TUESDAY, 13 MARCH 2007 __

                PROCEEDINGS OF THE NATIONAL ASSEMBLY
                                ____

The House met at 14:03.

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.

                          NOTICES OF MOTION

The CHIEF WHIP OF THE OPPOSITION: Madam Deputy Speaker, I hereby give notice that on the next sitting day of the House I shall move:

That the House joins the UN and the EU in condemning the human rights violations, the police brutality and the arrest of Mr Morgan Tsvangirai at the instance of the Zimbabwe government because, if it fails to do so, it would mean that South Africa is complicit before, during and after the shocking situation in Zimbabwe.

Mrs C DUDLEY: Madam Deputy Speaker, I give notice that on the next sitting day of the House I shall move:

That this House urgently debates South Africa’s response to the shocking human rights abuses taking place in Zimbabwe as the Zimbabwean government continues to ban all public gatherings, including prayer meetings, and brutally attacks and imprisons opposition leaders in the run up to the 2008 elections.

Thank you.

Mrs C DUDLEY: Madam Deputy Speaker, I hereby move without notice:

That the House … [Interjections.]

The ACTING CHIEF WHIP OF THE MAJORITY PARTY: Madam Deputy Speaker, on a point of order, we have not been given any notice … [Interjections.]

Mrs C DUDLEY: No, you have.

The ACTING CHIEF WHIP OF THE MAJORITY PARTY: No, we haven’t, and I thought there was an agreement amongst Whips that we wouldn’t be moving motions today.

The DEPUTY SPEAKER: Order! Mrs Dudley, let me say there hasn’t been sufficient consultation. So, I think that we may do so and still have that motion without notice tomorrow, if you are comfortable with that.

CONSIDERATION OF REPORT OF PORTFOLIO COMMITTEE ON FINANCE – APPROPRIATION BILL 2007-8 NATIONAL BUDGET

There was no debate.

The ACTING CHIEF WHIP OF THE MAJORITY PARTY: Madam Deputy Speaker, I move: That the report be adopted.

Motion agreed to.

Report accordingly adopted.

CONSIDERATION OF REPORT OF JOINT BUDGET COMMITTEE - 2007-8 NATIONAL BUDGET

There was no debate.

The ACTING CHIEF WHIP OF THE MAJORITY PARTY: Madam Deputy Speaker, I move: That the report be adopted.

Motion agreed to. Report accordingly adopted.

                         APPROPRIATION BILL

                       (First Reading debate)

Mr N M NENE: Madam Deputy Speaker and hon members, the online voice of the ANC, commonly known as “ANC Today”, Volume 7 of 23 February 2007, in the letter from the President carried an eloquent analysis of the 2007 Budget and the theme chosen by the Minister of Finance, “Human life has equal worth.” It is in this context that, as we debate this Appropriation Bill, we reflect on the state of affairs as they have unfolded since the advent of our democracy in 1994.

In his address the Minister posed the question whether we have done enough to give practical effect in South Africa today to our shared humanity, and if we have acted in a manner that shows that human life has equal worth. He also questioned whether we still live in a society where the shadow of history dominates the opportunities of an open society. He concludes this point with these words: “Without a powerful countervailing, the shadow of history will dictate opportunities, entitlements and outcomes.”

In the analysis I have referred to, the President’s letter identifies the Budget as occupying a critical place among the major annual statements as it allocates public sector resources to address the objectives stated in the statement of 8 January, and the state of the nation address of this year.

According to this analysis, the Budget also impacts on how the private sector and civil society respond to the national challenges and, therefore, it is important to understand the broad policy framework that informs any budget.

It goes on to refer to the Budget Review that outlines the Medium-Term Strategic Framework that defines the main priorities over the Medium-Term Expenditure Framework. This framework seeks to enhance the social and economic welfare of all South Africans as reflected in the following key objectives. The first is that of accelerating the pace of economic growth; the rate of investment in productive capacity; advancing the participation of the marginalised in economic activity through expanded job creation and the promotion of sustainable livelihoods. It also seeks to maintain and expand a progressive social security net, alongside investment in community services and human development. It also seeks to improve the capacity and effectiveness of the state, including combating crime and promoting service- oriented public administration, and finally, building regional and international partnerships for growth and development.

These objectives, as stated in the Budget Review, constitute an important part of our response to the task of enhancing social and economic welfare of all South Africans and to achieve the goal of a better life for all. In line with the central task of our national democratic revolution of constructing a people-centred society that in practice demonstrates that it values every human being on an equal basis, determined that each should enjoy a life of dignity, regardless of race, colour, gender, age and belief, this Budget focuses on those objectives.

What apartheid and colonialism bestowed upon us over the years continues to haunt us to this day. Poverty and high levels of unemployment largely affect unskilled black people with low levels of education. Gross imbalances exist in the distribution of wealth, income and opportunities along structural fault lines of race, gender and geographic space.

The state machinery that we had was constructed to serve the minority of the population and repress the majority which was incapable of playing a significant role as an instrument for the all-round development of society as a whole. The system of public finances was structurally designed to serve the purposes of a discriminatory and repressive state machinery and, finally, the purposes of an economy that was incapable of achieving significant growth, competing in the global markets and creating jobs.

All these and other socioeconomic challenges have occupied the centre stage in the ANC-led government’s agenda since 1994. The trust placed by the masses of our people in this movement is a great source of inspiration and continues to drive our government to the realisation of the fundamental goal of the national democratic revolution of building a nonracial, nonsexist, democratic and prosperous society.

Driven by this ideal, we continue to see resources being deployed where it matters most - on infrastructure and poverty alleviation.

Phini Lika Somlomo kanye NeNdlu ehloniphekileyo, awungivumele nje ngisho ukuthi lo hulumeni oholwa yi ANC impela uyinkomo esengwa iviyo, noma- ke singathi umfazi omabele made ngoba ukwazi ngisho nokuncelisa ingane isemhlane. Ngisho lokhu ngoba phela umkhankaso wokulwa nomashayandawonye usewukhathule kwaze kwabona ngisho ingane ekhasayo.

Isabelo sezimali salo nyaka siwuphawu olusobala lwalokhu engikushoyo. B, bheka nje ngoba ukuzinza komnotho nje kunikeza ithuba lokuthi kuqiniswe ukwakha amathuba emisebenzi kuphiende futhi kuqinise nezakhiwo zemiphakathi, kuye kudlule kuqinise ngisho ukulethwa kwezidingo ngqangi kubantu bakithi ikakhulukazi labo abadla imbuya ngothi.

Sizwile- ke futhi nokuthi labo abahola imali kadekle bona neyabantwana bakhushulelwe. Kanjalo nalabo abahola eyokugula noma ukukhubazeka nabo bathi ngcingci kamjoli. Into nje okumele siyenze emiphakathini yethu, ukukhuza umkhonyovu kulabo abahola kungafanele ngoba siyabazi futhi sihlala nabo. Uma bengawuyeki lo mkhuba, nazo ezikaDdalawane phezu kwabo, bayohlangana nemamba iphunga umhluzi. (Translation of isiZulu paragraphs follows.)

[Deputy Madam Speaker and this august House, allow me to say that this ANC- led government is like a cow milked by many and it can also be likened to a woman with ample breasts, one who can breast-feed a child whilst carrying her on her back. I say this because this government has gallantly fought the frontiers of poverty to an extent that even a crawling child can testify to this.

This year’s Budget debate is a clear indication of what I am saying. The stability of the economy affords the chance to strengthen job creation opportunities and the community structures. It goes on to intensify the delivery of services to our people, especially those who are poverty- stricken.

We also heard about the increment of the old age pension and the child support grant. And those who get disability grants are also happy. What we must do now in our communities is to expose those who get these grants fraudulently because we know them and we live with them. And if they do not stop this habit, they will be arrested, and they will get into serious trouble.]

At the macroeconomic level, the committee, after the tabling of the Budget, listened to the economists, academics, business and civil society. As the committee’s report states, which we adopted here a few minutes ago, there was general agreement amongst panellists that South Africa is currently enjoying the longest sustained period of economic growth, with the current upswing in the business cycle in its seventh year.

It is on this sound and prudent macroeconomic stability that this year’s Budget builds. This enables the Budget to provide for further channelling of the benefits of economic expansion to increase savings, economic and employment growth, and it contributes to transformation and poverty alleviation.

There was also consensus amongst the panellists that the Budget identified the need for stronger export performance through the development of a growth-oriented trade and industrial policy as it seeks to address the constraints of higher economic growth.

Global conditions also continue to be favourable and supportive of our strong economic outlook. The consolidation and expansion of economic growth through fiscal policy that mitigates the boom and bust of the past business cycles was equally welcomed. However, the global imbalance and reliance on short-term capital inflows accompanied by a growing current account deficit were mentioned as possible challenges to achieving the projected economic growth. On domestic economic outlook, allow me again to refer to some observations by our panellists. According to Mr Maia of the Industrial Development Corporation, although the pace of growth by the manufacturing sector was below the economic average, it recorded substantial improvement in growth performance with an average of 3% per annum versus 5% in the preceding years.

The key driver behind the tertiary sector’s performance is the strong domestic demand, more particularly in construction, electricity and telecommunications. Panellists agreed that the primary sector’s contribution to the gross domestic product has been substantially reduced with National Treasury arguing that if one excludes this sector, the economy would be growing at more than the 6% projected for 2010.

However, in the pre-Budget sessions that the committee held with various sectors, it emerged that even though the primary sector is on the decline, its contribution to the other sectors through forward and backward linkages cannot be underestimated. This augurs well for job creation and subsequent reduction of poverty.

Inflation remains the more pronounced focus of monetary policy and has been under control for at least the past 41 consecutive months with the Consumer Price Index averaging 4,6% in 2006 - well within the target range of 3% to 6%. Whilst the panellists did not enter the debate whether interest rates are the best tool for controlling inflation, there was general consensus that co-ordination between fiscal policy and monetary policy is yielding positive results. Whilst this development was welcomed, warnings by the Central Bank of impending risks in this regard should also not be underestimated.

The current account deficit, as mentioned earlier, remains cause for concern as it is a result of domestic spending on imports over the past two years against poor export performance over the same period. Again, some economists argue that, as long as these imports are capital goods, it will have a positive effect in the long run. The other argument is that the current account deficit not only reflects an imbalance between investment and savings, but is also symptomatic of a country that is consuming more than it produces.

The scenario I have painted is a clear indication of an economy that is poised to deliver on its objective of poverty alleviation and acceleration of economic development and, ultimately, guarantee a better life for all. I thank you, Chairperson. I yield the rest of my minutes to the other speakers. Thank you. [Applause.]

Mr I O DAVIDSON: Madam Deputy Speaker, once again, the Minister has presented this House with the Budget that has, as its mark, prudent macroeconomic policies, which give us an excellent base for economic growth going forward.

Let us acknowledge that 5% GDP growth is a good base from which to work. It is a base, which brings us within striking distance of the 6% growth rate set by the Deputy President’s growth initiative Asgisa, but let us remind ourselves what our real challenge is, and that is to reduce unemployment to below 15% and to halve the poverty rate in our country. Is 6% enough? Is 5% sustainable?

The underlying problem in the South African economy is that growth has been generated by the demand side, more particularly in a nontradeable sector of the economy with this supply side remaining fairly muted.

As a nation we are consuming more than we are producing. The balance has to be imported and this is manifesting itself in the growth of our current account deficit. While household consumption demand may be levelling off, the infrastructural roll-out, as envisioned by Asgisa and upon which the government relies for the generation of growth, reinforces the demand side with its high import content, which further boosts an already high import bill.

So yes, we have GDP growth, but it is unbalanced growth. Gross domestic expenditure is growing and continues to grow faster than gross domestic product and imports are growing faster than exports. Import volumes for the first nine months of 2006 rose 14,2%, an increase on the 12,1% growth for the same period last year, while exports for the same period grew by only 2,2%, which is down on the 3,9% growth of the previous five years.

If we look at the contribution of sectors to GDP growth in real terms over the 2002-06 period, where do we see the growth? It’s again mostly on the demand side in the nontradeable sectors of the economy. Construction, finance and business services, transport and communication, together with wholesale and retail, were our strong growth sectors, while the tradeable supply side sectors such as mining and manufacturing produced below average growth and the agricultural, forestry and fishing sectors recorded negative growth.

While it is acknowledged that growth in fixed investment has reached 12,5% in the third quarter of 2006 and as a percentage of GDP improved to over 18%, this is still well short of the 25% growth figure required to reach 6%.

The government’s R415 billion infrastructural roll-out will push this figure higher, yet as the Harvard economists point out, this “capital deepening” is not where the key to growth acceleration lies. While, of course, we acknowledge the need for, and are supportive of higher spending on the infrastructural side in order to create and support an environment in which the economy can grow, we also know that capital deepening at most explains about a third of growth accelerations.

But, we have 5% growth, which together with good tax compliance and an excellent connection service has enabled the government to grow its revenue strongly. Indeed, revenue as a percentage of GDP has grown from 22,5%, when the Minister first took office in 1996, to 28% in the present budget.

While the government has used these increased revenues laudably to bring down debt, improve infrastructure and give personal tax relief, for Asgisa to succeed, the government needs to stimulate the supply side rather than boost demand. This need is all the more urgent in the light of strong revenue flows, which will be needed in order to support the proposed social security plan estimated to cost the fiscus between R20 to R30 billion a year.

Yet, does this Budget address this need? In respect of fiscal policy, we see the government yet again in this budget massaging the demand side with personal income tax relief for individuals amounting to R8,4 billion. While we clearly welcome this relief, we would have liked to see this accompanied by strong supply side incentives, which the government clearly had the fiscal space to do.

The decision to phase out STC, secondary tax on companies, and replace it with a dividend tax is a modest stimulus to the supply side. While the reduction of the rate from 12,5% to 10% will only result in the fiscus sacrificing R2 billion in revenue, it will translate into a welcome decline in effective company tax rate to 35,4%.

STC was never popular with foreign investors, a point made repeatedly by ourselves. I cannot help but smile at this point in time, as I still have the Minister’s rebuff to our own suggestion in 2005 that STC be scrapped ringing in my ears. He responded to me in this House by saying: “It won’t disappear for as long as the ANC is in government. Of that I give the assurance.”

The proposal to introduce a wage subsidy to reduce the cost of doing business by reducing the direct costs of employment and thereby alleviating the high rate of joblessness is also welcomed by the DA. While this proposal, which is also linked to the proposed social security reform process, is still in its concept stage, I cannot help but reflect that when the DA proposed the wage subsidy two years ago, I was accused by the Minister of having a colonial mind as was told categorically by the Minister that that would not happen.

What the Minister’s speech does raise however, is the prospect of a very clear disincentive to the supply side, namely a possible tax on windfall gains in the synthetic fuels industry. While countries like Qatar, India, Australia and the USA are busy incentivising Sasol to utilise its technology in their countries in order to reduce their oil import bill and save foreign exchange, we threaten to slap an extra tax on them with a view to limiting the extent to which the company can maximise their return on investment.

Similarly, concerning the imminent imposition of a royalty tax on the mining industry, on an industry that has since 2002 registered negative growth, has since 1987 shed 383 000 jobs and now only contributes directly 6,3% to GDP, I would have thought the Minister would have been looking to stimulate this sector of the economy, not slap a further tax on it.

Indeed, from a fiscal stance, ever since 2004 we have seen R33,1 billion pumped into the demand side by way of tax relief to individuals as opposed to a mere R9,1 billion by way of tax relief on the supply side.

Little wonder there is upward pressure on interest rates. Little wonder also that the growth of our economy has been unbalanced.

Turning to the spending side, the DA welcomes the increased budget allocations to a number of key departments. Increases to safety and security, health, education and housing are particularly welcome. There is one caveat however to this approval and that is, firstly, the money is spent; and secondly, it is spent effectively and efficiently.

The point has to be made that the amounts voted are just budgeted amounts and in this respect it has to be noted that certain departments have been voted healthy increases in their budgets, notwithstanding the fact that according to the statement of expenditure of departments issued by the Treasury for the period ending 31 January 2001, they remain well short of their expenditure budgets for the present financial year.

Safety and security had by 31 January 2007 spent only 80% of their budget, namely R26 billion of R32,5 billion originally voted and are now with a new budget of R35,9 being given an effective 37% increase on the amounts spent as at 31 January 2007.

Justice had only spent 69% of their budget. It would have been given 61% increase on their expenditure as at 31 January 2007. Housing, likewise, had spent 79% of R5,8 billion and its effective increase would be 52% on expenditure at that date. Health’s calculated in the same vein would be an increase of 36% and Transport’s 43%.

Noticeable is Land Affairs that had spent 74% of its budget, that’s R2,7 billion of R3,7 billion, but with the new budget of R5,6 billion is getting a whopping 104% increase on expenditure at that date, and the provincial and local government, which had spent 59% of its budget - R15 billion of R25,4 billion – would, with the new budget of R28,8 billion, be getting an effective 91% increase.

The question is whether the Minister is concerned at the capacity of departments to spend exiting budgets without fiscal dumping taking place, let alone spend the increased budgets for 2007-08. Voting for money is one thing, having the ability to spend it is another.

Clearly what we are speaking about here is the whole question of the weak capacity of the state to deliver, which speaks about both management and skills shortages.

But also what has to be addressed here is the efficiency and effectiveness of the spending. To give but a few examples, in respect to education, while spending has increased 35% over the past three years, and while the number of learners and educators has increased, the number of schools has declined, the pupil-teacher ratio has slipped and the average pass rate fallen.

In respect of health, while spending has increased 48% over a three-year period, our infant mortality rate has increased from 53 per 1000 in 2004 to 60 in 2006. Our life expectancy decreased from 46 years to 42 years. The number of doctors per 100 000 of population decreased to about 77.

In respect of Safety and Security, the amount voted increased 43% over the three-year period, yet I don’t think anybody here could honestly believe that there has been 43% reduction in crime. So, the efficiency and effectiveness of the expenditure has to be interrogated more closely. Throwing more money at the problem is not the entire solution.

In closing, let me say that the DA welcomes the steps the Minister has taken in respect of the reform of the retirement industry, as it will not only provide a framework for individuals to adequately provide for their retirement, but also actively promote savings and so add greater resources for the country to invest.

We will monitor and positively contribute to the debate, particularly as it relates to the role to be allocated to the private sector in respect of the administration of the relevant funds as well as the underpinning of the asset allocations. In conclusion, the DA supports the Budget. Thank you. [Applause.]

The DEPUTY SPEAKER: Just before you address us, hon member, there are too many meetings taking place in the House, and I think that we need to ask some members to continue with their meetings elsewhere.

It won’t be polite when your name is called for you to excuse yourself from the House, because it’s very difficult for us to follow the debates.

We are appealing to you to please give us an opportunity to follow the debates. If the debate is not very appealing to you, there is a lot of work for you to do in the office and nobody will actually have anything against you for doing so.

But let us allow those people, including the presiding officers, to follow the debates so that when points are raised, they are able to give the correct judgement on that.

Mr H J BEKKER: Madam Deputy Speaker, the IFP has welcomed the Budget as presented by the hon Minister of Finance. It is a well-constructed Budget and we applaud him for that. Also, they had the privilege of looking at a tremendous amount of money that was oversupplied technically by means of the income side.

We in the IFP were, however, critical about the underexpenditure of certain departments, as this means that critical services had not been rendered. The IFP, however, was delighted that the shortfall originally planned for ended up in a surplus of R6 billion.

We want to congratulate the SA Revenue Services, which was the jewel in the Minister’s crown, for coming up again with a tremendous amount of taxation.

We would, however, look at the lowering of corporate and company tax as well as personal tax, which have moved quite high in terms - if you would take into consideration the fiscal brag with this. In this regard, the IFP would suggest that the time is ripe for a taxation summit. We have also been very delighted on the pension fund side with the abolishment of tax on all pension funds. We also trust that this tax relief will end up in the pockets of the pensioners and not in the pockets of the companies.

With regard to the existing 5% growth, which we are grateful about, we believe that we shall take the government’s hand as well and that we see if we can move it even higher than the present 5% in order to assist with what is necessary in our country.

We recognise that the Expanded Public Works Programme as well as the National Youth Service will create substantial temporary jobs. But, it is important to note that only the private sector can create permanent jobs and this is what this country needs.

We also appreciated that when the Minister said that red tape should be eliminated in business. And particularly in this regard, we will give him all the support we can.

I would also like to refer to the Cross-Border Road Transport Agency as an example. This agency is supposed to create income. Yet, we found that the total expenditure - the cost of having this agency - is more than the total income that it has produced.

The cost factor to business, the lack of their profitability and the revenue should actually be looked upon by the Minister of Finance and Minister of Transport to give serious attention to closing down the agency and transferring and streamlining its functions into the Department of Transport, for instance, or better transfer the staff to customs and provincial traffic authorities.

The IFP must also take issue with the red tape apparently in the South African mining sector. Despite assurances from the Department of Mineral and Energy Affairs, we still find that investors do not at the end get what they really want. Just last week, it was reported that an international investment group was planning to sue the government for hundreds of millions of Euros because, in their opinion, our new minerals legislation is in breach of a large number of international treaties.

The IFP does not necessarily share the latter view of this international companies, but it is of great concern that investment uncertainties still exists.

Turning to some of the detailed allocations, education - particularly school development - is of fundamental importance to South Africa. The Minister made a concerted effort with regard to the additional moneys regarding HIV/Aids, and this is definitely a step in the right direction.

The IFP applauds the extension and improvement of the system of welfare grants and the future introduction of the subsidy for low-income earners together with the improvement of other social grants and the introductions of a form of a compulsory saving scheme or even call it a core kind of government pension scheme.

The IFP will, however, study the details, as we are apprehensive of the creation of a “honey pot” which can be creamed off by corrupt politicians and civil servants.

The IFP believes that whether Minister Manuel believes it or not, we are indeed slowly-slowly moving towards the gradual introduction of a basic income grant as proposed in the Taylor Report. Madam Deputy Speaker, that is as far as economics are concerned. Politically, two recent developments underlined the fact that the ANC is scratching in places where there is no itch. The first is the obvious vendetta that the ANC has launched against Afrikaans-medium schools. The IFP will never tolerate a situation where Afrikaans-medium schools cater exclusively to white children. We will not tolerate that! But it is completely ridiculous to try and recolonise that school to an English-medium school or a parallel-medium school.

Secondly, the mad rush to change place names just for the sake of change. If I look at my old alma mater, why would you want to change Potchefstroom to “die bokke se Tlokwe”? Even worse, the ANC in eThekwini has now apparently decided that its new soccer stadium should be named after the comrade to satisfy the incessant barking of the leftists. Why this person’s name rather than a generally-accepted name like the proposed original name of the historically revered figure King Senzangakhona of the Zulus? [Laughter.] Particularly in this case, the principle should be addressed whether the renaming should focus on party- political figures instead of culturally significant persons. Please, do not scratch where there are phantom itches.

The deplorable events of the past few days in Zimbabwe also put a spotlight on our government’s policy of silent diplomacy. Is it not ironic that the ANC’s policy of “No sanctions against Robert Mugabe and his dictatorship” is based on the argument that sanctions will not hurt the leader or the regime but the ordinary people of Zimbabwe, especially the poor?

We in the IFP, of course, agree with this notion, but this was exactly what you said with regard to Prince Mangosuthu Buthelezi at that time. Thank you. [Time expired.]

Mr J P CRONIN: Madam Speaker, in January 1957 the bus company Putco announced a one-penny fare increase for the trip from Alexandra to Johannesburg. The response of Alexandra residents was immediate. From the date of the fare increase, which was 7 January, for three months all the way till the end of March 1957, 15 000 Alexandrans walked, daily, the 9 km to work and 9 km back from work, to cries of, “Azikhwelwa!” and “Asinamali!” – “We won’t ride!” and “We don’t have money!” The Alexandra bus boycott, whose 50th anniversary we commemorate this year, was in fact not confided to Alexandra. Residents from Sophia Town and from the Pretoria townships also boycotted the buses. Some 60 000 people in all stopped using the green Putco buses for those three months.

This most celebrated bus boycott was not the first of its period, and nor was it to be the last. In the early 1940s the bus company had tried three times to increase the Alexandra bus fare by one penny and each time it was forced down by resolute boycotters.

Now it’s a measure of the desperation of township households in the 1940s and 1950s that a one-penny fare increase could provoke such determined resistance. But with 80% of African families living on incomes below what was then called the minimum essential expenditure level, a one-penny fare increase was often the proverbial final straw.

We often say now that apartheid excluded the black majority and that is true enough. But apartheid was not just about excluding black people; it was also about including them, but of course on inferior terms, as exploited factory operatives, as underpaid municipal cleaners, as menial domestic workers in white suburbs and as consumers in white-owned shops.

Public transport was the raw nerve at the centre of this contradictory push- pull situation of racial exclusion and simultaneous racial inferior inclusion.

Successive white minority regimes did the bare minimum to ensure that black workers got to work and indeed during the height of apartheid in the mid- 1950s and early 1960s public transport was in fact rolled out so to speak. There was delivery. In the case of commuter rail this was the last time that there was a halfway serious effort to construct rail infrastructure to townships which is why the average age of a Metrorail coach is now 45 years because it dates back to that time.

Often, also as a direct result of bus boycotts and other popular mobilisation, white minority governments with the support of local chambers of commerce also had begun to provide limited public subsidies to bus operations in this period.

But none of the so called roll-out was motivated, of course, by concern for township dwellers. Overwhelmingly, black communities were compelled to pay for their own forcible exclusion to distant localities and then also for their inferior inclusion by way of long, and for them costly, daily commutes.

Much has, of course, changed, especially over the past 13 years since the 1994 democratic breakthrough. But working class and poor communities are still overwhelmingly located in distant peri-urban dormitory townships or stranded in even more marginalised dirt poor rural townships and villages.

Today, some 10 million South Africans commute into work on public transport. The buses, the trains and the now predominant minibuses that they use generally offer trips that are not noticeably safer, more dignified or more affordable than the public transport of earlier decades.

Still today, transport is typically the second largest expense item after food for a majority of poor households. They spend more than 10% and in many cases more than 20% of pitiful household incomes on transport costs.

That is the reality and that is the weight of history that bears down on this Budget 2007-08.

