11 February 2016

 

The Speaker of the National Assembly,

 

The Chairperson of the National Council of Provinces;

 

Deputy Speaker of the National Assembly and Deputy Chairperson of the NCOP,

 

Deputy President Cyril Ramaphosa,

 

Former President Thabo Mbeki, 

 

Chief Justice Mogoeng Mogoeng and all esteemed members of the judiciary,

 

The President of the Pan African Parliament, Mr Roger Nkodo Dang,

 

Ministers and Deputy Ministers, 

 

Premiers and Speakers of Provincial Legislatures,

 

Chairperson of SALGA and all Executive Mayors present, 

 

The Heads of Chapter 9 Institutions,

 

Chairperson of the National House of Traditional Leaders, 

 

Leaders of faith based organisations,

 

The former Speaker of the National Assembly, Dr Frene Ginwala,

 

Invited guests,

 

Veterans of the struggle for liberation,

 

Members of the diplomatic corps, 

 

Fellow South Africans, 

 

 

 

Good evening, sanibonani, molweni, dumelang, goeie naand, lotshani, riperile, ndimadekwana,

 

 

 

Thank you for the opportunity to address Parliament and the nation. 

 

 

 

Today marks the 26th anniversary of the release of President Nelson Mandela from prison, which was one of the most remarkable episodes in the history of our country.

 

 

 

It is also the 50th anniversary of the declaration by the National Party regime that District Six would be a whites only area, leading to the forced removals of more than 60 000 residents.

 

 

 

The year 2016 also marks the 20th anniversary of the signing into law by Madiba, of the Constitution of the Republic. The signing took place in Sharpeville on 10 December 1996.

 

 

 

We are proud of our democracy and what we have achieved in a short space of time. Our democracy is functional, solid and stable. 

 

 

 

Compatriots,

 

 

 

The Constitution, which has its foundation in the Freedom Charter, proclaims that South Africa belongs to all who live in it. A lot has been done to promote inclusion and a non-racial society.

 

 

 

However, the journey to a non-racial society has not yet been completed. 

 

 

 

The nation was shaken last month when racism reared its ugly head on social and electronic media, causing untold pain and anger. 

 

 

 

There is a need to confront the demon of racism. Human Rights Day, March 21, will be commemorated as the national day against racism this year. It will be used to lay the foundation for a long-term programme of building a non-racial society.

 

 

 

Compatriots, I would like to remind you of a few other important anniversaries.

 

 

 

The year 2016 marks 60 years since the women’s march to the Union Buildings to demand an end to the pass laws. We are happy to have in our midst Ms Sophie de Bruyn, who was among the heroic leaders of that historic march. 

 

 

 

We also acknowledge the former President of the Black Sash, Ms Mary Burton. We acknowledge the organisation’s track record in fighting for human rights, justice and equality.

 

 

 

This year also marks 40 years since the landmark June 16 student uprising in Soweto. 

 

 

 

We welcome the photographer who shot the famous photograph of Hector Peterson carried by Mbuyisa Makhubu with his sister Antoinette, Mr Sam Nzima.

 

 

 

We also salute the class of 1976 for their bravery in standing up against the brutal apartheid regime. We acknowledge one of the activists of that era, the Deputy Secretary of Parliament, Ms Baby Tyawa, who is in our midst. 

 

 

 

This year we also mark 30 years since the ambush and brutal killing of the Gugulethu Seven by the apartheid police in March 1986.

 

 

 

The University of Fort Hare celebrates its centenary, which is a critical milestone in the liberation history of not only our country but the continent. The national celebrations will take place on the 20th of May. 

 

 

 

Let me recognise uMntwana wakwaPhindangene, the leader of the IFP who is a former student of the university. 

 

 

 

The year 2016 also marks the centenary of the battle of Deville Woods in France, which took place during the First World War. 

 

 

 

Scores of Black soldiers fought in the war but were treated badly due to the colour of their skin.

 

A memorial that will restore their dignity and humanity is scheduled to be unveiled in July this year in France.

 

 

 

Compatriots, allow me as well to recognise three special guests who are also with us today, 

 

 

 

•           the chairperson of the National Church Leaders Forum and Archbishop of Cape Town, Archbishop Thabo Makgoba.

 

 

 

•           Archbishop Daniel Matebesi, the President of the National Interfaith Council of South Africa and 

 

 

 

•           Bishop Zipho Siwa, the Presiding Bishop of the Methodist Church of Southern Africa and the President of the South African Council of Churches.

 

 

Madam Speaker and Madam Chairperson,

 

 

 

A resilient and fast growing economy is at the heart of our radical economic transformation agenda and our National Development Plan.

 

 

 

When the economy grows fast it delivers jobs. Workers earn wages and businesses make profits. 

 

 

 

The tax base expands and allows government to increase the social wage and provide education, health, social grants, housing and free basic services - faster and in a more sustainable manner. 

 

 

 

Our economy has been facing difficulties since the financial crisis in 2008. We embarked on an aggressive infrastructure development programme to stimulate growth. 

 

 

 

Our reality right now is that global growth still remains muted. Financial markets have become volatile. Currencies of emerging markets have become weak and they fluctuate widely. 

 

 

 

The prices of gold, platinum, coal and other minerals that we sell to the rest of the world have dropped significantly and continue to be low. 

 

 

 

The economies of two of our partners in BRICS: Brazil and Russia - are expected to contract this year. The third, China, will not register the kind of robust growth that it is known for. 

 

 

 

Because our economy is relatively small and open, it is affected by all of these developments. 

 

 

 

Our economy is also affected by domestic factors such as the electricity constraints and industrial relations which are sometimes unstable. 

 

 

 

The IMF and the World Bank predict that the South African economy will grow by less than one per cent this year. The lower economic growth outcomes and outlook suggest that revenue collection will be lower than previously expected. 

 

 

 

Importantly, our country seems to be at risk of losing its investment grade status from ratings agencies. If that happens, it will become more expensive for us to borrow money from abroad to finance our programmes of building a better life for all especially the poor. 

 

 

 

The situation requires an effective turnaround plan from us. 

 

 

 

It is about doing things differently and also acting on what may not have been acted upon quickly before. 

 

 

 

I will share a few points that we believe would make a difference.

 

 

 

First, our country remains an attractive investment destination. It may face challenges, but its positive attributes far outweigh those challenges.

 

 

 

We must continue to market the country as a preferred destination for investments. This requires a common narrative from all of us as business, labour and government. 

 

 

 

If there are any disagreements or problems between us, we should solve them before they escalate. This is necessary for the common good of our country.

 

 

 

We have had fruitful meetings with business, including the high level meeting with CEOs on Tuesday this week.

 

 

 

We have heard the suggestions from business community on how we can turn the situation around and put the economy back on a growth path. 

 

 

 

We have heard the points about the need to create the correct investment support infrastructure.

