibilities … sparing neither effort nor strength, we can and shall build a South Africa that truly belongs to all who live in it, united in our diversity!” Thank you very much for your patience in listening to me today. [Applause.]

The Bill, together with the introductory speech and papers tabled, referred to the Portfolio Committee on Finance for consideration and report, and to the Joint Budget Committee to consider in terms of its mandate.

The House adjourned at 15:21. ____



National Assembly and National Council of Provinces

  1. Introduction of Bills
 (1)    The Minister of Finance

     (i)     Appropriation Bill [W 7 - 2005] (National Assembly - sec

     (ii)    Division of Revenue Bill [B 8 - 2005] (National Assembly -
          sec 76)

     Introduction and referral to the Portfolio Committee on Finance of
     the National Assembly for consideration and report and to the
     Joint Budget Committee to consider in terms of its mandate, as
     well as referral to the Joint Tagging Mechanism (JTM) for
     classification in terms of Joint Rule 160, on 23 February 2005.

     In terms of Joint Rule 154 written views on the classification of
     the Bills may be submitted to the JTM within three parliamentary
     working days.
  1. Fast-tracking of Bills
 (1)    The Joint Subcommittee of the Joint Programme Committee on 23
     February 2005 took a decision, in accordance with Joint Rule
     216(2), that the Division of Revenue Bill [B 8 - 2005] (National
     Assembly - sec 76) be fast-tracked, where necessary dispensing
     with any relevant House Rule or Joint Rule and shortening any
     period within which any step in the legislative process relating
     to the Bill must be completed, including the submission of the
     translated version of the bill as introduced before the debate in
     the National Assembly takes place. This process must be completed
     in order for the Bill to be enacted and for the Act to be
     published in the Government Gazette by 31 March 2005.

     In terms of Joint Rule 216(4) this decision must be tabled in both
     Houses for ratification.
  1. Bills passed by Houses - to be submitted to President for assent
 (1)    Bill passed by National Assembly on 22 February 2005:

     (i)     Petroleum Products Amendment Bill [B 16B - 2004] (National
          Assembly - sec 75)


National Assembly and National Council of Provinces

  1. The Minister of Finance
 (1)    The Budget Speech of the Minister of Finance - 23 February 2005
     [RP 9-2005].

 (2)    Estimate of National Revenue for 2005 [RP 7-2005].

 (3)    Taxation Proposals in respect of Income Tax.

 (4)    Budget Review 2005 [RP 8-2005], including:

     (a)     Taxation proposals in respect of customs and excise duties
          [tabled at 14: 00 ]; and

     (b)     "Annexure E: Memorandum to accompany the Division of
          Revenue Bill", tabled in terms of section 10(5) of the
          Intergovernmental Fiscal Relations Act, 1997 (Act No 97 of

 (5)    Estimate of National Expenditure 2005 [RP 6-2005], which

     1. Memorandum on Vote No 1 - "The Presidency", Main Estimates,

     2. Memorandum on Vote No 2 - "Parliament", Main Estimates, 2005-

     3. Memorandum on Vote No 3 - "Foreign Affairs", Main Estimates,

     4. Memorandum on Vote No 4 - "Home Affairs", Main Estimates, 2005-

     5. Memorandum on Vote No 5 - "Provincial and Local Government",
          Main Estimates, 2005-2006;

     6. Memorandum on Vote No 6 - "Public Works", Main Estimates, 2005-

     7. Memorandum on Vote No 7 - "Government Communications and
          Information System", Main Estimates, 2005-2006;

     8. Memorandum on Vote No 8 - "National Treasury", Main Estimates,

     9. Memorandum on Vote No 9 - "Public Enterprises", Main Estimates,

     10.     Memorandum on Vote No 10 - "Public Service and
          Administration", Main Estimates, 2005-2006;

     11.     Memorandum on Vote No 11 - "Public Service Commission",
          Main Estimates, 2005-2006;

     12.     Memorandum on Vote No 12 - "South African Management
          Development Institute", Main Estimates, 2005-2006;

     13.     Memorandum on Vote No 13 - "Statistics South Africa", Main
          Estimates, 2005-2006;

     14.     Memorandum on Vote No 14 - "Arts and Culture", Main
          Estimates, 2005-2006;

     15.     Memorandum on Vote No 15 - "Education", Main Estimates,

     16.     Memorandum on Vote No 16 - "Health", Main Estimates, 2005-

     17.     Memorandum on Vote No 17 - "Labour", Main Estimates, 2005-

     18.     Memorandum on Vote No 18 - "Social Development", Main
          Estimates, 2005-2006;

     19.     Memorandum on Vote No 19 - "Sport and Recreation South
          Africa", Main Estimates, 2005-2006;

     20.     Memorandum on Vote No 20 - "Correctional Services", Main
          Estimates, 2005-2006;

     21.     Memorandum on Vote No 21 - "Defence", Main Estimates, 2005-

     22.     Memorandum on Vote No 22 - "Independent Complaints
          Directorate", Main Estimates, 2005-2006;

     23.     Memorandum on Vote No 23 - "Justice and Constitutional
          Development", Main Estimates, 2005-2006;

     24.     Memorandum on Vote No 24 - "Safety and Security", Main
          Estimates, 2005-2006;

     25.     Memorandum on Vote No 25 - "Agriculture", Main Estimates,

     26.     Memorandum on Vote No 26 - "Communications", Main
          Estimates, 2005-2006;

     27.     Memorandum on Vote No 27 - "Environmental Affairs and
          Tourism", Main Estimates, 2005-2006;

     28.     Memorandum on Vote No 28 - "Housing", Main Estimates, 2005-

     29.     Memorandum on Vote No 29 - "Land Affairs", Main Estimates,

     30.     Memorandum on Vote No 30 - "Minerals and Energy", Main
          Estimates, 2005-2006;

     31.     Memorandum on Vote No 31 - "Science and Technology", Main
          Estimates, 2005-2006;

     32.     Memorandum on Vote No 32 - "Trade and Industry", Main
          Estimates, 2005-2006;

     33.     Memorandum on Vote No 33 - "Transport", Main Estimates,

     34.     Memorandum on Vote No 34 - "Water Affairs and Forestry",
          Main Estimates, 2005-2006.

National Assembly

  1. The Minister of Water Affairs and Forestry

(1) Report on the writing off of the Department of Water Affairs and Forestry’s portion of the Land Bank instalment for 2000, 2001, 2002, 2003 and 2004 made on behalf of Kalahari East Water User Association.

 (2)    Report on the writing off of State loan granted to Injimbali
     Irrigation Board.

 (3)    Report on the writing off of the balance of R 1 million owed by
     Great Fish River Water User Association.