National Assembly - 15 February 2006
WEDNESDAY, 15 FEBRUARY 2006 __
PROCEEDINGS OF THE NATIONAL ASSEMBLY
____
The House met at 14:13.
The Speaker took the Chair and requested members to observe a moment of silence for prayers or meditation.
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS – see col.000.
MAIN APPROPRIATION BILL
ADDITIONAL ADJUSTMENTS APPROPRIATION BILL
(Introduction)
The MINISTER OF FINANCE: Madam Speaker, Mr President, Deputy President, Cabinet colleagues, Governor of the Reserve Bank, Deputy Governors present, MECs for Finance here present, hon members, members of the diplomatic corps, your Excellencies, ladies and gentlemen, but also our friends who are joining us this afternoon at their place of work or at home, the great Nigerian author whose words we have used here from time to time is our inspiration, again, today. Ben Okri writes: There are no joys without mountains having been climbed. There are no joys without the nightmares that precede them and spring them into light …
The joys that spring from the challenges are profound. And the challenges will always be there. As long as there are human beings there will be challenges. Let no one speak of frontiers exhausted, all challenges met, all problems solved.
There is always the joy of discovering, uncovering, and forging new forms, new ways …
So, Madam Speaker, in tabling the 2006 Budget proposals for the further consideration of the House here, we also place before the nation an account of the mountains we have climbed and the frontiers that we still see before us.
Our Budget proposals are closely bound up with this journey, with our conception of democracy, with the progressive realisation of social and economic freedoms to which we aspire, with our understanding of the service delivery obligations of the government alongside the development impetus of active citizenship, our faith in these joys and our faith in these challenges.
We are able to report that the economy expanded by about five per cent last year, and we anticipate continued growth of about five per cent yearly over the period ahead. Business confidence is strong; investment and employment creation have gained momentum; inflation and interest rates remain moderate. The revenue outcome for 2005-06 will be about R41 billion more than we expected this time last year . . . [Applause.] . . . and this creates room for expenditure, growth and tax relief in this year’s Budget.
Umnotho wakuleli ukhulile, ngakho-ke asivuneni. Inala ifikile. [The economy of this country has grown, therefore let us reap the rewards. The period of abundance has arrived.]
Those words may sound original but they came as a Tip for Trevor from a certain Mr Mhlungu. Essentially, he is saying to us that this is a year of plenty when all South Africans will reap the fruit of economic growth.
Fine words, fine sentiments, but also we need to talk to the problem and we need to say to the problem:
Tlala o kotsing! [Hunger, you are in trouble!]
Hunger, you are in trouble! [Applause.] We have, as always, received a great deal of advice on what might be done in these happy circumstances. Government departments, Mr President, have tabled a thousand new service delivery proposals and expanded spending plans. Taxpayers have promised to invest more and work harder if more money is left in their hands.
Citizens and civil society organisations have again been generous in providing Tips for Trevor, highlighting frankly and precisely what the frontiers and challenges are that have yet to be addressed that “all possible joys may be uncovered”. I am saying that we have received a diverse range of advice about a diverse range of subjects.
So Mr Sipho Makola proposes, for example, a tax deduction on dating expenditure. [Laughter.] He writes: “It’s really difficult lately to find a woman without first dating her and such expenditure is sometimes beyond our budgets. [Laughter.] We either date or forever remain bachelors … ”[Laughter.][Applause.] It’s a wonderful thought; we are sure that Mr Makola was touched by the Valentine’s Day blues just yesterday. But, to budget is to choose.
Democracy and freedom have laid on this House the solemn duty of safeguarding the transparency and the integrity of these choices. The budgetary choices we make give life and meaning to the age of hope of which President Mbeki so eloquently spoke in the state of the nation address. The Budget tabled here today gives practical effect, Mr President, to our programme of social cohesion, and in particular to prioritising the needs of the poor, for that is what it means for rich and poor to share the privilege of a common nationhood.
There’s no simple index of fiscal solidarity that measures progress along this redistributive trajectory. The social wage comprises many overlapping areas of public investment and service delivery. This is a mountain to be climbed in stages, joys to be reached step by step.
Let me just interrupt the speech and say to colleagues that hon members have become accustomed to finding some food on the table. This year we provided food but it is not food for the body, it is food for the mind. The Sudoku you have before you tells the story of these many mountains we have to climb. When you solve the first one, there’s a next one and it will be a little more challenging, and when you have solved that, please tell us that you have solved the third one, because that is what this challenge of building a democracy that touches the lives of all our people is.
When we look at these kinds of challenges and the way in which we as South Africans have been able to respond over the past 12 years, there are a number of reference points, so I want to refer, for example, to the growth and income support to vulnerable households through social security and social assistance grants. This has been the fastest growing category of government expenditure since 2001, and now amounts to R70 billion a year, or 3,4% of GDP. It reaches more than 10 million beneficiaries. Social grants contribute more than half of the income of the poorest 20% of households, and have doubled in real terms over the past five years. Recent survey data has provided a clear empirical base of significant improvements in child nutrition associated with the child support grant, which in turn positively affects cognitive ability and also school outcomes, and, again, we can say without fear of contradiction:
Tlala o kotsing. [Hunger, you are in trouble.]
I refer also to the expansion of primary health care since 1994. More than 1 300 clinics have been built or upgraded; 2 300 have seen new equipment installed; childhood immunisation programmes have been extended; and our health services receive 101 million patient visits a year, or roughly about eight to nine visits per family. HIV treatment programmes are in place at 192 health facilities. Over the MTEF period ahead 46 hospitals will undergo physical rehabilitation and administrative overhaul as part of the nationally co-ordinated hospital revitalisation programme.
In the context of fiscal solidarity I refer also to steady progress in school enrolment; to the fact that 64 467 classrooms have been built in the last 10 years; that 114 000 study awards were made by the National Student Financial Aid Scheme in 2005; that 207 497 young people have registered for learnerships since the introduction of the skills development programme, funded in part through tax subsidies. School fees will be phased out in low- income communities this year and Minister Pandor confirms that in three weeks’ time the last remaining 17 trees will no longer substitute for classrooms. Well done, Minister. [Applause.]
I refer to the fact that 3,5 million homes have been connected to the electricity grid since 1994; water supply infrastructure now reaches some 90% of the population and the sanitation backlog is steadily declining. R23 billion will be spent on government subsidies for 500 000 housing units over the next three years, complemented by rising expenditure on community sports facilities, police stations, transport infrastructure and administrative services.
I refer to our commitment to ensure that no household is denied the simple dignity associated with basic water, sanitation and energy supplies. Data supplied by the Department of Provincial and Local Government indicates that 165 water service authorities currently provide 3,9 million poor households with free basic water and free basic electricity reaches 2,9 million households.
In 2005 the government spent R4 800 a year per person on community and household services and income transfers. When one compares this with the R2 000 of just a decade ago there is an increase of nearly 50% in real terms. And as we log up the many victories that we score for democracy, one of the important questions that arises is: What has made this possible?
“There are no joys without mountains having been climbed …”
Part of the answer lies in financial policy and debt management. In 1998, for every rand of revenue collected, 24 cents were spent on servicing state debt; in 2005 the debt cost 14 cents, and by 2009 it will be down to 10 cents. [Applause.]
Part of the answer lies in the substantially improved growth of the economy on the strength of sound macroeconomic, fiscal and monetary policies. Part of it lies in the considered reprioritisation and forward-looking policy reforms that underlie our budget choices.
