WEDNESDAY, 26 FEBRUARY 2003 __

                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.

                         APPROPRIATION BILL

                           (Introduction)

The MINISTER OF FINANCE: Madam Speaker, President - welcome back - Deputy President, Cabinet colleagues, including our brand new Minister of Housing, Brigitte Mabandla … [Applause] … Governor and Deputy Governors of the Reserve Bank, hon members, ladies and gentlemen, dear friends, Amartya Sen, the Nobel laureate for economics, writes:

Freedom is both the primary objective, and the principal means of development … What a person has the actual capability to achieve, is influenced by economic opportunities, political liberties, social facilities, and the enabling conditions of good health, basic education, and the encouragement and cultivation of initiatives. These opportunities are, to a great extent, mutually complementary, and tend to reinforce one another.

Today we table the tenth budget of a free and democratic South Africa - a South Africa proud in the assumption of the benefits and responsibilities of freedom: freedom we have won to choose our own destiny and, in so doing, to take our development into our own hands; freedom we have won to choose our own representatives and, in doing so, to decide for ourselves the character of our state and the actions we direct it to take on our behalf; freedom of which this Budget is but one expression, albeit a very visible one.

Freedom, writes Amartya Sen, is the primary aim of development, and also the principal means of achieving it.

Budget priorities - development as freedom

Our long walk to freedom bears testimony to a leadership and a people driven by a commitment to democracy, human rights, peace, shared opportunities and a better life for all. Our history bears testimony to our commitment and determination to do the right thing. We have always done so with the courage, integrity, energy and selflessness born from the knowledge that our principles and our values are worth fighting for. We fought apartheid because it was the right thing to do. We fought for democracy because it was the right thing do. When, on 26 June 1955, the Congress of the People adopted the Freedom Charter, it rose above the tyranny of that time to proclaim with one voice: We, the people of South Africa, declare for all our country and the world to know: that South Africa belongs to all who live in it, black and white …

[Applause.] And, as a reminder, the charter ends with a pledge:

… and we pledge ourselves to strive together, sparing neither strength nor courage, until the democratic changes here set out have been won.

The Freedom Charter reflected our people’s aspirations for political freedom; freedom from poverty; freedom to transform our society, its culture and values; freedom to explore our capabilities; and the freedom to choose a future for our children. We fought for that freedom because it was the right thing to do. Bekufanele! It was the right thing to do. [Applause.]

And it still was the right thing to do when, on 8 May 1996, in this very House, we adopted our new Constitution, embraced our history and accepted the enormous challenge of rebuilding our country and economy, of healing a nation, of restoring dignity, of inspiring hope and nurturing dreams, of assuming both the benefits and the responsibilities of our freedom.

In just under nine years we have worked hard to push back the frontiers of poverty, to rebuild a tattered economy, to return pride to our people, to build confidence, to care for the poor and most vulnerable. We have steered clear of the illusion that is populism. We have sought to build rather than postulate. We have chosen decision over vacillation and progress over stagnation. We have chosen inclusion over exclusion. We have chosen stability over chaos. We have chosen predictability over irrationality. We have embraced the present, mindful of the past, and boldly face our future. [Applause.] We nurture our youth while caring for our elders. We respect the community and the individual. We cherish our diversity and our common humanity. We have chosen respect over disregard. We have chosen humility over arrogance. We have chosen partnership over isolation. We have chosen learning over assuming. We have chosen frankness over glibness.

In the northwestern part of our country, people speak a language that was probably the most downtrodden under apartheid, Nama, the language of the gods. People there say: Sieda kee kghanoe goena ra die, kghanoe douwb y da kou goei-ouw! [Applause.] They say: We have chosen the right path, and that is why we take the correct decisions. [Interjections.]

And yet, Mr President, you have charged us to do more. When you stood at this podium on 14 February, addressing the nation, you reminded us that the key task with which we are charged is ensuring a better life for all. You said then:

The Government must act to ensure that we reduce the number of people dependent on social welfare, increasing the numbers that rely for their livelihood on normal participation in the economy. This is also especially relevant to the accomplishment of the goal of enhancing the dignity of every South African.

The 2003 Budget extends and strengthens our growth and development strategy and progressively realises the social and economic rights of our people. It embodies a set of policies aimed at pushing back the frontiers of poverty whilst supporting growth and creating opportunities. It seeks to empower people by expanding their capabilities.

This Budget benefits from and contributes to the strong growth performance of our economy. Despite a bleak global environment our economy registered improved growth last year. Our projections indicate that over the next three years we will continue to experience growth and see progress with employment creation, providing the basis for more and more South Africans to ``rely for their livelihood on normal participation in the economy’’.

The 2003 Budget:

• E beya pele go fokotsa bohloki le tshokolo;

• e oketsa tshelete ya bana le ya phepo dikolong;

• e oketsa tshelete ya batsofadi, dipuku t[s]a dikolo, meriana le maokelo; [Legowa.]

• e matlafatsa magato kgahlanong le HIV/Aids;

• e fa bommasepala tshelete ya ditirelo tsa mahala, le go oketsa infrastructure le go hlola mesomo; [Legowa.]

• e oketsa tshelete ya go busetsa lefase go beng; [Legowa.]

• e ema-nokeng diphetogo tsa diyunibesithi le diknikone; [Legowa.]

• e beeletsa le go kaonefatsa bokgoni bja basomi;

• e matlafatsa ntwa kgahlanong le bosenyi; [Legowa.]

• e oketja tshelete ya botseta dinageng disele le go ema-nokeng lenaneo la Nepad; [Legowa.]
• e theola metshelo.

We are saying, friends, that this Budget:

• gives priority to reducing poverty and vulnerability;

• extends the child support grant and increases spending on the primary school nutrition programme;

• increases spending on social grants, textbooks, medicines, hospital buildings and equipment;

• further reinforces the enhanced response to HIV and Aids;

• gives municipalities additional resources for free basic services, investment in infrastructure and job creation;

• accelerates spending on land restitution;

• supports further restructuring of universities and technikons;

• invests in skills development;

• strengthens the fight against crime;

• increases spending on foreign representation and support for Nepad; and - no surprise -

• gives generous tax relief. [Applause.]

This Budget once again recognises that making the right choices is not just about delivering a better quality of life for our people for a year or two. It is about ensuring that the policy choices we make today are affordable and sustainable 10 or 20 years from now.

But, as much as we have achieved, it is not enough.

Accountability for service delivery

There are a number of elements of the development equation that are often hard to quantify, yet are fundamental to achieving the outcomes we seek. The first of these is the quality of the services that Government delivers. When people experience poor service delivery, or our projects fail, then not only are citizens denied those services to which they are entitled, but in turn their capacity to contribute further to the development process is undermined. Unless our policies are implemented efficiently, courteously, honestly and enthusiastically, we will achieve far less than we intend, and than our people surely deserve.

Liphelile ixesha lokuba sinyamezelane nabasebenzi bakaRhulumente abamisa ootat’ omkhulu noomakhulu bethu ÿ.ÿ.ÿ. [Kwaqhwatywa.] ÿ.ÿ.ÿ. elangeni ngokufika kade kumaziko enkam-nkam. Asinakumelana nabongikazi abangenankathalo kwizigulane nezihlobo zazo.

