National Assembly - 21 February 2007
WEDNESDAY, 21 FEBRUARY 2007 __
PROCEEDINGS OF THE NATIONAL ASSEMBLY
____
The House met at 14:00.
The Speaker took the Chair and requested members to observe a moment of silence for prayers or meditation.
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS – see col 000.
INTRODCUTION OF APPROPRIATION BILL AND TABLING OF DIVISION OF REVENUE BILL
The MINISTER OF FINANCE: Madam Speaker, Mr President; Deputy President; distinguished colleagues; hon members; Governor and Deputy Governors of the SA Reserve Bank; Chair and commissioners of the Finance and Fiscal Commission, MECs, ambassadors and high commissioners - there is a delegation of parliamentarians from the European Parliament and we’d like to welcome them into the House today as well; our dear friends in the gallery here or wherever you may be joining us; whether at work or at home; fellow South Africans, ladies and gentlemen, good afternoon. [Applause.] In the introduction to his book on China and globalisation, Will Hutton reminds us:
The foundation of human association is the idea that human life has equal worth and human beings are equally entitled to political, economic and social rights, which allow them to choose a life they have reason to live.
Human life has equal worth.
Motho ke motho, ga a na bosehlana. [A human being is a human being, there is no lesser human being.]
The idea, then, that human life has equal worth and that this is the core value that unites us, invites us to ask whether we’ve done enough to give practical effect in South Africa today to our shared humanity. Have we acted in a manner that shows that human life has equal worth, or do we still live in a society where the shadow of history dominates over the opportunities of an open society?
As our young nation enters its 13th year, we have much to be proud of. We are building a society founded on the principles of equality, nonracialism and nonsexism. We’ve built institutions of democracy, creating an open society founded on the rule of law. And after stabilising the economy and public finances, we have created the conditions for rapid economic growth, job creation and the broadening of opportunities.
Sound management of public finances and the improved tax compliance culture on which it rests, provides us with the resources to invest in our public services, to renew our infrastructure, reshape our residential areas, provide water, electricity, housing, sanitation, schooling, health care and access roads to millions who were previously denied these elementary building blocks of modern society. The social grant system has expanded, hunger is in retreat and vulnerable families have been lifted out of poverty.
Yet the idea that human life has equal worth demands more of us. President Mbeki, at the fourth Nelson Mandela lecture reminded us that-
… to achieve the social cohesion and human solidarity we seek, we must vigorously confront the legacy of poverty, racism and sexism.
The 2007 Budget strives to accelerate economic growth and work opportunities, to modernise our public services and infrastructure and, of course, to fight poverty and inequality, because we have a shared pledge to work together in action. We do this, consciously, as a choice of this government, because without a powerful countervailing force, that shadow of history, that place from where we come, that luck of the draw, if you wish, will forever determine the opportunities, entitlements and outcomes.
We need government to be strong, to be there, to be focused, to intervene on behalf of the poor and to deal with these issues. That’s quite fundamental to the kind of democracy that we want and need in South Africa. [Applause.] And we do so because of a set of fundamental beliefs.
Izimpilo zabantu zinesisindo ngokufanayo. [People’s lives hold equal value.] [Interjections.]
The economic gains of the past 10 years enable us to begin to fulfil other key elements of our economic and social modernisation. Chief among these are the systems we create to plan and prepare for the long term, to set in place the policies and institutions that will help us to achieve prosperity for all and social solidarity for future generations. As our economy adapts to an ever-changing global environment, and as we recognise over time new policy challenges and priorities, our public services must support transition and transformation by providing rising income security and protection to individuals, families and communities.
In the state of the nation address, from this podium, just 12 days ago, President Mbeki indicated that the time is right to construct a broad-based social security system embracing all South Africans, and I am pleased to confirm that we are tabling the main proposals today.
We have had the good fortune, since 2001, to report on the healthy and strengthening state of the economy. Once again, economic performance has exceeded expectations.
The economy continued to expand at a robust pace of 4,9% last year, generating new jobs, broadening the consumer base and providing impetus for rapid growth in investment. Economic growth is projected to average just over 5% a year over the next three years. For 2007, somewhat weaker growth in the world economy and the interest rate increases of the past year are expected to result in a growth rate of 4,8%.
While household spending is projected to slow from the lively growth rate of over 7% last year, it is still expected to expand by close to 5% over the medium term - indeed a robust trend reflecting good growth in household income.
This expansion has been supported by a benign interest rate climate, with exceptional growth in the construction, finance, transport and communication sectors. The manufacturing sector has grown by more than 4% a year since 2004. Conversely, poor performances by agriculture and mining weighed on our growth performance last year.
Investment across the economy underpins a positive outlook for the period ahead. Investments increased by 11,7% in the first nine months of last year, and as a percentage of GDP rose to 18,4%. Investment by public corporations, government and the private sector will remain central to strengthening economic expansion over the medium term, as government maintains its focus on the extension and improvement of transportation links, increasing electricity supply and reshaping the built environment.
More rapid growth has meant more rapid job creation. According to the December 2006 quarterly employment statistics, employment in the nonagricultural parts of the economy rose by over 3% in the first nine months of last year.
The global economy has remained supportive of our growth performance in response to exceptional growth in China and India, healthy growth in G7 countries and, of course, high commodity prices. The commodity price rally has now entered its sixth year. Sometimes we must pause and consider just how big this rally has been. Between the end of 1999 and the end of last year, the gold price rose by 121%. Well, unfortunately the oil price rose by 144%, but the prices of both platinum and coal rose by more than 150%.
Our current account deficit has risen to levels close to 6% of GDP last year and we expect the deficit to continue running at between 5% and 6% over the medium term. This is a sign of robust economic growth. South Africa is not alone in this regard. A number of fast-growing, oil-importing and commodity-exporting markets such as Australia and New Zealand are also running sizeable current account deficits.
Capital inflows are expected to cover the current account deficit as rand- denominated assets remain attractive to foreign investors. Net capital inflows reached R96,3 billion in the first nine months of last year. High commodity prices, moderating household consumption trends and stronger exports will tend to put downward pressure on the deficit in the next few years.
At the same time, risks continue to arise from what economists call “global imbalances” – the large surpluses and deficits on the current and capital accounts of major world economies. The magnitudes involved are staggering. The American and Chinese current account deficits and surpluses have reached 6,6% and 7,2% of their respective GDPs. If measured in numbers, the US deficit is equal to US$869 billion or nearly R6 trillion. That is the gap between the imports and the exports, and it is staggering because so often we tie ourselves into knots about what is happening in this economy. But it’s important to understand some of these trends across the world.
Partly as a result of these deficits, liquidity in global markets is at very high levels. The search for higher returns for those funds has led to unprecedented flows of capital into emerging markets. Further, we are seeing the use of low-interest G7 currencies for leveraged speculation. The potential disorderly unwinding of these leveraged positions creates enormous risks for emerging market economies, including our own. We must raise this. But around the world, this matter was raised when the G7 finance Ministers met just over two weeks ago in Essen, Germany. For the first time, they put on the agenda the need to consider matters relating to both hedge funds and private equity funds, because these are large pools of funds. And the issue was raised because finance Ministers of the G7 consider this to be one of the major risks to the global economy.
So, while our higher current account deficit mirrors stronger growth and investment, we need to re-emphasise the importance of the more rapid and diversified economic growth, and improving our export performance rather than reliance on uncertain portfolio inflows.