But, the greater part lies in the quality and energy of people working together; citizens and public servants; community activists; and businesspeople, workers and managers. It is not the rand cost of public services that counts in the daily experience of women and children; workseekers; victims of crime; the elderly; or those with disabilities. It is the quality of care in the paediatric ward, the time it takes to process a business application, the effectiveness of court processes, and the attention to special learning needs in the classroom that make a difference to people’s lives and to their wellbeing.
As we celebrate the progress made in meeting household and community needs, we are also conscious of the work that lies ahead. Quality of care and efficient public services still require greater effort from all of us; improved public administration and also the kind of citizen activism that contributes constructively to community development. As we give consideration to another expansionary budget framework for the period ahead we need to pay tribute to the special character of selflessness that lies behind the social progress and development – people working together – because that is what is needed to get things done.
I have in mind people like the 22-member team known as the Madida Hotshots, led by Christopher Kasayi – Christopher is with us in the House. Christopher is from Jansenville in the Eastern Cape. Formerly all of these 22 people were unemployed and now they are skilled and dedicated firefighters in our Working on Fire programme. [Applause.] They joined their counterparts from the Western Cape in bringing under control 17 forest fires in the Boland and Table Mountain areas during the past month, under difficult and hazardous conditions. [Applause.]
I also have in mind, Mr President, the 63-year-old court maintenance officer, Aunt Hester Kok. Tant Hester is hier êrens. [Aunt Hester is around here, somewhere.] Hester Kok has a network of community workers in the Kalahari communities in little places such as Askam, Rietfontein, Philandersbron and Loubos. Through the efforts of local volunteers, and one of them was going to join us today but couldn’t – she has the nickname of Blommetjie [Little Flower] – people in these very remote settlements are assisted to receive maintenance payments on predetermined dates without the exorbitant expense and huge inconvenience of a monthly taxi trip to Upington. [Applause.]
I also have in mind people like Jabulisile Gumede, one of the founders of the Inanda Greening Project. Through this project they have established mini-nurseries at 30 schools in the areas of Inanda, KwaMashu and Ntuzuma, contributing to local vegetable gardens for school feeding and income generation. [Applause.] Jabulisile is there and we want to say thank you to you as well.
Ma, siyabonga kakhulu. [Thank you very much.][Applause.]
I have in mind one of the community leaders of Galeshewe in Kimberley. His name is Peter Nkota - he was at the airport but the plane didn’t take off this afternoon so we want to apologise and wish him well. He assists the police in visiting schools in the area twice every week to alert children to the risks of alcohol and sexual abuse, and has worked with youth leaders and justice officials to create a new mobile court to deal more promptly with local crime. So, Peter Nkota, in your absence, thank you very much as well. [Applause.]
As we reflect on our macroeconomic performance, tax proposals and aggregate spending plans for the MTEF period ahead, I know that all of you as members of this House, and others listening at home or at their places of work, will join me in remembering the special efforts of ordinary citizens and the dedicated work of our teachers, our doctors and nurses in weekend casualty wards, policemen and policewomen fighting crime, administrators creating order out of chaos, and those who every day live the nightmares that precede our joys and turn them into light.
Aan almal, die vrywilligers en die staatsamptenare, vanmiddag, van almal van ons in die regering, baie, baie dankie vir jul harde werk. [Applous.][To all, the volunteers and the civil servants, this afternoon, from all of us in government, thank you very, very much for you hard work. [Applause.]]
That transition from darkness into light also reminds us of “kumpondo zankomo” [very early in the morning]. [Interjections.]
Madam Speaker, the South African economy has grown more strongly over the past year than we anticipated. Our expectation in February last year was that GDP would increase by 4,3% in 2005; the revised estimate is five per cent. This follows a significant upward adjustment in growth for the previous year published by Stats SA last November, and is further evidence that both economists and statisticians, as a personality type, are prone to pathological caution. [Laughter.] There they are.
Indeed, when the full accounting is done towards the end of this year, we may well find that our economy grew by 5,5 or six per cent last year. I hope that this doesn’t render the Deputy President unemployed with Asgisa. [Laughter.] The extraordinary pace of vehicle sales, rising house prices, traffic congestion and VAT receipts all point to this conclusion.
Rising employee tax registrations and the records and financial performance of the Unemployment Insurance Fund confirm that employment is rising strongly. Labour force and household survey data indicate that job creation is now proceeding at about 350 000 new opportunities a year, or 1 500 new jobs every single working day. [Applause.]
This is, in part, the outcome of the economic restructuring and policy reforms over the past decade. Stronger economic growth now rests on a stable macroeconomic foundation and healthy investment trends.
Incomes and opportunities are still profoundly unequal in our economy, however. Growth brings with it broadening participation in the world of work and improved opportunities for those who rely on marginal and vulnerable second economy activities. To overcome poverty and inequality the pace of this restructuring needs to accelerate.
Ekunyamezeleni kukho umvuzo. [Good things come to those who wait.]
We have indeed already achieved a considerable acceleration in sustainable growth but we are mindful that the present buoyancy of business and consumer confidence is, in part, a cyclical trend. Commodity prices are at record levels, supported by strong growth internationally; global productivity growth is robust, while inflation and interest rates have remained at moderate levels. Preliminary indications are that South African exports grew by over 12% in real terms last year, which is a remarkable turnaround after several years of disappointing trade performances.
However, our appetite for imported goods and services has also grown strongly, and so the deficit on the current account of the balance of payments has deteriorated from less than one per cent of GDP in 2002 to just over four per cent last year. We rely increasingly on capital inflows from abroad to finance the excess of expenditure over the value of domestic production.
There is no shortage of liquidity internationally, and so inflows on the financial account comfortably exceeded our requirements in 2005. The Reserve Bank’s gross foreign exchange position improved from US$14,9 billion at the end of December 2004 to US$22,2 billion in January 2006. This is a healthy financial development, but we cannot assume that global circumstances will always work in our favour.
As has happened several times in the past decade, financial inflows could swing away from emerging markets, and these enormous shifts in global money cannot be predicted. Commodity prices may stay high for another year, perhaps several years, but one day they will retreat; this is after all the history of commodity price cycles.
We are conscious of the disquiet of many manufacturers about the current strength of the rand but, on the other hand, we know from past experience that rapid exchange rate depreciation would have disruptive effects on prices and on balance sheets. Our task as government, households and the business sector is to turn the opportunities before us into lasting progress; to translate the resource gains of an economic upswing into real investment in productive capacity; to moderate our consumption tendency; to broaden and diversify economic activity.
Two particular frontiers loom large in the period ahead: the challenge of investment and the challenge of skills. So let us all remember that, isisu sibekelwa ngaphandle [you need to make provision for that which you are going to consume]. There are encouraging signs that the investment trend is upwards. Gross fixed capital formation has increased by at least eight per cent annually since 2003, and we anticipate investment growth of between nine and 10 per cent a year over the next three years. It seems that there is a bit of disquiet. All that we’re saying is, remember there’s tomorrow; don’t eat the seed corn now. That’s all.
The construction sector reports strong growth in building contracts awarded and increased employment. Cement sales rose from 7,9 million tons in 2000 to 10,7 million tons in 2004, and by a further 11,5% in the first three quarters of last year. Some R4,4 billion is currently being invested in expanded capacity by our cement producers. Public sector infrastructure spending increased particularly sharply last year, as investment in electricity generation capacity, ports infrastructure, water schemes, and roads and telecommunications projects all gained momentum.