Ixesha labaphathi bamaziko kaRhulumente nootitshala abangamavila nabangawuthatheli ÿ.ÿ.ÿ. [Kwaqhwatywa.] ÿ.ÿ.ÿ. ngqalelo umsebenzi wabo liphelile. Asinakumelana nezi zinto zilandelayo kumaziko kaRhulumente:

• iimpompo ezivuzayo

• iincwadi ezilahlekayo ezikolweni

• abantu abalinda imini yonke bemele uncedo lukaRhulumente

• izigulane ezinezilonda namanxeba angapholiyo

• neencwadi zezicelo nezamatyala ezidukayo.

Abasebenzi abangazi bandakanyi nenkqubo kaBatho Pele sicela bakhululeke. [Kwaqhwatywa.]

Ukungananzi kwabo kusilelisa ilizwe lonke. Kuphazamisa amawaka abasebenzi abazinikeleyo emsebenzini nabanomdla wokwakha uMzantsi Afrika … [Kwaqhwatywa.] … okhululekileyo nosekelwe kwinkqubo yoBuntu. Umntu ngumntu ngabantu. [Kwaqhwatywa.] Andinakuzigwagwisa ngenkululeko kukho abantu abahluphekayo. (Translation of Xhosa paragraphs follows.)

[The time is over for public servants who let our grandfathers and grandmothers … [Applause] … stand in the sun by arriving late at the pension paypoints. We cannot tolerate nurses that show no regard for the patients and their relatives.

The time is over for administrators of public service centres and teachers who are lazy and show … [Applause] … no regard for their work. We cannot tolerate the following in the Public Service:

• leaking taps

• missing textbooks

• people waiting the whole day to be assisted by the Public Service

• patients with festering bedsores

• application forms and dockets that go missing.

Public servants that do not embrace the spirit of Batho Pele are requested to leave. [Applause.] Their lack of commitment has a negative effect on the whole country. It undermines the efforts of public servants who are committed to their work and who are interested in building a free South Africa … [Applause] … based on the principles of ubuntu, ``I am because you are’’. [Applause.] I cannot boast of freedom in the midst of poverty among the people.]

We’re saying that we simply cannot and must not tolerate those who make pensioners wait for hours in the sun because they have not bothered to arrive on time, or those who bring shame to their profession by treating patients and their families callously, or those who abuse the children in their care, or those who could not be bothered to ensure that hospitals have medicines. We cannot tolerate the breakdown in elementary management that results in run-down facilities, leaking pipes, missing textbooks, slow- moving queues, festering bedsores, lost case files.

Those who do not embrace the spirit of Batho Pele should do the right thing and leave the Public Service. [Applause.] Their lack of commitment and accountability hinders our ability to deliver and hinders our country’s development. They also undermine the efforts of the many thousands of civil servants who care and do work hard to deliver a meaningful service, who have grasped with both hands the new challenge of freedom and whose actions embody this nation’s philosophy for living: Ubuntu. I am because you are. I cannot be free unless you are free. [Applause.]

But ultimately, responsibility stops here. We, all of us in this House, in provincial legislatures and in municipal councils, are charged with ensuring that the funds we vote to departmental programmes and to Government agencies are responsibly and effectively employed. I hope that the information we table for the first time in our Estimates of National Expenditure on the measurable objectives of our departments will help this House in fulfilling that responsibility. The publication of the 2003 Intergovernmental Fiscal Review in April will provide all 10 legislatures with comprehensive information to exercise their oversight responsibilities. There can be no delivery without accountability, and no accountability without oversight.

I would like to take this opportunity to thank the many South Africans who again responded to the ``Tips for Trevor’’ campaign throughout the past year and vigorously in the past two months. Many, I hope, will recognise their contributions in the Budget we table today. Many have raised important issues which we will continue to consider.

Thanks to an innovative and far-sighted project of the African General Equity Foundation, we are joined today by four young people, Abongile Zweni, Rashaad Sujee, Mandla Ngobeni and Timothy Keleketse. They are styled the Ministers of Finance of Kwa-Bheki Langa High School in Alex, Nirvana Secondary School in Lenasia, Klipspruit West Secondary in Eldorado Park and Thabo Senior Secondary in Soweto. No relation, Mr President! [Laughter.] Drawing on the valued contribution and advice of these young colleagues, I will shortly outline proposals to spend more on education and health services, to increase social grants and to reduce personal taxes. I have noted in particular Mr Sujee’s suggestion - and I know everyone in this House will agree - that ``on taxes, in a perfect world, there wouldn’t be any, but we have to be more realistic’’. Quite so. [Laughter.]

Economic outlook

In a perfect world there would not be recessions or economic uncertainty either, but life is not like that.

Ten years ago, the Budget Review had to report that a recession, then in its fourth year, had deepened further and that the economy had shrunk by 2,1% in the previous year. Employment fell by 61/2% between 1989 and 1993 and gross domestic fixed investment declined by 15%. Consumer prices increased by 14% in 1992, and food price inflation averaged 25%. The then Minister of Finance reported a budget deficit of 8,6% of GDP in 1992-93, and proposed a 6,8% deficit for the following year.

Southern Africa has experienced hardship again this past year because of drought, shortfalls in regional grain production and rising food prices. As in the early 1990s, global conditions are unfavourable.

But unlike those years, our economy is growing strongly, jobs are being created, the public finances are in a healthy state and investment is accelerating. Government spending on social services has increased by 35% in real terms over the past decade. Building on the expansionary stance of the 2001 and 2002 Budgets, we are able to plan for real spending growth of 6,8% next year, and 41/2% a year over the forthcoming MTEF period. The Budget deficit is expected to be between 2% and 21/2% of GDP.

International economic environment

The global economy has passed through a decade of turbulence with four major international crises threatening financial stability. Across all these episodes the resultant contagion has meant that capital flows to emerging markets have declined and, at times, access to international capital markets has been severely constrained.

Several other developments have increased uncertainty and impacted negatively on capital markets and on global growth. The spectacular failures in corporate governance in the United States in the past twelve months, the collapse of the dot-com bubble and the massive write-down of assets in Europe have left regulators, company boards, shareholders and citizens searching for answers. Many painful lessons have been learnt. I am pleased to report that the Ministerial Panel for the Review of the Accounting Professions Bill has been established and has met, and that its work programme is now under way.

Our economic performance is in marked contrast to the experience of the rest of the world.

In the United States, Europe and Japan, the outlook for the years ahead remains depressed.

The potential for war in Iraq raises uncertainty, not only for South Africa, with respect to its inflation-raising effects, but for the global economy.

Domestic growth, investment and inflation

The resilience of our economy in this global context is testimony to the success of the reforms that we have implemented. Gross domestic product grew by 3% last year. Growth for 2003 is expected to be 3,3%, rising to 4% in 2005.

Investment grew by 6,3% last year and is expected to continue to grow at around 6% a year over the medium term. The primary sector expanded by 3,7%, driven by solid growth in platinum group metals and in the agricultural sector. Buoyed by investment in the manufacturing sector and the strong growth in construction spending, the secondary sector expanded steadily in the first three quarters of last year, helping to create employment opportunities.

The balance of payments remains healthy. The current account of the balance of payments is expected to record a small surplus in 2002. With buoyant economic growth, it is expected that the current account will move into a moderate deficit of 0,5% of GDP in 2003.

