TUESDAY, 18 MARCH 2003 __

                PROCEEDINGS OF THE NATIONAL ASSEMBLY
                                ____

The House met at 14:02.

The Deputy 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.

                    RESIGNATION OF MR ROBIN COOK

                         (Notice of Motion)

The CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I hereby give notice that I shall move on behalf of the ANC:

That the House - (1) notes that Mr Robin Cook, the leader of the House of Commons in Britain, has resigned in protest against the imminent military campaign by the US-led forces against Iraq;

(2) believes that any campaign of this nature, conducted outside the ambit of the UN organisation, is wrong; and

(3) congratulates Mr Robin Cook on his principled stand and urges all humanity to continue identifying with the side of peace.

[Applause.]

The CHIEF WHIP OF THE OPPOSITION: Deputy Speaker, on a point of order: May I ask whether the hon Chief Whip of the ANC is aware of the Rules of the House and the arrangement that has been made that members’ statements would take place on Tuesdays and Thursdays when arranged.

Today is not one of those days and notices of motion should not be routinely made by parties. The only purpose of making these notices is when there is a serious intention of debating the matter, and raising the question of Mr Cook’s resignation is hardly a serious matter for this House to take note of. [Interjections.]

The DEPUTY SPEAKER: Order! Hon member, the time for members’ statements was, as you say, agreed upon to be Tuesdays and Thursdays. The hon member is giving notice of a motion. His views as to whether this is a matter that can actually be debated by the House is something that he has a right to.

So I do not think that this is an issue that we can now debate on the basis of the substance of his motion. I would really like us to move on to see whether there are any other notices of motion. It is the presiding officers and the parliamentary staff who are going to process the notices of motion.

Mr A C NEL: Madam Speaker, the Leader of the Opposition has just referred to the Chief Whip of the Majority Party as a cheat'' and I did not hear whether he said he wasdishonest’’ or ``dishonourable.’’

An HON MEMBER: Dishonourable!

Mr A C NEL: I submit that that is unparliamentary and that the Leader of the Opposition should withdraw it.

The DEPUTY SPEAKER: Did the Leader of the Opposition say that? [Interjections.]

The LEADER OF THE OPPOSITION: [Inaudible.]

The DEPUTY SPEAKER: Thank you for withdrawing.

 SOUTH AFRICA'S CONSTITUTIONAL VALUES VERSUS SOCIETY'S MORAL VALUES

                         (Notice of Motion)

Adv Z L MADASA: Madam Speaker, I hereby give notice that on the next sitting of the House I shall move on behalf of the ACDP: That the House -

(1) notes that -

   (a)  a Government-initiated moral regeneration forum is an
       acknowledgement of the rapid moral decay in our country,
       witnessed by increased child rapes, pornography, prostitution
       and girl-trafficking - what others, unfortunately, call the sex
       industry;


   (b)  the series of carefully orchestrated court applications to the
       Constitutional Court to promote homosexual rights that are
       envisaged in the Constitution are inimical to our African
       societal values; and


   (c)  the Constitutional Court's decision to promote these rights is a
       condictio sine qua non for moral degeneration and a setback to
       the Government's initiative.

(2) calls on the Government, Parliament and interested civil society organisations to embark on a national debate on whether our constitutional values need adjustment to be in line with our dominant societal values and the promotion of a true African Renaissance.

The DEPUTY SPEAKER: Hon members, I really wish to appeal to members to remember what we have agreed on in relation to notices of motion, ie that they must be very brief, to the point and should really be about something that we do intend to debate in the House. They should not be what we used to have in the past, which were really statements that we wanted to make. I really want to make this appeal.

     ALLOCATION OF SPEAKING TIME TO DISCUSS IMMINENT WAR IN IRAQ

                           (Announcement)

The DEPUTY SPEAKER: Before I ask the Secretary to read the first Order of the Day, hon members, I would like to bring to your attention that the Speaker this morning received a request from the Leader of the Opposition to have a debate as a matter of urgent public importance on the imminent war in Iraq.

As the First Reading debate on the Appropriation Bill is a wide-ranging debate, it provides an opportunity to raise the matter proposed by the Leader of the Opposition. It has, therefore, been agreed that 30 minutes be added to the time allocated to that debate, to allow members to raise matters in relation to the imminent war in Iraq.

                         APPROPRIATION BILL

                       (First Reading debate)

Ms B A HOGAN: Madam Deputy Speaker, John Maynard Keynes, one of the greatest economic thinkers of all time, when looking at the issue of how long do you go back in the past or how long do you look into the future in economics in order to make a decision and in order to be able to compare what happened then to what is happening now - to evaluate how well we are doing - finally gave up and said, ``In the long run we are all dead’’.

However, when we look at this Budget, it would not be simply good enough for us to say,``Let’s look at this Budget and compare it to the last two or three years and let’s look at the Budget in terms of the two to three years ahead’.’ I think that we have to go way back to 1994, when we came into this House, to look, evaluate and see how far we have, indeed, progressed from that time when democracy blessed our land. That is what I want to propose to do.

Much has been said about the goodness of this Budget. It is a Budget that is bold, confident and buoyant. It is a Budget that has been very well received and has created enormous confidence. In fact, it has ridden on a wave of confidence. So, I am not going to spend my time there. I would like to spend my time more on the medium to long-term assessment of where we are going in terms of our economic policies.

Let us go back to 1994. Let us go back to that time when we arrived here in Parliament several years after the ANC had been unbanned. We had weathered a period of time in which, literally, this country teetered on civil war. Our inheritance was a long recession, from 1989 to mid-1993, with negative rates of growth; low levels of investment spending right from the 1980s; an economy that was characterised by lack of competition, inward-looking and obsolete technology; an economy that was stagnant; massive outflows of funds - in one year alone, 1993, R15 billion left this country; very high and worrying levels of public sector debt and borrowing, and falling employment - the total formal sector employment fell by 7,8% or by 430 000 people from 1989 to 1993. In fact, the entire employment growth over the period of eight years from 1981 to 1989 was wiped out over the ensuing four and a half years of transition and negotiation.

This was a war economy - bear that in mind. From 1960 to 1976 real fixed investment from general government increased at an average of 7,5%, whilst from 1976 to 1993 - the years of real political strife, conflict and at times war - fixed investment by government declined at an average rate of 2,5% between those years.

Let us just recall those times. Let us recall the funeral of Chris Hani and those dark moments when we did teeter virtually on the edge. When we look at that we have to recognise that, probably, the most apt term that we used as the ANC when we came to Parliament in order to describe what we had to do was to say we had to reconstruct and develop - the Reconstruction and Development Programme - because that was in actual fact what it was: the reconstruction of our economy. It wasn’t simply just growth and to make the economy better. We had to reconstruct an economy which had been shattered by a subterranean war.

We have often been accused of not being brave enough to take courageous decisions economically. It has been said that we need decisiveness and that we need to move forward. I would like to argue that, perhaps, the ANC was at its most courageous in its period of reconstruction. Yes, we were courageous in entering into negotiations. But, in that period thereafter we showed even more courage. I say this because we came - as a government - to power on a platform which said that the lives of people would improve dramatically under our Government. We came when the expectation was that Government’s spending would be reoriented from the privileged few to the underprivileged majority. We came with the expectations from our membership that we would do great things for those who had never had the benefit of government’s benefits.

Yet, what we were faced with was a situation where, instead of being able to spend freely and be able to benefit from a healthy and prosperous economy, not only was the economy not growing but we had massive debt. That was a contradiction that we had to face: a contradiction of scarce resources; not being able to expand those resources at the pace that we wanted to spend, and enhanced and great expectations of us. I think that it’s to the credit of this Government, Cabinet and those in leadership that we took on that challenge. We faced it squarely and we have seen it through to this day and we have won.

We did clip spending but we did not stop spending. Every year we spent more but we didn’t increase the pace at which we spent. Every year we borrowed but we limited the amount of borrowing that we did. That cut into the bone of our society. It was not without pain. We know just what the cuts on capital spending alone cost. But the fruits of that were clear for all of us, seeing that in these last couple of years the economy has grown and our debt has decreased. We are now able to not borrow simply just to pay back but we are able to borrow to invest. Our debt has declined dramatically and our Budget deficit is well within control at 1,5% from the 6,6% at which we did that.

Anyone who says that the ANC Government lacked decisiveness and courage in the face of populist demands needs to rethink what they say. But, over and above that, it was not just simply cutting spending that we were looking at. We were also looking at a total reform of our revenue collection and its systems, and a policy of our taxes which underlay revenue collection. In that regard, we undertook one of the most far-ranging and far-reaching tax reform policies that any government in this country has ever taken in that we brought this country - some of its members kicking and screaming - into the new globalised economy. We modernised our tax reform systems. We brought that in harmony with the world out there. We also brought substantial tax relief to the citizens of South Africa. From 1995 to the present, we have granted R49 billion in tax relief to South Africans. That was no mean achievement when we talked about the tasks that face us.

There is yet another contradiction that we had to straddle: the contradiction of keeping the growth path in line with our vision - the growth trajectory that we need from our economy and at the same time meeting the needs of our people. So we have had to balance the tax relief that we grant, which is essential for the stimulation of the economy, against the redistribution of resources to those who desperately need them. I think that, indeed, we have achieved a remarkable balance in that regard. If you look this year at expansion on spending for the underprivileged, for those who have never had opportunities, and if you look at what we have in fact achieved in terms of water, electricity and power provision, it is indeed remarkable.

So, once again, I say that it was an ANC Government which made crucial decisions about balancing those needs of the people who desperately require basic resources and the needs of an economy which also needs to be fuelled. We have not simply fallen into a populist trap, nor have we moved into a neoconservative growth-and-damn-everyone-else approach.

Above that, we have also paid very serious attention to getting value for the money that we spend. The money that we spend is budgeted for. It is embarrassing when you look at the 1994 documents that were given to us here in Parliament: a slim little volume this thick. Today the information that is given in our Budget is volumes and volumes of information. Anyone wanting to know what the strategic plans are of Government in any single department and in any single programme can locate those in our budgetary documents. Those documents, this year, spell out the output of what Government is going to deliver.

There is no space at this stage for anyone to argue that it is not clear what the Government is trying to achieve and that Government cannot be held to account. This is critical. Government must be held to account for what it promises to deliver, for I would argue that we have moved beyond just the debate on macroeconomics. We have stabilised this economy. We have brought it out of a war economy situation. It is in a period of stabilisation. We have moved onto the microeconomic debate. We have said that it’s the microeconomics that now must drive our economy. But, even further, we have moved into the debate about what is the role of Government; what is the role of service delivery; and how do we as Government improve that delivery. That is going to be as essential a theme as it was in the President’s address to this House a few weeks ago.

The Budget allows us that very essence of being able to hold Government to account on what it is delivering. There is an injunction on public servants and senior management within Government to be able to deliver more effectively, more efficiently. Certainly, this Budget will help us. But in saying that, let us not overlook the profound changes that have taken place in terms of budgeting, which have also helped to stabilise the economy: bringing in the Medium-Term Expenditure Framework over a three-year period; bringing in the substantial reforms to the way that the Budget is presented, and bringing certainty and confidence to the economy out there that we know where we are going, and how we are transparent about where we are going, which have been a major boost to the confidence in this economy.

Improved asset and liability management has also assisted. We have been able to improve the way that we manage our assets and liabilities to such an extent that that is no longer a major issue with us. We are able to improve revenue for Government precisely because we are able to better manage our liabilities and assets.

There are issues that we need to deal with. We have brought this economy to this stage and to the takeoff point where we have performed in a way that few other economies in the world have performed. The resilience that this economy has shown in the light of the international slowdown, generally and economically, has been remarkable. We have been able to maintain rates of growth over and above the average rate of growth internationally. In this climate of international depression, it is truly amazing that we have shown the resilience that we have. That does not mean that there aren’t challenges ahead of us. That does not mean that because there are challenges we haven’t succeeded.

What we have succeeded in is in stabilising and setting the growth path forward plus the redistribution of resources to those who need them. What we need to move onto now is paying concerted attention to unemployment, improved stimulation of the domestic economy, improved service delivery, and massive skills retraining and development. I say these things not because they are the so-called failures of Government, but these are the inevitables of what has confronted us by an economy that was wrecked by war and by a siege that apartheid inflicted on this country.

We have moved forward. We have stabilised. We have energised. We have moved this economy forward to a point where we can start isolating the very issues that are at the heart of a lot of what we need to deal with. Certainly, the growth and development summit which we are going to be engaged in in May becomes critical in this regard. Here, we need to have partnerships. We must not come with long lists of grievances: grievances from Government, business and labour. We must come with a list of issues which unite us and which give us a vision of what makes all of us proud to be South African; what makes this country tick, and how we can all unite to make this country tick and build on the most incredible base that we have been able to build in just nine years of Government from a base of zero forward.

Finally, we bear in mind that we are facing a war. It is an unwarranted war and as one economist said to us, ``This country simply does not need that war.’’ I would like to say to all of us that it is a great tragedy for every developing country that this war is being unleashed. Thank you. [Applause.]

The LEADER OF THE OPPOSITION: Deputy Speaker, forgive me for not following the arguments of the previous speaker, Ms Hogan. But I rise in response to the Speaker’s decision that a separate debate on the imminence of war in Iraq is not going to be granted and that this appropriation debate would be extended to accommodate that subject. I refer to the Speaker’s decision and wish to address Parliament accordingly.

It is now almost certain that force will be used to disarm and depose the regime of Saddam Hussein in Iraq. [Interjections.] We have reached this point, because of the failure of multilateralism. The fault line in the UN Security Council reaches around the world, and into this continent of Africa itself.

We believe that three points must now guide South Africa’s approach in the fateful period ahead. Firstly, we must accept that war is almost inevitable. Sadly, there is nothing South Africa or most other countries can do to restore the diplomatic process, whose collapse will have far- reaching consequences for all of us, inside and outside this House.

Secondly, we must stop our flirtation with Saddam Hussein. We have coddled the Iraqi regime for far too long. [Interjections.] A continued relationship with Saddam is, frankly, not in our national interest. [Interjections.]

Thirdly, we can and should play a role in the reconstruction of Iraq. In the aftermath of war, South Africa must lend its experience and commitment to building a peaceful, stable, and democratic Iraq. The Security Council was unanimous about the danger posed by Saddam and his weapons of mass destruction, but equally divided about how to deal with him and them. In the end, both sides at the UN must share responsibility for the failure of multilateralism. We have also in part failed. We have continued to embrace delinquent states which have weakened our international institutions and undermined the principles of Nepad and the African Union, to which this House has so commendably committed itself.

As a result, the world today is divided between two pessimistic views of the human condition. One holds that the common efforts of the international community have done nothing to ensure peace. The other believes that the bold action of strong nations will do nothing but ensure war. The one view denies us our abilities as individuals; the other denies us our capacity as a collective whole. The decision to go to war is a choice between these two, frankly, very bad alternatives.

Our hearts go out to the people of Iraq, not just because of the suffering they are almost inevitably about to endure, but because they have never had the chance to govern themselves or to choose something other than the brutal regime that rules them. Today, the entire world stands with them. Some want to be their liberators; others want to be their shields. All of us share their anxiety and their doubt.

Yet we know that South Africa can make a modest but certainly very honourable contribution to building a new Iraq, founded on principles of human rights and democracy. In doing so, we can help reconstruct the fractured framework of multilateralism, and restore the optimism and hope of humanity. [Applause.]

Dr R H DAVIES: Madam Speaker, our debate this afternoon is taking place against the background of developments in the international arena that make it impossible for us to continue as though it is business as usual. On that point - and that point alone - I agree with the hon Tony Leon. The ultimatum by President George Bush to President Saddam Hussein of Iraq to go into exile in 48 hours or face military action has taken the US-Iraq crisis to a new and extremely dangerous level, with serious implications for everyone in all parts of the world. Let us be clear: this ultimatum has been issued without any sanction of international law and without any authorisation from the only body competent in this regard, the UN Security Council.

Indeed, the small coalition that is chosen to walk this path has elected to act unilaterally, precisely because they know that they have no chance of convincing the UN Security Council to support them. Mr Leon, this is not a failure of multilateralism, but a failure to respect multilateralism and the principles of joint decision-making. [Applause.]

Those that are walking in this route are acting with flagrant disregard for the views of the majority in the Security Council and without the backing of the UN arms inspectors, despite their claim that they are taking this step because Iraq refuses to disarm and constitutes a threat to world peace. As the mass protests across the world in recent weeks have made clear, they are also acting against the tide of global opinion.

Iraq and the Iraqi people face the imminent prospect of massive loss of life and further material damage that cannot but exacerbate the acute human crisis that is already facing them. Even if President Saddam Hussein were to bow to the ultimatum and move into exile, Iraq would face an unwanted and unpopular military occupation by the US which, let us not kid ourselves, would be of long duration. This would create the conditions for the annexation of the country’s oil wealth, which many believe is one of the core factors which is leading to this war in the first place.

Emboldened by one success at regime change, who knows where the next target would be. Iran and Syria are definitely in the crossfire, but who knows where all this might end. All of this constitutes a major threat both to world peace and to the fundamental principles of multilateralism. Good governance and democracy are principles which are now universally held to be essential to the promotion of human progress, development and economic wellbeing.

Developed countries - and the US is prominent among them - have over the years insisted that these are essential elements for any programme of co- operation they participate in with developing countries. Of course, this has been highly selective, with useful allies being excused any minor transgression, like having a military coup, so long as they provide logistical support for militaristic adventures.

Those who have defended multilateralism have argued that precisely the same principles of good governance and democracy must apply to international relations. The defence of multilateralism is rooted in the conviction that rules-based systems in which rules bind the strong as well as the weak, and in which the strong submit to joint decisions, are the only way to advance an equitable, mutually beneficial and development-orientated global project.

Since the election of George W Bush - and let us not forget, in dubious circumstances - we have seen the US increasingly displaying scepticism for multilateralism and multilateral decision-making processes. This was evident when the US administration refused to sign the Kyoto protocol, and in their attitude to the World Conference Against Racism.

What we are now witnessing is a qualitative shift, with complete contempt now being displayed for multilateralism, international law and the principles of joint decision-making. This is a dangerous path. The US may feel it can get away with it for now, but who knows what Pandora’s box it has opened and with what consequences. One only needs to reflect on the way in which the demise of the League of Nations contributed to creating conditions that led to the Second World War, to know what a danger we are now facing.

South Africa, Mr Leon, has, I believe, taken a clear stand in this unfolding crisis. We have not been in any partisan way cuddling up to Saddam Hussein. While we have consistently stood with the majority of humanity for peace and multilateralism, our Government has acted with great credit and with considerable skill to avoid the scenario which now seems inevitable.

Power may be prevailing over respect for rules and for principles for now, and this will undoubtedly create new realities whose impact, in the fullness of time, we are going to have to analyse and assess. However, while might might prevail for now, the struggle for peace and progress will continue, and I am certain that it will gather pace in the face of this blatant display of arrogant disregard for the peoples of the world by US imperialism. Aluta continua, victoria asseta.

Madam Deputy Speaker, I now want to participate in the Budget debate. [Interjections.]

The LEADER OF THE OPPOSITION: [Inaudible] Dr R H DAVIES: You certainly will! The Budget debate offers a unique opportunity each year for parties represented in this Parliament to put forward their views on economic policy issues. It is an occasion, therefore, that allows contending perspectives to be identified, differences to be demarcated, and the alternatives being presented to be debated both by us as MPs and by the public and the electorate at large.

The ANC, as the party in Government, has put forward its approach in some detail, both in the President’s state of the nation address and in the Budget Speech. Our current perspectives were widely canvassed and debated in processes that culminated in the adoption of resolutions at our 51st national congress held in Stellenbosch in December 2002. Our fundamental objective is an unshakeable commitment to roll back the frontiers of poverty and bring a better life to our people.

Our basic approach is to see the challenges of promoting economic growth, increasing the output of goods and services, and improving human development as inextricably interrelated and therefore requiring integrated and multifaceted strategies. As the hon Barbara Hogan has indicated, the complex reality created by the appalling legacy of apartheid and the new challenges of globalisation have required different emphases at different phases of our struggle.

Our approach has been to consolidate on achievements of one phase to bring us ever closer to being able to promote lasting and sustainable solutions to the problems of poverty, inequality and underdevelopment confronting our people. Priorities in the current phase include pushing forward the microeconomic reform strategy as a key component of raising investment and promoting growth. Key initiatives here include infrastructure development, as well as promoting a transition from dialogue to collective action by stakeholders within the framework of an Integrated Manufacturing Strategy and the Growth and Development Summit.

Simultaneously, we have recognised the need for a number of new focused, integrated initiatives to combat poverty and unemployment. These include expanding public works programmes, accelerating efforts to promote income- generating opportunities for people in the so-called informal sector, encouraging the growth of a viable co-operative movement and expanding the social security system. All of this is informed by targets we set ourselves in Stellenbosch of halving the number of people who are unemployed by the year 2014.

The hon Hogan has already eloquently addressed a number of these points, and other speakers from our side will elaborate on various aspects later. I want to use the time that is still available to me today to reflect on the alternative that has been offered by the party which is today physically on my left, but which in political and ideological terms is far to the right.

What alternatives does the Official Opposition in this Parliament have to offer? We have recently seen a series of populist interventions from the DA on various issues of poverty and social transformation. We are told that the DA will be launching a new economic policy document in a few days’ time. No doubt this document will offer us more of the same.

Anyone who dropped in from Mars and had no other idea of what the DA was about could be forgiven for imagining that this was a party preoccupied with promoting the Basic Income Grant, reducing poverty and unemployment, and promoting access to treatment for sufferers with HIV/Aids. Those of us who don’t come from Mars, however, know that behind this new-found facade of concern with poverty, promoted with all the sincerity of a used-car salesman, lurks another, more familiar DA. [Applause.]

This is the DA whose core economic policy perspectives have frequently been presented in the form of a whinge about reducing taxes for the benefit of the rich. If you doubt what I am saying, I suggest you consult your own economic policy document, which is called DA Economic Policy Information,

1. The first substantial chapter of that document, entitled ``Fiscal Reform’’, begins with a call for the reduction of the tax burden. This is immediately followed by a more specific call to reduce the maximum marginal rates of tax on individuals.

If you want another example, consult the speech of the hon Ken Andrew - he has not been around much lately - in the 2001 Budget Vote debate which is recorded in Hansard, 15 March 2001, cols 1251 - 1257. Most of that speech is a rant about the alleged excessive tax burden on middle- and upper- income taxpayers, and the impact this was allegedly having on the emigration of what he called ``high-income and high-wealth individuals’’.

This is the DA that we are familiar with. [Interjections.] It is the DA that has consistently opposed capital gains tax, because it would hurt the same high-wealth individuals. This familiar DA, let us remind ourselves, has also consistently championed less progressivity in the tax system by advocating a shift away from income- and profit-based taxes in which the rich pay proportionately more, in favour of expenditure taxes like VAT, where the poor pay proportionately more. This DA which we know, is a party that has instinctively supported less regulation driven by a naive belief that … [Interjections.]

The DEPUTY SPEAKER: Order! Hon Davies, order!

Dr J T DELPORT: Will the hon member take a question?

Hon MEMBERS: No! [Interjections.]

Dr R H DAVIES: This is a party that has instinctively supported less regulation, driven by a naive belief that markets will always deliver, when in fact many Government activities arise precisely because markets have failed to deliver. This is a party whose instincts have led it blindly to champion corporate demands on issue after issue, resulting in what its leader later acknowledged was its biggest tactical blunder when in 1996 it slavishly responded to lobbying the pharmaceutical companies and opposed the Medicines and Related Substances Amendment Bill. This, too, is a party that has championed and continues to champion a big-bang, ideologically driven approach to privatisation.

I won’t pretend that this has been an easy issue for us in the ANC or in our alliance, but we are agreed on a number of fundamental principles. These include agreement that the fundamental issue with regard to state- owned enterprises is one of restructuring, not privatisation and that the main goal of restructuring is to make state-owned enterprises operate more effectively as public institutions operating according to a public and developmental mandate.

The second principle is that where restructuring involves elements of privatisation or nationalisation, the decision may be taken on a case-by- case basis on a balance of evidence. In other words, there is a strategic approach to this issue. The DA’s view, by contrast, sees privatisation on a large scale as a panacea in which state-owned enterprises are mere cash cows to be milked for revenue to avoid having to tax the rich, and in which privatisation is seen as an unmitigated benefit based on the naive belief that the private sector and profit-seeking institutions will always deliver services better.

The DA, in other words, has come to defend the kind of big-bang, ideologically driven approach to privatisation which Nobel economics laureate Joseph Stiglitz - speaking, take note, from the perspective of support for privatisation - has severely criticised. In his recent book, Globalisation and its Discontents, Stiglitz argues that, while in his view strategic privatisation of certain assets can be beneficial under the right circumstances, proponents of big-bang approaches ignore the reality that there are a range of vital services that profit-maximising institutions are simply not equipped to deliver.

He also criticises the cavalier dismissal of concerns and fears of workers about threatened layoffs, arguing that -

… moving people from low productivity jobs in state enterprises to unemployment does not increase a country’s income, and certainly does not increase the welfare of its workers.

Even the DA’s new flagship populist gesture, its supposed support for a Basic Income Grant, is fundamentally flawed by its overall ideological perspective. [Interjections.] The Basic Income Grant emanates as a proposal from a commission appointed by this Government, and is being championed by forces within our tripartite alliance.

The Deputy President confirmed last week that it is a proposal that remains under consideration, within the shared perspective that accepts the need for a comprehensive extension of social security. The DA has opportunistically taken up the call for a grant of R100 per month, but has added a proposal that this be financed by an increase in VAT. What the one hand giveth, the other hand taketh away. [Applause.]

When a similar proposal was put by an academic economist not linked to the DA, in the hearings which were held by the finance committee, it was suggested that VAT be raised to 21%. It was further suggested in those hearings that this would be of net benefit, because families that would be dependent on the grant consume only a few zero-rated commodities. Perhaps yes for the very poorest of the poor, but for many other poor people and ordinary working people, raising VAT to 21% would be a cause of great hardship.

What this debate has highlighted is the total unacceptability of proposals that envisage the burden of redistribution falling on other strata of the poor rather than the rich. Even the DA’s flagship populist gesture is constrained by the need to prioritise the interests of its core constituency, the rich and the privileged.

This is the DA that we are familiar with - the DA we know as a party that has consistently rooted its core economic policy perspectives in calls for tax relief for the rich, rapid big-bang privatisation, weakened labour rights and opposition to affirmative action, which its current policy document calls race-based quotas.'' If you doubt that, look at the section of their policy document headedPriorities’’, which says, and I quote:

Many of the impediments to savings, investment and growth will disappear if the DA’s macroeconomic privatisation and labour policies are implemented.

This is the DA that we are familiar with. It is, in short, recognisable as the local peddler of an ideology that is well known internationally. It is an ideology described by prominent British commentator, Will Hutton, in his recent book The World We’re In in the following terms:

The rights of the propertied and the freedom of business come before any assertion of public interest or social concern. Taxation is depicted as confiscation, an intolerable burden that should be reduced. The social, the collective and the public realm are portrayed as enemies of prosperity.

Whether they know it or not, the DA are our own local Tories or neoconservatives, the purveyors of an ideology that continues to enjoy support in powerful circles across the world, but which is, increasingly, widely recognised as incapable of producing answers to the central challenge facing peoples across the world, promoting inclusive growth and development, eliminating poverty and reducing inequality within countries and globally. Theirs is an outmoded and passé neoconservative approach whose claims to offer a way forward has patently proved false.

But this is an ideology that is of critical importance to them. The past decade or so has seen the DA increasingly abandoning the human rights liberalism of its predecessors, under whose banner a small number of individuals campaigned with honour against human rights abuses of apartheid. The contemporary DA has abandoned this approach in favour of an aggressive economic neoliberalism which marks it as a conservative force today. It is this ideological shift that underpinned its transition from a fringe group in the previous order to becoming today the authentic representative of a sizeable section of the most backward and reactionary forces in our country.

For such a group to present itself as a champion of the poor is rather like the Sheriff of Nottingham masquerading as Robin Hood. The DA’s campaigns on poverty issues are ill-thought-through, populist gestures aimed at opportunistically broadening its electoral support. But I’ve got news for the DA: neither we nor the electorate come from Mars. We know who you are and what you represent. Tony’s new facade of concern for the poor, to shift the metaphor, is like the emperor’s new clothes. It won’t take long to recognise there is nothing there. Thank you. [Applause.]

Dr G G WOODS: Madam Deputy Speaker, I begin by making my party’s statement on the situation in Iraq, and that is that we remain in support of the UN’s resolutions and the majority decisions of the Security Council. This keeps us in favour of multilateralism and we would wish that more was being done to achieve a peaceful resolution of the potential conflict. But if the United States does, indeed, lead an invasion of Iraq, we would pray that human casualties are not high.

We are going to say that if Iraq is invaded and weapons of mass destruction are found, it would mean one thing, ie who was right and who was wrong. But if Iraq is invaded and no weapons are found, it would mean something else as to who was right and who was wrong. In our opinion there are just simply too many facts which we remain unsighted of to take positions as strong as those being taken by many others who express themselves on the other side of the divide.

Thank you, I will now move on to my contribution to the appropriation debate.

Yes, Mr Minister, we agree and acknowledge that in many important ways you are doing the right thing. Even the so-called neoliberal-type approaches towards foreign investment, capital formation and trade flows, together with other facilitatory and stimulatory tendencies evident in the Budget, are essentially the right things to do. And how this all encourages economic growth can be seen in the steady growth that has been achieved in South Africa in recent times.

But as we can see elsewhere in the world, particularly in the developing countries, the approach does have its limitations in so far as the growth and successes are accrued, by and large, to the existing capitalist and professional classes, from which Government does of course get its slice through taxes.

The limitation is that it achieves little in bringing those from the poor masses into the formal economic activity of the country. In fact, the type of growth that we see even seems to cause growing disproportionality in the pattern of national income distribution. With credible figures now showing the richest 17% in this country to be getting 70% of the income pool and the poorest 60% to be getting only 4%, this seems to confirm the growing poverty which is visually evident in many parts of the country, particularly the rural areas. So the positive effects of economic growth somehow do not and are not cascading down to the poor. In fact, they do not even trickle down to the poor. In view of this problem, the Budget is however doing the right thing by taking more from the rich - which it does not do through higher taxes, but through more effective collection of taxes due and through various grants, poverty relief and other social spending programmes in an attempt to ease the lot of the poor.

But as we know, this does not resolve the structural problems which keep the poor out of the activities in the real economy. Against this problem, Government policy and, indeed, this Budget, do right things where they try to create jobs and to equip the disadvantaged people to take up such jobs. This is the right thing, because it is a pro-poor policy which looks beyond distributing handouts or waiting for a trickle to arrive.

We must ask questions as to why, after five years or more of a number of jobs and skills initiatives, the situation has not improved. This, Mr Minister, is where we do note a weakness in your repertoire of doing the right things; not because you - and I must include the Minister of Trade and Industry here - are not doing the right thing, but because it is not being done properly when it comes to job creation, especially through market expansion, and when it comes to skills training.

We could go through a long list of exciting and innovative policies, plans, dedicated funds, structures and laws that you have initiated, but as the situation on the ground shows, you will see that virtually none of these ever comes near to achieving their intended possibilities. They are almost all poorly implemented and poorly managed, causing a disgracefully poor socioeconomic return on investments and these initiatives.

We would like to ask the two Ministers concerned to please examine all these underperforming initiatives and then do their ruthless best to get them to produce the jobs and the people for those jobs in sufficient numbers, to reduce the country’s shameful income gap and thereby its levels of poverty, which is where doing-the-right-thing results are most urgent.