In the first nine months of 2006 the volume of exports rose by 2,2% compared to the same period in 2005, and by an average of 3,9% between 2000 and 2005. But a great expansion in the volume and value of exports and export-related employment is needed to lift and sustain the economy’s growth rate beyond 6% a year.
After several years of relative stability, the volatility of global exchange rates increased in 2006, shifting the levels of many currencies as commodity prices retreated from all-time highs and investor sentiment towards emerging markets cooled. The exchange rate of the rand depreciated by an average of 15% over the course of 2006.
Some volatility can be mitigated through a combination of increasing foreign exchange reserves, reducing debt denominated in foreign currency, promoting lower inflation, prudent fiscal decisions, and improving the economy’s potential growth rate. In contrast, a more rigid approach to exchange rates could stimulate larger capital inflows but make our exports less competitive and overheat the domestic economy. The reserve bank has continued its prudent accumulation of reserves. And I think, Governor, we want to say thank you very much for that. [Applause.]
Further exchange control relaxation announced in this Budget will be supportive of a greater two-way flow of capital and moderation in the movement of the exchange rate.
Led by our Deputy President, the Accelerated and Shared Growth Initiative of South Africa, Asgisa, lists clear areas where more work needs to be done to raise our trend growth. It recognises, amongst other things, firstly, that we will grow faster when we export more goods and services and accelerate investment in areas of competitive advantage. Secondly, it recognises that we will grow faster when our levels of productivity are raised and our ability to generate more low-skilled jobs is enhanced. Thirdly, it recognises that we will grow faster when the bureaucratic red tape that hobbles business is tackled head-on. Fourthly, it recognises that we will grow faster when the performance of the public sector is improved so that the state can become an effective tool for reconstruction and development. Fifthly, it recognises that we will grow faster when infrastructure capacity is enhanced, especially in relation to telecommunication, rail, roads, ports, electricity and water.
Hon members, we have much more work to do to ensure that economic expansion can be sustained, and more importantly that the participation in the economy be broadened. Part of the answer lies in our fiscal and investment decisions and part in ensuring that our economy is able to adjust to global risks and opportunities.
The CPIX inflation has remained within the inflation target band, averaging 4,6% in 2006, compared to 3,9% in 2005. Inflationary pressures in the short term, including high food prices, should abate during this year. The CPIX is projected to rise in the first half of the year, thereafter receding to the middle of the target band but still remaining within the 3% to 6% range over the medium term.
The increase in foreign exchange reserves and the present fiscal position are considerable strengths. Mr President, when you took office in April 1999, gross foreign reserves stood at US$5,5 billion, the public debt to GDP ratio stood at 49%, job creation was rising at about 200 000 a year and economic growth was 2,5%. There is now US$25,9 billion in reserves; our debt ratio is now 26% of the GDP – that would make us the envy of many parts of the world; the economy is creating about 500 000 jobs a year and we have economic growth of 5%. [Applause.] Under your stewardship, our economic transformation is well and truly under way.
However, Mr President, it has not all been smooth sailing. Could I point out that when you came into office, Bafana Bafana were ranked 25th in the world, and today they rank 59th. [Laughter.] So, we should expand this stewardship thing a bit more. [Applause.]
Madam Speaker, we are planning for a budget surplus in the coming fiscal year. The fiscal stance creates space for our future social security reforms and allows for rising funding levels for public sector infrastructure, improvements to education and other government priorities, while enhancing the competitiveness of the economy and sustaining the current growth trajectory.
Tax revenue has grown by an average of 17% a year for the past three years, much faster than the rate of economic growth. Hon members who passed legislation will know that it’s not because we raised any of the rates; in fact we reduced many of them. Alongside the new taxpayers created by a growing economy, legislative, administrative and technological changes have broadened the tax base significantly. All of these developments are exceedingly positive and will benefit us long into the future.
Public spending – that’s the growth after inflation is taken into account - has risen by over 9,2% a year in real terms over the past three years. The strong revenue trend and declining debt service costs have provided us with the room to invest in the modernisation of our services and infrastructure. This allows us to add further to our spending plans, raising public spending a further 7,7% a year over the next three years as government ensures that effective programmes and promising new initiatives are funded in line with government’s capacity to implement them. We are able to do this without leaving a legacy of debt for future generations. [Applause.] It is an ongoing battle that we have because debt is in fact a tax on future generations.
What we will announce in the course of this Budget today are significant changes to all of what we do. But we can do that by funding these from our own resources, and not being entirely dependent on debt. This gives us the independence of decision-making, but, more importantly, it places us in a position where few countries have been in the world. [Applause.]
This is important because, in a country like ours with a low level of savings, the planned fiscal surplus is in fact government’s contribution to a national savings effort, and we would like our citizens to follow this example.
In summary, our fiscal stance is a careful balance between increasing spending on services and infrastructure, and providing moderate tax relief to raise household income and savings and to lower the cost of doing business, while increasing government savings. Furthermore, the fiscal position helps to keep a check on emerging imbalances in the economy.
Despite generous tax relief and rate reductions, the tax to GDP ratio has risen considerably in the past three years, reflecting both the economic buoyancy and the broader tax base. For the fiscal year ending in March 2007, our revised estimate for revenue is R29 billion higher than the original budget. [Applause.]
Company tax and value-added tax receipts have exceeded expectations due to higher profits and strong domestic consumption. Personal income tax has also surpassed our estimates, driven both by rising employment and real gains in the income of persons. We are expecting the strong growth in revenue to continue into the new fiscal year, leading to a revenue estimate for the 2007-08 year of R545 billion or 28% of the gross domestic product. As private sector investment increases and as household consumption moderates slightly, we expect revenue as a share of GDP to decline to about 27% of GDP by the fiscal year that ends on 31 March 2010. The revised estimate for spending in 2006-07, that is the year that ends on 31 March, is R470,6 billion, and that is R3,6 billion less than the adjusted budget that we tabled at the end of October. As a result and contrary to our initial expectations, the Budget balance for the present year indicates a surplus of R5 billion. So, this is the unplanned one. The next one is planned for.
We are budgeting to spend R534 billion in 2007-08, rising to R650 billion in the 2009-10 fiscal year. Since tax revenues are likely to grow more strongly than spending for at least another year, we are budgeting for a fiscal surplus of around 0,6% of GDP in the first of these three years, reverting to a moderate deficit by the end of the forecast period.
Debt interest costs continue to fall as a share of GDP and are set to reach 2,1% by 2010. The savings on interest that we have seen since 2001 provide an additional R33 billion a year to spend on services and infrastructure, money that we would not have had if we had kept borrowing at the level that the country was borrowing in 1994.
In 1994 we had a choice to expand spending by borrowing or to reprioritise while reducing the dependence on debt. The choices that we have made - consciously made - provide us with the fiscal space to spend more on education, on health and on public transport. It has also provided us with the policy room to contemplate long-term reforms to our social security system that will benefit all South Africans into successive generations.
Much of our economic and fiscal policies have been aimed at increasing fiscal space and reducing our vulnerability to financial instability. These questions, and how governments think about them in a global context, will also be highlighted in the meetings of the G20 hosted in 2007 by South Africa.
The G20 or Group of 20 finance Ministers and central bank governors, includes seven industrialised and 13 of the most systematically significant emerging market economies, whose main purpose is the pursuit of global financial stability. This forum offers us a unique platform to identify common objectives and common solutions to global financial and economic challenges.