The latest data indicates net capital flows of R21,4 billion for the year to September. We have also made significant progress in reducing the Net Open Forward Position from US$4,8 billion at the end of December 2001 to US$11/2 billion at the end of January this year.

The depreciation of the rand towards the end of 2001 put upward pressure on inflation. Consumer price inflation as measured by CPIX averaged 10% in 2002 and peaked at 12,7% for the year to November. Much of the increase was due to rising food prices, housing and medical costs.

The Reserve Bank responded by raising interest rates by 400 basis points over the course of the year. This has contributed to moderating the inflation trend. The recovery of the exchange rate will also dampen prices this year. We expect average CPIX inflation for the year to be 7,7%, and to fall within the target range of 3% to 6% by early next year.

Re lemohile hore hajwale theko ya phofo e tshweu e theohile ho tloha ho R2 000, ho ya ho R940 tone ka nngwe. Ka hoo, ke tshepa hore balemi le barekisi ba tla theola ditheko tsa phofo; sepheo ele ho fa bareki monyetla wa ho reka ka ditheko tse tlaase. Tlala e tlameha ho kena tsietsing! [Mahofi.]

I think they’ve forgotten, Mr President, that I said, ``Tlala e tlameha ho kena tsietsing!’’ [Hunger must be in trouble!] [Laughter.]

Food price inflation has eased somewhat, but remains cause for concern.

We observe that the futures price of white maize has fallen from a peak of R2000 a ton to R940 currently.

I trust that in the determination of prices by producers, distributors and retailers we will see prompt corresponding downward adjustments, so that the consumer benefits fully from this favourable trend. [Applause.]

I would have hoped that lowering food prices through the food chain from producer to retailer would have warranted a better response. [Applause.] Not even that works! England is playing India this afternoon. People must be listening to that. [Laughter.]

We remain committed to inflation-targeting and believe that price stability remains one of the cornerstones of sound economic management. The inflation target of 3% to 6% will be retained for 2005. A target range for 2006 will be considered at the time of the Medium-Term Budget Policy Statement in October this year.

Employment and broadening development

According to the Survey of Employment and Earnings, annual employment growth in the third quarter of 2002 was positive for the first time in six years. Unemployment nonetheless remains a critical challenge.

Reducing unemployment and ensuring that the benefits of economic growth and development are more evenly shared remain central policy challenges for Government. Key economic policy initiatives in support of growth and broad- based development include:

• the skills development programme;

• stepped up infrastructure investment and tax incentives to boost industrial growth and employment;

• the redistribution of land, backed by agricultural support programmes;

• widening access to financial services and the integration of small businesses into the formal economy; and

• further easing of the tax burden on low- and middle-income households.

Black economic empowerment

A particular challenge for the decade ahead is the broadening of economic participation. Black economic empowerment has a central role in sustaining South Africa’s growth trajectory and improving the distribution of income and opportunities.

Alongside sectoral initiatives to deepen participation in the ownership and management of South Africa’s companies and the implementation of the preferential procurement policy framework, Government proposes to set aside R10 billion over the next five years to support the funding of new ventures and business expansions that meet agreed empowerment criteria. This will in part be financed from the extraordinary proceeds of the exchange control measures which we will announce today.

A new mandate for the National Empowerment Fund, and a review of the roles of other development finance and support institutions, to ensure that these resources are effectively and efficiently employed, will be developed by the National Treasury and Department of Trade and Industry.

The Budget framework

While economic growth provides us with the resources we require to meet our development objective, sound fiscal management ensures that we will continue to do so into the future. It is perhaps opportune to remind ourselves of the journey we have travelled in our public finances since a decade ago.

Following the deep recession of the early 1990s and a rapidly rising debt- GDP ratio, a period of consolidation saw a moderation of expenditure, steadily improving revenue performance and a marked reduction in the Budget deficit.

Beginning with the 2001 Budget, a more expansionary fiscal stance has been adopted, with a view to raising the long-term growth capacity of the economy. It allows us to expand our freedoms more deliberately, providing for the progressive realisation of the socioeconomic rights set out in our Constitution and promoting broad-based development, employment creation and redistribution of income and opportunities. Sound public finance management, a sustainable deficit relative to GDP and prudent limits on foreign borrowings remain key elements in protecting the public finances against external risks.

The Main Budget provides for expenditure of R334 billion in 2003-04, rising to R395,6 billion two years later. Revenue increases from R304,5 billion to R361,2 billion over the same period, resulting in a budget deficit of 2,4% of GDP next year, after an estimated 1,4% in the current year.

As in the past, the budget includes an unallocated contingency reserve, rising from R3 billion next year to R8 billion in 2005-06. This allows for unforeseeable and unavoidable expenditure in-year and new policy priorities in future years. The taxi recapitalisation programme, recapitalising the Post Office and further critical infrastructure projects may be financed from this reserve once operational business plans have been agreed.

Debt service costs are expected to fall from 4,2% of GDP in 2002-03 to 3,8% by the third year of the Medium-Term Expenditure Framework. National Government debt, which was 48,1% of GDP at the end of 1996-97, will decline to a projected 36,8% by the end of the MTEF period. [Applause.] The lower our interest bill, the more resources we have to spend on public services. It is also important to note the contribution of reprioritisation to strengthening our development effort. Spending on health, education, welfare, housing and other social services now accounts for 58,3% of noninterest expenditure, up from 52,9% a decade ago.

Division of revenue

Excluding debt service costs and the contingency reserve, the Budget framework provides for expenditure of R280 billion in 2003-04, rising to R332 billion in the year which ends on 31 March 2006, to be allocated between the national, provincial and local spheres. Over the next three years, this budget adds a further R105,4 billion to our spending plans. Of this amount, national departments receive R30,5 billion, provinces receive R69,3 billion and local governments receive R7,3 billion, signalling a marked shift in favour of provinces and local government.

The additional allocations accommodate substantial policy adjustments for all three spheres of government, and also provide for higher inflation than anticipated in 2002.

Medium-term expenditure proposals

Betekenisvolle toevoegings tot die Mediumtermyn Begrotingsraamwerk sluit die volgende in:

• uitbreiding van die kinderonderhoudstoelaag na kinders tot hulle veertiende verjaardag en verhoogde besteding op die skoolvoedingsprogram vir laerskoolkinders - ‘n verdere R11,9 miljard vir die behoeftes van kinders;

• R38 miljard meer aan provinsies vir die verbetering van paaie, hospitaalvernuwing, die aankoop van medisyne en skoolboeke en ‘n meer omvattende reaksie op MIV/Vigs;

• ‘n verdere R6 miljard vir die uitbreiding van toegang tot gratis basiese dienste, belegging in munisipale infrastruktuur, landelike watervoorsiening en sanitasie en die uitbreiding van indiensneming in gemeenskapsdienste;

• bykomende toekennings van R2,7 miljard vir howe en die Polisie ter verbetering van die regsproses en die beskerming van vroue en kinders; [Applous.]

• R1,7 miljard vir hoër onderwys, en vir ekstra fondse vir vaardigheidsontwikkeling;

• R1,9 miljard meer vir grondrestitusie en die grondhervormingsprogram;

• R2,2 miljard meer vir die verbetering van Binnelandse Sake se diens aan burgers en vir die uitbreiding van kapasiteit by die SA Inkomstediens;

• R1 miljard om die ontwikkeling van navorsing en tegnologie te bevorder;

• R1,3 miljard ter ondersteuning van ‘n toenemend internasionale rol, vredesendings en die Nuwe Inisiatief vir Afrika-ontwikkeling (Nepad); en

• R1,2 miljard vir voedselhulpprojekte.