Moving on, I will not say much about the Budget’s revenue side, other than that the Minister is here again, by and large, doing all the right things in terms of tax rates, the structure and proportions of the tax system and of course, the collection of those taxes. In fact, let me say that, in our opinion, all the praise given to Sars understates the true extent of the success story.

I want to acknowledge some people in this regard. The first will be Gill Marcus, the former chairperson of the Finance committee. I think she did more than anyone to get the former revenue service on the agenda. And then there is the former Deputy Minister of Finance, Alec Erwin, who pioneered the studies which laid the basis for the more efficient revenue-collection agency.

There is also the current Minister of Finance, who oversaw the birth of Sars, the introduction of the new approach and the strengthening of the top structures, and the commissioner, Pravin Gordhan, who just seems to always demonstrate his remarkable ability to make things happen, ie to identify shortcomings, to work out effective solutions to those shortcomings, to efficiently implement those solutions to achieve the desired results and then to move on to further improvement.

So we see Sars continually moving and keeping at the cutting edge of becoming professional and efficient. I think Pravin shows some qualities which might stand him in good stead to become a future president.

I now turn my attention to the expenditure side, where we once again see much of the right thing being done, including the various spending divisions and mixes and, in particular, the social spending patterns. The Minister has now proven his ability to keep spending within these laid-down parameters and I am sure that must in time gradually elevate him to a legendary status. However, less of the right thing to do is in evidence when it comes to the value-for-money performance of Government spending. I will argue this for two reasons.

Firstly, while Treasury’s PFMA implementation plan is generally sound, methodical and well managed, it fails the real essence of financial management performance as intended by the PFMA. And I think I speak with some authority here, having been involved in the research, the model construction, the writing of the relevant PFMA clauses and the selling of all this to the Portfolio Committee on Finance’s legislative process back then. I have on a number of occasions brought these concerns to the attention of Treasury.

Secondly, there is the general inability across Government of officials to properly respond to the PFMA’s performance content, due to a very serious lack of appropriate expertise - a situation which will be greatly exacerbated when the Financial Management Bill comes into force later this year.

We are paying - and will continue to pay - a very high price because of this problem. Departments can continue to spend outrageously large amounts of money on the instant colleges set up by retired old-school Treasury officials or on universities where no practical experience or real insights exist, but without the desired results.

Minister, I must say that I am disappointed at your rejection of my proposal to establish a state financial management college where you could lay down the appropriate curriculum, the standards of courses and teaching, and the outputs and outcomes. I think the faith you placed in Samdi in this regard for them to get some attention to this very costly failing is, with respect, misplaced. Just look at Samdi’s track record and you will see that it is the worst-case example of the very same problem I am talking about.

Mr Minister, amongst your very impressive array of doing the right things, this is one that is missing. Thank you.

Mr M RAMGOBIN: Madam Deputy Speaker, comrades, ladies and gentlemen, I am sorry that Mr Leon has left, because I was going to tell him to stop dancing on the potential graves of the men, women and children in Iraq when he refuses to lift a finger on the deaths of men, women and children in Palestine. To Mr Leon and in this instance the DP, the problem is not the failure of the United Nations as a multilateral institution, but the total disregard, as we have seen it, of the United Nations at the hands of both the USA and Israel.

Yes, I agree with him that the heathenistic view of the human condition is a vulgar one. The vulgarity of those of us who are possessed with power - obsessed with it, as some of the people in the Middle East are - is wrong. But equally, the heathenistic condition of the human mind or the human condition is bad when in America today we see people who have already got tenders, have already decided as to who is going to control which oil well, and who is going to mop up Iraq or reconstruct Iraq. Mr Leon, this is an anomaly that we cannot tolerate. In respect of the weapons of mass destruction and the call that we as South Africans must not flirt with Saddam Hussein, we are on record as having made our position very clear. But we need to now re-emphasise to the DA, and to Mr Leon in particular, that the masters of weapons of mass destruction are the Americans themselves. [Applause.] They have pioneered it, stored it and have used it. They used napalm bombs in Vietnam, which incinerated vast areas of that country. They used the atomic bomb in Nagasaki and Hiroshima. Who gives them the moral right to come and say to the rest of the world today: ``You should not be in possession of weapons of mass destruction’’? [Applause.]

Let me come back to the debate on the Appropriation Bill. Mr Minister, thank you very much for giving me the opportunity to talk on the question of black empowerment. Our budget, in the words of the hon Minister, makes an important contribution to the extension of our freedom and the unlocking of our capabilities. He goes on to say we remain true to the spirit, courage, passion, commitment and values that drove our historical struggle for freedom.

The ANC-led Government is charged by its history and the hon President to do more to push back the frontiers of poverty, to return pride to our people, to build confidence, to care for the poor and to enhance the dignity of every South African. So we are on track. Despite the arrogance and glibness of a particular sector of this House, we in the ANC, with respect, chose inclusion, partnership and stability for our common humanity and the freedom to transform our society. We fought for this freedom because it was the right thing to do - the Minister has made this very clear.

For me ``right’’ means in accordance with the accepted standards of moral, legal behaviour or justice. This rightness, this ethic, is a central thesis which is the product of our social reality. It is this social reality that compelled us in the ANC to note at our last conference that, despite our efforts, South African society remains characterised by vast racial and gender inequalities in the distribution of and access to productive assets, income skills and employment.

We went further and noted that little progress has been made in achieving greater operational participation and control in the economy by black people. We have instead seen the rise in fronting. And here, I believe, Mr Minister, we need your intervention.

We in the ANC resolved that black economic empowerment is a moral, political, social and economic requirement of this country’s effective future. It is true that the BEE component on the stock market had reached 9% in 1994, but currently this component has dropped to around 2%. In 1990 Nafcoc had set an ambitious target with regard to its BEE policy.

It was reasonable for it to target that by the year 2000, 30% of all equity would be in black hands; that 40% of all managers in South Africa and 50% of directors of listed companies would be black, and that 60% of all goods and services bought by companies would be sourced from black businesses. This has not happened. The reasons are pretty obvious and I agree with Comrade Joel Netshitenzhe’s statement that the market will never push empowerment on its own.

But when the market does, more often than not it defeats the objective of broadening economic participation. The isolated successful empowerment deals are more because of the black entrepreneurial spirit than blacks being fully accepted into the mainstream of business. Because black economic empowerment has a central role in sustaining South Africa’s growth, we in the ANC, in pursuing this objective, will work with the emerging black capitalist class to ensure joint commitment and practical action to attain increasing investment, job creation and employment, equity and poverty alleviation.

It is here that the ANC-led Government goes beyond platitudes and rhetoric by setting aside R10 billion over the next five years to support the funding of new ventures and business expansions that need agreed empowerment criteria. This will directly impact positively on the promotion and the design of empowerment programmes. Having declared our hand, shown with deeds and the knowledge that the market will never push empowerment, the ANC-led Government has to say that legislation is essential. This legislation must be accompanied by enforcing, monitoring and evaluating mechanisms. It must be promotional, but also punish those who resist change, as well as those blacks who conspire as fronts to make change not possible.

With fiscal discipline, accompanied by our more efficient tax collection, Government now has enlarged spending power. It is my view that government procurement at all levels, from national to provincial and local government, together with procurement by parastatals and other Government- controlled organisations, must support this BEE legislation.

Furthermore, Government must visibly influence and urge companies that enjoy large Government contracts and tenders to purchase from BEE companies. It must insist that these meet other employment, social spending and BEE targets. This legislation and enforcement must shift from being activity based to outcomes and results based. For this purpose, I believe quotas and predetermined financial and other targets are essential.

Millions of South Africans, especially blacks, having savoured political freedom and democratic rights, are demanding and are entitled to economic freedom and a better quality of life for them and their families. Legislation is essential, but it must be accompanied by effective and efficient monitoring, evaluation and corrective-action processes. An ombudsman must be appointed nationally, provincially and particularly in rural areas to ensure that our policies are benefiting all South Africans and also provide links between constituents and the Government.

Professional black bodies like Nafcoc, the BMF, the Black Accountants’ Forum and others must be involved in this process. These must range from certifying genuine BEE companies or enterprises; ongoing monitoring of BEE contracts; advising BEE companies and so on. Anomalies in drawing up BEE points or criteria must be investigated and corrected.

We have the experience of certain parastatals - such as Telkom and Eskom - who have taken the lead in implementing enlightened and effective BEE policies. Telkom is a good working example. It has set aside contracts and areas of activity exclusively to BEE companies with the installation of quality systems and so on. Legislation has to be accompanied by major publicity and public relations campaigns, because meaningful black participation in the economy is vital to satisfying rising black aspirations. It is also, rather ironically, essential for continued white corporate prosperity.

It is, therefore, essential that corporate South Africa must be encouraged and, if need be, coerced into this process. The recent mining initiatives whereby mining companies have put up R100 billion to assist in transferring ownership of the mining industry to 15% in five years and 26% in 10 years are laudable. But it must not be forgotten that this would not have happened or come about without Government intervention.

If there are amongst us here those who have illusions about our future, it would do you good to know that real growth in our economy can only take place if blacks have a worthwhile and vested stake in the economy. All else is glibness, isolation, disregard, irrationality, exclusion, vacillation, populism, stagnation and chaos, to use the Minister’s words.

It would do you good to know that the ANC lives; it lives and leads all South Africans from chaos, isolation, glibness, irrationality and exclusion in the spirit of our common humanity to make South Africa liveable for all who live in it, because South Africa belongs to all who live in it - black and white.

Lastly, if it is not too much to ask yourselves as South Africans, what have you done to make South Africa liveable for all who live in it? Examine your lives and tell us what you do to engage or enhance the development process. Since you do not do these things, it would do you good to shut up, lest you leave only your arrogant glibness as a talisman for your children. Remember the dictum that comes from the Judeo-Christian ethos, ``A life unexamined is not worth living’’, Ms Taljaard. [Applause.]

Dr P J RABIE: Madam Deputy Speaker, hon Ministers, hon members, the 2003-04 Budget was presented within the context that South Africa experienced economic growth in the face of the global economic slowdown. The Budget, like the Budget of 2003, provides for personal income relief to the lower- and middle-income groups. A number of themes mentioned in the Medium-Term Budget Policy Statement, like increased infrastructure, investment, broadening the social security net, and an increase in spending on health and education, are significant.

The term ``robust revenue collection’’ was used to describe the broadening of South Africa’s tax base. An increase in the primary rebate to R5 400 has pushed up the income threshold to R30 000. The tax threshold for taxpayers aged 65 and over is up by 10,7% to R47 220.

The Budget Review states that of the total tax relief 56% accrues to taxpayers earning less than R150 000; 23% to those earning between R150 000 and R250 000 a year, and 21% to those earning more than R250 000. Another benefit is that the threshold for domestic interest, and dividend income exemption is up from R6 000 to R10 000 for taxpayers under 65 years of age, and from R10 000 to R15 000 for taxpayers aged 65 and over.

The transfer duty threshold is increased from R100 000 to R140 000. This will enable thousands of South Africans at the lower end of the market to purchase fixed property. The tax on retirement funds is reduced from 25% to 18%, and this is welcomed. The comprehensive review that relates to the tax treatment of the retirement industry is expected to be made public in 2004, and it is my considered opinion that there is a great need for reform within our tax industry.

I appeal to all the interested parties, if possible, to further reduce the taxes that relate to retirement funds. It is in the general interest that our retirement industry remains viable. The announcement that the accelerated depreciation allowance for urban development zones - 20% straight-line depreciation over five years on refurbishment costs - is a positive announcement.

An appeal is made that this depreciation allowance also be extended to some of our towns with historical CBDs. Towns like Stellenbosch, Paarl, Worcester, Graaff Reinet, Swellendam, Elim, McGregor, Arniston, Waenhuiskrans, and a number of others, also qualify for this particular form of tax refurbishment, and I think we should really investigate the possibility of that particular form of grant. They have a unique architectural history and Government support in this regard will enable local authorities to develop the tourist potential of these selected towns even further. A number of economists and academics addressed the finance committee. A number of issues were raised by Prof Matthew Lester of Rhodes University, namely that corporate tax collection has increased in real terms by more than a third since 2000. Major factors in this regard were the introduction of capital gains tax and the residence-based tax system, as well as the increase in Sars’ efficiency.

Another issue worth noting is that a change in residential property rules is occurring, which means that individual owners, as opposed to trust or company membership, will from this year pay far less in tax duties when selling property.

Belastingwetgewing is besonder kompleks. Dit is gebiedend noodsaaklik dat alle belastings, of dit betrekking het op nasionale vlak, provinsiale vlak of plaaslike owerhede vlak, streng gekoördineer word. ‘n Beroep word veral op plaaslike vlak en provinsiale owerhede gedoen om, waar moontlik, te besin oor addisionele belastings. ‘n Sleutelvereiste vir ‘n gesonde, aanvaarbare belastingstelsel is dat dit verbruikersvriendelik moet wees. Dit moet regverdig wees, en versoenbaar wees met internasionaal aanvaarbare belastingstandaarde en -norme.

Dit skyn vir my asof sommige plaaslike en provinsiale owerhede voortdurend soek na addisionele inkomstebronne. Alvorens daar enige heffings of belastings oorweeg word, moet dit, en dit is my versoek, baie deeglik met die+ tesourie gekoördineer word. (Translation of Afrikaans paragraphs follows.)

[Tax legislation is particularly complex. It is essential that all tax, whether it pertains to the national level, provincial level or local authorities level, should be co-ordinated strictly. An appeal is made to the local level and provincial authorities especially to, where possible, reflect or consider additional taxes. A key requirement for a healthy, acceptable tax system is that it should be consumer-friendly. It should be fair and reconcilable with internationally accepted tax standards and norms. It seems to me as if some local and provincial authorities are continuously seeking additional sources of income. Before any levy or tax is considered it should, and this is my request, be very thoroughly co-ordinated with the Treasury.]

The fact that VAT was not increased is significant. Currently VAT contributes something like 24% to 25% of total revenue. Our VAT model of 14% contributes 6,5% of GDP. It is my opinion that an increase in VAT will adversely affect the lower-income categories, because a larger proportion of their total income is spent upon food and other essentials.

What is also significant is that during Budget hearings one of our committee members enquired whether South Africa has reached a plateau regarding possible revenue collection. The Commissioner of Revenue responded that the tax gap is approximately R30 billion. This is not acceptable. I think all responsible role-players should do everything possible to reduce this tax gap. The reduction in the tax gap will be to the benefit of all South Africans.

Ring-fencing of secondary trade losses was also discussed during the Budget hearings. Sars argued that some taxpayers use tax write-offs unfairly to compete with people who are not able to exploit the tax system.

Minister, in your Budget you stressed the importance of accountability for service delivery. The quality of service that some Government departments deliver is often not acceptable. Where I hail from pensioners often start queuing at about six o’clock in the morning on pension day. The pension offices close at three o’clock, no matter how many people are in the queue. When I approach Government departments regarding the quality of service, the standard answer is that they are understaffed or the relevant official is in a meeting.

A key prerequisite for sustained economic growth is to create capacity productivity at ground level. The Reserve Bank’s monetary policy in relation to interest rates, and the supply of money in the economy, is also acceptable. The question remains whether the Reserve Bank will be able to cut interest rates, because of the present value of the rand. The possibility of war in the Middle East may result in a sharp increase in the price of crude oil, which may result in a sharp rise in our consumer price index.

Economists often cite three threats to the South African economy, namely inflation, unemployment and the threat of HIV/Aids. The cost of crime to the South African economy, in its various forms, cannot be underestimated. Unemployment is often used as the justification for crime. My personal opinion is that this is a gross simplification. This particular Budget will provide an additional allocation of R2,7 billion to streamline the criminal justice sector, and improve the protection of women and children.

Poverty plays a role within crime, but is not a driver. The poor are no more likely to turn to crime than the rich, but poor people have less social safety mechanisms to enable them to cope with family break-ups, alcohol abuse, and in the case of South Africa, the ever-increasing number of children orphaned by Aids-related deaths. The Financial Mail of 14 March, page 23, states that UN research has found that there are 660 000 Aids orphans in South Africa. This number is expected to grow to nearly 2 million by 2010.

What is further reason for concern is that the arrests of offenders under 21 have risen by 27%, from just under 115 000 to an estimated 146 000 last year. In mid-2002 nearly 18 000 children under 18 years were serving sentences; three in every 200 sentenced prisoners were juveniles. This is according to official police figures.

It is of the utmost importance that crime be addressed by means of partnerships between the state and other role-players. NGOs, especially the small grass-roots organisations working for social upliftment, to enhance skills and provide an alternative to crime, must be mobilised. This particular Budget provides for more infrastructure spending by municipalities: an extra R1 billion for labour-intensive community development projects which will employ local people. The fact that people at the local level will take responsibility is very important in this regard. The fact that the money was allocated to municipalities, rather than to the national Department of Public Works, indicates a shift away from nationally driven to public-level development programmes, which I think is a very positive factor.

The National Skills Fund will receive R720 million for the year ahead, which will enable 50 000 individuals under the age of 30 to undergo a structured training programme. The announcement that the Public Service will initiate an internship programme is also a positive step.

Fiscal management must create an environment where domestic and foreign investors invest in long-term viable projects that provide sound, good returns. This Budget, and our present tax regime, will enable exporters to remain competitive and profitable.

The Portfolio Committee on Finance had lengthy discussions on how demand within the economy could be increased. Examples such as land distribution, public works programmes, the establishment of more small to medium enterprises, the creation of an entrepreneurial spirit and the broadening of domestic demand were mentioned.

A particular challenge for the forthcoming financial year is that the broadening of economic participation must occur.

Swart bemagtiging is van sleutel belang indien die Suid-Afrikaanse ekonomie sy groei wil behou, veral as daar na geleenthede in al die sektore van ons ekonomie gekyk word. Die feit dat R10 miljard oor die volgende vyf jaar bewillig gaan word, is bemoedigend. Dit is gebiedend noodsaaklik dat die proses van bemagtiging ordelik, deursigtig en op ‘n verantwoordbare wyse geskied, wat beleggingsvertroue sal versterk. Die restitusie van grond is ‘n sleutelveranderlike, en die begrote bedrag wat vir die restitusie van grond bewillig is, styg van R1,1 miljard tot R1,6 miljard. Grondsake meld dat 9 469 landelike en stedelike eise, wat na 400 000 hektaar verwys en 45 000 Suid-Afrikaners sal bevoordeel, teen 2004 afgehandel sal wees. Dit skyn asof die fokus verskuif word van grondrestitusie en bestaansboerdery na kommersiële landbou, wat ‘n positiewe verwikkeling is. AgriSA bereken dat die koste van ‘n gemiddelde kommersiële landbou-eenheid vandag R1,25 miljoen beloop.

Wat egter belangrik is, is dat die Landbank en ander rolspelers ook moet meehelp dat opkomende swart boere tot hulle volle potensiaal ontwikkel. (Translation of Afrikaans paragraphs follows.)

[Black empowerment is of key importance if the South African economy wants to maintain its growth, especially if we look at opportunities in all sectors of our economy. The fact that R10 billion will be allocated over the next five years is encouraging. It is essential that the process of empowerment is done in an orderly, transparent and justifiable manner which will strengthen investor confidence.

The restitution of land is a key variable, and the amount budgeted for the restitution of land increases from R1,1 billion to R 1,6 billion. Land Affairs reports that 9 469 rural and urban claims, which refer to 400 000 hectares and which would benefit 45 000 South Africans, will be finalised by 2004. It seems as if the focus is being shifted from land restitution and subsistence farming to commercial agriculture, which is a positive development. AgriSA estimates that the cost of an average commercial agricultural unit today will amount to R1,25 million.

What is, however, important is that the Land Bank and other role-players should also help the emerging black farmers develop to their full potential.]]

In my speech I referred to the effect of HIV/Aids. Over the next three years R3,3 billion will be added to the provincial equitable share and conditional grants to extend the preventative programmes and finance medically appropriate treatment for HIV/Aids.

It is generally accepted that, besides health care, Aids needs to be addressed on a wide range of fronts, such as the alleviation of poverty and empowerment. Increased social spending and tax relief may enable lower- income earners to have improved access to proper medical care and information assimilation. It is widely accepted that a strategy of reducing income inequality may reduce the burden of HIV/Aids and other diseases.

A comprehensive strategy combining prevention, care, voluntary counselling, testing and national antiretroviral treatment is urgently needed. Activist groups have warned that Government is seen as ``dragging its feet in publishing a national strategy in this regard’’.

Aids-related spending is bound to increase steadily over the next decade. I therefore appeal to all role-players to develop and implement a comprehensive national strategy to deal with one of the biggest threats to the South African economy, namely HIV/Aids.

The New NP supports this Bill. [Applause.]

Mr D J SITHOLE: Madam Speaker, hon members, the Freedom Charter declares that ``The People Shall Share in the Country’s Wealth!’’ This Budget seeks to meet the challenge posed by the Freedom Charter.

As we deal with the reallocation of resources, we must accept that those who benefited to the exclusion of others will want to hold onto their benefits and continue to exclude others. In his inauguration address in May 1994, former President Mandela declared, and I quote:

We have, at last, achieved our political emancipation. We pledge ourselves to liberate all our people from the continuing bondage of poverty, deprivation, suffering, gender and other discrimination. These words were a recognition that our political freedom will mean nothing unless we distribute the economic resources of the country equally and equitably amongst all South Africans. It is true, therefore, that the biggest beneficiaries of our policies will be those who were denied access and marginalised by the apartheid regime.

If we do not create conditions where people can reap the benefits of their struggles, we would have failed our people and society, and we cannot expect to live in peace thereafter.

In Long Walk To Freedom Madiba wrote:

I have taken a moment here to rest, to steal a view of the glorious vista that surrounds me, to look back on the distance I have come. But I can rest only for a moment, for with freedom comes responsibilities, and I dare not linger, for my long walk is not yet ended.

If we want to remain relevant to the majority of our people, we must also take the long walk and not linger, for the journey to a better life started just nine years ago.

There are those sitting on my left who lack the credibility to be honest and tell the truth that the ANC has made strides to move the country to a better tomorrow. [Interjections.] They use megaphones to shout that we are not doing what they tell us to do, for they are locked in the old paradigm of being masters and having Africans as servants. [Interjections.]

The allocation of R38 billion to provinces will enhance our work and response to HIV/Aids. We may argue about its adequacy, but this Government has made a commitment to do everything in its power to fight and create a better life for all. [Interjections.]

The fight against HIV/Aids must not be viewed as an isolated battle. It is a fight linked to our effort to push back the frontiers of poverty and eliminate social conditions that make our people vulnerable to curable diseases that sometimes cause their untimely death.

We will continue to struggle against diseases that flourish as a result of poverty and underdevelopment, because ``it is the right thing to do,’’ as the Minister of Finance said. Those who are used to issuing commands and expecting us to do as instructed by our masters shout and lie when we do not follow their instructions.

The allocation of R3,3 billion over this medium term via the national department, as well as conditional grants to provinces, is the continuation of the mandate of the ANC’s national conference to strengthen and accelerate the implementation of the National Aids Strategy as amplified in the Cabinet statements of 17 April and 28 October 2002, respectively.

ANC MPs and Sanco must be at the forefront of community mobilisation and leadership around HIV/Aids struggles, especially on issues of awareness, prevention, voluntary testing, counselling, treatment and care, so as to expose the self-appointed leaders who masquerade and pretend to be concerned about our people whilst propelling their self-interest.

During our struggle against apartheid there were people who emerged at different epochs and presented themselves as alternative moderate leaders against the radical ANC leadership. We exposed them for what they were through our mass work, and today we are called upon to go back to the streets to mobilise our people to fight against HIV.

We should continue to mobilise resources to improve our clinical protocols and training programmes, as well as support the health workers, who are at the cold front of the fight. As the ANC and the SA National Civics Organisation, we must insist on the building of an efficient infrastructure for the monitoring and following up of patients, the treatment of opportunistic infections, and the use of antiretroviral drugs, where appropriate.

Those who accuse us of not caring are not mentioning the fact that we placed the fight against poverty and HIV/Aids at the highest authority of this country. [Interjections.] It’s true! It is headed by the Deputy President. They do not mention the fact that it is the Government that has fought the battle with the powerful pharmaceutical companies and won.

They are also not mentioning that it is this Government that has made available R98 million in an effort to change the lifestyles of South Africans. They do not tell the people that it is this Government that has worked to break the stigma against the use of condoms. Let me just mention that last year the Government budgeted for the distribution of 350 million condoms for both males and females.

They are not saying that it is this Government that has made available child grants to all South African children. They say nothing about the old age grant that was used to bolster whites and starve our people. They do not say anything about the extension of social grants to those people living with HIV/Aids who can no longer work due to illness.

They pretend not to know that it is the ANC Government that has increased the allocation of home-based and community-based care from R25 million last year to R138 million for the year 2004-05. [Interjections.] They pretend not to know, Taljaard, that nearly 500 cadres in the provinces are receiving home-based and community-based care kits to care for the sick. [Interjections.]

The SPEAKER: Order!

Mr M J ELLIS: Madam Speaker, on a point of order: When the hon member at the podium refers to another hon member in the House, he is expected to use the term ``hon’’ and I request that he does so. [Interjections.]

The SPEAKER: Order! Hon Mr Sithole, will you please correct your comment about Ms Taljaard?

Mr D J SITHOLE: Madam Speaker, hon Ms Taljaard … [Laughter.] The hon Ms Taljaard pretends that the ANC Government has not increased the allocations mentioned above.

It is our movement that has long recognised that good health is a fundamental requirement of a better quality of life. How then, can this movement not be concerned about people who are HIV-positive and their families?

It is now accepted that building and strengthening the immune system helps to ward off infections. Therefore, good nutrition is critical for those who are infected by the virus. It is the ANC view, hon Taljaard, that for us to win the battle against HIV/Aids, we must adopt a comprehensive and balanced approach to the challenge of providing health for all, based on a more accurate understanding of the incidence of diseases in the country. [Interjections.]

We mention this to demonstrate that the fight against HIV/Aids is not a one- dimensional fight, as some people want us to believe, ie that the solution is just drugs. I must pause here and remind everyone that to date there is no known cure for HIV/Aids, though we know that, with timely intervention using certain antiretroviral drugs, we can mitigate and improve the life of a person infected with the disease. Hence we argue for a comprehensive treatment plan, including the approach to antiretroviral therapy.

Allow me to warn those who use the issue of HIV/Aids as a vehicle to present themselves as martyrs, pretending that this Government does not care, that their efforts to present the ANC as an uncaring organisation will fail in the same manner as apartheid failed to present the ANC as a terrorist organisation to the masses. [Interjections.]

This Government will listen to what it needs to do to ensure that we create a better life for all, including those who today see it prudent to showcase their militancy. The ANC reaffirms its support for the constitutional right of all South Africans to freedom of expression, hon Louis, and peaceful protest. [Interjections.]

It is, therefore, difficult to sometime understand why people would embark on wilful, unlawful actions which undermine the institutions of democracy for which so many South Africans fought and made sacrifices. Such actions would constitute a rejection of democratic values and disdain for the wishes of our people. [Interjections.] In this battle there is a role for you, hon Taljaard. The question is, what are you doing? What is your role?

This question is not only relevant to our struggle against HIV/Aids, it is also related to our opposition to the unilateral declaration of war on Iraq by the government of the US, supported by the government of the UK without the benefit of an empowering resolution from the UN Security Council, which constitutes a violation of international law.

While the regime led by Saddam Hussein and the Ba’athist Party of Iraq is undemocratic, repressive and intolerant of opposition, the reprehensible character of that government does not entitle any other government to overthrow it by force of arms, let alone impose an unjustified war on other countries and regions.

The US-led invasion of Iraq is setting an extremely dangerous precedent, the consequence of which can be disastrous for world peace and security. The unilateral declaration of war by the US, supported by the government of the UK, will probably completely destroy the authority of the UN and all the other multilateral institutions of world governance, so painfully built since 1945.

The governments of the US and the UK will have to bear full responsibility for the situation of international chaos and disorder that their actions have precipitated. The timing of this declaration of war reinforces the view expressed by a number of observers, not least among them the citizens of the US, that the US and UK diplomacy over the past year was, in fact, a well-orchestrated ploy to permit the US and its willing allies the time to make the necessary logistical arrangements for a massive invasion of Iraq. [Interjections.]

Ms R TALJAARD: Rubbish!

Mr D J SITHOLE: If that is rubbish, what happened then, Ms Taljaard?

Thank you. [Applause.]

Dr G W KOORNHOF: Madam Speaker and hon members, the most crucial challenges facing South Africa at the start of the 21st century - and, therefore, within the medium-term Budget cycle - are poverty and unemployment. The Budget Review of 2003 acknowledges this problem, stating that ``poverty and unemployment remain deeply embedded in the structure of our communities.’’

The well-known international rating agency, Standard and Poors, is forthright in their judgment of this phenomenon: ``Government policies have failed in creating job opportunities and reducing poverty.’’ This statement is confirmed by the fact that since the 1990s there is a gap between the Gross Domestic Product and employment growth, which translated into a growth in joblessness in South Africa over the past 10 years. In addition, it is estimated that at least 500 000 jobs have been lost just in the formal sector of the economy since 1995.

With regard to poverty, there is a growing gap between the rich and the poor in the country. A report issued by Statistics South Africa found that this gap had increased considerably since 1995, with the richest 20% of our people getting richer and the poor, substantially poorer.

Against this background, an argument can be made out for an increased role for Government in the economy. The time has arrived for Government in South Africa to invest more in the economy through investment programmes, to assist the marginalised and impoverished people. In his book History of inequality in South Africa, Prof Sampie Terreblanche similarly argues for an interventionist approach by the state to address poverty, inequality and unemployment. Let us explore this option.

General Government expenditure of R307 billion in 2001-02 represents 30,5% of GDP. Average general Government expenditure in OECD countries during this period amounts to 37% of GDP. An increase in general Government expenditure in South Africa to higher levels should be characterised by an increase in the new infrastructure development projects; the eradication of large backlogs in economic infrastructure such as roads, bridges, dams, etc; social infrastructure like schools, hospital, etc, and increased socioeconomic spending among the poorest of the poor.

In a recent article, Prof Sadie from the University of Stellenbosch states that the alleviation of poverty cannot be left to the private sector. Government has an important role to play on behalf of the marginalised and improverished people of the country. From the 1920s to 1940s the governments of this country played an important role in addressing the so- called ``poor white’’ problem in South Africa by intervening in the economy to assist poor white people. It is, therefore, not a question of whether Government should invest in the economy, but the extent to which general Government expenditure as a percentage of GDP should focus on the poorest people in the community.

In the post-apartheid period, looking at the extent of chronic unemployment and poverty in South Africa, Government cannot shy away from the fact that it should do more through the implementation of Government-led development programmes which are sustainable. Such an increased investment in the economy should be comprehensive and labour intensive. An increased role for Government will have to include larger investments in public works programmes and the initiation of infrastructure development projects in which business opportunities are created for small businesses, and employment opportunities are created for workers.

In addition to such an interventionist approach by the Government, it should also spend more on the creation of skills, as well as on on-the-job and professional training. In this regard the UDM has proposed that a half percent of an anticipated decrease in personal income tax should rather be put on hold and utilised for a large skills-creation programme in the country, which should then be reported on separately to Parliament.

When Government embarks on an increased investment in the economy by financing Government-led investment programmes, it should keep intact the macroeconomic stability in South Africa. It should focus on rooting out corruption, especially in the public sector. It also implies that it should ensure that the capacity of the public sector to deliver services effectively is dramatically improved. Unfortunately, the latter has been neglected during the last eight years.

Recognising the chronic unemployment situation in the country and the magnitude of poverty still being experienced by the majority of citizens, the Government must accept its responsibility to invest in the economy. It cannot rely on market forces or the private sector alone to solve these problems. It was the RDP which stated that reconstruction and development would be achieved through the leading and enabling role of Government, a thriving private sector and active involvement by all sectors of civil society, which in combination would lead to sustainable growth. The time has arrived for Government to assume this leading and enabling developmental role.