The theme for the G20 this year is, “Sharing – influence, responsibility, knowledge”. South Africa has prepared a detailed work programme for the year focused on three major areas. In addition to the area of fiscal space, the G20 will look at the issue of increasing the voice of developing countries on the global economic stage by giving impetus to efforts to strengthen the voting power of emerging markets and low-income countries in the International Monetary Fund and the World Bank.
A final area of focus seeks to better understand the impact of high commodity prices on macroeconomic management and the implications for countries’ financial systems.
South Africa will also use the opportunity of its host year to improve and strengthen knowledge, within the forum, of African economic and financial policy challenges, and to facilitate a sharing of knowledge with African countries, through a series of parallel discussions between the G20 and African finance Ministers and governors.
The budget framework allows us to provide R89,5 billion in additional spending over the next three years, in comparison with our spending plans from what we had a year earlier. Our spending priorities are informed by the overriding objective of accelerating growth, modernising our public services and infrastructure, and reducing poverty and inequality.
Over the next three years, we are budgeting to spend almost R2 trillion – that is a two followed by 12 zeros in rands. [Applause.] Now, we must use these resources for the very purpose that democracy exists, that is, – “iimpilo zabantu zixabiseke ngokulinganayo” [to ensure that human life can indeed have equal worth] or, as we said earlier: Motho ke motho, ga ana bosehlana. [A human being is a human being; there is no lesser human being.]
If we truly want to create a society where human life has equal worth and where every child has an equal opportunity to succeed, hon members, we must improve the quality of our schools. This will not happen on its own. We need concerted action to make things change.
Our teachers are the frontline of our education system. It is in their hands that we place our 11 million children each and every school day. In most cases, our teachers do a sterling job under difficult conditions. We pay tribute to them and we ask no more than that they continue to serve with dedication and integrity.
We also know of course, that a minority of teachers do not prepare their lessons adequately, are frequently late and are unfit to be in the position where they are asked to nurture our children. But we cannot let the minority of teachers denigrate a profession based on love for children, a desire for learning and a commitment to our collective future. [Applause.]
Over the next three years we are making available an additional R8,1 billion to hire additional teachers, teaching assistants and support staff in schools and districts and to improve remuneration levels of teachers. [Applause.] The many people who submitted suggestions to the “Tips for Trevor” campaign on this issue, I am sure, will be pleased to hear of these developments.
The Minister of Education, who is unfortunately absent today, will lead the process of determining how these resources should be used, focusing on the need to reward good teachers, provide support to poor schools and improve the quality of schooling in general. We are also setting aside R700 million for bursaries for teachers to encourage young people to train as teachers and to pursue careers in our public schooling system. [Applause.] This amount should benefit about 13 000 teachers over the next three years.
Together with resources set aside in the provincial equitable share for the implementation of no-fee schools, and a substantial increase in resources for classroom building and providing water, electricity and sanitation in schools, the investments announced in this Budget constitute a concerted effort to improve the quality of schooling in our country. It is a step change in resources going to schools, and of course we would like to see a step change in the results as well. [Applause.]
The SA Schools Act recognises that the strength of our democracy is dependent on the depth of involvement of our democratic institutions, such as school governing bodies. We need committed parents to stand up and make a contribution to the success of their children’s schools, so that we can build a society where human life has equal worth.
The national Department of Education receives a further R850 million for a step up in its adult basic education and training programmes, the Abet programmes as we know them. [Applause.] The 2007 Budget also makes available a further R2,2 billion to support our university sector to meet its objectives of increasing enrolment and, for the ears of the Deputy President, producing more science, engineering and technology graduates. [Applause.] The further education and training sector, or FET sector, receives R600 million for bursaries for deserving students. [Applause.]
Now, since the shifting of the social grants function to the Social Security Agency, provinces have been able to focus on rebuilding their welfare service capacity. A new bursary scheme for social workers is established, with an initial allocation of R365 million. Together with steps taken to increase social worker salaries, an initiative that we have taken certainly since 2005, this initiative aims to revive interest in a profession critical to the wellbeing of our communities and the development of a more caring society. [Applause.]
The health sector receives a further R5,3 billion to spend on increased remuneration for health workers and an increase in staffing levels. [Applause.] We are budgeting to increase the number of health workers by about 30 000 over the next five years. Our previous budget framework made provision for the treatment and care of about 250 000 people who are ill with Aids. We are likely to reach that figure in the course of the next few months. Health receives a further R1,7 billion for this programme, presently being delivered through 272 sites, allowing for a doubling of the uptake over three years. [Applause.] Spending on dedicated HIV and Aids programmes by health, education and social development departments will exceed R5 billion by 2009-10.
The hospital revitalisation programme, one of our more successful infrastructure programmes, receives a further R1 billion, taking total spending on this programme to R6,8 billion over the next three years. In addition, the sector receives R1 billion for the modernisation of tertiary services, with particular emphasis on diagnostic equipment.
One of the clearest ways in which we are able to act against poverty is through our system of social grants. We presently have just under 12 million people receiving social grants, of whom over seven million are beneficiaries of the child support grant. There is strong evidence that South Africa’s social grants are well targeted and account for a substantial share of the income of poor households. Grants are associated with a greater share of household expenditure on food, and hence improved nutrition, and the child support grant contributes measurably to the health status of young children. Statistics SA data shows that the proportion of households where children often or always went hungry decreased from 6,7% in 2002 to 4,7% in 2005. I think we will all agree that it is still 4,7% too many, but I think we can measure the trend, and improve this in the nutrition of young children. This means that we can say to many more children, ``Hunger is no longer knocking on the door.’’ Die lewe van alle mense is gelykwaardig. [The lives of all people are equal.]
Three years ago, the Department of Social Development initiated measures to curb fraud in our social grants system. With the help of the Special Investigating Unit, over 130 000 people have been removed from the system and about 2 500 have thus far been charged with fraud – tragic, but real. This has contributed significantly to the stability of the overall system. Ensuring that we eliminate fraud and corruption from the social grants system is critically important. As we deal with this issue on a continuous basis, there are, in fact, additional resources to provide for people who really need them.
The state old age pension, disability and care dependency grants will rise by R50 to a maximum of R870 a month, providing a strong signal that money released from the reduction of corruption will be given back to those who deserve it. [Applause.] Child support grants increase by R10 to R200 a month, and foster care grants rise to R620 a month. [Applause.]
Let me turn, then, to our criminal justice sector. To quote President Mbeki:
While we have already surpassed that targeted figure of 152 000 police officers … and while we have improved the training programme, we recognise the fact that the impact of this is not yet high enough.
There has been a significant increase in the resources going to the fight against crime. Since the 2003-04 fiscal year, allocations to the Safety and Security Ministry have increased by 43% already. Over the next three years, resources going to the police will rise by a further 34% from R33 billion in the current year, that’s 2006-07, to R44 billion in 2009-10. [Applause.] The budget for the Department of Justice and Constitutional Development increased by 41% in the past three years and will rise by 52% over the next three years.
In this year’s Budget, we are allocating an extra R2,4 billion to the police to further expand police numbers and invest in technology and forensic equipment. [Applause.] As the President advised last week, by 2010 we will have close to 190 000 police officers on our streets. I hope they are going to be on the streets and not in the stations, but we will have 190 000 police officers. [Interjections.] Electronic fingerprints and dockets will become the norm. The 2007 Budget also allows for the implementation of the salary upgrade programme for police that started in 2005. The Department of Justice and Constitutional Development receives a further R1,5 billion over the next three years to improve court capacity, reduce case backlogs and modernise the administration of justice. I think they all heard the hon Buthelezi on this issue last week.