 

 

 

Government is developing a One Stop Shop/Invest SA initiative to signal that South Africa is truly open for business. We will fast-track the implementation of this service, in partnership with the private sector.

 

 

 

Such an initiative requires that government removes the red tape and reviews any legislative and regulatory blockages. 

 

We have established an Inter-Ministerial Committee on Investment Promotion which will ensure the success of investment promotion initiatives.

 

 

 

Compatriots, we have heard the concerns raised about the performance of state owned enterprises and companies.

 

 

 

Many of our SOCs are performing well.

 

 

 

Sanral has built some of the best roads in Gauteng and in many parts of the country. These make us the envy of many parts around the globe.

 

 

 

The Trans Caledon Tunnel Authority has constructed dams of varied capacities, thus making it possible for our people to have access to safe drinking water.

 

 

 

Transnet has built rail infrastructure which has enabled our country’s mines to move massive bulk of commodities through our ports to markets around the globe.

 

 

 

Eskom, in spite of the challenges, still manages to keep the economy going, against all odds.

 

 

 

Our development finance institutions such as the Industrial Development Corporation (IDC) or Development Bank of Southern Africa and others have provided finance for infrastructure, various industries and agricultural businesses without fail, even in the aftermath of the global financial crisis.

 

 

 

For the state owned companies to contribute to the successful implementation of the National Development Plan, they must be financially sound. 

 

 

 

They must be properly governed and managed. We will ensure the implementation of the recommendations of the Presidential Review Commission on State Owned Enterprises, which outlines how the institutions should be managed.

 

 

 

The Deputy President chairs the Inter-Ministerial Committee which is tasked with ensuring the implementation of these recommendations.

 

 

 

We have to streamline and sharpen the mandates of the companies and ensure that where there are overlaps in the mandates, there is immediate rationalization. 

 

 

 

Those companies that are no longer relevant to our development agenda will be phased out. 

 

 

 

Government departments to which they report, will set the agenda and identify key projects for the State owned companies to implement, over a defined period. Proper monitoring and evaluation will be done.

 

 

 

These interventions are essential for growth and also for the reduction of national debt levels. 

 

 

 

Compatriots,

 

 

 

We must take advantage of the exchange rate as well as the recent changes of visa regulations, to boost inbound tourism.

 

 

 

SA Tourism will invest one hundred million rand a year to promote domestic tourism, encouraging South Africans to tour their country.

 

 

 

We have heard concerns from companies about delays in obtaining visas for skilled personnel from abroad. While we prefer that employers prioritise local workers, our migration policy must also make it possible to import scarce skills.

 

The draft migration policy will be presented to Cabinet during the course of 2016. 

 

 

 

We have heard the appeals for policy certainty in the mining sector, especially with regards to the Mineral and Petroleum Resources Development Bill.

 

 

 

The Bill was referred back to Parliament last year. We await Parliament to conclude the processing, which we trust will be done expeditiously. 

 

 

 

Compatriots

 

 

 

We need to empower SMMEs to accelerate their growth. Access to high-quality, innovative business support can dramatically improve the success rate of new ventures. 

 

 

 

The department of small business development was established to provide such targeted support to small business.

 

 

 

Economic transformation and black empowerment remain a key part of all economic programmes of government.  One of our new interventions is the Black Industrialists Scheme which has been launched to promote the participation of black entrepreneurs in manufacturing.  

 

 

 

We urge big business to partner the new manufacturers including businesses owned by women and the youth, as part of broadening the ownership and control of the economy.

 

 

 

Compatriots 

 

 

 

We are proud of our Top 10 ranking in the World Economic Forum competitiveness report with respect to financial services. 

 

Maintaining and indeed improving our ranking is important to our competitiveness as a country. 

 

 

 

It is also fundamental to our ambition to become a financial centre for Africa. 

 

 

 

The banks, through the Banking Association of South Africa, are to launch a project aimed at establishing a centre of excellence for financial services and leadership training. 

 

 

 

This will ensure that as a country we can attract, nurture, develop and retain the best talent in financial services in our country and across our continent. 

 

 

 

They will work with the Minister of Finance and the National Treasury to get this done. We believe that this will over time ensure that we can expand the pool of financial skills and broaden the job opportunities for many young people. 

 

 

 

This strategic project from the banking sector is a positive and encouraging outcome of our engagement with business this week. 

 

 

 

Together we move South Africa Forward!

 

 

 

Compatriots,

 

 

 

We have made an undertaking to spend public funds wisely and to cut wasteful expenditure, but without compromising on the core business of government and the provision of services to our people. 

 

 

 

In 2013, the Minister of Finance announced a number of cost containment measures. 

 

 

 

Excessive and wasteful expenditure has been reduced, but there is still more to be done to cut wastage.

 

 

 

I would like to announce some measures this evening. 

 

 

 

Overseas trips will be curtailed and those requesting permission will have to motivate strongly and prove the benefit to the country. 

 

 

 

The sizes of delegations will be greatly reduced and standardised. 

 

 

 

Further restrictions on conferences, catering, entertainment and social functions will be instituted.

 

 

 

The budget vote dinners for stakeholders hosted by government departments in Parliament, after the delivery of budget speeches will no longer take place. 

 

 

 

The Minister of Finance will announce more measures and further details in the budget vote speech on the 24th of February.

 

 

 

The executive management and boards of public agencies and state owned companies must undertake similar measures. 

 

 

 

I also invite Premiers of all nine provinces as well as mayors to join us as we begin eliminating wasteful expenditure within government. 

 

 

 

I trust that Parliament and the Judiciary will also be persuaded to consider the implementation of similar measures.

 

 

 

Compatriots

 

 

 

A big expenditure item, that we would like to persuade Parliament to consider, is the maintenance of two capitals, Pretoria as the administrative one and Cape Town as the legislative capital. 

 

 

 

We believe that the matter requires the attention of Parliament soon.

 

 

 

Compatriots

 

 

 

We all have a lot to do to turn the economy around and to cut wastage. We will go through a difficult period for a while, but when the economy recovers, we will be proud of ourselves for having done the right thing. 

 

 

 

Compatriots,

 

 

 

I would now like to report back on the undertakings made last year.

 

 

 

During the State of the Nation Address in February 2015 

 

 

 

I announced the Nine Point Plan to respond to sluggish growth.

 

 

 

The nine point plan consists of: 

 

a.         Revitalisation of the agriculture and agro-processing value-chain;

 

b.         Advancing beneficiation adding value to our mineral wealth; 

 

c.         More effective implementation of a higher impact Industrial Policy Action Plan;

 

d.         Unlocking the potential of SMME, co-operativess, township and rural enterprises; 

 

e.         Resolving the energy challenge;

 

f.          Stabilising the labour market;

 

g.         Scaling-up private-sector investment;

 

h.         Growing the Ocean Economy;

 

i.          Cross-cutting Areas to Reform, Boost and Diversify the Economy;

 

i.          Science, technology and innovation

 

ii.         Water and sanitation

 

iii.        Transport infrastructure

 

iv.        Broadband rollout 

 

v.         State owned companies. 