Internationally, investments by various governments in their owm economies is an acceptable practice. In countries such as France, Germany and Sweden, high government spending as a percentage of GDP, including higher social spending, are acceptable norms. Government intervention in many sectors of the economy in these countries is regarded as a legitimate activity to improve the lives of their citizens. The challenge of our times is that Government must do more. It must play an active developmental role in our economy.

It will assist greatly if our future budgets were to indicate how many jobs have been created by the increased investment of Government in the economy. Such increased Government-led development programmes must be sustainable and increase during the outer years of the budget cycle or until such time when unemployment and poverty are substantially reduced.

We can regard the increased role of Government in the economy through labour-intensive infrastructure development programmes as the first pillar to create jobs and alleviate poverty. The second pillar is the advancement of small business development. It is estimated that micro, small and medium enterprises contribute 35% of the formal sector’s GDP, and creates more jobs than larger businesses.

A major obstacle for small businesses remains the unnecessary, outdated and ineffective laws and regulations. If we are serious about enterprise development and the promotion of small business development, Government must remove the burden imposed on small business by onerous laws and regulations. South African small businesses face too much red tape, which hinders their establishment and growth. We should emulate the UK, Australia and Japan, where the paperwork involved in setting up a company takes only about a week to complete.

As a start, consideration should be given to simplifying tax laws and regulations. Tax and the compliance costs imposed by the various tax laws are a tremendous burden to small firms. Other obstacles for small businesses include licensing laws, access to finance, access to and restrictions on land use, inappropriate labour legislation for small businesses, inadequate access to justice, inappropriate health laws, etc.

I hope that the two issues which I have addressed in this debate will be considered seriously by Government, namely an increased role for Government in the economy to address chronic unemployment and deep-rooted poverty in our society, and removing laws and regulations hampering the operation of small businesses.

The UDM supports the Appropriation Bill. In conclusion, it is a sad moment to witness the war clouds gathering around Iraq as we speak today. The outbreak of a war between the USA, its allies and Iraq will have a negative impact on the global economy, including that of South Africa. Developing countries, including South Africa, cannot afford a war.

Mr L ZITA: Madam Speaker, one of the key characteristics of a modern capitalist economy is the alienation of the majority of people from the ownership and control of the means of production, as well as their dependence on the system for their livelihood through the sale of their labour power to capitalists.

Those whose labour power is not drawn by the system are subjected to a life of misery and poverty. In the developed capitalist world this threat is partially attenuated as a result of the central role that manufacturing has played in their economies.

Due to the centrality of value adding to all the sectors of the economy, there is a relatively more integrated society and economy, with most of the workers drawn into employment. This is primarily a reflection of autocentred development, a development that was driven and controlled by the indigenous people at their own pace and on their own steam. Of course, this autocentredness had something to do with the subjugation of the south, but this is not the total explanation.

As a result of colonialism and neocolonialism, a disarticulated form of capitalism took root in the south. This decentred capitalism is what we share with the rest of the underdeveloped world. Underdeveloped economies have a limited manufacturing base, with an export regime of a few primary products.

South Africa is not as big as others, but the essential features are the same. Such economies are characterised by high levels of unemployment and poverty on the one hand, and a small elite whose lifestyle is consonant with that of the most privileged in the north.

The Budget that we are debating today is an attempt by the ANC Government to undo both the underdeveloping impact of the globalised capitalist system, as well as the legacy of its domestic expression, apartheid.

In seeking to undo this legacy, we are informed by a humanism that is tempered by an awareness of the challenge of managing a modern economy. Expressing this humanism, Comrade Thabo Mbeki, in his opening address to Parliament in June 1999, said, and I quote:

What will guide us in everything we do will be the challenge to build a caring society. Caring as we are, we are not unsighted of the challenges of running a modern capitalist society.

Caring should be underpinned by an awareness that the principal challenge should be to build a society whose citizens are effective subjects, capable of defining their own autonomous involvement in the economy, community and society at large.

Thus, informed by this insight, the President said in this year’s state of the nation address, and I quote:

The Government must act to ensure that we reduce the number of people dependent on social welfare, increasing the numbers that rely on it 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.

With this Budget, we continue to express solidarity with the most threatened and the most vulnerable sections of our society, whilst simultaneously strengthening interventions that can promote wealth creation. It is our view that caring for the majority of the people and building the economy are not mutually exclusive, but actually would reinforce each other.

In giving priority to poverty eradication and protection from vulnerability, this Budget allocates a further R11,9 billion, designed to extend the child support grant and to strengthen the Primary School Nutrition Programme. This will have the effect of defeating malnutrition and stunted growth in children of the working people, the principal constituency of the ANC.

In the same vein, this Budget increases the pension and disability grant by R60, to R700 a month. An amount of R38 billion is set aside for education and health, specifically for textbooks, medicines, hospital buildings and equipment, as well as an effective and comprehensive response to HIV and Aids.

More importantly, the bulk of these funds are for capital expenditure. It seeks to strengthen our public health system, which serves the majority of the country’s population. Of this amount, R280 million strengthens the National Student Financial Aid Scheme. Though not perfect, this scheme has the real effect of genuinely opening the doors of culture and learning at the most advanced level to the children of the poorer sections of our society.

An amount of R23,7 billion has been set aside to extend basic services by local government to poor households over the next three years. Of this, R6,5 billion municipalities are offered for additional resources for free basic services, investment infrastructure and job creation.

As part of this package, the budget provides R1 billion for labour- intensive community development. These interventions reflect the ANC’s understanding of the critical role that local government must play in transforming the lives of the majority, and give concrete expression to the local government elections manifesto of the ANC, namely to substantially decomodify water and electricity.

An amount of R1,2 billion accelerates spending on land reform, land restitution and agricultural support programmes. The solution of the land and agricultural question is not only important for historical redress, but is an important economic catalyst in its own right. The modern industrial sector is always beset by problems in the underdeveloped world. It finds it difficult to provide employment to the millions that leave rural areas in search of jobs.

Clearly worked out and popular-based agricultural initiatives have a major role to play, both to provide sustainable livelihoods and to eradicate poverty. For the men in our country who find themselves in conditions of absolute destitution, the Budget provides R1,2 billion for them for food parcels. This is the first time that this is being done on this scale. It indicates a serious attempt at comprehensiveness in addressing poverty, an attempt to ensure that we touch the life of everyone who is threatened by hunger.

Addressing the challenge of poverty, however, should not only be a welfare matter, but a matter for popular involvement in the economy. To this extent, a number of economic stimulating and catalysing measures have been provided for in the Budget. As a reflection of the fact that we are in an era of knowledge-based economics, R1,7 billion is set aside for higher education and skills development. Together with the billions of rands in the sectors, we will be able to match jobs and skills.

In the same vein, to modernise our technical base, R1 billion has been put aside to supplement research and technology development. Together with the four-year tax write-off for investment and research development in natural and applied sciences, this is a major boost to the competitiveness of the economy, and will provide more revenue and jobs.

More importantly, to improve the efficiency and competitiveness of the world economy, R105 billion has been allocated for physical and capital transfers. Better roads and ports, and a more efficient government will improve the economic life of the country. A further indication of the productiveness of the Budget is the reduction of income tax to the tune of R13,3 billion. The principal beneficiaries of this move will be lower and middle-income households. The fact that this compensates for inflation is a real relief to millions of South Africans.

Another R10 billion over the next five years has been put aside for black economic empowerment. In line with this, there will be a new mandate for the National Empowerment Fund. For us, black economic empowerment is broad and must extend beyond a few individuals.

These measures, together with tax deductions that are proposed for the first R20 000 incurred in the startup of new businesses, will be a major stimulant for economic growth and will serve to integrate small businesses into the formal economy.

As the ANC, we believe that this Budget is a correct response to the challenge of building a modern economy that is not only relevant, but is at the same time also meaningful to all South Africans, especially the poor. Thank you. [Applause.]

Mr L M GREEN: Madam Speaker, hon Minister and members, South Africa’s economy is growing steadily, despite a cloud of global insecurity. The world is facing an almost certain war in Iraq and peace in the Middle East remains a distant dream. It is regrettable that both the US and Britain are now no longer willing to seek peaceful means to disarm Iraq in terms of Resolution 1441.

The UN Security Council unanimously agreed to Resolution 1441, in order to disarm Iraq by peaceful means. Although the threat of military action was clearly envisaged in this resolution, I believe that the US and the UK should have taken more time to exhaust all diplomatic channels to implement Resolution 1441.

Military action against Iraq, if carried out without the backing of the UN Security Council, would be a breach of the UN Charter and international law. If the war takes place - which seems to be inevitable - the ACDP hopes and prays that there would be minimal damage to Iraq’s civilians, especially women and children.

I shudder when I think of the amount of damage that can be done by 1 000 war planes all armed with highly destructive missiles; 265 000 highly trained and fully armed troops, and 130 warships armed with state-of-the- art, computer-guided missiles. If this war takes place - God forbid - and if the US and the UK use all the weapons at their disposal, it would be a massacre. That is why we must pray for a miracle.

Let me now turn to our Budget. The critical issues facing South Africa are at the microeconomic level. Without growth to meet the basic human needs of our people, our nation would be at risk if the Iraqi war is prolonged and political instability amongst our neighbouring states does not end.

South Africans individually suffer from a national pessimism which may impact on productivity and civic responsibility, due to many factors. It is time we countered this negativity amongst our own people and found ways of bringing all of them together, to build this nation.

The Appropriation Bill breaks down how money will be allocated to many levels of government. The Budget for 2003 indicates the areas where Government has to spend money, eg poverty relief and infrastructure. The good news about this Budget is that provincial and local governments will be major beneficiaries and the ACDP therefore agrees with this approach.

The increase of R6,5 billion to municipalities for free basic services and employment opportunities alleviates certain poverty-related problems. The cut of personal income tax by R13,3 billion - which we welcome - comes as a welcome relief to many South Africans, since the pricing of basic commodities remains high. The price of petrol, especially for those who depend on their vehicles, has a major impact on the household expenditure and quality of life of these persons. In an uncertain market such as the oil market the state must invest more money in developing a First World public transport system. This will lighten the load of many people who have to commute to work. In the same way we are able to invest billions of rands in new air buses for air travellers, we need to seek ways to pour money into building a transport system suitable for the needs of this nation.

Our train services are in desperate need of an overhaul, with new management needed and better quality of services required. It must be free of criminal activity on the one hand, and intimidation from Metrorail management on the other. Metrorail has handed an appeal to the court to extricate itself from the responsibility to ensure the safety of train passengers. A rejuvenated transport system will reduce costs, create generous employment and, most importantly, add hugely to economic growth and prosperity in this nation.

South Africa does not lack the resources to maintain a steady growth of its economy. We lack a professional approach to the delivery of services. The Minister has correctly pinpointed that lack of accountability and commitment in the Public Service are to be rooted out and we commend him for this. We have succeeded admirably in attracting tourists to this country - which, incidentally, is estimated to be 20% at the current growth level over the last year.

There are also strong chances that South Africa’s rating on the international market will greatly improve this year. Standard and Poors has placed South Africa on a positive rating scale, which should boost the confidence of the nation even more. This improved international rating must translate into more jobs for the many unemployed persons.

We all know that the task of keeping foreign investors happy is much harder in South Africa even if we outperform the more established economies, simply because of the connotation attached to African states. As such, we need to especially invest more handsomely in upgrading the standard of service delivery.

We have many capable and skilled South Africans overseas who should be lured back to their homeland. There are so many other entrepreneurs of foreign descent who wish to make a living in this country. It is the pervasive perception that South Africa is a country riddled with crime, corruption and poor infrastructural competence that impacts upon their decision to stay for long.

The growth in the confidence rate amongst South Africans is the next challenge that must be faced. The criminal justice system, for example, will receive an extra R2,7 billion to assist with its operations. This we welcome. When children die in the streets of the Cape Flats the people ask for swift justice, and not just a short-term show of force by the police.

With these words and in conclusion, the ACDP supports this Appropriation Bill.

Mr N M NENE: Madam Speaker, hon members, in its January 8 statement the ANC NEC called on all of us in this august House to use the state’s Budget to improve the quality of life of our people, especially the poor, whilst contributing to the expansion of the economy. Among other things, we are called upon to ensure the functioning of our social welfare system and effective use of poverty alleviation funds.

It is in this spirit that poverty alleviation is a prime priority as we debate this Appropriation Bill today. Our main task is to ensure that the state machinery functions properly and carries out its tasks effectively and efficiently. We need to bring this machinery closer to the people and improve its responsiveness to the needs of the people; therefore the role of Parliament becomes very crucial in the Budget process.

In discussing the role of Parliament, maybe it is important that we look at where we come from. The ANC has come a long way in democratising the Budget process to bring about fiscal transparency, turning the Budget into an important tool to address the ills of apartheid that have caused abject poverty among the majority of our people.

The Budget process was a closed book and lacked legitimacy and accountability, as it was not backed by a credible legal framework. Since 1994 new national legislation has strengthened fiscal transparency in South Africa, built on the following legal foundations: the constitutional framework; the Public Finance Management Act of 1999; the obligations that are placed on departments under the new Public Service Act; the Medium-Term Expenditure Framework, which is the multi-year budgeting process, and the Intergovernmental Fiscal Review.

The establishment of the Joint Budget Committee is the latest development. Its establishment was the culmination of a lot of work by the Budget Reform Task Team, which concluded its work in June 2001. The Budget committee is charged with the task of influencing the Budget and performing an oversight function, which means that it must hold the executive to account for their expenditure, and propose amendments as soon as the legislative framework is in place.

The interventions mentioned above are envisaged to be aligned with three focus areas, namely, at policy and allocation levels, as well as during the actual spending and delivery. These interventions would also be aligned with the stages of the process, so will influence the Budget in terms of policy during its drafting, as well as hold the executive accountable during implementation.

The Joint Budget Committee was established with clear terms of reference and commenced its work in October 2002. After the tabling of the Medium- Term Budget Policy Statement, we held informative hearings with clusters, as identified by Government priorities in the statement. A report was tabled and adopted in this House with concrete recommendations.

Having outlined the role of Parliament in the form of the Budget committee, let me also focus my attention on the broader Parliament, the parliamentarians themselves. Members of Parliament have a very important role to play, both in Parliament and in our constituencies. As elected representatives, we need to ensure that once the allocations are made and budgets are passed, the money is spent for the betterment of our peoples’ lives as outlined in the Medium-Term Budget Policy Statement.

Departments are also required to prepare strategic plans where they set objectives and later present us with estimates of national expenditure, which is then tabled in this House, together with the Appropriation Bill, on Budget Day. The latest feature on these estimates of national expenditure is that of measurable objectives against which the performance of departments can be measured. This innovation presents portfolio committees with a valuable tool to exercise its oversight.

Members are again in a position to ensure the implementation of the programmes at constituency level. Our people are ready to volunteer in the spirit of Letsema, and all what they need is support and direction from their elected representatives-ourselves. This is what we in the ANC mean by a broad front for reconstruction and development. Let me take this opportunity to call upon members of Parliament to open their constituency offices for the benefit of communities in terms of information and Government services.

An example of this is what we were able to achieve in the Kranskop area during the week of 17 to 21 February this year. Working with the Department of Home Affairs, the Department of Social Development and the Department of Welfare, community-based organisations and dedicated volunteers, a total of approximately 500 people were registered in the deep rural areas. These people would not have been able to access their social grants had we not entered into this partnership with the other stakeholders. I would like to extend my appreciation to all those who made it happen, amongst them Home Affairs staff; the Outreach Project managers; the Little Elephant Tree Centre for Early Education; my administrator, and, more especially, the volunteers from these areas.

Our role as members of Parliament extends far beyond these corridors, into our areas of residence and deployment. There can be no better oversight than being with the people and working with local structures to ensure delivery of services. We need to work with the local government councillors, community organisations, churches, traditional authorities and NGOs to push back the frontiers of poverty.

The local structures need to be assisted in the preparation of integrated development plans and the establishment of local economic development forums. We need to ensure that the free basic services reach our people, that they benefit from the social grants provided by Government, and that the food parcels and the starter packs from the Department of Agriculture are distributed, because it is our responsibility to do that and, as the Minister of Finance put it, ``it is the right thing to do’’.

The upcoming Growth and Development Summit must be supported by our actions on the ground. Our people are ready to respond positively, because they stand to benefit from these programmes. One of the successes of this ANC Government is that we have transformed the Budget to speak to the needs of the entire nation, black or white, rich or poor. For the first time, when one meets the people on the streets they tell one that there was something in this Budget for each one of them.

In line with the Medium-Term Budget Policy Statement, poverty alleviation is at the top of Government priorities. This is supported by a significant increase in social and infrastructure spending. Infrastructure projects and the expansion of Public Works programmes are going to be the main drivers of job creation in the poor communities, whilst also improving the lives of the people and contributing in economic development.

Our mandate is clear: to bring a better life for all South Africans, black and white, and, indeed, the tide is turning. [Applause.] Dr P W A MULDER: Agb Mevrou die Speaker, die erns van die huidige internasionale situasie in die Midde-Ooste moet nie onderskat word nie. Die geskiedenis het geleer dat ‘n oorlog altyd onvoorsiene gevolge tot gevolg het. (Translation of Afrikaans paragraph follows.)

[Dr P W A MULDER: Hon Madam Speaker, the seriousness of the current international situation in the Middle East should not be underestimated. History has taught us that a war always has unforeseen consequences.]

The big challenge for the United States will not so much be during the war, but how to manage the turbulent Middle East and bring democracy and peace to Iraq after the war. My prediction would be that this situation will become a long-term problem for the United States, and they will not solve the problem that way.

Mevrou, na die oorlog sal ons met ‘n totale nuwe wêreld sit. Die feit dat die Verenigde State die Verenigde Nasies ignoreer in hierdie konflik beteken dat die belangrike rol wat multi-laterale organisasies soos die Verenigde Nasies tydens die Koue Oorlog-tydperk gespeel het, nou drasties en permanent verander het. Die outomatiese eenheid tussen Westerse en Navo- lande tydens die Koue Oorlog is ook nie meer so outomaties nie, met Frankryk en Wes-Duitsland se kritiek teenoor die VSA. Suid-Afrika sal versigtig en korrek die regte besluite moet neem om tydens hierdie konflik teenoor die nuwe wêreld hierna in die beste belang van Suid-Afrika op te tree.

Saddam Hoesein is ‘n diktator wat enkele jare gelede sonder rede Koeweit binnegeval het. Saddam Hoesein het enkele jare gelede gewetenloos opgetree teen die Koerde, wat ‘n minderheid in Irak vorm. Duisende Koerde is deur gifgas en chemiese wapens gedood. Vir Suid-Afrika om vir Saddam Hoesein kant te kies sal ‘n fout wees en is beslis teen ons nasionale belange.

Maar, Amerika se redes waarom hy tans oorlog teen Irak wil maak sonder die Verenigde Nasie se toestemming, getuig van dubbele standaarde as die posisie van Pakistan en Noord-Korea daarmee vergelyk word. Vir Suid-Afrika om onvoorwaardelik vir die VSA kant te kies is ook nie in ons nasionale belang nie. Dit is in Suid-Afrika se belang om nie kant te kies in hierdie oorlog nie. Ons kan wel ‘n betekenisvolle rol speel in die moeilike internasionale omstandighede wat na die oorlog sal volg.

Ek kom by die begroting, en ek is jammer die Minister se begroting word hierdeur beïnvloed, want ek het baie te sê gehad en daar is min tyd oor. Die Vryheidsfront het in sy reaksie aan die media na die Minister se begroting vir die Minister, sy departement wat hier agter sit en ook vir mnr Gordhan spesifiek gelukgewens met die begroting in die breë en veral met die groter as verwagte inkomste en geld wat beskikbaar is.

U weet, in die Bybel lees ons hoe Josef in Egipte aangestel is om tydens die sewe vetjare te beplan vir die sewe maerjare. Dit gaan tans relatief goed met die ekonomie, maar die geskiedenis het geleer dit kan oornag verander, en die Josef sit daar wat nou die sewe maerjare moet beplan tydens die sewe vetjare. Hierdie huidige geld moet dus só aangewend word dat dit voorsiening maak vir die maerjare wat binnekort kan volg.

Nou wat presies is ‘n begroting? ‘n Begroting is die regering se beleid, sy prioriteite vertaal en omgesit in syfers en in rand en sent. Die toets is dus: Het ons daarin geslaag? Kom ons kyk na die probleme: Die kernprobleem in Suid-Afrika is sonder twyfel armoede - werkloosheid gaan daarmee saam

• dan kan ons sê misdaad, dan kan ons sê Vigs.

Hoe spreek jy armoede en werkloosheid aan? Baie eenvoudig, wat my betref, twee maniere: Deur hulp te gee - staatshulp van die staat se kant af; of om die geleentheid te skep waar jy kan werk skep dat mense ‘n inkomste kan kry. Die staatshulp is maklik as daar baie geld is, dus pensioene, meer welsyndienste. Maar dit bring geen inkomste in vir die staat op die langer termyn nie. In die sewe vetjare is dit maklik om so armoede aan te spreek, maar in die sewe maerjare gaan jy beslis in ‘n krisis ingaan. Dan bly werkskepping die beste manier om armoede aan te spreek; die beste manier van voorsorg tref.

Ek wil ‘n bewering maak dat ons nou in ‘n unieke situasie is om dit te kan doen. Die goudprys is op, die rand is sterker, daar is meer belastinggeld. Dit gaan nou goed. As ons werkloosheid oplos, dan los ons ‘n klomp ander probleme ook op. Sosiale projekte soos behuising is goed. Dit koop goedgesindheid by die kieser vir ‘n kort rukkie, maar dit los nie die probleem op die lang termyn op nie. Sonder werk kan hy nie water en ligte vir sy nuwe huis betaal nie. Sonder werk kan hy nie die huis betaal nie, en uiteindelik verloor hy dit en is ons terug waar ons begin het.

Hoe moet ons hierdie werk skep? Nommer een, ons moet buitelandse beleggers oorweldigend trek. Hy wil wins maak, hy wil kapitaalgroei hê. Hy wil nie Zimbabwe-styl hier vasgevang word nie en hy wil nie verplig word om miljoene rande te spandeer aan allerlei sosiale projekte wat hy deur die staat verplig word om te doen nie. Ek dink ons moet baie groot dink in hierdie verband, anders gaan ons nie hiermee slaag nie groot planne maak, geen belasting vir buitelandse beleggers nie.

Ons kan later die werkers belas wat dan nou ‘n werk gekry het daarmee saam, maar kom ons lok hulle met die maksimum moontlikhede. Die tweede moontlikheid is om na die huidige werkgewers te kyk. Die huidige entrepreneurs - en ek moet spesifiek hier die landbou noem die landbou en die boere is u grootste vriend op hierdie stadium om werk te skep, en u moet asseblief praat met u kollega, die Minister van Arbeid, wat nie begrip het vir die situasie in die landbou tans waar minimum lone pragtig idealisties gestel word, maar die implikasies nie deurdink is nie. Die boere sukkel om ‘n gesprek te kry. Hulle berekeninge sê 150 000 mense kan hulle werk verloor, 130 seisoenwerkers kan hulle werk verloor, 50% van die boere kan uiteindelik in sekere bedrywe tot niet gaan. Dit is belangrik. Buitelandse beleggers is belangrik. Kom ons kyk na die huidige werkgewers wat ons hier het. Ek dank u. (Translation of Afrikaans paragraphs follows.)

[Madam, after the war we will have a completely new world. The fact that the United States is ignoring the United Nations in this conflict means that the important role that multilateral organisations such as the United Nations played during the Cold War period has now changed drastically and permanently. The automatic unity between Western and Nato countries during the Cold War is not as automatic as it used to be either, with France and West Germany’s criticism against the USA. South Africa will have to make the the right decisions carefully and correctly to act in the best interests of South Africa during this conflict against the new world after this.

Saddam Hussein is a dictator who attacked Kuwait for no reason a number of years ago. A number of years ago Saddam Hussein acted unscrupulously towards the Kurds, who are a minority in Iraq. Thousands of Kurds were killed by means of poisonous gas and chemical weapons. For South Africa to side with Saddam Hussein will be a mistake and is definitely against our national interest. But America’s reasons why it currently wants to wage war against Iraq without the permission of the United Nations testify to double standards if the position of Pakistan and North Korea is compared to it. For South Africa unconditionally to side with the USA is not in our national interest either. It is in South Africa’s interest not to take sides in this war. We can, however, play a meaningful role in the difficult international circumstances that will follow after the war.

I am coming to the Budget, and I regret that the Minister’s Budget is being influenced by this, because I had a lot to say and there is very little time left. In its reaction to the media after the Minister’s Budget, the Freedom Front congratulated the Minister, his department who are sitting back here and also specifically Mr Gordhan on the Budget in the broader sense, and especially on the bigger-than-expected income and money that is available.

You know, in the Bible we read how Joseph was appointed in Egypt to plan for the seven lean years during the seven fat years. Currently it is going relatively well with the economy, but history has taught us that this can change overnight and this Joseph sitting over there now has to plan for the seven lean years during the seven fat years. This current money should therefore be used in such a way that it provides for the lean years that might follow shortly.

Now what exactly is a budget? A budget is where the government’s policy, its priorities, have to be translated and converted into figures and in rands and cents. The test is therefore: Have we succeeded in that? Let us look at the problems: The core problem in South Africa is without a doubt poverty, concomitant unemployment, then crime and then we may say Aids.

How do you address poverty and unemployment? Very simply, as far as I am concerned, in two ways: By lending assistance - state help on the part of the state; or by creating opportunities in which you can create work so that people can generate an income. State aid is easy if there is a lot of money, thus pensions and more social services. But this does not bring in any income for the state in the longer term. In the seven fat years it is easy to address poverty in this manner, but in the seven lean years you are definitely going to go into a crisis. Then job creation remains the best way to address poverty, the best way of taking precautions.

I would like to contend that we are now in the unique position to be able to do so. The gold price has gone up, the rand is stronger, there is more tax money. Everything is going well now. If we solve unemployment, then we would also be solving a number of other problems. Social projects such as housing are good. They buy goodwill from the voter for a short while, but do not solve the problem in the long term. Without work he cannot pay the water and electricity of his new house. Without work he cannot pay for his new house and eventually he loses it and we are back where we started.

How do we create this work? Number one, we have to draw overseas investors overwhelmingly. They want to make a profit, they want capital growth. They do not want to get trapped here Zimbabwe-style and they do not want to be forced to spend millions of rands on all kinds of social projects that the state compels them to. I think we have to think very big in this regard, otherwise we are not going to succeed in this. We must make big plans, with no tax for overseas investors.

We can tax the workers later who now get a job as a result, but let us lure them in with maximum possibilities. The second possibility is: look at the current employers. The current entrepreneurs - and here I must specifically mention agriculture; agriculture and the farmers are your biggest friends at this stage to create jobs and you should please speak to your colleague, the Minister of Labour, who has no grasp of the situation in agriculture at present, where minimum wages are set beautifully and idealistically, but where the implications have not been well considered. The farmers struggle to achieve discussion. Their calculations indicate that 150 000 people could lose their jobs, 130 seasonal workers could lose their jobs, 50% of the farmers could eventually come to nothing in certain industries. It is important. Foreign investors are important. Let us look at the current employers that we have here. I thank you.]

Mrs M N OLIPHANT: Madam Speaker, hon members, on 26 June 1955 the Freedom Charter was adopted by the Congress of the People. In that congress a declaration was made which says, and I quote:

All people shall have the right to live where they choose; to be decently housed and to bring up their families in comfort and security. Peace and friendship among all our people shall be secured by upholding the equal rights, opportunities and status of all.

In 1994, when the ANC took power, housing the nation was one of the foremost challenges facing the Government. Therefore, the legislative framework for a housing policy was established. The Housing Act is now the supreme housing law in the land and the housing policy is about ensuring access to homes for all South Africans on a sustainable basis, at a price they can afford.

As the ANC-led Government, we believe that of all our resources, nothing compares with the talent and energy of our people. Our housing policy is designed to unleash this energy not only to build houses, but also to a policy of disseminating information and giving meaning to the notion of people-centred development.

Today we can proudly speak of women developers and contractors who entered the construction industry not only to build, but also to earn a living through construction. The Housing department committed itself to ensuring that provinces give at least 10% of their housing subsidies to women developers and contractors. This shows that this ANC-led Government is committed to the programme of women empowerment.

Happily, for the first time in their lives, our people have shelter. What we can infer from the above is that this ANC-led Government continues to have a caring attitude towards the poorest of the poor. In its 1999 manifesto, the ANC promised to speed up change and delivery.

The rate of housing delivery is now approximately 211 000 units per annum. May I state that the rate at which we deliver these units has not been challenged, even internationally. Allow me to illustrate my point. Singapore built 55 000 units in five years, while South Africa built 750 000 units in five years. Sweden built 1 million units in 10 years, while South Africa built 1,5 million units in nine years. To ask for more than what these figures suggest is rather unfair and unrealistic for a struggling country like South Africa.

As the ANC-led Government, we have embarked on townships’ and hostels’ upgrading. It fills me with great joy to realise that at last we have a Government that cares and sees to it that poor people do not live in filthy and hardly bearable conditions. It is as a result of the humaneness of the ANC-led Government that today we have a Budget that recognises the need to have urban renewal strategies, and also transfers ownership of previously Government-owned houses to the poor. Millions of families benefited from our programme of providing housing with security of tenure. We as the ANC have chosen this route, not only as a way of bringing dignity to our people, but also because the right to security of tenure forms the most indispensable core element.

Any increase in the housing budget has a positive impact on job creation in the sense that, although some people built their own houses, others are built by contractors who employ more people to do the job. When a person has a structure or a house with clean water and electricity, which form part of basic needs, the dignity of that person is restored. When the house is finished there are other things that are needed, for example appliances such as TVs, fridges, furniture, etc. Furthermore, where these appliances and furniture are manufactured, employment is created for people, because these are in demand.

By increasing the housing budget, the Government is in a position to create more jobs and at the same time contribute to economic growth. As we speak, Land Affairs has a strategy which accommodates a more proactive approach through the acquisition of private land for settlement. Municipalities will be drivers of a co-ordinated settlement strategy, as identified in the integrated development plans.

The purpose of the Land Redistribution Programme, or LRP, is to provide poor people with land for residential and productive purposes, in order to improve their livelihoods. The programme not only assists subsistence farmers, but is also aimed at settling black, emergent and commercial farmers by providing the previously disadvantaged communities with access land, specifically for agricultural purposes, as well as improving the nutrition and incomes of the rural poor who want to farm on any scale.

Since 2001, 838 farms have been redistributed under the Land Redistribution Programme. This involved 15 676 beneficiaries, of which 5 462 were women and 3 437 the youth. During the apartheid era some farmers used to pay their workers part of their salaries in alcohol, which they called the ``tot system.’’

After 1994 the ANC-led Government called on businesspeople, including farmers, to improve the lives of their workers. One farmer heard that call. This farmer sat down with his workers and said:

I need your help. Run the farm for me. Help me make a championship wine and I will reward you once that has happened. You will work under less supervision.

In May 1996 his wine was crowned South African champion. In May 1997 this farmer called his workers and said:

I will give you 9,5 hectares of vineyards. The land should be used for agricultural purposes. If you do not want it, I will buy it back from you. If you do grow grapes, you can use my farming equipment for three years. If you decide to make wine, you can do so in my cellar. You will continue to work for me and look after your new land in your own time.

This means that, working together, we can make a difference and also give positive impact in a sense that contributes towards poverty alleviation, black economic empowerment, nation-building and moral regeneration. This confirms that this is a people’s Budget allocated according to the needs of the poor.