Our government recognises the seriousness of the crime situation, and will continue to provide leadership in the fight against crime, but effective crime fighting depends on partnerships between our law-enforcement agencies and the communities they serve. Through community police forums, all citizens have the opportunity to contribute towards making their communities safer. In this way, each person can and should help in the construction of a society where, truly, human life has equal worth.
Even as we step up the fight against crime, we must ask ourselves: What cultural, social and economic conditions give rise to crime? We have spoken in the past about the destructive effects of the relentless pursuit of individual self-enrichment at the expense of the broader development and progress of society. We cannot escape the fact that the culture of greed plays a role in driving crime. Long-term, sustainable solutions lie in addressing the causes of crime and the conditions that give rise to the alienation of some in our communities. Only a stronger sense of society, of community, of family; a sense of responsibility to each other – “umuntu ngumuntu ngabantu”. [a person is a person through other people.] - can heal the fractures that give rise to crime.
We also need to insist that honesty and integrity are core values of our economic and financial institutions. We continue to see instances of flagrant abuse of this principle, often involving hundreds of millions of rands. In addition, we continue to see the extraordinary methods used to evade tax and the legal obligations relating to anti-money-laundering legislation.
I want to make it clear that we will not tolerate a situation where individuals pillage and plunder millions from the companies they run or from ordinary South Africans who are poor and humble people – here I am also including the widows and orphans - whose entire life savings get destroyed in the process by these rapacious doings. [Applause.]
Mr President, I have asked the Financial Intelligence Centre, the Financial Services Board and the SA Revenue Service to work collaboratively with the SA Police and prosecutors in dealing with financial crime and its proceeds. I have also asked that fiduciary and trusteeship responsibilities receive the highest priority in the oversight activities of our regulators. We must ensure that neither organised crime nor the abuse of stewardship obligations is allowed to violate our hard-earned democracy and the integrity of our country. Since 2001, we have channelled an ever-greater share of our resources into capital spending. Our investment in infrastructure has been focused on two major areas: the built environment and then economic infrastructure. The built environment refers to a cluster of activities and services that centre on building viable, secure residential communities that include housing, water, electrification, sanitation, roads, sports facilities, community halls, police stations, schools, clinics and so on. These programmes seek to change the landscape across both urban and rural areas, to turn barren, dusty land into places where houses are frequently built that people feel proud to live in, those places where people can find the comfort and security to raise their children.
In the past two years, we have added considerably to our public transport budget. In 2005, we created the Public Transport Infrastructure Systems Grant, aimed mainly at putting in place passenger transport services that would facilitate the movement of people for the Fifa World Cup.
This, together with the impetus that the World Cup provided, has resulted in something of a revolution in municipal planning for public transport and, healthily, forward thinking about urban development. The bids that we have seen are impressive, in terms of knitting together communities with places of work, recreation and leisure. In particular, the development of the Bus Rapid Transit Schemes offers exciting opportunities to improve municipal public transport systems. To ensure that the World Cup leaves us with a legacy of better public transport, we are also adding a further R2,3 billion to this programme. [Applause.] Again, it’s worth emphasising that it’s not just about stadiums; it’s about what improves in the lives of all South Africans. That is why a developed public transport system that allows people to interact between residential, recreational and places of work becomes exceedingly important for us in the way in which we approach 2010.
Our housing budget receives a further R2,7 billion, taking the total allocation over the next three years to R32 billion. [Applause.] To give a sense of the scale of increase in our housing budget, in 2003-04 we spent R4,6 billion on housing. By 2009-10, the end of our present budgeting period, the budget rises to R12,5 billion. I don’t know, my friend and colleague, the Minister of Housing, clearly lacks ambition. She has been pleading for the doubling of the housing budget; we’ve tripled it! [Applause.] In fact, what we have available for the Medium-Term Expenditure Framework is about equal to what we spent on housing in the first decade of democracy. [Applause.]
Allocations for water, sanitation, electrification and municipal roads all rise in a complementary fashion. Our government is determined to meet the target set by the President in 2004 in relation to water, sanitation, electrification and housing. Motho ke motho, ga a na bosehlana. [A human being is a human being, there is no lesser human being.]
The Neighbourhood Developmental Partnership Grant, a new innovative funding model, encourages private participation in the rejuvenation of our townships. The urban landscape is often described as dysfunctional, with large townships far from city centres, far from places of work and leisure. This landscape will not change of its own accord. We will not be able to reshape our cities, integrate our townships and create residential communities unless we intervene and act decisively. The Neighbourhood Developmental Partnership Grant has already allocated money for technical assistance to upgrade Bara Central in Soweto, Njoli Square in KwaZakhele and Ngangelizwe in Mthatha. Planned interventions include the eThekwini Bridge City and the KwaMashu Town Centre.
Many of the programmes outlined are labour-intensive and form a part of the Expanded Public Works Programme aimed at drawing in marginalised communities in the second economy. Since its inception, this programme has created about 300 000 work opportunities already, mainly in rural areas and mainly for women. But, taking our cue from the state of the nation address, together with the Minister for Public Works we will review this programme to see how it can be amended and further ramped up to increase a number of work opportunities that it can create. We believe that the 300 000 is just in fact the beginning of the potential that we should be able to deliver. A further R125 million is allocated to the Department of Public Works, not for the programme itself but to improve co-ordination and the oversight in this programme.
Turning then to the 2010 Fifa World Cup, I’m happy to announce that the Local Organising Committee for the World Cup has reached an agreement with municipalities in the budgets for construction and the upgrading of stadiums and that these agreements are within the R8,4 billion set aside for stadiums. These agreements set a firm precedent that we must go out of our way to ensure a successful tournament and a lasting legacy beyond 2010
- the hon Rev K R J Meshoe. [Interjections.] But fiscal prudence and sound budgeting principles must be adhered to at all times.
The SA National Roads Agency and the SA Rail Commuter Corporation receive a further R1,7 billion to upgrade roads and stations in and areas critical to the World Cup. In total, over R9 billion will be allocated by national government for municipal transport, roads and precinct upgrading relating to the 2010 World Cup. So, it’s R8,4 billion on stadiums and R9 billion on the transport infrastructure. [Applause.]
Turning, then, to the economic services, agencies and entities falling under the Department of Trade and Industry receive an additional R1,7 billion to promote industrial development, black economic empowerment and small business development. [Applause.] To support the process of broadening participation in the economy, the National Empowerment Fund receives a further R380 million as capital injection. The critical infrastructure programme is allocated a further R300 million to leverage private sector investment, especially into our industrial development zones, and the film and television production incentive gets another R300 million to encourage local and international filmmakers to film here in South Africa. [Applause.] I’ve been very encouraged to see the long list of movies that have benefited from this incentive scheme, and I’m sure that it has created many thousands of jobs in the production of these movies - and these are seriously big films.
Our research and development capacity has been strengthened in the past five years with targeted investments to our science councils and universities. This year we are setting aside a further R1,2 billion for science and technology, of which R500 million is for government’s contribution to the Square Kilometre Array, contingent of course on the success of our bid. But I’m sure I can say that the Minister of Science and Technology and I are exceedingly confident that we will get the Square Kilometre Array to the Northern Cape. [Applause.]
The SA Research Network, a joint project of the Department of Public Enterprises and the Department of Science and Technology aimed at providing a low-cost broadband link for the local academic community, receives R95 million, and R60 million is allocated to set up science research chairs at our major universities.