Investment in organisational and human capacity is no less important than physical infrastructure – in the long run it is the firmest foundation of growth and development, and for the medium term there are several pressing skills constraints that we have to address. Opening the doors of a learning culture is about building and equipping classrooms, it is about how we train our teachers, it is about the learning materials in our schools, it is about how we pay our educators and how we promote better school management, it is about building a culture of enthusiasm and enterprise in our school communities.
Recapitalisation of our further education and training colleges will get under way this year, full steam, and the revised skills development strategy for the 2005-2010 period was launched in March last year. Training related to employment programmes in housing, roads, water services and agriculture was prioritised in 2005, and has already benefited some 80 000 learners. Building sound institutional capacity in municipalities and addressing associated skills constraints are clearly key challenges for public service delivery, and are the focus of several interventions for the period ahead.
“There are no joys without mountains to be climbed …”
Infrastructure investment and skills development are the main frontiers ahead. These are journeys that have just begun, and they promise unbounded opportunities for discovery, unprecedented opportunities for initiative and partnership. But economic growth and broad-based development also depend on other institutional dynamics, or may be held back by particular barriers or constraints.
The Accelerated and Shared Growth Initiative is designed to ensure that we understand these dynamics fully, and to prepare appropriate policy interventions. It recognises that challenges exist in specific sectors – our chemicals industry, clothing and textiles, business services, tourism and hospitality, agriculture and food processing. Each one of these requires a focused analysis and very specific solutions.
It also recognises that work needs to be done on several broad aspects of our economic prospects and policy framework, these include:
• The level and stability of the exchange rate, and its impact on
exports as part of a growth strategy;
• The role of public infrastructure in lowering the costs of economic
activity;
• Appropriate and efficiently administered labour market institutions,
empowerment policies and skills development;
• The role of industrial policy, competition and trade policies;
• The need to increase innovation and investment in new technology
capable of competing internationally; and
• The role of financial markets in supporting investment activity.
For the three-year planning period of the 2006 Budget, export growth is expected to benefit from continued commodity demand globally, favourable tourism trends and several industrial expansion and diversification projects. Strong investment growth by the public and private sectors and moderate growth in household consumption are anticipated, contributing to an overall economic expansion of about five per cent a year, with a deficit on the current account of the balance of payments averaging 4,3% of GDP.
Our export performance will, as always, depend greatly on the economic fortunes of other regions of the world economy. Growth in the world economy is expected to remain reasonably strong, averaging about 4,3% over the next three years. In the developing and emerging economies of the world, economic growth is particularly brisk. Africa’s economies are expected to grow by nearly six per cent in 2006. The commodity price cycle and sustained economic reform in many countries have underpinned the stronger growth rates of recent years.
Consumer price inflation has remained within the target range of three to six per cent since September 2003, reaching a low point of 3,1 per cent in February last year. Excluding transport costs, which have increased in response to higher oil prices globally, CPIX inflation for the year to December was just 2,8%. Consumer price inflation is expected to average about 4,5% a year over the next three years. And so we can say to the Governor that the CPIX is set to remain in the middle of our target band for inflation – it makes your work easier; it makes growth prospects a lot brighter.
In summary, the economic outlook is exceedingly favourable – more promising than has been seen in 40 years . . . [Applause.] . . . but we recognise the need for both restraint and redoubled efforts, so that we take full advantage of the opportunities before us. And our policy stance, unlike that of 40 years ago, emphasises development opportunities for all South Africans . . . [Applause.] . . . built on a foundation of social solidarity and a shared economic destiny, a partnership in which citizens and the state face shared challenges, to meet shared joys.
Injobo enhle ithungelwa ebandla. [If you have an idea, then share it with others.]
I am pleased to be able to announce the completion of the adjudication of applications received in respect of the exchange control and tax amnesty announced in February 2003. A total of 42 672 applications have been dealt with, and a total of R68,6 billion in foreign assets have been disclosed. The regularisation of the foreign asset holdings and tax obligations of the vast majority of applicants means that they can now manage their financial affairs without fear of criminal or civil prosecution. It also raises the declared income tax base by some R1,4 billion, and contributes to the statistical records of the Revenue Service and the Reserve Bank.
The R2,9 billion in revenue raised through amnesty levies will be assigned to joint public-private partnership investments in community infrastructure and business development in low-income neighbourhoods. This is going to be part of our Asgisa; it is the rich who took the money off saying that now, as an act of contrition, this money should be used in the interests of dealing with the many who find themselves in the second economy. [Applause.]
The completion of this amnesty process lays a foundation for a more orderly process of portfolio diversification by South Africans. The offshore individual allowance will accordingly be increased from its present limit of R750 000 to R2 million per person. To encourage participation in projects supportive of the Nepad development goals, the present foreign direct investment threshold of 50% will be lowered to 25% for investments in Africa by South African corporates and mandated parastatals. Further details will be provided in a circular issued today by the SA Reserve Bank.
South Africa’s international engagement is organised around four broad themes: consolidation of the development agenda for Africa; co-operation between developing nations; improved global governance; and strengthening bilateral relations.
Regional integration remains a key policy initiative. It is given practical effect in the revised Southern African Customs Union Agreement, which establishes joint institutions and a development-oriented distribution of customs and excise revenue between its members.
Our international financial engagement also includes participation in the Financial Action Task Force, which is the standards-setting body for combating money-laundering and the financing of terrorism, which is currently meeting here in Cape Town under the chair of Prof Kader Asmal. It involves 45 governments of the major economies of the world and, in assuming the presidency for this year, the government has signalled South Africa’s continued commitment to combating financial abuse, both domestically and as part of this international effort.
Turning then to fiscal policy and the budget framework: South Africa’s economic outlook both supports a more expansive fiscal stance, and is itself a consequence of steady improvement in fiscal trends. Members of the House who have been with us since 1994 know that as we enter a new phase of policy development, under the Accelerated and Shared Growth Initiative, we do so on the strength of continuing implementation of our reconstruction and development programme, which itself was supported by the macroeconomic consolidation that we initiated from this platform in June 1996 – we called it Gear. There is no contradiction; they all have to support one another; they all have to interact.
In the noise and haste of economic policy debate, we forget too easily that there are long lead times in the practical implementation of policy. Our present economic performance reflects the choices we made a decade ago, and the economic reforms now in progress will yield their returns five and 10 years from now. As Ben Okri wrote: “There are no joys without the nightmares that precede them and spring them into light …”
Between 2000 and 2004, general government capital formation increased by 4,8% a year and investment by public corporations by an average of 7,4% a year, in real terms. Higher growth in investment of 10% and 15% a year is projected for the period 2004-2008. Real wage and non-wage consumption expenditure are expected to increase by three per cent and 8,4% a year respectively. Interest on public debt will continue to decline as a percentage of GDP, and general government tax revenue will stabilise at about 26% of GDP.
These are the statistical indicators of steady improvements in the quality of the public finances – robust revenue performance, declining debt costs, rising investment and a more healthy balance between personnel expenditure and the maintenance of facilities – but given the fact that the Deputy Minister, the DG, the Commissioner and I were stuck in the lift we have to look at the maintenance of facilities again. [Laughter.] This also includes the acquisition of equipment and support services that allow public servants to work efficiently and effectively.