 

 

 

We have made significant progress in the implementation of the plan. 

 

 

 

Progress has been made to stabilise the electricity supply. There has been no load shedding since August last year which has brought relief for both households and industry alike. 

 

 

 

Government has invested eighty three billion rand (R83 billion) in Eskom which has enabled the utility to continue investing in Medupi and Kusile, while continuing with a diligent maintenance programme.

 

 

 

Additional units from Ingula power station will be connected in 2017, even though some of them will begin synchronisation this year.

 

 

 

The multiple bid windows of the Renewable Independent Power Producer Programme have attracted an investment of one hundred and ninety four billion rand. 

 

 

 

This initiative is a concrete example of how government can partner with the private sector to provide practical solutions to an immediate challenge that faces our country.

 

 

 

In 2016, government will select the preferred bidders for the coal independent power producer. 

 

 

 

Request for Proposals will also be issued for the first windows of gas to power bids.

 

 

 

The nuclear energy expansion programme remains part of the future energy mix. 

 

 

 

Our plan is to introduce nine thousand six hundred megawatts of nuclear energy in the next decade, in addition to running Koeberg Nuclear Power Plant. 

 

 

 

We will test the market to ascertain the true cost of building modern nuclear plants. 

 

 

 

Let me emphasise that we will only procure nuclear on a scale and pace that our country can afford.

 

 

 

Compatriots,

 

 

 

Our government through the Department of Trade and Industry introduced a number of incentives in the past few years to boost investments in the manufacturing sectors especially textiles, leather and the automotive sectors.

 

 

 

Progress has been made in these sectors.

 

 

 

The incentives for the automotive sector have attracted investments of over twenty five billion rand over the last five years. We welcome key investments from Mercedes, General Motors, Ford, Beijing Auto Works, the Metair group, BMW, Goodyear and VW. 

 

 

 

The clothing and textile sector has also been successfully stabilised after a difficult few years. 

 

 

 

Multinational companies such as Nestle, Unilever Samsung and Hisense have also affirmed South Africa as a regional manufacturing hub. 

 

 

 

They have retained and expanded their investments in new plants. 

 

 

 

Indeed the progress made in manufacturing has certainly demonstrated that the incentive programmes are effective and attractive to investors.

 

Compatriots,

 

 

 

I announced programmes for the revitalisation of agriculture last year. We introduced the Agri-Parks programme, aimed at increasing the participation of small holder farmers in agricultural activities.  

 

 

 

Construction has begun in at least five agriparks, which are: Westrand in Gauteng, Springbokpan in North West, Witzenberg in Western Cape, Ncora in the Eastern Cape and Enkangala in Mpumalanga. 

 

 

 

The agricultural programmes must empower women farmers as well. Allow me to introduce the winner of the Female Entrepreneur of the Year 2015, Ms Julia Shungube, from Nkomazi municipality in Mpumalanga. 

 

 

 

Honourable Speaker and Chairperson,

 

 

 

Land reform remains an important factor as we pursue transformation.

 

 

 

I spoke about the fifty/fifty policy framework last year, which proposes relative rights for people who live and work on farms. 

 

 

 

Twenty seven proposals have been received from commercial farmers and four are being implemented in the Eastern Cape and the Free State.

 

 

 

I also announced the Regulation of Land Holdings Bill which would place a ceiling on land ownership at a maximum of 12 000 hectares and would prohibit foreign nationals from owning land. They would be eligible for long term leases. The draft Bill will be presented to Cabinet in the first semester of the year.

 

 

 

We also announced the re-opening of land claims for people who had missed the 1998 deadline. The number of new land claims that have been lodged stood at close to one hundred and twenty thousand as of December last year.

 

 

 

Compatriots,

 

 

 

As we are aware, five provinces have been seriously affected by drought, namely North-West, KwaZulu-Natal, Free State, Limpopo and Mpumalanga. 

 

 

 

Government provides relief to affected communities. Isomiso sixakile impela ezifundazweni eziningi. Imfuyo iyafa kanti nezolimo zisele emuva. Isikhathi esinzima lesi. 

 

 

 

Uhulumeni uzoqhubeka nokuxhasa abalimi kanye nokusiza imiphakathi ngezimoto ezithwala zamanzi.

 

 

 

Let me take this opportunity to commend the civil society initiative, Operation Hydrate  and others for the provision of water relief to many communities in distress.

 

 

 

The building of water infrastructure remains critical so that we can expand access to our people and industry.

 

The first phase of the Mokolo and Crocodile Water Augmentation project in Lephalale area in Limpopo is fully operational. It will provide 30 million cubic meters of water per annum.

 

 

 

The raising of the Clan William Dam wall in the Western Cape entails raising the existing dam level by 13 metres to provide additional water supply. 

 

 

 

To curb water wastage, the Department of Water and Sanitation has begun its programme of training fifteen thousand young people as artisans. 

 

 

 

Madam Speaker

 

Madam Chairperson,

 

 

 

On improving labour relations, we welcome the agreement reached by social partners at NEDLAC on the principle of a national minimum wage. 

 

 

 

Deliberations continue on the level at which the minimum wage must be placed.

 

 

 

It is important to emphasise that the national minimum wage should be implemented in a manner that does not undermine employment creation, the thriving of small businesses or sustained economic growth.

 

 

 

We are also encouraged by reports from NEDLAC that a framework to stabilize the labour market by reducing the length of strikes and eliminating violence during strike action is being finalized.  

 

 

 

We have heard the concerns of labour about the Tax Amendment Act that I signed into law in December, following its passing by Parliament.

 

 

 

Government is in discussion with COSATU about the matter and a solution is being sought.

 

 

 

Discussions are also on-going within government, led  by the Department of Social Development and National Treasury, with regards to finalising the comprehensive social security policy.

 

 

 

Compatriots,

 

 

 

Only a few years ago, our mining sector was in turmoil especially on the platinum belt. 

 

 

 

The situation has improved and we commend business and labour for the progress made. 

 

 

 

Another positive development in the mining sector was the Leaders’ Declaration to Save Jobs which was signed by mining industry stakeholders in August 2015. 

 

 

 

We urge the parties to implement the agreement and to continue seeking ways of saving jobs. 

 

 

 

We appeal to business again that retrenchments should not be the first resort when they face difficulties.

 

 

 

Compatriots,

 

 

 

In 2014 we launched the popular operation Phakisa Big Fast results methodology and implemented it in the ocean economy, health, education and mining sectors.

 

 

 

Seven billion rand has been committed in new port facilities, following the adoption of a Public- Private-Partnership model for port infrastructure development by Transnet National Ports Authority.

 

 

 

Compatriots, we were concerned that South Africa did not own vessels while we are surrounded by about three thousand kilometres of a coastline. 