The budget framework includes a contingency reserve of R3 billion for the first year, that is 2007-08. This allows for unforeseeable and unavoidable expenditure that may need to be accommodated in the adjustments budget this year and allocations to several state-owned enterprises that are not yet finalised. [Laughter.] Our commitment to finance 51% of capital requirements of the Pebble Bed Modular Reactor project over the next three years amounts to R6 billion. An allocation to settle the land claim and other obligations relating to the Alexkor mine has yet to be finalised and will be provided for in the adjustments budget, which will also include further equity contributions for the InfraCo telecommunications initiative and Sentech’s investment requirements, contingent of course on the approval of business plans and the outstanding regulatory requirements.
Turning to general government, administration and international affairs, South Africa’s foreign policy objective seeks to achieve greater unity and solidarity between African countries to accelerate political and socioeconomic integration and, of course, to promote peace, security and stability. Support for key institutions of the African Union remains a priority. The African Renaissance Fund, through which most of our initiatives are funded, is given a further R275 million. That will make peace between my bench mates and I. [Applause.] Our commitments to host the Pan-African Parliament also require a further R113 million.
In a short period of time, our Defence Force has already assisted significantly in helping reduce a number of conflicts on the continent. We now have peacekeeping operations in the Democratic Republic of the Congo, Burundi and Sudan. I’m told that others are in the offing and we have technical advisers in a number of other countries. The SA National Defence Force receives additional allocations to acquire airlift capacity, for exchange rate adjustments to the strategic defence package and for the military skills development programme, an innovative programme aimed at introducing young people into the military.
Improving service delivery in the Department of Home Affairs has positive benefits for government, for the economy and all citizens. The Minister of Home Affairs is working with colleagues to finalise a plan to turn this department around. I think we want to, again, this afternoon, pledge our full support to her in this endeavour. [Applause.] A further R900 million is allocated to the department to support its turnaround, to fill critical posts, purchase a new passport printer and modernise IT and back-office operations. [Laughter.] Is it too much or too little?
Following considerable tax policy changes in the 1990s, the past five years have been characterised by better services to taxpayers, improved compliance and, of course, a broader tax base. The 2007 Budget provides a further R1,3 billion to upgrade core IT systems in the SA Revenue Service. The modernisation of Sars will enable it to manage increased administration volumes. A single customer view, automation, e-business and improved walk- in services will be supported by enhanced risk management.
Priority is also given to modernising customs administration to cope with significant increases in volumes at all our land, sea and air border posts. The acquisition of cargo and container scanning equipment will enable Sars to perform nonintrusive inspections on goods going through our ports.
I now turn to the intergovernmental transfers for the MECs for finance. Our budget allocations must reflect the priorities that government sets. In recognition of the critical role that provinces and municipalities play in the delivery of social and household services, these two spheres receive 64% of the additional R89,5 billion allocated in this budget.
Transfers to local government grow by 19% a year. In addition, municipalities receive the bulk of the allocations for stadiums and related infrastructure for the 2010 Fifa World Cup. The local government equitable share receives a further R5 billion for the delivery of free basic services, which now reach an average of about 80% of households. [Applause.] The municipal infrastructure grant receives R400 million more for a final push to eradicate the bucket system; a further R600 million for the electrification programme; R1,4 billion for bulk water and sanitation infrastructure; and R950 million to deliver water and electricity to schools and clinics. [Applause.] Total infrastructure transfers to municipalities now total R52 billion over the next three years.
Ubujamo bethu busho siyalingana empilweni. [Our situation means our life is equal.]
Transfers to provinces grow by 12,7% a year with the major additions going to education and health personnel, social welfare services and for provincial infrastructure. This year we introduce a new conditional grant called the community library services grant to develop the infrastructure and stock of books in local libraries to spread the joy of books to millions more children – or all readers, I should say – and to provide access to information to teachers and parents. [Applause.] The grant starts off with an initial allocation of just under R1 billion over the next three years. The provincial equitable share, through which 86% of provincial transfers flow, is updated to reflect changes to provincial boundaries. This is so that the Minister of Defence doesn’t have to have such a difficult time any more.
Preliminary assessments of provincial budgets indicate that allocations are broadly in line with the priorities outlined in last year’s Medium-Term Budget Policy Statement. Spending on both education and health at a provincial level is projected to grow by 10,5% a year, and on welfare services it grows rapidly from R5,3 billion in the present year to R8,8 billion in the third year of the new Medium-Term Expenditure Framework period.
Over the next three years, provincial capital spending totals R65 billion. I wish to commend the provinces for the steady progress being made in rolling out their infrastructure programmes. In 2005-06, only 8% of infrastructure funds were unspent as opposed to 14% in the previous year. This year, spending for the first nine months is 35% higher than in the same period last year.
Over the past decade we have created a tax policy regime which is internationally competitive. We have broadened South Africa’s tax base while, at the same time, providing billions of rands in tax cuts to improve the equity of the system.
Mr A S Smit submitted a tip for Trevor, in which he suggested the following.
“Kan u in u begrotingsrede belastingbetalers bedank vir hul bydrae?” Meneer Smit is heeltemaal korrek, so ek vra om verskoning indien ek dit nie genoegsaam in die verlede gedoen het nie, en spreek ons gesamentlike dankbaarheid uit aan alle belastingbetalers. [Applous.] (Translation of Afrikaans paragraph follows.)
[“Can you thank taxpayers in your Budget speech for their contribution?” Mister Smit is completely correct, and so I ask forgiveness in case I did not do so satisfactorily in the past, and express our joint gratitude to all taxpayers. [Applause.]]
So, admonished by Mr Smit, I thank all South African taxpayers for their diligence in contributing to our revenue pool.
Ndo livhuwa nga maanda! [Thank you very much.] [Applause.]
Is that okay, Minister Mufamadi? [Laughter.] This year, individuals benefit from moderate personal income tax cuts and the elimination of the retirement fund tax. Business benefits from reforms to the secondary tax on companies. We extend accelerated depreciation allowances to certain infrastructure, and the cost of corporate reorganisation is reduced.
The 2007 Budget provides personal income tax relief amounting to R8,4 billion, increasing the level below which no income tax is levied for people under the age of 65 to R43 000. It’s a big number. A few years ago people earning R16 000 had to pay tax. Now we’ve been able to lift that threshold to R43 000. [Applause.] Changes to the personal income tax brackets provide relief to compensate for the negative effects of inflation on taxpayers, and to partially offset the effects of changes to the taxation of medical aid contributions and car allowances. This is more money in the pockets of taxpayers, and I want to appeal to taxpayers to use this relief to first settle their debts or save, rather than for consumption. The Governor said I should say that if they don’t listen to my pleading, he’ll have to report them to the Monetary Policy Committee. [Laughter.]
The monthly monetary caps for tax-free medical aid contributions are increased from R500 to R530 for each of the first two members and from R300 to R320 for each additional beneficiary. This measure is aimed at further incentivising people to join low-cost medical schemes and for the market to respond to the demand in this area.
Public-benefit organisations play an important part in the social fabric of our society. During the past few years the tax regime applicable to these organisations has been reformed to give due recognition to their contributions to society. I’m pleased to announce that tax-deductible contributions by both individuals and companies to specific public-benefit activities will be increased from 5% to 10% of taxable income.
In addition, the tax-free income threshold from trading activities by public-benefit organisations will be doubled from R50 000 to R100 000. Arising from discussion with Cricket South Africa recently, amendments are also proposed to ease the tax liabilities on professional sports bodies that contribute meaningfully to the development of amateur sport. [Applause.] Now, since we had that discussion, our one-day cricket team has been rated number one. I should just announce that the same terms are likely to be available to all the codes, so perhaps the others will follow suit. [Laughter.]