Main budget revenue in 2005-06 – that is the present fiscal year; the one that ends on 31 March - is expected to amount to R411,1 billion or R41,2 billion more than the original estimate, and 18,2% more than in the previous financial year. As noted already, we underestimated the impetus of the economic recovery last year, buoyant trade and rising commodity prices have favourably impacted on corporate profits, and there has been a strong demand boost to both VAT receipts and import taxes. But the revenue performance is also testimony to the success of the sweeping tax reform agenda of the past decade, and the growing competence and effectiveness of the SA Revenue Service.
The anticipated expenditure outcome for the current fiscal year is R419 billion and takes into account two additional allocations, placed before the House today as a further Adjustments Appropriation Bill for unforeseeable and unavoidable expenditure. The first is an amount of R2,7 billion to relieve the cash-flow crisis of the Road Accident Fund and contribute to addressing its backlog in claims settlements. The second is a R2 billion capital investment in Denel Corporation, to enable it to proceed with the restructuring necessary to achieve solvency and profitability.
The difference between revenue and expenditure is a budget deficit of R7,9 billion in the present fiscal year or 0,5% of GDP. At this time last year, we anticipated a deficit of R48 billion or 3,1% of GDP.
Members of the House are entitled to ask: What will be done with the extra R40 billion we planned to raise? The answer is in three parts:
• We will begin the new year with a net debt position equivalent to
30,8% of GDP, down from 33,2% at the end of 2004-05. Lower debt means
lower debt service costs in years to come, and lower interest rates
across the entire economy.
• We are able to table an MTEF that provides for greater expenditure
growth over the period ahead than we otherwise would have.
• We again have room for moderate tax relief, while taking into account
that the revenue outcomes this year are in part a consequence of both
cyclical and temporary features.
For the MTEF period ahead, budget plans are set out in considerable detail in the Budget Review, and I propose to highlight just a few key features. In recognition of the social and development challenges ahead, we propose to raise about 26% of GDP in revenue, after providing for payments to our Southern African Customs Union partners, which will amount to R19,7 billion next year – a considerable contribution to promoting development and trade with our neighbouring economies.
State debt costs will decline from 3,3% of GDP in 2005-06 to 2,7% in the fiscal year that ends on 31 March 2009. The budget framework again contains an unallocated contingency reserve, rising to R8 billion in the third year. After taking into account these amounts, R418,2 billion is allocated for national, provincial and local government expenditure in 2006-07, rising to R507,6 billion in the third year.
The national budget deficit is expected to be 1,5% of GDP next year, falling to 1,2% in the third year. Taking into account social security funds, for provinces, public entities, local government and public enterprises, the public sector borrowing requirement is expected to average 2,4% of GDP over the period ahead.
These projections allow for a marked increase in infrastructure and capital spending by the public sector over the next three years. Infrastructure spending has lagged somewhat behind budget allocations in recent years, and so concerted efforts are now in progress to strengthen the capacity to plan, to implement and monitor these projects more effectively.
Within the Treasury, efforts are concentrated on support for provincial and municipal planning and construction contract management. The Development Bank of Southern Africa is currently assembling a task force of engineers, and project managers and some accountants, to be named Siyenza Manje, to contribute to operational and strategic capacity in distressed municipalities and to accelerate the roll-out of basic services. [Applause.] Mr President, the Minister for Provincial and Local Government is not applauding here. [Applause.] Thank you.
Under the Department of Public Works and the Construction Industry Development Board, an assessment of the state of public infrastructure maintenance is under way and improved maintenance standards and management systems will be implemented.
Under the umbrella of Project Consolidate, we will give focused attention to municipal financial management and procurement administration.
Alongside enhanced planning and project management capacity, we are also reinforcing our tools and procedures for fighting corruption and waste. Supply chain management reforms include rules to prohibit illegitimate business activity of public employees and elected office -bearers, and improved guidelines for tender practice, transparency, prompt payment and performance management. [Applause.] Where necessary, investigative powers and early intervention capacity over all three spheres of government will be developed to compliement resources of prosecuting authorities.
The scale of this programme, stepping up public sector project management capacity, is considerable. The Treasury infrastructure database currently has some 15 000 entries, and our provincial files a further 10 000 projects. Many of these are comparatively small pPublic wWorks projects that require straightforward tendering and contract management procedures. This provides growing opportunities for small business development and empowerment.
There are also several major projects, which in turn generate more complex business development programmes, often associated with deliberate skills development and mentorship. I am pleased to note that joint initiatives involving public and private sector stakeholders are in progress to contribute to the institutional capacity needed for success in this broad- based development and empowerment journey.
The investment programme is well under way, and we will continue to see steady growth in infrastructure spending in the government accounts, in company reports and project announcements, and in the dust and noise of incredibly busy construction sites.
The 2006 Budget includes a contribution to our investment commitments for the 2010 Soccer World Cup. Details of project allocations have not yet been finalised, but we will spend up to R5 billion in dedicated infrastructure for the World Cup, of which R3 billion is being set aside for over the next three fiscal years.
Mr President, I believe that both the national football side and the cricket team have volunteered to do unpaid clearing of building rubble as an act of collective contrition. [Applause.] “There are no joys without the nightmares that precede them. . . . . .” [Laughter.]
Ekunyamezeleni kukho umvuzo. {[Good things come to those who wait.]
Let me turn to the tax proposals for the 2006-07 year. Governmnent’s approach to meeting the state revenue requirements has several components: broadening the tax base, improving tax administration and building a culture of tax compliance, and lowering the tax burden associated with unduly high rates of tax. These are general goals of sound tax design, and contribute to economic growth and tax fairness, and, in addition, we seek to contribute to government’s economic and social objectives where this can efficiently be done through the tax structure.
A measure of success is that revenue collections have remained robust, relative to national income and output, while at the same time rates of income tax on businesses and individuals and on international trade have been lowered in line with international trends.
Several specific concerns are addressed in this year’s tax proposals: long- term retirement savings; small business development; investment in research and technology; skills development; and home ownership.
The SA Revenue Service is also implementing several reforms aimed at reducing compliance costs, enhancing service to taxpayers and improving tax and customs administration over the period ahead.
As announced the pastlast year, the regional service and joint service council levies will fall away in July this year. This amounts to effective tax relief for the business sector and other employers of about R7 billion a year, and lowers the costs of job creation. It also reduces the monthly administrative burden on companies.
Municipalities will receive compensating income through an increase in the equitable share grants from nationally collected revenue. What we now have to do is to ensure that that R7 billion in the hands of the employers is actually utilised to best effect to ensure the growth of decent work for more people. [Applause.]
It has also been agreed that municipal property rates revenue will be zero- rated for VAT purposeds with effect from July this year. This will result in a benefit of about R1 billion for municipalities, and will also contribute to simplifying their accounting and tax records.
Personal income tax relief this year will amount to a total of R13,5 billion, partially offset by an increase in the withholding rate on motor car allowances and amended treatment of company car benefits. The net benefit in personal income tax returned to taxpayers is R12,1 billion.
The income threshold below which no tax is payable by individuals is raised from R35 000 to R40 000 for the tax year beginning next month, and for taxpayers over the age of 65 to R65 000 a year. [Applause.] Changes to the tax brackets result in significant relief for all taxpayers, with an estimated 49% of the benefit going to those who earn less than R150 000 a year, and a further 24% going to the income bracket of R150 000-R250 000 a year. The maximum marginal rate of tax remains 40%, while the threshold where this rate becomes operable is raised from R300 000 to R400 000. [Applause.]