 

 

 

Through the oceans economy segment of Operation Phakisa, we are trying to solve this challenge.

 

 

 

I am pleased that two bulk carrier vessels have been registered in Port Elizabeth, and a third tanker in Cape Town under the South African flag. 

 

 

 

Another positive Operation Phakisa development has been the launch of a fuel storage facility here in Cape Town, bringing an investment of six hundred and sixty million rand.

 

 

 

Aquaculture appears to be an important growth area within the oceans economy segment of Operation Phakisa. 

 

 

 

Close to three hundred and fifty thousand rand private sector investment has thus far been committed in the Aquaculture sector. Nine aquaculture farms are already in production.  These farms are located within the Eastern Cape, KwaZulu-Natal, Western Cape and Northern Cape.  

 

 

 

We continue to promote innovation within the Nine Point Plan programme. 

 

 

 

The Department of Science and Technology will finalise the Sovereign Innovation fund, a Public private funding partnership aimed at commercialising innovations that are from ideas from the public and the private sectors. 

 

 

 

Government will fast track the implementation of the first phase of broadband roll-out to connect more than five thousand government facilities in eight district municipalities over a three year period.

 

 

 

Funding to the tune of 740 million rand over a three year period has been allocated in this regard.

 

 

 

Compatriots

 

 

 

A lot of work was done in the social sector as well in the past year.

 

 

 

Government has responded to the financial shortfall arising from the zero per cent university fee increase, as agreed in meeting with students and vice-chancellors last year.

 

 

 

The Minister of Finance will provide the details of education shortfall funding in the Budget speech. 

 

I have appointed a Judicial Commission of Inquiry into higher education. We urge all stakeholders to cooperate with the Commission and help ensure its success.

 

 

 

On the health front, the life expectancy of South Africans for both males and females has significantly improved and is currently 62 years across genders, which is an increase of eight and a half years since 2005.  

 

 

 

The HIV policy turnaround in 2009 led to a massive rollout of HIV testing and treatment for 3.2 million people living with the virus. 

 

 

 

This has contributed immensely to healthier and longer lives for those infected. 

 

 

 

We acknowledge the contribution of partners in the South African National Aids Council which is chaired by the Deputy President.

 

 

 

Our next step is to revive prevention campaigns especially amongst the youth. The Minister of Health will soon announce a major campaign in this regard.

 

 

 

I am also happy to announce that the state-owned pharmaceutical company, Ketlaphela, has been established. The company will participate in the supply of anti-retroviral drug to the Department of Health from the 2016/17 financial year.

 

Meanwhile, the White Paper on National Health Insurance was released in December aimed at improving health care for everyone in South Africa. 

 

 

 

Compatriots,

 

 

 

Local government elections will be held within three months after the 18th of May, the date of the last elections. 

 

 

 

We urge all citizens who are over the age of 18 to register to vote during the first registration weekend, 5 and 6 March 2016. 

 

 

 

We urge the youth in particular who are turning 18 years of age this year, to register in their numbers for this first ever opportunity to cast their votes.

 

 

 

Our Back to Basics local government revitalisation plan was launched in September 2014 and 2015 has been the year of intensive implementation. 

 

 

 

In this second phase of implementation, national government will engage in more active monitoring and accountability measures. 

 

 

 

This includes unannounced municipal visits, spot checks of supply chain management processes, the implementation of recommendations of forensic reports, site visits of Municipal Infrastructure Grant funded projects, and increased interventions to assist struggling municipalities.

 

 

 

A 10 point plan of Back to Basics priority actions has been developed to guide this next phase.

 

 

 

The plan includes the promotion of community engagement, which is absolutely critical to enable communities to provide feedback on their experience of local government.

 

 

 

I already undertook a walkabout at Marabastad taxi and bus rank in Pretoria on Monday to speak to informal traders and commuters.

 

 

 

The majority of complaints and issues raised related to municipal services.

 

 

 

They would like the Tshwane municipality to clean the area and also to fix some broken sewerage pipes. Traders said they needed and were prepared to pay.

 

 

 

They alerted me that many people in Elandspoort receive RDP houses but instead of occupying them, they either sell them or rent them out other people. 

 

 

 

Mrs Baloyi who runs a stall complained about nyaope drug addicts who steal goods from traders.

 

 

 

Other commuters said I must visit Kwaggafontein in the former KwaNdebele and see the lack of service delivery. I will visit the area soon.

 

 

 

I was also able to speak to foreign nationals who said they queue daily to apply for documentation from the Department of Home Affairs. We will continue to visit communities to hear their concerns and suggestions. Issues raised during the visit will be followed up by the respective departments.

 

 

 

Compatriots

 

 

 

The South African Police Service is undergoing a turnaround and has adopted the Back to Basics approach to management to rebuild the organisation and to improve performance at all under-performing police stations.

 

 

 

We note sadly, as well that fifty seven police officers have been murdered to date during the 2015/16 financial year. We condemn this criminality strongly.

 

 

 

We urge the police to defend themselves when attacked, within the confines of the law.

 

 

 

Compatriots 

 

 

 

The African continent remains central to our foreign policy engagements. 

 

 

 

South Africa continued to support peace and security and regional economic integration through participation in the African Union and the Southern African Development Community initiatives.

 

 

 

We continued to assist sister countries in resolving their issues for example in Lesotho and South Sudan. 

 

 

 

The South African National Defence Force represented the country bravely and remarkably well in peacekeeping missions on the continent.  We are truly proud of our soldiers. They will be showcasing their capability in Port Elizabeth from the 13th to the 21st of February, the celebration of Armed Forces Day.

 

 

 

The Agreement by BRICS nations on the New Development Bank or BRICS Bank came into force and the bank is envisaged to approve its inaugural projects in April this year.

 

 

 

We participated in the India-Africa Summit as well as the Forum on Cooperation between Africa and China as we strengthened these important partnerships.

 

 

 

China announced investments of fifty billion US dollars of which South Africa will receive ten billion US dollars for infrastructure, industrialisation and skills development. 

 

 

 

On North-South cooperation, we continued our engagements with the European Union as a bloc which is our largest trading partner and foreign investor. 

 

 

 

Over 2000 EU companies operate within South Africa creating over three hundred and fifty thousand jobs. 

 

 

 

South Africa’s relations with the USA and Canada continue to strengthen, especially in the areas of economy, health, education, energy, water, safety and security, capacity building and the empowerment of women.

 

 

 

The renewal and expansion of the African Growth and Opportunity Act (AGOA) provides a platform for the enhancement of industrialisation and regional integration. All outstanding issues around AGOA are being attended to.

 

 

 

Compatriots 

 

 

 

We extend good wishes to all athletes who have qualified for the Olympic Games to be held in Rio de Janeiro. 

 

 

 

We encourage participation in several programmes aimed at promoting healthy lifestyles and nation building.