Through the Land Affairs department’s budget the Government assisted these workers to form their communal property association and start growing grapes. As the Minister of Finance said, the freedom we have won enables us to choose our own destiny and, in so doing, take our development into our own hands. After their first harvest, their first bottling sold like a dream. For these farmworkers it was a dream come true.

We, as the ANC-led Government, have proved our commitment to pushing back the frontiers of poverty. In 1997 farmworkers shifted from poverty and alcoholism to successful wine making. This means and also confirms that this ANC-led Government is a Government of the people, by the people and for the people. I thank you.

Mr I S MFUNDISI: Madam Speaker, the UCDP is against the war, regardless of who is the aggressor. It is regrettable that President Bush has decided to substitute courts for carnage, dockets for rockets, briefs for bombs and warrants for warheads. His decision - together with that of his cohorts in Britain and Spain - shows the extent to which they are not prepared to take advice from other nations.

The resignation of the British Cabinet Minister shows that in essence there are no war-like people, only war-like leaders. The UCDP maintains that the real test of power is not the capacity to make war, but the capacity to prevent it. After all, peace is better than war. We believe in pointed speeches, but not pointed bullets. There is no doubt that the USA will live to rue the day they decided to declare war against Iraq. Back to today’s topic: The current Budget emphasises poverty reduction and investment in infrastructure. An injection of R105 billion has been identified for use in the next three years to boost social services and infrastructure investment, and enhance local government programmes.

The big question, however, is whether social services will benefit, and how much of the money will line the pockets of the officials without paying for the child support grants. How much of that money is going to pay for medicines which will end up in the consulting rooms of doctors with connections in high offices of Government, instead of state hospitals? How much of that money will be paid to municipal managers, instead of providing infrastructure in municipal areas?

This is surely a friendly Budget, as personal income tax will be cut by R13,3 billion. It gives relief to people who earn below R30 000 a year, as they will not pay personal income tax. The consideration given to the low- income earners has brought to light the fact that Government does not want to price itself out of the market by taxing even those who earn next to nothing by today’s standards.

While it is appreciated that the child support grant will be made available to children up to the age of 14, public statements made by Government around this matter should not create the impression that such children qualify with immediate effect, when in fact it will take three more years before they qualify. The sentiment is good, the problem is with its communication.

The R160 a month for each deserving child is welcome, as long as all those involved - parents, guardians and officials - take this with the greatest responsibility. In his call for accountability and service delivery in his speech on Budget Day, the Minister said:

Unless our policies are implemented efficiently, courteously, honestly and enthusiastically, we will achieve far less than we intend and they surely deserve.

The good fine points of the Budget are left in the hands of officials, who have to execute all these noble intentions of the Minister. Much depends on the efficiency of these officers, as well as their courtesy, honesty and zeal in the performance of their duties.

The UCDP proposes that tax concessions be considered for investors and industrialists who put up manufacturing plants in areas far-flung from the metropolises. This will encourage them to invest in their numbers and create more jobs, thus ensuring that people are not dependent on Government handouts.

Social welfare is mainly a provincial competence - that we do not doubt. But the national department deserves more than what has been allocated to it, in order to cover the grant systems and issues around poverty reduction, as well as strategies to mitigate against the impact of HIV/Aids. The UCDP welcomes the increases in the price of intoxicating beverages and tobacco products. In fact, we feel they could be raised even higher. We note the diligence of the National Treasury by having on hand the Division of Revenue Bill four months before it will be needed. This shows commitment and foresight, and only dedicated staff can do that.

Just like it is in life, Mr Minister, where the same object is viewed differently by different people, this Budget will, with all good intentions, not satisfy all people, but is by and large welcomed.

The UCDP supports this Appropriation Bill. I thank you. [Applause]

Ms I MUTSILA: Ndi a livhuwa Mulangadzulo wa Mufumakadzi. [Thank you, Madam Speaker.]

One of the main objectives of this Appropriation Bill is to push back the frontiers of poverty and injustice; to uphold and protect the Constitution and the rule of law, and to promote access to a fair, speedy and cost- effective administration of justice in the interests of a safer and secure South Africa.

The Minister of Finance, in his February 2003 Budget Speech, indicated that he gave priority to reducing poverty and vulnerability. This is our largest and most effective redistribution programme. He further stated that justice and constitutional development received resources to improve the protection of women, children and the disabled in the court process, and to improve the links between the criminal justice agencies through information. Technology is critical in reducing the level of crime in the country.

This Bill also seeks to make the justice system more accessible and user- friendly for the vulnerable groups, especially women, children and the disabled. The Department of Justice and Constitutional Development is continuing to increase access to the courts by building additional facilities and upgrading what exists, especially in previously disadvantaged areas.

About 26 justice centres have been established and an additional 23 are to be established. By the end of 2004 the Legal Aid Board will have a national network of about 60 justice centres throughout the country. The needs of the vulnerable groups will remain a focus and the department will strengthen measures relating to child maintenance, special sexual offences courts, family court centres, domestic violence and extended family advocates. These services are priority areas for the department.

Domestic violence is a social evil. It impacts negatively on the daily lives of the victims. Everyone deserves the opportunity to grow as a human being, and to be treated with dignity and respect. Government places strong emphasis on the eradication of violence. The Domestic Violence Act has been in operation since 15 December 1999. Various problems have already been brought to the attention of the Government department responsible for implementing the Act.

The magistrates’ courts, be they rural or urban, are having enormous problems with implementing the Act, due to the fact that they do not have enough personnel to deal with the huge increase in domestic violence cases. Some offices in the rural areas do not have enough personnel who are able to help an applicant in his or her own language or another understandable language, which results in community members setting up booths where they charge a fee to fill in application forms for applicants. The situation requires urgent and top-level intervention.

The key function of prosecutors is mainly to effectively prosecute the perpetrators and ensure that proper sentences are imposed. However, the National Directive on Domestic Violence extends the prosecution role by assisting victims of domestic violence and advising them on the relief available to them in terms of the Act.

It intends to ensure that there is a reduction in secondary victimisation by empowering prosecutors with ongoing specialised training. This will focus mainly on the level of training given; the relevant loss of policies and the challenges facing all role-players in the justice system, as well as on conducting public outreach programmes, including the role of the prosecuting authority in this area.

The law requires every child to be supported or maintained by his or her parents, whether married, separated or divorced, including parents who have adopted a child. Maintenance is governed by the Maintenance Act, which came into operation on 26 February 1999. Refusal of access may amount to a criminal offence.

The Department of Justice and Constitutional Development does not have sufficient prosecutors for this purpose. The core function of prosecutors is to prosecute cases in our courts. Therefore, they are unable to do administrative tasks on maintenance. Clerks of the court or even interpreters have successfully been appointed as maintenance officers in a number of districts in our country.

To further assist in this matter, the Department of Justice and Constitutional Development has further embarked on a national action plan on developing the maintenance system, with a primary focus on improved service delivery and the appointment of maintenance investigators.

In an attempt to make the justice system more accessible and user-friendly for children, special courts have been established with the view to create a relaxed and informal atmosphere. These have cheerful waiting rooms equipped with playthings for children, as well as comfortable offices and adequate childcare facilities.

These courts have been designed primarily to make them accessible and sensitive to the needs of the community, operate according to simple, appropriate procedures, offer counselling and mediation support services, and provide quality service in a pleasant, user-friendly environment. In the SA Police Service statistics for the year 2000 on rape cases, specific emphasis is placed on the race and age of both victims and perpetrators. The aim of this statistical analysis is to identify certain risk categories pertaining to victims and perpetrators and, consequently, guide us in our preventative initiatives.

Although every woman is a potential victim of rape, these statistics show that coloured and black females are most at risk. The high incidence of rape among coloured and black people could possibly be a result of excessive alcohol consumption and drug usage. Boys are raised to be dominant and to use physical power to illustrate their manliness. They are entitled to use violence to get what they want. Girls are not considered equals, nor are they seen as having equal rights. It has been suggested that a solution may be to begin at home, looking at the way in which children are raised.

Even though the statistical research findings contained in the above report highlight certain risk categories pertaining to victims and perpetrators, one should never lose sight of the fact that all women and girls remain potential victims irrespective of age, colour, culture, creed or place of residence. The Department of Justice and Constitutional Development gained the most from the 2001-02 Budget. An expenditure is given over three years to improve the effectiveness of the criminal justice system and bring a better life for people from all walks of life.

The ANC-led Government is prepared to fight all forms of crime, in order to protect its citizens. We call on and plead with all members of Parliament to utilise their constituencies and portfolio committees to play an oversight role, monitoring that the laws we pass are implemented in the various Government departments, and that our masses are receiving adequate services.

Let us unite in fighting to change the lives of our people for the better, especially those who were previously disadvantaged. This Appropriation Bill is designed to do exactly that.

Ndi a livhuwa. [Thank you.] [Applause.]

Dr S E M PHEKO: Deputy Chair, I must apologise for my voice. Firstly, I want to express the PAC’s profound appreciation to France for using her veto in the UN Security Council to block America’s illegal and irresponsible action of starting a war in Iraq. That war will affect this very Budget and other budgets of the world, especially the budgets of the developing countries.

The PAC supports the Appropriation Bill with some reservations. We are not happy with the way the resources of this country continue to be used. A government’s budget is a statement of the nation’s priorities. It symbolises who is valued and who is not.

The PAC believes that Budget 2003 should have been used as an important instrument to allocate funds liberally to social spending and give effect to the socioeconomic rights of the people. Furthermore, this Budget fails to deracialise the economic system. It continues to perpetuate economic inequality.

This Budget has limited prospects for growth. It does not have the necessary ingredients to generate jobs and address poverty, which is today increasing in South Africa among the African majority population. The Budget has limited prospects for providing the urgent social security net that the people in this country are waiting for.

The PAC is concerned about the absorption of the unskilled, poor labour force in our country. South Africa’s economic problems are far more serious in 2003 than they were in 1994. In 1995, 46% of Africans were unemployed. It is estimated that today 55% of these people cannot find jobs. The strict control of our Government’s social spending has had a negative effect on social service delivery and further impoverished the African majority.

The past eight years have produced policies that led to low economic growth, on average 2,7% instead of 6%. This has intensified the social crisis in our country. The PAC has risen to reject Gear and the premise on which it is based. It maintains a dualistic environment of unequal power relations, exploitative labour patterns and uneven socioeconomic development. It is also underdeveloping the African labour sector.

This is perpetuating the two-nations syndrome of the haves and the have- nots. One sector of the economy is efficient, modern and globally oriented, while the other comprises neglected, messy, unskilled and downtrodden people thriving on violence and crime. There are too many young people in our prisons because of this. The Budget must create conditions that are conducive to developing the youth of our country, preventing them from wasting their talents in prisons.

We are certain that the people of this nation want a Budget that equitably redistributes income and is complemented by employment creation, as well as educational opportunities and entitlements for the African majority through a just sharing of the land.

The National Treasury has not done enough for the poor. It is the contention of the PAC that there was plenty of room in the Budget for the Treasury to take a more aggressive approach to eradicating poverty. It is atrocious that 50% of the people who qualify for social spending grants are not receiving assistance at present. If the plan to supply every household with free water and electricity is implemented, it would go a long way to making a meaningful difference in the lives of the poor majority.

If this Government’s intention is to raise the standard of living among the poor, then extending the social security system and raising the amount of the old age pension to R1 000 would have gone much further than the R60 increment, which appears large in nominal terms but amounts to only R19,70 cents in real terms.

The PAC believes that the people of this country deserve the scrapping of VAT on food, water and electricity. This would go a long way in encouraging saving and putting money back into the pockets of people who have suffered months of high inflation rates on food.

With the high rate of unemployment in this country, we must consider an unemployment allowance linked to acquisition of skills and education for job creation.

However, we support this Bill. [Applause.]

Mme L L MABE: Motlatsa Modulasetilo, Motswana wa maloba o buile nnete fa a re, ``Phiri e sola boa, mokgwa ga e o latlhe.’’ O ne a raya Rre Tony Leon le lekoko la gagwe gore ba sola boa, mme ga ba latlhe mokgwa wa gore ba tseye batho ba ba sotlegileng ba bantsho e se sepe. Go ntse go le jalo ba itumelela go tshegetsa Rre Bush fa a gatelela batho ba bangwe. Motswana o ne a bua ka batho ba ba tshwanang le bona ba. (Translation of Tswana paragraph follows.) [Ms L L MABE: Deputy Chairperson, there is a proverb which says that a leopard never changes its spots. It was referring to Mr Tony Leon and his party who do not change their ways in regarding the destitute black people as nothing. Again, they are happy to support Mr Bush in oppressing other people. This proverb refers to such people.]

The Katz Commission reported in the early 1990s that over the past decade the tax burden moved from corporations to individuals, primarily those in the income group R20 000 to R80 000 per annum, who pay 70% of all the income tax. Now, for your information, currently personal income tax forms 34% of the main Budget, and not the 70% that it used to be in the past.

Collins’ economics dictionary defines taxation as government receipts from the imposition of tax on personal and business income, spending, properties and capital gains. Taxation is used by Government to, firstly, raise revenue to spend on the provision of social goods; secondly, alter income and wealth distribution; and, thirdly, control the volume of imports into the country.

Mo nakong e e fetileng batho ba le bantsi ba ne ba kaya lekgetho jaaka mokgwa wa go duelela tlhaolele, gore e kgone go gatelela batho ba rona. Seno se ne se dira gore batho ba le bantsi ba tile go duela lekgetho. Kana lekgetho leo e ne e le la poelomorago, ka lebaka la gore ba ba dikobo di magetleng, bomme ba ba nyetsweng le batho bantsho ba ne ba duela lekgetho go ya ka palo ya bana ba bona. Ka jalo e ne e le la poelomorago, le sa lebelele kwa pele. (Translation of Tswana paragraph follows.)

[In the past many people regarded paying tax as a means of paying for apartheid to oppress our people. This made many people avoid paying tax. That tax was a drawback, because the poor, married women and black people were paying tax according to the number of children they had. As such it was a drawback and had no foresight.]

The tax system was in a mess and could not raise sufficient revenue during that period. Government depended on borrowing to fund its activities. This situation led to a vast debt that became a yoke on the neck of the democratic Government; a debt which the Government had to repay. What is surprising is that the apartheid government had no clue at all as to what its combined debt with Bantustans was.

Our tax system is progressive in the sense that low-income groups do not pay tax or pay less tax than the high-income groups. Tax discrimination based on gender, marital status or race has been eradicated by this Government.

Aforika Borwa ke nngwe ya dinaga tseo di neng di na le pharologanyo e kgolo mo letsenong la batho. Seo se raya gore bahumi ba ne ba thuma mo khumong, mme ba ba dikobo di magetleng ba ne ba robala le lehuma. (Translation of Tswana paragraph follows.)

[South Africa is one of the countries that had a huge disparity in the people’s income. This means that the rich were very rich whilst the poor were very poor.]

With a Gini coefficient of 0,65, Government is faced with the serious challenge of addressing poverty and income distribution. These are hard choices that cannot be resolved overnight.

The RDP document states that Government must review personal income tax to reduce the burden caused by the fiscal drag on the middle-income groups. The ANC is committed to pushing back the frontiers of poverty in a united action with South Africans. Consequently, this Government has not increased VAT since 1993.

The Mafikeng Conference resolved, and I quote:

Effective fiscal policy requires that Government raise maximum amount of resources possible and free the maximum resources for tangible transformation efforts towards the implementation of the RDP.

Since 1995 Government has consistently reduced the tax burden on the low- income and middle-income groups from R2 billion in 1995 to R13,3 billion in

1. Government gives tax relief to individuals to increase real disposable income, stimulate demand in the economy for goods and services, and increase savings. The R13,3 billion tax relief is targeted across the spectrum of income earners. For example, individuals younger than 35 years who earn R30 000 per annum will not pay income tax.

Go tlaleletsa seno, ba bangwe gape ba ba leng ka fa tlase ga dingwaga di le 65 ba ba golang R65 000 ka ngwana - ke bua ka batho ba ba golang R5 000 ka kgwedi - ba tla duela lekgetho la R450, mme ba tla boelwa ke R161, gore ba kgone go ka e boloka kgotsa go e dirisa mo go tseo ba di tlhokang. (Translation of Tswana paragraph follows.)

[To add to this, others who are below the age of 65 and earn R65 000 per annum - I am talking of people who earn R5 000 per month - will pay income tax of R450, and will get a return of R161 so that they can save it or use it on those things that they need.]

Government is committed to making housing affordable to low-income and middle-income groups. With effect from 1 March 2003 the threshold on transfer duty to acquire residential property is increased from R100 000 to R140 000.

Mongwe le mongwe yo o rekang ntlo go tloga ka 1 Mopitlwe 2003 ga a kitla a duela madi a transfer duty, mme fa motho a batla go reka ntlo ya R200 000, a itse gore o tlile go duela fela 5% mo godimo ga madi a a kwa godimo ga R140 000. Go raya gore o tlile go duela fela R3 000 mo go R60 000. Ga a duele sepe mo go R140 000. (Translation of Tswana paragraph follows.)

[Anybody who buys a house as from 1 March 2003 will not pay transfer duty, but when one wants to buy a house worth R200 000 one should know that one will only pay 5% on the amount exceeding R140 000. This means that one will only pay R3 000 on R60 000. One does not pay anything on R140 000.] The objective of Government is to make more people participate in the economy. We want to make people proud to earn a living and not be dependent on Government grants. Government encourages individuals to make sustainable life savings for retirement, therefore the stamp duty on retirement funds is reduced from 25% to 18%. Government is appealing to consumers to ensure that the tax relief is effected on their retirement savings and to protect their own consumer rights.

Many South Africans have a long history of illegally shifting their funds offshore since the 1980s. Individuals that were sceptical or pessimistic and had unfounded fears about the new dispensation of the ANC led- Government shifted their funds offshore on the eve of our democracy.

Many individuals and institutions now wish to repatriate their assets voluntarily and regularise their affairs. Some of the reasons for repatriating voluntarily are that Government taxes offshore earnings to ensure that taxpayers do not have artificial incentives to invest offshore. In 2002 Government introduced deemed income charges for failure to report foreign earnings. The Financial Intelligence Centre Act has increased the risk of holding illegal offshore earnings. Internationally, the legal and economic environment has become less favourable for illegally held offshore funds. The world community is now intolerant of tax haven countries. The other reason is that onshore investments have performed far better and have better growth prospects than offshore investments. Individuals and institutions will have to abide by the principles of the foreign exchange control and income tax amnesty to regularise their affairs.

The situation I have just outlined shows the increasing confidence that individuals and institutions have in the ANC-led Government. The Government inherited a tax system that was in a shambles, could not raise enough revenue, was ineffective and inefficient, and was disliked by many South Africans who believed that it was an engine to drive their repression.

Government has made a turnabout and has made Sars a resilient, effective and efficient system that raises sufficient revenue and is succeeding in reinstating many taxpayers back into the tax system. I want to thank the team of Sars for their dedication, hard work and passion to serve this Government and help us make a better life for all a reality.

Before I close, I want to indicate that parties like the PAC will always remain crying babies. They would never be satisfied even if all South Africans were happy about this Budget. Unfortunately, because the PAC is naive, it is still crying. [Time expired.] [Applause.]

Miss S RAJBALLY: Chairperson, no matter how sufficient the Appropriation Bill may appear, the pending war on Iraq appears set to be a major catastrophe for our rand. Global stock markets rebounded dramatically yesterday as the uncertainty about whether or not Iraq would be attacked drew to a close. It is predicted that this war will weaken our rand and set us back in our attempts to bridge the gap in society and attain the ends our Budget was master-planned to fulfil.

However, economists predict that South Africa is quite safe, even though the rallying behind the dollar and the drop in the gold price might cause the rand to slide. Well, it’s always good to keep our chins up, but the risk poses a greater threat - and the effects of this war should be taken seriously - not only for South Africa, but for Africa as a whole.

The MF, though concerned about the effect that the attack on Iraq would have on our economy, also extends its concern about the South African human shields that have left for Iraq. This war is totally irrational and can be dealt with in a more civilised and rational manner. The loss of innocent lives, especially of women and children, is the price.

We need to do something, not just for our people, but also for all humanity. The MF believes in: ``No war, no loss of life; love ever, hurt never!’’ Coming back to the Appropriation Bill, poverty, unemployment, HIV/Aids, illiteracy and so many other factors are eating away at the South African population. Since the first democratic elections in 1994, the new South African Government has been planning, juggling and working hard to correct the injustices of the past; to attain equity in our community in all spheres and sectors, and to work towards a better South Africa in the global economy.

Bridging the gap has not been easy, and although a great deal of success has been attained, many shortfalls still exist. Our achievements serve as encouragement to continue reaching for our goals. Our failures serve as encouragement to succeed, and we shall not give up until we do.

Looking at the Appropriation Bill, it is encouraging to note that 16,38% of the total Budget of R133,6 billion has been allocated to Safety and Security. With escalating crime and the effect it holds on other branches and spheres, it is logical that this budget is allocated for containing crime, thus making South Africa safe and secure.

How many newspapers throughout South Africa report daily about crimes? It is a harsh reality that South Africa is crime-infested, for which many factors - including poverty - lie at the root cause.

The MF hopes that the department shall utilise the funds appropriately, so that ends may be met successfully. Noting that tourism is one of our state revenue’s greatest assets, a safer South Africa would be a bonus to ensure that. It’s a sure way of strengthening our fight against crime.

The allocation of funds to social services, namely Education, Housing, Health and Water Affairs and Forestry will hopefully meet societal needs, noting the strains and shortages that each is challenged with. It is questionable as to whether the 11,34% allocated to Education is sufficient, noting that the Education department had already spent 95,72% of its budget by December 2002. That means that the Vote was left with only 4,28% of its budget for expenditure over three months.

The allocation of funds to Votes 1, 2, 7, 9, 10, 11, 12, 13, 20 and 23, totalling an appropriation of less than 0,5% of the total Budget, is adequate, noting that such reasoning previously constituted major roll- overs such as the Public Enterprises one, which constituted the highest decrease at 75,83%. More emphasis must be placed on the black empowerment enterprises.

The MF supports the Appropriation Bill. [Applause.]

Ms R TALJAARD: Chairperson, colleagues, in a recent paper, Estian Calitz argues as follows with reference to Government’s Gear policy:

The post-apartheid Government’s choice of economic measures of macroeconomic stability and structural economic reform show meaningful similarities with the Washington consensus, and received foreseeable praise and critique. With disappearing socialist thought after the fall of the Berlin wall and the bad track record of macroeconomic populism in Latin America, there were few other options which could be taken with confidence.

An outward development strategy was the flavour of the day and the alternatives had little reliability. The nonpopulist choice was not made on grounds of conditionalities of structural adjustment programmes of the IMF or World Bank. In this sense it represents a freedom of choice.

Gear was a politically brave exercise. It has resulted in an important structural reform of the South African economy. We have lauded and always will laud Gear as a bold and brave political step in the right, though difficult, macroeconomic direction.

But we will always contest the degree to which it has been achieved. We will always question what remains to be done where Gear targets on growth and employment have not been reached. We will always, obviously, disagree on matters such as labour market reform and privatisation with regulation, where we believe that foot-dragging is harming and has harmed our growth.

Within the governing alliance, the macroeconomic debate has sometimes been a dialogue of the deaf and a deflection on the left - some of which we have witnessed here today. Government’s Gear strategy was unequivocally and undoubtedly the right thing to do, Minister. If we had opted for the ``left’’ thing to do, there would literally be nothing left. There would be no growing economic cake to share through tax cuts, but mere crumbs to dispose of in a brittle, garbage-bag economy.

Minister Manuel, you are justifiably starting to reap rewards for sticking to your guns on Gear. If only your Cabinet colleagues had followed suit with a vision and clear policies, South Africa would be further along the development path, with socioeconomic development that could underpin a sustainable push for even higher growth of the 6% calibre our country needs to alleviate poverty. These other policy areas, mainly the social ones, are crucial to our ability to attract long-term foreign direct investment, but not all Ministers play the game. In considering an upgrade of South Africa’s credit rating, Standard and Poors said they would have to -

… balance the good track record built up so far in fiscal policy and economic restructuring with the challenges out there, ie social problems, the wealth gap, unemployment and HIV/Aids.

These are areas where your Cabinet colleagues fail to deliver. Had you not stuck to your guns, there would certainly not have been the prospect of balancing sound fiscal management with a renewed focus on social delivery - a balance which the Budget before the House seeks to strike by rolling out poverty relief in the form of food programmes, increased grants, child nutrition programmes and public works programmes.

A successful social safety net and effective Government expenditure programmes to reduce poverty and income inequality are crucial elements of successful structural economic reform, provided - and this is where the emphasis lies - the Government delivers.

As Standard and Poors’ Mr Preuss said in a measured response, ``it was a sensible Budget that put emphasis on social services and poverty alleviation.’’

For Gear to deliver further rewards, South Africa needs to act now to continue structural reform, increase savings, reduce crime, speed up privatisation - yes, with regulation - improve education and fight HIV/Aids.

While the Budget, in the context of a relatively resilient growth, projects growth of 3,3% in 2003 and 4% by 2005, curveballs could, indeed, still hit the South African economy. The world is on high alert, with a possible imminent war. The consequences in terms of currency volatility and inflationary expectations could jeopardise our projections. In the context of such global uncertainty and possible further dampening of demand for exports, South Africa has to look at measures to stimulate domestic demand. In this respect, while maintaining a small and responsible expansionary fiscal stance, the Budget should have done more to spur demand.

The Budget before us delivered more of the same treasured commodity, ie fiscal discipline. It delivered tax relief across all income groups. It delivered a normalisation of tax and exchange control affairs via an amnesty that will not only bring a degree of normalisation, but will also pave the way for more liberalisation.

It also delivered a near-elimination of Government dissaving, a further significant exchange control liberalisation, some tax stimuli for saving, targeted tax incentives for business and SMMEs, and the first smatterings of a social security net.

But this Budget failed to deliver in some material respects. It did not deliver the 6% growth rate we need. It did not deliver substantive corporate tax reform across the board, such as the abolition of secondary tax on companies and capital gains tax or a cut in the corporate rate. It did not deliver jobs or a game plan to generate the skills we need and the growth, primarily in the skills-absorbing tertiary sector, which has 500 000 vacancies in the skills-intensive sectors. Perhaps you do listen to this, Mr Minister, but we haven’t seen it.

It did not deliver affordability planning and expenditure projections across departments to deal with the HIV/Aids pandemic. It did not deliver privatisation proceeds or, indeed, a timetable to be used to attract foreign direct investment or introduce clearer competition and liberalisation in crucial sectors such as telecommunications, transport and energy. It did not deliver a basic income grant, whilst it delivered four more maritime helicopters, more foreign debt to finance their acquisition, paying more for the SAS Amatola and padding the salaries of those who will operate and maintain the Hawks and Grippens by means of salary increases and an incentive scheme in air defence. Given the further roll-out for the arms deal, we have to ask what the priorities of this Government are. In Brazil, President Lula has opted for a zero-hunger campaign and cancelled his arms deal. President Lula has his priorities right; we clearly do not. Perhaps the arms dealers forgot to point out to Government that these conventional arms cannot fight hunger, disease, poverty or unemployment - South Africa’s real, not imaginary wars.

South Africa has been on the path of structural reform for nine years. Some of our key competitors for foreign direct investment, China and India, have been reforming for 24 and 12 years respectively, with China raking in over 70% of foreign direct investment in the developing country marketplace. At US$50 billion per annum, foreign direct investment in China is impressive. South Africa lags far behind. Whilst lauding our structural reforms, we have to ask why we lag behind in this regard.

Part of the reason is unresolved structural reform. Gear was never fully implemented as an integrated package, with all the structural reform it promised. In addition, risk-shy investors see a ``bad neighbour’’ factor in South Africa’s risk profile. Those who minimise the importance of this political risk factor need only look at foreign direct investment in South Korea this year and the fate it had after North Korea re-embarked on its nuclear development prospects.

Structural economic reform is always politically difficult. One can point to clear examples in the developed world where this remains a feature, Germany and France being key examples under the Growth and Stability Pact that accompanied monetary union. Structural reform in a country in transition, with high inequality and poverty to arrest, is even more difficult.

But there is no alternative to structural reform. The salient lesson from the Chinese and Indian examples is that growth-enhancing sustainable structural reform is the road of the long haul, not the road of the short cut. This is the message that Government, business and labour have to take to the Growth and Development Summit. This summit must craft a consensus on where South Africa is moving in terms of its growth rate and how it plans to invest in its human capital, be it in terms of skills or HIV/Aids, and what we need to get there.

Some of our needs are abundantly clear. We need consensus at the summit to continue structural reform. We need responsible black economic empowerment and clear rules of the game to limit uncertainty. We need job creation, as well as accelerated and targeted social delivery to alleviate poverty. We need to win the war against crime decisively to attract foreign direct investment. We need a clear and unwavering focus on HIV/Aids, with specific targets to cut back the epidemic by 2005, 2010, 2015 and so forth.

Our economy literally cannot afford not to set targets for treatment. Business, labour and Government need to make it a serious area of economic focus at the Growth and Development Summit in May. If affordability of a treatment roll-out is such a key constraint and R3,3 billion is all Government can spare to comply with the Constitutional Court ruling, the time has come for a public-private partnership to fight HIV/Aids as not only a national emergency, but as an economic emergency.

Part of the success rate of the Indian economy is not only its focus on the IT sector, which South Africa cannot merely mimic and replicate, but its social investments, primarily its investment in combating HIV/Aids with targets, a social factor recognised as crucial to continued economic progress.

On the employment front the challenge is stark. Quick-fix solutions to South Africa’s employment challenges are not available. This is partly due to structural elements in our economy, and partly due to the historical and global context in which we find ourselves.

In respect of job creation, the Budget is disappointing. While tax incentives for small, medium and micro enterprises, skills development drives, municipal infrastructure projects with public works potential and rural development will do no harm, they are no substitute for long-term job creation through sustainable economic growth.

Important as short-term remedies, such as the ones in the Budget are, there is in the end no substitute for addressing structural impediments to employment growth in South Africa. It is difficult to imagine this happening without a clear agreement between role-players at the Growth and Development Summit. The minimal labour market reform we have seen has not gone far enough.

The structure of South African exports is much more human-capital intensive than in countries like China, Indonesia and Korea, which all deliver a much higher percentage of unskilled intensive exports than South Africa. The real competition is not between labour, Government and business, though they all vie to protect their respective vested interests: it is between labour in South Africa and labour in Malaysia, Vietnam, India, China, Brazil and others. We need to stop fighting each other and take on the global competition. [Interjections.]

The DEPUTY CHAIRPERSON OF COMMITTEES: Order, hon members! Proceed, hon member.

Ms R TALJAARD: We further need the development of a lower-skills-intensive factory production, which undoubtedly requires a more flexible labour market, as well as a policy and price environment that is more favourable for labour-absorbing, rather than labour-saving technology. If this implies further structural reform, it must simply be done in a pragmatic way with consensus, without dogma or ideological fixation.

We clearly need an increase in the supply of skilled workers. This must be buttressed by better utilisation of the existing corps of skilled South Africans both here and overseas, as well as the expansion of opportunities for life-long learning and an immigration policy that promotes the acquisition of scarce skills.

In this year’s Budget, Minister, you have shown a vision of where we could be going to move onto a path of accelerated economic growth. You have been bold. Many of your colleagues have been timid, and have failed to deliver. Your achievements have to pave the way for their achievements. But if their achievements do not follow suit, we will not move on to a higher growth path.

They have delivered policy snarl-ups in too many departments, and crucially, we can think of Telecommunications in the IDC cluster. We must tackle the remaining structural reforms with vigour, despite their political holy-cow status, and the social challenges that confront this country, with dedication. That is the right thing to do. It will deliver more results; it will take South Africa forward.