I am pleased to say that, perhaps for the first time substantially since 1994, there is now the beginning of a focused attention on public transport, not just on extending by a few kilometres a railway line here or maintaining bus subsidies there, or on upgrading 45-year-old Metro coaches. We obviously do need to do running repairs. We do need to do these things, but we cannot afford to remain locked simply into an upgrade, maintain, recapitalise and extend mode. If we do that, we will never break out of the cycle of exclusion and costly, unsatisfactory inclusion to which the majority of South Africans are condemned.

We have to actively transform the past that is still very much with us in the present. This is a question of money, to be sure. But it is not just money. In fact we are already spending enormous amounts of budget on public transport – over R5 billion a year on bus and train operating subsidies. A proposed R7,7 billion will be spent on taxi recapitalisation and, dare I say, R23 billion on the Gautrain - my G-spot! [Laughter.] And R10 billion is now set aside for 2010 World Cup public transport.

In his Budget Speech, Minister Manuel quite correctly located the question of public transport within the broader context of mobility, access and, above all, the spatial character of our built environment. He noted that since 2001 the government has channelled an ever greater share of our resources into capital spending and that one of the key pillars in this regard is the transformation of the built environment, he said, I quote:

These programmes seek to change the landscape across both urban and rural areas, to turn barren, dusty land into places that people feel proud to live in.

This is the context from within which we must approach the challenges of public transport. It doesn’t help if we built RDP houses in one direction and recapitalise taxis or subsidise bus and rail operations somewhere else. If we are to transform our reality we have to integrate our planning and our implementation, especially at the local level.

There are, of course, many national challenges, for instance in 2010, Minister of Finance, we will be transporting something like 150 000 fans every three or four days in the first week of that event, from one city to another. Currently we only have 500 quality luxury buses and a very inadequate national rail system to do that, so I don’t think we’ve quite got our minds around the magnitude of the national public transport challenges. But it is especially at the local level that we shall either succeed or fail in getting public transport and the built environment generally right.

Therefore this means that as national and provincial spheres of government, we have to have the courage and confidence to devolve planning and implementation, particularly of public transport, as much as possible to the municipal, and particularly, if we are talking about capacity and large volume commuting, to the metro sphere.

It is for this reason that we particularly welcome Minister Trevor Manuel’s Budget Speech observation that:

The impetus that the World Cup provided has resulted in something of a revolution in municipal planning for public transport and forward thinking about urban development.

We agree with this observation, of course, and we have also conducted oversight with many of the metro governments. It is true that there is imaginative planning, but often it’s wonderful PowerPoint presentations and beautiful maps, and the implementation issue is still one which I think needs to be looked at seriously. But we’ve noticed these encouraging developments. They are also often stymied by a range of institutional counter-pressures from diverse quarters and a mismatch between plans and actual funding flows for implementation. Sometimes major projects, which are multi-year projects, as most these are, are treated as if you only approve one a year, and it often leaves the planning and implementation a little bit stranded.

We believe that the Department of Transport and the Treasury should be alert to these challenges and play, as they have been generally, an active and facilitating role.

Minister Manuel went on to say in his Budget Speech:

The city 2010 bids that we have seen are impressive in terms of knitting together communities with places of work, recreation and leisure. He mentioned, in particular, the development of bus rapid transit schemes which offer exciting opportunities to improve municipal public transport systems.

Again we agree. As Minister of Transport, Comrade Jeff Radebe has said that we must use 2010 to do the things that we have to do on the transport front in any case. But we need now to move very quickly with operational planning and implementation of catalytic rapid public transport networks. Time is quite short.

We‘ve heard from some experts that we are already too late to spend all of the R9 billion to R10 billion set aside before early 2010. But let us use the next three years to begin to implement these integrated rapid public transport systems as a key component of transforming the way our towns and cities work. We owe it to the many guests that we will be receiving in 2010, we owe it to the 10 million South Africans who are still commuting in unsafe, unreliable and often costly public transport modes.

And on this 50th anniversary of the Alexandra bus boycott we owe it to the memory of the 15 000 Alexandrans who marched 18 km daily for three months against a one-penny fare increase.

With this budget, we can no longer say as they said then: Asinamali - we don’t have money. We do have money. The challenge now is to use it wisely, effectively and with determined transformational intent. Thank you.

Mr J BICI: Madam Deputy Speaker and hon members, the Minister delivered a good Budget and this Bill presents the fruits of yet another year where revenue collection exceeded focus.

The years of austerity that had to deliver these revenues have prolonged the hardship of many. So it is only right that now this benefit must be ploughed back into socially responsible programmes. The UDM is therefore, pleased with the promised increases in the salaries of teachers, medical workers and members of the police force.

As we have indicated earlier, these core groups of the civil service represent the backbone of building a caring democratic society. Similarly we welcome the social grant increases, but we are still content that these increases are from a relatively small base.

The UDM contends that the government could have done much better than the revenue expected to be at its disposal. The Social Development Net can and should be expanded, and similarly the government can and should enhance its efforts to fight HIV/Aids. It is our conviction that the revenue at the government’s disposal could be used to lower the threshold of ARV treatment by, for example, commencing treatment at a higher CD4 count than currently. It would mean that we would save many more lives.

The current policy correctly seeks to distribute the bulk of revenue to the lower spheres of government, because resources must necessarily be devolved downward to be as close as possible to the people who require the delivery. However, the capacity of provincial and local government to correctly utilise the revenue remains suspect.

A combination of insufficient skills, the failure to adhere to the PFMA and related audit requirements, as well as critical staff vacancies, continue to bedevil many provinces and municipalities. Even national departments such as Justice and Constitutional Development and Home Affairs, both of them critical service delivery conduits, have dismal track record on spending and management.

The additional revenue at government’s disposal must be used to fill the obvious scales and capacity shortages and gaps. It is inexcusable that the money to uplift the poor cannot be spent because we are not willing to spend a fraction of it on appointing people who will ensure delivery. The UDM supports the Bill. Thank you.

Mr A HARDING: Chair, the Budget for 2007 is tabled at a time when the South African economy has been growing in a sustained and possibly accelerating fashion. The government has been able, through an administratively efficient tax system, to collect increased tax revenues as a result of the trend. Thus, whilst the fundamental resource constraint remains applicable, the context of Budget 2007 is also framed by the question of how one budget does in a time of plenty.

There are encouraging features in the 2007 Budget that suggest a higher allocation to programmes aimed at eradicating poverty. The allocations for housing subsidies and land reform grants show significant increases over the MTF period even after discounting inflation. Housing increased by 15% and land by 80% in real terms. Moreover, the maintenance of the tax to GDP ratio above 27% is significant given pressure from the private sector to reduce expenditure. Furthermore, the adjustments for the MTF show a significant focus on supporting jobs in education and social work. These are important steps in dealing with poverty in our society.

The ID, however, believes that there is little in Budget 2007 to make significant inroads into appalling levels of unemployment, poverty and hunger, which still scar our country. There is good evidence to suggest that the budget will be more supportive of business and the poor. There is also little in a budget for unemployed people, especially young adults. Yet unemployment is the most important problem in our country.

Similarly, the adoption of a fiscal surplus of 0,6% for the current financial year is aimed at reducing inflation, and is in turn an attempt to keep interest rates low. The ultimate aim is to keep the cost of borrowing down in the hopes of continuing the economic growth of South Africa. The problem is that the current levels of economic growth support the creation of low-paying casual jobs - thus increasing the ranks of the working poor. Overall, the government can do more to address poverty.

Using the Budget to target poverty and inequality more effectively is, however, complex but not an unattainable policy objective. Reducing inequality in our society is important for ethical reasons if, in the Minister’s words: “Human life does have equal worth.” However, it is also important to support long run economic growth. Tackling inequality is good for economic growth in that it supports a longer run of economic growth but, more importantly, it ensures that the poor benefit from growth.

Breaking inequality in our society requires significant transfers of resources to the poor. Despite welcome increases in housing and land the budget lacks a measure redistributive mechanism such as the basic income grant. The Public Service must be improved because building an effective Public Service is a long-term project.

World Cup 2010 presents a good opportunity for local economic development but serious political will is critical. Implementation of these ideas cannot be undertaken without a comprehensive development plan. This is a responsibility of government to drive. In conclusion, the ID supports the budget. [Time expired.]

Ms A VAN WYK: Chairperson, a budget remains just figures on paper and it only becomes of value once action and service follow the amount that was budgeted and allocated, and it is in light of this that I want to address specifically the issue of safety and security in the Budget.

Under the headline, “Crime - Where Facts, Politics and Emotions Clash” the political commentator and analyst, J P Landman, refers to the intensity of feelings around crime. He describes it as a “combustible combination”. He says South Africans have never felt as “vulnerable and fearful of crime as now”. The conclusion, he says is clear: “Citizens’ perceptions of crime are that it has deteriorated -matters got worse.

The second point he makes, as an empirical fact, is that several categories of crime have declined. Here he makes use of figures provided by the SA Institute of Race Relations, an organisation that, even the opposition would agree, cannot be considered a friend of the ANC government.

The SA Institute of Race Relations reported that 8 out of 12 categories of crime have declined over the period 1994-2005 to 2005-06. These are confirmed with victim surveys. For those of us that might not know, in victim surveys, official statistics are ignored and a sample of the population is asked if they experienced crime, what types, how often and so on. Interestingly, these independent victims’ surveys confirm the official statistics of the SAPS, on which the opposition tries so very hard to cast suspicion.

According to these surveys, crimes that have decreased include murder by 41%, attempted murder by 36,5%, car theft by 32,8% and commercial crime by 28,9%. In light of this you correctly ask then why citizens still feel unsafe. He offers that an increase in the number and violent nature of housebreakings might be a factor. After all, our houses are suppose to be our safe haven.

’n Populêre en baie gevaarlike stelling wat gemaak word, meestal vir korttermyn politieke gewin, is dat misdaad ’n poging is om van blankes ontslae te raak. Die einste slagoffermarkopname wys dan ook dat blankes en Indiërs onveiliger voel as swart en bruin Suid-Afrikaners. Landman haal dan interessante statistiese gegewens van Johnny Steinbeck aan: blankes maak een elke 11 mense in die bevolking uit - net meer as 9% - maar slegs een uit elke 33 moordslagoffers. (Translation of Afrikaans paragraphs follows.)

[A popular and very dangerous statement that is mostly made for short-term political gain is that crime is an attempt to get rid of whites. The same victim’s market survey also shows that whites and Indians feel more unsafe than black and brown South Africans.

Landman quotes interesting statistical data from Johnny Steinberg: whites constitute one out of every 11 people in the population - just more than 9%- but only one out of every 33 murder victims.]

What Jonny Steinberg, a sociologist, is saying is that even though whites constitute one out of 11 of the population, they are only one in 33 murder victims. You have a far better chance in South Africa to die a violent, crime-related death if you are young, black and male.

This dangerous spreading of lies by some in politics and many on the political fringes, posing as labour organisations, agricultural bodies and yes, even cultural bodies, need to stop. It is creating a fear that is clearly unfounded and devoid of all truth, but has the capacity to lead to paralysing fear and unjustified action.

In the past the Minister has referred to the fact that in 81% of murder cases, the murderer knew the victim. In rapes, 76% and in serious assault 89,5% of assaulters were known to the victim.

In the last two weeks, the country was shocked and outraged by the murder of two young and innocent girls, Sheldean Human and Annastacia Wiese. Both of them were murdered by someone they trusted, a close family friend. Why does this happen? Since when do we treat people that we know and are suppose to care for in such a violent manner? What is wrong with a nation’s social fibre and morals when four young white males with their future ahead of them pass the time by beating an unknown homeless person to death, like the so-called “Waterkloof Four” did? Or what drives a 23-year-old like the murderer of David Rattray to commit such a senseless act?

These are questions that we believe need to be asked. We need to get answers and implement solutions and only then will we be able to address crime effectively.

Landman makes a couple of suggestions himself. Firstly, he says that just to talk about police efficiency and political accountability is not the answer: “People do not change their values and behaviour because politicians ask them nicely to do so.” The ANC believes that we need a concerted effort by all the role-players in society, organised civil society, and family units. In all of this, the government must play a leading role.

Secondly, he suggests that we need to rebuild the social capital of our nation unlike the West Germans after the Second World War. We need a concerted effort to counter our own legacy of apartheid. We should counter nepotism and corruption, take action against incompetence, but very importantly, we should avoid cynicism.

He ends his article by challenging the government to ask what we are going to do to change the feelings about crime. His question is one of service delivery and the quality of that service.

In an effort to answer Mr Landman’s question, I would like to raise a few points from this Budget and the SAPS strategy that clearly illustrates what it is that the government is doing not only to address the feelings about crime but its commitment in fighting crime. This budget allows the Department of Safety and Security to implement their strategy without any budgetary constraint whatsoever.

Over the past seven years expenditure in the Safety and Security Vote increased significantly. In 2003-04 it was R22,7 billion. Today, in 2007-08 it stands at R35,9 billion. It is 44% of the total allocation for the justice and protection services clusters. It is expected to reach R43,6 billion by 2009-10. The question that we as parliamentarians and selected leaders of the community should start asking is not one of more money or resources, but one of value added to the budget made available.

The strong growth in expenditure reflects the employment of large numbers of additional police officers; investment in capital infrastructure and improvement of conditions of service. In other words, this budget reflects a robust increase in resources, both human and capital, directed towards the fight against crime.

The ANC government is increasing visible policing by increasing the number of such personnel. By the end of March 2007 we should have an establishment of 163 000 members. By the end of 2009-10 this number should have to increase to 193 000. It is now the responsibility of the SAPS management and us as Parliament to oversee that, to develop and implement an operational deployment plan to make ultimate use of these increased numbers on the streets to do visible policing.

The increased presence of SAPS members on our streets and in our communities will contribute greatly towards a feeling of safety.

With rapidly growing personnel numbers as replacements and additions, the all important aspect of training comes to the fore-front. Vast numbers of people are trained; from annual enlistments to detectives and station commissioners. It is of utmost importance that the qualitative elements of training programmes be ascertained as to enhance the capabilities of the human resources we have. We cannot be naïve and think that with increased numbers to be catered for and a shift in focus towards community involvement and sector policing, we can simply expect that our training capacity and modules can remain as is.

Experience indicates to us that many station commissioners were not up to the task despite their training and it resulted in the transfer of skills to stations that we now see. Like in the training of any other occupation or careers, the training of our members in the SAPS should be cutting edge.

Funding was made available to implement an automated vehicle location system for SAPS vehicles with the focus on improved service delivery. This system, if properly used and managed, will bring to an end the abuse of police vehicles for private use and will allow for rapid and more effective deployment of vehicles and members to incidents of reported crimes. They should mean quicker reaction time and should also boost the confidence of the citizens.

On January 13 in Witbank in Mpumalanga, the President said:

The Police Service and government agencies cannot fight crime alone. It requires the involvement and active participation of all communities and all sectors of society.

The Minister of Safety and Security a month later on 13 February 2007 reminded us about this. He went further to say that effective policing was not dependent on huge police numbers, but on better police community relations. He highlighted two main aspects required for that to happen. The police must be rooted in and very importantly accountable to the community in whose name they do policing.

As government and as elected leaders, irrespective of our political affiliation, we share a responsibility to mobilise our communities, to be in partnership with the police, to prevent and combat crime. Government has the added responsibility to lead that process. The SAPS’ responsibility is to treat the communities they serve with the necessary respect and be accountable to them.

We are not going to strengthen our police-community relationships when, like happened in Pretoria just last week, a business across the street from a police station is robbed. The case is reported and no one arrives to investigate. We are not going to get our communities involved if after hours of waiting the owner of that business walks over to the station and then, in very rude terms, is chased out of the station.

Our communities will not get involved when the SAPS spokesperson’s comments on radio was that the aggrieved complainant must go back to the station and report the matter to the station manager. This kind of action undermines the strategy and the budget that supports it.

Die Minister het ook in sy toespraak op 13 Februarie aangekondig dat gemeenskapspolisiëringsforums onafhanklike liggame gemaak moet word, verantwoordelik aan die gemeenskappe wat hulle dien. In dié verband sal die portefeuljekomitee die begroting in die toekoms fyn dophou om toe te sien dat wanneer dit realiseer dit wel geïmplementeer kan word.

In die lig hiervan wil die ANC op die vele anti-misdaad burgerlike groepe wat hulle ontstaan toeskryf aan die misdaad in die land ’n beroep doen: as julle ernstig is om ’n verskil aan die misdaadsituasie te maak, sluit aan, en moedig julle ondersteuners om hulle aan te sluit, by julle plaaslike gemeenskapspolisiëringsforums. Dit is die enigste plek waar werklik ’n verskil aan misdaad gemaak kan word, waar ’n impak gemaak kan word. Dit is hier waar woorde en emosie omgesit kan word in aksie, waar goeie voornemens daadwerklike optrede word, nie op verhoë saam met sangers nie. Dit ís die verantwoordelike ding om te doen. (Translation of Afrikaans paragraphs follows.)

[On 13 February the Minister also announced in his speech that community policing forums must be declared independent bodies, responsible to the communities they serve. In this regard, the portfolio committee will keep a close eye on the budget in future to ensure that when it is realised, it will be implemented.

In light of this the ANC wants to make an appeal to the many anti-crime civil groups in the country that attribute their existence to the crime in the country: if you are serious about making a difference to the crime situation, join and encourage your supporters to join your local community policing forums. It is the only place where a real difference to crime can be made, where an impact can be made. It is here where words and emotion can be put into action, where good intentions become real actions, not on stages with singers. It is the responsible thing to do.]

The resources are available. The budget has been committed, what we now need is the will and action to make these plans a reality. Thank you. [Applause.]

Dr S M VAN DYK: Agb Voorsitter, Minister Manuel se begroting vanjaar skenk nie genoeg aandag aan ekonomiese groei nie. Die ekonomiese groeikoers word jaarliks opwaarts aangepas, maar die werkloosheidskoers staan steeds op 39%, so in werklikheid het Suid-Afrika ’n werklose ekonomiese groei, want die vraag na werk groei vinniger as die aanbod van werksgeleenthede.

Die gevolge van die 8 miljoen werklose mense is armoede en misdaad, en dit het ’n verdere negatiewe effek op ekonomiese ontwikkeling, wat werkloosheid net verder vererger.

Wat armoede betref, leef 53% van die bevolking in armoede en ’n groot persentasie daarvan oorleef op staatstoelaes. Armoede kan verlig word met sosiale welvaartstoelaes solank die ekonomie dit toelaat, maar mense wat afhanklik is van toelaes dra nie produktief by tot die skepping van werk of welvaart nie. Hulle raak afhanklik van die staat vir ekonomiese oorlewing. In plaas dat meer werk geskep word sodat die ekonomie self armoede kan verlig, kruip daar jaarliks meer mense onder hierdie veiligheidsnet van sosiale sekuriteit in, want uitgawes aan sosiale welvaartstoelaes groei vinniger as enige ander vorm van openbare besteding en beloop tans R89 miljard van die nasionale Begroting.

Daar word dus ’n groter las op die bestaande werkersklas geplaas om ’n persentasie van die bevolking te onderhou. Belastingbetalers het toegeneem met 85% sedert 2000, terwyl die ontvangers van welsynstoelaes toegeneem het met 295%, en om genoeg geld vir die staatskas te vorder, het die totale belastinglas as persentasie van die BBP vanaf 2003 tot nou toe van 23% tot 28% gestyg.

Die vraag is hoe lank Suid-Afrika se ekonomie die gevolge van bakhandstaan sal kan dra. Die ekonomie moet eerder bevorder word sodat mense hulself kan bemagtig.

Wat misdaad betref, rem dit ekonomiese ontwikkeling, dit rem ook ekonomiese groei, produktiwiteit en werkskepping, en ek wil graag na faktore verwys wat die koste en ekonomiese opoffering van misdaad reflekteer.

Eerstens, die ``brain drain’’. Business Against Crime se navorsing wys daarop dat 30% van alle besigheidsmislukkings aan misdaad toegeskryf kan word en dat 26% mense in Suid-Afrika nie ’n besigheid plaaslik sal begin nie, as gevolg van misdaadvrees. Kundiges verlaat nou die land terwyl die ekonomie ’n tekort aan geskooldheid ervaar.

Tweedens sê die SA Versekeringsvereniging dat motordiefstal en kapings die versekeringsbedryf R2,5 miljard per jaar kos. Die koste daarvan in terme van verhoogde versekeringspremies word ook op verbruikers afgewentel en dit is ook geld wat andersins meer ekonomies spandeer kon word aan welvaartsverhoging.

Wat betref gesteelde goedere soos motors, voorraad en toerusting moet die verbruikers by die vervanging daarvan weer BTW betaal – ook geld wat andersins direk in produksie teruggeploeg kon word. Maar aan die ander kant vind Minister Manuel hierdie miljarde rande belastinginkomste gerieflik. Miskien is dit een van die redes hoekom die regering so traag is met misdaadbekamping.

Derdens kan die indirekte koste van misdaad nie gemeet word nie. Die waarde van produktiwiteitsverlies as gevolg van menslike trauma is onmeetbaar. Ons lees dat die gemiddelde Suid-Afrikaner ’n stresvlak ervaar wat 80% hoër is as die wêreldgemiddeld, as gevolg van onder andere misdaad.

In hierdie verband verwys die internasionale ouditfirma Grant Thornton se internasionale sakeverslag dat 65% sakeondernemings in Suid-Afrika erken dat misdaad hul werkers se produktiwiteit en motivering ondermyn; 41% sakeondernemings sê dit verlaag werkers se kreatiwiteit en vindingrykheid, terwyl 32% sakeondernemings beweer dat hulle werkers verloor as gevolg van misdaad.

In die vierde plek wys die Grant Thornton-verslag ook daarop dat 84% private sakeondernemers in Suid-Afrika self, óf ’n gesinslid óf van hul werkers, verlede jaar ’n slagoffer van misdaad was en 88% van hierdie sake- eienaars sê dat hulle steeds groter uitgawes moet aangaan vir beveiliging.

In die vyfde plek kelder misdaad toerisme. Volgens die bedryfstydskrif Southern African Tourism Update beweer 85% toeroperateurs dat misdaad die grootste hindernis is om die getal buitelandse besoekers op te stoot. Bykans 75% oorsese groothandelaars in toerisme sê hulle sal die aantal besoekers na Suid-Afrika met 50% verhoog as dit nie vir die hoë misdaad was nie, en gegewe dat elke agt buitelandse besoekers aan Suid-Afrika kan lei tot die skepping van een werkgeleentheid, beteken dit dat 125 000 ekstra werkgeleenthede hierdeur geskep sou kon word.

In die sesde plek beperk misdaad ook buitelandse beleggings en investering in Suid-Afrika. Frankryk, Brittanje, Kanada en Australië waarsku reeds hulle landsburgers op webtuistes om twee keer te dink voordat Suid-Afrika oorweeg word. ’n Onlangse peiling wat deur die kamers van groothandel van Brittanje, Duitsland, Italië en Swede gedoen is, toon dat 69% respondente pessimisties is oor misdaad in Suid-Afrika, en miljarde rande se beleggings heroorweeg. In die sewende plek absorbeer onwettige immigrante Suid-Afrika se werkgeleenthede. Sake Rapport verwys na bevindings van ’n verslag wat deur ekonome saamgestel is wat daarop dui dat onwettige immigrante tot 2,8 miljoen werkgeleenthede van Suid-Afrikaners ontneem.

In die agste plek is veediefstal ’n bron van groot kommer. Volgens Landbouweekblad is daar in net drie maande vanaf Julie tot September verlede jaar 60 000 beeste en 109 000 skape en bokke met ’n waarde van R89 miljoen gesteel. Enersyds is dit vee wat bemark kon word, met laer verbruikerspryse as resultaat, en andersyds bring boerderyverliese mee dat werkers afgedank word in plaas daarvan dat groter winsgewendheid meer indiensneming meebring.

In die negende plek maak baie geskoolde persone deel uit van die meer as 100 000 mense wat sedert 2001 vermoor is. As in ag geneem word dat een hoogsgeskoolde persoon volgens ’n ekonoom van Barlow World agt verdere werkgeleenthede sou kon skep, het derduisende werkgeleenthede verlore gegaan as gevolg van dié moorde.

Laastens sit Suid-Afrika met die grootste tronkbevolking in Afrika - 154 000 gevangenes. Van hierdie mense is ook reeds opgelei en sou andersins meer voordelig in die ekonomie aangewend kan word, in plaas daarvan dat dit die belastingbetaler nou meer as R18 miljoen per dag kos om hulle in tronke te onderhou.

Wat is dan die probleem? Volgens die Instituut vir Strategiese Studies spandeer Suid-Afrika reeds twee keer meer as die wêreldgemiddeld per persoon aan veiligheid en te min op wat misdaad veroorsaak, naamlik werkloosheid, ongeletterheid, behuising en maatskaplike dienslewering.

Minister Manuel slaag baie goed daarin om die gehoor in die Parlement se steun te kry met gewilde aanhalings wat dit vir kritici moeilik maak, maar ongelukkig praat die harde werklikheid van die ekonomie anders. Armoede en werkloosheid kan nie verder verskans word nie.

U sê ook in die Begrotingsrede dat die regering ’n voorbeeld vir Suid- Afrika stel met die begrotingsoorskot. Minister, met alle respek, ’n begrotingsoorskot is verkeerd. ’n Oorskotbegroting in Suid-Afrika se omstandighede is ’n skande en vir ’n ontwikkelende land is dit uiters ongehoord. Verder ook, in die lig van ons openbare hospitalekrisis, onderwys en opleidingskrisis, werkloosheid en behuisingskrisis en agterstand in maatskaplike dienste, kan dit nie bekostig word nie.

Die DA wil graag sien dat u die begrotingsoorskot terugploeg en voldoende begroot vir agterstande in hierdie verwaarloosde dienslewering sodat die oorsake van misdaad en armoede bekamp kan word. Suid-Afrika se lae staatskuld aan die een kant en ruimte vir ’n 2% begrote tekort van die BBP aan die ander kant gee vir die Tesourie daardie fiskale geleentheid.

Alternatiewelik, gegewe die staat se kapasiteitsprobleme, moet ons daaraan begin dink om meer fiskale aansporings in terme van korporatiewe subsidies en belastingverligtings aan die privaatsektor toe te staan, om investering te bevorder, werk te skep en selfs tradisionele staatsdienste op kontrak te lewer.