Significant additions to the MTEF plans include expenditure proposals such as:

• the extension of the child support grant to children up to the age of 14 and stepped up allocations to the primary school nutrition programme, adding a further R11,9 billion to meeting the needs of children; [Applause.]

• R38 billion more to provinces to improve roads, revitalise hospitals, purchase medicines and school books and enhance our response to HIV and Aids; [Applause.]

• a further R61/2 billion for extending free basic services, investing in municipal infrastructure, rural water supply and sanitation and the expansion of employment in community services;

• additional allocations of R2,7 billion for courts and police, to streamline the justice process and improve the protection of women and children;

• R1,7 billion for higher education and increased development funding;

• R1,9 billion more for land restitution and the land reform programme;

• R2,2 billion more for administrative improvements to Home Affairs’ services to citizens and for building the capacity of the SA Revenue Service;

• R1 billion to supplement research and technology development;

• R1,3 billion to support a growing international role, peace-keeping missions and Nepad; and

• R1,2 billion for food relief projects.

The provincial and local government spheres are at the forefront of delivering the social and economic services which this Budget supports. The provincial share of nationally raised revenue is projected to rise by 6,1% in real terms from 56% in the present fiscal year to 57,6%, while the share going to municipalities rises by 12,2% in real terms and from 3,6% to 4,4% of the total over the MTEF period.

The issue of the increasing share to provinces is, I’m told, very welcome in Team Finance because previously I’d been accused by one of the MECs of playing morabaraba.

Addressing poverty and vulnerability

Social assistance grants provide critical income support to vulnerable groups - the elderly, young children and people with disabilities. This is our largest and most effective redistribution programme. In keeping with the advice of the Youth Minister of Kwa-Bheki Langa High School in Alexandra, with effect from April 2003 the pension and disability grants increase by R60 to R700 a month … [Applause] … and child support grants will increase by 14% to R160 a month. [Applause.] Once again we are able to give real increases in these grants. The cost of the adjustments is provided for in the provincial equitable share. Over the next three years, we will also extend the means-tested child support grant to children up to their 14th birthday, raising the total number of social assistance beneficiaries to more than eight million in

1. We do this ever mindful, Mr President, of your injunction that we ``reduce the number of people dependent on social welfare’’.

This Budget sets aside R1,1 billion, R3,4 billion and R6,4 billion over the next three years to phase in the extension of the grants. This means that seven- and eight-year-olds will qualify for grants in April this year, nine- and ten-year-olds in April next year and 11- to 13-year olds the following year. The funding will be directed to provinces through conditional grants. The national Department of Social Development gets additional funds to improve the capacity of the grants payments system.

Children receive further priority in the expansion of the integrated nutrition programme. This grant-funded programme increases from R592 million this year to R809 million in the first year and further to R1,042 billion in 2005-06, more than offsetting the impact of food inflation. The programme will be extended to Grade R pupils and to a larger number of schools.

Investing in health and education

Our future is in the hands of our children. Education expands abilities and opportunities. It is a great freedom in itself, and opens the doors to other freedoms.

We recognise this. That is why, at 23,2% of noninterest expenditure, investment in education and deepening of the skills base of the economy remains our largest expenditure area.

Spending on school education at the provincial level is budgeted to grow from R59 billion in the first year of the MTEF to R67 billion two years later. Raising the level of funding for learner support materials tops education priorities this year. More money will be spent on school buildings and maintenance as well as textbooks, stationery, mathematical sets and science kits, supporting effective teaching and learning in schools. [Applause.]

At the national level, R800 million is directed towards the restructuring of the higher education system over the next three years. These allocations will contribute towards recapitalisation and facilitate the restructuring of higher education institutions. A further R280 million replenishes the National Student Financial Aid Scheme, making tertiary education a reality for poorer students. [Applause.]

In preparing the 2003 Budget, we have given special emphasis to the critical requirements for improving the quality of provincial health services - supplies of medicines, hospital and clinic management and, Sis’ Manto, staffing. [Laughter.] We also ensure that over the next three years 18 additional hospitals will be upgraded and refurbished through the hospital revitalisation programme. [Applause.] But then the challenge is to maintain what has been revitalised, of course. The Budget provides for a substantial reinforcement of our response to the health care challenges we face. Over the next three years, an additional R3,3 billion has been added to the provincial equitable share and conditional grants to extend the preventative programme and finance medically appropriate treatment for HIV and Aids.

This Budget provides additional funds for land restitution. Recognising the critical role that it plays in restoring what rightfully belongs to those formerly dispossessed, R1,9 billion is provided to accelerate this programme, together with enhanced agricultural development support. It’s the right thing to do. Ho a tshwanela! [Applause.] And, as we say in Nama: Sieda kee kghanoe goena ra die.

Investment in infrastructure and technology advancement

We are setting aside a further R1 billion to increase expenditure on the National Research and Development Strategy for programmes relating to health, industrial biotechnology, food security and agricultural production. Dr Ngubane, you may say: Yes, thank you very much. [Laughter.]

Investment in infrastructure allows us to expand the provision of basic service, contributes towards economic growth and strongly supports job creation.

Over the next three years Government will spend over R105 billion on physical assets and capital transfers.

Further allocations to national departments are made for office accommodation and technology investment by Home Affairs, maintenance and general repair of buildings - please, please, please! - forensic laboratory equipment in Health, further upgrading of court buildings and security in our courts, investment by the SA Police Service in buildings, vehicles, computer equipment and a new radio communications system in Gauteng, and additional investment in rail commuter stock.

Infrastructure grants to local governments grow strongly over the MTEF period and include a further R1 billion for labour-intensive community development programmes, as part of the consolidated municipal infrastructure programme. Mr President, I really hope that some of this money will be spent on labour-intensive projects, like the fencing in rural areas, so that Mr Cunningham Ngcukana no longer needs to raise that with us. [Laughter.]

Partnerships with local government

Real development happens largely at a local level. Strengthening partnerships in our communities helps us to listen to people’s different needs and work together to improve access to services and opportunities at the local level.

We know that access to basic services - electricity, water and sanitation - advances local development. The Budget sets aside more than R23,7 billion over the next three years to assist municipalities to extend basic service delivery to poor households. This Budget provides R4,1 billion for free basic services over the next three years, including for electricity. Other allocations are directed towards community infrastructure investment and rehabilitation, including water schemes, electricity and sanitation facilities, roads and community facilities. Since 1997, the municipal infrastructure programme has benefited some 2,5 million people.

And this year, for the first time, we are publishing all transfers to local government by municipality on Budget day, four months ahead of the next municipal financial year. [Applause.] We ask that municipalities take hold of this opportunity and plan their budget and spending activities early so that the moneys are spent timeously, improving community service delivery, all in the spirit of the Local Government: Municipal Finance Management Bill currently before Parliament. I know that the Rev Mkhatshwa is here and that he will take care of this matter.