The summit must move us in this direction. If it fails to reach consensus on what we need for an accelerated growth path, we will not reach the fulfilment of the second decade of development and we will not move South Africa onto a path to a decade of accelerated economic growth and substantial social economic development. I thank you. [Applause.]

Mr M J MALAHLELA: Deputy Chairperson, the general parlance of society today

• an issue which is becoming habitual in debates of this nature - is that managers must manage, and the flipside of the coin will become clearer in the next 10 minutes.

However, it is also important to indicate that there is a loose rhetorical cannon which is becoming sterile, and that is that South Africa is much worse that it was in 1994. We need to examine this. Ukuthi singabo obani, sibuya phi, siya phi. [Who we are, where we come from and where we are going.]

As the last scene of apartheid darkness was interred to spell an end to the tragic episode of 34 years of colonial terrorism and capitalist exploitation in the form of apartheid colonialism, so ascended to the stage in 1994 actors in a new episode, affirming the pronouncements of the congress of the people in Kliptown in 1955, ``There shall be houses, security and comfort’’.

When the curtain of the new and struggling-to-be-born episode was raised, it was noticed by the proletariat viewers of national and international origin that the fleeing actors of the dying episode left on the scene ticking time bombs which were ready to explode. The powder keg was a racially polarised and morally decadent defence force, a moribund justice system and an intelligence service whose immune system was ready to give in. It was left to these actors of our people, the ANC, to defuse these ticking time bombs.

The debris of the explosions that these exuberant actors started clearing and cleansing ushered in a new parlance - reconstruction and development - which was and still is the theme of our new scene. In barely a decade we, the actors in the new scene, were able - to the amusement of all and sundry

• to unravel the complexities of the dying episode, an episode of ferocious atrocities and dreadful activities that were ruthlessly unleashed against the innocent masses of our people by those who were responsible for their security.

In clearing this debris and unravelling the aforesaid complexities, the creation of constitutional supremacy was at the apex, with the Constitutional Court being the custodian of our rights, so that constitutionally contentious issues could be entertained, as against the inclination to coups d’état. Let us steal this leaflet from the UDM of Gen Bantu Holomisa.

Not only were we concerned in this episode about that which could be seen by the naked eye, but so also were we concerned about the debris of the last episode located within the hearts and minds of our people. As such, we created a new broom, the Truth and Reconciliation Commission. It flushed out the moral and spiritual debris located in the hearts and minds of our people and in unison they sang, Alex Borain, kha ubabize, kha ubabuze, batheth' inyani.'' [Alex Borain, call them, ask them to tell the truth”.]

For the first time in our lives, after 34 years of colonial terrorism and capitalist exploitation, we knew what happened to Sparrow Mkonto, Matthew Goniwe, Fort Calata - the list goes on and on. When the morality of our times dismisses the immorality of the past through the Scorpions of our own creation, the Asset Forfeiture Unit of our times, the pleas of the immoral souls perish under the ever-echoing ululations of the moral souls.

Basking in the outskirts of the extravagant suburb of Jacaranda City on the road to Delmas, our industrious and ever-vigilant intelligence service uncovered and outsmarted the vile activities of vigilante groups in the form of Bontle Magolego’s Mapogo a Mathamaga and People Against Gangsterism and Drugs. We made further strides to expose, in our peaceful Limpopo and North West provinces, clandestine operations of a lunatic fringe of disgruntled and verkrampte [Conservative] Boeremag … … ‘n skorriemorrie-Boeremag, ‘n niksbeduidende Boeremag. [Tussenwerpsels.] [a rabble Boeremag, an insignificant Boeremag. [Interjections.]]

This sting and waves of the Scorpions of our creation swept through Bronkhorstspruit to confiscate counterfeit goods crippling our economy. We cannot tolerate, in the new episode of our people, economic treasoners who devalue our reserves with a piece of aluminium, our coat of arms printed, a mathematical figure 5'' and the respectful letterR’’ all in the name of the production of fake R5s in Randburg. We arrested them.

It dawned on those KPNG directors who thought that transfer pricing could be used as a leeway to starve our economy of its deserved surplus that they were wrong. We arrested them. Those who faked their way to the top in the SA National Defence Force realised upon our arrival in Sandton that they had overestimated their luck; they had overestimated their hegemony. We arrested them.

At the foot of the mountains of South Africa ululate those who have been condemned by the last episode as drawers of water and hewers of wood. In the distance rejuvenated voices warn, however, that prisons should not be used as places of condemnation that condemn people to the dungeons. In doing so they welcome the provision of funding to provide skills and personal development programmes, as well as processes for reintegrating prisoners into the community upon their release.

Now recently those who felt the impact of our cleansing wave, not in their minds, not in their hearts and not on their skill, but in their pockets, sprinted to Wits University and declared that the judiciary was taking a sharp curve. They attacked the Director of Public Prosecutions, for Harksen is negotiating his way to oblivion.

We, the proud Africans of the South, pride ourselves on the heroism of our soldiers who bravely waded through the floods of Mozambique to save the lives of millions of our people East of our fairest South. As we speak in this secure House of Parliament, the free birds of Cape Town and South Africa are leading the chorus, so joined by the birds of the once-fearful forest of Rwanda and Burundi as guns stutter no more.

In appreciating the R1,3 billion to support peacekeeping missions and the New Partnership for Africa’s Development, they sang:

Hail to you, South Africa; hail to thee, ANC, for no man of the conception of your womb should interrupt this, at its thinnest to the 100th generation, the episode of consolidating your power in pushing to the doldrums, the frontiers of our poverty, our insecurity.

[Interjections.]

From Senegal of Abdoulaye Wade in the West to Somalia of Abdikassim Salad Hassan in the South, the swallows of Algeria of Abdelaziz Bouteflika and of Nigeria of Olusegun Obasanjo, freely in their flight conveyed the message of ours that one swallow cannot make a summer.'' The whole of Africa was united and in unison they sang the song of Nepad:Nepad, Nepad’’, we sing, and to the last lyrics, ``ourselves, our Africa, our only hope.’’ [Applause.]

Mr C AUCAMP: Mr Chairperson, with regard to the imminent war in Iraq, I would like to give the Government some good advice from the Good Book. Proverbs 26: 17 reads:

He that passeth by, and meddleth with strife belonging not to him, is like one that taketh a dog by the ears.

Die wêreld is verdeeld oor hierdie oorlog. Indien Saddam Hoesein wesenlik in gebreke gebly het om te voldoen aan Resolusie 1441 van die Verenigde Nasies, is hy gewoon die outeur van sy eie ondergang. Ons eie ``wapeninspekteur,’’ die agb mnr Aziz Pahad, het die hele span van Hans Blix in die skadu gestel en sommer ná drie dae die gewigtige uitspraak gelewer dat Saddam saamwerk met ontwapening. So maklik is dit nie. Wat werklik in die skuilplekke en opslagplekke van Bagdad aangaan, weet ons nie. Kom ons neem dus maar die woorde van Salomo ter harte en, in Suid- Afrika se eie belang, gryp nie die verbylopende hond aan die ore nie, want dit kan ons duur te staan kom.

Wat die Begroting betref, het die agb Hogan in haar toespraak die huidige Begroting in langtermynperspektief geplaas. Sy het dit vergelyk met die laat tagtigerjare toe die ekonomie op die rand van ineenstorting gewankel het. Sy, en talle ander kommentators, het ook gewys op die feit dat die Suid-Afrikaanse ekonomie groei te midde van ‘n wêreldwye resessie en ekonomiese afplatting. ‘n Mens kan nie teen hierdie syfers stry nie. Die jongste Begroting is ook bewys daarvan. Dit sit R13 miljard terug in die belastingbetaler se sak en bewillig tegelyk genoeg geld vir sowel noodsaaklike maatskaplike besteding as vir infrastruktuurontwikkeling.

Dit is inderdaad ook so dat die Regering krediet moet kry vir sy makro- ekonomiese beleid en fiskale dissipline. Die beweegruimte wat die Minister op die balanseerbalk gehad het en doeltreffend benut het, illustreer dit duidelik. By uitstek moet krediet gegee word vir die feit dat die Regering nie soos talle ander Afrikalande ná uhuru geval het voor die populistiese druk om vinnige kitspasellas uit te deel met geleende geld uit die buiteland nie, maar om maatskaplike besteding te koppel aan groei en ontwikkeling. Dit het die skuldlas binne perke gehou en ‘n gesonde Begroting en volhoubare ontwikkeling moontlik gemaak. Die AEB erken hierdie gesonde dissipline en gee graag daarvoor krediet.

Dit is egter net die een kant van die munt. Hierdie Begroting toon vir ons twee dinge. Eerstens toon dit vir ons die geweldige potensiaal wat hierdie land het. Ons is in wese nie ‘n Derdewêreldland nie. Ons natuurlike en menslike hulpbronne plaas Suid-Afrika eenvoudig in die Eerstewêreldliga en as hy nie daar speel nie, is daar fout.

Tweedens - hier verwys ek weer na die agb Hogan se positiewe vergelyking met die era voor ‘94 - spreek die ekonomiese opbloei, die ekonomiese aktiwiteit en die gunstige betaling aan die keiser wat hom toekom ook daarvan dat die Suid-Afrikaanse bevolking, en by uitstek die ekonomies aktiewe deel daarvan, nie die speelgoed uit die wieg gegooi het ná 1994 nie, maar positief, patrioties en met toewyding verder gebou het aan hierdie land; nie gehoop het op die groot katastrofe of die een of ander ontvlugting nie, maar gewoon skouer aan die wiel gesit het.

Dit spreek daarvan dat diegene wat voorheen eksklusief die mag gehad het, die nuwe werklikheid aanvaar het, Suid-Afrika as tuiste aanvaar het en gedoen het soos die profeet Jeremia die Israeliete self onder ‘n vreemde juk in ballingskap in Babel beveel het toe hy geskryf het dat hulle moet huise bou, wingerde plant, trou en kinders verwek en kleinkinders, die vrede en voorspoed van die stad soek, want sy belang is ook hulle belang.

Dit is wat die meeste Suid-Afrikaners gedoen het. Dit sluit in die sakesektor, die media, die burgerlike samelewing, ja, selfs die opposisie, wie se kritiese ingesteldheid te maklik as onpatriotisme afgemaak word. Hierdie Begroting is soos ‘n veer in die hoed, nie net vir die Regering en die Minister nie, maar vir Suid-Afrika en al sy mense. Ons kon net sowel die Savimbi-opsie gehad het.

Hierdie positiewe bydrae en deelname is egter nie vanselfsprekend nie. Dit sal slegs volhoubaar wees indien groter erns gemaak word met die belange van elke gemeenskap; indien deur duidelike distansiëring die Zim-spook in Suid-Afrika besweer word; indien dienslewering, veiligheid en nie- diskriminasie van so ‘n aard is dat al hoe meer Suid-Afrikaners uit alle bevolkingsgroepe sal sê hulle toekoms is hier. Die AEB steun die Begrotingswetsontwerp. Ek dank u. (Translation of Afrikaans paragraphs follows.)

[The world stands divided on this war. If Saddam Hussein did indeed fail to comply with Resolution 1441 of the United Nations, he is simply the author of his own downfall. Our own ``weapons inspector’’, the hon Mr Aziz Pahad, overshadowed the whole team of Hans Blix, and within only three days issued the important statement that Saddam is co-operating with the disarmament. It is not that simple. What is truly occurring in the hiding places and depositories of Baghdad, we do not know. Let us therefore take the words of Solomon to heart and, in South Africa’s own interests, let us not take the passing dog by the ears, because this could cost us dearly.

As regards the Budget, the hon Hogan, in her speech, placed the current Budget in a long-term perspective. She compared it to the late eighties when the economy was on the verge of collapse. She, and many other commentators, referred to the fact that the South African economy is growing amidst the worldwide recession and economic levelling off. One cannot argue against these numbers. The latest Budget is also proof of this. It places R13 billion back into the taxpayer’s pocket and, at the same time, votes enough money for the necessary social expenditure, as well as for infrastructural development.

It is indeed also true that the Government should be given credit for its macroeconomic policy and fiscal discipline. The room to manoeuvre that the Minister had and effectively used on the balancing beam clearly illustrates this. In particular, credit must be given for the fact that the Government did not, as several other African countries did after uhuru, fall for the populist pressure to hand out instant freebies with borrowed foreign money, but linked social expenditure to growth and development. This kept the burden of debt within limits and made possible a sound Budget and sustainable development. The AEB recognises this sound discipline and gladly gives credit for it.

However, this is only one side of the coin. This Budget demonstrates two things to us. Firstly, it demonstrates to us the enormous potential that this country has. We are, in essence, not a Third World country. Our natural and human resources simply place South Africa in the First World league, and if it is not playing in that league, there is a problem.

Secondly - here I again refer to the hon Hogan’s positive comparison to the era before 1994 - the economic revival, the economic activity and the favourable rendering unto Caesar of the things which are Caesar’s also attest to the fact that the South African population, and particularly the economically active part of it, did not throw its toys out of the cot after 1994, but positively, patriotically and with dedication further built this country; did not hope for the great catastrophe or one or other way of escape, but simply put its shoulder to the wheel.

This says that those who previously had the power exclusively, accepted the new reality, accepted South Africa as home and did as the prophet Jeremiah commanded the Israelites themselves while under a strange yoke in exile in Babylon, when he wrote that they must build homes, plant gardens, marry and have children and grandchildren, seek the peace and prosperity of the city, for what is in its interests is also in theirs.

This is what most South Africans did. This includes the business sector, the media, civil society, yes, even the opposition, whose critical approach is all too easily slated as being unpatriotic. This Budget is like a feather in the cap, not only for the Government and the Minister, but for South Africa and all its people. We could just as well have had the Savimbi option.

This positive contribution and participation is, however, not self-evident. This will only be sustainable if the interests of each community are treated more seriously; if, through clear distancing, the Zim ghost is exorcised in South Africa; if service delivery, safety and nondiscrimination are of such a nature that more and more South Africans from all population groups will say that their future lies here. The AEB supports the Appropriation Bill. I thank you.]

Mr B A MNGUNI: Mr Chairperson, I would like to open this debate by quoting the President at the ANC Policy Conference on 27 September 2002, where he said:

The progress we have made with regard to our economy has made it possible for us to be confident that we can stand up to the challenges posed by the global economy, without any fear that we will collapse at the face of these challenges. Instead, we have transformed an economy that owed its vibrancy to the apartheid incentives, protection and super-exploitation, to one that has the competitive strength and initiative to take its place within the global market.

The solid foundation for a change from protectionism to competitiveness has been laid by the blood, sweat and tears of old and young revolutionaries, many of whom never lived long enough to taste the sweet fruits of their toil and turmoil. Thousands of others, with determination and deep conviction to build and bring about a better society, are putting their shoulders to the wheel to see this economy prosper and not falter, even though they themselves suffer from the legacies of the previous economic policies, which are as persistent as dew or frost on the grass in the morning sunlight.

The change from a bleak to a resilient economy has been confirmed by organised business like the SA Chamber of Business, Afrikaanse Handelinstituut, the Black Business Council and two or more others who attended the public hearings to air their view on this Budget. Irrespective of their sectorial differences and socioeconomic persuasions, organised business and labour’s testimony corroborates the fact that Government’s economic policies are addressing the needs of the country, creating suitable conditions for investments.

Despite signs of recession in Europe’s robust economies like Germany and France, and the fall by 50% of the stock markets in the US, the South African economic growth increased by 3% in 2002. This growth and development, like cumulus clouds gathering under the gale-force westerly winds over the blue highveld skies, is expected to gather momentum in the medium-term expenditure period ahead, due to initiatives taken to encourage investments by the Government.

Rightly so, organised business has pointed out that more attention should be given to the domestic environment if we want to maintain our sacred position on this tidal wave of economic growth and development. One cannot but agree. However, this Budget and the MTEF ahead pose many challenges and opportunities for big and small, as well as organised and disorganised business to complement Government in the reduction of unemployment, hunger and poverty.

This Budget provides a number of concessions in creating an enabling environment for domestic investors. These concessions range from a primary to a secondary sector. They range from accelerated depression for bio- diesel plants and machinery, to an accelerated four-year period for capital expenditure relating to research and development in the field of natural and applied science. Small entrepreneurs will no doubt benefit by claiming losses from ordinary revenue on the sale of devalued depreciable business assets with short economic lives.

The fertile, but uncultivated soil in the property development sector and financial services has been turned over for sowing by increasing the exempt duty level from R100 000 to R140 000, and abolishing stamp duty on insurance policies and fixed-deposit receipts.

The increase of the turnover limit from R3 million to R5 million for small business qualifying for a lower company tax rate will probably go a long way in encouraging savings and investment in the sector. A further boost to encourage savings and investment is provided by the relief given to business assets sale proceeds if these are invested within 18 months.

Just as the westerly winds and dust from the red soils or the highveld create atmospherically suitable conditions for a heavy downpour over the dry, grey, grassy hills, Government creates suitable conditions for business to generate as many job opportunities as possible for the flood of new job-seekers from schools and tertiary institutions, as well as the unemployable victims of corporate restructuring in the quest for better profit margins.

Job losses did not start in 1995: they started two-and-a half decades ago. South Africa is a developing country and most of the jobs are in the primary sector. As we transform from the primary sector to a service sector, we are bound to lose jobs. This is not because of the Government’s policies.

I do not disagree that any entity that is a going concern has to make a profit. Like a farmer who ploughs after a good rainy season, the harvest will be plentiful. I think it is high time that the corporate sector took a bold step and started investing in the domestic market.

Room has been created, through exchange control relaxation, for South African companies to raise their offshore investment to R1 billion, thus enhancing diversification of their investments and minimising market risk. Testimony was presented at the hearings that cash surpluses in the corporate sector were not only due to the lack of domestic investment opportunities, but also the lack of investment opportunities internationally as well.

Organised business have expressed their concern about the burdensome tax compliance legislation and regulations, of which costs are said to be driving away potential international and local investors from the country. Put in Sacob’s own words:

A business environment must be created that makes it easy for businesspeople to comply with the law. Laws that put the majority of businesspeople outside its ambit are bad laws.

Capital gains tax was cited as one of the administrative hurdles to tax compliance. The argument over capital gains tax is long over. However, I am confident that the Minister is aware of all the hot spots, and knows when and how to tackle them. No matter how hard a farmer can work with the anticipation to have a good harvest at the end of a season, he cannot protect his crops from a devastating hailstorm on a hot summer afternoon. It is as a result of Government’s deliberate effort to implement sound and prudent economic policies that we find ourselves enjoying one of the most robust and resilient economies in the world. The Afrikaanse Handelsinstituut said in its own words, and I quote:

The stability of the balance of payments depends on the investors’ confidence and consequently, on sound economic policies and a stable political and macroeconomic environment, not only in South Africa, but also in the subregion. International competitiveness is the norm for success in the world economy. In this regard, the Budget presents a friendlier package for investors, internationally and locally, big and small.

I would like to conclude by quoting the President again at the policy conference, where he was referring to the 1997-98 East Asian financial crisis and the post-September 11 global economic slowdowns. He said:

Obviously, this is not to suggest that we are immune from negative developments in the world economy or adverse consequences emanating from the processes of globalisation.

The crisis facing the world today of America attacking Iraq is one of those exogenous factors that will see us failing in the implementation of this Budget. It’s not because the Government is endorsing bad economic policies, but because of exogenous factors from which we cannot run away. [Applause.]

Mr P J NEFOLOVHODWE: Deputy Chairperson, Azapo has always held the view that the war in Iraq is not about the weapons of mass destruction, but about the control of Iraq’s oil resources and other material benefits. This truth is now beginning to be evident, and it will become clearer as the events unfold. We as Azapo will not be surprised if the Americans drop weapons of mass destruction during this war, and then turn around to claim that those belong to Iraq. [Applause.]

With regard to today’s debate, Azapo supports this Appropriation Bill. However, whilst we support this Appropriation Bill and agree with the statement that we should push the frontiers of poverty, we would like to make certain suggestions to accelerate this push for tax cuts. Budget allocations to the most vulnerable citizens of our country are, indeed, an important step towards the eradication of poverty and other ills of our society.

The Budget before us does indicate a willingness on the part of Government to move in this direction. But for those who are not working and the aged, as well as those who were retrenched in 2002 and earlier, these tax cuts will not be meaningful. Therefore, our suggestion is that, as we push back the frontiers of poverty, we should not forget the rural communities, who presently do not enjoy the other benefits that the urban communities enjoy.

Azapo believes that for as long as we cannot create jobs, we will always be in a situation where some of our citizens are not able to enjoy what has been placed before us by this Budget. Those of you who stay in rural areas and those who make it their concern to interact with rural communities will have come across the following factors: the absence of sanitary facilities; lack of adequate educational facilities; the prevalence of gravel roads that are not properly maintained; lack of clean drinking water; a long distance from one Government facility to the other; no electricity, and poor medical facilities, if any.

Again, in order to raise the standard of life for the rural citizens, the Budget should have been biased in their favour, since, as I said, they do not presently enjoy some of the benefits that are enjoyed by urban people. Azapo believes that in order to liberate rural women in particular, the Government must pay particular attention to making water and electricity accessible to rural communities, thereby freeing women from having to fetch water from rivers and wood from the mountains and valleys.

Land must also be made available to women, again in order to free them from their dependence on men and develop their actual potential. The urban and rural divide should be attended to with speed. I thank you. [Applause.]

Mr K A MOLOTO: Deputy Chairperson and hon members, the liberation movement of our people, the ANC, has remained faithful to its commitment to eradicating poverty and creating a society that cares for all its citizens, especially the most vulnerable.

It is this unwavering commitment to fight for a better life for all our people that has inspired many in our ranks to cast away their fears in the face of danger, to the point of laying down their lives. It is also this total commitment to our people that truly defines the character of this great liberation movement. It will continue to occupy a special place in the hearts of our people.

Therefore, it is an honour and a great privilege to rise and speak on behalf of this organisation of ordinary people. The critical question that confronts us today is whether conditions among our people have changed since 1994, with particular reference to the aged, the disabled and children. This is a very important question which can only be answered through a penetrating analysis of our history and current social expenditure trends.

The social security system during the apartheid era was designed to provide a safety net for poor whites. It was accompanied by a massive investment in education of whites; thus white workers were empowered with skills that ensured that they enjoyed higher incomes in the labour market. This removed their dependence on social security grants. The question still remains: Have our people’s conditions of existence changed since 1994?

How do local experts pronounce themselves on this matter? Profs Serfus van der Berg and Careen Brendenkamp of the University of Stellenbosch indicate that spending on the aged, children and the disabled in South Africa is large for a developing country. The two distinguished academics also say that social assistance as a proportion of GDP in western European states in 1980 - during the height of the welfare state - indicates, when contrasted with the 1999 social assistance in South Africa, that our country spends proportionately more than many developed welfare states on social assistance.

It would be fair to indicate that France, Sudan and Denmark spend more on social assistance as a percentage of GDP than South Africa when using the same data for those periods. It is estimated that by March 2003 beneficiaries of social assistance will be more than 5 million. By 2005 the total number of social assistance beneficiaries will be more than 8 million. Therefore, it is totally incorrect to claim that the ANC is not sensitive and caring towards the most vulnerable in society.

These distinguished academics indicate that about two thirds of households receiving old age pensions are in the rural areas. They also indicate that social assistance programmes in South Africa are well targeted towards the poor, with small linkages to the non-poor. The social security grants have a profound impact on the quality of the lives of our people.

The extension of the child support grant from seven to 14 years and the extension of the school feeding scheme from Grade R are critical to the wellbeing of our children. Research conducted on the school feeding programme reveal that it is having a positive impact in terms of improved school attendance and better learner attentiveness during lessons. It also contributed to the food security of the households from which those children were drawn.

Good nutrition is essential for the growth and development of children. It reduces their vulnerability to opportunistic infections. It is a well-known fact that poor individuals make up a disproportionately large share of the disabled population. Poverty increases vulnerability to disability, mainly due, among others, to poor nutrition and inadequate basic health care. Therefore, it is important to reduce our people’s dependence on welfare. It is also important to ensure that our people are empowered to participate in normal economic activities, instead of depending on welfare. Spending on education and training, health and land reform plays a critical role in empowering fellow South Africans to engage in productive work. A good foundation has already been laid for the achievement of these objectives.

We are also encouraged to realise that Government is developing a comprehensive social security system for South Africa. There are no quick- fix solutions to some of these challenges. The ANC-led Government has followed a correct approach in the financing of the social security grants. It is compatible with our progressive tax policy.

However, there are some disturbing calls from certain quarters advocating an increase in VAT to finance other types of social security grants. It is important to indicate that none of these advocates of a VAT increase could convince the Finance portfolio committee during the Budget debate. The poor will be adversely affected by such an increase. It is very disturbing to hear business sector representatives calling for a VAT increase. It is also quite disturbing to realise that there are certain political parties in this House who are advocating an increase in VAT.

Re a leboga Mmušo wa ANC maitapišong a wona a go lwantšha bodiidi le go ntšha tlala motseng. Mokgatlo wo o lwetše ditokelo tša MaAfrika Borwa ka moka. Bao ba nnetšego go goelela ba re ANC ga e hlokomele dinyakwa tša batho, ba bolela ditaba tšeo di sa kopanego. A re ba tlogeleng ba bolele tšeo di sa yego ka tsela, bana ga nke ba swana, bangwe o kare o ba rutile ditaba tše dibotse wa bona ba fapoga mo tseleng. Rena re tšwela pele ka go aga Afrika Borwa ye mpsha. Re leboga Mmušo ge o okeleditše batšofe, bana le digole godimo ga tšhelete yeo ba e humanago kgwedi ka kgwedi. (Translation of Sepedi paragraph follows.)

[I thank the ANC Government for its tireless support in fighting poverty and pushing back the frontiers of poverty. This party fought for the rights of all South Africans. Those who keep on complaining that the ANC is not attending to the needs of the people do not know what they are talking about. Let us leave them to talk about weird things; children are never the same. You can teach your children, then all of a sudden others may go out of the way. We are continuing to build our new South Africa. We thank the Government for adding an increase for senior citizens, children and the disabled to the amount they received before.]

Mr C M LOWE: Chairperson, Mr Minister, there is a lot of good news in the Budget. The hon Taljaard has identified and welcomed much of it, and challenged you to be bold and make further structural adjustments where necessary. The DA believes it’s the right thing to do.

But, just as crucially, we believe that it is also necessary to focus Government’s attention on the weaknesses, the shortcomings and the issues not spelt out in the Minister’s Budget Speech, but buried away in the Budget Review, a 279-page document that only the truly intrepid, the brave or the foolhardy might plough through.

This Budget also marks the start of an election year, with the ANC losing traction on a range of key issues and failing to deliver on important areas of need … [Interjections.] Please listen, Minister, you’ll have your chance later! There is deep unhappiness resonating across the people whom they claim, somewhat ironically, to still represent - ironically because, with ANC representatives such as fraudster, liar and Gucci-socialist, Tony Yengeni, and serial absentee, the hon Winnie Madikizela-Mandela, for too many South Africans the promised better life has simply not translated into a better life. [Interjections.]

As the election battle commences, the Minister and, this afternoon, the hon Davies, thumped a populous message, avoiding the pitfalls of the President, who, in his speech, kicked Zimbabwe into touch with reality and scored an own goal by completely ignoring the HIV/Aids pandemic and the genocide that it has fuelled. A populous message on tax cuts was, however, masked in reality by the huge VAT overruns on the back of horrendous price increases for consumers, poverty relief and infrastructure spending.

But a word of advice to the Minister about populism appears aptly in today’s Business Day, directed at his coalition comrade, Mr Marthinus Hang 'em High'' van Schalkwyk:If patriotism is the last refuge of a scoundrel, then populism is a place to rest on the road to oblivion.’’ [Interjections.]

South Africa is not working and Government has failed to grasp job creation as our most urgent national priority. Since 1994 over a million jobs have been lost and black unemployment has risen to 55%. While this Budget does do something about tax and poverty relief - lessened, of course, by inflation readjustments - it is cruelly reduced by an all-pervasive national pastime of fraud, corruption and theft inside and outside Parliament and the Public Service. Perhaps it’s because so many people do take their lead from ANC leaders like Tony Yengeni. It avoids or evades the key question: ``Where are the jobs?’’ [Interjections.]

One out of every three South Africans is unemployed. Seven million people are out of work, and in the entire Budget Review only one paragraph deals with the conundrum of job creation. [Interjections.] Those ANC posters promising jobs are as fraudulent as Tony Yengeni’s claims in this House that he received no special discount from Daimler on his 4x4.

Black economic empowerment also threatens to be a nonstarter, except, of course, at the very highest levels of ANC cronyism, jobs for pals and further self-enrichment of the already fabulously wealthy. Ten billion rand is allocated for new empowerment ventures, but the asset transfer targets in the mining industry alone require R100 billion over the next five years. Where will the money come from? With the ANC closing ranks around the lying Yengeni; unable or unwilling to deal with the hon Mandela; actively propping up the Mugabe regime in the face of horrendous human rights abuses in that country; appearing oblivious to the Aids pandemic, and, incredibly, supporting Libya for the chair of human rights at the United Nations, this money is hardly likely to come from confident international investors.

Government’s promised black economic empowerment strategy, the nuts and bolts of how it’ll all be done, scheduled for 5 March, has failed to materialise. The DTI, without formal notice to the committee, cancelled the day before. Two weeks later, I’ve been unable to establish why this important milestone that was announced by the President was missed, why the report had to go back to the Cabinet, or when we can expect Government to unveil the prized document. Does it actually exist?

Under the circumstances, Thursday night’s Idasa debate on black economic empowerment entitled -``Empowerment of the people or the creation of a new elite’’ should be most instructive. I notice that one of our colleagues, Jeremy Cronin, will be speaking. Let’s hope he tells it like it really it, and won’t have to apologise afterwards for saying so.

If Government were really serious about black economic empowerment, then instead of setting targets for the transfer of existing equity that simply further grossly enrich the same few elite while leaving the majority of black South Africans as excluded as ever, the Minister would boldly make the interventions and adjustments that my colleague has proposed. It’s the right thing to do.

Now to Saambou Bank, where, buried away on Page 13 of the Budget Review, Government has raised a contingent liability of R4 billion to cover its obligation to repay Saambou deposits in full - R4 billion, equal to the entire national budgetary allocation to local government, to allow them to provide free services!

The amount is in itself hugely optimistic, and with the annual interest payment to FirstRand likely to exceed R800 million, the remaining asset value of the bank would probably end up closer to R6 billion. Saambou’s former employees and customers, as well as the entire South African public, have a right to know what happened at Saambou Bank.

Why did the Financial Services Board not confirm that they had handed a docket over to the Scorpions, when the story of the report first broke in November last year? Why didn’t the bank’s regulators pick up serious breaches of the licence conditions under the Banks Act and possible criminal conduct at Saambou, including, as we now know, systematic overcharging of interest on loans in terms of the Usury Act, and act accordingly to avert the subsequent curatorship crisis?

Did the bank regulators act correctly in putting Saambou under curatorship? Did they have all the facts about alleged insider trading and money laundering? Who initiated the probe? Was the Minister aware of it and what role, if any, did National Treasury play?

The DA has tabled these questions and applied for access to all three Saambou reports in terms of the Promotion of Access to Information Act. We have yet to receive a response. Apart from a press statement on the curatorship decision and a statement of Parliament on the collapse of the bank, the Minister has yet to make a public statement on the allegations of criminal conduct against former directors and on the section 6 investigation of a subsequent launching problem.

Questions about the apparent conflicts between the regulators, the Reserve Bank, the National Treasury and the curator remain unanswered, as does the fact that correspondence between the curator and Deputy Reserve Bank Governor, Gill Marcus, reveals that a potentially more lucrative bid by Nedcor for Saambou’s microlending division was rejected in favour of a less attractive bid by African Bank Investments, one that was not focused on maximising the bank’s assets.