Ons moet dus die ekonomie bevorder om meer werk te skep, gepaardgaande met voldoende owerheidsdienslewering sodat die oorsake van armoede en misdaad eerste aangespreek kan word. Dankie, Voorsitter. [Applous.] (Translation of Afrikaans speech follows.)

[Dr S M VAN DYK: Hon Chairperson, Minister Manuel’s budget this year does not pay enough attention to economic growth. The economic growth rate is adjusted upwards annually, but the unemployment rate remains on 39%. In reality South Africa has jobless economic growth, because the demand for employment grows faster than the supply of employment opportunities.

The results of having 8 million unemployed people are poverty and crime, and this has a further negative effect on economic development, which further increases unemployment.

Regarding poverty, 53% of the population are poverty-stricken and a large percentage of them survive on government grants. Poverty can be alleviated with social welfare grants for as long as the economy permits it, but people who are dependent on grants do not contribute productively to job creation or prosperity. They depend on the government for their economic survival. Instead of more jobs being created so that the economy by itself can alleviate poverty, more people are annually making use of the safety net of social security, because expenditure on social welfare grants is growing faster than any other form of state expenditure and at the moment it amounts to R89 billion of the national Budget.

Thus a greater burden is placed on the existing working class to support a percentage of the population. Taxpayers have increased by 85% since 2000, while those that receive welfare grants have increased by 295%, and in order to collect enough revenue for the Treasury, the total tax burden as a percentage of GDP has increased from 23% since 2003 to the present 28%.

The question is how long South Africa’s economy will be able to bear the results of this begging. The economy should rather be stimulated so that people can empower themselves.

Regarding crime, it inhibits economic development, it also retards economic growth, productivity and job creation, and I would like to refer to factors that reflect the cost and economic sacrifices of crime.

Firstly, the “brain drain”. Business Against Crime’s research shows that 30% of all business failures can be attributed to crime and that 26% of people in South Africa will not start a business locally as a consequence of fearing crime. Experts are leaving the country while the economy experiences a skills shortage.

Secondly, the SA Insurance Association says that motor vehicle theft and hijackings costs the insurance industry R2,5 billion per year. The cost of this in terms of higher insurance premiums is also devolved to the consumer and this money could otherwise also have been utilized more economically to improve prosperity.

Concerning stolen goods like motor vehicles, stock and equipment, consumers have to pay VAT again when they replace the stolen items– money that could otherwise also have been directly ploughed back into production. But on the other hand Minister Manuel finds these billions of rands in tax revenue convenient. This might be one of the reasons why the government is so slow to combat crime.

Thirdly, the indirect cost of crime cannot be calculated. The value in loss of productivity as a result of human trauma is incalculable. We read that the stress levels experienced by the average South African are 80% higher than the global average, as a result of, inter alia, crime.

In this context the international audit firm Grant Thornton’s international business report refers to 65% of South African business enterprises that acknowledge that crime undermines their workers productivity and motivation; 41% of business enterprises say that it reduces workers creativity and ingenuity, while 32% of business enterprises allege that they lose workers as a result of crime.

In the fourth instance the Grant Thornton report also refers to the fact that 84% of private entrepreneurs in South Africa were themselves, or a family member or some of their workers, victims of crime last year and 88% of these business owners say that they have to continue to increase their expenditure on security.

In the fifth instance crime hampers tourism. According to the business periodical Southern African Tourism Update 85% of tour operators claims that crime is the biggest obstacle to increasing the number of foreign visitors. Almost 75% of overseas wholesale-merchants in tourism say that they would increase the number of visitors to South Africa by 50% were it not for the high crime rate, and given that every eight foreign visitors to South Africa can lead to the creation of one job, it means that 125 000 extra employment opportunities can be created in this way. In the sixth instance crime limits foreign investments and investing in South Africa. France, Britain, Canada and Australia are already warning their citizens on websites to think twice before considering South Africa. A recent survey by the chambers of wholesaletrade of Britain, Germany, Italy and Sweden, shows that 69% of respondents are pessimistic about crime in South Africa, and are reconsidering investments worth billions of rand.

In the seventh instance illegal immigrants are absorbing South Africa’s job opportunities. Sake Rapport refers to the findings of a report compiled by economists which show that illegal immigrants deprive South Africans of up to 2,8 million job opportunities.

In the eighth instance theft of livestock is a great source of distress. According to Landbouweekblad - in only three months from July to September last year 60 000 cattle and 109 000 sheep and goats were stolen worth R89 million. On the one hand it is livestock that could have been marketed resulting in lower consumer prices, and on the other hand farming losses bring about retrenchment of workers instead of higher profit yields bringing about more employment.

In the ninth instance many skilled people form part of the more than 100 000 people who have been murdered since 2001. If it is considered that one highly skilled person can according to an economist from Barlow World create a further eight jobs, then thousands of job opportunities were lost as a result of these murders.

Lastly South Africa has the largest prison population in Africa - 154 000 prisoners. Some of these people are already trained and would otherwise have been utilized more profitably in the economy, instead of it costing the taxpayer more than R18 million per day to provide for them in prison.

What is the problem? According to the Institute for Strategic Studies South Africa is already spending double the global average per person on security and too little on the causes of crime, namely unemployment, illiteracy, housing and delivery of social services.

Minister Manuel succeeds very well in gaining the support of the audience in Parliament with popular quotations that makes it difficult for the critics, but unfortunately the hard reality of the economy tells a different story. Poverty and unemployment cannot be entrenched any further.

In your budget speech you also say that the government sets an example for South Africa with the budget surplus. Minister, respectfully, a budget surplus is wrong. A surplus budget in South Africa’s situation is a shame and for a developing country it is utterly unheard of. Further more, in the light of our state hospital crisis, education and training crisis, unemployment and housing crisis and the backlog in social services, it can be ill afforded.

The DA would like to see the budget surplus being ploughed back and that sufficient funds are allocated in the budget for the backlog in this neglected area of service delivery so that the causes of crime and poverty can be combated. South Africa’s low public debt on the one hand and room for a 2% budget deficit from the GDP on the other hand lends the Treasury this fiscal opportunity.

Alternatively, given the government’s capacity problems, we must think along the lines of more fiscal incentives in the form of corporate subsidies and the granting of tax relief to the private sector, promoting investment, job creation and even delivering traditional public services on contract.

Thus we have to stimulate the economy to create more jobs, coupled with adequate service delivery by local government so that the causes of poverty and crime can be addressed first. Thank you, Chairperson. [Applause.]]

Mr S N SWART: Chairperson, hon Minister, this is indeed a watershed Budget with the first ever budgeted surplus, an ambitious social security pension plan, scrapping of retirement fund tax and huge infrastructure spending to encourage faster economic growth. Individuals are to receive a cut in personal tax and companies are aided by the phasing out of STC and loosening of foreign exchange controls. Our cup indeed runneth over, for which we should be grateful.

We are now committed to becoming a welfare state which is undoubtedly necessary in the short-term to address widespread unemployment and poverty. Human life does have equal worth and citizens should enjoy equal opportunities. Certain questions do however arise as to the sustainability of a welfare state in the long run. Does the danger not exist in the long run of focusing too much on fiscal redistribution to raise living standards through welfare rather than job creation? Is it further compatible with the concept of a developmental state?

However one looks at it, fiscal restraint has enabled funding for growing social reform, and to lift an estimated half of our population out of dire poverty, which is commendable and which the ACDP supports.

The reduction in and the eventual phasing out of STC is to be welcomed. We trust that this step will also stimulate the supply side of the economy and encourage an investor-friendly economy where growth is not driven by consumer spending on imports.

Additional government spending will also help raise economic growth to the projected level of 6%. The critical question remains whether the government can spend capital budget effectively. Capacity constraints must be addressed.

In view of the unacceptably high crime rate, fighting crime and ensuring personal safety remains a paramount concern and needs to be addressed. South Africans would, we believe, even forgo tax cuts if they were assured of personal safety. The ACDP, therefore, welcomes the additional amounts to be spent on providing resources to fight crime.

There is also a huge need for more and better paid social workers to assist families and strengthen families struggling with unemployment, poverty and HIV/Aids. The ACDP believes that strong families result in strong communities and thus welcomes the announcement of a bursary scheme and better salaries for social workers.

The agricultural sector is a potential area for huge job creation, particularly if accompanied by possible wage subsidy. Successful models of job creation in the agricultural sector should be copied and rolled out nationally.

Hon Minister, you have attempted to allay concerns regarding the growing current account deficit. Should we not be concerned, particularly in view of the recent market jitters which may affect capital inflows used to cover the shortfall? To conclude, the critical issue is whether the increased budget addresses unemployment and poverty, whilst stimulating economic growth and development in a safe and secure environment.

The ACDP will support today’s Budget Vote. I thank you.

The HOUSE CHAIRPERSON (Mr G Q M Doidge): Order! Hon members, please lower your voices.

Dr P W A MULDER: Mr Chairman, the FF Plus congratulates the Minister on a good news Budget – a Budget according to which huge amounts of money are going to be spent on education, crime and infrastructure.

Meneer, ons het vir 89 maande in Suid-Afrika nou volgehoue groei gehad en dit is beslis ’n nuwe rekord. Ek dink die vorige rekord was 44 maande. Die harde ekonomiese werklikheid is dit kan nie altyd so aanhou nie, en miskien moet die Minister tog maar in die Bybel gaan lees van Josef in Egipte en die sewe vet jare en die sewe maer jare en dat ons ook vir die sewe maer jare moet voorbereiding tref. (Translation of Afrikaans paragraph follows.)

[Sir, we have had sustained growth in South-Africa for 89 months and this indeed is a new record. I think the previous record was 44 months. The harsh economic reality is that it cannot always continue like this, and maybe the Minister should go read in the Bible about Joseph in Egypt and the seven years of abundance and the seven years of famine and that we should also make provision for the seven years of famine.]

The problem is that this is the seventh year of continued growth and of this kind of good news Budget without the results being visible on ground level. Somewhere there is a hole in the bucket - dear Trevor, but I don’t know where it is - which causes that the good news which is announced in Parliament every year do not always filter through to ground level.

The capacity problem of the provinces and local management at present places a definite restriction on the capability of the government to make use in full of the continued growth.

It is very important that the country in years of growth uses its surplus for capital projects which in more difficult years will help to stimulate tax incomes. Against this backdrop, it is important that the billions of rands which have been budgeted for the 2010 Soccer World Cup are created in a practical manner and will still be available after the tournament.

The FF Plus has for a number of years been asking that tax on pension funds be abolished as it is an extra burden on the finances of people who try to provide for retirement. We welcome the fact that the Minister has listened to our request and abolished this tax. Die regering gee toe dat misdaad baie ernstige afmetings aanneem. As deel van die oplossing stel die Minister van Veiligheid en Sekuriteit voor dat die gemeenskap moet help om misdaad te bekamp. Die VF Plus vra reeds sedert 2001 dat die agb Minister van Finansies moet kyk in watter mate belastingtoegewings moontlik is vir die groot bedrae wat gewone landsburgers tans moet spandeer vir hulle eie veiligheid.

Die Begroting is soos die aankondiging van die Springbok-rugbyspan of soos Bafana Bafana. As die name aangekondig word hier in die Raad, dan klink dit baie goed en ons is baie tevrede omdat ons al die goeie goed hoor. Maar as jy die volgende dag in die koerant lees wie nie die span gehaal het nie, is jy ongelukkig, want jy het nie besef wat die Minister eintlik nié gesê het nie. Dit is met die Begroting dieselfde.

Die Minister het hier in die Raad gepraat van belastingverligting van R8,4 miljard vir ons mense. Dit klink baie goed en ons het dit verwelkom. Volgens my somme word die belastinglas op individue net elke jaar al groter. Een rede hiervoor is dat die fiskale sleuring, oftewel belasting weens inflasie, nie werklik uitgeskakel word nie.

Die belofte was dat die staatskas nooit meer as 25% van BBP behoort te beloop nie. Hierdie jaar beloop dit reeds 27%. Met ander woorde, die staat het te veel geld wat dit van ons vat en vashou aan hierdie kant, wat groei kon gestimuleer het. As ons ook provinsiale belastings bytel, dan trek dit by 30% van BBP.

Ons kan nie voortgaan om ’n klein klompie belastingbetalers op ’n subtiele manier ál meer en meer te belas en steeds dink die koei gaan nie lateraan leeg gemelk word nie. Ons moet die belastingbasis uitbou, anders gaan ons vorentoe probleme hê. Ek dank u. (Translation of Afrikaans paragraphs follows.)

[The government acknowledges that crime is reaching alarming proportions. As part of the solution the Minister of Safety and Security proposes that the community assists in the fight against crime. Since 2001 the FF Plus has been asking that the hon Minister of Finance should see to what extent tax concessions are possible for the big amounts that ordinary citizens are currently spending on their own safety.

The Budget is like the announcement of the Springbok rugby team or like Bafana Bafana. When the names are announced in the House, it sounds very good and we are very satisfied because we hear all the good things. But if you read in the newspapers the following day about who did not make the team, you are unhappy, because you did not realise what the Minister actually did not say. It is the same with the Budget.

The Minister spoke here in this House about tax relief of R8,4 billion for our people. It sounds very good and we welcomed it. According to my calculations the tax burden on individuals just increases every year. One reason is that the fiscal drag, that is tax due to inflation, is not really eliminated.

The promise was that Treasury should never amount to more than 25% of the GDP. It already amounts to 27% for this year. In other words, the government has too much money that they take from us and hold onto on this side, which could have stimulated growth. If we also add provincial tax, it will add up to 30% of GDP.

We cannot continue to subtly burden a few taxpayers more and more and think that the cow will not be milked dry at the end of the day. We must expand the tax base otherwise we will have problems in future. I thank you.]

Mr L V J NGCULU: Chairperson, the Minister of Finance in introducing the Budget, quoted Will Hutton’s book on China and globalisation, as follows:

The foundation of human association is the idea that human life has equal worth and that human beings are equally entitled to political, economic and social rights which allow them to choose a life they have resolved, they have reason to live.

The idea that human life has equal worth and that is the core value that unites us, invites us to ask whether we have done enough to give practical effect in South Africa today to our shared humanity. Have we acted in a manner that shows that human life has equal worth or do we still live in a society where the shadow of history dominates over the opportunities of an open society?

As our young nation enters its 13th year, we have much to be proud of. We are building a society founded on the principles of equality, nonracialism and nonsexism. We have built institutions of democracy, creating an open society founded on the rule of law. After stabilising the economy and the public finances we have created the conditions of rapid economic growth, job creation and the broadening of opportunities.

We in the ANC, therefore, take great pride that this Budget puts, once again, emphasis on the stated goals of the ANC, that is, the value of shared humanity. We are, therefore, pleased that in eliminating the backlogs in social services delivery, including improved salaries for the health professionals and people in the educational and social development sectors, as well as increasing the numbers of these professionals in the public sector, is one of the five key social and economic development policy objectives of the next three years, as prioritised by our Minister of Finance. We say so, because we know that there is a direct link between people’s health and their social conditions and their ability to contribute to the betterment of society. It is, therefore, clearly in the interests of all of us that we strengthen social services within this country, as largely provided for by the state.

For us, when it comes to health, we would like to state the most important elements in the Budget. The real growth in the Health budget is about R3-R4 billion per annum. The main areas emphasized in the Budget are the following: Firstly, the conditional grants, and here in particular we refer to grants for the fight against HIV and Aids, are estimated to be R1,68 billion over the next three years. There is also the modernisation of hospitals and the hospital revitalisation programme.

Secondly, there is the area of equitable shares that would allow new ambulances, better and improved communication in the ambulance system as a whole, as well as improvement in the air ambulances service that would better prepare South Africa for 2010. The third area deals with the new wage deals that are put forth here and lastly, there is the area of the additional health personnel that will go up to about 30 000 over the MTEF period, at about R5,3 billion over the said period.

To give effect to these policy imperatives, it is particularly taken into account in the Budget that the public health sector serves 80% of the population of South Africa. We, therefore, welcome the increased allocation in the MTEF period in 2007-08 Budget and in particular we welcome the hospital allocations, the modernisation of tertiary services, the allocation for HIV and Aids is also welcomed, and these are all additional resources. We are of the view that we will see a marked improvement in the delivery of better health services in our country.

It should also be emphasized here that whilst these are indeed large amounts of new funding for the health sector, the public sector requires significantly more resources to meet the needs of the population. We have already seen, for instance, in terms of the national strategic plan that is being unveiled by the government, that more demands to give effect to this particular plan will be required from us in order to meet the demands in future. Besides the conditional grants referred to, there are also the hospital revitalisation programme and the comprehensive HIV and Aids allocations, the increased allocation for human resources for health, as well as emergency medical services and medical equipment that are all allocated through the equitable share to provinces. It is critical that these increases are indeed passed on to the Department of Health.

The National Treasury and the national Department of Health are therefore called upon to work together under the political guidance of the respective Ministers to ensure that these funds are indeed channelled to improving the public health sectors in each of our provinces. Finally, we call on the political heads as well as the management of the public health sector to work hard to ensure that all the resources provided for by this government are utilised efficiently and effectively. Even as we request additional funding to strengthen the national health system, we must ensure optimal use of existing resources.

As this House knows, the national health system also comprises the private health sector in our country. We are all aware that it is indeed disturbing that this sector has not been able to curb the cost increases. We are aware that even though this sector provides care to only 20% of the population, yet if you compare it to what is actually spent in the public sector, it comes to much more. This inequity itself requires the need to be addressed. Indeed one might add that this level of greed by elements within the private health sector cannot be left unchallenged. We must, as we continue to support this Budget, call upon the government to review the expenditure in the private health sector, with a view to firstly contain the cost increases in this sector and, secondly,.we need to ensure that the implementation of the Health Charter is actually an instrument that will assist us to achieve these results. We therefore hope that the finalisation of the Health Charter will be implemented with greater speed and haste.

Chairperson, may I also take this opportunity to wish our Minister of Health well and a speed recovery. [Applause.] I am aware that there are those who have displayed and behaved in a manner so insensitive and perhaps reflective of their uncouth upbringing and whose values for human life are found to be despicable and objectionable. Perhaps it is very easy for them, even as we speak here at this podium today, whilst perhaps the bulk of our population listens attentively, they have got the temerity to howl and scowl, rather than to take an interest in the debates at hand. This is a character perhaps that has actually characterised the party on my left here. [Interjections.] It is indeed important in the ANC to state the following. There is a song that we sing in the ANC. [Interjections.] Umthetho wakho awunambeko. Abantu abadala akubazi. [You are known to be disrespectful towards elderly people.]

Whilst therefore the Minister of Health was lying in her sickbed, the villains who have no regard for or respect the quality of black life, danced on the floor, praying for her removal from office. [Interjections.]

Yet, on Sunday, they may declare themselves Christians and servants of God, but their behaviour reflects the opposite and they are perhaps servants of Lucifer. [Interjections.] We who have known the Minister for years and have been with her long before the luxuries of government were even in our thoughts, and we have no doubt about her commitment to her profession and her responsibility. We must therefore know that as she lies in her bed reflecting on her work and life, that we in the ANC value her so much and wish her a speedy and complete recovery. [Applause.]

Mr S J F MARAIS: Chairperson, thank you very much for this first opportunity to address this House. It is an honour and a privilege for me as a proud South African. I am looking forward to my constructive involvement in the future.

Ek is ’n trotse lid van die DA en dankbaar teenoor my partyleierskap hier en in die Wes-Kaap vir die vertroue in my gestel om hierdie amp te vul; ook aan my politieke mentor, die agb King, vir sy leiding en advies. My dank aan my gade en vir die wonderlike steun van my gesin en my kiesafdeling, Helderberg, en vir hulle teenwoordigheid hier.

Ek het passies in die lewe en is dit ’n voorreg om dit te kan uitleef. Ek moet satisfaksie daaruit put. Ek moet met konstruktiewe kritiek ’n noemenswaardige bydrae maak en erkenning gee waar dit regverdig is. Ek gee graag aan Minister Manuel erkenning vir die fiskale disipline van sy departement en ook die rol wat die portefeuljekomitee daarin speel.

Een van my ander passies is om gestremdes te verteenwoordig. Dit is vir my lekker om vandag van my gestremde vriende, al die pad van Worcester af op die galery saam met ons te hê. Minister Manuel, hulle is die kwesbaarste van die kwesbares en is baie dankbaar vir die verhoogde toelaag wat hulle kry. Wie min het, vir hulle is elke rand baie welkom.

Tog is dit so dat my vriend, Desmond de Koker, en sy vrou albei van elektriese rolstoele gebruik moet maak wat elk R20 000 kos. Die beoefening van sport is vir hulle almal baie belangrik. Verskillende rolstoele is nodig vir rolstoelbasketbal, rolstoelrugby, rolbal, marathon, ens, teen ongeveer R12 000 per stoel per sport. Verder betaal hulle hul huishuur, munisipale kostes en moet hulle hul skoolgaande kinders onderhou. U sal met my saamstem dat dit nie met die R870 per maand gedoen kan word nie. (Translation of Afrikaans paragraphs follows.)

[I am a proud member of the DA and grateful to my party leadership here and in the Western Cape for the trust they have placed in me to take up this office; also to my political mentor, the hon King, for his guidance and advice. My gratitude to my spouse and for the wonderful support from my family and my constituency, Helderberg and for their presence here.

I have passions in my life and it is a privilege to live them. I must get satisfaction from them. I must make a significant contribution by means of constructive criticism and give recognition where it is due. I gladly give credit to Mr Manuel for the fiscal discipline of his department as well as the role that the portfolio committee plays. One of my other passions is to represent persons with disabilities. It is my pleasure to have my disabled friends here with us today in the gallery, all the way from Worcester. Minister Manuel, they are the most vulnerable of those at risk and they are grateful for the increased grant which they receive. Those that have little welcome every rand that they receive.

Yet it is so that my friend, Desmond de Koker, and his wife both have to make use of electric wheelchairs which cost R20 000 each. The practice of sport is very important to them all. Various wheelchairs are needed for wheelchair basketball, wheelchair rugby, bowls, marathon, etc, at approximately R12 000 a chair per sport. Furthermore they pay their rent, municipal costs and they must support their school-going children. You will agree with me that it cannot be done with R870 per month.]

I want to challenge Mr Manuel with the following, especially if again Budget surpluses materialise, when considering the Mid-term and the Main Budget of next year: bigger allocations to benefit the disabled in the roll- out of the new social security scheme, meaningful contributions directly benefiting the disabled practising sport, both on developmental as well as high performance levels. This will result in more Paralympic medals and bigger representation of PDIs in Team South Africa, grants to ensure the improved accessibility of facilities in our communities and implementation of mechanisms to ensure that the targeted employment of persons with a disability is reached.

Soos dit elkeen se plig is om na oueres en siekes om te sien, is dit ons morele plig om te verseker dat ons gestremdes alle moontlike hulp van die regering kry, sodat dit as ’n gelykmakende faktor vir hulle kan dien. Ek dank u. [Applous.] (Translation of Afrikaans paragraph follows.)

[Just like it is everyone’s duty to look after the frail and aged, we have a moral duty to ensure that our disabled persons get all the help they can from the government, in order for it to serve as an equalising factor. I thank you. [Applause.]]

Dr G G WOODS: Chairperson, we don’t have any serious difficulties with the Budget at all. We think it’s a Budget that’s well harmonised, has the right emphasis and has a set of priorities which we think represent the national reality. It’s a very credible plan of what we need to do in our country to take our country and its people forward. So the issues I would rather spend my time on in the few minutes I have are the issues that a lot of the other members have referred to in passing, where they talked about the lack of capacity, poor implementation, poor execution and those sorts of problems. I would rather not just do that in passing, I think those problems are far more serious than we give voice to.

Perhaps, I should start off by talking about some well-known Harvard research that shows that even the world’s most successful businesses, which are very adequately resourced and which work in very fiercely contested industries, often produce up to 80% value for money return on their budgets. In other words, 20% of their resources is poorly used. So, deriving from that, we must ask ourselves: What percentage might there be for an undermanaged government bureaucracy that doesn’t have any competitive forces driving its efforts? In other words, what social or other returns do we or does the taxpayer actually get back for our budget each year?

I think we only have to look at areas of faltering service delivery and one could name health, education, the criminal justice system - to name some. We only have to look at the rather regular incidence of wasteful spending, underspending and dishonest or corrupt spending to see that we do have something of a problem.

To us, it all gets back to the same thing: The quality of management across the administrative structures is generally poor, where many of the management positions are filled with people with insufficient capabilities; and then, indeed, many of the positions not filled at all, and some filled by lesser bureaucrats.

Without being melodramatic, we would see this as a crisis of substantial proportions. It’s a crisis which costs the country so much and which in many instances makes the very good intentions of a fine budget somewhat farcical. So why, might we ask, is the problem not being adequately dealt with? And it is a problem which we have watched and spoken about as it grew and grew over the years. Each year, Minister Fraser-Moleketi appears before the House, where she seems to have a new range of ideas and a new range of assurances. But with respect, these do not seem to demonstrate a full enough understanding of what is causing this crisis and how to fix it.

I have even seen now that Samdi, who have been with us for so many years, have now come forward with their, probably, 54th plan which is about to go before Cabinet on their latest ideas, but what happened to all the other plans? Surely, we cannot go on simply dabbling with the problem.

It is a crisis, a very central and costly crisis, and one which requires big thinking and a comprehensive plan. Mr Minister, we think we have developed such a plan, which we would like to discuss with you. It is a plan which we feel could do justice to the important intentions of the budget and the money it provides. Thank you.

Mr B A MNGUNI: Chairperson, hon Ministers and colleagues …

… mangikhumbuze aMalungu ePhalamende ukuthi uhulumeni ngeke akwazi ukuthi afeze izethembiso ngaphandle kokuthi thina singabantu sikhokhe intela …[… let me remind the Members of Parliament that the government cannot fulfil the promises if we, as the people, do not pay tax …]

… because such resources do not come from anywhere else but from us, as citizens; unless government policy would need to be dictated by whoever foots the bill to implement government policy. Thus taxation is the main source of government revenue. The question then is: How much tax should citizens, individuals or corporates pay? This brings us to the tax proposals outlined by the Minister in his Budget Speech two weeks ago.