The domestic interest and dividend exemption for taxpayers under the age of 65 is raised from R15 000 to R16 500, and for senior citizens the threshold increases from R22 000 to R24 500. The proportion of the exemption applicable to foreign interest income and dividends is raised from R2 000 to R2 500.
As announced last year, the deemed private usage applied in calculating tax on motor vehicle allowances increases to 18 000 kilometres per year. The monthly tax benefit of a company car increases to 2,5% of its value with effect from next month. In keeping with these changes, the proportion of the motor vehicle allowance subject to Pay As You Earn tax will be increased from 50% to 60%, and the new cost tables will be published today. The anticipated gain to the fiscus of this measure is R1,4 billion in the first fiscal year.
Members of the House will recall that a revised tax regime for medical scheme contributions and medical expenses was announced in the 2005 Budget. It has the effect of raising the tax benefit for middle and lower income earners, while restricting the tax allowance in respect of more expensive medical schemes. Monthly monetary caps for medical scheme contributions have been introduced, and the threshold for individual tax-deductible medical expenses is raised from 5% to 7,5% of income. Taxpayers 65 years and older will continue to enjoy a full deduction of all medical expenses. These changes take effect on 1 March 2006.
Tips for Trevor this year included an interesting perspective from a Mr Norman Greenfield, who suggested that:
The high costs of transfer are deterring retirees from downsizing, depriving younger people of the housing stock. Could transfer duty be waived after age 60 or 65? There is only a limited time left for for amortise ing the rights.
[Laughter.] There are ages to take into account on both sides of a property transaction, so this is probably not the right way to proceed. But I agree that the decrease in transfer duties will encourage the secondary housing market and contribute to promoting home ownership. So, with effect from 1 March 2006, houses costing less than R500 000 will attract no duty. [Applause.] I see a very famous estate agent in the gallery. Please don’t raise the prices to make this less affordable. [Laughter.]
The 5%five per cent rate will apply to all houses between R500 000 and R1 million, and 8%eight per cent thereafter. The flat 10% rate for companies and trusts is will hereafter be reduced to eight per cent8%. Taking into account the substantial increase in property prices in recent years, I know that this will be a welcome relief to all home buyers, and especially first- time entrants to the property market. The cost to the fiscus of this measure is R4, 5 billion.
The threshold exemption for stamp duties on leases is raised from R200 to R500 per agreement, reducing the compliance burden for taxpayers and the administrative load on the Revenue Service.
The tax system contains various monetary thresholds relating to rates that have not been adjusted for inflation for several years. Changes proposed for 1 March 2006 include the following: Ffirstly, the annual donations tax exemption is increased from R30 000 to R50 000. Secondly,; the exemption from estate duty is raised from R1,5 million to R2,5 million. Thirdly,; the annual capital gains exclusion will increase from R10 000 to R12 500. Fourthly,; the primary residence exclusion from capital gains tax will increase from R1 million to R1,5 million; and the capital gains exclusion on death will increase from R50 000 to R60 000.
As part of a broader review of public policy relating to social security and retirement savings, the tax treatment of retirement funds and aspects of industry practice have come under scrutiny over the past year. The tax regime aims to encourage South Africans to make provisions for their retirement, and options for achieving this more effectively have been intensively assessed. In order to contribute to the build -up of retirement savings and taking into account interest rates that have stabilised at lower levels, the present tax on retirement funds will be reduced from 18% to 9%nine per cent with effect from 1 March 2006, at a cost of R2,4 billion. [Applause.]
Regulatory reforms relating to tax cost disclosure, the structure of commissions and governance of funds will be proposed in a policy paper to be released very soon. Our pension reforms aim to ensure that the benefits of the favourable tax regime are passed on to retirement fund members in the form of improved returns and that retirement savings are not depleted by excessive charges and penalties. [Applause.]
We reached a very important milestone agreement in December last year as a result of a number of findings by the Pension Funds Adjudicator, Mr Ngalwana. And as a consequence of that we have now placed retirement annuities on a solid footing. Now, we have to ensure that the benefits of a lower tax in retirement funds are transferred to the contributing members to ensure that their retirement benefits improve. [Applause.] That’s the responsibility that we have.
Although not a question of tax policy, I have been reminded by many retired correspondents this year that civil pensions and many private pension arrangements have in the past not adequately kept pace with inflation. People use all kinds of methods to remind one of theseis. There is a certain Mr Rademeyer who wrote that I must consider this because I too will grow old. [Laughter.] I have taken note, and would welcome appropriate remedies to prevent it. I do agree that preservation of the real value of pensions should be a central principle of our retirement industry reform programme.
Following various stimulus measures aimed at small business development in the 2005 Budget, a number of monetary threshold adjustments will take effect in the year ahead: With effect from the tax year starting on 1 April 2006 or thereafter, the annual turnover threshold to qualify as a small business corporation will be raised from R6 million to R14 million, the taxable income threshold for the lower 10% rate will be increased from R250 000 to R300 000 and the small business income tax exemption threshold will be increased from R35 000 to R40 000; oOne-time capital gains tax relief will increase from R500 000 to R750 000 after 1 March 2006, and the asset value threshold for immediate depreciation will increase from R2 000 to R5 000. These measures will cost an estimated R400 million.
The SA Revenue Service will also offer tax amnesty to small businesses to with a turnover not exceeding R5 million, and who have not been compliant with the tax system. One of the aims of the amnesty is to afford those who have been historically marginaliszed an opportunity to regularise their tax status. Taxes and penalties will be waived for years of assessment ending on or before 31 March 2004, subject to a non-disclosure penalty of 10% based on taxable income for 2005.
tThe first phase of the amnesty will take effect between August 2006 and May 2007, and the focus will be on the taxi industry. If we can bring taxi owners into compliance with laws more generally, it will clearly facilitate the Taxi Re-capitaliszation Programme. A second phase will extend the amnesty to other small businesses later in the next year.
I am pleased to confirm that the learnership allowance introduced in 2002 will be extended for a further five years in view of its contribution to encouraging on-the-job-training and skills development. The allowances will also be increased in value, at an estimated cost of some R80 million. A more favourable allowance will be introduced with effect from July 2006 for the additional expenses associated with employing disabled persons as learners. [Applause.] An enhanced learnership allowance for the business process- outsourcing sector is under consideration.
With effect from 1 March 2007, a simplified set of rules for the tax treatment of bursaries and scholarships provided by employers will be introduced.
To encourage businesses to increase investment in technology and innovation, the deduction for the current research and development expenditure will be increased from 100% to 150%, and a more favourable regime for depreciation of R&D capital expenditure is proposed. That should please you, Minister Mangena. [Applause.]
Members of the House will be aware that the Minister of Health has not relaxed her vigilance regarding tobacco products and alcoholic beverages. [Laughter.] She is a militant campaigner. I think she wears a blue ribbon. [Laughter.] To the extent that this commitment contributes to reduced consumption, the fiscus is of course disadvantaged. Happily, we can more than compensate through the raising rates of duty, and I trust that the House will welcome the following measures as enthusiastically as in the past. [Laughter.]
Excise duties on sparkling wines rise by 20% . . . [Interjections.] I have to toast with water. [Applause.], u Unfortified wine rises by 12,5% and other alcohol products rise by between 9%nine per cent and 10% this year. [Applause.] I have to toast with water. Tax on cigarettes, cigarette tobacco, pipe tobacco and cigars will increase by 10%, 5%five per cent and 8%eight per cent respectively. [Applause.] The tax on cigars should have been higher, but I was set upon by a certain Governor, who shall remain nameless. [Laughter.] These changes take immediate effect, and will raise R1,4 billion in revenue.