Enhancing safety and security

The criminal justice sector receives a further R2,7 billion to fight crime and ensure the safety of our communities. Colleagues, we have to build communities that do not live in fear, where we can reclaim the streets from criminals, where our magistrates feel safe in our courts. Safety and Security receives additional funding to hire more police and further expand the sector policing strategy … [Applause] … and improve communications. Recognising the debt we all owe to police officers who lose their lives in the course of duty, provision is made for a supplementary death benefit of R200 000 in each case. [Applause.]

Justice and Constitutional Development receives resources to improve court performance, upgrade the Master’s Office and improve the protection of women and children in the court process. [Applause.] Correctional Services receives money to expand accommodation for the growing prisoner population, to fight corruption and to address repair and maintenance requirements. [Applause.]

Additional allocations to the SA National Defence Force provide for the acquisition of four maritime helicopters and R200 million a year to contribute to the costs of peace support operations. [Applause.]

The Budget also provides for an enhancement of capacity in the intelligence agencies and for the establishment of the Financial Intelligence Centre, aimed at combating money-laundering.

Regional development and Nepad

South Africa remains at the forefront of multilateral initiatives aimed at promoting a more equitable international order and ensuring a better future for Africa’s people. The 2003 Budget accommodates a phased expansion of missions in African countries, funding for the African Union and the Nepad secretariat and increased contributions to regional development through the African Renaissance Fund administered by the Department of Foreign Affairs.

Total expenditure

This brings total expenditure on the national Budget to R334 billion next year, rising to R395,6 billion two years later - which, of course, is the right thing to do. Kumele kube njalo! [Applause.]

Tax proposals

Madam Speaker, let me turn to our proposals for financing our spending plans.

Buoyant revenue collections over the past year again reflect improvements in tax administration and the longer-term benefits of sound tax policy reforms.

Main Budget revenue is now expected to be R275,7 billion in the present year, or 4% higher than the original estimate. Higher personal income tax receipts, robust company tax trends and higher VAT receipts are the main sources of higher than anticipated revenue.

The 2003 Budget tax proposals again provide relief for individuals and also several stimulus measures aimed at encouraging business investment.

Tax relief for individuals - personal income tax rates and brackets

The personal income tax remains South Africa’s most important revenue source, contributing nearly 34% of the Main Budget revenue in the new fiscal year.

Taking into account the marked improvements in tax collection efforts and supported by sound base-broadening initiatives, we propose this year to reduce income taxes on individuals by R13,3 billion. The personal income tax reductions primarily benefit lower- and middle-income households. The adjustment again compensates fully for inflation, and provides real relief to all taxpayers.

• The primary rebate is raised to R5 400, increasing the threshold below which no tax is paid by 11,1% to R30 000 a year. [Applause.] So anybody earning below R30 000 doesn’t pay any personal income tax. [Applause.]

• The tax threshold for taxpayers aged 65 and over is raised to R47 222, or 10,7% more than the current level. By the time Dr Essop Pahad gets to that age, it will be even higher. [Applause.]

• Brackets are adjusted to provide relief across the entire income spectrum.

• Of the total relief, 56% accrues to taxpayers earning less than R150 000 a year, and 23% to those earning between R150 000 and R250 000 a year.

Since 2000, the minimum tax threshold has been increased by over 50% for individuals below the age of 65 and by 40% for those over 65. This means that over a million people, ordinary workers and pensioners, who would otherwise have had to transfer part of their monthly pay to the fiscus, pay no income tax at all. I believe, Madam Speaker, that we can take some pride in the fact that we are able to raise progressively this elementary measure of solidarity on which our tax structure is built. [Applause.]

Interest and dividend exemption

As in 2002, we propose to complement this personal income tax relief by increasing the domestic interest and dividend exemption thresholds. The exemption is increased from the current R6 000 to R10 000 for taxpayers under the age of 65 and from R10 000 to R15 000 for senior citizens.

This proposal will encourage savings and assist those who rely on interest income. The change will take effect on 1 March this year, at a cost to the fiscus of R227 million.

Stamp duty and transfer duty

As a further step in tax simplification and to reduce costs of financial services this year, stamp duty on insurance policies and fixed deposit receipts will be eliminated. This proposal will come into effect from 1 April 2003 year at an estimated cost of R200 million.

Again this year, we are able to contribute to making home ownership more affordable by amending further the graduated transfer duty rate structure in respect of the acquisition of fixed property. The duty exempt level will be increased from the current R100 000 to R140 000.

The average duty on property with a value of R200 000 will fall from 21/2% to 11/2%; the duty on property with a value of R400 000 falls from 41/2% to 3,9%. These duty adjustments will apply to property acquired from 1 March this year and will cost the fiscus R435 million. [Applause.]

Tax on retirement funds

The tax treatment of retirement savings is currently under review by a task group that includes representatives from the National Treasury, Sars and the Financial Services Board. As part of this review, an open three-day conference was held in September last year, including representatives of the retirement industry and other stakeholders as well as South African and international experts.

During the course of this year, a second discussion document will be released and further consultations will be held with a view to ensuring that the final proposals and legislation represent a fully deliberated product. We hope to include the reform of the tax treatment of retirement savings in next year’s Budget proposals.

Members of the House will recall that the tax on retirement funds was first introduced at a 17% rate in 1996, and then increased to 25% in 1998. At that time, our thinking was primarily motivated by concern about neutrality between retirement funds and other savings vehicles. It remains, nonetheless, an important objective of public policy that all individuals should be encouraged to provide adequately for retirement. Many members of contractual savings plans that are subject to the 25% retirement fund tax would ordinarily be subject to an 18% rate on their income from savings. Added to this has been the increase over time in the domestic interest and dividend exemption threshold, which does not apply to savings held in retirement plans.

Against this background, it is proposed that the retirement fund tax rate be reduced from 25% to 18%. [Applause.] This change will take effect from 1 March at an estimated cost of R1,85 billion. But having said that, I want to ask every pensioner, every contributor to a pension fund, to ensure that the benefits of this change accrue to them. It’s fundamental. We cannot leave this additional resource in the institutions. It has to be for the benefit of members. That would be the litmus test.

Encouraging business investment

There are also several proposals set out in the Budget Review aimed at encouraging business investment.

• The accelerated depreciation arrangements for manufacturing assets, introduced as a temporary measure, will be retained as a fixed element in our tax policy.

• In keeping with practice in many other jurisdictions, relief will be provided where business asset sale proceeds are reinvested within 18 months.

• Taxpayers will be allowed to claim losses from ordinary revenue on the sale of devalued depreciable business assets with short economic lives.

• An accelerated four-year write-off period is proposed for capital expenditure relating to research and development in the field of natural and applied science.

• A double deduction is proposed for the first R20 000 of costs incurred in the start-up of new businesses.

• The turnover limit for small businesses qualifying for a lower company tax rate will be increased from the current R3 million, to which it was raised last year from R1 million, to R5 million. [Applause.]

These general business tax stimuli will be effective from the date promulgated into law and will cost approximately R80 million in the first year.

Encouraging urban development and support for public benefit organisations

Many urban areas in South Africa suffer from inadequate infrastructure maintenance and environmental decay. Urban renewal requires greater business investment in the regeneration of inner city areas. With this in mind, it is proposed that investment in the refurbishment or construction of buildings in certain urban areas receive special treatment. Taxpayers refurbishing a building within designated zones will receive a 20% straight- line depreciation allowance over a five-year period. Construction of new buildings within such a zone will receive a 20% write-off in the first year and 5% a year for a further 16 years. [Applause.] This benefit will be available to owners as users of the building and as lessors and financiers of these investments.