Personal income tax or individual tax has been greatly reduced since 1994, when the ANC government took over. This has put more money in the pockets of individuals to make their lives a little bit easier or a little bit better. This year another R8,4 billion will be taken back to the taxpayer in order to improve their lives. The majority of the taxpayers who will benefit from these mostly are from those who earn less than R3 583 per month, as they no longer have to pay any tax from their salaries or wages. According to the retirement fund industry, more than R50 billion was collected by the SA Revenue Service over the 11-year period; that is money which should have gone to the beneficiaries.

Doing away with retirement fund tax means less burden for individuals and better benefits when one retires. We, however, should ensure that those benefits do reach the intended beneficiaries. We should guard against fund managers who would like to make a quick buck through the misery of the poor and ignorant people. Incidents such as Fidentia, illegal or secret profits through bulking by the likes of Alexander Forbes, Glenrand-MIB and others should come to a stop. We cannot be complacent and expect that the Financial Services Board will effectively arrest such incidents as it has to oversee more than 13 000 retirement funds.

Ngakho-ke kufuneka siqiniseke ukuthi abantu esibakhethayo abazoba yiso nezindlebe zethu ezigungwini zokuqhuba le zikhwama zezimpesheni bangabantu abanolwazi noma abanekhono ngalolu daba. Kungenjalo, kufuneka thina siyizinyonyana noma singabantu nje siqinisekise ukuthi banolwazi olufanelekile ukuze babhekane nalezi zimo. (Translation of isiZulu paragraph follows.)

[Therefore we need to ensure that people that we elect, who will be our eyes and ears in the Financial Services Board are people with knowledge and the necessary skills. If not so, we as unions or ordinary people need to ensure that they have appropriate knowledge in order to face these situations.]

The argument by the business fraternity at the public hearings and mostly from our colleagues, the DA, is that personal income tax in South Africa is too high. When you look at developing countries, South Africa is among the countries with the lowest personal income tax. For instance, when you look at Brazil, personal income tax ranges from 15% to 27%, which is one of the lowest. But when you look at Egypt, it ranges from 20% to 40%; and with Morocco it’s from 0% to 41,5%. Therefore, it is not really true that South Africa has the highest personal income tax when compared to developing countries. If you look at developed countries such as Sweden, you will find that it’s up to 51,1%.

We cannot run away from globalisation. We have to, from time to time, adjust our policies to capitalise on opportunities that come with it. Doing away with secondary tax for companies is not yielding to pressure from the DA or its lobbyist group, but it’s because it is the right time to do so and in order to broaden our tax base.

South Africa is also one of the developing countries with the lowest rate when it comes to income tax on companies. Although investors would like to see returns at the end of the day on their investments, it is not tax rates that keep investors away. During our visit to the US recently, the Africa Commission informed us that most companies or individuals would like to invest in South Africa, not because there is low tax but because of financial and political stability, and macroeconomic and sound macroeconomic principles. Therefore, South Africa is one of the countries that enjoys such confidence.

The remaining budget proposals are actually mainly the yearly improvements that are there on a year to year basis. For instance, sin tax is basically aimed at changing our behaviour in society. The increase on tobacco, wine and spirits is a way of trying to ensure that other health principles are adhered to, and that policies that we pass as Parliament are adhered to by the citizens. These changes are on a yearly basis therefore they are not such a problem.

Regarding the percentage of investment to GDP, it is proposed by Treasury that 25% of investment be made to the GDP so that the 6% growth rate can be reached, as envisaged. It’s not a principle that’s cast in stone because that is an economic model and, therefore, every economic model, as I usually say, has a percentage error that needs to be accommodated. The emphasis by our friends or colleagues that we have to make sure that …

… noma kanjani i-25% iba yingxenye yezimali ezitshalwa eNingizimu Afrika ukuze sithole ukukhula komnotho ngama-6% akulona iqiniso. Sithanda-ke ukwazisa wonke umuntu emakhaya nanoma ikuphi lapho bekhona ukuthi baqaphelisise ukuthi imali yabo iyakhula, ikakhulukazi njengoba sesiwususile lo mthetho wokuthi impesheni yabo ibanjelwe intela uma umuntu esethatha umhlalaphansi. Uma singakuqaphelisisi lokho, izinkampani ezifana nabo-Fidentia, Alexander Forbes zizoqhubeka nokuthi zithathe imali okufuneka ifinyelele kubantu okudingeka bahlomule kulokho. Ngiyabonga, Sihlalo. [Ihlombe.] (Translation of isiZulu paragraph follows.)

[… exactly 25% of GDP is made of our domestic savings rate so that we can have economic growth of 6% is not true. We therefore like to inform everybody at home, wherever they may be, that they must be aware that their money is growing, especially now that we have scrapped the law that states that retirement funds should be taxed when one is retiring. If we are not alert about these things, companies like the Fidentia Group and Alexander Forbes will go on taking monies that need to reach people who must be compensated. Thank you, Chairperson. [Applause.]]

Mr B E PULE: Chairperson, the UCDP congratulates the Minister of Finance, hon Trevor Manuel, for the comprehensive budgets he presents to this House. The 2007 Appropriation Bill was tabled in order to allocate money to the different national government departments in terms of section 213(2) of the Constitution of the Republic of South Africa, 1996, that makes provision that money may be withdrawn from the National Revenue Fund only in terms of an appropriation by an Act of Parliament. To this end the Appropriation Bill divides R299 billion of the National Revenue Fund among departments. This is 11,04% higher than the previous year’s national allocation of R266 billion.

I have indicated and, of course deliberately, that this appropriation is in terms of an Act of Parliament. In the same breath allow me to remind government departments that an Act of Parliament cannot and shall not be compromised in the use of these monies.

The UCDP would like to draw the attention of both executive authorities and accounting officers to section 63(1)(a) and (b) and 63(2) and section 2, and sections 38 – 41 of the Public Finance Management Act, No 1 of 1999 respectively, about their financial responsibilities.

Of paramount importance is section 38 1(a) of the Act. I quote:

The accounting officer for a department trading entity or constitutional institution must ensure that the department trading entity or constitutional institution has and maintains an effective, efficient and transparent system of financial and risk management and internal control.

This, without compromise, is a sine qua non in the appropriation of state funds. I am happy to indicate that the UCDP is supporting the Bill and not noncompliance with financial regulations. The UCDP supports the Bill and not unauthorised wasteful and fruitless expenditure. The UCDP supports the Bill, and not emphasis of matters. The UCDP supports the Bill, and not qualifications, disclaimers or adverse opinions.

It must further be explicitly clear that this institution, Parliament, must also account for monies it receives. Parliament must not wait for big guns, as suggested by weekend’s newspapers … [Time expired.]

Mr T M MASUTHA: Mutshami wa xitulu, ndzi tlakuka ndzi seketela ku avanyisiwa ka timali leti nga endliwa lembe leri hi murhangeri wa hina, Holobye Trevor Manuel. Hi khensa swinene marito ya yena lama ya nge: Vutomi bya vanhu hinkwavo bya ringana. [Chairperson, I rise to support the appropriation of money which was done this year by our leader, Minister Trevor Manuel. We are very grateful for his words that went: “The lives of all the people are equal.”]

At its 50th national conference held at Mafikeng in December 1997, the ANC, having noted that the government inherited a system of social security which was fragmented, unco-ordinated and based on past policies of discrimination, inequality and inaccessibility to beneficiaries, acknowledged and supported the present process in government to transform the social security system into a co-ordinated and comprehensive policy.

In addition and in pursuance of this objective, the government appointed a commission, which I am most privileged to have been part of, led by Prof Vivienne Taylor, to investigate the possibilities of developing a comprehensive social security policy.

At its 51st national conference, December 2002 in Stellenbosch, the ANC acknowledged the Taylor report presented to the government that year as providing a basis for the development of such a social security policy and affirmed the need to strengthen the implementation and to expand the reach of existing policies whilst finding new ways to close existing gaps which leave certain people still vulnerable. It also called on the government to continue with plans towards a comprehensive social security system through the consolidation and ongoing review of all existing social security measures.

Allow me, before I proceed, to express my sincere gratitude to the Minister of Social Development, Dr Zola Skweyiya, who in 2000 invited a number of us from the Portfolio Committee on Social Development and the Taylor committee to join him on a visit to Berlin to study the German social security system, commonly known as the Bismarck System -forgive Bismarck for all his ills; at least he produced something positive - famous for its tenacity and having endured for more than 100 years, survived two world wars and a few economic depressions, and continues to give the German people a common sense of nationhood and social solidarity till this day.

A question may well be asked, legitimately so, as to what is wrong with our current arrangements given the proverbial rhetorical question: Why fix it if it is not broken? The current arrangements after all seem to be working and millions of people benefit from them. The problem, however, is that in 1994 South Africa inherited splinters of both publicly and privately managed social security schemes be they contributory in that they are funded by members of the respective schemes or noncontributory in that they are publicly funded through the general tax system.

The only thing that was common amongst these schemes was that they were not bound together by any common thread other than to address white poverty and income security and to deal with the rest of the population incidentally as an afterthought. It thus did not afford equal access and protection to all citizens, irrespective of race, gender or social class, so as to secure all from such contingencies as the loss of a breadwinner, or loss of income due to unemployment, retirement, ill-health or disability.

Before 1994, for instance, the maintenance grant provided by the apartheid government was only available to poor white children and a few black children – mainly coloured children in the Western Cape. All this has since changed and today over 7 million children of all races from poor households are receiving the grant. [Applause.]

The UIF, until recently, did not include domestic and farmworkers and because of poor regulation and lack of proper auditing and management, many employees were often left out in the cold when after years of working they discovered that their employer was dodging contributions to UIF or Codia. The fault principle applicable to the motor vehicle system, which is currently applicable, means that motorists, commuters and pedestrians alike have no claim to any social benefits under that scheme, unless they can prove fault on the part of the other party – proof which is often near impossible to adduce.

Oft-times, insurers will repudiate claims because of the failure of the policy holder to disclose certain information, citing the common law principle that an insurance agreement is a contract uberima fides, that is, of utmost good faith. Given the low literacy levels, language difficulties and other challenges, many of us do know that a lot does go wrong, resulting in many beneficiaries being left out in the cold.

Then there is the problem of the poverty trap. Whilst citizens, especially those at the lower end of the income distribution ladder, are strongly encouraged to save up for their retirement, their meagre resources work against them when they retire, because at a certain point those meagre resources are taken into account when consideration is made as to whether they qualify for state social assistance or not. [Interjections.] I will retire some years after you. [Laughter.] For this reason and others, many who worked their entire lives often find themselves retiring in poverty, with limited hope of recovery in their lifetime.

What then is the primary objective of the respective comprehensive social security system that is being envisaged? This is to ensure the human wellbeing of all through measures that address income poverty through adequate incomes throughout a person’s life cycle, including efficiency of benefits.

The Taylor committee distinguishes between income replacement measures, as the area on which social security is largely focused on the one hand, and the broader area of social protection which takes a more holistic view of social policy and the various social interventions aimed at protecting people from exclusion from participation in the social life of society, or protection against social exclusion on the other.

A distinction is drawn between income poverty, asset and/or capability poverty – which relates to a lack of access to such assets, whether tangible or otherwise – including skills necessary to enable one to participate in productive or gainful activity or for their general wellbeing; and poverty relating to access to basic services such as water, sanitation, electricity, etc, matters for which this Budget has adequately or significantly made provision.

With regard to the development of a system of comprehensive social security, the President, in his state of the nation address this year, had the following announcement to make:

In order to improve on the social programmes that we have implemented over the years, we aim this year to complete the work already started to reform our system of social security so that phased implementation can start as early as possible. A critical part of this reform will be the task of repairing a defect identified in the 2002 report of the Committee of Inquiry into a Comprehensive System of Social Security in South Africa. This is that the contributory earnings-related pillar of our social security system is missing or unreliable for large numbers of our working people. The principle guiding this approach is that, over and above social assistance provided through the government budget, we need to explore the introduction of an earnings–related contributory social security system that is informed by the principle of social solidarity.

Key recommendations emanating from the Taylor report include: Mandatory insurance cover for all in formal employment and their dependants; voluntary contributions to social insurance for those who cannot realistically be covered by mandatory arrangements; adoption of an official poverty line and improved data and research on poverty and human development; a phased and measured introduction of a comprehensive system of incomer support, on the strength of improvements over time in fiscal and administrative capacity – something which all of us will agree, has been showing significant improvements; continued active labour market and job creation policies alongside the extension of social insurance to all workers; special attention to the needs of children, particularly those in child-headed households – in this regard I think we have seen a significant rise in the uptake of the foster care grant which signifies that a lot more orphaned children are actually being covered in that safety; a phased reform of health care financing towards mandatory, universal coverage – these are matters that my colleague, hon Ngculu, has dealt with to some length; an integrated approach to retirement provision based on mandatory participation, preservation and benefits, improved fund administration and governance, simplification of the tax structure and improved consumer protection; and last but not least, improved disability insurance and compensation, for occupational injury and diseases, as well as reform of road accident benefits, as part of a new insurance framework. The ANC supports the Budget. [Time expired.]

Mr M T LIKOTSI: Chairperson, let me start by saluting the President of Zimbabwe, his Excellency Robert Mugabe of Zanu-PF in protecting the legitimate people of Zimbabwe. We want to assure you, Comrade President, that you have our full support in the defence of the people of Zimbabwe’s hard-fought liberation and freedom. Soldier on until the whole continent of Africa is totally emancipated from the bondages of neo-colonialism.

Coming to the topic at hand, hon Minister, this Budget has some elements of capitalism in it, as in its outlook it speaks too little about the plight of the downtrodden and poorest masses of our people – the unemployed, illiterate and landless Africans.

This Budget, as it stands, will find it difficult to address the scourge of abject poverty, inequalities and the suffering facing the Africans. Some pensioners die in the long queues of the pension payout points. Many school- going children become dropouts at high school level due to hunger as the crafters of the school-feeding schemes pretend that only children at the primary schools come from poor families.

The Budget speaks about envisaged subsidy remuneration of the working people, whilst many unemployed people are denied an unemployment allowance. Students who pass their matric for university entrance are unable to register due to the high costs of tertiary education fees. The African small businessmen only hear about millions of rands reserved for small, medium and micro enterprises for economic development, and none or very little filters down to the prospective beneficiaries.

The projected 9,2% economic growth over three years will have little significance if the present much-publicised 5% growth is mum about the plight of the homeless persons, people who live under bridges, the street kids who sleep on empty stomachs and our schools that are without science laboratory accessories and equipment, and the schools that have hospitality classes without the necessary equipment.

Hon Minister, the bottom line of capitalism is that the poor should remain poor whilst the rich become richer. The first thing to do in our country is to uncompromisingly fight capitalism as the evil that will keep us slaves forever.

The PAC finally wishes to put it in clear terms that the budget for the poor and the downtrodden masses of our people should in principle address the issue of equitable distribution of land and wealth. It must speak to the issues pertaining to free medication, free education, stopping the privatisation of strategic assets and the protection of its citizens. It must speak to the effective and efficient delivery of much-sought-after services and create permanent jobs. The PAC supports this Bill. [Applause.]

Mr B M KOMPHELA: Hon Ministers, hon Deputy Ministers, hon members and comrades, I want to invite hon Likotsi to a meeting where the sports and recreation committee is dealing with the 2010 Special Measures Bill, and to see the location of those downtrodden people he is talking about. These are deliberate efforts created by the Department of Trade and Industry in collaboration with Treasury to make sure that the ordinary people at home are going to be the beneficiaries of that.

The 30% that is requested there that should deliberately go to the poorest of the poor, MaMkhize, I think is something that the hon Likotsi is supposed to applaud and he probably knows that. If he doesn’t know, I am prepared to show him the 2010 Special Measures Bill.

Hon members, we are ready to kick off. If today, Minister, it could be said we must stage the Confederation Cup of Nations, South Africa would do that, and in a better way and in its own unique way. So, it is not that we are not ready. We are ready to do that. Winning the bid to host the 2010 Soccer World Cup is more than a national triumph. It has immense financial benefits for Africa and South Africa. It will change the lives of millions of people.

After and before the 2010 Soccer World Cup, South Africa will never be the same, both in terms of infrastructure and international exposure. South African tourism will boom forever because of this important occasion that the country is going to host.

Can you think what is going to happen to the gross domestic product of this country? Think of the increase in direct foreign investment in this country. Think of the marketing opportunities that this country is posed to have for the nations of the world. It cannot be something that we think is just not going to benefit the people of this country forever. I think it is something that is going to last for decades in this country. Minister, you spoke about the very important aspect of the tax incentives for federations that are going to have a development programme. I think this is the most important thing that federations have been expecting to get. Time and again, they say: “We are not getting tax incentives even if we are doing the developmental programme.” This is one of the most important things that has happened to the federations.

Minister, we want to keep our eye on the ball. This incentive that you are giving to the federations must really be an incentive that is biased towards the development of the athletes.

We have a proposal that you must introduce another challenging incentive in that even those that are rural-based – completely rural-based in terms of development - must be told as to what they can come and have so that the people in Limpopo and down at Dlangezwe in KwaZulu-Natal must also be able to get this. That should be one of the most inspiring incentives that those people could get.

Regarding those that want to put facilities in areas like those, and regarding those who want to engage in social responsibility issues, the Minister must look into that, saying that it is a good thing for them to do, and he must look into incentivising those who are biased towards the rural areas and those who are responsible for the social responsibility programmes. This will strengthen the partnership between the government and the federations so that they advance community participation in sport all over the country.

On the question of 2010, Comrade Jeremy, whilst you are having nightmares, I think in as far as game play is concerned, South Africa can play a game now. So, unfortunately, you are having those nightmares, but in as far as playing the game goes, we can play the game at any time as South Africans.

Minister, the R8,4 billion appropriation for the building of five new stadiums and also the upgrading or renovation of the stadiums is something that we welcome. By 2008, which is the target date for the final inspection of the stadiums by the Fifa delegation, we shall have met that target.

With regard to the new stadiums - completely new - that we have gone around to see, when you look at their underground parking, there is not a single indoor facility. I do not think it is the intention of the government to put up stadiums that are not multipurpose, and are only meant for rugby and soccer. So, our input, Minister, is that a certain little space should be provided for an indoor sports centre where people can go and enjoy themselves.

In 2008, the construction of the stadiums for the confederation will be completed. By December 2009, the whole question of the 2010 stadiums and the supporting infrastructure will also be finalised, in spite of all other things, and probably the worries that people have.

Minister, we have gone to the FNB Stadium; the nation is at work. We have gone to KwaZulu-Natal to see the new stadium; the nation is at work. We have gone to Mangaung; people are working there. We have gone to Nelson Mandela Stadium in Port Elizabeth; people are working there.

One important feature that we have observed in the Nelson Mandela Stadium and also in the KwaZulu-Natal Stadium is that, as we speak, people are serious. They are working 16 hours per day trying to finish this work. By June 2007, they are prepared in their plan to increase the work that is going to be done. Therefore, they will be working 24 hours per day. I think we need to applaud those people who are committed to their work in dealing with those kinds of things. [Applause.] They are prepared to finish in time.

The new upgrading of stadiums will really be a permanent feature for this country and there will never be a legacy programme. According to the business cases that were submitted by these hosting cities, it is clear that, after the 2010 Soccer World Cup, those stadiums will remain a commodity or entity that our people will enjoy forever, and they will be owned by the people of this country.

When you stand there, in the Nelson Mandela Metropole you’ll see how the city is working; you’ll see how the network, the upgrading of the roads that converge on the old taxi rank and the work that is going on at the taxi rank in preparation for this kind of work is progressing. Definitely, the network there is a mind-blowing network. We are definitely sure that this country will never be the same in as far as the flow of transport and conducting of business is concerned, because all those that are entailed in the plan of making this country efficient in the delivery of service and also in conducting business.

We are urging the municipalities to have fiscal discipline in as far as the funding of sport is concerned. Why do I say this, Minister? I can just give you a brief outlook. From 2003 to 2005, when the Department of Sports and Recreation had a programme called “The Building for Sports Programme”, it built 189 basic facilities. With the advent of the municipal infrastructure grant, it has had unintended consequences.

From 2005 to 2007, no basic facility has been built. It is a great loss, from 189 down to nothing. It is a great loss. I think the municipal infrastructure grant, as good as it is, has unintended consequences. I think it has to be looked into how it could contribute deliberately to the MIG. There is no problem with the MIG, but the problem lies with the question of prioritising the sports facilities out of that MIG. I think the municipalities need to be sensitive on the issue of sports facilities.

Municipalities do not prioritise the maintenance of the stadiums and all that is related to those stadiums. I can tell you a very sad story. In Montshiwa, the stadium was upgraded at a cost of R8 million, but if the Minister were to go there now; because the municipality is very small, it has no financial capacity, and that stadium has collapsed, because the municipal infrastructure grant does not provide for to the maintenance of that facility. We urge municipalities to really look at fiscal discipline in as far as the MIG is concerned and also to look after those stadiums. That is a very important thing that we need to look into.

As far as the legacy programme is concerned, having R312 million for legacy projects in the community will also be wonderful. We were at the Orlando Stadium, which people were saying is dilapidated. Orlando Stadium has become the mecca of Soweto’s people, and this project is long overdue. They applauded and said that they thought the 2010 Soccer World Cup and the commitment of the government in making Orlando Stadium a home for the people of Soweto again is something that is very commendable.

The school sports funding from the Minister, which refocuses on the funding of school sports, is something very important because many times parents say, ”We don’t have money for our children to go to such and such a place.” Therefore, this time, we will not tax our parents heavily. You have created relief for the parents to help their children to go and participate in this freely.

Also, with regard to mass participation, that programme is booming. It is like petrol being poured on the fire, but … [Time expired.] Thank you very much. [Applause.]

Mr M J J STEPHENS: Madam Speaker, hon Minister, hon members, this Budget presents us with a Minister at the end of his tether. His increasing ability to collect revenue has finally caught up with his government’s ability to spend it. Some countries have budget surpluses, some aspire to have them, but I fear, this Minister has had a surplus thrust upon him.

Never has a balanced budget been advanced as a policy target, much less than a surplus. The Minister’s conversion to the balanced budget lobby was rather sudden. Hence, one finds the rationalisation that debt is a tax on future generations rather disingenuous. He now finds himself in the philosophical space occupied by far right American organisations, such as the Cato Foundation. Developing countries without socio-economic backlogs and challenges certainly cannot afford budget surpluses.

But the Minister clearly makes a virtue out of necessity. Debt is a tax on future generations, but better a tax than a pox, an insufficiently developed infrastructure and a legacy of unrelenting poverty. Future generations will gain from present capital programmes at today’s prices; why should they not assist in paying for them?

The Minister faces a dilemma. He cannot increase spending because the public sector lacks capacity to spend fruitfully what they already have. He will not lower taxes further for fear of soon having to raise them again. So, he’s stuck with a surplus that might get worse but he prays that it will disappear in a year or two.

Given this dilemma, dramatic steps to improve the civil service are expected, but not proposed. Take a leaf out of the exemplary French experience. France has a national network of 35 French civil service training colleges. We have not a single one.

Without a competent, fully staffed civil service, excellence in service delivery is impossible. I mention only two critical areas: Firstly, provinces cannot transform hospitals efficiently. The government’s only policy is to throw more money at them, yet chaos increases while hospital budgets are actually cut. Secondly, our commuter transport system needs urgent development. Taxi recapitalisation might give us more roadworthy taxis but not more taxi-worthy roads. [Laughter.] Off-road rapid transit commuter networks throughout South African urban areas are required.

When will we be able to attend to these and other chronic, yet urgent, problems? We cannot start before we fix our civil service and we cannot win before we innovate in socio-economic policy. I thank you. [Applause.]

Ms J L FUBBS: Madam Speaker, members of this House, comrades, colleagues, I must say that I was a little nervous until I heard the wisecracking by the hon Stephens. Thank you, that really relaxed, me. I enjoyed your jokes.

It’s quite clear that South Africa is facing a huge struggle in the scarcity of skills. When I was told that this is going to be my topic to speak on, it did worry me because it is such an incredible challenge. I then decided to acquaint myself fully with what was happening in our Budget. But also, whether they have problems like these overseas or is this indeed unique to South Africa? I was actually quite taken aback when I read the words of one writer: “There is a call to arms. We are in the midst of a battle as we compete on a new fresh warfront for skills.”

Now, I must say that I don’t believe that because one recognises that there is a global crisis, that this should in any way, reduce our own response. And indeed it has not. If anything, I think we’ve shown them a thing or two and we’ve also benefited their own services with our skills.

Madam Speaker, the department’s projected expenditure on infrastructure and services as reflected in the Estimate of National Expenditure and the Budget Review, underpin the scarcity of skills such as engineers, scientists, technicians, artisans, managers and especially, project managers, financial skills and IT competencies.

Yes, we do need skills development and corresponding programmes. And yes, indeed, we need corresponding allocations. I am happy to say to those who have already studied the Estimates of Expenditure, there have been significant allocations in a number of departments in this regard.

Given the time that I have, I would highlight but a few of these to illustrate my point. One of the things is the joint initiative on skills, which will conduct job-matching guidance and placement, which will help address the current irony around unemployed graduates in our country and other skilled workers through to tracking down these individuals with scarce skills. This, I believe, would go a long way to addressing the urgent situation in our communities, which all of us as MPs find in our constituencies. There are so many skilled technicians, qualified workers who perhaps - perhaps I shouldn’t use the word “qualified” - they are skilled workers with competencies but they don’t necessarily have a recognised qualification.

This is just one major impediment, which must be urgently addressed. And that is where skilled and or a professional person’s qualifications do not satisfy some professional institution or someone who has the competency, who simply requires this to be tested in order to be given the paper recognition for it. We also need to consider and revise exactly what the various qualification criteria guidelines are that are currently being used as gates, quite often, to professional recognition to undertake a job.

We may think that it is a joke. We may think this is a new form of affirmative action. I certainly don’t think I was affirmed anyway. But I can remember that I would no sooner get an undergraduate degree. And if I didn’t get my experience fast enough, I would learn that there was yet another little qualification I would have to take because somehow I’d missed one year and now I was no longer competent to be a clinical physiologist. Oh dear, hell! I wonder what I’ve done to all those other people I’ve been working with.