Then, most telling of all, why, in the middle of the Saambou debacle, did the Registrar of Banks suddenly announce the need for a review of corporate governance in the banking sector? Did it have anything to do with the problems picked up at Saambou, and if so, who picked them up, when, and why were those findings not released?

Despite the shame of Tony Yengeni still hanging heavily over this Chamber, we can and must still speak the truth here. It’s time for the truth about Saambou Bank, Mr Minister. The public has the right to know; Parliament has the right to know.

This afternoon the ANC here has made much of the need to empower South Africans. Well, let’s empower them with the truth this afternoon. Mr Minister, it’s time to speak up about Saambou Bank. Thank you. [Applause.]

Ms C C SEPTEMBER: Chairperson and hon Minister, if only we could get the hon Lowe to come to our Trade and Industry committee meetings, where this morning we dealt with how the CSIR is dealing with technology in South Africa and how the Industrial Development Corporation is now moving into disadvantaged areas, spending the kind of moneys that we want them to spend, focused on these areas. If only we could beg his party to send him to these meetings, so that he does not have to rely on the newspapers when responding to the Minister here. Nevertheless, I’m sure he’ll grow up.

From the early days of the democratic Government, there was a recognition that the massive backlog and disparities in the provision of social services required special funding, over and above that provided for in routine budgeting. The RDP fund was meant to provide for this funding, but some administrative problems arose which led to it being relocated to the Treasury.

However, the need for additional special funds remained evident. Section 6 of the RDP, which deals with funding, correctly pointed out that in order to implement the RDP, a thorough, ongoing reform would be necessary to address some major structural weaknesses, amongst these excessive departmentalism, leading to unco-ordinated and sometimes contradictory decision-making by various state agencies. It also pointed out that the potential contribution of NGOs to reconstruction and development was reduced by the lack of an overall framework and integrative programme. This always resulted in fragmented and isolated projects.

Therefore, the RDP recognised that access to planning procedures and information was unequally weighted in favour of an already privileged group, and that we must ensure that historically oppressed communities get the resources they need to participate meaningfully in planning, processing and decision-making, with particular emphasis placed on the role of women in urban and rural areas, as well as in micro enterprises.

Between 10 and 12 March this year we in the Portfolio Committee on Trade and Industry were fortunate, together with the economic cluster, to hold public hearings on development funding or what is referred to as special funds. The intention of the hearings was to provide a conceptual base for assessing the impact of spending as a tool for Government and civil society to use, as well as how these funds can be more effectively used to achieve the objectives of poverty alleviation and development, amongst others.

Special funds are understood to be additional to routine departmental allocations provided by the fiscus. They may be off-budget allocations and include allocations for civil society organisations like poverty relief funds, as well as foreign donor grants and various other funds.

The overall conclusion flowing out of the presentations made by, amongst others, organisations and agencies that attended - including the RDP Fund, the Isibaya Fund, the International Development Co-operation Office, the National Empowerment Fund, the Department of Provincial and Local Government, the Umsobomvu Fund, the NDA and some NGOs - is that substantial funds for development work are, indeed, available from Government and foreign donors. Indeed, there was a decisive recognition of the tremendous need for poverty alleviation and job creation, as well as the commitment of the ANC and the Government to civil society participation. The public hearings have, indeed, enabled us to reflect on the need to build the capability of Government to spend more effectively, particularly through the special funds, so that the centrality of eradicating poverty can be enhanced. Allocating funds to expand programmes has indeed begun, as we have seen in these hearings. What is important now is to see how the strategic utilisation and realisation of developmental goals is incumbent upon us.

It was revealed at the hearings that in some cases the provision of funding has been very ad hoc, and some of them have spawned the creation of a substantial amount of new spending agencies. In most cases some of them took three years to get established, and their policies are not focused. They are deficient and their outcomes are not necessarily monitored.

Further, access - particularly among previously disadvantaged people - to these funds remains unsatisfactory and there is a need for management skills for project development. Some of them claim that the rigidness of the Budget does not seem to allow support towards long-term project planning, whilst ensuring, of course, that we prevent the corrupt misuse of funds.

A comprehensive report on the outcome of the hearings and some of the suggestions that we are putting forward will be tabled in this House in the near future. However, it is our considered view that we should maybe take the opportunity to draw some attention to some of the following areas.

The first one would be to realise our commitment to development in relation to what the RDP and our programmes have called us to do. Secondly, maybe we should give some attention to accelerating work on promoting greater co- ordination. Indeed, most of the agencies have called for a big effort in co- ordination amongst them in the allocation of funds and, of course, the implementation of programmes. Indeed, this applies to the NGOs and the agencies.

Also, if Government has any further funds to be allocated, perhaps some consideration should rather be given to the lessons that we have learned in the past years to use existing agencies such as the IDT in the hearings. They are not necessarily being used.

We also think that there is ample opportunity here to use the development approach, through community development workers, for our people in rural areas and the townships, including, of course, women and the youth, so that they can all be trained to gain and assist our people to access funding in a very developmental process. Donor funds, we discovered, are off-budget, which may present tracking, monitoring and accounting difficulties, and sometimes inhibit the oversight for Parliament.

The democratic Government will reduce the burden of implementation which falls upon its shoulders through appropriate allocations and responsibilities. If we can considerably pull together our collective effort behind further development, we can ensure that it meets the practical requirements of design programmes in different areas. We have discovered that, yes indeed, moneys have been set aside, and it is our view that it is going in the correct direction. The only other thing that we can perhaps say, Mr Minister, is: ``Let’s make the money work’’. I thank you. [Applause.]

Mrs S A SEATON: Chairperson, hon members, Minister Manuel delivered what many South Africans would consider the near-perfect Budget Speech, proving once again what the leader of the IFP has continuously been saying, ie that Minister Manuel is the best Minister of Finance that this country has ever had.

I liken this Budget not to the plum, but to the rose. Like the beautiful rose, the Budget brightens the lives of many. However, as with the rose, as beautiful and splendid as it may be, and just as there are thorns attached to its stem, so too are there thorns attached to the Budget.

What are the thorns of this Budget, you may ask, considering that in the main it has been praised worldwide as an excellent, well-rounded Budget that gives priority to reducing poverty and extending the child support grant; a Budget that increases spending on social grants and textbooks; a Budget that expands the Integrated Nutrition Programme; a Budget that increases spending on medicines, hospital buildings and equipment; a Budget that goes some way in dealing with HIV/Aids; a Budget that is aimed at strengthening the fight against crime, and a Budget that offers tax relief.

In dealing with some of these issues and taking cognisance of what Minister Manuel himself said when he spoke of prioritising the reduction of poverty, ``eradicating poverty is complex and takes time’’. The thorns are the many folk who sadly cannot wait for the time that it will take. People are jobless today. There are those who are homeless right now; they are hungry today. And to those who are jobless, homeless and hungry, the Budget does little for them. They just can’t wait!

The child support grant extended to children up to the age of 14, to be introduced over the next three years, is great in the longer term, but does not assist those who need it now; to them this is a thorn. Textbooks and the expansion of the Integrated Nutrition Programme are all very well, but then we need electricity, water and toilet facilities in all our schools, including the rural communities, if the youth are to really benefit.

One would hope that the additional money allocated for medicines, hospital buildings and equipment will ensure that our hospitals that are at present not fully staffed and don’t have the equipment will become fully staffed, adequately equipped and have medication available to treat all patients in this country. If not, the thorn begins to fester.

Has adequate provision been made to provide treatment for those who are ailing because of HIV/Aids, more especially the women and innocent children? Or is the provision insufficient to prevent people from dying in their hundreds and thousands? Many of our people are not receiving treatment to which they are entitled under our Constitution. People are suffering and dying and we should - and can - do something to stop it. Although to some extent the Budget strengthens the fight against crime, one must ask: How far does it go? Does it go far enough? We are at war! We are not only at war against HIV/Aids, but the war is also on our streets. Every day thousands of our people are victims of crime. Is there sufficient money allocated to placing more policemen and policewomen on the streets; and to keep those already on the streets there by providing increased and better salaries, more vehicles, adequate equipment and improved resources and infrastructure? Our men and women in the Police Service are seriously stretched and stressed. This is a big thorn.

This Budget makes provision for improving court performances. One can only hope that this will bring about urgent and complete alleviation of a crisis which could compound the present problem of crime beyond anyone’s worst nightmare. Our judiciary is just not coping at present. No amount of policing will redress the rising scourge of crime for as long as criminals bear the legitimate expectation of never being sentenced even if caught, because of a judicial system that just cannot process them. This is a thorn.

The thorns hurt and will continue to hurt until our people can feel that they are not alone; that behind them is a state that really and effectively cares for the suffering people of this country. Our problems will not come to an end and, indeed, are bound to multiply until, and unless, we deal with the problem of unemployment.

Levels of unemployment have substantially risen in the past 10 years. Unemployment lies behind all social evils we debate in this House, ranging from crime to moral degeneration and poverty. If we are to do everything we can to assist the pain caused by the thorns, we have to provide adequate food security, adequate treatment to those who suffer from HIV/Aids, protection for all of us from crime, and the generation of employment for the jobless and homes for the homeless.

Minister Manuel, the Budget is good, but to many just not good enough to prevent the festering prick of the thorn. The Budget remains a rose, and the thorns continue to hurt. Let’s ensure that the hurt does not fester. Thank you.

Dr B L GELDENHUYS: Voorsitter, ek het net een versoek vir die agb Minister van Finansies. Skaf asseblief alle inkomstebelasting af. [Chairperson, I have only one request for the hon Minister of Finance. Please abolish all income tax.]

The New NP still believes that the United States of America should not attack Iraq unilaterally. The New NP still believes that war is not an appropriate mechanism to resolve international disputes. But unfortunately, our beliefs are no longer relevant at this point in time. The United States of America is going to attack Iraq unilaterally. The failure of the United Nations to take effective punitive measures against Iraq for having thus far transgressed 12 UN resolutions is partly to blame for this sorry state of affairs.

Only one man can stop an attack on Iraq within the next 48 hours: Saddam Hussein. If he went into exile as proposed not only by George Bush, but also by prominent leaders of the Gulf states, the attack would be called off. The fate of Iraq and all its people is therefore entirely in the hands of Saddam Hussein. It is unthinkable that a head of state could be prepared to sacrifice a whole nation merely to hang on to power. Saddam Hussein is a phone call away. On behalf of the people of Iraq, President Mbeki should pick up the phone and encourage him to go.

We support the Budget.

Mr B NAIR: Mr Chairperson, I hope hon members can hear me. I am using a hi- tech communication system here.

Chairperson, hon Minister, hon members and friends, in the first place let me congratulate the Minister, the Director-General of Finance Ms Maria Ramos and her team and Pravin Gordhan and the SARS team for a formidable Budget, widely hailed except by a few in this House.

From the Budget presented by the Minister and the Budget Review it is clear that the macroeconomic fundamentals are in place. The budget deficit is manageable, the rate of debt to GDP has been consistently reduced over the past nine years and economic growth, which was negative over 20 years, has grown steadily and is now at over 3%.

Unemployment is the bugbear that has been dogging our economy. Officially it stands at about 30% or 5 million, but researchers put it at about 10 million. This has meant that the state had to provide welfare, housing, pensions, education, school feeding, child grants, food, water and electricity to the needy as the people were unable to provide for themselves. Our detractors, who will scream their heads off that the Government is neglecting poverty, should have their heads examined. Each year over the past nine years about 45% to 60% of the budget has been used for social services.

When in the past 350-year history of South Africa has this happened? Under apartheid scarce resources were invested in war and terror. Did not some of you on the other side of the House support this campaign of terror and help to reduce our people to poverty and degradation? Now you shout: Reduce poverty!

Minister Manuel is meeting the unemployment challenge by outlining the skills development programme, stepped-up infrastructure investment and tax incentives to push growth and unemployment, and tax breaks to small businesses. Infrastructure spending of R70 billion a year over three years and capital projects of R105 billion will involve all spheres of government, the parastatals and private-public partnerships to provide roads, housing, clinics, water, sanitation etc. It is crucial that the extended public works programmes use labour-intensive techniques and promote nontraditional income-generating activities in the townships and rural areas through infrastructural programmes and other means to leverage new investments.

The Governor of the Reserve Bank recently observed that if the unemployed became productive and each contributed R650 per month, their combined output would be R40 billion per year. He said that disillusionment and desperation accompanied unemployment.

At our 51st ANC conference in Stellenbosch we set ourselves the target of halving the level of unemployment by the year 2014. There is no quick fix to deliver this. What is required is a comprehensive, multifaceted programme embracing Government leadership and hard work by our communities in a spirit of Vukuzenzele.

Big business is increasingly going hi-tech, as evidenced by the aluminium smelter in Richards Bay involving billions of rand in investment, but employing only a small number of highly qualified and technologically competent workers. Similarly, the motor industry exported R40 billion’s worth of vehicles, but is increasingly using robotics and hi-tech machinery. Mining is also going the same way. Recently Telkom listed on the stock exchange and simultaneously announced their shedding of 10 000 jobs. This is simply because it is going to use the more sophisticated telecommunications machinery. This will, perhaps, enhance profits. Modern technology no doubt increases production and ensures efficiency and improved quality, but it also fuels unemployment.

This brings me to the excellent work done by the National Development Agency, or NDA, funded by the Government and the EU. In partnership with the National Land Claims Commission and the Land Bank, the NDA is actively engaged in land reform programmes, addressing the needs of those who have been given access to land. These include capacity-building, technical support, business planning, skills development and provision of financial support. Since its inception two years ago, the NDA had provided funding for 2 500 development projects and has in the process created jobs. The projects in Limpopo, Mpumalanga, Eastern Cape, KwaZulu-Natal, Free State, Western Cape and Northern Cape range from cattle ranches, mixed farming, dairy, etc. The people set up structures, adopt constitutions, elect officials and run the organisation. They market jointly, but farm independently.

A good example is that of Oom Jas Barendse, who runs the 906-hectare Rockwood Farm on behalf of the New Life Communal Property Association. [Interjections.]

Hey, suka [go away]! Shut up, man! What are you talking about? [Interjections.] All right. If you don’t want to hear, go outside.

Let me read that again. [Interjections.] I was disturbed here. There is a big racket going on here, Chair.

A good example is that of Oom Jas Barendse, who runs the 906-hectare Rockwood farm on behalf of the New Life Communal Property Association, the only black-owned commercial dairy in Humansdorp. Barendse is also a member of Sefa, the Stormberg Emerging Farmers’ Association in the Chris Hani district at Cradock. Sefa, led by anti-apartheid activists and ably assisted by white farmers, is engaged in commercial farming. Twenty-five farm projects support 420 families and the projects are growing all the time. They work collectively and hard. The white farmers are being paid by the Department of Agriculture to train their black counterparts. Essentially, subsistence farming is being transformed into mainstream commercial agriculture.

In another case 15 people bought a 216-hectare farm and named it Isidingo. The Government granted each farmer R16 000 in subsidies and they then borrowed R230 000 from the Land Bank. The R470 000 purchase price included implements. Wheat, lucern, mealies and cotton are grown. Some cattle are also reared.

Another white farmer, Louis van den Bergh, is mentoring the emergent farmers. They have heaped high praise on Van den Bergh for his commitment. The object of these farmers is to establish a dairy to produce milk, cheese, yoghurt, etc. Already the younger people are being trained. Their problem remains the scarcity of water and they thus employ windmills and boreholes. They are saddled with faulty pumps and a lack of pipelines.

Again, at Eksteenkuil, an island on the Orange River, 113 farmers, funded by the NDA, established ÿ.ÿ.ÿ. [Time expired.] [Applause.]

Mr P F SMITH: Chairperson, may I start by indicating to the Minister that we think, as a party, he’s doing a pretty good job as Minister of Finance and he’s got a pretty good Budget. Indeed, I would concur with my colleague who said that, of all the Ministers of Finance, you are indeed the best, but I think, having said that, given the quality of some of your predecessors, perhaps that might be construed as damning you with faint praise, so let me say it’s a sincere compliment. [Interjections.]

But, having said that, I think members on this side of the House have alluded to a number of problems which indicate that, good as the Budget is, there are nonetheless some serious problems with it, and more particularly with Government’s policy in respect of key matters. I want to refer to just two of those right now.

The first, which is a common theme among many of us, is that of unemployment. We, frankly, believe that Government is not doing and has not done enough to address job creation. Since 1994, year in and year out, the problem has got worse and there is little to suggest, despite Mr Nair’s listing some of the programmes that Government is in fact undertaking, that this is adequate to address what is really a crisis.

In our view the haemorrhaging since 1994 of the formal job structure and the vast increase in survivalist work is actually a disaster, and it is a terrible indictment of this country since 1994. It is of course at the centre, also, of increasing poverty in South Africa, and this issue of increasing poverty, I think, we’ll be discussing next week on the 27th. The point to be made is that freedom cannot be eaten by a hungry person and, likewise, liberation doesn’t keep your bed warm on a cold winter’s night. So a consequence of these levels of unemployment is, of course, that we’re having to address poverty alleviation and instead of eradicating poverty, we’re having to expend vast resources on alleviating poverty precisely because we’re not doing sufficient to address job creation. I do want to say that if you look at our unemployment rate in this country now, it is considerably worse than that that obtained in the USA during the Great Depression. The question we want to ask is, where is our Roosevelt, where is our New Deal?

I think it is true to say that the Government is in fact trying to do certain things, but it, frankly, is not doing enough, and we think the ANC lacks the leadership and lacks the vision to adequately address the matter of job creation and that the Budget therefore fails in this regard. [Interjections.] You show me the million jobs that this Budget is creating, then you’re a half-wit, because they do not exist!

The second crucial thing I’d like to point to is the Government’s lack of response to the Aids pandemic and in particular its refusal to roll out antiretroviral drugs to the persons infected with HIV/Aids. If you had to identify what is perhaps the most critical issue in the country, I would say this is it. Nothing can be more important than the fact that millions of people are being doomed to die because of the inactivity from that side of the House. I think you should all be ashamed of yourselves. [Interjections.]

It’s true to say that the Health budget does indeed allocate fairly significant sums of money to HIV/Aids programmes, but I want to stress that since it fails to address this particular issue, the roll-out of ARVs to the general population, it is in fact failing to address the total health needs of the population.

And it must be said that Government’s response to this issue is really shocking. There are also other adjectives one could use. Let me give you a few: It’s bizarre, absurd, criminal, calamitous, idiotic, shameful, etc. There are lots of adjectives to describe your Aids policy, but frankly, the key point is that one suspects that amongst the ranks of those on that side of the House there’s an ANC leadership that’s been infected with a disease or perhaps a syndrome of its own which is presenting itself in slavish adherence to irrational beliefs.

You hear these idiots running around the corridors saying it’s the food, stupid! Feed the people and they’ll be fine, but we can’t afford it. Really, this is totally inadequate.

The key facts of the matter are that the infection of HIV/Aids is not caused by poverty - I repeat, not caused by poverty - and secondly, that we can afford to treat it. [Interjections.] In fact, we cannot afford not to treat it. Study after study has shown conclusively that the cost to the fiscus of not supplying drugs to treat people with HIV/Aids is in fact greater than continuing with the present course of action. So I should think even simple logic should determine a change of course.

In this connection I do want to congratulate - I hope this whole House and members here might wish to join me - the Premier of KwaZulu-Natal, Dr L P H Mtshali, who is doing what you’re not doing; he’s convening a provincial conference whose brief it is to explore the modalities of rolling out the provision of ARVs to the entire population of the province infected with HIV/Aids, which you’re not doing. It’s also to link up with international agencies and donors and anyone else who can assist, including the local people who are concerned with this process. [Interjections.]

One hopes that this process would get the support of this Government, rather than its objection, but somehow I doubt it very much. Thank you. [Interjections.]

Mr I VADI: Comrade Trevor, it’s been a long afternoon, you’ve heard about 28 speeches and I think on behalf of the House I want to thank you for sitting through all of them, and even listening to some of the nonsense the opposition parties have spoken, with courtesy and respect. [Interjections.] I know you are always heckling, but this time you’ve been more than kind to them. Let me say that I want to raise few things because of the long day.

The first is that there’ve been many responses by business groups, the rich and powerful in society and media groups about this Budget, but I want to bring to you a report from my own constituency, from people on the ground, ordinary men and women, who have responded to the Budget.

There’s a friend of mine, called Farouk Cassim, who lives in my neighbourhood in Lenasia. He says he’s never listened to a Budget before, but when he switched on the TV that day, he listened to the whole speech, and he thoroughly enjoyed it. The women, the ordinary pensioners who come to our parliamentary constituency office, say thank you for their additional grant that they are going to be receiving soon. That is the R700 pension grant. [Applause.]

Whatever the opposition parties might say about the basic income grant and the politics around that, the children from the Tembalihle informal settlement, the eight-year-olds, the seven-year-olds and the single mothers there and in other informal settlements say thank you very much for the R160 that you are going to be giving them this year. [Applause.] They wait in anticipation for the roll-out of this thing over the next two years.

This is the grass-roots feeling. Forget about the rich and powerful in society; these are the voices of ordinary men and women on the street - the poor, the dispossessed and the weak - who are saying thank you for the wonderful Budget that you have presented this year.

The second point I want to make, Comrade Trevor, is that you have quoted extensively from the Freedom Charter in your introduction. You said that the charter reflected the aspirations of political freedom, freedom from poverty, freedom to transform our society’s culture and values, freedom to choose a future for our children. We fought for that freedom because it was the right thing to do. These words sound like music to my ears. This is the first time that I have heard a Budget Speech which has drawn so extensively on the values and the principles of the Freedom Charter. I don’t think any other Minister of Finance has embedded his Budget Speech on the principles of the Freedom Charter. I think you were making an important political statement.

It reflects a reassertion of political issues over economic and budgetary questions. You have restored the centrality of politics over this Budget, and this is a vital thing for a society that is emerging from apartheid capitalism, internal colonialism and race discrimination. The rich and powerful, the former oppressors, will not understand the importance of politics over economic questions. [Applause.] I want to thank you for restoring the balance between politics and economics in this Budget, for bringing back to the fore a concept of political economy rather than naked capitalism.

This morning I had the opportunity of looking at the Freedom Charter again. I was struck by its amazing far-sightedness and the remarkable concept of peace and security displayed by those delegates who met there on the 25th and 26th of June 1955. Those words ring true today when the heavy guns of war and destruction are about to boom over Iraq. The Freedom Charter declared 48 years ago for all our country and the world to know that South Africa respects the rights and sovereignty of all nations, that South Africa shall strive to maintain world peace and the settlement of international disputes by negotiation, not war, and that South Africa will develop an education system that shall teach our youth to love their people, to honour human brotherhood, liberty and peace.

Today our Government is giving full expression to these basic fundamental principles that were enshrined in the Freedom Charter. This is the important thing: the continuity and the centrality of the Freedom Charter in our politics. We are proud that our Government and its security forces have chosen not to be a partner in war. We are proud that they have chosen to be a force for peace in Africa and in the world. South Africa can be proud today that it is not a warmonger on the world stage, that its security services are contributors to peace in Africa in Burundi and the DRC, and in Palestine and the Middle East at large.

This is in sharp contrast to the position taken by the Leader of the Opposition, hon Tony Leon. Today he has endorsed the principle of unilateral militarism in international politics. [Interjections.] He has opened the way for chaos in international politics. He has given vent to the principle of the law of the jungle in his speech. I think that the DP and Tony Leon will live to regret his endorsement of this principle. [Interjections.] Let me tell you why.

Israel is the only state in the world that has violated and refuted almost 50 resolutions of the United Nations General Assembly and Security Council. Israel possesses weapons of mass destruction, including nuclear weapons. The state of Israel continues to terrorise the people of Palestine, using heavy machinery against defenceless civilians. The state of Israel continues to threaten world peace and the Middle East. The state of Israel is a violator of human rights and the Geneva Convention. With the hypocrisy of the United States and, in fact, even of the United Kingdom, and the hypocrisy of that party, they will begin to expose themselves.

If we follow the logic of Tony Leon and his principle of unilateral military action against a rogue regime, then we are opening the door for any country in the world to attack another country without going through multilateral institutions. [Interjections.] I think a time might come when some states will take unilateral action to dislodge the dictatorial regime of Ariel Sharon. On that day the hon Tony Leon will be shouting till he is blue in the face. [Interjections.]

The United States … [Interjections.] The United States … [Interjections.] Who’s talking? [Interjections.]

The CHAIRPERSON OF COMMITTEES: Order!

Mr I VADI: Did you avoid military conscription? [Interjections.]

The CHAIRPERSON OF COMMITTEES: Order!

Mr I VADI: Did you condemn South Africa’s incursions into Angola? [Interjections.]

The CHAIRPERSON OF COMMITTEES: Hon member …

Mr I VADI: You are socialised into a military society. [Interjections.] Rework your mind! [Interjections.] Rework your mind, please! [Interjections.]

The CHAIRPERSON OF COMMITTEES: Order!

Mr I VADI: The United States and the United Kingdom are ready to attack Iraq for defying UN resolutions, but the irony of it is that the United States and the UK today are themselves defying the United Nations. Two wrongs don’t make a right in international politics.

A number of people have raised the issue of the HIV/Aids pandemic. Let us state for the record what is the ANC’s position. It’s simple and straightforward: HIV causes Aids. [Interjections.] Poor socioeconomic conditions exacerbate the virus and the pandemic. [Interjections.] It is critical to have public education and to raise awareness and public consciousness on this issue - the ANC agrees with that. It is critical for people to change their lifestyles and sexual preferences - the ANC agrees with that. It is critical to distribute condoms on a massive scale - the ANC is doing that. It is vital to have home-based care and support mechanisms - the ANC supports that. It is critical to improve nutrition and to have a healthy diet for patients - the ANC supports that. The ANC also supports the handing-out of antiretrovirals to rape victims and to mothers who are pregnant. The ANC supports ongoing research around Aids.

The only issue of difference, for the moment, between the ANC and the HIV/Aids lobby outside is on the question of the roll-out plan. We know the TAC, for example, has done its costing on the antiretrovirals. The Government has appointed its own task team. Give it time to complete its own research and study. [Applause.] It will be reporting quite soon, and I think we will be able to resolve this matter very, very shortly. [Interjections.] What is important for the ANC and the Government is to talk to the TAC to avoid the social disobedience campaign. I think … [Time expired.] [Applause.]

The MINISTER OF FINANCE: Chairperson, let me firstly express appreciation for the broad support for the Budget. I’d like to keep it that broad by being brief here this evening.

Of course the issues we are dealing with in the context of the discussion today are about the risk of war. I want to state unequivocally that the position of this Government is not a position in support of Saddam Hussein. It’s a position against unilateralism. It’s a position premised on the Freedom Charter. It’s a position that recognises that in a world that is increasingly integrated, you need systems of collective decision-making. If they fail, you fail the world, you fail future generations. And if you then within that failed environment take the position that the hon Boy Geldenhuys takes, then you open the door very widely to this notion of regime change in which the big and the ugly can march in anywhere and determine who should rule a country. That has to be fundamentally wrong in terms of the tenets of democracy anywhere, everywhere and for all time. That’s the position that we have to take, that’s the position that we as a nation have to rally around, because that is the only correct position in the present time. [Applause.]

We also have to look at the duplicity of the United States in particular. The Secretary for Defence, Donald Rumsfeld, had personally handled Saddam Hussein. He’s no angel. He’d been personally handled. He’d been empowered in the fight against Iran by none other than the same Donald Rumsfeld. And if you look at North Korea, the nuclear reactors that they have were purchased from ABB where the same Donald Rumsfeld was serving on the board. So let’s recognise the duplicity and let us unite as a nation against unilateralism. Let us take forward a battle for multilateralism, because that is in the interests of the developing world. It’s not about dogs and their ears. It’s about a set of principles that shape the world, Cassie, a set of principles that we must all unite around to ensure that we can hold a position for sustainable peace.

Let us deal with some of the issues raised in the debate. The hon Mulder is not here; he did apologise to me before he left. The notion that you can have foreign investors in this country operate tax-free is just wrong. It’s illegal in terms of rules agreed to. It has been the kind of situation that you’ve seen in the Channel Islands and so on. It can’t work. So let’s not go there.

In respect of the position on farm labourers, I don’t know how the hon Mulder lives with his conscience. When you say, as the Minister of Labour does, pay farmworkers R600 or R650 a month - and this country can pay the aged R800 a month - and you say that that R600 or R650 is too much to pay, how do you live with your conscience? [Applause.] There has to be something wrong with people who approach life from the premise that it doesn’t matter, you can exploit the vulnerable because they don’t count for much.

I’m hoping that in the House and as we take forward the debate on the Budget to the Second Reading, Chairperson, we will be able to deal with some of those issues as well.

With regard to the hon Pheko, I think he just fails a fundamental factual test. That test is about the position of Government in relation to dependence syndromes. There can’t be glory in 40 million people depending on a welfare system. The President said that; that was the mainstay of our argument in the Budget. And, yes, we must have a social security net that deals with the vulnerable, but it should be when you have run out of other alternatives.

I’d like to turn to the hon Taljaard. Of course, Dr Estian Calitz has a history. He was Director-General of the Department of Finance in that period when the apartheid regime was spending like drunken sailors, when the deficit was built up. I don’t know what, from his own past, gives him this moral authority to comment on the policy direction of this Government. I think he’s lost it. [Applause.]

The second point I’d like to make in relation to the Minister of Finance and Cabinet is that the Budget is the strongest statement of collective Cabinet responsibility. In the same way as Robin Cook resigned from Cabinet in the United Kingdom about collective responsibility, the Budget is a statement of collective Cabinet responsibility, not of an individual. It can’t ever be that. [Interjections.] I think the hon Davies had pre-empted what you said, because the schizophrenia about trying to protect the rich and the powerful is there. It’s certainly there in the way in which you argued the tax points.

Regarding the issue of a basic income grant, BIG, I’m sorry that I have to use the words of Professor Pieter le Roux who now has become the one arguing this position of a BIG plus increasing VAT to 21%, which has been so readily grabbed by the DP.

In his presentation to the Portfolio Committee on Finance he said: ``South Africans often ask why we should opt for a universal income grant when no other country, except for the state of Alaska and then for reasons unrelated to poverty issues (See Goldsmith 20020), has opted for such a programme. Even one of the major proponents of a BIG, …

The Belgian philosopher - …

Philip van Parijs (1995), has argued that developing countries cannot effectively implement a universal grant, and should rather opt for a limited means tested targeting.

That’s the main proponent here. I think he does a pretty good job of arguing against himself.

In respect of the rest of what you said, hon Taljaard, I only plead that God spare us from such policy immaturity.

I would like, however, to come back to two other issues. The one issue is this issue of jobs, and perhaps we should hear in this House what people are saying, because I don’t think Smith knows what he is talking about. [Interjections.] I’d like to hear from these parties, who have all these wonderful ideas, what on earth they would do about them; why they fail to appreciate that what’s happening in the global economy and, indeed, in this economy is as big a change as in the industrial revolution, that the heritage that we have from the past is a bifurcation between those who have skills and who are insiders, and those who don’t. Our economy is growing where the skills work better.

We have skills development programmes. We have R3,5 billion in the National Skills Fund. But … [Interjections.] You know nothing about skills, clearly; that is why you are talking. You don’t take somebody and put them through a three-week course and say, ``Now you’re skilled. You are now part of a hi-tech economy.’’ Life simply does not work like that. To try to suggest that it does, you’ve got to be lying. [Interjections.] You’ve got to be lying.

I would like to just amplify what the hon Vadi said about the issue of HIV/Aids, because here, too, I think there is a lot of voodoo being spoken by the likes of Smith. [Interjections.] The hon'' Smith. [Interjections.] I can sayMr Smith’’ without saying ``hon’’ as well.