Relevant criteria, to be included in legislation, are noted in the Budget Review. Clearly this kind of initiative must help us deal with those inner- city areas where people live, areas that are in very serious decline and decay. I think we must rid this country of what Hillbrow looks like now. [Applause.] We must get owners to take responsibility and we must assist them in this process. The incentive will last for four years, and is allocated R1,3 billion of tax revenue foregone over the period.

A complementary proposal extends tax advantages to public benefit organisations that provide affordable housing to low-income households in underdeveloped urban areas, as part of a more comprehensive broadening of the list of activities qualifying for tax-deductible donations.

Tax treatment of foreign dividends and related tax preferences

South African taxpayers became subject to tax when receiving foreign dividends from 23 February 2000, and since January 2001 they are taxed on their worldwide income.

The current system of taxing foreign dividends has the unintended effect of discouraging dividend inflows. In order to eliminate this disincentive, the tax on foreign dividends will be removed where a South African taxpayer has a meaningful interest in the foreign subsidiary paying the dividend. This removal necessitates a number of collateral changes, which are set out in the Budget Review.

The Budget Review also contains details of the removal of some tax preferences. The tax exemption for a foreign-owned gold share company will be removed with effect from 1 January next year. These changes, together with amendments ensuring consistency, will simplify administration and compliance significantly.

Indirect taxes - alcohol and tobacco duties

I turn now to the indirect tax proposals. I received at least 20 Tips for Trevor'' pleading that I should not call thesesin taxes’’, so I won’t call them that. [Laughter.]

The following adjustments to taxes on alcohol and tobacco are proposed:

• Beer and ciders are raised by 10%, bringing the proposed excise duty to 48 cents per 340 ml can or an average increase of 4,4 cents per can.

• Sorghum beer and sorghum flour duties, Minister Buthelezi, will not be increased for a second year running … [Laughter.] [Applause.] … thereby reducing the indirect tax burden in real terms.

• Duties on unfortified and sparkling wine are raised by 11%.

• Duties on fortified wine are raised by 10%.

• In respect of izinyembezi zika-Victoria [whiskey], duties on spirits are raised by 10% … [Laughter.] … bringing the average total duty to R13 per bottle.

• Taxes on tobacco products are raised by an average of 11%, increasing the excise tax to R3,89 per packet of 20 cigarettes. [Applause.]

Colleagues will note that I haven’t raised a special excise on cigars, and that is in the interest of my friend the Governor of the Reserve Bank. [Laughter.]

But these taxes too are the right thing to do. Ke tshwanelo!

These excise measures will raise additional revenue of about R907 million. Taxes on fuel

There were no increases in the general fuel levy on diesel and petrol last year. The tax burden on fuel has now fallen from an average of 45% of the pump price in 1998 to approximately 31,4% in the present year.

Taking into account the current strength of the rand and the adoption of a more streamlined approach to fuel pricing, the following adjustments are proposed:

• The general fuel levy on both leaded and unleaded petrol will increase to 101 cents per litre - an increase of 3 cents per litre on leaded petrol and between 6,2 and 9,2 cents per litre on unleaded petrol.

• The general fuel levy on diesel will increase by 4 cents to 85 cents per litre.

• The Road Accident Fund levy will increase by 3 cents from 181/2 cents per litre to 211/2 cents per litre.

The proposals will raise approximately R642 million in 2003-04 for the National Revenue Fund and an additional R474 million for the Road Accident Fund. These adjustments will take effect from 2 April this year.

Air passenger tax and other excises

The air passenger departure tax has not been adjusted for inflation since its introduction in 2001. It is proposed that this tax be increased by R5 to R55 per passenger departing to Botswana, Lesotho, Namibia and Swaziland and by R10 to R110 per passenger departing for all other international destinations. This increase will raise approximately R30 million in additional revenues in 2003-04 and will take effect from 1 July this year.

After consultation with the motor vehicle manufacturing industry, it is proposed that the graduated formula for ad valorem excise duties on new motor vehicles be adjusted to address the inflationary element. This will cost the fiscus approximately R243 million in revenue foregone next year.

It is also proposed that with effect from 1 April this year the ad valorem excise duty on computer equipment be abolished. [Applause.] Those applauding are clearly computer-literate. [Laughter.] This will benefit both businesses and consumers investing in information technology equipment, contributing to technology advancement and improved competitiveness. This measure will cost the fiscus R572 million in 2003-04.

Total Main Budget revenue

These proposals, taken together, amount to aggregate tax relief of R15,1 billion in 2003-04, bringing the projected total tax revenue estimate for the year to R310 billion. After taking into account departmental receipts of R4,2 billion and payments of R9,7 billion to our Southern African Customs Union partners, Main Budget revenue of R304,5 billion is projected.

Aspects of tax administration

In noting this target for the next financial year, it is perhaps appropriate to record also the contribution that enhanced administration plays in sustaining the robust revenue trend we have seen in recent years. Key initiatives include the launch of a Service Monitoring Office in October last year, the strengthening of enforcement powers, creating a mechanism for resolving past noncompliance and ongoing reorganisation of the Sars revenue structure. The Siyakha administrative reforms and systems modernisation of tax offices were implemented in KwaZulu-Natal last year and will be rolled out in the Western Cape and Gauteng during this year. The Budget Review details a range of revenue activation measures that will be prioritised over the year ahead, contributing further to reducing the outstanding tax debt and securing improved compliance with the tax laws.

I have described a number of steps directed at meeting the challenge of broadening the base and improving the tax compliance culture of South Africans. Members of the House will agree that the complexity of compliance challenges faced by Sars requires that serious consideration must be given to further steps to broaden the tax base and improve compliance. Surely this too is the right thing to do.

Further steps in exchange control liberalisation

Government remains committed to a gradual approach to exchange control liberalisation.

Part of this process of gradual exchange control liberalisation and financial sector strengthening is the shift to a system of prudential regulation.

Institutional investors will be allowed to invest, on approval, up to existing foreign asset limits. These foreign asset limits are 15% of total assets for long-term insurers, pension funds and fund managers, and 20% of total assets for unit trust companies. The previous restriction based on 10% of the prior year’s net inflow of funds will no longer apply. The Exchange Control Department of the SA Reserve Bank reserves the right to stagger the transfer of such funds in the interests of overall financial stability. The new dispensation will become operational on 1 May this year, once revised reporting requirements are in place as part of the shift to prudential regulation.

The global expansion by South African firms holds significant benefits for our economy - expanded market access, increased exports and improved competitiveness. In October last year, the exchange control allowance for foreign direct investment into Africa was increased from R750 million to R2 billion, in line with South Africa’s commitment to Nepad. The exchange control allowance for direct investment outside of Africa is increased from R500 million to R1 billion.

The global expansion by South African firms should result in inflows from dividends and other income earned. It is proposed that dividends repatriated from foreign subsidiaries should be eligible for an exchange control credit, which will allow them to be re-exported, upon application, for approved foreign direct investment. This change will be synchronised with the removal of the foreign dividends tax, where the taxpayer has a meaningful say in the foreign subsidiary paying the dividend.