This is not a new thing, the problem is we in the past – believe you me Afrikaners know this only too well - we followed the British system. We said we would belong to the royal blah, blah, blah institution.

I know that you are going to say I should be talking about lowering skills. I don’t need a bloody doctor on my table in the surgery that is not qualified. Let’s not get ridiculous! Let’s not get ridiculous!

Mr M J ELLIS: On a point of order, Madam Speaker: The hon member uses some interesting phrases and words, but I do think that she overstepped the markers slightly there by referring to a certain word that begins with a “b” and ends with a “y”. [Laughter.]

Ms J L FUBBS: Well, I thought in using it there would be semantic licence because a theatre in a hospital is full of blood. [Laughter.]

The SPEAKER: A bit of colour here and there, especially when the hon member is not really throwing it at any hon member’s face, is not, out of order.

Mr M J ELLIS: Is it not out of order?

The SPEAKER: She is not out of order.

Mr M J ELLIS: Well, that’s marvellous news. We look forward to using it ourselves. Thank you very much.

Ms J L FUBBS: There’s a lot of poetic licence in my speeches, thank you.

Well, let’s just get back to the point. The point I’m making is that we should not take anything to a ridiculous edge. And that’s not the case at all. We do need both vertical and horizontal strategies, as indeed do the Jipsa employees. We need to fast-track people’s skills within the country. We need to identify skills that are outside the country and bring them in. Some of them belong to our own South Africans, and we are busy doing that.

We also need to look within our own educational system - I know that we are doing that – and to develop a solid foundation for the future so that we breed a new generation of people whose development and skills match the nature and the requirements of the developmental state we are working towards achieving.

The first year of a three-year Medium-Term Expenditure Framework is, I believe, making a serious attempt to do just that with some departments showing more evidence than others.

Just to quickly note a few of these, what we have currently is the sum of 50 000 artisans - we recognise that – that have to be trained over the next few years to meet the demands of our growing economy. And this budget identifies a artisan development programmes aligned to the National Skills Development Strategy, which is being conducted by the Department of Labour. Again, more than 116 learners have been registered through the Sector Education Training Authorities Systems. Complementary to that, the Further Education Training Programme is a programme to train the trainers in the national development of trade, employment and labour assessment. And that is allocated R47 million to upgrade facilities and equipment. A further R681 million has been proposed for bursaries and curriculum development.

And the bursaries, incidentally, will target disadvantaged people so that they too can benefit from FET colleges. But we should not divorce this from previous allocations. In the previous budget, R2 billion, I think, was for the recapitalisation of FET.

Scarce skills in the social sector have not been forgotten. They also receive additional funding. Indeed, it would target the training of social workers and educators.

An additional R700 million will go to prospective educators over this Medium-Term Expenditure Framework, MTEF. Some 13 000 students are expected to benefit from this new bursary scheme.

This ANC government recognises that education is indeed the nurturing process to cut the skills shortage and it thus receives R6 billion, as a pay progression for teachers. It is unfortunate that I don’t have the time to go into those bursaries that target maths, science and other areas of specialisation. An amount of R8 billion goes to education and support staff, R5,3 billion to the health sector for increased remuneration of existing staff but also to hire more staff. To ensure that we avoid the donga of dependency, National Treasury has earmarked increasing funds related to bursaries in this field.

The military skills development programme is one that has received international acclaim. Really, what a far cry it is from what we were doing in field 20 years back.

Skills begin with reading skills - and that gets R1 billion. Labour has sharpened its skills strategy and is focusing on engineering, construction, artisan development and infrastructure.

The World Cup by now has been spoken of. Perhaps I haven’t heard sufficiently myself about farmers and chemical workers. They will also benefit through the biofuels industry.

One thing I must raise in my last minute is my concern about the SITAS and the mismanagement of funds. In the previous years they were underspending, now they’ve gone on a spending spree. I don’t know what they are spending it on. They are spending it so fast. They can’t even figure out what investments to go to. We don’t need risky investments and a focus from people who don’t know what they are doing and risky things such as Fidentia.

In fact, what’s worrying me is that they have interpreted their autonomy as a licence to abuse their mandate and their commitment has become liquefied in the process rather than solidified as a clear commitment to the mandate.

The ANC supports this Budget, as indeed I do, and I believe that we are on the right path to addressing the scarce skills challenge in our country. [Applause.]

Mr R B BHOOLA: Madam Speaker, as a democracy, the nation eagerly awaits this time of the year when the Budget and the appropriations indicate the government’s reaffirmed commitment to delivering and transforming South Africa into an aspiring global entity with an affluent citizenry that works together at advancing its aims and intentions. The Appropriation Bill gives a clear breakdown of the government’s division of funds to the various departments of the government to enable delivery of functions.

This year we have an increase of 11,04% in the allocation to the national Budget. The MF takes this opportunity to once again, applaud our hon Minister of Finance, Mr Trevor Manuel, for a terrific job in managing state affairs. Over the past two terms of this democracy that this portfolio has been entrusted to you, hon Minister, we have enjoyed great progress, and overwhelming development as a nation.

Budget allocations award us insight into the government’s commitments for the year ahead. It appears that, in line with the state of the nation address of 2007 by our hon President and the Budget Speech of 2007, there is a substantial increase in the budget for Sport and Recreation, Land Affairs, Labour, Government Communication and Information Services, and Foreign Affairs.

With the 2010 World Cup just three years away, we accredit the 69,6% to Sport and Recreation to the government’s commitment to infrastructure development, job creation, and preparing the nation for the 2010 Fifa World Cup.

The Department of Land Affairs remains heavily backlogged with land restitution and redistribution claims. The MF hopes that the 34,31% increase in its budget for this financial term serves to endorse more effective delivery and address the backlog.

With the loopholes in our bureaucracy, we welcome the 26,53% increase to the Government Communication and Information Service with the hope that it shall assist in co-operative governance and more efficient and effective administration.

South Africa has built strong international ties and has entered into a variety of global initiatives to our domestic benefit. With the acknowledgement of this and the honorary seat we now fill on the UN Security Council, we welcome the 21,11% increase to the Department of Foreign Affairs’ budget for this year. Our growth as a fast-progressing Third World country is a threat to the First World countries. We need to cement strong relationships to ensure that we continue to grow, but as a minimal threat.

Alarm is not raised noting the decrease in budget to Public Enterprises since there had been a large increase in the department’s budget in the Adjustments Appropriation Bill of 2006.

Furthermore, since Statistics SA has had much underspending over a number of years, we agree with the decrease of its budget by 5,6% for the financial year 2007-08.

In consideration of the fact that many departments such as Education and Agriculture received the bulk of their funding from provincial government funding, we accept the decrease of the Agriculture budget by 3,8%.

With the determination to eradicate poverty, government enforces a budget that shall award each portfolio funding to facilitate a variety of projects for the transformation of South Africa into a true democracy, free of the shackles of poverty and progressing aggressively to take our rightful place on this continent of Africa and globally.

The creation of jobs will save us from hunger and sickness. It will ensure our children’s right to education, and give our nation a supply of skills that shall enable economic growth, social cohesion and effective advancement.

It is easy for us to point out shortfalls, because of the great need, but we need to ensure equal opportunity by supporting policies that shy away from an elite dominance. We once again call upon government to reassess our policy of affirmative action, and whether we have a reversal of discrimination.

The MF looks forward to effective governance in 2007. We support the Appropriation Bill. Thank you.

Mr S A MSHUDULU: Madam Speaker, hon Ministers, hon members, and the House at large, on behalf of the ANC, let me first support this Budget on the day when the NCOP, as part of this Parliament, visited my constituency in Sedibeng under ``Masijule Ngengxoxo Mzansi’’ [Let us deepen the debate, South Africa.].

In his state of the nation address, the President said:

Fifty years before, as they prepared to convene the Congress of the People, which adopted the Freedom Charter, the patriots of the day had said, ‘Let us speak together, all of us together - African and European, Indian and Coloured … all the people of South Africa … let us speak together of freedom. And of the happiness that can come to men and women if they live in a land that is free.’

He said:

We must today renew our pledge, to speak together of freedom, to act in partnership to realise the happiness for all that should come with liberty, to work together to build a South Africa defined by a common dream, to say, together in action - enough of everything that made our country to contain within it and represent much that is ugly and repulsive in human society!

He said:

We must continue to respond to the perspective we spoke of as the present government began its term of office, fully conscious that ‘none of the great social problems we have to solve is capable of resolution outside the context of the creation of jobs and the alleviation and eradication of poverty’, and therefore that ‘the struggle to eradicate poverty has been and will continue to be a central part of the national effort to build the new South Africa’.

These words were quoted a month ago as we stand here today. This happened at the time when communities in some areas had gone out marching and were showing petitions as a gesture of expressing how they feel. As a democratic country, we therefore call on all South Africans to utilise instruments of dialogue that are at their disposal. Let me quote the President again, when he was in the last opening of the NCOP in KwaZulu-Natal:

… that a central feature of the evolution of the South African government as close as possible to the people, to engage them in process of government and not allow gaps to appear between the governors and the governed.

He further emphasised, according to the oversight report, the importance of entrenching the process of popular participation, and strengthening the process of transformation, which is focused on the objective of ensuring a better life for all. In these words, he was communicating to us a need to, at all times, make sure that the tools of consultation, like the independent development plans, are utilised.

These directives preceded the tabling of the Budget by Minister Trevor Fowler … Trevor Manuel on 22 February 2007. [Interjections.] I worked with him; maybe that is the case. This included the Medium-Term Expenditure Framework. He says that this Budget, through the Division of Revenue Bill of 2007, is a financial instrument that is used to ensure that the policy programmes of the ANC-led government are brought into effect through the provision of the necessary financial resources as this Budget represents the legal division of revenue.

We must also note that he drew our attention to focus on an area where we must awaken to the reality of capacitating municipalities, given the deployment of such resources. The Minister of Finance further asserted that the Budget allocations must reflect the priorities that the government had set. He added that the huge increase in provincial and municipal coffers was in recognition of the critical role that these spheres of government played in the delivery of social and household services.

In addition, he said, municipalities received the bulk of the allocation for stadiums and related infrastructure. The local government equitable shares received a further R5 billion for the delivery of free basic services, which now reach an average of about 80% of household services, which then means that the transfers of local government will grow by 19%.

This then takes us to the total infrastructure transfer of R53 billion over the next three years. This selective shift of resources, we must note, is aimed at a targeted approach to maximise impact.

This is not a numbers game, but a challenge to all implementers and beneficiaries as well as Parliament with all its oversight instruments. Before we get excited by the deployment of such financial resources, let us look back at where we have come from since 1994. We must remember that the ANC-led government, at the attainment of its democratic dispensation, was faced with the challenges that have been mentioned earlier, but amongst these was the need for significant institutional transformation and the introduction of new policies aligned to our new Constitution.

The Government had a task of dealing with the legacy of apartheid, as was mentioned. We were faced also with the systematic dismantling of apartheid social relations, and the creation of a democratic society based on principles of equity, nonracialism and nonsexism. We are still faced with backlogs and other developments that have been inherited from the apartheid regime, as services in the past were not designed to reflect public interest and expectations.

The ANC-led government in its 10-year review, and also in its analysis, utilised the Human Sciences Research Council indexes, which included infrastructure; quality of life; political participation, which I must emphasize that has to do with the trust people have in institutions; economic participation that has to do with quality of work and poverty alleviation policies; safety and security; economic preparedness and social inclusion.

In order for our government to champion the cause of transformation, it introduced - this is very important for you to know - a national planning framework to enhance integration in the areas of strategic policy prioritisation, and improved policy decisions of government’s national spatial development perspective. It also enhanced the facilitation of dialogue between and within spheres about the country’s spatial priorities regarding infrastructure investment and development.

We also have to be aware that for us not to lose focus, we should single out areas of priority in our municipalities. Noting that, unlike provinces, municipalities vary significantly in their revenue capacity like those we have adopted from the TBVC states, rising from 97% in some metros that do have capacity to 3% in the most rural municipalities, the national transfer of municipalities takes account of fiscal capacity. It also complements own revenue, and positions such municipalities to fulfil their developmental role in terms of delivering on provision of free basic services, progressive redressing of backlogs, job creation, and the enhancement of service delivery. Another area, which I think remains a challenge to us is the capacity of our municipalities, in institution and personnel terms. Hence, through project management and financial management, these municipalities will be capacitated to manage such a budget.

I also have to touch - before I pause – on the fact that the Minister for Provincial and Local Government has been also involved, through his department, and through Project Consolidate, which was aimed at evaluating capacity shortcomings, in inculcating the hands-on approach; giving support as required by the Constitution; deploying the technical expertise required, and transferring skills to both institutions and personnel; deepening democracy through monitoring and evaluation of IDPs; enforcing the policy of an integrated approach and co-operative governance; maximising popular community participation, and championing targeted service delivery to the poor and marginalised areas that were in dire need of basic services.

Before I close, it is important that one must also highlight to this House that the role of women in local government has been accommodated, and we urge all …

… oomama ukuba bathabathe inxaxheba ngamaxesha onke kukho i-IDPS ukuze bangathathelwa izigqibo ngootata. Imithetho efana neStructures Act, kunye neSystems Act, yawiselwa ukwenzela ukuba kwiWard Committee, oomama bakwazi ukuthetha ngezinto ezingqamene nabo. Kwakhona, kubalulekile ukuba uluntu luthabathe inxaxheba kwindlela yobomi boomasipala banamhlanje. Laphela elaa xesha lokuba amagosa oomasipala angabi nasizathu sokubeka iinyawo zawo kwezinye zeendawo ezihlelekileyo ezifana namatyotyombe ukuya kunika iinkonzo.

Inkqubo yophuhliso oludibeneyo (integrate an interg development) yenye yeendlela zokuzisa ulawulo lwentando yesininzi nakwiiwadi ezisezantsi. Ndiyabulela. [Ixesha liphelile.] (Translation of isiXhosa paragraphs follows.) [… women to participate at all times when IDP programmes take place, so that men do not make decisions on their behalf. Acts like the Structures and Municipal Systems Acts have been passed, so that women in ward committees should talk freely about issues that affect them directly. Once again, it is important that everybody should participate in the local government programmes. Gone is the time when municipal officials could not visit historically disadvantaged areas and informal settlements with the intention of delivering services to these communities.

The Integrated Development Programme is one of the traditions of bringing democracy to the wards. Thank you. [Time expired.]]

Mr V B NDLOVU: Somlomo neNdlu yakho ehloniphekile … [Madam Speaker and your august House …]

… as a country, we spend the biggest chunk of money on learners in the world. Our education budget takes the biggest slice of the entire budget. But despite all that money allocated we still have shortages of classrooms and schools and thousands of our learners are being taught under the trees. Therefore, quality sometimes suffers and we must desist from doing so.

The IFP insists on more schools and better equipment in our schools. The IFP demands better qualified teachers that are not allowed to strike or disrupt the teaching programmes. Therefore, the labour relations and wage negotiators for teachers should be streamlined to avoid any possibility of having a strike within the period of learning.

While the departments in the cluster of justice, peace and security receive increase allocations every year, their spending is inadequate and the large sum of money is often utilised ineffectively. Therefore, the departments of Justice, Safety and Security and Correctional Service must be better integrated and must share throughout the entire criminal justice process, from the arrest to, trial and incarceration.

The IFP does not accept that children should be incarcerated together with dangerous criminals. Officials are easy to buy as we know from the Mathe case, for example. Court officials must be disciplined and work longer hours instead so that the awaiting-trial prisoners or people should not be in the system for more than six months before their trials come to court.

EMnyangweni Wezokuxhumana, kubonakala sengathi ngaso sonke isikhathi uma sishaya izincingo kuyadula lapha eNingizimu Afrika kunakwamanye amazwe. Ikakhulukazi kudinga kwenziwe umhlahlandlela wokuthi kubhekisiswe izindaba zokuxhumana, ngamafuphi izincingo zokuxoxa, ama-e mail ne-Internet ngoba kuyadula kakhulu ukukwenza lokho lapha eNingizimu Afrika kunakwezinye izindawo. Ngakho-ke uMnyango Wezokuxhumana kufanele uqhamuke nomhlahlandlela ongcono, ozokwazi ukulekela abantu bakithi abasemakhaya, abantu bakithi abasemadolobheni nalaba abahlala ezindaweni eziyizakhiwo ezingahleliwe.

NePosi kufuneka likwazi ukusiza bonke abantu. Makungabi elezicwicwicwi kuphela, okungabantu abakhuluma isiNgisi, abakhuluma o-because no- although, kodwa abantu bakithi emakhaya bebe bengakucoshi lokho kusizakala.

ILUNGU ELIHLONIPHEKILE: Njengawe nje.

Mnu V B NDLOVU: Yebo, njengami nje. Ngakho-ke kufuneka kwehliswe lokhu kubiza kangaka kokuxoxisana ngoba kuzokwenza abantu bangakwazi ukuxhumana ngendlela abafanele baxhumane ngayo.

Siyathokoza mhlonishwa Ngqongqoshe Wezezimali ukuthi ukhiphe imali enkulu kangaka ukulekelela imidlalo yezebhola eza lapha eNingizimu Afrika ngo-

1. Kuyasithokozisa kakhulu lokho. Siyabona-ke kodwa ukuthi engathi uvele wabeka iqatha phezu kogqoko ngoba sesibona izinkampani ezinkulu zilwa nezinkampani ezincane zibanga lelo qatha, esingazi ngempela ukuthi kuzogcina kwenzeke njani ngoba sibona nokukhula kokwakhiwa kwezinkundla kuthuthuka kakhulu manje, kanti kukhona abantu lapha abangobhodweliyaconsa. Lapho kukhona ngakhona imali bagijima bashayise bonke abanye abantu ngoba bengafuni ukuthi izinkampani ezincane zicoshe ukusebenza.

Sibona kufanele ukuthi uMnyango Wezasekhaya noMnyango ophathelene nezohulumeni basekhaya yelekelelane noMnyango Wezemidlalo ukwenza isiqiniseko sokuthi nezimboni ezincane ziyakucosha ukuthi zikwazi ukuthola izinkontileka zokwakha lezi zinkundla ukuze konke okwavunyelwana ngakho kwenzeke kusenesikhathi, futhi nezimboni ezincane zikwazi ukucosha umsebenzi, kungadli izimboni ezinkulu kuphela.

Ukwakhiwa kwezinkundla kufanele kwenze isiqiniseko sokuthi kuyalekelela ekuqashweni kwabantu bakithi abangasebenzi, kungatholi abantu abambalwa kuphela. Nezinkampani eziqhamuka ngaphandle kufuneka ziqashe abantu bakithi. Zingabuletha ubuchwepheshe babantu abathile kodwa maziqashe abantu bakithi lapha abazosebenza ngaphakathi ukuze abantu bakithi bakwazi ukucosha imisebenzi.

Thina siyakholelwa ukuthi maqondana nalezi zinkundla zonke ezikade zishiwo umhlonishwa uKhompela, onguSihlalo Wekomiti Lezemidlalo Nokungcebeleka, uma bengase baqashwe bonke abantu bakithi, imvamisa kulezo zindawo lapho zizokwakhiwa khona, kuyokwazeka ukuthi bacoshe imisebenzi ukuze ikati l ingalali eziko.

Siyakuthokozela-ke mhlonishwa ukuthi, akuthi konke kwenzeka lokhu kube kukhona ingqalasizinda yokuqapha ukuthi izimali ezinikwe laba bantu zokuthi bakhe izinkundla zokudlala aziweli phansi, okungadala ukuthi kuze kuphele isikhathi zingakhiwe izinkundla zo kudlala. Ngeke kwalunga ukuthi siphuthelwe ukubukela umdlalo esiwuthandayo, siyeke ukuyohlala emakhaya lapho sibuka kumabonakude imidlalo esiwuthandayo.

Asincome-ke ukuthi iSabiwomali sakho sibe sihle. Siyathemba ukuthi thina esihlala emakhaya sizokwazi ukucosha ukusizakala kuso. Ngiyathokoza. (Translation of isiZulu paragraphs follows.)

[The Department of Communications needs to look at the following. It seems like it is still very expensive to make a phone call here in South Africa as compared to other countries. We need to have the policy to look at issues of communication, ie things like telephones, e-mails and Internet because it is costly to use them in South Africa, when compared to other countries. Therefore, the department must come up with a better guideline, which will help our people in rural areas, urban areas and those who live in informal settlements.

The SA Post Office must help all people. It should not be for a selected few of the elite who speak English, using big English words like “because” and “although”, but it should also cater for our fellow people in the remote rural areas.

An HON MEMBER: Like you, for example.

Mr V B NDLOVU: Yes, like me. Therefore, we need to reduce these exorbitant communication costs because they will make it hard for our people to communicate the way they are supposed to.

We are pleased hon Minister of Finance that you have allocated such a huge budget to support the 2010 Fifa World Cup that is coming to South Africa. That makes us joyful. We are, however, aware that you have put something interesting on the table because the big companies are now scrabbling with small companies for what you have put on the table. We really do not know what will finally happen because the reconstruction of stadia is developing fast now and there are people who are opportunists. These opportunists would run to wherever there is money, in the process pushing away whoever stands in their way just because they don’t want small companies to get jobs.

We believe that the Department of Home Affairs and the Department of Provincial and Local Government should co-operate with the Department of Sport and Recreation to see to it that small companies also secure contracts to build stadia so that what we agreed on happens on time, and that small companies, like big companies, should also benefit.

Construction of stadia should make sure that it does help in the employment of our fellow countrymen who are unemployed, not to benefit only a few people. Foreign companies should also employ our people. They can, however, bring in certain professionals and experts but they must also employ our people to work under their supervision so that our people have jobs.

We believe that with regards to all these stadia that were mentioned by hon Khompela, who is the Chairperson of the Portfolio Committee on Sport and Recreation, if they can employ our people, particularly in those areas where construction is taking place, they would have jobs, and they would not go to sleep hungry.

We would be happy, hon Minister, if by the time all this happens, we have a centre to monitor the allocated funds which are given to these people to build stadia, to see that they are not mismanaged, which may jeopardise the chances of completing these stadia well on time. It would not be a good thing to miss a game that we like; but refrain from just watching games that we like on television.

Let us commend your Budget. It was good. We just hope that we who live in the rural areas will get help from it. Thank you.]

Mr V G SMITH: Madam Speaker, comrades, hon members, the Budget allocation is the primary tool available to the government to ensure that service delivery is possible.

Almost 51 years ago there was the adoption of the historic manifesto of the people of South Africa in Kliptown. We, the legitimate democratically elected leaders of the people, have an obligation to implement the Freedom Charter. In that document, we promise that the people shall share in the country’s wealth. We further promise that the land shall be shared amongst those who work it, and we further promise that there shall be work and security.

The access to physical resources, particularly land, housing and community infrastructure is critical to the transformation of the economy so that we can confront the legacy and ultimately be victorious in the struggle against poverty.

Public spending rose by an average of 9,2% a year over the last three years. The consolidated Budget in the year 2003-04 stood at R375 billion. In the year 2004-05, the Budget stood at R410 billion. The consolidated Budget figure in the year 2005-06 stood at R466 billion, and the estimate for the year 2006-07 stands at R529 billion.

The real concern, however, is the expected underspending of approximately 15% of the total Budget allocations for national departments in the current year. This amounts to R42 billion in addition to R5 billion in the previous year.

A simple calculation shows that, for whatever reason, underspending by national departments over the past two years is a staggering R47 billion. This is money that, we believe, with proper planning and management, would have gone a long way in the struggle to improve the quality of life of the citizens of South Africa. Parliament’s oversight and timely intervention in ensuring maximum value for money spent must be improved upon, and indeed it must be strengthened.

At the ANC conference in 2002, the movement noted with respect to financial management in the Public Service that, one, staff do not have sufficient skills; two, fraud, maladministration and corruption is often not detected; three, financial management systems are not adequate to meet the challenges, and four, state assets are not managed prudently.

We then resolved that the government must address the skills gap, and that the government must develop and adopt appropriate financial management systems.

As we speak, many departments have been called upon to account for the unspent funds blamed on lack of skills. Another reason being offered in mitigation of financial misconduct is a lack of financial and information systems.

Those tasked with the responsibility for the implementation of government policy must be made to understand that the consequence of their actions or lack thereof results in a young child still being taught under a tree in some parts of Limpopo. A child in the Eastern Cape, because of poor financial management and corruption within the administration, must spend its day at school hungry because the school is unable to provide a slice of bread or a glass of milk. The mother in rural KwaZulu-Natal still battles to feed her family due to the nonexistence of a reliable system of getting child maintenance from an absent or distant husband - 13 years into our democracy.

Section 55 of the Constitution demands that the National Assembly provide mechanisms that ensure that the executive arm of government is accountable to it, and also to exercise oversight over the national executive authority.

In addition to the constitutional requirements, the ANC at its 51st conference noted that, firstly, misconduct is widespread within the Public Service; and secondly, a culture is evident where individuals lack accountability and responsibility for their performance of their jobs. At that conference, we resolved that such acts must be punished urgently and appropriately.

The question that must be answered is: Does the National Assembly have the mechanism demanded by the Constitution, and if so, does that mechanism work effectively? We want to argue that the current practice of portfolio committees focusing on policy and the Standing Committee on Public Accounts focusing on financial management only is not yielding the desired results. We argue this point because Scopa interacts with departments as late as 18 months after the year-end, and in our view, accountability delayed is not very useful. We suggest that because of the more regular interaction between departments and portfolio committees, it makes sense that all committees must engage departments on financial management as well as the findings of the Auditor-General so that oversight is exercised, and corrective action – where necessary – is effected immediately it is detected.

To continue the practice of committees working as silos and not in an integrated fashion, examining financial management and policy simultaneously, can only result in the child in Limpopo continuing to be taught under a tree, or the hardships that South Africans experience because of a lack of services continuing.

The real tragedy is that this hardship experienced by the masses of our people is not because of a lack of resources, but rather because of a lack of accountability, a lack of a culture of Batho Pele, and a lack of effective and efficient oversight by Parliament and other constitutional institutions established to entrench the Bill of Rights as well as to protect the benefits derived from our hard-fought democracy.