 

 

 

These include the National Recreation Day, the Nelson Mandela Sports and Culture Day; the World Move for Health Day, the Golden Games and the Andrew Mlangeni Golf Development Day.

 

 

 

Compatriots,

 

 

 

A committee has been established to coordinate the participation of our performing arts legends in nation building activities in the country.

 

 

 

The Living Legends committee is chaired by playwright Mr Welcome Msomi working with music icon, Ms Letta Mbulu, as deputy chairperson.

 

 

 

We are also happy that musicians and actors amongst others heeded our call to unite and have formed the Creative Industries Federation of South Africa. The Presidency has established the Presidential Creative Industries Task Team to support our artists.

 

 

 

Compatriots,

 

 

 

To achieve our objectives of creating jobs, reducing inequality and pushing back the frontiers of poverty we need faster growth. 

 

 

 

In the National Development Plan, we set our aspirational target growth of five per cent per year, which we had hoped to achieve by 2019. 

 

 

 

Given the economic conditions I have painted earlier on, it is clear that we will not achieve that growth target at the time we had hoped to achieve it. 

 

 

 

The tough global and domestic conditions should propel us to redouble our efforts, working together as all sectors. In this regard, it is important to act decisively to remove domestic constraints to growth. 

 

 

 

We cannot change the global economic conditions, but we can do a lot to change the local conditions. 

 

 

 

Let us work together to turn the situation around. It can be done.

 

 

 

I thank you.

 

 

 

http://www.presidency.gov.za/pebble.asp?relid=21584

 

International Convention Centre (ICC),

Durban.

15 October 2014

 

The Premier of KwaZulu-Natal, Mr Senzo Mchunu,

Ministers and Deputy Ministers, MECs, Mayors,

The Chief Whip of the ruling party and all Members of Parliament and of the Provincial Legislature,

Representatives of Business, Labour, Academia, Religious Sector and Non-governmental Organisations,

The leadership of the ruling party,

Representatives of the Government of Malaysia,

Members of the diplomatic corps,

Senior government officials

Fellow South Africans,

Sanibonani,

Good morning to you all!

 

We gathered here in Durban on the 19th of July to launch Operation Phakisa.

We said then that we would begin with the segment of Phakisa focusing on the ocean economy.

Today we have gathered to share the results of six weeks of exploring the economic potential of our country’s oceans.

We did not start Operation Phakisa in a vacuum. It is in line with the goals outlined in the National Development Plan, to promote economic growth and to boost job creation.

We had announced in June this year that we are chasing a growth target of five percent by 2019.

To achieve that target, werequire new and faster ways of doing things, and Operation Phakisa represents that new spirit of moving faster in meeting our targets.

Operation Phakisa is an adaptation of the Big Fast Results Methodology of Malaysia.

In only a few weeks of implementing this approach, we are convinced that we are moving in the right direction.

Our starting point was that South Africa is surrounded by a vast ocean and yet we have not fully taken advantage of the immense potential of this untapped resource.   

The oceans have the potential to contribute up to 177 billion rand to the Gross Domestic Product and create just over one million jobs by 2033. 

To further explore this potential, we brought together teams from government, labour, business, academia and other sectors to work together in experimental laboratories, to explore all possibilities and further unlock the potential of our country’s vast coastline.

 

The teams have focused on four critical areas. These are marine transport and manufacturing, offshore oil and gas exploration, aquaculture as well as marine protection services and ocean governance.

I will give an overview of each workstream.

The workstream on Marine Transport and Manufacturing moved from the premise that we have not exploited South Africa’s strategic location, infrastructure and skills base to accelerate growth of this sector. 

The teams have highlighted a concern that South Africa currently has no registered ships. This is in spite of the fact that each year, three hundred million (300 million) tons of cargo moves through our ports in imports and exports.

In addition, 1.2 million tonnes of liquid fuels move along our coast, while the rapidly expanding offshore oil and gas activities require a supporting fleet of vessels.

Another opportunity arises from our country’s location.

South Africa is ideally positioned to serve the East-West cargo traffic and the booming African offshore oil and gas industry, through marine manufacturing, which includes ship and rig repair, refurbishment and boatbuilding.

Despite this competitive advantage, we currently capture only one percent of the global market of ship repair and refurbishment.

Of the eighty oil rigs estimated to be in the range of the Western Cape, only four rigs are serviced per year, showing significant potential for growth.

As a solution, the marine transport workstream has developed eighteen initiatives across three categories, infrastructure and operations, skills and capacity building as well as market growth to accelerate sector growth. 

The initiatives will expand South African port capacity for repair work for oil ships and oil rigs.

Some of the initial targets drawn up include firstly, an increase in the local manufacturing capacity through a ten percent increase in the usage of local components for boat and ship building.

Second, is an increase in the ship repair capacity in Richards Bay, thus creating two hundred (200) direct jobs.

The third target is to create a dedicated Occupational Team for the sector within the Department of Higher Education and Training to drive alignment between theoretical and workplace learning.

The fourth target entails increasing the amount of minerals exported on South African ships, which will create more than four thousand direct jobs.

Some of the progress made already include the process of establishing a National Shipping Company, a partnership with South Korea.

The second workstream, Offshore Oil and Gas Exploration, has indicated that South Africa’s coast and adjoining waters have possible resources of approximately nine billion barrels of oil.

This is equivalent to forty years of South African oil consumption.

We also have eleven billion barrels oil equivalent of natural gas, which is equal to three hundred and seventy five years of South African gas consumption.

However, there is significant uncertainty about the extent of these resources. 

This workstream has developed eleven initiatives.

The team has set an ambitious target of drilling thirty exploration wells in ten years. Over the next twenty years, this work could lead to the production of three hundred thousand (370 000) barrels of oil and gas per day.

This is approximately eighty percent of current oil and gas imports. The result would be one hundred and thirty thousand jobs and a contribution of two point two billion US dollars (US $2.2 billion) to GDP. 

As a Government, we are aware that we have to create the enabling environment to give industry the comfort to invest in this capital-intensive sector.

The workstream has outlined some initial targets towards this goal.

 

They say we have to provide clarity and stability in the legislative framework governing offshore oil and gas, ensuring a “win-win” outcome for government, industry, and society.

We have to build a “one-stop shop” within the Department of Mineral Resources to streamline and regulate the licensing process for offshore oil and gas exploration and production.

We must conduct emergency response drills jointly as industry and government to initiate the creation of a world-class oil spill response capacity in South Africa.

We have to make the International Oil Pollution and Compensation Fund operational.

And lastly we have to exploit  research opportunities presented by offshore oil and gas explorations that will unlock data ecosystems, marine resources, and ocean-related renewable energy.

We welcome these initiatives and proposals.

Ladies and gentlemen,

The Aquaculture workstream has underlined the high growth potential of South Africa’s aquaculture sector due to increasing demand for fish.