This notion that it’s antiretrovirals or bust is bunkum. It’s a position that can only be taken by pharmaceutical companies. It’s not supported by fact. And the more people who sprout this kind of nonsense, the more we’ll end up in difficulty. There is no need to polarise society on this issue.

We need to recognise that the term we use: medically appropriate treatment'' will cover a range of issues. But the bulk of our investment has to be in the prevention regime, because you can put people on antiretrovirals but they are not going to cure them. They might at times and in circumstances arrest the growth of the disease, but they don't cure it. So stop polarising ourselves. Go back to your premier and say to him, Spend money on poverty relief. Build schools. Do all of the other things that are necessary. Don’t waste these very limited resources in an exceedingly poor province.’’ Thank you very much. [Applause.]

Debate concluded.

Bill read a first time.

The House adjourned at 18:47. ____

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS

                        FRIDAY, 14 MARCH 2003

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. Introduction of Bills:

 (1)    The Minister of Finance:


     (i)     Bophuthatswana National Provident Fund Act Repeal Bill [B
           13 - 2003] (National Assembly - sec 75) [Bill and prior
           notice of its introduction published in Government Gazette
           No 25032 of 11 March 2003.]


     (ii)    Sefalana Employee Benefits Organisation Act Repeal Bill [B
           14 - 2003] (National Assembly - sec 75) [Bill and prior
           notice of its introduction published in Government Gazette
           No 25032 of 11 March 2003.]


     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
     14 March 2003.


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

National Assembly:

1. Membership of Portfolio and House Committees:

 The following members have been appointed to serve on the Committees
 mentioned, viz:
     Joint Budget Committee:


     Appointed: Baloyi, R M (Alt).

1. Referrals of Bills to committees:

 (1)    The Anti-Terrorism Bill [B 12 - 2003] (National Assembly - sec
     75), introduced on 10 March 2003, is referred to the Portfolio
     Committee on Safety and Security, the Portfolio Committee on
     Justice and Constitutional Development, the Portfolio Committee on
     Finance, the Joint Standing Committee on Intelligence and the
     Portfolio Committee on Foreign Affairs. The Portfolio Committee on
     Safety and Security to report after having conferred with the
     other committees mentioned above.

1. Referrals to committees of tabled papers:

 (1)    The following papers are referred to the Portfolio Committee on
     Finance:


     (a)     Resolutions of the Standing Committee on Public Accounts
          for 2002 and replies thereto obtained by the National Treasury
          - Twenty-fourth and Twenty-fifth reports, 2002.


     (b)     Government Notice No 104 published in Government Gazette
          No 24257 dated 14 January 2003: Designation of an institution
          of which the activities do not fall within the meaning of "The
          Business of a Bank" ("Ithala Development Finance Corporation
          Limited" formerly known as "KwaZulu Finance & Investment
          Corporation Limited"), made in terms of the Banks Act, 1990
          (Act No 94 of 1990).


     (c)     Government Notice No 33 published in Government Gazette No
          24264 dated 24 January 2003: Proposed amendment of Pension
          Fund Regulations, made in terms of the Pension Funds Act, 1956
          (Act No 24 of 1956).


 (2)    The following paper is referred to the Portfolio Committee on
     Public Service and Administration:


     Report of the Public Service Commission on the State of the Public
     Service for November 2002 [RP 6 - 2003].
 (3)    The following paper is referred to the Portfolio Committee on
     Public Enterprises:


     Report and Financial Statements of the South African Forestry
     Company Limited (SAFCOL) for the year ended 30 June 2002.


 (4)    The following papers are referred to the Portfolio Committee on
     Public Works. The Reports of the Auditor-General is referred to
     the Standing Committee on Public Accounts for consideration and
     report:


     (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.
 (5)    The following paper is referred to the Standing Committee on
     Public Accounts for consideration and to the Portfolio Committee
     on Finance for information:


     Report of the Office of the Auditor-General on the Budget of
     Income and Expenditure for 2003-2004 [RP 11-2003].


 (6)    The following paper is referred to the Portfolio Committee on
     Home Affairs:


     A list of approved early naturalisation applications in terms of
     section 5(9) of the South African Citizenship Act, 1995 (Act No 88
     of 1995).


 (7)    The following paper is referred to the Portfolio Committee on
     Transport:


     Report of the Regulating Committee for Airports Company of South
     Africa and the Air Traffic and Navigation Services Company Ltd for
     2001-2002, established in terms of section 11 of the Airports
     Company Act, 1993 (Act No 44 of 1993).


 (8)    The following paper is referred to the Portfolio Committee on
     Justice and Constitutional Development:


     Proclamation No R 6 published in Government Gazette No 24351 dated
     7 February 2003: Commencement of sections 8 to 13, 15 to 22 and 24
     to 28 of the Debt Collectors Act, 1998 (Act No 114 of 1998).

TABLINGS: National Assembly and National Council of Provinces:

Papers:

1. The Minister for Agriculture and Land Affairs:

 Strategic Plan for the Department of Agriculture for 2003-2006.

COMMITTEE REPORTS:

National Assembly:

1. Report of the Portfolio Committee on Arts, Culture, Science and Technology on the Natural Scientific Professions Bill [B 56 - 2002] (National Assembly - sec 75), dated 11 March 2003:

   The Portfolio Committee on Arts, Culture, Science and Technology, having considered the subject of the Natural Scientific Professions Bill [B 56 - 2002] (National Assembly - sec 75), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, reports the Bill with amendments [B 56A - 2002].

2. Report of the Portfolio Committee on Justice and Constitutional Development on the Judicial Matters Amendment Bill [B 2 - 2003] (National Assembly - sec 75), dated 11 March 2003:

   The Portfolio Committee on Justice and Constitutional Development, having considered the subject of the Judicial Matters Amendment Bill [B 2 - 2003] (National Assembly - sec 75), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, endorses the classification of the Bill and reports the Bill with amendments [B 2A - 2003].

                     MONDAY, 17 MARCH 2003
   

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. Introduction of Bills:

 (1)    The Minister of Finance:


     (i)     Banks Amendment Bill [B 15 - 2003] (National Assembly -
          sec 75) [Bill and prior notice of its introduction published
          in Government Gazette No 25020 of 7 March 2003.]


     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
     18 March 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.

TABLINGS:

National Assembly and National Council of Provinces:

Papers:

1. The Minister of Social Development: Strategic Plan of the Department of Social Development for 2003-2006 [RP 28-2003].

2. The Minister of Housing:

 Report and Financial Statements of the People's Housing Partnership
 Trust for 2000-2001.

1. The Minister of Water Affairs and Forestry:

 Government Notice No 193 published in Government Gazette No 24363 dated
 7 February 2003: Extension of time for general authorisation in terms
 of section 36 of the National Water Act, 1998 (Act No 36 of 1998).

COMMITTEE REPORTS:

1. Report of the Portfolio Committee on Finance on the Appropriation Bill [B 8 - 2003] (National Assembly - sec 77), dated 14 March 2003:

 The Portfolio Committee on Finance, having considered the Appropriation
 Bill [B 8 - 2003] (National Assembly - sec 77), referred to it and
 classified by the Joint Tagging Mechanism as a Money Bill, reports as
 follows:


 A.     INTRODUCTION


     The Portfolio Committee on Finance and the Joint Budget Committee
     together held hearings on the 2003/04 Budget between 27 February
     2003 and 6 March 2003. The Committees wishes to express
     appreciation to all participants for their contributions. Written
     presentations submitted form part of the records of the Committee
     Section. The Committee would also like to express its appreciation
     to the Minister of Finance, the Deputy Minister of Finance, the
     Director-General of Finance, the Commissioner of the South African
     Revenue Service, the Chairperson of the Financial and Fiscal
     Commission and their staff for their presence and contributions
     during the hearings. A list containing the names of all those who
     made oral submissions is included in part D of this Report.


 B.     OVERVIEW OF THE BUDGET


     The 2003/04 Budget was presented in the context of South Africa's
     relative economic resilience and growth in the face of global
     slowdown and uncertainty. The expansionary fiscal policy stance
     begun in 2001 is continued. In line with the 2002/03 Budget, the
     2003/04 Budget offers considerable personal income tax relief to
     lower and middle income groups, and shows strong growth in
     expenditure which focuses on the themes set out in the Medium Term
     Budget Policy Statement (MTBPS). Continuing on from last year's
     Budget, the focus areas of this Budget include poverty reduction,
     increased infrastructure investment, broadening the social
     security net, strengthening access to health and education while
     focusing on the quality of service delivery and the expansion of
     municipal and provincial services. Real non-interest expenditure
     growth of 4,5 per cent is expected over the MTEF.


     1. ECONOMIC POLICY AND OUTLOOK


          (a) International context and forecast


              Internationally, global economic conditions are
              unfavourable, with falling stock markets, weak consumer
              and business confidence, and sluggish output and activity
              indicators.


              Despite this global slowdown, and hardship within
              Southern Africa due to drought, shortfalls in regional
              grain production and rising food prices, South Africa's
              economy is growing steadily. Growth and development is
              expected to gather momentum in the years ahead due to
              initiatives to encourage investment, raise skills levels
              and reduce constraints on business formation. Further
              gradual liberalisation of exchange control is proposed to
              support the further integration of South Africa with the
              global economy.


          (b) GDP Growth


              South Africa's growth proved resilient in 2002,
              increasing to 3 per cent. Projected growth for 2003 is
              3,3 per cent, rising to 4 per cent by 2005. A number of
              factors underpin Treasury's optimism: strong consumer
              demand and investment spending (investment grew by 6,6
              per cent in 2002 and is expected to continue to grow
              around 6 per cent a year over the medium term); declining
              household debt; formal sector employment is turning
              around; the current account balance is healthy; and
              inflation is expected to decline in 2003 and 2004.


          (c) Interest rates


              Following the sharp depreciation of the currency, rising
              food prices and the increase in money demand in the early
              part of 2002, the Reserve Bank increased interest rates
              by 400 basis points in the first nine months of last year
              in an effort to stem second round inflationary pressures.
              This has assisted in moderating the inflation trend.


          (d) Inflation


              Inflation increased sharply in 2002, with CPIX inflation
              peaking at 12,7 per cent in November 2002, with headline
              CPI inflation rising to 14,5 per cent in the same month.
              Towards the end of 2001 the depreciation of the Rand put
              upward pressure on inflation. Consumer price inflation as
              measured by CPIX averaged 10 per cent in 2002 and peaked
              at 12,7 per cent for the year to November. Much of the
              increase was due to rising food prices, housing and
              medical costs.


              Following the Rand's subsequent recovery, CPIX inflation
              started to decline, and is set to fall within the target
              range in 2004. The Treasury remains committed to
              inflation targeting and stated that the inflation target
              of 3 to 6 per cent will be retained for 2005.


          (e) Output and investment trends


              Investment growth was strong across the economy in 2002,
              increasing by 6,3 per cent. Treasury believes it is set
              to grow by around 6 per cent over the medium term, buoyed
              by robust public infrastructure spending, several major
              mining projects and diversified manufacturing growth.


              Net foreign direct investment reached R12,8 billion in
              the first three quarters of 2002. Gradual liberalisation
              of exchange controls continues this year, supporting
              global expansion by South African companies and unwinding
              of blocked assets.


          (f) The Balance of Payments and the Current Account


              The balance of payments remains healthy. A surplus on the
              current account of the balance of payments was recorded
              in 2002, despite sluggish global demand for South
              Africa's exports. Manufactured exports continued to grow
              strongly, tourism is booming and trade performance is
              expected to benefit from the global recovery. With strong
              investment growth and increased import demand, it is
              expected that the current account will move into a
              moderate deficit of 0,5 per cent of GDP in 2003.


              The latest data indicates net capital inflows of R21,4
              billion for the year to September.


          (g) The Net Open Forward Position


              Treasury has made significant progress in reducing the
              net open forward position (NOFP) from US$4,8 billion at
              the end of December 2001 to US$1,5 billion at the end of
              January 2003.


          (h) Employment and productivity


              Formal sector employment increased in 2002 for the first
              time since 1996, and labour productivity continues to
              improve steadily, increasing the competitiveness of the
              economy and helping to stabilise prices. Treasury
              announced that black economic empowerment must take
              priority over the next decade. Alongside sectoral
              initiatives to deepen participation in the ownership and
              management of South African companies, government will
              support the funding of new ventures and business
              expansions that meet agreed empowerment criteria.


          (i) Accountability for service delivery


              Treasury hopes that the Estimates of National
              Expenditure, together with the publication of the 2003
              Intergovernmental Fiscal Review in April, will provide
              all 10 legislatures with comprehensive and quantifiable
              information to exercise their oversight responsibilities.


     2. FISCAL POLICY AND BUDGET FRAMEWORK


          (a) Fiscal policy trends and targets
              Beginning with the 2001 Budget, a more expansionary
              stance was enabled by the earlier period of
              consolidation. Strong real spending growth is now
              projected within a sustainable fiscal framework, with
              social spending and infrastructure investment increasing
              strongly. At the same time, tax relief again benefits
              lower income households and encourages targeted
              industrial investment. Over the next three years, a
              budget deficit of between 2 and 2,5 per cent is
              accommodated within a sustainable framework and a
              declining debt-GDP ratio, after an estimated 1,4 per cent
              in the current year.


              General government capital formation is targeted to grow
              by at least 5 per cent a year, while government
              consumption expenditure will stabilise at about 19 per
              cent of GDP. General government tax revenue will remain
              at between 27 and 28 per cent of GDP, and interest on
              public debt is expected to decline from 4,9 per cent of
              GDP in 2002 to 4,2 per cent in 2005. A public sector
              borrowing requirement of 2,6 per cent of GDP is
              projected.


          (b) Revised budget framework


              The main budget provides for expenditure of R334 billion
              in 2003/04, rising to R395,6 billion in 2005/06. Revenue
              increases from R304,5 billion to R361,2 billion over the
              same period. Higher GDP growth and inflation contribute
              to substantial upward revisions in revenue estimates for
              2002/03 and the following three years. Main budget
              revenue is expected to be 26,6 per cent of GDP in the
              budget year, and to remain at that level over the next
              three years, which again allows for substantial tax
              relief in 2003/04.


              The budget deficit for 2002/03 is expected to be 1,4 per
              cent of GDP, mainly due to robust revenue growth.
              Expansion in spending planned for the MTEF period will
              however raise the deficit to a projected 2,4 per cent of
              GDP in 2003/04.


              Debt service costs, however, are expected to fall from
              4,2 per cent of GDP in 2002/03 to 3,8 per cent by
              2005/06. National government debt will decline to a
              projected 36,8 per cent by the end of the MTEF period, in
              contrast to its level of 48,1 per cent of GDP at the end
              of 1997/98.


          (c) Fiscal policy as tool for growth and development


              This budget framework reinforces growth and development
              partly through strong expenditure growth and tax relief,
              but also through the emphasis on investment and transfers
              to households.


              The Minister emphasised that growth in spending has to be
              accompanied by improved management and service delivery
              at all levels, with measurable objectives in the
              Estimates of National Expenditure aimed at improving
              accountability and oversight. Additional allocations
              signal a marked shift in favour of provinces and local
              government, whose role in driving successful development
              is recognised.


     3. REVENUE


          Revenue collections remain buoyant, reflecting both
          improvements in administration and longer term benefits of tax
          policy reforms. This provides scope for further tax relief,
          increased incentives for domestic investment and savings, and
          tax reforms designed to stimulate business growth and
          development. All of these trends are in line with this
          budget's expansionary stance concentrating on employment and
          enhanced economic development.


          (a) 2003/04 tax relief proposals


              (i)  Direct tax measures affecting individuals


                   *     The tax threshold is raised by 11,1 per cent to
                       R30 000, so those earning less than this amount
                       will not pay personal income tax next year.
                       Income tax brackets have been adjusted across
                       the income spectrum to provide relief for all
                       income earners and to compensate for bracket
                       creep.


                   *     Interest income exemption is raised from R6 000
                       to R10 000 for individuals below 65 years, and
                       from R10 000 to 15 000 for individuals 65 years
                       and older.


                   *     The transfer duty threshold is increased from
                       R100 000 to R140 000, reducing the cost of
                       buying property at the lower end of the market.


                   *     The tax on retirement funds is reduced from 25
                       per cent to 18 per cent once again. However, tax
                       treatment of retirement vehicles is under
                       comprehensive review, with legislative changes
                       expected in 2004.


              (ii) Business tax stimulus measures


                   *     Accelerated depreciation for investment in
                       designated urban areas.


                   *     Conversion of the accelerated depreciation
                       window period for manufacturing assets into a
                       permanent feature.


                   *     Comprehensive business asset reinvestment
                       relief.


                   *     Losses on sale of depreciable business assets.


                   *     Accelerated depreciation for research and
                       development.


                   *     Accelerated depreciation for biodiesel plant
                       and machinery.


                       Small businesses are given tax relief and
                       incentives in the form of lower tax rates, an
                       increased turnover limit and extra deductions on
                       start-up expenses. Tax rules will be clarified
                       in the case of start-up expenses.


                       The tax on foreign dividends is removed where a
                       South African taxpayer has a meaningful interest
                       in the foreign subsidiary paying the dividend. A
                       number of collateral changes accompany this.


                       The list of public benefit organisations
                       eligible for tax-deductible donations is
                       expanded, and government grants are exempted
                       from income tax.


          (b) Indirect taxes


              Excise duties on alcohol and tobacco products see a
              general increase on all alcoholic beverages of between 10
              and 11 per cent. Sorghum beer and sorghum flour are the
              only exceptions; these products will see no change in
              excise duty. Taxes on tobacco products will also rise
              from 11 per cent (cigarettes and pipe tobacco) to 39 per
              cent (cigars).


              The fuel levy increases an average of some 4 cents per
              litre.


              Other excises and charges: Ad valorem excise duty on
              computers is abolished, and duties on lower cost motor
              vehicles are adjusted for inflation. A levy on plastic
              bags will be introduced and some of the revenues
              collected will be earmarked for the recycling of plastic
              bags. Air passenger departure tax will be adjusted by 10
              per cent.


          (c) Foreign exchange amnesty


              Government has moved to introduce a tax and foreign
              exchange amnesty in order to facilitate repatriation of
              assets illegally moved offshore. Government's view is
              that individuals with illegally held offshore assets
              increasingly want to repatriate these assets, both
              because domestic and international enforcement targeting
              illicit funds has increased, and because of disappointing
              yields of foreign markets.


              The amnesty will run for six months. A 5 per cent
              Exchange Control one-time levy will be enforced for the
              repatriation of any foreign assets, and a 10 per cent
              Exchange Control one-time levy will be enforced to the
              extent that any foreign assets remain offshore. All
              individuals filing for amnesty relief are released from
              all civil penalties and criminal liabilities, except
              those currently under investigation, who may not file.


          (d) Measures to enhance tax administration


              Tax administration is being enhanced by reforming
              collection mechanisms, increasing the penalties for non-
              compliance and introducing an advance rulings process.
              Reforming collection mechanisms include outsourcing
              undisputed tax debts to private collection agencies and
              making those responsible for collecting VAT directly
              liable for failure to pay.


     4. ASSET AND LIABILITY MANAGEMENT


          (a) Debt management strategy


              Since 1999, debt management's primary aim has been to
              reduce debt costs within risk limits. The debt
              consolidation programme is now complete, and total
              nominal value of outstanding illiquid government bonds is
              now some R2 billion, down from R50 billion three years
              ago.


              Government has steadily increased the share of foreign
              debt in the overall debt portfolio. The proceeds of these
              issues have contributed to reducing the net open forward
              position (NOFP) held by the Reserve Bank from US$23,3
              billion in 1998 to US$1,5 billion at the end of January
              2003.


              South African debt has performed well on international
              and local markets.


          (b) Borrowing requirements, debt costs and total debt trends


              In addition to financing the budget deficit, the budget
              provides for extraordinary payments of R28 billion
              between 2002/03 and 2005/06 to compensate for forward
              cover losses.


              R10,2 billion is expected to be paid into the fiscus in
              2003/04 from Transnet's disposal of its M-Cell interest,
              sale of Telkom shares, and restructuring dividends from
              the Central Energy Fund.


          (c) Contingent liability


              Contingent liability is provided for, to deal with
              unexpected eventualities such as natural and human
              disasters, and to provide stability to the financial
              sector.


              In 2002/03 a total of R10,5 billion in guarantees were
              provided. The Saambou liquidation includes an outstanding
              claim against the State for R4 billion.


          (d) Public enterprise restructuring and corporate governance


              The Telkom listing in March 2003 is viewed as broadening
              equity participation in the SA economy, while a 20 per
              cent stake in M-Cell has been bought by its management
              and staff.


              Forthcoming projects include concessioning of the Durban
              port container terminal; sale of 30 per cent of Denel to
              British Aerospace; sale of 30 per cent of Eskom's
              generation business; transformation of electricity
              distribution under management of an Electricity
              Distribution Holding Company; sale of 51% of Western Cape
              Safcol forests; and completion of sale of Aventura
              resorts.


              Cabinet has approved a revised Protocol on Corporate
              Governance for public entities.


     5. MEDIUM-TERM EXPENDITURE ESTIMATES


          (a) Policy priorities and the MTEF


              Priorities include deepening infrastructure expenditure
              by all levels of government; with increased emphasis on
              investing in skills; public-private partnerships;
              targeting poverty through extending the child support
              grant, skills investment, access to education and health,
              land redistribution and small business development.
              Provision for increased local government funding,
              utilities user support and capacity building initiatives
              stress local upliftment, while strengthening of the
              social protection services (police, justice and prisons),
              increased foreign representation, peace-keeping
              activities and support for NEPAD are envisaged.
              Additions to the MTEF spending plans include:


              *    R11,0 billion more for extension of the child
                   support grant to children up to 14 by 2005/06, and
                   primary school nutrition.


              *    R38 billion more for hospital and road improvement,
                   medicines and school books, as well as increased pay
                   for health care and welfare workers.


              *    R6,5 billion more to extend free basic services,
                   municipal infrastructure and community services.


              *    Significant additions for courts and police, higher
                   education and further skills development, and land
                   restitution and land reform.


              *    Increased support for services to citizens, SARS,
                   research and technology development.


              *    More for a growing international role, peace-keeping
                   and NEPAD.


          (b) Consolidated expenditure by function


              Social services account for 58,3 per cent of spending,
              and will grow rapidly in the years ahead, mainly because
              of the extension of child support. Growth in the criminal
              justice sector is mainly service-orientated.


     6. PROVINCIAL AND LOCAL GOVERNMENT FINANCE


          (a) Provincial grants and spending trends


              The division of revenue in the 2003 Budget shows strong
              increases at provincial and local level, reflecting their
              responsibilities for delivery.


              The provincial share of nationally raised revenue is
              projected to rise from 56 per cent in 2002/03 to 57,6 per
              cent in 2005/6. The provincial equitable share is
              increased to improve education and health materials as
              well as personnel pay, social assistance grants, road
              construction and maintenance and economic development
              services.


          (b) Local government


              The financing framework for local government is under
              review, with both revenue and spending issues under
              scrutiny. A new division of powers and functions between
              local and district municipalities will be part of a
              transformation of municipal finances this year.


              National budget transfers to municipalities will increase
              by 18,4 per cent over the MTEF period. Free basic
              electricity, water and sanitation services for poor
              households are an important factor in this.
              Infrastructure grants to municipalities and district
              management areas are a key instrument in urban renewal
              and rural development, and their rationalisation is
              proposed.


     7. ISSUES RAISED BY THE COMMITTEE


          Poverty alleviation: The Committee approved of the measures
          taken in the Budget to alleviate poverty, as they felt that
          this would support economic stability and raise standards of
          living. The question of how to ensure that the vision of
          policy makers is shared by policy implementers was posed. The
          Minister replied that standards of delivery would be improved
          by holding management accountable, and emphasised that local-
          level accountability was important. National office bearers
          should not be involved in implementing policy on a local
          level.


          Privatisation: In reply to a committee enquiry about the drop
          in projected returns from privatisation, the Minister pointed
          out that the current situation was quite different from the
          heady dot.com period when privatisation was first mooted. This
          is not a uniquely South African problem: there have been
          worldwide shifts in both market sentiment and business
          thinking, which are reflected in the modest anticipated
          proceeds. Further, headlong privatisation can create
          additional problems, as this is not an easy time for
          privatising large industries.


          Growth and skills: Asked about the limits placed on tertiary
          sector growth by skills shortages, the Minister said that the
          tertiary sector is indeed the main growth sector and will
          remain so. It will run into absorption ceilings because of the
          skills supply constraint. In this budget, the skills
          development fund is up to R3,5 billion from R3,3 billion, but
          there is little suggesting that SETAS focus on output. They
          have few measurable objectives for training, and it is wrong
          that SETAS' required outputs are as vague as at present.


          Consumer activism: In relation to the food price monitoring
          programme, the Minister raised the issue of consumer activism,
          which is still weak in SA. Media comparisons of prices are
          useful. Government is not looking at price controls, but will
          closely scrutinise retailers' behaviour.


          TRC Reparations: Asked why there was no provision for TRC
          reparations in this budget, the Minister pointed out that in
          the 2001/02 Budget, R800 million was allocated to the
          Department of Justice for reparations. Now that the litigation
          threat has passed, discussion can go forward with the
          Department of Justice, since the R800 million is still
          available, plus interest.


          Black Economic Empowerment: Asked how BEE would be delivered,
          the Minister responded that BEE was not a budgetary issue, but
          part of the economic plan. The details are being worked on,
          and within three weeks the DTI should announce these. The
          Minister said that the National Empowerment Fund must be
          revamped with substantially amended legislation and Treasury
          representatives on the board, to be used as a vehicle for BEE,
          quite different than hitherto.


          He added that he was not saying that the R10 billion allocated
          for BEE would be financed via the foreign exchange amnesty,
          but that it would be good if the levy from the amnesty
          facilitates expansion of the economy. It cannot be the only
          source, as the amnesty lasts six months, and BEE is planned
          for at least the next five years.


          Management and delivery: The Committee was concerned that the
          value-for-money and performance measures mentioned in the
          Budget would not be realised. When questioned as to how this
          would be done, the Minister said that greater emphasis would
          be placed on management training, specifically management in
          the accounting for and planning of expenditures. If management
          were trained and skilled, they would be better able to
          implement public programmes.


 C.     RESPONSES TO THE BUDGET


     1. MACROECONOMIC PERSPECTIVES ON THE BUDGET


          Three economists made submissions to the Committee, focusing
          on the macroeconomic implications of the Budget. All strongly
          endorsed the Budget and the expansionary policies it embodied,
          and stressed that there was higher private sector confidence
          in government's will to deliver on policy than ever before.


          (a) Sandra Gordon: Independent economist


              Ms Gordon noted that this is the boldest pro-growth
              Budget to date, and called for still more stimulatory
              measures aimed at domestic demand, as the export-led
              growth strategy comes under pressure in the present
              global context. She sees an increased role for the State.


              Local growth is set to slow in 2003, due to the effects
              of high inflation and high interest rates, and domestic
              demand has declined. Although the tax cuts tabled in the
              2003 Budget have addressed this to some extent, further
              oil price increases are likely to act as a tax on
              consumers and negate some of the benefits of tax relief.


              Additional factors slowing growth in 2003:


              *    Export-led growth, so successful during 2002, is
                   beginning to falter, due in part to the stronger
                   Rand.


              *    The global economic slowdown is also cutting into
                   export performance, with war fears and uncertainty,
                   and consequent higher fuel prices exacerbating this.


              *    In the medium term, US economic recovery will see a
                   lower growth norm of around 2 to 2,5 per cent; it
                   will cease to be the global growth engine.


              *    Positive pro-growth government policies include:


                   -     Inflation targeting, if wage and price
                       increases can be kept within target levels.


                   -     Tax relief, which reinforces stability, with
                       consumer spending less volatile, and household
                       debt dropping to its lowest since 1991.


              She noted that there is a tendency by government to
              underestimate revenue, which affects GDP deficit
              projections and results ultimately in a less stimulatory
              Budget. Government should develop additional methods to
              manage inflation, supplementing the Reserve Bank's
              interest rate interventions.


              During the period of jobless growth in the 1990s, South
              Africa experienced a steady shedding of employment. There
              needed to be a strong focus on the capacity to deliver on
              expenditure.


              Economic reforms in the 1990s have created a much more
              resilient economy. However, they also saw the steady
              shedding of employment. She acknowledged the success of
              policies in generating growth, and setting the stage for
              further growth, but stressed global trends suggest a
              shift of focus to fostering domestic demand. There is
              scope for an increased role for government. New
              stimulatory measures, notably capital expenditure, should
              be accelerated as capacity for delivery improves.


          (b) Prof Charles C Okeahalam, Chair of Minerva Group and
              Professor at WITS


              Prof Okeahalam's view was that the crux of this Budget
              was the decline in sovereign debt and debt service costs,
              which have brought down the overall cost of capital.


              In general he reviewed the Budget positively, areas for
              concern to be:


              *    The household savings structure.


              *    Uncertainty about the long-term effects of HIV/AIDS.


              *    The ability of the supply-side to deliver.
              The last was his major concern: he felt that policies to
              stimulate the private sector must not be expected to
              solve the problems of unemployment and poverty. However,
              he noted increased spending on infrastructure, with
              government capital expenditure projected to increase to
              23,3 per cent over the 2003/04 period, and the increased
              focus on service delivery. However, he felt that there
              had been insufficient attention to HIV/AIDS and
              competition issues.


          (c) Dr Iraj Abedian, Director and Group Economist, Standard
              Bank


              Dr Abedian's overview was strongly positive, seeing this
              Budget as a leap forward in normalising macroeconomic
              conditions. He pointed to three major developments:
              *    The rising level of general confidence, in
                   particular of the business sector in government.


              *    The nature of the global economy in which the Budget
                   is presented. For the first time in four decades
                   South Africa's growth rate of 3 per cent is above the
                   global average of 2,5 per cent.


              *    Budget 2003 is a leap forward in normalising
                   macroeconomic conditions. He pointed to the fact that
                   disposable incomes have been rising since 1994.


              The increasing resilience of South Africa's economy
              stands on four pillars:


              *    Reinforced by structural changes, South Africa's
                   economic efficiency is rising. South Africa's economy
                   is no longer dominated by the primary sector. In
                   combination, the secondary and tertiary sectors'
                   share of GDP is close to 90 per cent, with the
                   tertiary sector dominant at 66 per cent of GDP. These
                   structural changes have transformed the economy.


              *    South Africa's export diversification is paying off.
                   In the World Economic Forum's competitiveness
                   rankings, South Africa is in now 32nd out of 84
                   industrial and emerging economies.


              *    Macroeconomic stability and solid fiscal conditions
                   afford predictability, with steady real GDP and
                   rising fixed investment, and inflation trends
                   declining.


              *    Deepening democracy and social stability also
                   strengthen confidence.


              Dr Abedian stressed that in the now dominant tertiary
              sector, confidence was far more important than in other
              sectors. Availability of skills is also a key limiting
              factor. He was also critical of SETAs as being poorly
              designed and failing to deliver. Although continued
              privatisation was important to maintain political
              credibility, he said, the government should pay more
              attention to ensuring that better competition policy and
              regulations were in place in all sectors.


          (d) Major issues raised by the Committee


              (i)  Concrete measures to improve demand


                   Ms Gordon responded that demand within the economy
                   could be increased through land redistribution,
                   public works programmes - though these are a
                   temporary measure - and supporting establishment of
                   more SMMEs by simplifying their regulatory
                   environment. Creating an entrepreneurial spirit and
                   effective learnerships in the workplace were also
                   important.


                   She stressed that she advocated broadening the growth
                   policy focus to include domestic demand, but not
                   abandoning export led growth. Some supply-side
                   measures are needed in the present global
                   uncertainties. To supplement these with domestic
                   demand stimulus, one should look towards the primary
                   and secondary sectors, which have greater capacity to
                   absorb less skilled labour. Dr Abedian, however,
                   noted that activity in the secondary sector is
                   different from 10 years ago, with greatly diminished
                   labour intensity.