The strategy of departments spending aimlessly in March so that they are not guilty of having unspent funds must be discouraged with all the vigour that we can muster. Money is used for meaningless procurement of goods and services at the expense of real investments that could contribute in fighting poverty. [Interjections.] In some instances, monies that must be returned to the National Revenue Fund lie in uncleared suspense accounts instead of being deposited into the National Revenue Fund and then rerouted by Treasury to more needy causes.

All of us must accept that, by its very nature, oversight means that there will be inherent tensions between the legislature and the executive. All of us, the executive and the legislature – at least the ANC component thereof – must understand that, together, we are co-implementers of the ideals of the Freedom Charter, and must not view each other as watchdogs or opponents.

``A better life for all’’ is not just a slogan. It is an achievable reality. Parliament, as the primary oversight arm of the state, dares not fail in exercising its constitutional mandate because of fear or because of favour.

HON MEMBERS: Hear, hear!

Mr V G SMITH: Oversight is not a Sunday morning picnic in the park or a popularity contest. Oversight is about disturbing comfort zones. We have no doubt that if our role of oversight is exercised diligently, this will have a direct and meaningful impact on our meeting the obligations and responsibilities entrusted to our generation by the Freedom Charter.

The struggle to eradicate poverty and its legacy is the responsibility of all of us. This struggle is in recognition and in honour of the sacrifices of the Chris Hanis, the Joe Slovos, the Solomon Mahlangus, the Steve Bikos, the Robert Sobukwes, the Lillian Ngoyis and many other heroes and heroines who went before us. Eventually we must succeed in pushing back the frontier of poverty for the sake of our grandchildren and their grandchildren.

Daar is van hulle wat tussen ons is wat wil sê die stryd van die mense van Suid-Afrika het geëindig op 27 April 1994. Feit is, die stryd om politieke mag het miskien geëindig, maar dit was die begin van die stryd om die lewe van alle Suid-Afrikaners, wit en swart, te verbeter. (Translation of the Afrikaans paragraph follows.)

[There are some among us who would say that the struggle of the people of South Africa ended on 27 April 1994. The fact is, the struggle for political power might have ended, but it was also the beginning of the struggle to improve the lives of all South Africans, white and black.]

We want to emphasise that the struggle, as some amongst us conveniently believe, did not end on 27 April 1994. Comrade Trevor, like you, we believe that the Budget must contribute towards ensuring that human life has equal worth. Aluta continua. [The struggle continues.] [Applause.]

Mr S SIMMONS: Chair, it is evident that the primary functions of the Department of Finance are well-comprehended by its leadership, and are complemented by sound utilisation of all the department’s human resources, resulting in the delivery of sound annual national budgets. However, given our unique national challenges, it is important that the department guards against blind allocations.

Departmental financial needs should, rightly so, be a major consideration for all allocated amounts. However, given the clear lack of financial and other operational management skills, a department’s budget allocation should also be determined by its ability to utilise its budget optimally and for its intended purpose that is ensuring a better life for all South Africans.

So byvoorbeeld blyk die Departemente van Gesondheid, Onderwys, Maatskaplike Ontwikkeling, Binnelandse Sake asook die SA Polisiediens nie oor die vermoë te beskik om verbeterde dienste te lewer ooreenkomstig hulle groter finansiële toekenning nie. Hierdie feit word weerspieël in die posisie wat Suid-Afrika op die Menslike Armoede-indeks beklee, wat sowat 50% swakker is as vroeër; ’n duidelike mislukking in die doelwit om ’n beter lewe vir almal te skep. So byvoorbeeld is dit nie voldoende dat fondse beskikbaar gestel word om net meer polisiebeamptes aan te stel nie, maar moet daar ook gekyk word na hoe fondse aangewend word om die effektiwiteitsvlakke van die bestaande lede te verbeter. (Translation of Afrikaans paragraph follows.)

[It appears, for example, that the Departments of Health, Education, Social Development, Home Affairs and the SA Police Service do not possess the capacity to deliver improved services in accordance with their greater financial allocation. This fact is reflected by South Africa’s position on the Human Poverty Index, which is approximately 50% weaker than before; a clear failure in the aim to create a better life for all. Therefore, for example, it does not suffice to make funds available to only appoint more police officers, but the focus should also be on how the funds are utilised to improve the levels of efficiency of the existing members.]

The UPSA believes that this problem would be alleviated with the implementation of a mentorship or guardianship programme for the financial management of the problem departments. These departments cannot be allowed to continue in the manner they do. This would broadly mean that Treasury has regular liaison sessions with problem departments, which would require that their performance be measured along the same lines as Project Consolidate.

In conclusion, if Treasury is to achieve its objective of accountable, economic, efficient, equitable and sustainable management of South Africa’s public finances, with emphasis on sustainable management, then the Department of Finance, together with the Office of the Auditor-General, has to make sure that measures are in place to ensure that individual departments meet their fiscal responsibilities. The UPSA supports the Bill. I thank you.

Prof S M MAYATULA: Chairperson, hon Ministers and Deputy Ministers, hon members, on 6 March 2007 the portfolio committee had a presentation from Unisa. They reminded us of the Millennium Development Goals, which, among other things, are: One, to eradicate extreme poverty and hunger; two, achieve universal primary education; three, to promote gender equality and empower women; four, reduce child mortality rate and, five, combat HIV/Aids.

Regarding the status of South Africa and achieving these goals, Unisa has made the following observations: One, that the gross enrolment rate at primary schools increase from 99% in 2000 to 103% in 2006; two, there is a new curriculum focus on outcomes-based learning; three, gender parity has been attained. However, there is a challenge with high drop-out rates for boys at secondary schools and higher ones for girls at tertiary level; four, there’s a concern at the low uptake for children aged 0 to 5 years in the Early Childhood Development phase; five, 5,9% of 15 to 19-year-olds are living with HIV/Aids; six, violence, including gender-based violence, is a major concern in our schools.

Fortunately, Unicef conceded that these concerns were raised by the President in the state of the nation address, when he said, among other things, that South Africa is making progress in achieving the Millennium Development Goals.

There is recognition of the importance of Early Childhood Development; investing through the Expanded Public Works Programme; the resolution to increase nonfee-paying schools in order to expand the opportunity for all children; and the situation of violence against women and children is unacceptable.

We have to intensify the campaign against HIV and Aids, and implement a comprehensive package in addressing this pandemic. In order to address some of these challenges, the ANC’s NEC/Lekgotla commands all of us to ensure that school governing bodies are empowered to play a leading role in the provision of Early Childhood Development in their respective local communities, particularly in rural and poor farming areas.

We are also called upon to ensure that Adult Basic Education and Training is accessed more and expanded by utilising empty school buildings, in the process ensuring that poor families move steadily out of the shackles of poverty. We are called upon to ensure that the school nutrition programme is expanded to include schoolchildren of all grades who are experiencing extreme poverty. We are called upon to ensure that proper school infrastructure and resources, such as laboratories and libraries, are in place, including the appropriate catering for special needs of disabled learners. We are called upon to ensure that career guidance and computer literacy subjects are compulsory in our schools.

Does the current budget come anywhere close to addressing these issues? Is the ANC-led government putting its money where its mouth is? The facts do speak for themselves. The Minister of Finance, in his Budget Speech, made the following announcements.

Imali engange-8,1 yezigidi eziliwaka leerandi iza kubekelwa ecaleni ukuze isetyenziselwe ukuba kuqeshwe iititshala, kunyuswe imivuzo yeetitshala. Iititshala ezilalini ziza kuba nabancedisi. Liphelile ixesha lokuba iinqununu zibe kwangomabhalane.

UMphathiswa ukwabekele bucala imali engangama-700 ezigidi zeerandi eza kuncedisa bonke abantwana abafuna ukufundela ubutitshala. Akuzi kuthi andikwazi ukufundela ubutitshala kuba ndingenamali; ikhona imali ebekwe ecaleni ukulungiselela iimeko ezinjalo.

UMphathiswa ukwabekele bucala imali engange-850 yezigidi zeerandi yokufundisa abantu abadala. Sesinawo nomthetho othi kuloo ndawo kukho abazali kuyo, kufanele ukuba kubunjwe la maziko. Ngoko ke, maqabane, masiye kwenza ezi zinto kwiindawo esizabelweyo njengabameli boluntu. UMphathiswa uphinde wabeka ama-600 ezigidi zeerandi ukuze abantwana bethu bakwazi ukuya kwiikholeji zokufundela imisebenzi. Ngelishwa, ezi kholeji ziyinto entsha nalapha kuthi. Singabanye zange khe singene ngaphakathi, kwaye asazi nento eyenzekayo kuzo.

Ndenza isicelo sokuba kwezo ndawo sizabelweyo njengabameli boluntu, sikhe siye kubona ezi kholeji zokufundela imisebenzi zintsha nezilungiswe ngokutsha. Kufanele ukuba sikhuthaze abantwana bethu ukuba bangafundeli ukuba baqeshwe, koko bafundele ukuzenzela umsebenzi. Iyenzeka loo nto kwiikholeji zokufundela umsebenzi. (Translation of isiXhosa paragraphs follows.)

[About R8,1 million will be set aside to hire additional teachers and to improve remuneration levels of teachers. Teachers in rural areas will get assistance. The time when principals used to work as secretaries is over.

The Minister has also set aside R700 million that will assist all young people who want to train as teachers. You will not say, “I cannot train as a teacher because I do not have money.”

The amount of R850 million has been set aside by the Minister for an adult basic education programme. We already have legislation, which provides that these institutions should be established in places where there are parents. However, comrades, let us work in partnership with our constituencies. The Minister has also set aside R600 million rand so that our children can get access to these further education and training colleges. Unfortunately, these colleges are new to us. Some of us did not attend them; we are not well informed about what is happening there.

I appeal to our constituencies; we need to visit these new Further Education and Training Colleges that have been refurbished. We need to encourage our children that they must not study to become employed, but to be self-employed. This is possible in these Further Education and Training Colleges.]

The Minister has introduced a new conditional grant, the community library services grant, to consolidate library services at provincial level. This programme provides R984 million to transform library infrastructure. This will transform our youth into a reading nation. This resource will revolutionise our communities and enhance a better understanding of the world we live in.

Xa kusithiwa abantu abamnyama abafundi, ngelinye ixesha siye sizibuze ukuba inokuba yenziwa yintoni loo nto. Isiqhelo siyayoyisa ingqondo. Ukuba uthe ngexa usesesikolweni awaqhela ukumana ufunda, kuba nzima ukuqala ebudaleni. Le projekthi iza kujika loo nto, ukuze abantwana bethu babe neencwadi ezikolweni zabo, bafunde ukufunda. (Translation of isiXhosa paragraph follows.)

[There is a saying that black people are lazy to study, and we sometimes ask ourselves what that means. Usuality conquers the brain. If it happened that when you were at school, you did not acquaint yourself with studying, it is difficult to start when you are old. This project will transform that, so that our children can have their own books and study.]

In his Budget Speech, the Minister of Finance had this to say, and I quote:

Our teachers are the frontline of our education system. It is in their hands that we place our 11 million children each day. In most cases our teachers do a sterling job under difficult conditions. We pay tribute to them and we ask no more than that they continue to serve with dedication and integrity.

On 1 March 2007, I was privileged to attend the most improved school awards ceremony, which was hosted by the national Department of Education in Pretoria. I saw with my own eyes, and I met the kind of teachers that our Minister was referring to. They received awards in different categories. One of these was excellence in mathematics.

Kufuneka sazi ukuba kwiititshala zethu zikhona ezenza umsebenzi ekumele ukuba ziyawenza. [We must understand that among our teachers there are still those who perform their duties as required.]

Ten schools were honoured for achieving high passes in mathematics, specifically at higher grade level. Another award was for outstanding achievement in home language and English as second language.

Xa sisithi iilwimi zethu ezisesikweni zili-11, sikutsho oko sinyanisile. Kungoko bethiwe jize ngamawonga abantwana abaphumelele yo Kwiilwimi zabo. [When we say we have 11 official languages, we mean that. That is why we gave awards to learners who have made an outstanding achievement in their home languages.]

The third award was for consistent improvement. Nine schools, mainly from the disadvantaged communities, were honoured in this category for the number of endorsements they achieved, with emphasis on quality education.

Into eyonwabisayo ngeli candela kukuba sithetha ngezikolo ezingenazilabhoratri, amathala eencwadi kwanezikolo kwezinye zazo ekungekho nezindlu zangasese ezi, kodwa ezikwazileyo ukuthi zivelise abantwana abaziincutshe kwizibalo. Loo nto ke ithetha ukuba simele ukuba singamane sisithi ingxaki yethu yile. Ingxaki yezikolo zethu lulawulo ezikolweni. (Translation of isiXhosa paragraph follows.)

[What is consoling about this category is that we are talking about schools, some of which do not have laboratories or libraries, while other schools have no toilets, but which have managed to produce experts in mathematics. That means, therefore, that we should not always say that this is our problem. The problem of our schools is management at schools.]

One award was referred to as “the 100 club”.

Kweli candelo bekuwongwa izikolo ezithe zakwazi ukuba isikolo ngasinye sibe nabantwana abangaphezu kwekhulu abaphumelele izibalo ngeNqanaba eliPhezulu, okanye i-Higher Grade. Naleyo yinto eyenzekayo kwizikolo zethu. (Translation of isiXhosa paragraph follows.)

[In this category schools that have managed to have more than 100 learners who passed mathematics on the higher grade were honoured. That also obtains in our schools.]

The bond that binds these schools together is the professionalism of their teachers, the commitment to their jobs, the sense of duty and the calling to better the lives of their learners. Teaching is a profession. No one needs to be pushed and no one needs to be supervised. It needs that sense of responsibility, knowing that you are responsible for changing the lives of our people.

These are the kinds of schools that I wish everybody to take note of so that they can emulate their success. I thank you.

Mr L M GREEN: Chairperson, hon Ministers and members, I do want to say that I liked the theme of Mr Manuel’s speech when he presented the Budget Speech, especially on the issue of human life that has equal worth. I think as a pastor I can construct a sermon on that called: The importance of equality as far as human life is concerned.

However, there are many people in South Africa who do not actually believe what the Minister has said in terms of that theme, namely that human life has any value whatsoever. That is why there are, unfortunately, still between 18 000 and 20 000 murders in South Africa every year. Those who murder, rape and loot from ordinary citizens with impunity every day must, I think, hear this message very clearly, that not only does human life have equal worth or value, but that we must be able to stay alive in order to enjoy a life of equal value.

Prof Koos Malan of Public Law at the University of Pretoria presents a very persuasive argument in an article in Business Day of 7 March 2007 in an article entitled, “In the absence of state protection”, when a government fails to protect the public against violent crime.

We all have the inalienable rights, and I quote him, “to life and physical integrity.” Each one of us is also entitled to do personally what is necessary to defend ourselves against attacks that endanger our physical integrity. This right - the right to private defence - is also inalienable and universal.

We act in private defence whenever we defend ourselves against an unlawful attack, but also when we help somebody else in fending off an unlawful attack.

The point is that whenever a pressing emergency arises, when life and limb are under threat, everyone is naturally entitled to take the law into his or her own hands individually, corporately or as a community. And when that happens, of course, we have a situation where more and more people are defending themselves and relying on the right to self-defence, but this right must, in a normal society, be the exception and not the rule. If it becomes a rule, however, the very integrity of government will be at stake.

The Minister, I think, successfully attempted to deal with this issue in his Budget Speech when he spoke of protection services and our criminal justice system. We applaud the Minister for the Budget allocation and the significant increases in resources – the huge amount of money. The hon Minister has done his fair share. I hope the police and the courts will do theirs and we will have fewer deaths in our society. I thank you.

Mr G D SCHNEEMAN: Chairperson, comrade Ministers, comrades and hon members, in its 2004 election manifesto, the ANC committed to invest more than R100 billion in improving roads, rail and air transport, as well as telecommunications and energy. The ANC also committed to build more subsidised housing, improve health infrastructure, ensure that all children have decent classrooms, speed up programmes to provide water, sanitation and electricity.

Two years later, in its 2006 local government election manifesto, the ANC committed to invest more than R400 billion in infrastructure to create jobs and fight poverty, build roads, rail networks, dams electricity-generating plants and communications infrastructure. The ANC also committed to providing all households with access to clean running water and decent sanitation by 2010, and to providing electricity to every household by 2012.

In his address to the first Joint Sitting of the Third Democratic Parliament on 21 May 2004, President Thabo Mbeki announced the following: That all households would have easy access to clean water within the next five years. Within the next eight years, working together with our state enterprise Eskom, we will ensure that each household has access to electricity and that there should be no learner or student learning under a tree.

The ANC statement of 8 January this year stated that:

Clearly, the guiding principle of our road map must continue to move forward decisively to eradicate poverty and all other elements of the legacy of colonialism and apartheid.

The ANC National Executive Committee declared 2007 as the year to intensify the struggle against poverty as we advance in unity towards 2012 – Phambili! [Forward ever!]

The Budget presented by the Minister of Finance on 21 February this year provides the necessary resources to deliver the necessary infrastructure which is required to meet these commitments.

The spending priorities of this Budget have been informed by the need to accelerate economic growth, create employment and reduce poverty.

Significant allocations in this Budget are directed towards the provision of infrastructure, such as new classrooms, water, electricity and sanitation in schools, which will help to improve the quality of education in our schools; the hospital revitalisation programme; the built environment, with emphasis on the building of vibrant and safe communities; the provision of efficient and effective public transport and related infrastructure; the provision of water sanitation and electricity and the eradication of the bucket system by the end of this year; the construction of stadiums for the 2010 Fifa World Cup and other related infrastructure, such as the upgrading of roads, railway stations and precincts that will help make the 2010 Fifa World Cup the best yet staged; and the provision of well equipped libraries in our communities.

It is estimated that the public sector expenditure on infrastructure over the MTEF period to 2009-10 will amount to R415,8 billion. In addition, major investment commitments have been made by Eskom and Transnet which include power generation and the expansion of the freight rail network. These investments will assist in reducing the cost of business by providing certainty of the supply of critical services to industry.

The investment in infrastructure, and not only the maintenance but also the provision of new infrastructure, provides an opportunity to develop a new generation of workforce which is well skilled and equipped to serve the economy in years to come.

It will be important that we ensure that we develop the skills that we will need in the future now, and not wait for the future to arrive before we realise that we do not have the necessary skills or capacity both to utilise available resources and to deliver the required infrastructure.

This is not the task of the government alone. It requires the private sector and all other relevant stakeholders to join the government in both identifying and providing the necessary skill and capacity through the Joint Initiative on Priority Skills Acquisition programme, Jipsa, led by the Deputy President.

The allocations which are provided for the built environment provide an opportunity to continue to implement the Breaking New Ground housing strategy, which seeks to build new residential communities that are vibrant, sustainable, safe, nonracial, and have the necessary infrastructure, such as housing, roads, community halls, sports fields, water, sanitation, electricity, police stations, schools, libraries and clinics.

Whilst we are seeing the roll-out of the pilot projects which focus on informal settlements upgrading and the creation of new human settlements, the speed at which they are being implemented needs to be increased. Even though the concept of these pilot projects was announced in mid 2004 as part of the Breaking New Ground housing strategy, in some provinces these pilot projects are still in the planning phase on paper.

Although the N2 Gateway pilot project here in Cape Town is progressing, we need to see a speeding up of the implementation of this important housing project.

The resources of R32 billion over the next three years provide an opportunity to accelerate the provision of new human settlements and the upgrading of informal settlements. However, this will necessitate better and more streamlined municipal and residential planning, as well as improved interdepartmental co-ordination, planning and budgeting.

Red tape, which often reportedly delays delivery of housing and related infrastructure, needs to be identified and simplified to allow faster implementation. According to Sasha Planting, who wrote in the Financial Mail of 23 February this year -

Money is not the issue. Overcoming the backlog is about getting the execution up to speed and forging good partnerships with all tiers of government, the financial sector and the handful of developers who are able to tackle projects on a big scale.

Whilst the Minister of Finance commended provinces on the progress they have been making in rolling out their infrastructure programmes, it is incumbent on national departments to strengthen their monitoring strategies on provinces, municipalities and agencies to which they make transfers.

Here in Parliament, we need to pay special attention to our oversight over those departments who have received significant infrastructure allocations. These departments need to provide relevant portfolio committees with detailed plans and spending projections linked to timeframes so that we will be able to institute effective monitoring. We are often told that our policies are excellent but that the implementation thereof is what often lets us down. Departments in all spheres of government need to take proactive steps to ensure that effective, efficient and quicker implementation of policies takes place.

The financial resources which are available for infrastructure must be well utilised to ensure that employment opportunities are created, that poverty is eradicated and that economic growth takes place. The 2007 Budget provides resources to improve co-ordination in policy development and planning and the technical capacity to manage expenditure effectively.

Furthermore, the Infrastructure Delivery Improvement Programme, which addresses underspending of provincial capital expenditure budgets, targets poor planning, lack of delivery, management systems and the general lack of skills. It also supports improved effectiveness and efficiency of public sector infrastructure delivery through the use of best practice methods and also builds capacity to enable departments to deliver on their mandates.

This provides a clear indication of the seriousness of the government in ensuring that departments are well equipped and capacitated to deliver on their mandates. This applies not just to government departments but also to those in the private sector who are awarded tenders by government departments. In particular, I want to draw your attention to two news items which appeared in the Star of 12 March relating to a housing development at Everton in Gauteng and the Metro supplement of the Sunday Times of 11 March, which relates to a housing project at Cosmo City in Johannesburg.

In both of these cases, tenders were awarded to specific companies who have in turn reportedly not delivered what they were required to. If these reports are correct, such mismanagement of state funds cannot be tolerated and must be condemned, with the necessary action being taken.

I have raised these two examples because it must be clearly understood that the infrastructure budget allocations are there to improve the lives of all South Africans, particularly those who are most marginalised. This also reaffirms the need for departments to improve their monitoring and the evaluation of funds which they transfer, be it to other spheres of government or to private sector companies who are awarded tenders.

According to the 2007 Budget Review:

Civil construction in particular benefited from increased investment in road and water infrastructure. Employment gains have been robust with labour complement increasing from 348 000 in March 2001 to 548 000 in March 2006. This is a clear indication of the impact of employment creation through investment in infrastructure. These figures will be significantly increased with increased allocation for infrastructure which includes the 2010 World Cup Stadium construction and the Gautrain.

President Mbeki wrote the following in his weekly letter in the ANC Today of 23 February 2007:

The central task of the national democratic revolution is to construct a people-centred society that will, in practice, demonstrate that it values every human being on an equal basis.

Whilst we have done a lot to give meaning to the statement that human life has equal worth, we still have to do more to confront the legacy of poverty, racism and sexism.

In concluding his state of the nation address on 9 February this year, President Mbeki made a call to all of us to roll up our sleeves and get down to work. He made that call to all of us here in Parliament, to provincial legislatures, local government and every person in the employment of the different government departments to get down to the work of delivering quality services to all South Africans. He made a call to improve the living conditions of all South Africans and to create employment and reduce poverty. I thank you. [Applause.] Dr P J RABIE: Madam Chair, hon Ministers and hon members, the 2007-08 Budget must be seen in context. Our economy is fairly buoyant and commodity prices like coal, platinum and gold are doing well. The Gross Domestic Product growth for the period was 4,9% and that is in line with projections.

The rand is one of the emerging currencies, but foreign investment capital is of a short-term nature. The influence of relatively high domestic interest rates and positive dividend payments must be taken into account when we evaluate this Budget.

The DA welcomes the further relaxation of exchange controls announced by the hon Minister in his Budget Speech. However, the DA appeals to the hon Minister to abolish all exchange controls for individuals.

A number of economists have expressed the view that seen in the light of our present positive financial position and the healthy increase in foreign reserves, the removal of exchange controls for individuals will have the net effect that a normalisation with international money markets will take place; the investment horizon for domestic investors will widen and the economy as a whole could benefit.

Ondanks die feit dat valutabeheer op buitelandse beleggers afgeskaf is, bly dit steeds ’n onweerlegbare feit dat individuele binnelandse beleggers steeds aan beperkte valutabeheer onderworpe is, wat steeds buitelandse beleggers tot ’n mate van skeptisisme teenoor langtermynkapitaalbeleggings in Suid-Afrika stem. (Translation of Afrikaans paragraph follows.)

[Despite the fact that exchange controls for foreign investors have been done away with, it is an irrefutable fact that individual local investors are still subject to limited exchange controls, resulting in foreign investors harbouring a degree of scepticism towards long-term capital investments in South Africa.]

The DA welcomes the abolishment of retirement fund tax from 1 March 2007. With respect to the hon Minister, this announcement is long overdue. The significance of it is that this reform will make an important contribution to the adequacy of funds available to about 9 million members of retirement funds in South Africa. The raised income interest exemption for under and over 65 is also welcomed.

Hon Minister, in your Budget Speech you announced an additional R89,5 million to be spent to attain accelerating economic growth, modernising our public services and infrastructure and reducing poverty and inequality. More than merely spending money is, however, required.

It is estimated that about 5,5 million South Africans pay individual income tax, most of them being middle income earners – the remainder pay indirect taxes. It is to be expected that the South African electorate get value for their hard-earned tax payments regarding protection, health, education, etc. If we benchmark ourselves with internationally accepted norms we find that there is ample room for improvement regarding basic services.

Another key characteristic of the South African economy is its severe shortage of skills. The Centre for Development and Enterprise estimates that between 1994 and 2005, 841 000 white skilled South Africans emigrated.

In a number of submissions to the Joint Budget Committee, various departments attributed their lack of capacity to deliver to high personnel vacancy rates. Allow me to quote CDE figures:

Junior to middle and senior management vacant posts in domestic affairs amount to 34%. For Trade and Industry the figure is 41%, for Education 26%, and 45% for senior management in the Department of Transport.

This is reason for grave concern. The only way to solve the problem is to acknowledge that our labour sector is part of an international global network like the communications sector. It is thus in the national interest to relax our rigid labour laws and to encourage skilled immigrants to settle in South Africa.