Foreign exchange control amnesty and accommodating tax treatment

Exchange controls are designed to protect the growth and development objectives of the nation. As such, contravention of exchange control regulations by individuals at the expense of society as a whole cannot be condoned. However, Government also recognises that exchange control contravention may have taken place in the past for a variety of reasons. At the same time, many South Africans with funds held illegally offshore are realising that foreign markets do not present the nirvana they sought and that South Africa offers both higher returns and lower risks than many had perceived. [Applause.] They wish to bring these funds back to South Africa, but are unable to do so without risk of prosecution. It is thus appropriate at this point, marking almost 10 years of democracy and thriving growth, that we are able to announce plans to assist individuals in repatriating these funds and to regularise their tax affairs in respect of foreign assets. [Applause.]

An amnesty will be offered with respect to foreign assets in terms of the Exchange Control Regulations, together with supporting relief measures in terms of the Income Tax Act. The window period for filing for amnesty relief will run from 1 May to 31 October this year. Individuals filing for exchange control amnesty are released from all civil penalties and criminal liabilities stemming from the illegal shifting of funds offshore in contravention of exchange controls on or before 28 February last year. Individuals filing for income tax relief are released from all income taxes, interest, civil penalty and criminal penalties stemming from their failure to disclose gross income or capital gains from foreign sources arising on or before 28 February 2002. In return, individuals filing for exchange control amnesty are subject to a 5% exchange control charge on funds repatriated back to South Africa, or a 10% charge on any foreign assets remaining offshore. A 0% charge will apply for all assets that can be held legally offshore under the normal exchange control limits.

Any individual can apply for relief unless an enforcement investigation has been initiated against him or her.

Going forward, there is no excuse for individuals to be in contravention of exchange controls or taxation on foreign income and assets.

A system of exchange control allowances for the export of funds when persons emigrate has been in place in South Africa for a number of decades. Emigrants’ funds in excess of the emigration allowance were placed in emigrants’ blocked accounts in order to preserve foreign reserves. Reflecting the improved strength and resilience of the South African economy, these blocked assets will now be unwound. The following dispensation will apply with immediate effect:

• The distinction between the settling-in allowance for emigrants and the private individual foreign investment allowance for residents is to fall away and there will now be a common foreign allowance for both residents and emigrants of R750 000 per person (or R1,5 million in respect of family units).

• Amounts up to R750 000 (inclusive of amounts already exited) will be eligible for exiting without charge.

Holders of blocked assets wishing to exit more than R750 000 (inclusive of amounts already exited) must apply to the Exchange Control Department of the SA Reserve Bank to do so. Approval will be subject to an exiting schedule and an exit charge of 10% of that amount. The same dispensation will apply for new emigrants.

Various other limits pertaining to travel, study, gift, maintenance and alimony allowances will be adjusted by the SA Reserve Bank.

Towards the Growth and Development Summit

Against a background of faltering growth and uncertain prospects internationally, South Africa enters 2003 with a strengthening currency, robust investment growth, rising business confidence and a moderate recovery in the employment trend.

Measures to ensure that broad-based development accompanies this growth will be the subject of a Growth and Development Summit later this year. Our approach places freedoms - political, social and economic freedoms - at the centre of our development strategy. Key elements include:

• first, progressive broadening of the income security net, revitalised health services and targeted poverty reduction initiatives;

• second, a national skills development strategy, focused on productivity enhancement and learning opportunities for the unemployed;

• third, redistribution and restitution of land, coupled with investment in rural development and agricultural support services;

• fourth, public administration reform, founded on respect for citizens’ rights, courteous and efficient service delivery, the modernisation of systems and honest, accountable governance;

• sixth, strengthening the fight against crime and combating corruption

• seventh, widening access to financial services, the integration of small businesses into the formal economy and the further easing of the tax burden on low- and middle-income households;

• eighth, a sustainable, broad-based and transparent approach to black economic empowerment; and
• ninth, the deepening of democracy, promoting peace and security and expanding investment and trade as principles of international co- operation and Nepad.

That is the basis of the social contract that the President spoke about when he addressed the nation in February last year.

Madam Speaker, allow me firstly to place upon the Table:

(1) Budget Speech - 26 February 2003 [RP 22-2003].

(2) Estimate of National Revenue, 2003 [RP 19-2003].

(3) Taxation proposals: Income Tax.

(4) Division of Revenue Bill [B 9 - 2003], tabled in terms of section 10(1) of the Intergovernmental Fiscal Relations Act, 1997 (Act No 97 of 1997).

(5) Budget Review 2003 [RP 21-2003], including:

 (a)    Taxation proposals in respect of customs and excise duties
     [tabled at 15:18]; 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 1997).

(6) Appropriation Bill [B 8 - 2003].

(7) Estimates of National Expenditure, 2003 [RP 20-2003].

Lots of paper, lots of work for committee members. Perhaps not very environmentally friendly, but exceedingly important in the construction of accountable governance.

Madam Speaker, allow me to express my profound appreciation to:

• President Mbeki for his leadership and support and the manner in which he challenges us to be bold and to ensure that our democracy delivers the freedoms we fought for; [Applause.]

• Deputy President Zuma and my Cabinet colleagues, in particular members of the Ministers’ Committee on the Budget for the commitment, support and camaraderie;

• Deputy Minister Mandisi Mpahlwa for sharing the load and for friendship;

• my Team Finance colleagues, the MECs for finance, for the courage and professionalism with which they have tackled the enormous task of keeping provincial finances healthy; and

• a special colleague, comrade and friend who is not here today, but who I know is watching at home, Dullah Omar, whom I want to wish a speedy recovery so that we can see him take his place with us again. [Applause.]

Our task is always facilitated by many others:

• Governor Tito Mboweni and the team at the SA Reserve Bank, and I would like to welcome Deputy Governor Mr Ian Plendeleith, on his first visit to Parliament, sitting alongside Gill Marcus, an old hand here;

• Mr Murphy Morobe and the members of the Financial and Fiscal Commission;

• Philip Dexter and everybody from Nedlac; and

• Ms Barbara Hogan and Ms Qedani Mahlangu, as chairpersons of the Portfolio and Select Committees on Finance respectively, and Mr Nhlanhla Nene and Mr Tutu Ralane, chairpersons of the newly established Joint Budget Committee. [Applause.]

We have had an overwhelming response to the ``Tips for Trevor’’ campaign. I want to thank the many South Africans who took time and made the effort to respond. Your inputs are much valued and we have tried to accommodate as many of the ideas and suggestions as possible.

The Budget is put together by a group of dedicated, hard-working professionals at the National Treasury and the Revenue Service. Special thanks are due to Maria Ramos and Pravin Gordhan for the leadership they have given, and to everybody in their teams. [Applause.]

Thanks are also due to the staff of the Ministry, who tolerate us with good cheer.

Last but not least, I’d like to thank my family for their support.

This Budget makes an important contribution to the extension of our freedoms and the unlocking of our capabilities. We remain true to the spirit, courage, passion, commitment and values that drove our historical struggle for freedom. Something of this spirit is captured in a pamphlet written in January 1955 to the volunteers who collected together those priorities that were chosen for the Freedom Charter. In it is written: ``This is a great task,’’ and it concludes:

But freedom is not easily won! It is won through hard persistent work, organising the people, mobilising them and leading them forward. Let’s get down to it …

Let’s do it together, without delay. Let’s do it because it’s the right thing to do. Kufanele!