Hon Buthelezi, I don’t know why, but my officials have again neglected to recommend changes to tax on traditional beer and beer powder. [Laughter.]
No increase in the general fuel levy is proposed this year. However, an additional 5 five cents a litre on petrol and diesel will go to the Road Aaccident Fund, with effect from 5 April 2006.02.15. But, very importantly,
Tthis will bring the tax share of the pump price of petrol to between 28% and 29%, which is down from 36% a year ago.
Following a review of international practice, it is proposed that the fuel levy rebate to encourage a domestic bio-diesel industry should be raised from 30% to 40%.
It has been agreed that the new diesel-powered electricity generation plants planned for the national electricity network should be fully exempted from fuel levies.
These and other tax measures, together with an ongoing programme of improvements in tax administration, are discussed in more detail in the Budget Review and will be elaborated on in further communication from the SA Revenue Service.
A list of tax-exempt public benefit activities has again been refined, and deductible donation status will be extended this year to organisations undertaking conservation, environmental and animal welfare activities. No, that does not include agriculture; that is not animal welfare, Minister Didiza. [Laughter.]
Work is still in progress on some reforms, such as the proposed diamond export levy, the tax treatment of synthetic fuels industry, mining royalties and tax incentives for environmental rehabilitation funds.
Corporate taxpayers will welcome moves towards a self-assessment system, and the introduction this year of an advance tax ruling procedure. The record of 3,7 million individual income tax returns filed in 2005 is evidence of a growing culture of tax compliance, and plans for the phasing in of electronic filing by individuals are now well advanced.
On the subject of tax compliance, there was this tip in my mail, from a taxpayer whose name I had best withhold. He writes:
Eienaars wat strandhuise besit en oral in Suid-Afrika woon, verhuur hul tweede huise aan vakansiegangers. Ontduiking van betaling kan plaasvind. . . . . . ek stel voor dat huisverhuringfirmas by u geregistreer word en verplig word om sekere bedrae terug te hou om oorbetaal te word as belasting …. . . (Translation of Afrikaans paragraph follows.)
[People who own beach houses, and who are living all over South Africa, are renting their second houses to holiday-makers. Evasion of payment might be taking place . . . I suggest that letting firms should be registered with you and should be compelled to withhold certain amounts, which should be paid over by way of tax …]
For those who have difficulty with all of our languages, people who own second beach houses, who rent them out, pocket the money without paying any tax on them. The suggestion then from an individual, who lives in a coastal town, actually, is that we should establish a register of those who do the leasing and ensure that a sum is withheld and paid over by way of tax. :It’s just a tip; I’ll pass it on to the Commissioner. [Laughter.]
The overall impact of the tax proposals is to reduce the tax burden by R19,1 billion, bringing the total Main Budget revenue to an estimated R446,4 billion for the 2006-07 year.
Hard work by dedicated officials of the SA Revenue Service and the honesty and good judgment of those who pay their taxes on time, are features of the mountain to be climbed, towards our season of joy. The Constitution requires that nationally raised revenue should be equitably shared between national, provincial and local government, in line with their respective functions and fiscal capacity. The Division of Revenue Bill sets out these allocations and details of the various conditional grants to provinces and municipalities, which include funding flows for several key development programmes.
Two significant changes in the division of revenue take effect this year. The national Department of Social Development takes full responsibility in April 2006 for social assistance grant programmes, administered through the newly established SA Social Security Agency. This means that R61 billion shifts from the provincial share to the national share.
The second change is that R7 billion is added to the local government equitable share in 2006-07, and R24 billion over the Medium-Term Expenditure Framework period, to compensate for the removal of RSC levies as a municipal revenue source.
Allocations for national department functions amount to R215 billion next year. Provinces receive R176,7 billion, and R26,5 billion goes to local government. All three shares grow strongly over the MTEF period, providing for balanced and progressive support for the objectives of economic growth, broad-based empowerment and social development.
In 2006-07, R150,8 billion will be distributed between provinces in terms of the equitable share formula, which takes into account population size, education and health needs, amongst other factors; R18,1 billion will be distributed through the municipal equitable share formula. The Financial and Fiscal Commission has again provided valued advice on the structure of the distribution formula, the design of several conditional grant programmes and the design of the local government equitable share formula.
After the transfer of responsibility for social assistance grants to national government, and several other adjustments, conditional grants to provinces are budgeted to grow from R19,2 billion in the current fiscal year, the one that ends on 31 March, to R30,4 billion in the year that ends 31 March 2009.
Growth is mainly due to increased allocations for the housing and human settlement grant, hospital revitalisation programme, forensic pathology services and a new grant for the recapitalisation of further education and training colleges. The success of these programmes, as in so many areas of social development, relies on both competent planning and administration, and the dedication and commitment of community partners.
Four recently upgraded hospitals in Piet Retief, Colesberg, Calvinia and Swartruggens bring to these communities the benefit of new buildings, fully equipped wards and newly trained management teams and clinical personnel. In the coming year, new or upgraded hospitals will be completed in another four communities in the Western Cape, Limpopo and Eastern Cape. Our revitalised hospitals are truly a new joy sprung from the nightmares of the past. People now have access to safe, clean, modern and properly administered health facilities. [Applause.]
Effective housing and community development initiatives, similarly, rest on dynamic local joint initiatives, state and citizens in partnership. In Newtown, at the heart of Johannesburg’s regeneration zone, in view of the Nelson Mandela Bridge, for example, the Brickfields and Legae housing projects, undertaken in partnership with the Johannesburg Housing Company, have seen 537 families recently moved into new affordable apartments designed around safe play areas and community facilities. [Applause.]
The revitalisation of education institutions brings light and joy that is equally profound. In 1994, the Tsolo Special School in the Mhlontlo Municipality north of Mthatha, housed 72 mentally disabled learners in two dilapidated prefabricated classrooms, which also served as hostels. Today there are 240 learners in three new hostels, with a fourth under construction, 10 new classrooms and facilities for practical and occupational learning in leatherwork, hairdressing and switchboard operation. [Applause.]
Shared and accelerated growth is partly about how we mobilise joint resources and the initiative of public and private sectors in pursuit of the development goals for which our main provincial and local government grants have been established. We have a new funding programme for our further education colleges. Their contribution to meeting the skills of the economy depends on stronger linkages with employers and enterprises.
We will introduce, this year, a new grant programme for local development projects. This will specifically target public-private partnerships to invest in infrastructure and community services in low-income residential neighbourhoods.
Let me turn to the main expenditure proposals for the Medium-Term Expenditure Framework period ahead. Details, again, are set out in both the Budget Review, that’s the lunchtime reading, and the Estimates of National Expenditure, which is the evening reading. [Laughter.]
Members of the House will find a wealth of information on the links between spending plans, and the service delivery objectives and targets set out for each Vote and departmental programme – information intended to support the work of parliamentary committees, the media, civic organisations and anyone with an interest in public affairs.
I am going to make this appeal again to portfolio committees and select committees: There’s no shortage of information. We’ve yet to design how to use the information effectively for the oversight of government by Parliament.
A core priority is to strengthen education, public health services and social welfare services. These are largely provincial responsibilities, and so the largest adjustment in the 2006 Budget is to the provincial equitable share, which receives an additional R30,9 billion over the next three years. Increased resources for schools, an expansion of preschool learning opportunities, implementation of the new curriculum for grades 10 to 12, and stepped-up school building and equipment programmes will be prioritised.