Vergun my die geleentheid om na die uitspraak van mnr Marius Fransman, lid van die Uitvoerende Komitee van Wes-Kaap, te verwys toe hy gemeld het dat daar ’n moratorium van drie jaar op SEB-vereistes geplaas word. Die DA verskil met hom slegs ten opsigte van die tydelike vergunning rakende verblyfreg. Waarom moet persone hul werksekerheid ontneem word indien hulle ’n positiewe bydrae tot die ekonomie van die land kan lewer? Meriete, en nie velkleur nie, is die … [Tyd verstreke.] (Translation of Afrikaans paragraph follows.)

[Allow me the opportunity to refer to the pronouncement delivered by Mr Marius Fransman, member of the Executive Committee of the Western Cape, when he indicated that a moratorium of three years would be placed on BEE- requirements. The DA differs with him on the issue of temporary residential rights only. Why should those who can make a positive contribution to the economy of this country be deprived of job security? Merit, not skin colour, is the … [Time expired.]]

Mme L L MABE: Modulasetilo, ba re e re o ntima o mphele ngwana. Ngwana yo ke tlileng go bua ka ena yo, ke ngwana wa motlhomphegi. Fa ke bua ka motlhomphegi, ga ke bue ka ngwana wa nnete, ke bua ka motlhomphegi, motho yo o sokotseng, a lebeletse puso e, gore e tla mo thusa, gore bophelo ba gagwe bo ke bo tokafale. (Translation of Setswana paragraph follows.)

[Ms L L MABE: Chairperson, there is a saying that it does not matter if you do not give me something but help my child. The child that I am going to talk about here, is a child of a respected person. By a respected person I am not referring to the real child, but to a poor person who has suffered with the hope that this government will help him improve his life.]

I want to demystify the mist that blurs the vision of some people in the society that the ANC’s deployees in Parliament cannot be critical of their own indifferent trenches in their deployment. This mist ignores the critical fact that the ANC in Parliament has the responsibility to the nation to have vigorous oversight over implementation of ANC policies that are translated into government policies.

ANC MPs must be the vanguards of ensuring that the government’s fiscal resources are efficiently and effectively utilised towards the achievement of a better life for all. Therefore, it is crucial for ANC MPs in committees of Parliament to ensure that the departments spend as planned, but also that spending should be premised on quality and value for money.

This scenario is dictated to by the ANC’s vision, thus we will be failing the nation if we do not hold all those who received funding from the national fiscus to account. The ANC Today of 23 February 2007 states that our nation has deeply entrenched poverty underpinned by high levels of unemployment, largely affecting unskilled black people with low levels of education. Women and the youth are the hardest hit. They are also unemployed due to the legacy of apartheid. But the reduction of dependence on debt service costs has opened fiscal space to spend more on core issues that affect our society and to gear the government for long-term reforms to release funds that would have been utilised for the service burden and more capacity by the SA Revenue Services, commonly known as the taxperson, not the taxman, to collect taxes.

Most of the departments were caught off balance in the spending of their budgets and I deliberately indicate this fact, because most of the departments cannot account properly on how they use the funds, and on how they implement policies of the government to ensure that the ordinary person’s life on the street is improved.

But I also want to indicate that departments in the past did not invest in capacity to spend. Although their capacity to spend has improved in the 2005-06 Budget, the critical issue is: Is spending targeted at balancing the books to bid for increased allocations or is that spending for value for money? By value for money I refer to the projects that would be completed, being quality projects and not the ones that will lead to people complaining about the government’s service delivery.

I also want to quote one of the commentators on the Budget, Jabulani Sikhakhane, when he says, “People must have power.” Power in this sense refers to the form of resources that we have. Without physical resources you do not have power. We have fought for liberation, also but we fought for power to have resources to participate meaningfully and effectively in the economy, and without these resources our hard-fought freedom will not be achieved. As a result, it is incumbent upon the departments to ensure that they spend qualitatively, efficiently and effectively to ensure that our people benefit to the maximum.

Research also confirms that there is ample evidence that access to services for the poor has increased to a great extent over the past 12 years, and that is a reality, because most of the people before 1994 did not have access to basic services. Right now most of the people can have access to those services. This is an achievement on the side of the ANC, but it does not at the same time say that we must be complacent as the ANC that we have achieved the best for every South African citizen. The year 2014 is still yet afar, and we therefore have to roll up our sleeves to ensure that the targets that we have set up as the ANC - not as government – but as the ANC, will be achieved, and it will be possible if we monitor the Budget.

I also want to refer to the Budget Review of 2007 that states that rapid growth in budgeted expenditure does pose a challenge in terms of the capacity to effectively utilise the allocated funds. It is good that the government acknowledges that the capacity to spend is a big challenge. We therefore say that as parliamentarians we must roll up our sleeves and hold them to account. We should have proper oversight in the committees, and that will mean fighting against our own comrades who are in the executive or who are in government. The aim is to alleviate poverty and achieve a better life for all. We are all destined towards the same direction.

The government acknowledges that there have been lags in the implementation of policy and challenges in the co-ordination of delivery, especially for large infrastructure projects, but the pace of investment has continued to grow strongly since 2001, and that is a fact, because in 2001 our spending on servicing debt reduced dramatically, which means that it leads to resources being made available to be used in critical sections which address poverty in our communities.

The ANC welcomes special attention given in the Budget to improve co- ordination in policy development and planning and technical capacity to manage expenditure efficiently.

It is time for those who are tasked with the responsibility of providing service and improving the lives of our people to do some self-introspection and a departmental analysis. I want to state this in Setswana:

A re dira go tlala seatla go netefatsa gore re atlegisa puso go tokafatsa maphelo a batho ba rona, kgotsa re itumelela go phara molato mo pusong re lebala gore puso e re thapetse go tlhomamisa maikano le maikaelelo a yona jaaka badiredipuso? Potso ke gore, a re itumelela go bona dikhuduego le ditshupetso mabapi le ditirelo re sa ipotse bongwe ka bongwe, gore a re nnile le seabe mo go tliseng seemo se se ntseng jalo?

Tseo di diregang kwa porofenseng ya Bokone-Bophirima, re tshwanetse re ipotse jaaka badiredipuso gore a re nnile le seabe gore go fetse go le ka mokgwa oo. A naa madi a re a neilweng gore re tokafetse maphelo a batho a re a dirisitse gore re ba fe ditirelo, kgotsa ga re a dirisa jalo? Re tlogetse bao ba ratang manyofonyofo, gore ba tseye madi ao ba a dirisetse maitlhomo a bona, e seng maitlhomo a ANC, e seng maitlhomo a puso?

Kgotsa re dira ka bomo tse re di dirang, re dira gore re senye puso ya ANC leina? Kana re lebela gore badiredipuso re tshwanetse go tlhomamisa maitlhomo a puso, ka lebaka la gore puso ke yona e e re thapileng, ka jalo, re tshwanetse re lebale gore re ba dipolotiki tse dife re lebelele gore re dire, re diragatse maitlhomo a puso.

Fela fa go direga tsotlhe tse, tse di diregang jaaka kwa Bokone-Bophirima di a direga mo lefatsheng la rona la Aforika Borwa. Fela ditshupetso tse di diragalang tse, ga re dumelane rona re le mokgatlho wa ANC le tshenyo, ka lebaka la gore tshenyo eo, e re busetsa kwa morago go tseo puso e setseng e di dirile. Ke ka moo re dirang boikuelo go setšhaba gore le na le tshwanelo ya go dira ditshupetso, fela ga le na tshwanelo ya go senya, ka gore se le se senyang, ke se se tshwanetseng se le thuse ka moso, se thuse bana ba lona. (Translation of Setswana paragraphs follows.)

[Are we doing enough in ensuring that the government succeeds in improving the lives of our people, or do we enjoy blaming the government and forgetting that as public servants we are employed to ensure that the government achieves its aims and objectives? The question is: Are we happy to see protest actions and unrest as a result of poor service delivery without asking ourselves, individually, whether we have contributed to this situation?

We, as public servants, have to ask ourselves if we have contributed to what is happening in the North West province. Are funds allocated to us being used to improve the lives of our people? Did we use these funds for service delivery or we did not use them as we were supposed to? Did we allow those who are corrupt to use these funds for their own benefit and not that of the ANC or government?

Are we doing this purposefully to tarnish the image of the ANC-led government? It seems that we as public servants tend to forget that we are employed by the government to ensure that it meets its objectives. Therefore, we need to put aside our political affiliation and focus on achieving the government’s objectives. But when all these occur, as is the case in the North West province - a part of our country, South Africa - we, as the ANC, condemn vandalism despite the ongoing protest actions because vandalism regresses what the government has already achieved. That is why we acknowledge the right of the people to protest but we condemn acts of vandalism, because what people destroy is what might help them and their children in future.]

It is important for Parliament to urgently address the problem of member support and to make provision for human resources to improve service to members and committees of Parliament, to enable them carry out their oversight functions with in an increased efficiency. Without proper support, Parliament will not be able to do this function properly.

I therefore, as a member of the Joint Budget Committee, tell Parliament that it is doing us a disfavour. It is doing the nation a disfavour by not properly capacitating committees of Parliament so that members can have information at their fingertips. [Applause.]

Without having information at our fingertips, how will we call the departments and state institutions to account? People will get away with murder, and this is not what the ANC wants.

I also want to say that it is unfortunate that tertiary institutions took a long period to come to the table to transform and bring meaningful change in the new dispensation. This exacerbated the skills deficit that we have now. It solidified the structural unemployment and deficiencies in our economy, because tertiary institutions did not want to come to the table as part of the transformation of this country.

That is unfortunate because it is only now that they are rolling up their sleeves. By this time we ought to have moved a great leap forward in addressing the skills problem and education problems. We are spending a lot on education, but it does not give us the necessary outputs.

Modulasetilo, ke rata gore ke re madi ao a tshwanetseng go katisa batho, ao a fiwang di Seta, tota go re utlwisa botlhoko, e bile di Seta bontsi ba tsona di re tsholotse, gore ba feleletse ba tsaya madi, ba ye go a naya ditlamo tse di tswanang le bo Fidentia.

Tota di Seta di re tsholotse, mme di re tsholotseng, go raya gore se ke neng ke se bua ke re, a dikomiti tsa Palamente di fiwe ditlabakelo tse e leng gore di tla kgona gore di re fe tshedimosetso, re kgone go re re ba bitse batle go ikarabela ka nako, e seng tshenyo e e kanakana e setse e diragetse. (Translation of Setswana paragraphs follows.)

[Chairperson, I am disappointed by the decision to allocate funds to Setas which were intended to train people. Most Setas are established financially and it was not a good decision to have allocated funds to companies like Fidentia. In fact, I would like to suggest that parliamentary committees be provided with resources that will enable them to solicit information to call Setas’ related companies to account in time, before any damage is done.]

If proper integrated planning, implementation and monitoring of the Budget by government departments and institutions can be the priority, with vigorous oversight by Parliament, we can meaningfully reduce poverty and improve the lives of our people.

An increased budget estimate from R534 billion to R650 billion over the Medium-Term Expenditure Framework can go a long way towards tilting the scales of income inequality and poverty in our communities.

I also want to say that I am disappointed that some people from time to time talk about the flight of white skills out of the country. It is so unfortunate that people forget that it is not only whites who are leaving the country. Blacks also do. Why don’t you talk about the skills of blacks who are leaving? Is that racism? [Interjections.] White and black are leaving the country and the government is playing its part to ensure that those skills across the racial divide come back to the country to be utilised. [Applause.] [Interjections.]

I also want to state that we welcome the task team that is in the Department of Home Affairs and we monitor the outcomes and outputs of that task team, because without a Home Affairs that functions properly, service delivery by all departments will be compromised. We are, therefore, interested, as Parliament, that Home Affairs must be up and running on its own feet. We hope that this task team will assist Home Affairs to improve on service delivery because, as the ANC, this is a concern to us, as Home Affairs is central to service delivery.

Ke rata gore ke re, re le ANC re dumelana le Molaotlhomo Tekanyetso o. [I would like to say, as the ANC we support this Budget Vote.]

The MINISTER OF FINANCE: Deputy Chairperson, I would like to express my appreciation to all parties in the House, because all of them supported the Budget. I am not quite sure how some of them arrived at the conclusion, but we appreciate the fact that they supported it.

I also want to say a special word of welcome to my colleague, Minister Pandor, because when we delivered the Budget she was in hospital. It’s good to have you in the House - a lonely place this afternoon. Good to have you here. [Applause.]

Let me respond by dealing with a few of the thematic issues that were raised. The first of these issues is that of surplus, which was raised by the hon Bekker, Harding, Van Dyk and Stephens. But I think the counter to that is what has been raised by the hon Mulder. We’ve said that many of our revenues are cyclical. [Interjections.]

Mr T D LEE: [Inaudible.]

The MINISTER OF FINANCE: Hon Lee, would you please allow me to speak? [Interjections.]

Mr T D LEE: I didn’t say a thing, Trevor! [Laughter.]

The HOUSE CHAIRPERSON (Ms C-S Botha): Order! Please continue, hon Minister.

The MINISTER OF FINANCE: So many of our revenues are cyclical, and if we aren’t careful about that, we will make commitments that can’t be supported by financial flows later, and we will have to cut them.

This idea that we should be ashamed of the surplus in the current commodity cycle has to be born of ignorance. It’s very important that we deal with the issues for what they are, because we must be careful about making mistakes. We have seen this all over the world. We have seen the exuberance of people who believe that there is no tomorrow. But economies, companies and businesses all operate cyclically and commodities have proven themselves to be cyclical, and there is sufficient evidence in this regard. So, we shouldn’t be silly about this.

In respect of the tax issues, on the one hand, we’ve broadened the tax base but we have reduced the tax rates. The tax-to-GDP ratio is something. It is there. We’ve said it would be optimally 25%, but I don’t think we should be too hung up about this issue.

On the issue of the secondary tax on companies, STC, we aren’t eliminating it; we are converting it to a dividend tax. If the hon Davidson doesn’t believe me, I am inviting him to look at chapter 4, on page 67 of the Budget Review, which explains the two-step change. It will be there. For the moment, we estimate that we will probably cede about R2 billion, but I’m pretty sure that knowing the recipients of those dividends would not be too difficult for SARS. So, it’s not a gap that will be a permanent feature.

On the issue of the wage subsidy, the hon Davidson is, of course, being quite disingenuous, because his arguments a few years ago were about subsidising those who employ domestic workers who can drink their gins and tonics while they lie by the side of the pool. That was the argument we heard, and what we are dealing with here is substantially different. He knows that and he shouldn’t mislead the House or anybody else.

On the issue of social security, I heard the hon Bekker saying that this is BIG, or basic income grant. It’s not BIG. I think that it’s very important that we understand this issue, and perhaps this House will afford us an opportunity to have a wider discussion about the social security reform, which is quite fundamental!

Philosophically, what we are talking about is a contributory scheme that deals with the poverty trap. It’s very different from a “bakhand” approach

• the state must provide everything. This deals with people who will contribute, and therefore we will be in a much better position to deal with a series of other issues in society. It’s a big change; it’s a monumental change. But it is a change that deals with the lives of people long beyond their working lives. And that is what is so significant about it. So, we must disabuse ourselves of the idea that this is BIG by the back door, or BEG - a basic endowment grant - or anything else like it. It’s not that. And the President has spoken on this issue.

The issue of capacity was raised by a number of members. The first thing I’d like to do is to recognise that we have challenges. As we said in the Budget Speech, don’t knock the provinces too hard, because if we tracked the infrastructure spending, as I am sure all members of this House regularly do through their section 32 reports - it’s there in the Government Gazette, and I am sure that every committee discusses this section 32 report of the PFMA every month - then we would all know that the infrastructure spending of provinces has improved very significantly.

What was left at the end of the last fiscal year was 5%. And if you track it six months into this fiscal year, it is already 35% up. There are some provinces that are going to overspend this year on infrastructure, and that is not an entirely bad thing.

So, in examining the oversight issues, let’s take account of those issues as well, because they are indicative of very significant changes.

We are not unique in this regard. Labour came to government in the UK almost eight years ago now. For the first four years of their tenure, each year, the infrastructure spending remained untouched. This is also a situation where the government takes account of spending for roads and so on in municipalities. Long untouched! So, don’t feel too het up about this issue.

Just like in respect of the skills base of our skills endowment, the hon Stephens, apart from the other silly things he was saying, said: “Look to France, where there are 37 colleges that train the public servants”. Well, there is an article now in a news magazine that has just come out that indeed looks at France. Amongst the things they raise in this article is the fact that the picture in France is not so pretty. The article says in 1975 a 30-year-old Frenchman earned 15% less than a 50- year-old; now it’s 40% less. It also says that only 5% of French young people believe that they have a better chance of success than their parents. It also says that the proportion of 24-year-old French, who still live at their parents’ houses, has doubled to 65%. This is indicative of very significant changes.

Just like in Germany, there is talk of the intern generation - people who are highly skilled, with multiple degrees, who can’t find permanent employment - who are happy to do unpaid labour in order to find one of those elusive jobs.

Now, you can be silly about it. You can believe that it’s affirmative action. Of course, you are wrong about that. You are so wrong, because you have not bothered to read the Act, hon Rabie, just like the hon Lowe, who has not bothered to read the Act. The Act is abundantly clear.

It says:

Recognising that as a result of apartheid and other discriminatory laws and practices, there are disparities in employment, occupation and income within the national labour market; and that those disparities create such pronounced disadvantages for certain categories of people that they cannot be redressed simply by repealing discriminatory laws. The Act is clear. The intent is clear. It isn’t even optional; it’s a constitutional imperative, so get a life. We will have to do it, because that is what the Constitution requires of us. [Applause.]

In respect of the hon Woods, I was raised by something called “Woods Great Peppermint Cure”. Is he still in the House? Perhaps it’s part of that. [Laughter.]

The issues of oversight have been well-canvassed by the hon Smith, the hon Mabe and a number of other members. We value that, but let me also say that a lot of the oversight needs to happen in our constituencies where we are. That is going to be the best source of information about what happens. That is the place where Parliament or parliamentarians need to find information against which they can verify the section 32 report.

One of the big changes that we are introducing, and something that Cabinet has already decided on, is to budget for infrastructure differently from what we have done in the past. The new approach will involve budgeting over the cycle of the project. You might find some budgets for infrastructure going beyond the MTEF into five years and so on, to ensure that we don’t have these roll-overs; to ensure that departments can better plan; and to ensure that the planning cycle doesn’t even need to depend on whether the money is available or not.

These decisions have now been taken by Cabinet and I am sure that by next year there will be another lot of information for Parliament to digest so that we can improve on the quality of spending in respect of infrastructure.

The last point I would like to raise, which is in part a response to the hon Scheemann, is that the Constitution sets out responsibilities; some concurrent powers and some exclusive powers. Whilst we may have the Minister of Education sitting with what the Education Act calls the Council of Education Ministers, the discussions they have are at best recommendations to provincial ExCos who allocate the resources.

So whilst there may be a commitment, for instance - because I think the hon Ndlovu raised the issue of learning under trees – and whilst may be an agreement about that, the allocation of resources happens in a different place, and lining this up is a process far more complex than what we frequently understand. Therefore, whilst the Budget Review in table 5 in the Annexures puts all of this together so that we have a sense of what we are spending on education - we can say we are spending R109 billion on education - the spending happens in different places, and so the oversight function needs to happen in different places as well. That is why what the National Assembly is responsible for is important, and what the NCOP is responsible for is also important and that goes for the provincial legislatures as well. We need to have an information base that will allow us to take all of these together.

Finally, let me express my appreciation. I think this was a very good debate. Members are far more familiar with the issues. There was far less controversy. Occasionally, yes, there was a bit of silliness, but I think that it is in the nature of the beast. Thank you very much. [Applause.]

Debate concluded.

Bill read a first time.

The House adjourned at 18:10. ____

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS


                        FRIDAY, 9 MARCH 2007

TABLINGS

National Assembly and National Council of Provinces

1. The Minister in The Presidency

(a)     Strategic Plan of the International Marketing Council (IMC) for
    2007 to 2009.

1. The Minister of Water Affairs and Forestry

(a)     Report and Financial Statements of Sedibeng Water for the year
    ended June 2006, including the Report of the Independent Auditors
    on the Financial Statements for the year ended June 2006.


(b)     Report and Financial Statements of Bushbuckridge Water for the
    year ended June 2006, including the Report of the Independent
    Auditors on the Financial Statements for the year ended June 2006.

COMMITTEE REPORTS National Assembly and National Council of Provinces

1. Report of the Joint Budget Committee on 2007/8 National Budget, dated 09 March 2007:

2. INTRODUCTION

The Minister of Finance tabled the Budget for 2007/8, including the MTEF for the 2008/9 and 2009/10, on 22 February 2007.The Committee’s mandate regarding the Appropriation Bill requires it to consider the allocation of available financial resources against government policy. This mandate is distinct from that of the Portfolio and Select Committees on Finance, which deliberate on the macro-economic, fiscal and intergovernmental dimensions of the Appropriation Bill respectively.

The Committee has interpreted its mandate to mean that it should consider the following: • The expected impact of expenditure allocations on the effectiveness and efficiency with which departments can respond to government’s stated policy priorities; and • Whether departments are making the tough choices required, tailoring their planned expenditures to priorities, choosing effective strategies and seeking efficiency in implementation.

After studying tabled documents and conducting hearings the Committee also reviewed earlier processes on the Budget, including the Medium Term Budget Policy Statement during it’s deliberations on the Appropriation Bill.

1. THE PROCESS

The Joint Budget Committee, the Portfolio and Select Finance Committees held joint hearings on the budget that started with the briefing by the Minister, the Director General and the Commissioner of Revenue Services (SARS). Between 27 February and 5 March 2007 the Committee received further submissions from National Treasury and SARS, economists and a tax specialist, organised labour and business as well as the Department of Transport and Department of Health. Due to changes in parliament’s programme the Departments of Sport and Recreation and Public Service and Administration were unfortunately unable to attend. These submissions dealt with the full range of issues raised in the Appropriation Bill 2007/8, as well as other related issues. Specific emphasis was given to issues of expenditure, infrastructure, capacity/skills and human resources as these have been identified as the major focus areas for governmental spending.

• The capital expenditure budget in government has seen a sharp increase
  over the  recent  period.  Capital  expenditure,  which  is  currently
  directed  towards   massive   infrastructure   development,   provides
  government with the opportunity to grow the economy at a higher  scale
  to reduce poverty and  create  jobs.  As  such,  the  2010  World  Cup
  provides  government  with  a  valuable  opportunity  to   invest   in
  development, to address the priority of poverty alleviation.

Having applied the mandate to the Appropriation Bill and after applying its mind, the Committee has made several recommendations.

1. MACRO-ECONOMIC ISSUES

Although macro-economic issues do not fall within the mandate of the Joint Budget Committee, their impact on financial management and expenditure requires the JBC’s consideration. Increasing efficiency of revenue collection has caught up with the State’s capacity to spend. The present surplus results from revenue collection outstripping projections as reflected in the Budget Review of 2006. This development provides an opportunity for allocating more funds to infrastructure, social services and crime prevention. The committee is of the opinion that the current capacity challenges may constrain the efficient, effective and economical expenditure of these increased funds.

1. SUBMISSIONS TO THE JOINT BUDGET COMMITTEE

Briefing by the National Treasury

The Minister of Finance and the Director-General (DG) of the National Treasury briefed the Committee on the 2007/08 Budget on 22 February 2007.

The minister and his team highlighted the key aspects of the Budget 2007/08. He noted that increased revenues and steadily improving economic growth enabled greater expenditure in key policy areas, which included investment in social and economic infrastructure, improvement in the education and health services, the modernisation of justice and administration services as well as long-term investment in social security. Critical concerns raised by members included the design of the social security reform, methods to improve the current shortage of skills needed for economic growth and the need to improve export performance. Concerns were also raised over the continued inaccessibility and lack of integration of transport services, despite existing and planned improvements in transport infrastructure.

National Treasury stated that government expenditure had grown by 9% in real terms, due to the steady growth in revenue collection. This led to an improved fiscal position and a recorded surplus for the current financial year. The committee welcomes this improved position resulted in a net tax relief of R12.4 billion and the abolition of retirement fund tax. Greater investments in health and education to improve the skills capacity and improved remuneration of teachers and health workers are also welcomed. The new reforms would need to include unemployment benefits, disability and death benefits, and savings and pension would be based on a standard payment log of 15 to 18% percent of income of all workers in the formal employment sector. A wage subsidy would be introduced for low-income earners to encourage employment creation and the improvement in the working and living conditions of low-income earners. This would offset the social security contribution of this group. The total cost of this system would be around R20 to R30 billion.

The Impact of the Allocations of the Division of Revenue

The recommendations by the FFC, and the responses thereto by the National Treasury, were considered by the JBC in respect to the Division of Revenue 2007 and taken into account as they related to the Appropriation Bill. The Division of Revenue aim to strike two critical balances: one between executive authorities and administration and the other between executive authorities across spheres. The JBC also noted the recommendations that government did not implement. The JBC believes it is critical that the confusion over the concurrent functions and responsibilities of provincial governments and municipalities should be speedily resolved. There is also a need for greater coordination between spheres of government as well as an improvement in the monitoring and spending of conditional grants.

National Treasury briefed the Committee on the DoR and the 2010 FIFA World Cup Stadiums Development Grant, and the Bulk Infrastructure Grant. Clauses were also refined to facilitate the project registration of the Municipal Infrastructure Grant.

Efficiency Group Briefing

The Efficiency Group’s submission focussed on taxation, which is being dealt with by the Portfolio Committee on Finance. The Efficiency Group highlighted that the increase in social expenditure in health, social development, education and housing stood at 43% in real terms in 1994 and has increased to 50% in this budget, which represents a significant increase. it further noted that this increase with the significant reduction in debt has increased funds available for public expenditure.

Bureau for Economic Research (BER) briefing

Bureau for Economic Research stated that there were sound fiscal finances and there were generally stable expenditure and tax ratios, implying that there were no dramatic fiscal effects. Attention was being given to the issue of savings and Government’s own savings were positive. There was some evidence of delivery in terms of infrastructure spending, but it needed to be stepped up. On the downside, the combination of a ‘dovish’ monetary policy and a ‘stable’ fiscal policy at this point may not be enough to address macro-economic imbalances reflected in the current account, which implied risk.