In order to promote saving for retirement, we propose to this House the abolition of the retirement fund tax from 1 March this year. [Applause.] However, I would like to add a very important point. This is an appeal to trustees of these pension funds to ensure that the benefits of this reform accrue to the contributors and beneficiaries of retirement funds. [Applause.] There is no point in granting relief that then sits in layers with new fund managers who arrive on the scene while the pensioners and beneficiaries are poorer than they were before. The cost to the fiscus of this measure is R3 billion a year, and it is part of a number of related measures aimed at encouraging household savings. With the same objective in mind, the interest income exemption is raised from R16 500 to R18 000 for those under 65 years of age and from R24 500 to R26 000 for those who are 65 years of age and over. In addition, the annual exclusion threshold for capital gains or losses will be increased from R12 500 to R15 000.
Most countries have a dividend tax at the shareholder level. We have a secondary tax on companies collected directly from a few thousand companies, as opposed to millions of shareholders. To further improve the transparency and equity of the tax system, we are proposing that it be phased out and replaced with a dividend tax at shareholder level. This reform would consist of two phases. We propose reducing the rate from 12,5% to 10% and that the base be redefined to apply to all distributions. Thisslr will come into effect on 1 October 2007, except for standard anti- avoidance measures that will commence, of course, at the conclusion of the speech here today. [Laughter.]
The conversion to a dividend tax collected at the shareholder level will be completed by the end of 2008, subject to the renegotiation of a number of international tax treaties. The taxation of gains realised from the sale of shares is presently subject to ambiguous procedural treatment. In order to provide equitable treatment and certainty for both taxpayers and for Sars, all shares disposed of after three years will trigger a capital gains tax event.
Our tax laws provide for the depreciation of buildings used in manufacturing but not for commercial purposes. We are proposing that tax depreciation allowances for the economic wear and tear of newly constructed or upgraded commercial buildings be implemented. A 20-year write-off period will be envisaged.
The Income Tax Act has also not kept pace with changes to the local and international environmental regulatory regime. It is proposed that environmental capital structures such as dams and tanks, which are presently not depreciable, qualify for depreciation allowances. I am hoping that the Budget next year will be much greener than this one is. We need to look at these issues with the necessary attention.
Consideration is being given to facilitating investments in high-risk investment areas such as mining exploration by junior mining companies. The introduction of flow-through shares will be investigated, and a final decision in this regard will be made next year.
Now, for the excise tax increase: Tax on a packet of 20 cigarettes goes up by 60 cents; [Applause.] tax on a 340 ml can of beer goes up by five cents; [Laughter.] tax on a 750 ml bottle of wine goes up by 10 cents; tax on a 750 ml bottle of spirits goes up by R1,88. [Applause.] These changes to excise taxes will raise an additional R1,5 billion.
The general fuel levy is increased by five cents a litre and the Road Accident Fund levy also by five cents a litre.
Entrepreneurship remains a vital ingredient in the growth of our economy. In this regard, we have previously announced measures to assist and encourage small businesses, including a tax amnesty for small businesses announced last year. This amnesty offers those outside the system a fresh opportunity to become compliant and to benefit from the myriad of support measures offered by the government. For instance, with the Ministry of Transport, we have a close collaboration on the Taxi Recapitalisation Programme to ensure that we aren’t giving scrapping allowances to those who have never bothered to even register for the payment of tax.
The amnesty ends in May this year, and over the coming weeks Sars will be intensifying its efforts to ensure that all businesses with a turnover of R10 million or less are offered the opportunity to apply. So far, about 12 000 have come forward to apply for the amnesty.
The task team appointed to investigate the fiscal regime applicable to windfall profits in the liquid fuel sector submitted its final report to me on 9 February 2007. The task team has exhaustively inquired into the fiscal and regulatory aspects of the industry. I would like to thank the team led by Dr Zav Rustomjee for their efforts in completing their work in such a short space of time.
In responding to the report, I have referred the regulatory matters to the Minister of Minerals and Energy for further consideration. The task team has made two substantial fiscal recommendations, involving a possible tax on windfall profits and an incentive arrangement for new investment in liquid fuel production capacity. I believe that there is merit in these proposals. However, we will consult the industry before we finalise this matter. The task team’s report will be released for public and stakeholder comment by the end of this week.
Turning to exchange control changes, the gradual process of exchange control relaxation has focused on enabling an ordinary process of global reintegration, encouraging South African firms to expand from a domestic base and allowing South African residents to diversify the portfolios through domestic channels. The continued strength of the South African economy and financial markets supports further steps in this regard, including, firstly, the lowering of the current shareholding threshold for foreign direct investment outside of Africa from 50% to 25%, to further enable South African companies to engage in strategic international partnerships; secondly, simplifying customer foreign currency accounts, which exist for trade and services-related payments, and expanding the range of permissible transactions; and thirdly, further developing South Africa’s financial markets by increasing liquidity in the currency market by permitting the Johannesburg Securities Exchange to establish a rand futures market. The South African Reserve Bank has today published the details of the three measures announced.
As has become a bit of tradition, I have received hundreds of “Tips for Trevor”. So let me thank all of those South Africans who’ve taken the time and effort to write to me about the issues they would like to see in the Budget. The strength of our democracy will be measured by the depth of involvement of ordinary people in the affairs that affect them.
The overwhelming sense I get from reading these tips is that almost all South Africans recognise that the challenges we face will only be overcome through a full-on frontal assault on poverty, and that the best way to achieve this is through a combination of faster economic growth and active intervention by government on the side of the poor. I think that they do so because all South Africans share in this value system, that human life has equal worth.
Magoshu Motau wrote to us to say that the tax-free lump sum portion of the retirement funds be increased, since it’s been at R120 000 for some time now. Mr Motau is very perceptive and correct. It could also be added that the formula required to calculate this tax-free lump sum is incomprehensible to the average person. We are, accordingly, proposing an increase in this threshold and will simplify the whole calculation.
Last year I received the suggestion that we should make lobola tax- deductible. [Laughter.] This year I’ve been given a suggestion that I should impose VAT, or that I must tax the lobola trusts since some people are making money out of them. I declare that these issues are too complex for me and I will consult elders in this House and elsewhere to help me crack this problem. [Laughter.] I don’t know if we can get involved in these matters through Sars in the way suggested by the writers.
Of course, there have been other contributors. There is a young man in the gallery there who wrote to me and asked me to increase all of these taxes on alcohol. He said that underage drinking is a problem in the circles that he moves in, and we must deal with this issue by tax. Now, if only we could! But we’ve to recognise and deal with the issues, and I think we must ensure that community participation will deal with these kinds of issues. We would like to tax it more heavily, but it’s not going to work just yet. [Interjections.] [Laughter.]
In concert with the task of growing the economy and creating new opportunities for work, we have been working at pushing back the frontiers of poverty since 1994, recognising that no people can be truly free until they have cast aside the shackles of poverty and underdevelopment. It is for this reason that the eradication of poverty has been at the centre of our policies and programmes since the first democratic elections.
To help measure progress in the fight against poverty, Statistics South Africa will pilot a poverty line for an initial period to allow for public comment and consultations before its design is finalised. Alongside the Budget, we are publishing a discussion document that sets out our proposal for a national poverty line. I appeal to, especially, members of this House to continue to advise us on the appropriateness and usefulness of this measure.