Approximately R4 billion will be spent over the MTEF period on social sector employment programmes, including home-based community care and early childhood development, community health workers and social development partnerships with non-governmental organisations. Care of child-headed households, strengthening of HIV/Aids programmes and appropriate management of children in conflict with the law are amongst the social service priorities.
Education, health and welfare services also feature strongly in adjustments on the national Budget. Higher education and recapitalisation of further education institutions receives R2,4 billion more, revitalisation of hospitals and forensic pathology services a further R1,6 billion, and social assistance grant programmes an additional R2,7 billion.
Income transfers to households, mainly through our social assistance grant programmes, have increased from R42,9 billion in 2002-03 to R74,2 billion last year, an increase of 20% a year. The 2006 Budget provides for continuing growth in eligible beneficiary numbers, and social grants will increase in real terms on 1 April. The maximum old age and disability grant, and the care dependency grant will increase by R40 to R820 a month. [Applause.] The foster care grant increases by R30 to R590 and the child support grant by R10 to R190 a month.
We are exceedingly mindful that these amounts are modest in relation to household needs, although alongside education, this is the largest programme of expenditure on the Budget. The challenge remains to balance these income support commitments with continued strengthening of expenditure on infrastructure and service delivery.
Also, I think all of us as South Africans need to be mindful that if we have a situation where the grants programme is higher than the minimum wage set in a number of sectors, there will be a disincentive for many people to work. So, striking these balances presents us with a set of hard choices. We’ve got to understand the balances that we try and strike in this regard. Housing and municipal infrastructure, local transport and water schemes are allocated an additional R9,3 billion in this Budget. A new subsidy programme for community libraries will be introduced, and cultural institutions and sports promotion receive supplementary funding.
R3,5 billion is added to our national roads and rail infrastructure spending plans, and R7,1 billion is set aside as a national contribution to the Gautrain rapid rail project. Industrial development zones, the pebble bed modular reactor project, various research and technology initiatives, tourism promotion and support for the business process outsourcing industry receive additional funding allocations.
Also, R5,4 billion will go to expanding and equipping the SA Police Service, and improvements in court administration and capacity of the Justice department. R3,1 billion is added to defence modernisation and infrastructure, and R900 million to foreign affairs capacity and the African Renaissance Fund. R3,3 billion is proposed for improved maintenance of government buildings, including that lift, and R2 billion will supplement the capacity of the SA Revenue Service and the investment in government financial management systems.
The 2006 Budget Review provides a new and more complete classification of government expenditure, which extends our data to include a further 66 public entities and government business enterprises, many of which have substantial economic infrastructure and development responsibilities.
The main research organisations are now included, 22 sector education and training authorities, 15 water boards, the Marine Living Resources Fund, the National Roads Agency, the SA Post Office, and the SA Bureau of Standards. The resulting consolidated statistics provide a compelling picture of government at work, of decisive reprioritisation in favour of social and household services and of robust growth in spending on economic infrastructure.
Spending on community development will increase by 29% a year over the next three years. Support for housing, agriculture and land affairs increases by nearly 16% a year, and investment in transport and communications by 18%. Non-interest government expenditure will grow by an average of 11,6% a year over the MTEF period ahead, or 6,7% in real terms.
The 2006 Appropriation Bill provides for expenditure of R260 billion in the financial year ending 31 March 2007. Direct charges against the National Revenue Fund will amount to R52 billion in state debt costs, R150,8 billion in provincial equitable share allocations, R5,5 billion in skills development funds and R1,3 billion in other statutory amounts and standing appropriations.
I need to advise that an amount of R600 million remains unallocated at this stage to provide for possible cost implications for national departments of the new Government Employees Medical Scheme, and to contribute to the planned new and refurbished stadiums for the 2010 World Cup. A contingency reserve of R2,5 billion is set aside, subject to the finalisation of business plans. Allocations may be made from these funds in the Adjustments Budget for the capital requirements of state-owned enterprises, and we anticipate that the recent flooding in some parts of the country and fire in others may require emergency relief allocations. Again, hon members, there is that reminder …
Isisu sibekelwa ngaphandle. [While you eat some of the food you have to reserve some for the future.]
Having reached this place in our mountain journey, let no one speak of frontiers exhausted. We have ahead of us the joy of discovering, uncovering, and forging new forms, new ways within an expenditure framework designed to accelerate growth, broaden reconstruction and development, and reinforce the partnerships between state and citizen on which our progressive responsibility rests.
Injobo enhle inthungelwa ebandla. [If you have an idea, then share it with others.]
I need to table before this House all these documents. The speech I have delivered now, the estimates of national revenue, the taxation proposals in respect of income tax, the Division of Revenue Bill, the Budget Review, the Appropriation Bill, the estimates of national expenditure, and the Additional Adjustments Appropriation Bill. The mass of the documents is 4,138kg. [Laughter.]
The preparation of a Budget relies on the hard work of many people, both in the Treasury and other national and provincial departments. It also depends on the understanding and the goodwill of Cabinet colleagues, and we need a lot of goodwill, and most especially on President Mbeki’s wise leadership. [Applause.]
Our task has been aided this year by the energetic guidance given by Deputy President Mlambo-Ngcuka to our growth initiative. [Applause.] If Mr Rademeyer notices how old I am growing, it is because of the hard work that the Deputy President assigns to us.
Members of the Minister’s Committee on the Budget, and especially Deputy Minister Jabu Moleketi, have shared in the difficult task of assessing spending proposals and reviewing policy options. [Applause.]
We have had another fruitful year of engagement with the provincial executive council members responsible for finance. They are all sitting over there, Team Finance. They have brought both energy and good judgment to the enormously important challenge of deepening the quality of provincial budgeting and service delivery. [Applause.]
Governor Tito Mboweni and the deputy governors and the staff of the Reserve Bank have steered an excellent course at the helm of our monetary ship. [Applause.]
The Financial and Fiscal Commission was ably led by Dr Renosi Mokate until her move to the Reserve Bank, and we welcome Dr Bethuel Setai as the new chairperson of this very important advisory team. [Applause.]
We have also benefited from the advice of business, labour and community representatives in the public finance chamber of Nedlac and the support of its head, Mr Herbert Mkhize. [Applause.]
One of the features of the discourse on financial management, issues of savings in the past year, has been the role of the FSB and the adjudicators. To both the Pension Funds Adjudicator, Mr Vuyani Ngalwana, and the Fais Adjudicator, Mr Charles Pillay, thank you for your role in raising the profile of what you do. [Applause.]
Pali Lehohla continues to drive ongoing improvements in the extent and quality of government statistics. Perhaps he’ll look up now and be a bit more optimistic, but he is also supported by a new Statistics Council, chaired by Mr Howard Gabriels. I would like to express special appreciation to Nhlanhla Nene, chair of the Portfolio Committee on Finance, Mr Tutu Ralane, who chairs the select committee, and the joint chairs of the budget committee, Buti Mkhalipi and Louisa Mabe, who will now take on the responsibility for the next phase of the 2006 Budget process.
Thanks finally to Pravin Gordhan and the staff of the Revenue Service, who have surpassed all expectations. [Applause.] Thanks also to Lesetja Kganyago who leads the National Treasury with inimitable flair and conviction. [Applause.]
I want to say a very special thank you to the Ministry staff. We have a single Ministry, not a Minister’s office and a Deputy Minister’s office. They put up with a lot from us, and so, thank you to them.