Industrial Development Corporation (IDC) Briefing

The Industrial Development Corporation stated that domestic demand had been a key driver behind the sector’s recovery in the past three years, mainly due to buoyant consumer spending and manufacturers had increasingly switched to the lucrative domestic market. The remarkable recovery in South Africa’s overall economic performance since 1994 had not translated into significant job creation in the formal non-agricultural sectors of the economy. The economy had become less labour-intensive over the years, although some reversal in this trend had been observed in more recent years.

The Impact of Issues of Taxation

The Portfolio Committee on Finance is dealing with the briefing made by Mallinicks and BUSA due to its focus on macro-economic issues. In the Committee’s opinion the resulting increased revenue arising from economic growth and robust collection will be utilised by government to increase expenditure in prioritised areas.

Department of Transport

The Department stated that the economy is growing and as part of a concerted commitment towards the 2010 World Cup and the expansion of public transport, a sharp increase in capital expenditure has been planned. The department placed an emphasis on the revitalisation, maintenance and expansion of existing and new infrastructure. The committee stressed the importance of ensuring that the infrastructure development creates a lasting legacy beyond 2010. In order to address commodity price concerns, the department has, together with the Department of Trade and Industry put macro-economic processes in place around the acquisition of materials. Other strategies include improving local manufacturing to circumvent some costs; local assembling; as well as securing up-front commitments where bulk purchases are to be made.

On the issue of the alignment between government departments to maximise the utilisation of funds, the department confirmed that interdepartmental coordination and the cluster system is followed. These measures have brought about much closer cooperation between various departments, although this must be done at an accelerated pace. The committee raised its concern around the low integrated approach between departments in service delivery.

Key policy areas of the Department of Transport regarding infrastructure

• World Cup support: public transport infrastructure
• Scaling up of EPWP in the road sector with a budget
• Improvement of strategic secondary road network
• Regional road infrastructure development
• Passenger rail
• South African National Road Agency

The department expressed its satisfaction with the budget, which shows a 54% increase. Furthermore it raised the issue of the lack of the skills needed in order to implement some of its key priorities.

The JBC considered the following:

     • In  terms  of  transfer  expenditure  the  department  is  doing
       reasonably well and outcomes are dependent on  the  implementing
       agencies such as provinces, municipalities among others
     • In this regard JBC is concerned about the lack  of  capacity  of
       the implementing agencies to spend
     • The JBC further observed that  the  monitoring  of  implementing
       agencies by the national departments are minimal
     • The pace  to  meet  the  deadlines,  in  particularly  the  2010
       deadlines, may be hindered by lack of capacity
• The EPWP are indeed labour intensive and  as  such  creates  jobs  and
  develops skills

After considering the above observations the JBC believes it is important to monitor the expenditure challenges monthly, where possible and otherwise quarterly and when necessary obtain departmental briefings to assist in the committee’s oversight in these areas.

The Department of Health

The committee did not share the Department of Health’s optimism in regards to the pattern of accelerated expenditure in the last quarter, which led to a possible problem of fiscal dumping, notwithstanding the department’s point that March transfers have been moved to December.

The department stated that though hospital revitalization has improved in totality, funds allocated to revitalization are only sufficient to spend on projects that have already been awarded tenders. Among the challenges they face, are rollovers that are awarded too late for, as the DG stated, effective expenditure, this includes provincial transfers. Furthermore, the department assumed that the presentation of business plans would lead to the required allocation of funds; given the emphasis placed on providing business plans in previous years. The committee believes that the increase of funds without the capacity to spend effectively and efficiently is not the solution.

The JBC intends scrutinising the processes that led to these problems raised by the department, in a joint engagement with Department of Health and National Treasury, so that corrective measures can be taken to avoid a recurrence of these problems.

The department noted an increase in a conditional grant allocation for HIV/AIDS that led to more than 245 106 patients being treated in 2006/07 compared to the 28 393 treated in December 2004. The committee welcomed this improvement. The department made it clear that this figure is small, relative to the challenge the country is facing and pointed out that the demand for resources is greater than the supply and noted that the time will come when the system will not cope. The current policy requires that the department provide treatment to all those patients who present themselves and the DG noted the impact that the increasing numbers will have on the department’s medium term expenditure projections. However the department did indicate the role poverty plays and the importance of supporting medication with proper nutrition.

GENDER CONSIDERATIONS IN THE BUDGET

The JBC also considered how far women, who are the greater percentage of poor people, are directly taken into account in department’s allocations. In this respect the submission from the Community Agency for Social Enquiry was also considered when deliberating on the budgets. The Committee agrees that there are weaknesses in making linkages between the various steps of the planning, budgeting and monitoring processes.

The Department of Justice and Constitutional Development’s budget makes no mention of maintenance in the 2007/08 ENE. The sexual offences courts are not mentioned in the 2007/08 ENE apart from a target conviction rate, as in 2006/07, of 70%. The JBC believes that all departments and the EPWP, which is one of government’s key programmes to address poverty alleviation, should consider increasing their focus on women. The Department of Health vote in the 2007/08 ENE states that 7 795 caregivers were trained in HCBC in 2005/06, but does not state whether this was done as part of the EPWP. The Department of Social Development, which also supports HCBC as part of the social sector EPWP, provides no budget or performance figures on delivery in this area in the ENE.

The JBC identified two aspects of the 2007/08 budget which are particularly supportive from a gender perspective. Firstly, the increased attention to bursaries and increased salaries for teachers, nurses and social workers will benefit women because these areas of work are female-dominated. To date, the salaries paid to these workers have been far lower than for other jobs that require equivalent education and training. Secondly, the above- inflation increases in the social security grants will benefit women because it is they, disproportionately who benefit from the grant system. However the JBC remains concerned at the lack of gender disaggregation of targets and indicators in the Estimates of National Expenditure.

1. RECOMMENDATIONS

The recommendations focus on infrastructure and capacitation in its broadest sense.

Infrastructure

• The national departments should strengthen their monitoring strategies
  on provinces, municipalities and the agencies
•  Parliament  should  prioritise  oversight  in  all  departments  with
  significant infrastructure allocations which should furnish parliament
  with detailed plans with spending projections that are linked directly
  to timeframes and monitor and evaluate monthly expenditure trends  and
  conduct robust on site oversight function particularly  on  the  major
  projects

Capacitation

• DPSA should monitor and  evaluate  the  government’s  current  general
  personnel retention guidelines. It should also identify  the  existing
  limitations  in  addressing  the  current  challenges  that  exist  in
  obtaining and retaining strategic professional scarce skills
• Departments should adopt innovative approaches within  the  parameters
  of the conditions of service
• National Departments must provide  uniform  norms  and  standards  and
  service delivery plans to monitor
• Parliament welcomes increased allocations. The critical responsibility
  is for parliamentary committees to strengthen their oversight  with  a
  focus on value for money, sustainability of  projects  and  impact  on
  communities.

BRIEFINGS & SUBMISSIONS RECEIVED

National Treasury Financial Fiscal Commission Efficiency Group Bureau for Economic Research Industrial Development Corporation Community Agency for Social Enquiry

Report to be considered

National Assembly

1. Report of the Portfolio Committee on Labour on the Instrument for the Amendment of the Constitution of the International Labour Organisation (ILO), 1997, dated 9 March 2007:

   The Portfolio Committee on Labour, having considered the request for approval by Parliament of the Instrument for the Amendment of the Constitution of the International Labour Organisation (ILO), referred to it, recommends that the House, in terms of section 231(2) of the Constitution, approve the said Instrument. Request to be considered

                     MONDAY, 12 MARCH 2007
   

ANNOUNCEMENTS

National Assembly and National Council of Provinces

The Speaker and the Chairperson

1. Translation of Bill submitted

   (1) The Minister of Finance

   a) Finansiewetsontwerp [W 5 – 2007] (National Assembly – sec 77).
   

   This is the official translation into Afrikaans of the Finance Bill [B 5 – 2007] (National Assembly – sec 77)

TABLINGS

National Assembly and National Council of Provinces

1. The Minister of Public Works

(a) Strategic Plan of the Department of Public Works for 2007 to 2009. COMMITTEE REPORTS

National Assembly

1. Report of the Portfolio Committee on Finance on the Appropriation Bill 2007/8, dated 9 March 2007:

   The Portfolio Committee on Finance, having considered and examined the Appropriation Bill [B2 – 2007] (National Assembly – Sec. 77) and its related documents, referred to it, and classified by the Joint Tagging Mechanism as a Section 77 Bill, reports as follows:

   1. Introduction

   The Minister of Finance tabled the Budget for 2007/8, including the MTEF for the 2008/9 and 2009/10, on 22 February 2007.

   On 22 February 2007, the Committee, in a joint sitting with the Joint Budget Committee was briefed on the Budget for 2007/8 and the MTEF forecast by the Minister of Finance, together with the Director-General of National Treasury and the Commissioner of the South African Revenue Services (SARS).

   Between 27 February and 2 March 2007 the Committee received further submissions from National Treasury and SARS, economists and a tax specialist, as well as organised labour and business. These submissions dealt with the full range of issues raised in Budget 2007/8, as well as other related issues. The report is structured around the following main themes that emerged throughout the hearings:

• Macroeconomic framework • Fiscal Policy, Revenue trends and tax proposals • Other issues

1. Macroeconomic Framework

There was general agreement amongst the panellists that South Africa is currently enjoying the longest sustained period of economic growth, with the current upswing in the business cycle in its seventh year. The establishment of economic stability and sound macroeconomic management over the last years provided the foundation for this continued upswing.

The Committee commends Government on the fact that the 2007/8 Budget continues to build on the sound and prudent macro-economic policies reflected in a robust economy, reinforced by the high levels of business optimism. The Budget provides for further channelling of the benefits of economic expansion to increase savings, economic and employment growth, and contributes to transformation and poverty alleviation.

The 2007/8 Budget identifies the need to accelerate growth at a more rapid pace to further reduce poverty, unemployment, to eliminate inequality, modernising service delivery institutions, investing in long- term security, and protecting the vulnerable. It supports the structural development of the economy with increased expenditure in economic and social infrastructure investment, which would have a long-term positive effect on the economy. There was consensus among the panellists that the Budget identified the need for stronger exports performance through the development of a growth orientated trade and industrial policy, as it seeks to address the constraints to a higher economic growth path. Mr Jorge Maia from the Industrial Corporation of South Africa (IDC) highlighted that although we have seen a remarkable recovery of South Africa’s overall economic performance since 1994 it did not translate into significant job creation in the formal non-agricultural sectors of the economy, and the economy has become less labour intensive over the years.

The panellists welcomed the fact that the Budget sought to consolidate and expand economic growth through fiscal policy that sought to avoid the “boom and bust” of past business cycles through prudent management of the current economic upturn. Improved Government savings over the last few years, reducing future debt serving obligations further, highlighted the complimentary fiscal and monetary policies stance underlying a steady improvement in macroeconomic stability. Prudent fiscal policy will ensure the sustainability of current economic upswing. The Committee believes that the planned fiscal surplus could be seen as government’s contribution to the national savings effort.

The panellists were in agreement that the strong economic outlook is supported by global conditions, that although a slow down in the short- term is expected, global conditions remain favourable. Global economic trends remain supportive of sustained growth in developing countries, but global imbalance remains source of economic and financial risks. The reliance on short-term capital inflows, the high level of domestic consumption expenditure, and the growing current account deficit are the major risk factors for South Africa in achieving the desired growth projections over the medium term.

All presenters echoed that business and consumer confidence remains high, providing a good indication of their confidence about the performance and prospects of the economy, despite inflationary pressures and high imports. Pieter Laubscher alluded to the fact that the current buoyant economic conditions are cyclical, and a result of favourable global conditions that might change. National Treasury viewed the continued buoyancy of tax revenues as a signed of strong economic growth as tax receipts grew at a faster rate than reported GDP. This would imply a tax multiplier and the average value of the tax multiplier had gone through significant peak and troughs. National Treasury implied that this was due cyclical factors, such as swings in commodity prices, the external value of the currency and shifts in the business cycle.

2.1. Domestic economic outlook

Panellists welcomed South Africa’s improving economic growth performance and highlighted the strong dominance by the non-agricultural service related sectors. According to Jorge Maia (IDC) although the pace of growth by the manufacturing sector was below the economic average, it recorded substantial improvement in its growth performance with an average of 3% p.a. versus the 0.5% p.a. in the preceding years. He further argues that the key driver behind the sectors recovery was the strong domestic demand. Recent figures published would indicate an improvement within the sector, with construction, electricity and telecommunication sectors the major drivers. Panellists agreed that the primary sectors contribution to GDP has been substantially reduced, with National Treasury arguing that if one excludes mining and agriculture the economy would be growing at more than 6%, well within the target for 2010.

The growth rate has substantially increased to an average of 5% projected over the MTEF period, marginally better that the ASGI-SA target of 4, 5%. Pieter Laubscher, chief economist at the Bureau for Economic Research (BER), concludes that the growth rate is more stable and sustainable and that the growth rate over the last three years was underpin by strong household consumption as well as gross fixed investment of above 9% since 1993. The panellists highlighted the fact that the demand side has driven the growth, while the supply side had been fairly muted. Net export made a strong negative contribution to economic growth with a sharp increase in domestic demand resulted in the widening of the output gap.

2.2 Inflation

CPIX inflation has remained within the 3 – 6 % target range for 41 consecutive months averaging at 4.6% in 2006. The rising oil price, along with acceleration in food prices, contributed to the higher inflation rate. The business community welcomed the better coordination between fiscal and monetary policy. The short-term interest rates seemed to have peaked, however, but risks do remain. The panellist agreed that fiscal policy supportive of the need for a higher level of domestic savings would make the implementation of monetary policy easier. The inflation outlook has improved since the end of 2006, and inflationary expectation seems to be well anchored.

2.3 Current Account deficit

The strong expansion of domestic spending and imports over the 2004-2006 period, combined with a poor export performance over the 2002-2006 period, 3% on average per annum, led to the widening of the current account deficit. Government argued, supported by the panellist that the current account deficit not only reflected the imbalance between investment and savings, but that the country was consuming more than it had produced, with the difference being imported.

Pieter Laubscher (BER) further concluded that the strong currency played an important role in constraining manufacturing exports, stimulated by domestic spending and import demand. Prof Ray Parsons said during the hearings that “South Africa is currently having too much investment chasing to little savings” resulting in the widening of the current account deficit. A concern from the business community was how Government would further stimulate the supply side of the economy to address the current imbalance.

Although the current account deficit had risen from 4.2% of GDP to 5,7% of GDP since last year, stimulated by the increase in import levels, high oil prices and sharp increase in South African Customs Union (SACU) payments, Government and business remained optimistic, as this would be offset by strong capital inflows. Factors underpinning this view were the stable macroeconomic climate and the improved economic growth position.

The Committee commends Government on its fiscal stance as it helps to sustain growth by improving Government savings and prioritising spending programmes, thus strengthening the economy. The Committee would caution Government on its reliance on portfolio investments, adding that it needs to attract foreign direct investment to address this imbalance. Pieter Laubscher (BER) cautioned against this reliance as the direction of these inflows was globally determined. Government, however, is committed to improving export performance through appropriate industrial policy initiatives.

2.4 Exchange Control

The Budget contained few announcements with respect to further exchange control relaxation, with the gradual approach still in place. The Committee welcomed the announcement that the current shareholding threshold for foreign direct investment outside of Africa is to be lowered from 50% to 25%. This will make it easier for companies to engage in strategic international partnerships.

1. Fiscal Policy

The continued expansionary fiscal stance adopted received widespread endorsement by all commentators, as it supports the growth momentum. Pieter Laubscher (BER) alluded to the fact that as fiscal policy continued on its expansive phase, Government had to guard against stimulating the consumption side of the economy.

The strong fiscal position underpins the medium term policy objectives of job creation, modernising service delivery institutions, accelerating economic growth and tackling crime. As highlighted in the Budget Review of 2007, the Budget continues to build on the gains of prudent fiscal management to make a further contribution to economic growth and social development.

Expectations are that the economy will to grow 5% a year over the medium term, reaching 5.4 % in 2009 in line with the ASGI-SA target, with inflationary expectations to remain within the target range. The 2007 Budget reflects real growth in non-interest expenditure by an annual average of 7.7% over the medium term.

The Budget reflects quite strong expenditure over the MTEF both in terms of current payment of 11% and wages and salaries of 10%. Dawie Roodt highlighted that Government’s spending trajectory was faster than the rate of economic expansion, with social expenditure (education, housing, health and social development) the main beneficiaries.

Gross fixed investment is forecast to increase rapidly with R410 billion Government infrastructure programmes accompanied by higher levels of private sector fixed investment. Jorge Maia from the IDC highlighted in his presentation the positive spin-offs of infrastructure growth, of increased demand inputs, the manufacturing of capital goods and transport equipment, and the crowding in of private sector investment through effective infrastructure. He further argued that in order to achieve the ASGI-SA targets of 6% GDP growth, fixed investment activity for the economy at large had to accelerate by more than 13% per year over the period 2011 to 2014.

3.1 Budget deficits and surplus

The 2006 Medium Term Budget Policy Statement (MTBPS) announced a projected surplus of 0.5% of GDP for the fiscal year 2007/8. Due to strong revenue growth the revised predictions for 2006/7 forecast a budget surplus of 0.3% to GDP and a surplus of 0.6% of GDP forecast for 2007/8.

Jorge Maia (IDC) argued that prudent fiscal policy and continued improvements in tax collections resulted in a shift in Government balance from progressively lower deficits towards a budget surplus, hence enabling a developmental approach to fiscal expenditure going forward. The broadly balance budget over the MTEF period was welcomed by all commentators, as it is positive from both a confidence and credibility point of view. Pieter Laubscher (BER), although welcoming the budget surplus, cautioned that, from a cyclical perspective, this might stimulate the demand side of the economy.

1. Tax Policy

The tax policy framework seeks to broaden the tax base, taking cognisance of societal realities, by minimising the distortionary impact that taxes may have on economic growth and employment creation. The tax reforms support accelerated growth in job creation and poverty alleviation, while at the same time encouraging individual savings. The buoyant tax revenue over the past three years was due to strong economic growth and the broadening of the tax base, coupled with the efficiency of SARS. The broad underpinning principles of the 2007 Budget’s tax proposals are:

• Supporting economic growth,  investment  and  job  creation,  business
  development and confidence
•  Promoting  financial  security  of  households  and  reducing   their
  vulnerability through retirement reforms that encourage savings  • Supporting macroeconomic policy objectives.

The Budget provides for individual tax relief of R 8.4 billion, which, according to some commentators provide further stimulus for consumer spending, with total net relief of R12.5billion.

As the GEAR policy intention was to maintain a ratio of tax-to-GDP of about 25%, the increase from 26.4% to 27.9% of tax revenue as percentage of GDP was met with concern by certain commentators.

4.1 Corporate Income Tax (CIT) and Secondary Tax on Companies (STC)

Robust debate on the global competitiveness of the South African corporate tax structure was evident during the hearings on the Budget. BUSA/CHAMSA argued that to encourage Foreign Direct Investment (FDI), the CIT should be internationally competitive, as a lower CIT rate would attract investment. Pieter Laubscher argued that CIT had been a major source of the revenue overrun, and that going forward, fiscal policy had to consider the tax burden borne by companies. Tax relief to companies would stimulate the production side of the economy. Government was not convinced that a reduction in CIT would automatically lead to supply side benefits as suggested by business. The Committee requested that in the debate on the international competitiveness of the tax system, commentators should not be selective in their comparative analysis of international CIT, as information provided by National Treasury and SARS indicated that South Africa compared favourably with other countries. National Treasury was of the view that the current tax system in South Africa is not an impediment to investment and resource allocation had to be based purely on commercial grounds and not tax decisions only.

In supporting and encouraging business development and confidence the Government announced the phase-out of secondary tax on companies and replace it with a dividend tax. This would be two phased approached as the dividend tax would be applied at a rate of 10% down from 12, 5%. The second phase, commencing in 2008, would entail the conversion to a dividend tax on shareholders, with administrative enforcement through a withholding tax at company level. The Committee welcomed this, as it is in line with the international norm, and also would have a stimulatory effect on business.

1. Social Security Reform

Improved economic performance has created the fiscal space that allowed Government to move towards a social security system that provides income security for all. Despite the economic upturn, the Committee recognised that poverty and unemployment remain a major challenge for government. The Committee welcomed the proposal by Government to introduce a broad- based social security framework over the 2001-2010 period. This would involve a broadening of social security reform to include an earnings- related contributory system. If the principles mentioned – those of equity, pooling of risks, mandatory participation, and administrative efficiency - are adhered to, it could be a force for greater social stability and increase the levels of personal savings.

The Committee welcomed the commitment by Government that all details on the earning-related social security tax system, the wage subsidy and revision of retirement industry would be tabled, and an all-inclusive consultative process would be undertaken before the new dispensation was finalised.

5.1 Savings and Retirement fund reform

Over the past two years the Committee has provided a platform for the discussion on retirement fund reforms. The Committee welcomed the recent announcement in the Budget of proposed reforms to retirement funds savings as part of the broader social security reform process. Business supports the proposed reforms and will contribute to the debate as a social partner at NEDLAC.

The Committee, business and labour sectors welcomed the abolition of retirement fund tax, urging trustees to be vigilant in ensuring that the benefits accrue to the intended beneficiaries.

1. Concluding comments

South African is experiencing sustained growth, with the management of public finance creating the fiscal space to step up spending in key areas. The previous Budgets had laid the foundation for future sustained economic growth, job creation and alleviating the plight of the poor.

The growth outlook remains positive over the medium term, strongly supported by investment. Investment would continue to grow underpinned by public corporation’s and departments capital investment programmes. Export growth is expected to exceed 6% over the MTEF as it benefits from significant investment in new capacity and continued international demand.

The projected softening in consumption expenditure and possible moderation in the exchange rate would ease import volume growth. The continued strong investment expenditure means that capital import growth might remain high. This will be good as it contributes to the productive capacity of the economy.

Despite the upward pressure on the CPIX it is expected to remain within the target range. The fiscal stance adopted by Government provides a buffer against economic instability and the fiscal space allows for reforms on the social front.

The proposal to introduce a broad-based social security system will seek to address the legacy of discrimination and inequality, and will work toward the elimination of poverty.

1. 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 T Manuel, Minister of Finance
  2. Mr L Kganyago, Director-General: National Treasury
  3. Mr P Gordhan, Commissioner of SARS
  4. Mr Pieter Laubscher, BER: Stellenbosch University    5. Mr D Roodt, Chief Economist: Efficiency Group    6. Mr Hennie Bester, Director: Mallinicks    7. Mr J Vilakazi, CEO: BUSA    8. Prof R Parsons, Business Unity South Africa (BUSA)    9. Adv A Meiring, BUSA   10. Mr R Baxter: Chief Economist: CHAMSA   11. Ms Riefdah Ajam, Federation of Unions of South Africa (FEDUSA)

Report to be cons

                       TUESDAY, 13 MARCH 2007

TABLINGS

National Assembly and National Council of Provinces

1. The Minister in The Presidency

   (a) Strategic Plan of the Media Development and Diversity Agency (MDDA) for 2007 to 2010.

2. The Minister for Justice and Constitutional Development

   (a) Draft Amendment of Regulations made in terms of section 92 of the Promotion of Access to Information Act, 2000 (Act No 2 of 2000).

3. The Minister of Water Affairs and Forestry

   (a) Increase in water tariffs for 1 July 2007 to 30 June 2008 by Rand Water, tabled in terms of section 42(4) of the Local Government: Municipal Finance Management Act, 2003 (Act No 56 of 2003).

   (b) Increase in water tariffs for 1 July 2007 to 30 June 2008 by Namakwa Water, tabled in terms of section 42(4) of the Local Government: Municipal Finance Management Act, 2003 (Act No 56 of 2003).

   (c) Increase in water tariffs for 1 July 2007 to 30 June 2008 by Botshelo Water, tabled in terms of section 42(4) of the Local Government: Municipal Finance Management Act, 2003 (Act No 56 of 2003).

   (d) Increase in water tariffs for 1 July 2007 to 30 June 2008 by Lepelle Northern Water, tabled in terms of section 42(4) of the Local Government: Municipal Finance Management Act, 2003 (Act No 56 of 2003).

   (e) Increase in water tariffs for 1 July 2007 to 30 June 2008 by Bloem Water, tabled in terms of section 42(4) of the Local Government: Municipal Finance Management Act, 2003 (Act No 56 of 2003).

   (f) Increase in water tariffs for 1 July 2007 to 30 June 2008 by Umgeni Water, tabled in terms of section 42(4) of the Local Government: Municipal Finance Management Act, 2003 (Act No 56 of 2003).

   (g) Increase in water tariffs for 1 July 2007 to 30 June 2008 by Magalies Water, tabled in terms of section 42(4) of the Local Government: Municipal Finance Management Act, 2003 (Act No 56 of 2003).

   (h) Increase in water tariffs for 1 July 2007 to 30 June 2008 by Sedibeng Water, tabled in terms of section 42(4) of the Local Government: Municipal Finance Management Act, 2003 (Act No 56 of 2003).

   (i) Increase in water tariffs for 1 July 2007 to 30 June 2008 by Pelladrift Water, tabled in terms of section 42(4) of the Local Government: Municipal Finance Management Act, 2003 (Act No 56 of 2003).

   (j) Increase in water tariffs for 1 July 2007 to 30 June 2008 by Mhlatuze Water, tabled in terms of section 42(4) of the Local Government: Municipal Finance Management Act, 2003 (Act No 56 of 2003).

   (k) Increase in water tariffs for 1 July 2007 to 30 June 2008 by Bushbuckridge Water, tabled in terms of section 42(4) of the Local Government: Municipal Finance Management Act, 2003 (Act No 56 of 2003).

   (l) Increase in water tariffs for 1 July 2007 to 30 June 2008 by Amatola Water, tabled in terms of section 42(4) of the Local Government: Municipal Finance Management Act, 2003 (Act No 56 of 2003).

   (m) Increase in water tariffs for 1 July 2007 to 30 June 2008 by Albany Coast Water, tabled in terms of section 42(4) of the Local Government: Municipal Finance Management Act, 2003 (Act No 56 of 2003).

(n) Increase in water tariffs for 1 July 2007 to 30 June 2008 by Overberg Water, tabled in terms of section 42(4) of the Local Government: Municipal Finance Management Act, 2003 (Act No 56 of 2003).