I will now turn to the issue of social security reforms. Ubuntu acknowledges that all people are an integral part of broader society and humankind, and our individual fortunes are intimately connected to the fortunes of the whole. In the past decade we’ve gradually expanded our system of social grants, providing income support to vulnerable groups, children, the disabled and the elderly. Our social assistance grants provide an effective income safety net for the poor, and about 3,5% of the gross domestic product, GDP, is spent on this redistributive budget programme.
However, it’s also important to encourage savings and self-reliance. The tax system contains a retirement savings incentive that particularly benefits higher-income individuals. But for working people who fall below the tax threshold, there is effectively no incentive, and indeed there is a perverse effect that if you save enough you might lose the old-age pension because of the way the means test works.
So, although we have a well-developed retirement industry, and most employees are covered by pension or provident fund arrangements, in practice too many people surrender their policies or cash in their benefits when they change jobs. It slris estimated that more than half of those who contribute to retirement funds reach retirement age with a pension that is less than 28% of their final wage or salary. Over two-thirds of people are dependent on the state old age pension.
The time has come to put in place a new arrangement in which all South Africans will share and that provides a basic saving and social protection service that meets the needs of low-income employees. We are therefore proposing a mandatory earnings-related social security scheme to provide improved unemployment insurance, disability and death benefits targeted at the income needs of dependants and a standard retirement savings arrangement. This will be financed by a social security tax administered by Sars and collected in individual accounts in the name of every contributor. Significant capacity-building and institutional reforms are needed on both the tax side and to administer benefits. This work has begun, with a view to implementation by 2010.
To offset the cost of the social security tax for low-income workers and to lower the cost of creating employment, we are proposing the introduction of a wage subsidy for those whose earnings fall below the income tax threshold. [Applause.]
Madam Speaker, these proposals are bold and ambitious. Much work still needs to be done. The principles that will underpin these reforms are, firstly, equity, since there must be fair and uniform rates of contribution and benefits for all; secondly, regarding the pooling of risk, collective funding arrangements and non-discriminatory rules and entitlements must apply; thirdly, concerning mandatory participation, there will be compulsory participation of employees and inclusion of self-employed individuals on reasonable terms; fourthly, regarding administrative efficiency, the streamlined use of payroll-based contributions, modern information systems and efficient payment arrangements are essential; fifthly, there must be solidarity and minimum benefits will be assured through continued social assistance grant programmes financed through the Budget.
Alongside the phasing in of social security arrangements, several reforms to the regulation, governance and tax treatment of occupational and individual retirement funds will be implemented over the period ahead.
These are far-reaching reforms and, as President Mbeki has indicated, consultation will be needed before the finalisation of legislation, administrative systems and transition arrangements. We aim to conclude these discussions with trade unions and employers during the second half of this year. I’d like to commit to trying to ensure that, in the legislation, at least, some ideas would have been tested so that we can go forward, and 2008 must look very different, and we will need the participation of unions. In discussion with one of the union leaders on this – who happens to be in the House, and that is Mr George – he said it is not negotiations but it is about joint problem solving. I hope that would be the spirit that does obtain as we deal with this exceedingly difficult issue, going forward. [Applause.]
We do this, Madam Speaker, to proclaim loudly that human life has equal worth. Our sense of community, our sense of humanity is dependent both on our well-being and the well-being of those around us.
Members of this House should be advised that, following steady improvements in the financial position of the Government Employees’ Pension Fund over the past decade, it has been possible to award increases to civil pensions this year that fully compensate for inflation and that also correct for past erosions of real values. This substantially improves the position of many elderly pensioners and spouses.
I am pleased to introduce to the House Mr Phineas Tjie, who has been appointed head of the administration of the Government Employees’ Pension Fund, and I am grateful for the wise counsel that Martin Kuscus gives to the board of trustees. He is the chairperson of this board. [Applause.]
We should also pay tribute to the work of the Public Investment commissar … I mean Corporation, ably managed by CEO Brian Molefe. [Laughter.][Applause.] Under their expert investment management, the GEPF has again recorded excellent financial results.
The Budget is a culmination of a full year of preparation involving literally thousands of people in national, provincial and local government, and many of our public entities. The preparation of the Budget relies on the hard work of many.
Under the stewardship of President Mbeki and the drive and determination of Deputy President Mlambo-Ngcuka, the Cabinet has been instrumental in shaping this Budget. I’d like to thank, especially, the members of the Ministers’ Committee on the Budget for the long hours and thousands of pages of documentation they’ve had to endure to craft this Budget. [Applause.]
Deputy Minister Jabu Moleketi continues to bring his sharp analysis and intellectual insight to the Budget process. [Applause.] I’d like to thank him, but also the MECs for finance – who are all seated over there and who are in the midst of finalising their own budgets and budget speeches – for the work that they have done in strengthening discussions in the Budget Council. I would also want to express appreciation to Salga for their efforts in guiding our understanding on the issues relevant to local government. [Applause.]
I’d also like to express a word of gratitude to Governor Tito Mboweni and the staff of the Reserve Bank for their support and assistance; the Financial and Fiscal Commission Chairperson, Dr Bethuel Setai, and the other commissioners and staff for their sound advice and considered contributions to our intergovernmental framework. I’d like to express our appreciation to the Development Bank of Southern Africa that hosts, amongst others, Siyenza Manje – I am going to be corrected for pronunciation on this again. The chairperson, Jay Naidoo, and the CEO, Mr Paul Baloyi, are with us. I’d like to express appreciation to them.
I would also like to express a word of gratitude to Mr Herbert Mkhize, who has skilfully steered our discussions with business, labour and community representatives in Nedlac, and to Mr Pali Lehohla, who continues to drive ongoing improvements in the extent and quality of government statistics, supported by the Statistics Council Chair, Mr Howard Gabriels.
Thanks also to the chairpersons of the four committees who look after us: the Portfolio Committee on Finance chaired by the hon Nhlanhla Nene; Mr Tutu Ralane, who chairs the Select Committee on Finance in the NCOP, and the joint Chairs of the Budget Committee, Ms Louisa Mabe and Mr Buti Mkhaliphi, for diligently working on holding government to account. [Applause.] Thank you very much for the stewardship and leadership that you offer us and the way in which you hold us to account. Madam Speaker, could I beg your indulgence and ask that the House joins me in wishing Sars a happy 10th birthday. [Applause.] It is remarkable that an organisation so young can do so much for the good of our country and our people. So, congratulations to you, Commissioner Gordhan, and your dedicated band of 15 000 staff members. [Applause.]
Lesetja Kganyago continues to lead an inspired group of professional staff at the National Treasury, always striving to do better and in the result driving everybody crazy. [Applause.] Thanks, too, to the officials in the Ministry who give their all, especially at the time of the Budget.
Lastly, thanks to my family, who continue to inspire me to build a society that values our shared humanity. [Applause.]
President Mbeki has also advised:
What this means is that when we talk of a better life for all, within the context of a shared sense of national unity and national reconciliation, we must look beyond the undoubtedly correct economic objectives our nation has set itself.
When our forebears formed the ANC in 1912, in response to being excluded from the formation of the Union of South Africa, they were driven by the single-minded belief that human life has equal worth. When, 90 years ago to the day, the SS Mendi sank with 649 South African men on board, brave hearts in drowning said: We are here because we believe that human life has equal worth.
When Nelson Mandela and Walter Sisulu tabled the 1949 programme of action to spur more active resistance to discrimination, they believed that human life has equal worth.