To my family and Maria, thank you very, very much for your support. But most importantly, to all of you in the House, and outside of the House, for your patience this afternoon. [Applause.]
Having reached this place, let no one speak of frontiers exhausted. We have ahead of us the joy of discovering – including your Sudoku there – new forms, new ways to accelerate growth, broaden reconstruction and development, and give light to the shared nationhood on which our progressive democracy rests. Thank you very much. [Applause.] The SPEAKER: Order! The Appropriation Bill, together with the introductory speech and papers tabled, will be referred to the Portfolio Committee on Finance for consideration and report, and to the Joint Budget Committee to consider in terms of its mandate.
The Additional Adjustments Appropriation Bill will be referred to the Portfolio Committee on Finance for consideration and report.
The House adjourned at 15:38. ____
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS
ANNOUNCEMENTS:
National Assembly and National Council of Provinces
- Introduction of Bills
(1) The Minister of Finance
(i) Appropriation Bill [B 2 - 2006] (National Assembly - sec
77)
ii) Division of Revenue Bill [B 3 - 2006] (National Assembly -
sec 76)
Introduction and referral to the Portfolio Committee on Finance of
the National Assembly for consideration and report and to the
Joint Budget Committee to consider in terms of its mandate, as
well as referral to the Joint Tagging Mechanism (JTM) for
classification in terms of Joint Rule 160, on 15 February 2006.
iii) Additional Adjustments Appropriation Bill (2005/06 Financial
Year) [B 4 – 2006] (National Assembly – sec 77)
Introduction and referral to the Portfolio Committee on Finance of
the National Assembly for consideration and report, as well as
referral to the Joint Tagging Mechanism (JTM) for classification
in terms of Joint Rule 160, on 15 February 2006.
In terms of Joint Rule 154 written views on the classification of
the Bills may be submitted to the JTM within three parliamentary
working days.
- Fast-tracking of Bills
RESOLUTION OF THE JOINT PROGRAMME SUBCOMMITTEE
The Subcommittee convened on 15 February 2006, at 15:30, and adopted
the following decision:
That, in accordance with Joint Rule 216(2), the Division of Revenue
Bill be fast-tracked, where necessary dispensing with any relevant
House Rule or Joint Rule and shortening any period within which
any step in the legislative process relating to the Bill has to be
completed, including the submission of the translated version of
the Bill as introduced before the debate in the National Assembly
takes place. This process must be completed in order for the Bill
to be enacted by 31 March 2006.
In terms of Joint Rule 216(4) this decision must be tabled in both
Houses for ratification.
TABLINGS:
National Assembly and National Council of Provinces
- The Minister of Finance
(1) The Budget Speech of the Minister of Finance - 15 February 2006
[RP 10-2006].
(2) Estimate of National Revenue for 2006 [RP 11-2006].
(3) Taxation Proposals in respect of Income Tax.
(4) Budget Review 2006 [RP 9-2006], including:
(a) Taxation proposals in respect of customs and excise duties
[tabled at 15:12]; and
(b) "Annexure E: Memorandum to accompany the Division of
Revenue Bill", tabled in terms of section 10(5) of the
Intergovernmental Fiscal Relations Act, 1997 (Act No 97 of
1997).
(5) Appropriation Bill [B 2 – 2006].
(6) Division of Revenue Bill [B 3 – 2006], tabled in terms of
section 10(1) of the Intergovernmental Fiscal Relations Act, 1997
(Act No 97 of 1997).
(7) Additional Adjustments Appropriation Bill (2005/06 Financial
Year) [B 4 – 2006].
(8) Estimates of National Expenditure 2006 [RP 8 - 2006], which
includes:
1. Memorandum on Vote No 1 - "The Presidency", Main Estimates,
2006-2007;
2. Memorandum on Vote No 2 - "Parliament", Main Estimates, 2006-
2007;
3. Memorandum on Vote No 3 - "Foreign Affairs", Main Estimates,
2006-2007;
4. Memorandum on Vote No 4 - "Home Affairs", Main Estimates, 2006-
2007;
5. Memorandum on Vote No 5 - "Provincial and Local Government",
Main Estimates, 2006-2007;
6. Memorandum on Vote No 6 - "Public Works", Main Estimates, 2006-
2007;
7. Memorandum on Vote No 7 - "Government Communications and
Information System", Main Estimates, 2006-2007;
8. Memorandum on Vote No 8 - "National Treasury", Main Estimates,
2006-2007;
9. Memorandum on Vote No 9 - "Public Enterprises", Main Estimates,
2006-2007;
10. Memorandum on Vote No 10 - "Public Service and
Administration", Main Estimates, 2006-2007;
11. Memorandum on Vote No 11 - "Public Service Commission",
Main Estimates, 2006-2007;
12. Memorandum on Vote No 12 - "South African Management
Development Institute", Main Estimates, 2006-2007;
13. Memorandum on Vote No 13 - "Statistics South Africa", Main
Estimates, 2006-2007;
14. Memorandum on Vote No 14 - "Arts and Culture", Main
Estimates, 2006-2007;
15. Memorandum on Vote No 15 - "Education", Main Estimates,
2006-2007;
16. Memorandum on Vote No 16 - "Health", Main Estimates, 2006-
2007;
17. Memorandum on Vote No 17 - "Labour", Main Estimates, 2006-
2007;
18. Memorandum on Vote No 18 - "Social Development", Main
Estimates, 2006-2007;
19. Memorandum on Vote No 19 - "Sport and Recreation South
Africa", Main Estimates, 2006-2007;
20. Memorandum on Vote No 20 - "Correctional Services", Main
Estimates, 2006-2007;
21. Memorandum on Vote No 21 - "Defence", Main Estimates, 2006-
2007;
22. Memorandum on Vote No 22 - "Independent Complaints
Directorate", Main Estimates, 2006-2007;
23. Memorandum on Vote No 23 - "Justice and Constitutional
Development", Main Estimates, 2006-2007;
24. Memorandum on Vote No 24 - "Safety and Security", Main
Estimates, 2006-2007;
25. Memorandum on Vote No 25 - "Agriculture", Main Estimates,
2006-2007;
26. Memorandum on Vote No 26 - "Communications", Main
Estimates, 2006-2007;
27. Memorandum on Vote No 27 - "Environmental Affairs and
Tourism", Main Estimates, 2006-2007;
28. Memorandum on Vote No 28 - "Housing", Main Estimates, 2006-
2007;
29. Memorandum on Vote No 29 - "Land Affairs", Main Estimates,
2006-2007;
30. Memorandum on Vote No 30 - "Minerals and Energy", Main
Estimates, 2006-2007;
31. Memorandum on Vote No 31 - "Science and Technology", Main
Estimates, 2006-2007;
32. Memorandum on Vote No 32 - "Trade and Industry", Main
Estimates, 2006-2007;
33. Memorandum on Vote No 33 - "Transport", Main Estimates,
2006-2007;.
34. Memorandum on Vote No 34 - "Water Affairs and Forestry",
Main Estimates, 2006-2007.
Referred to the Portfolio Committee on Finance for consideration
and report.
2. The Minister of Transport
a) The Convention for the Unification of Certain Rules for
International Carriage by Air, tabled in terms of section
231(2) of the Constitution, 1996.
b) Explanatory Memorandum on the ratification and/or accession to
the Convention for the Unification of Certain Rules for
International Carriage by Air.