While aquaculture contributes to almost half of the global fish supply, it contributes less than one percent of South Africa’s fish supply.

The sector offers significant potential for rural development, especially for marginalised coastal communities.

This workstream has identified eight initiatives to spur the growth of the sector. 

One initiative will address the selection and implementation of twenty four (24) projects across South Africa by 2019.

Together, these projects are expected to grow the aquaculture sector’s revenue from about half a billion rand today, to almost one point four billion rand (R1.4billion) in 2019.

Three further aquaculture initiatives relate to the creation of an enabling regulatory environment, including the establishment of an Inter-Departmental Authorisations Committee.

The committee will co-ordinate aquaculture applications and approvals. The intention is to reduce processing time from the current periods of about 890 days to 240 days in future. 

Other initiatives focus on funding support, increasing the skills pool and awareness and improving access to markets.

The stream has identified some initial targets as well.

They recommend implementing nine projects in the Eastern Cape, North West, KwaZulu-Natal and Western Cape provinces.

The work stream also proposes the establishment of the Aquaculture Development Fund, consolidating approximately five hundred million rand  of Government funds from five departments into one pot.

The teams also propose the creation of a South African industry body that will establish seventy to eighty buyer relationships such as local retailers and food service companies.

This will create a comprehensive market database covering one hundred percent of South African aquaculture production.

Ladies and gentlemen

The last workstream is that of Marine Protection Services and Ocean Governance. They looked at South Africa’s jurisdiction over a very large Exclusive Economic Zone, with an extent of one and a half million square kilometres.

With such a large ocean jurisdiction, effective governance is critical but will be challenging given the size and complexity of our oceans.

This workstream undertook the task of developing an overarching, integrated ocean governance framework for the sustainable growth of the ocean economy. 

 

The workstream identified ten initiatives to be implemented by 2019.

These include the development and implementation of an overarching governance plan by March 2015.

The plan entails the protection of the ocean environment from all illegal activities and to promote its multiple socio-economic benefits with results by 2017.

The team also proposes the delivery of a National Marine Spatial Planning Framework in order to enable a sustainable ocean economy by December 2015.

In the spirit of Operation Phakisa and getting things done as quickly as possible, there is already progress on working towards an Oceans Act. We hope to have a draft Oceans Bill ready in 2015. 

The Oceans Act will provide a clear foundation for marine spatial planning. 

Going forward, Delivery Units have been established in the lead departments that will drive the implementation of the detailed delivery plans. 

The progress will be monitored on a weekly basis by the Department of Planning, Monitoring and Evaluation in my office, the Presidency.

We intend to provide regular feedback so that the public can also track progress.

Compatriots and friends,

We will achieve the growth and the jobs we need in the economy sector, if we continue working together in this manner.

The initiatives arising out of this hard work are expected to increase the ocean economy’s GDP contribution by more than 20 billion rand by 2019.

I would like to congratulate the teams for hard work, cooperation and commitment during the six week period. You have been able to prove that when we put South Africa first, we achieve results that move our country forward.

We are encouraged by the success of Operation Phakisa Ocean Economy. The second project, focusing on Health began on Monday the 13^th of October.

Workstreams are working in Gauteng for six weeks to uncover what will entail the ideal, effective clinic in our health system.

Delivery plans will be released to the public as well once they have completed their exploratory phase.

We will continue working hard each day, to build a more prosperous and successful South Africa, and a better life for all.

Our founding President, Madiba reminds us of our responsibility. He said;

“As long as many of our people still live in utter poverty, as long as children still live under plastic covers, as long as many of our people are still without jobs, no South African should rest and wallow in the joy of freedom.”

You will all be able to engage more intensively with the workstreams in the exhibition today.

They will appreciate feedback in order to improve the work done and sharpen the delivery phase.

Working together, let us move South Africa forward.

I thank you all.

Issued by The Presidency

Pretoria

 

Email Disclaimer: http://www.thepresidency.gov.za/pebble.asp?relid=97

Pretoria

25 May 2014

 

Fellow South Africans,

Ladies and gentlemen of the media,

I am pleased to join you on Africa Day, as we conclude our transition to a new administration following the fifth national general elections.

I announced on Saturday that we have entered the second phase of our transition to a national democratic society. I also said this would be a radical phase of socio-economic transformation.

It is my pleasure today to announce the members of the National Executive, who have been tasked with improving and speeding up the implementation of our progressive policies and programmes.

The team will implement the five year Medium Term Strategic Framework of government, which has been developed using the National Development Plan and the ANC Manifesto.

To improve implementation and ensure impact, we have reconfigured some departments while others have been expanded to improve capacity.

I will briefly outline the changes and then announce the names of the new ministers and deputy ministers.

 

We have established a Ministry of Telecommunications and Postal Services. 

Our country has a fast growing telecommunications sector which in 2012 was estimated at being worth R180 billion.  We also see a great developmental value in the Post Office given its role of delivering financial services to remote areas of our country.

This new department will ensure that the country derives more value out of the booming information communications and technology industry and the postal services sector.

The National Planning Commission as well as the Performance Monitoring and Evaluation Ministries in the Presidency have been combined into one Ministry to harmonise the planning and monitoring functions.

This Ministry will also continue to be responsible for youth development.

We have established a new Communications Ministry, which  will be responsible for overarching communication policy and strategy, information dissemination and publicity as well as the branding of the country abroad.

Improved communication and marketing will promote an informed citizenry and also assist the country to promote investments, economic growth and job creation.

This Ministry will be formed out of the following components;

·         The Independent Communications Authority of South Africa.

·         The SA Broadcasting Corporation.

·         Government Communications and Information System (GCIS).

·         Brand SA and

·         The Media Development and Diversity Agency.

 

Ladies and gentlemen,

The functions related to support for people with disabilities and children, will be transferred to the Department of Social Development. 

The current Ministry of Women, Children and People with Disability is now the Ministry of Women which will be located in the Presidency.

 

The Women’s Ministry will champion the achievement of women’s socio-economic empowerment and women’s rights.

To further improve efficiency in the criminal justice system, we have combined the Department of Justice and Constitutional Development with the Correctional Services department.

The Department will now be called the Department of Justice and Correctional Services.

Ladies and gentlemen,

We have made an undertaking to significantly improve the provision of water and sanitation to our communities in the new term.

In this regard, we have established the Ministry of Water and Sanitation.

You will recall that we stated in the inauguration address that the economy will take centre-stage. The development of the small business sector is critical to economic development and transformation.

We have thus established a new Ministry for Small Business Development.

Ladies and gentlemen,

It is now my pleasure to announce the members of the National Executive.

The Deputy President is Mr Cyril Ramaphosa.