In 1955, when our parents came together at Kliptown at the Congress of the People to proclaim loudly that South Africa belongs to all who live in it, black and white, they were united by the belief that human life has equal worth.
In 1983, when we launched the United Democratic Front in Mitchell’s Plain, hundreds of community organisations said with one voice: human life has equal worth. [Applause.]
In 1994, when we stood in line and voted as equals in our first democratic elections, we could feel the mood, and the mood said: Human life has equal worth. [Applause.]
When our Constitution was unanimously adopted in this House in 1996, our declaration to the world was loud and clear: Human life has equal worth. [Applause.]
And today, again, we proclaim loudly that human life has equal worth and we will be unwavering in our dedication to the social cohesion and human solidarity that we seek in order to deliver that human life of equal worth. Thank you very much. [Applause.]
I knew I wouldn’t get it right, Madam Speaker. This pile is made up of a series of Budget documents: the Budget Speech, the Estimates of National Revenue, the Taxation Proposals, the Budget Review, the Appropriation Bill, the Division of Revenue Bill and the Estimates of National Expenditure. My job is to table them before this House for consideration. Thank you. [Applause.]
The SPEAKER: Order! Thank you, hon Minister. The Appropriation Bill, together with the introductory speech and the papers tabled, will be 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 15:30. ____
ANNOUNCEMENTS TABLINGS AND COMMITTEE REPORTS
ANNOUNCEMENTS
National Assembly and National Council of Provinces The Speaker and the Chairperson
-
Draft Bills submitted in terms of Joint Rule 159
1) Division of Revenue Bill, 2007, submitted by the Minister of Finance. Referred to the Portfolio Committee on Finance and the Select Committee on Finance.
2) Banks Amendment Bill, 2007, submitted by the Minister of Finance. Referred to the Portfolio Committee on Finance and the Select Committee on Finance.
3) Pension Funds Amendment Bill, 2007, submitted by the Minister of Finance. Referred to the Portfolio Committee on Finance and the Select Committee on Finance.
National Assembly
The Speaker
- Introduction of Bills
1. The Minister of Finance
a) Appropriation Bill [B 2 – 2007] (National Assembly – proposed
sec 77)
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 21 February 2007.
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.
b) Division of Revenue Bill [B 3 – 2007] (National Assembly –
proposed 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 21 February 2007.
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.
-
Referrals to Committees of papers tabled
Please note: The announcement below replaces item 13 under “Referrals to Committees of papers tabled” on page 167 of the Announcements, Tablings and Committee Reports of 20 February 2007.
(13) The following papers are referred to the Portfolio Committee on Justice and Constitutional Development for consideration:
(a) Proclamation No R49 published in Government Gazette No 29456 dated 7 December 2006: Amendment of Proclamation, in terms of the Special Investigating Units and Special Tribunals Act, 1996 (Act No 74 of 1996).
(b) Proclamation No R50 published in Government Gazette No 29456 dated 7 December 2006: Referral of matter to existing Special Investigating Unit and Special Tribunal, in terms of the Special Investigating Units and Special Tribunals Act, 1996 (Act No 74 of 1996).
(c) Government Notice No R990 published in Government Gazette No 29278 dated 13 October 2006: Regulations regarding the Promotion of Access to Information, made in terms of the Promotion of Access to Information Act, 1996 (Act No 2 of 2000).
TABLINGS
National Assembly and National Council of Provinces
- The Minister of Finance
(a) The Budget Speech of the Minister of Finance - 21 February 2007
[RP 03-2007].
(b) Estimate of National Revenue for 2007 [RP 04-2007].
(c) Taxation Proposals in respect of Income Tax.
(d) Budget Review 2007 [RP 02-2007], including:
• Taxation proposals in respect of customs and excise
duties; and
• "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
1997).
(e) Appropriation Bill [B 2– 2007].
(f) Division of Revenue Bill [B 3– 2007], tabled in terms of section
10(1) of the Intergovernmental Fiscal Relations Act, 1997 (Act No
97 of 1997).
(g) Estimates of National Expenditure 2007 [RP 01 - 2007], which
includes:
1. Memorandum on Vote No 1 - "The Presidency", Main Estimates,
2007-2008;
2. Memorandum on Vote No 2 - "Parliament", Main Estimates, 2007-
2008;
3. Memorandum on Vote No 3 - "Foreign Affairs", Main Estimates,
2007-2008;
4. Memorandum on Vote No 4 - "Home Affairs", Main Estimates, 2007-
2008;
5. Memorandum on Vote No 5 - "Provincial and Local Government",
Main Estimates, 2007-2008;
6. Memorandum on Vote No 6 - "Public Works", Main Estimates, 2007-
2008;
7. Memorandum on Vote No 7 - "Government Communications and
Information System", Main Estimates, 2007-2008;
8. Memorandum on Vote No 8 - "National Treasury", Main Estimates,
2007-2008;
9. Memorandum on Vote No 9 - "Public Service and Administration",
Main Estimates, 2007-2008;
10. Memorandum on Vote No 10 - "Public Service Commission",
Main Estimates, 2007-2008;
11. Memorandum on Vote No 11 - "South African Management
Development Institute", Main Estimates, 2007-2008;
12. Memorandum on Vote No 12 - "Statistics South Africa", Main
Estimates, 2007-2008;
13. Memorandum on Vote No 13 - "Arts and Culture", Main
Estimates, 2007-2008;
14. Memorandum on Vote No 14 - "Education", Main Estimates,
2007-2008;
15. Memorandum on Vote No 15 - "Health", Main Estimates, 2007-
2008;
16. Memorandum on Vote No 16 - "Labour", Main Estimates, 2007-
2008;
17. Memorandum on Vote No 17 - "Social Development", Main
Estimates, 2007-2008;
18. Memorandum on Vote No 18 - "Sport and Recreation South
Africa", Main Estimates, 2007-2008;
19. Memorandum on Vote No 19 - "Correctional Services", Main
Estimates, 2007-2008;
20. Memorandum on Vote No 20 - "Defence", Main Estimates, 2007-
2008;
21. Memorandum on Vote No 21 - "Independent Complaints
Directorate", Main Estimates, 2007-2008;
22. Memorandum on Vote No 22 - "Justice and Constitutional
Development", Main Estimates, 2007-2008;
23. Memorandum on Vote No 23 - "Safety and Security", Main
Estimates, 2007-2008;
24. Memorandum on Vote No 24 - "Agriculture", Main Estimates,
2007-2008;
25. Memorandum on Vote No 25 - "Communications", Main
Estimates, 2007-2008;
26. Memorandum on Vote No 26 - "Environmental Affairs and
Tourism", Main Estimates, 2007-2008;
27. Memorandum on Vote No 27 - "Housing", Main Estimates, 2007-
2008;
28. Memorandum on Vote No 28 - "Land Affairs", Main Estimates,
2007-2008;
29. Memorandum on Vote No 29 - "Minerals and Energy", Main
Estimates, 2007-2008;
30. Memorandum on Vote No 30 - "Public Enterprises", Main
Estimates, 2007-2008;
31. Memorandum on Vote No 31 - "Science and Technology", Main
Estimates, 2007-2008;
32. Memorandum on Vote No 32 - "Trade and Industry", Main
Estimates, 2007-2008;
33. Memorandum on Vote No 33 - "Transport", Main Estimates,
2007-2008;.
34. Memorandum on Vote No 34 - "Water Affairs and Forestry",
Main Estimates, 2007-2008.
Referred to the Portfolio Committee on Finance for consideration
and report.