Oh, and before I go, the plums - we should explain the plums. You may recall that we started the Budget Speech in 2001 with three important questions. After quoting from a poem by David Diop, we said:

The bitter taste of liberty? Does the lemon always ripen before the sweet plum? Or do we have it in our power to determine for ourselves the quality of the liberty we earn from struggle?

Colleagues, do enjoy the sweet plums. They’ve ripened, but remember that we must work together to ensure that all South Africans share in the sweet fruits of liberty. Kumele kubenjalo! [Applause.]

Bill, together with the introductory speech and papers tabled, referred to the Portfolio Committee on Finance for consideration and report.

The House adjourned at 15:24. ____

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

Introduction of Bills:


 (1)    The Minister of Finance:


     (i)     Appropriation Bill [B 8 - 2003] (National Assembly - sec
           77).


     (ii)    Division of Revenue Bill [B 9 - 2003] (National Assembly -
           sec 76).


     Introduction and referral to the Portfolio Committee on Finance of
     the National Assembly, as well as referral to the Joint Tagging
     Mechanism (JTM) for classification in terms of Joint Rule 160, on
     26 February 2003.


     In terms of Joint Rule 154 written views on the classification of
     the Bill may be submitted to the Joint Tagging Mechanism (JTM)
     within three parliamentary working days.


 (2)    The Minister for Justice and Constitutional Development:


     (i)     Compulsory HIV Testing of Alleged Sexual Offenders Bill [B
          10 - 2003] (National Assembly - sec 75) [Explanatory summary
          of Bill and prior notice of its introduction published in
          Government Gazette No 25029 of 21 February 2003.]


     Introduction, as well as referral to the Joint Tagging Mechanism
     (JTM) for classification in terms of Joint Rule 160, on 26
     February 2003.


     In terms of Joint Rule 154 written views on the classification of
     the Bill may be submitted to the Joint Tagging Mechanism (JTM)
     within three parliamentary working days.

National Assembly:

1. Referrals to committees of tabled papers:

 (1)    The following papers are referred to the Joint Standing
     Committee on Defence and to the Working Group on the African Union
     for consideration. The Portfolio Committee on Foreign Affairs must
     confer with the above-mentioned committees and the Portfolio
     Committee on Foreign Affairs to report:


     (a)     Protocol relating to the Establishment of the Peace and
          Security Council of the African Union, tabled in terms of
          section 231(2) of the Constitution, 1996.


     (b)     Explanatory Memorandum to the Protocol.

TABLINGS:

National Assembly and National Council of Provinces:

Papers:

1. The Minister of Finance:

 (1)    The Budget Speech of the Minister of Finance - 26 February 2003
     [RP 22-2003].
 (2)    Estimate of National Revenue for 2003 [RP 19-2003].


 (3)    Taxation Proposals: Income Tax.


 (4)    Division of Revenue Bill [B 9 - 2003], tabled in terms of
     section 10(1) of the Intergovernmental Fiscal Relations Act, 1997
     (Act No 97 of 1997).


 (5)    Budget Review 2003 [RP 21-2003], including:


     (a)     Taxation proposals in respect of customs and excise
          duties; [tabled at 15:18] 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
          1997).


 (6)    Appropriation Bill [B 8 - 2003].


 (7)    Estimate of National Expenditure 2003 [RP 20-2003], which
     includes:


     1. Memorandum on Vote No 1 - "The Presidency", Main Estimates,
          2003-2004;


     2. Memorandum on Vote No 2 - "Parliament", Main Estimates, 2003-
          2004;


     3. Memorandum on Vote No 3 - "Foreign Affairs", Main Estimates,
          2003-2004;


     4. Memorandum on Vote No 4 - "Home Affairs", Main Estimates, 2003-
          2004;


     5. Memorandum on Vote No 5 - "Provincial and Local Government",
          Main Estimates, 2003-2004;


     6. Memorandum on Vote No 6 - "Public Works", Main Estimates, 2003-
          2004;


     7. Memorandum on Vote No 7 - "Government Communications and
          Information System", Main Estimates, 2003-2004;


     8. Memorandum on Vote No 8 - "National Treasury", Main Estimates,
          2003-2004;


     9. Memorandum on Vote No 9 - "Public Enterprises", Main Estimates,
          2003-2004;


     10.     Memorandum on Vote No 10 - "Public Service and
          Administration", Main Estimates, 2003-2004;


     11.     Memorandum on Vote No 11 - "Public Service Commission",
          Main Estimates, 2003-2004;


     12.     Memorandum on Vote No 12 - "South African Management
          Development Institute", Main Estimates, 2003-2004;


     13.     Memorandum on Vote No 13 - "Statistics South Africa", Main
          Estimates, 2003-2004;


     14.     Memorandum on Vote No 14 - "Arts and Culture", Main
          Estimates, 2003-2004;


     15.     Memorandum on Vote No 15 - "Education", Main Estimates,
          2003-2004;


     16.     Memorandum on Vote No 16 - "Health", Main Estimates, 2003-
          2004;


     17.     Memorandum on Vote No 17 - "Labour", Main Estimates, 2003-
          2004;


     18.     Memorandum on Vote No 18 - "Science and Technology", Main
          Estimates, 2003-2004;


     19.     Memorandum on Vote No 19 - "Social Development", Main
          Estimates, 2003-2004;


     20.     Memorandum on Vote No 20 - "Sport and Recreation South
          Africa", Main Estimates, 2003-2004;


     21.     Memorandum on Vote No 21 - "Correctional Services", Main
          Estimates, 2003-2004;


     22.     Memorandum on Vote No 22 - "Defence", Main Estimates, 2003-
          2004;


     23.     Memorandum on Vote No 23 - "Independent Complaints
          Directorate", Main Estimates, 2003-2004;


     24.     Memorandum on Vote No 24 - "Justice and Constitutional
          Development", Main Estimates, 2003-2004;


     25.     Memorandum on Vote No 25 - "Safety and Security", Main
          Estimates, 2003-2004;


     26.     Memorandum on Vote No 26 - "Agriculture", Main Estimates,
          2003-2004;


     27.     Memorandum on Vote No 27 - "Communications", Main
          Estimates, 2003-2004;


     28.     Memorandum on Vote No 28 - "Environmental Affairs and
          Tourism", Main Estimates, 2003-2004;


     29.     Memorandum on Vote No 29 - "Housing", Main Estimates, 2003-
          2004;


     30.     Memorandum on Vote No 30 - "Land Affairs", Main Estimates,
          2003-2004;


     31.     Memorandum on Vote No 31 - "Minerals and Energy", Main
          Estimates, 2003-2004;


     32.     Memorandum on Vote No 32 - "Trade and Industry", Main
          Estimates, 2003-2004;


     33.     Memorandum on Vote No 33 - "Transport", Main Estimates,
          2003-2004;.


     34.     Memorandum on Vote No 34 - "Water Affairs and Forestry",
          Main Estimates, 2003-2004.

1. The Minister of Public Works:

 (a)    Report and Financial Statements of the Construction Industry
     Development Board for 2001-2002, including the Report of the
     Auditor-General on the Financial Statements for 2001-2002.


 (b)    Report and Financial Statements of the Independent Development
     Trust for 2001-2002, including the Report of the Auditor-General
     on the Financial Statements for 2001-2002.