                   Ms Gordon added that the business sector would be
                   happy with smaller tax cuts if government had the
                   capacity to spend more to alleviate poverty or
                   strengthen SA's growth rate - stability is
                   increasingly seen as a priority.


             (ii)  Inflation


                   The Committee questioned whether there was a conflict
                   between trying to increase domestic demand and
                   containing inflation. Ms Gordon's opinion was that
                   there was no conflict at present. The Reserve Bank
                   should cut interest rates as soon as possible. She
                   noted that the position of the Reserve Bank was
                   severely complicated by the present value of the Rand
                   and the threat of war, with the possibility of oil
                   prices spiking at $40 per bbl.


                   Asked how inflation policy could be managed
                   differently, her view was that inflation targeting
                   should have been on hold until pre-privatisation
                   price increases introduced by rationalisations by
                   parastatals had been absorbed.


                   Asked about the effects of privatisation, Prof
                   Okeahalam replied that privatisation has value as an
                   effective efficiency policy, but called for a robust
                   regulatory framework.


                   Dr Abedian's view was that the main focus should not
                   be privatisation per se, but with promotion of
                   competition and an appropriate regulatory frameworks.
                   He stressed that government should not simply replace
                   a public monopoly with a private monopoly, which
                   improves neither pricing nor delivery.


           (iii)   Cash surpluses


                   The Committee enquired about cash surpluses in the
                   corporate sector due to a lack of domestic investment
                   opportunities. Ms Gordon agreed that they existed,
                   but stated that this was because of a lack of
                   investment opportunities internationally as well as
                   in SA. Such money used to be taken offshore, but
                   perception of the international environment has
                   changed.


                   Ms Gordon felt that if government took the initiative
                   in investing in capital expenditure and these
                   projects were perceived as raising SA's growth, then
                   the corporate sector was likely to become involved in
                   the form of public-private partnerships.


           (iv)    Growth and the need for skills


                   The Committee raised the issue of how government
                   could continue to drive tertiary sector expansion
                   since it is our main growth area, while at the same
                   time stimulating the primary and secondary sector
                   because those impact more strongly on the
                   unemployment problem. Dr Abedian commented that there
                   are no shortcuts in this regard. The national skills
                   shortfall is an intergenerational problem, requiring
                   retraining and commitment to growing existing skills
                   as much as possible, while taking care of those who
                   will never gain the skills.
                   There is a real challenge for SETAs to become
                   industry-led, providing usable skills, the kind of
                   training that is genuinely demanded. They must be
                   held accountable for delivery.


                   He criticised the new immigration legislation as
                   inappropriate for an economy with a shortage of
                   expertise, especially since much growth was in the
                   tertiary sector, which needs skilled professionals.
                   Saying xenophobia is costly, he estimated that each
                   skilled immigrant could generate four to eight jobs.


              (v)  Black Economic Empowerment


                   Asked for views on the Budget's BEE measures, Prof
                   Okeahalam responded that a number of countries have a
                   history of adopting such policies. A common problem
                   is that only a small number of elites benefit from
                   BEE, with intended beneficiaries often not reached.


                   Dr Abedian's view is that BEE is part of the
                   normalisation of South Africa, and will take some
                   time. The present risk is one of maldistribution of
                   wealth and income, making BEE a dangerous, double-
                   edged sword. In general, where the tertiary sector is
                   dominant, the economy is increasingly knowledge-
                   based, with knowledge as the major wealth creator. In
                   efforts to broaden BEE, the focus must remain on
                   effectively increasing and dispersing knowledge and
                   thus wealth.


     2. BUDGET 2003/04: PERSPECTIVES ON TAX POLICY


          Representatives of the National Treasury and SARS presented
          the tax proposals set out in the Budget, outlining their
          projected impact and setting the strategic context of medium-
          term tax policy. SARS' compliance strategy, use of
          depreciation as incentive, exchange control amnesty and their
          effect on taxpayers were discussed at some length. Prof
          Matthew Lester and Prof Pieter le Roux gave their respective
          views on the effectiveness of tax policy to date and of
          potential policy developments.


          (a) National Treasury


              A representative of Treasury outlined the background to
              the present tax proposals, setting out their global
              context and objectives. He noted that personal income tax
              (PIT) relief has been a feature of Budget policy since
              1995, with R49 billion given in relief over the past
              eight years, and corporate tax having dropped 10 per
              cent, to 30 per cent, since 1994. These rates compare
              favourably to the rest of the world, notably the EU and
              OECD economies.


              He outlined the 2003/04 tax relief proposals and their
              objectives (See Section B3 above). Direct tax provisions,
              general business tax stimulus measures and indirect tax
              provisions were presented and motivated. Notable elements
              were exemption of foreign dividends from taxation and a
              six-month amnesty period for repatriating or declaring
              illegally exported assets.


          (b) The South African Revenue Service


              The SARS presentation outlined the revenue position to
              date, and the target for 2003/04:


              *    The revised estimate is R11,6 billion above the
                   Budget estimate - R280,1 billion compared to R268,5
                   billion.


              *    For the past six years SARS has had collections
                   above its targets, with total additional collections
                   at R46,8 billion.


              *    Additional collections have assisted in the reform
                   of tax rates and increased expenditure programmes.


              *    The revenue target for 2003/04 is R310 billion.


              SARS unveiled its Compliance Strategy, as based on
              education to create a culture of compliance; enforcement
              through high visibility and targeted campaigns; and a
              service culture, focusing on efficiency and
              communication.


              The foreign exchange amnesty was motivated as having low
              penalties relative to international standards, and easy
              accessibility.


          (c) Prof Matthew Lester


              Professor Matthew Lester of Rhodes University presented a
              review of the period between the 2000/01 and the 2003/04
              Budgets. He argued that last year was a year of
              consolidation, while the coming year is one in which
              major legislation comes into force.


              He reviewed in detail the following changes:


              *    Individuals' tax position, showing that payers of
                   PIT are clear gainers over five years, despite the
                   fact that a number of loopholes have been closed over
                   the period.


              *    Elderly and retired taxpayers he calculates to be
                   entitled to R62 222 free of tax, and obliged to pay
                   only 14,9 per cent on R155 000 under the current
                   proposals.


              *    Corporate tax collections have increased in real
                   terms by more than a third since 2000. Major factors
                   are the introduction of capital gains tax (CGT), the
                   residence-based tax system (RBT), and the disallowing
                   of personal service companies, as well as the
                   increase in SARS' efficiency.


              *    The change in residential property rules means that
                   individual ownership, as opposed to trust or company
                   membership, will from this year pay far less in tax
                   and duties when selling property.


          (d) Prof Pieter le Roux


              Prof Pieter le Roux of UWC presented an argument in
              favour of increasing VAT to 21 per cent in order to
              finance a basic income grant of R100 per person.


              He argued that the VAT increase would bite hardest on the
              richest five per cent of the population, despite their
              also receiving the BIG, allowing a net benefit to the
              poorest 80 per cent of the populace. He felt this would
              be an effective measure to alleviate poverty, while
              acknowledging the practical problems in implementing it.


          (e) Issues interrogated by the Committee


              (i)  Impact of tax cuts


                   The Committee enquired whether the Treasury is
                   realising the desired benefits of the tax cuts given
                   so far to taxpayers, for example in higher private
                   savings or increased consumption.


                   Individual savings behaviour over the last five years
                   has shown improvement, officials indicated, and
                   Treasury is working on a modelling exercise that may
                   provide hard data. Meanwhile, it is difficult to be
                   exact as to how many changes in economic activity are
                   direct effects of tax cuts.


                   However, over the past two years household
                   consumption expenditure in South Africa has been
                   robust, growing in excess of 3 per cent per annum.
                   Treasury believes that the tax cuts did underpin the
                   growth in household consumption expenditure, because
                   the household sector has not yet been saving.


              (ii) Value-Added Tax (VAT)


                   The Committee expressed relief that VAT had not been
                   increased, and wanted to know if this was premised on
                   the assumption that no VAT increase compensated for
                   inflationary increases.


                   Treasury noted that it was loathe to tamper with VAT,
                   as this would open up a debate which might not be
                   productive. South Africa's VAT model is very much
                   designed to support the enforcement capacity of SARS.
                   Currently it contributes some 24-25 per cent to
                   overall revenue, which is the world average. South
                   Africa's relatively low VAT rate of 14 per cent still
                   contributes 6,5 per cent of GDP.


              (iii)      The foreign exchange amnesty


                   Prof Lester sparked some discussion by suggesting
                   that the amnesty might not succeed if perceived as a
                   witch hunt. The Committee noted that all applications
                   for amnesty would be dealt with confidentially,
                   because this is how SARS is obliged to operate.


                   The Commissioner responded that the amnesty move was
                   about cleaning up SARS' history and its act, and
                   making sure that it broadens the tax base. It also
                   serves to create a new kind of compliance culture in
                   South Africa and to ensure that, as of the 2003
                   return, SARS gets a different set of figures that
                   appear on its books, which it can then take forward
                   from that point.


             (iv)  Viability of BIG


                   The Committee asked whether any serious work had been
                   done on the macro-economic impact of a social income
                   grant versus tax relief, because this seems to be at
                   the heart of the current debate in South Africa.


                   This work, which is ongoing within Treasury, is more
                   comprehensive than the BIG concept because it
                   considers the entirety of social security provision
                   in South Africa. However, Treasury is also guided by
                   the need to give as many people as possible an
                   opportunity to participate meaningfully in economic
                   activity, guiding them away from dependence on
                   welfare.


                   Prof le Roux argued for raising a BIG by increasing
                   indirect taxes, notably VAT. There was some debate
                   about whether this would be harshly punitive to the
                   poor, a larger proportion of whose spending would be
                   in respect of VAT, even without calculating
                   distribution costs, before BIG benefits reached them.


              (v)  Urban Development Zones
                   The Committee asked whether Treasury has focused on
                   depreciation because it is believed to be a more
                   effective stimulator than income tax adjustments.
                   With the urban zone depreciation provisions, Treasury
                   incentivises a specific behaviour, with the aim of
                   channelling investment towards declining urban
                   centres. It is a highly targeted approach. Treasury
                   has clearly limited it to some 13 areas major areas,
                   where the biggest impact can be made.


                   Prof Lester, however, noted that numerous examples of
                   targeted incentives have had unintended consequences,
                   been ineffective or even corrupting.


             (vi)  The fuel levy
                   The Committee posed questions about the impact of an
                   increased fuel levy. Public sector transport would be
                   severely affected, and the Committee asked about the
                   impact on long-distance commuters.


                   The Treasury replied:


                   *     The taxi industry has the oldest stock of
                       vehicles, mainly using leaded fuel, and these
                       would need to be upgraded. There may be a time
                       lag, but taxi recapitalisation will happen this
                       year.


                   *     The contingency reserve of R8 billion over the
                       next three MTEF years is available for taxi
                       recapitalisation, after which taxis would most
                       probably be utilising diesel-powered engines.


                   *     Tax policy has taken into account incentives to
                       use larger vehicles using more efficient
                       (diesel) fuel.


           (vii)   Corporate tax rate


                   The Committee raised the issue of whether a reduction
                   in the corporate tax rate was desirable. Treasury
                   responded that numerous international instances show
                   a convergence of corporate tax rates at 30-32 per
                   cent.


                   Treasury is unconvinced by the argument that the rate
                   should be reduced:
                   *     Instead it favours creating a stable investment
                       environment with attractive accelerated
                       depreciation allowances. With the proposed
                       increased depreciation regime, effective tax
                       rates faced by companies in the first year could
                       effectively be zero, with subsequent tax rates
                       for South Africa companies being as low as 5-15
                       per cent.


                   *     Investors, whether domestic or international,
                       prefer predictability. Where some countries
                       dropped company tax to unsustainable levels,
                       only to increase it again, investors recoiled -
                       consistency is investor-friendly.
                   *     There is a also a premium willingly paid for
                       the business environment: South Africa has an
                       excellent banking regulatory environment and
                       profit opportunities relative to the developing
                       world.


                   Prof Lester also took the view that lower company tax
                   was not the biggest drawcard for investment. He felt
                   that investors are not scared away by taxes as much
                   as by the economic climate of a country.


              (viii)     Revenue estimates and increased collections


                   The Committee enquired whether South Africa has
                   reached a plateau in the rising trend of its revenue
                   collections. SARS believes not, noting that some 48
                   hours after the amnesty provision was announced,
                   almost R3 billion was already on the table,
                   indicating a significant amount of unreported money
                   still extant.


                   The Tax Gap Project has given SARS a much better
                   understanding of where the revenue leaks are,
                   enabling a more targeted approach this year. The
                   Commissioner responded that SARS does hold a view on
                   the actual quantum of the tax gap, loosely estimating
                   it at R30 billion.


                   The Committee asked why SARS continued to have a
                   problem with overruns on its revenue estimates. The
                   Commissioner replied that it was due to the
                   unpredictability of economic endeavour, citing the
                   effects of unexpected inflation, fuel, the resources
                   sector and war on 2002's estimates.


                   While forecasting of corporate tax is most difficult
                   because of all the external factors impacting on it,
                   Treasury believes that South Africa has a good record
                   when it comes to indirect taxes, and in many cases
                   South Africa is out R30 million on a tax base of R16
                   billion.


             (ix)  Ringfencing of secondary trade losses


                   The Committee raised a number of points and concerns
                   about the ringfencing of secondary trade losses, and
                   asked if this would not unfairly penalise certain
                   taxpayers who have a legitimate secondary trade,
                   notably in agriculture.


                   SARS emphasised that the proposed legislation would
                   not impact on someone who is in the business of
                   farming, but would impact on someone who is in the
                   secondary business of farming. In the second case,
                   SARS argues, they could use tax write-offs unfairly
                   to compete with people who not able to exploit the
                   tax system. The fiscus was being undermined by people
                   who used secondary trade tax for a tax write-off. It
                   was these people who were the target of the
                   ringfencing.


              (x)  Complexity and coherence of the tax system
                   The Committee asked for comment on how coherent the
                   tax system is as a macroeconomic instrument. Prof
                   Lester's view was that SARS had never worked as
                   effectively as now, to the extent of generating
                   taxpayer paranoia and terror.


                   Asked whether the system was over-complex, Prof
                   Lester noted that he was not sure that the law could
                   be simplified. By international standards, it is
                   relatively simple. It had increased in complexity in
                   order to align itself with international standards.
                   The cost of compliance on the government side has
                   shown a positive return, but has become much harder
                   for businesses - an unfortunate effect of the use of
                   best practice.
     3. SUBMISSIONS BY ORGANISED BUSINESS AND LABOUR


          (a) The Black Business Council (BBC)


              The BBC was represented by Ms Futhi Mtoba of Deloitte &
              Touche, Mr Mandla Maleka, Chief Economist: Eskom
              Treasury, and Mr Veli Ntombela, Director Taxation: Sizwe
              Ntsaluba.


              The BBC broadly endorsed the Budget, specifically
              referring to the child support grant, government's
              position on inflation targeting, relaxation of exchange
              controls and the proposed amnesty and the 4% increase in
              government consumption. A major element of their
              presentation involved SMME-friendly proposals to be taken
              into account in the 2004/05 budget.


              (i)  Small business support measures


                   The BBC felt that the tax dispensation of SMMEs
                   requires review, specifically:


                   *     Redefinition of "small business" in the Income
                       Tax Act, as the BBC felt this was too narrow.


                   *     Further simplification of tax compliance
                       requirements.


                   *     Further extension of the turnover ceiling.


                   The accelerated depreciation provisions for urban
                   development areas would help small business in these
                   areas. It went on to call for extension of these
                   concessions to other sectors, such as tourism.


           (ii)    Black Economic Empowerment


                   The BBC believes that the proposed R10 billion BEE
                   support funding will foster economic participation
                   for the deprived sector of the economy. It awaits
                   details of the funding strategy, and requested that
                   it be consulted on the process of disbursement.


                   The moves to promote corporate reorganisation should
                   include BEE transactions, and the BBC proposed:


                   *     A shareholding test of at least 50% (and not
                       75%) for BEE companies.


                   *     That inclusion of community trusts should also
                       be considered.


           (iii)   Poverty relief and social support


                   The BBC appreciated the increase in transfers to
                   pensioners and disabled people. It put forward the
                   following proposals:


                   *     Reducing the pensionable age for women by 2-5
                       years (from 60).


                   *     Next year's tax bracket adjustment should
                       concentrate on lower earners, enabling savings
                       from this to support a lower pensionable age for
                       women.
                   *     Rather than considering increasing the eligible
                       age for child support grants above 14 years in a
                       future MTEF, equivalent funding should rather be
                       allocated to ensure that primary education is
                       genuinely free.


          (b) Die Afrikaanse Handelsinstituut (AHI)


              Mr Jac Laubscher (Chief Economist: Sanlam) and Ms Anne-
              Marie Wiehahn (Sasol Economist) presented Die Afrikaanse
              Handelsinstituut's (AHI) submission to the Committee.


              The AHI feels that the Budget enhances South Africa's
              appeal to international investment through the proposed
              urban areas depreciation allowances; exchange control
              relaxation; the strong increase in infrastructure
              expenditure; and increased spending on policing.


              The AHI foresees that:


              *    Inflationary pressure could come from an increase in
                   the government wage bill and a pickup in domestic
                   demand.


              *    A short-term depreciation of the Rand will follow
                   exchange control relaxation, with medium-term
                   stabilisation. An IMF study suggested an optimal
                   value of the Rand at R8,80 to the US Dollar.


          (c) South African Chamber of Business (SACOB)


              Karl Muller, Des Kruger, John Lewis and Adv Meiring
              presented on behalf of SACOB.


              SACOB called for simplification of the tax system and
              reduction of the administrative burden on taxpayers. It
              asked for a familiarisation period for business people to
              implement tax regime changes, and clarify new
              developments in foreign dividend taxation and capital
              gains tax.


              Some upward pressure on inflation is expected from this
              Budget's tax relief measures, but SACOB emphasised the
              negative impact on price stability of large public
              enterprises' annual tariff increases.


              Recommendations and representations by SACOB included:
              *    The present depreciation allowance discriminates
                   between suppliers of goods on the one hand and
                   services on the other. SACOB proposes that this be
                   equalised.


              *    Adjustments to personal income tax effectively
                   offset bracket creep, and this should become a
                   standard policy for the national budget.


              *    SACOB called for further increase in the expenditure
                   on transport infrastructure, to promote international
                   competitiveness.


              *    SACOB questioned SARS' decision to regulate "tax
                   practitioners" and to clamp down on tax avoidance, as
                   minimising one's tax burden was well within the law,
                   and taxpayers should be allowed to employ the
                   services of advisors not linked to the SARS in any
                   way.


              *    On ringfencing of secondary trades, SACOB argued
                   that owners of a legitimate second business would be
                   penalised for the sins of a few. It added that the
                   distinction under tax law is usually between active
                   and passive incomes, and not the different sources of
                   income.


          (d) Federation of Unions of South Africa (FEDUSA)


              Ms Gretchen Humphries (FEDUSA Parliamentary Officer)
              presented the submission.


              FEDUSA raised concerns about the trend of unemployment in
              South Africa. It welcomed increased social spending by
              the State, seeing this as a vehicle for increased
              development, especially where it is labour-intensive.


              FEDUSA feels that the Budget did not adequately address
              HIV/AIDS, and feels that greater provision should be made
              to fund the prevention and treatment of HIV/AIDS.


              FEDUSA recommends:


              *    That a detailed and specific budget be outlined for
                   HIV/AIDS treatment/prevention.


              *    Intensification of HIV/AIDS awareness campaigns.


              *    That Government should implement a treatment
                   strategy outlining the availability of anti-
                   retrovirals.


              *    That funds should be specifically allocated for the
                   empowerment of Health Care Professionals, for the
                   training of lay counsellors and for community
                   upliftment programmes.


              *    A legislative framework should be established by
                   Government to ensure all employers negotiate and
                   adopt workplace policies on HIV/AIDS.


          (e) Focus areas of discussion in Committee


              (i)  Support for SMMEs and BEE


                   The Committee focused on the issue of SMME support,
                   endorsing the fact that the BBC put forward proposals
                   for future budgetary policy, and the extension of the
                   legal definition of SMMEs, and enquired about further
                   action to remove obstacles here.


                   The BBC is investigating a number of legal and other
                   changes that will increase SMMEs' success rate,
                   feeling the economic environment opens opportunities
                   for employment creation.


                   The BBC also said it was preparing submissions to
                   SARS on the problems that SMMEs have with paying VAT,
                   since the current lump sum affects their liquidity.
             (ii)  Women's pensions


                   The Committee queried the constitutional implications
                   of reducing the pensionable age for women only. An
                   additional concern was whether it would have the
                   effect of shortening women's careers, which generally
                   start later than men's. The BBC responded that the
                   retirement age for men is 65 and for women is 60, an
                   existing differential. In South Africa's unique
                   circumstances it could be an effective addition to
                   social spending.


                   He added that to stimulate savings the government
                   would have to allow for more disposable income.


           (iii)   Skills levy
                   Responding to a request for feedback on the skills
                   levy, the BBC said it found that not very many people
                   are making use of it. Part of the problem was lack of
                   public awareness, due to a lack of information and
                   education on the levy.


             (iv)  Targeted child benefits


                   On the BBC's proposal not to extend the child support
                   grant to children over 14, but instead use the money
                   for free primary education, the BBC said in response
                   to a question that their motivation was that intended
                   beneficiaries often are not the ones receiving the
                   benefits. Ensuring free schooling would be one method
                   of ensuring that the funding reaches those it was
                   intended for.


 D.     Oral submissions


     The following people made oral submissions before the Committee,
     some in their personal capacity.  These submissions are available
     on request from the Committee Section of Parliament.


     1. Mr J Josie, Deputy Chairperson: Finance and Fiscal Commission.
     2. Mr B Khumalo, Finance and Fiscal Commission.
     3. Dr H Fast, Manager: Parliamentary Office, Finance and Fiscal
          Commission.
     4. Mr C van Gass, Finance and Fiscal Commission.
     5. Mr I Momoniat, DDG: Intergovernmental Fiscal Relations.
     6. Mr V Khahle, Legal Services: Intergovernmental Fiscal
          Relations.
     7. Prof M Lester, Rhodes University, Tax Expert.
     8. Prof P Le Roux, University of the Western Cape, Tax Expert.
     9. Dr I Abedian, Macroeconomist: Standard Corporate Merchant Bank.
     10.     Prof C Okeahalam, Wits University, Macroeconomist.
     11.     Ms S Gordan, Macroeconomist.
     12.     Ms M Mtomba, Black Business Council.
     13.     Mr V Ntombela, Black Business Council.
     14.     Mr M Maleka, Black Business Council.
     15.     Mr J Laubscher, Die Afrikaanse Handelsinstituut.
     16.     Ms A Wiehahn, Die Afrikaanse Handelsinstituut.
     17.     Mr Karl Muller, Chairperson: SACOB Taxation Committee.
     18.     Mr Des Kruger, Member Taxation Committee.
     19.     Mr John Luss, Deputy Chairperson: SACOB Economic Affairs
          Committee.
     20.     Adv Abri Meiring, Chairperson: SACOB Parliamentary
          Committee.
     21.     Mrs Peggy Drotskie - SACOB Director: Policy.
     22.     Ms G Humphries, Parliament Officer: FEDUSA.

                       TUESDAY, 18 MARCH 2003

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. Bills passed by Houses - to be submitted to President for assent:

 (1)    Bill passed by National Council of Provinces on 18 March 2003:


     (i)     Constitution of the Republic of South Africa Fourth
          Amendment Bill [B 69B - 2002] (National Assembly - sec 74).


     NOTE: If the Bill is assented to by the President, the name of the
     Act will be Constitution of the Republic of South Africa Amendment
     Act, 2003.

TABLINGS:

National Assembly and National Council of Provinces:

Papers:

1. The Minister of Foreign Affairs:

 (a)    Southern African Development Community Protocol on Politics,
     Defence and Security Co-operation, tabled in terms of section
     231(2) of the Constitution, 1996.


 (b)    Explanatory Memorandum on the Protocol.

1. The Minister for Agriculture and Land Affairs:

 Report and Financial Statements of the Perishable Products Export
 Control Board for the year ended 31 December 2001. COMMITTEE REPORTS:

National Assembly:

1. Report of the Joint Committee on Ethics and Members’ Interests on the Breach of the Code of Conduct by the hon Mr Yengeni, MP, dated 14 March 2003:

 Present


 Chairperson Mr L Landers


 Present


 National Assembly


 Chikane M M (ANC) Green L M (ACDP) Seaton S (IFP)
 Cronin J P (ANC)  Jassat E E (ANC) Solomon G(ANC)
 De Lille P (PAC)  Radebe B A (ANC)
 Ditshetelo P H (UCDP)   September R K(ANC)
 NCOP
 Kolweni Z S (ANC) Lubidla E N (ANC)      Mkhaliphi J (ANC)
 Nkuna C (ANC)     Ackermann C (NNP)


 The Joint Committee on Ethics and Members' Interests met at 10:00 on 14
 March 2003 in -Room V226, Parliament, to consider the complaint against
 Mr Yengeni.


 Background


 1.     On the 25 March 2001 the Sunday Times carried a detailed article
     on Mr Yengeni's purchase of the ML 320 Mercedes Benz, Registration
     CA 802333 chassis number WDC 16315424048577.


 Complaint


 2.     On 27 March 2001 Mr Gibson referred the matter to the Joint
     Committee on Ethics and Members' Interests for investigation. He
     requested that Mr Yengeni be asked to explain the following:
 2.1    Non-disclosure of benefits exceeding R350.00; this included the
     free use of a motor vehicle for a lengthy period and on the
     appropriateness of the Chairperson of the Defence Committee
     entering into a contractual arrangement with a company itself or
     whose affiliates were involved in tendering for arms.


 2.2    Mr Gibson also questioned the non-disclosure of Mr Yengeni's
     home erf number 18250 in Milnerton.


 Perusal of disclosure form


 3.     Mr Yengeni's disclosure form for 1998-2000 reveals that Mr
     Yengeni did not disclose the benefits as required in terms of
     section 8(f) which require that the nature and source of any other
     benefit of a material nature and the value of the benefit must be
     disclosed. Mr Yengeni's 1996 disclosure form contained details of
     his Milnerton home.
 Mr Yengeni's response to the allegations


 4.     On 18 April 2001 Mr Yengeni responded in a letter to the
     Committee to the allegations. He stated that the vehicle was
     legitimately purchased and that the acquisition did not in any way
     amount to a gift or a donation. Mr Yengeni further informed the
     Committee that he had disclosed his home in 1996.


 Interim Report of the Committee, tabled in the National Assembly on 5
 June 2001


 5.     In respect of non-disclosure of his home the Committee found:


     (a)     that Mr Yengeni did not comply with the Code


     (b)     however, it agreed that Mr Yengeni's non-compliance was
          not mala fides


 Accordingly the Committee recommended that Mr Yengeni submit details of
 erf 18250 Milnerton by 31 May 2001. [Mr Yengeni subsequently complied
 in this regard.]


 5.1    In response to non-disclosure of the benefit of the motor
     vehicle CA 80233 the Committee agreed:


     (a)     that the allegations were made in the context of the
          Strategic Defence Procurement Process; and


          i.  further noted on 2 November 2000, that the National
              Assembly accepted the recommendation of the Standing
              Committee on Public Accounts that a forensic
              investigation be conducted into allegations of
              impropriety in relation to this process.
          ii. further noted the Report of the Standing Committee on
              Public Accounts tabled and adopted by the National
              Assembly on 4 April 2001, that such an investigation was
              being co-ordinated by the Office of the Auditor General
              and comprises the Office of the Public Protector and the
              Investigating Directorate for Serious Economic Offences
              in the Office of the National Director of Public
              Prosecutions.


         iii. believes that the subject matter of the complaint falls
              within the scope and ambit of the above investigation and
              that a separate investigation of the Committee would
              traverse the same issues. Therefore a parallel
              investigation, at that point, into the matter was not
              desirable.


 Accordingly, the Committee in respect of the above two matters;
 recommended that Parliament should await the Report of the Joint
 Investigation Team; and should consider that Report in order to proceed
 with the complaint.


 Report on the Consideration of the Joint Investigating Report into the
 Strategic Defence Packages


 6.     The Joint Committee on Ethics and Members' Interests considered
     the Report of the Investigation into the Strategic Defence
     Packages referred to the Committee on the 14 November 2001 by the
     Speaker of the National Assembly and tabled on 6 December 2001, in
     respect of the allegations against Mr Yengeni.


 6.1    The Report in Chapter 1.3.1.2 (point four in the table) states
     that a criminal case was pending against Mr Yengeni. The opinion
     from the Chief Parliamentary Legal Adviser was, that in terms of
     the sub judice Rule, it would be prudent for the Committee to wait
     for the conclusion of the criminal case before it considered the
     allegation of the non-disclosure of the benefit by Mr Yengeni. The
     Committee agreed to pursue the matter after the conclusion of the
     criminal case against Mr Yengeni.


 Guilty Plea


 7.     Following Mr Yengeni's plea of guilty, case number 14/09193/01
     in the Regional Court for the Regional Division of Northern
     Transvaal held at Pretoria, the Committee at its meeting of 25
     February 2003, resumed its consideration of the complaint against
     Mr Yengeni.


 7.1    Based on the plea of guilty the Committee requested that Mr
     Yengeni be given the opportunity to place his views on record and
     state any possible mitigating factors. Mr Yengeni's attorney
     indicated that he was of the view that he had expected the
     Committee to follow proper procedure. On this basis, a formal
     notice of a hearing was sent to Mr Yengeni, setting out the
     charges against him.


 7.2    Mr Yengeni resigned from Parliament before the date of the
     hearing.


 Resignation


 8.     It is the Committee's view that the complaint against Mr Yengeni
     may not be pursued, as he is no longer a Member of Parliament.


 8.1    The Committee can, however, consider Mr Yengeni's guilty plea
     and express its view on whether he breached the Code of Conduct
     with regard to financial interests.


 8.2    The Committee considered Mr Yengeni's admission that he breached
     the Code and his acknowledgement to the Court that his failure to
     disclose the benefit he received, "constituted a breach of his
     duties and was potentially prejudicial to the integrity and
     reputation of, and trust in Parliament".


 8.3    The Committee notes that Members of Parliament are expected to
     display the highest standards of propriety, and that any deviation
     from those standards of ethical behaviour by Members, results in
     the erosion of public trust in Parliament.


 8.4    It is the Committee's task to ensure that the integrity of
     Parliament is beyond question.


 8.5    The Committee re-iterates that Members of Parliament are
     expected not to take any improper advantage or benefit by virtue
     of the office they hold.


 8.6    On the basis of Mr Yengeni's admission in court, it is the
     Committee's view that his continued participation in Parliament
     would have been inappropriate.  Mr Yengeni's resignation is
     therefore appropriate.
 In addition, the Committee is of the view that Mr Yengeni breached the
 Code of Conduct. Furthermore, the Committee deplores, in the strongest
 terms possible, the damage done to public trust in Parliament by Mr
 Yengeni.


 Review of Code


 9.     The Committee further notes in its consideration of the
     complaint, that a review of the Code and some of its investigation
     procedures are necessary, including:


     (a)     guidelines in the Code of Conduct in respect of discounts
          received by Members;


     (b)     Clarify rules on the acceptance of gifts which constitute
          a conflict of interests;


     (c)     In terms of the procedure developing rules to deal with
          non-cooperation by Members;
     (d)     Assessing the capacity and powers which the Committee
          requires to fulfill its mandate in terms of the Joint Rules;


     (e)     A review of the sub judice rule;


     (f)     The role and functions of the Registrar.


     The Committee unanimously adopted the report.


 Report to be considered.