 

MINISTERS

1.    The Minister in the Presidency is Mr Jeff Radebe.

2.    The Minister of Women in the Presidency is Ms Susan Shabangu.

3.    The Minister of Justice and Correctional Services is Mr Michael Masutha.

4.    The Minister of Public Service and Administration is Mr Collins Chabane.

5.    The Minister of Defence and Military Veterans is Ms Nosiviwe Mapisa-Nqakula.

6.    The Minister of Home Affairs is Mr Malusi Gigaba.

7.    The Minister of Environmental Affairs is Ms Edna Molewa.

8.    The Minister of State Security is Mr David Mahlobo.

 

 

9.    The Minister of Telecommunications and Postal Services is Dr Siyabonga Cwele.

10.  The Minister of Police is Mr Nkosinathi Nhleko.

11.  The Minister of Trade and Industry is Dr Rob Davies.

12.  The Minister of Finance is Mr Nhlanhla Nene.

13.  The Minister of Agriculture, Forestry and Fisheries is Mr Senzeni Zokwana.

14.  The Minister of Water and Sanitation is Ms Nomvula Mokonyane.

15.  The Minister of Basic Education is Ms Angie Motshekga.

16.  The Minister of Health is Dr Aaron Motsoaledi.

17.  The Minister of International Relations and Cooperation is Ms Maite Nkoana-Mashabane.

18.  The Minister of Rural Development and Land Reform is Mr Gugile Nkwinti.

19.  The Minister of Higher Education and Training is Dr Bonginkosi “Blade” Nzimande.

20.  The Minister of Economic Development is Mr Ebrahim Patel.

21.  The Minister of Transport is Ms Dipuo Peters.

22.  The Minister of Mineral Resources is Adv Ngoako Ramathlodi.

23.  The Minister of Social Development is Ms Bathabile Dlamini.

24.  The Minister of Public Enterprises is Ms Lyn Brown.

25.  The Minister of Sport and Recreation is Mr Fikile Mbalula.

26.  The Minister of Labour is Ms Mildred Oliphant.

27.  The Minister of Arts and Culture is Mr Nathi Mthethwa.

28.  The Minister of Public Works is Mr Thulas Nxesi.

29.  The Minister of Small Business Development is Ms Lindiwe Zulu.

30.  The Minister of Energy is Ms Tina Joemat-Peterssen.

31.  The Minister of Science and Technology is Ms Naledi Pandor.

32.  The Minister of Cooperative Governance and Traditional Affairs is Mr Pravin Gordhan.

33.  The Minister of Communications is Ms Faith Muthambi.

34.  The Minister of Human Settlements is Ms Lindiwe Sisulu.

 

35.  The Minister of Tourism is Mr Derek Hanekom.

 

DEPUTY MINISTERS

The Deputy Ministers are the following;

1.    The Deputy Minister of Human settlements is Ms Zoe Kota-Hendricks.

2.    The Deputy Minister of Basic Education is Mr Enver Surty.

3.    The Deputy Minister of Cooperative Governance and Traditional Affairs, responsible for provincial and local government is Mr Andries Nel.

4.    The Deputy Minister of Cooperative Governance and Traditional Affairs, responsible for traditional affairs, is Mr Obed Bapela.

5.    The Deputy Minister of Defence and Military Veterans, Mr Kebby Maphatsoe.

6.    The Deputy Minister in the Presidency is Mr Buti Manamela.

7.    The Deputy Minister of Tourism is Ms Thokozile Xasa.

8.    The Deputy Minister of Health is Dr Joe Phaahla.

9.    The Deputy Minister of Public Service and Administration is Ms Ayanda Dlodlo.

10.  The Deputy Minister of Home Affairs is Ms Fatima Chohan.

11.  The Deputy Minister of Public Enterprises is Mr Gratitude Magwanishe.

 

The Ministry of Justice and Correctional Services will have two deputy ministers.

They are;

12.  Mr John Jeffery, responsible for the justice and constitutional development component and

13.  Mr Thabang Makwetla responsible for the correctional services portfolio.

14.  The Deputy Minister of Environmental Affairs is Ms Barbara Thomson.

15.  The Deputy Minister of Sport and Recreation is Mr Gert Oosthuizen.

16.  The Deputy Minister of Agriculture, Forestry and Fisheries is Mr Bheki Cele.

17.  The Deputy Minister of Telecommunications and Postal services, Ms Hlengiwe Mkhize.

18.  The Deputy Minister of State Security is Ms Ellen Molekane.

19.  The Deputy Minister of Police is Maggie Sotyu.

20.  The Deputy Minister of Trade and Industry, is Mzwandile Masina.

International relations and cooperation will remain with two deputy ministers.

These are;

21.  Ms Noma-India Mfeketho and

22.  Mr Lluwelyn Landers.

23.  The Deputy Minister of Finance is Mr Mcebisi Jonas.

24.  The Deputy Minister of Water and Sanitation is Ms Pam Tshwete.

About 17 million South Africans live in rural areas. However, rural areas bear the brunt of poverty, joblessness and gross inequality, particularly former homeland areas.

Given this reality, I have decided to appoint two Deputy Ministers for Rural Development and Land Reform.

They are;

25.  Mr Mcebisi Skwatsha  and

26.   Ms Candith Mashego-Dlamini.

27.  The Deputy Minister of Higher Education and Training is Mr Mduduzi Manana.

28.  The Deputy Minister of Economic Development is Mr Madala Masuku.

29.  The Deputy Minister of Transport is Ms Sindi Chikunga.

30.  The Deputy Minister of Mineral Resources is Mr Godfrey Oliphant.

31.  The Deputy Minister of Social Development is Ms Henrietta Bogopane-Zulu.

The labour portfolio will gain a deputy minister given the important role of the department in

the economic cluster.

32.  The Deputy Minister is Inkosi Patekile Holomisa.

33.  The Deputy Minister of Arts and Culture is Ms Rejoice Mabudafhasi.

34.  The Deputy Minister of Public Works is Mr Jeremy Cronin.

35.  The Deputy Minister of Small Business development is Ms Elizabeth Thabethe.

36.  The Deputy Minister of Energy is Ms Thembi Majola.

 

37.  The Deputy Minister of Communications is Ms Stella Ndabeni-Abrahams.

I have appointed 20 men and 15 women Ministers as well as 20 men and 16 women deputy ministers.

We are happy to be moving closer to our target of having more women in Cabinet and the national executive as a whole.

I would like to take this opportunity to thank Deputy President Kgalema Motlanthe and all the Ministers and Deputy Ministers who served in the fourth administration.

Their contribution to the improvement of the quality of life of our people is highly appreciated.

We wish Deputy President Ramaphosa and all the newly appointed Ministers and Deputy Ministers all the best as they lead the nation in moving the country forward.

I thank you.

Issued by The Presidency

 

Pretoria

26 Feb 2014

Honourable Speaker

I have the honour to present the fifth and last budget of President Zuma’s first administration.

In just over two months, we will again exercise our most fundamental expression of freedom – our right to vote for a new government.

Political emancipation is just the beginning of our journey towards justice and equality. In exercising the responsibilities that flow from democratic participation, we have the opportunity to create a better future for all. As Madiba wrote on his prison calendar in 1979, “The purpose of freedom is to create it for others.”

At the outset, I want to thank all South Africans for your support, cooperation and encouragement. Ngiyabonga, ndia livhuwa, enkosi, ke a leboga....

We have achieved much over the past five years, in a very difficult post- recession climate. But there is more to do ahead, more to build, more to put right, more to learn, more to implement. We can only do this together.

Fellow South Africans, let me be frank with you – the world economy is still in difficulty, and global institutions are struggling to find their way.

In South Africa, we stabilised our economy after the 2008 crisis. We have achieved a recovery in growth and jobs. Yet we need to do more, together with labour, business and all stakeholders, to lead our economy in a new, bold direction for higher growth, decent work and greater equality.

Mister President, as you said in your reply to the State of the Nation debate: “Twenty years of freedom and democracy have changed the face of our country. The last five years have further advanced change and a better life for all, especially the poor and the working class.”

An agenda for transformation

Our plans for the period ahead are focused on the transformation imperatives that will accelerate growth, create work opportunities and build a more equal society.

This Budget lays the foundation for the structural reforms envisaged over the next term of this Government. It sets out the resource plan for an intensified implementation of our National Development Plan. It is tabled in the knowledge that all South Africans will gain from our economic transformation, just as we all share a new pride and identity in our Constitutional democracy.

So the new economic order we seek cannot just be a pact amongst elites, a coalition amongst stakeholders with vested interests. Nor can it be built on populist slogans or unrealistic promises. Our history tells us that progress has to be built on a vision and strategy shared by leaders and the people – a vision founded on realism and evidence.

We have to work together to radically change our economy. This means working with our major businesses so that they sparkle across the globe. It means working with black entrepreneurs to grow their companies across South Africa and beyond, working with small and large businesses to build value chain linkages that support dynamic export oriented, competitive enterprises. It means bringing those who are marginalised into the mainstream of opportunity and activity. It means a better standard of living for all.

Whether you are employed or unemployed, a young person caring for a family yet still going to school, someone looking for experience in order to move on to a better job, looking for skills or needing further education opportunities, working in a government employment programme or a temporary construction project, whether you are an unskilled worker or a young professional looking for opportunities to develop specialist experience – we can, together, move forward towards a better life for all.

It is time for a bold vision of our future as set out in the National Development Plan. It is time for action and implementation. It is time to move South Africa forward to the next stage of our historic journey to more rapid growth, jobs and development – time to leave behind poverty, joblessness and inequality!
Overview of the 2014 Budget

Mister Speaker, allow me to summarise the key features of the 2014 Budget.

The economy

• The global economic outlook remains unsteady – some advanced economies have returned to growth, others continue to lag. The slowdown in quantitative easing by the Federal Reserve has caused further uncertainty to financial markets, currency volatility and capital outflows from emerging markets.
• South Africa’s economy has continued to grow, but more slowly than projected a year ago. We expect growth of 2.7 per cent this year.
• A weaker exchange rate is a risk to the inflation outlook, but it supports exporters. Sustained improvements in competitiveness require further investment in infrastructure and a range of microeconomic reforms.

The budget framework

• Despite slower economic growth, the 2013/14 budget deficit is projected to be 4 per cent of Gross Domestic Product (GDP), lower than projected in October.
• The deficit will narrow to 2.8 per cent of GDP over the medium term, and net debt will stabilise at about 45 per cent of GDP in 2016/17.
• Consolidated non-interest spending will amount to R1.1 trillion in 2014/15, growing to R1.3 trillion in 2016/17, increasing by about 2 per cent a year over the medium term.
• National government departments are allocated approximately 48 per cent of available funds, provinces 43 per cent and municipalities 9 per cent.
• Capital spending is the fastest-growing component of expenditure, and is set to exceed inflation by over 4 per cent a year.

Benefits to households

 

• The Budget provides R9.3 billion in income tax relief to households.
• Government will expand its employment programmes over the next three years and continue to support job creation by the private sector.
• We will build 216 000 houses and connect 905 000 households to electricity over the Medium Term Expenditure Framework (MTEF )period.
• The number of children receiving the child support grant will increase to 11.4 million.
• 433 schools will be rebuilt.

Support for businesses

• Increased support and tax relief for entrepreneurs and small businesses is proposed.
• Incentives for industry are strengthened, including funding for special economic zones.
• Nearly 500 000 subsistence and small-holder farmers will receive training and financial support.

Financial security

Further steps will be taken to make sure you have a secure income in retirement. Unnecessary costs in the system will be cut.

Global crisis and response

Your administration started out, Mister President, with an economy that, in rugby terms, might be called a “hospital pass”.

We experienced a once-in-70-year economic earthquake, the aftershocks of which are not yet over. Today we can report to the South African people, on what we have done in the past five years to respond to this crisis.
We began on a firm footing:

• Growth of 5 per cent a year between 2003 and 2008,
• A steady expansion in employment, and
• A budget surplus for the first time in 50 years. We were set back by the crisis:
• A collapse in commodity prices, sharp declines in international trade and a crisis in financial markets,
• The South African economy contracted by 1.5 per cent in 2009, nearly a million jobs were lost, and
• Government revenue in 2009/10 fell short of the budget target by R61 billion.

We stabilised the economy, and ensured a recovery:

• Our response was to implement an aggressive countercyclical fiscal adjustment.
• When global trade went into reverse, we took steps to improve competitiveness of businesses within the framework of the Industrial Policy Action Plan. We accelerated infrastructure investment and we expanded financial assistance to businesses in distress.
• We expanded the Community Work Programme.
• Unemployment insurance and our expanding social grants programme provided increased income support to the most vulnerable.
• Our response to the global crisis was founded on a collectively agreed framework for working together – government, business, labour and communities – facilitated by the National Economic Development and Labour Council.

And so although the great waves of financial turbulence and the slow growth in developed economies have constrained our economic recovery, we have recorded positive growth since 2010. We have more than recovered the jobs that were lost. And we have initiated a coordinated infrastructure investment programme, organised into seventeen Strategic Integrated Projects to catalyse opportunities in mining, industry, agriculture and services across the country. We have saved this country from the worst!

What is to be done?

Mr President, in 1987 Oliver Tambo said: “South Africa today is a country of immense inequalities. The bedrock of our perspective is our commitment to the establishment of democracy in a South Africa that belongs to all who live in it, black and white. In keeping with this commitment to our people, our policy positions enshrined in the Freedom Charter have been formulated with the fullest participation of our people.”

Fellow South Africans, I can share with you that both as the Government and the ruling party, the African National Congress (ANC), we have reviewed the successes of the past 20 years, understanding our weaknesses and strengths, and reflecting on how best we can lead this country and all of our people to a better, more dynamic future.

Mister Speaker, no one in this house denies that South Africa is a different country from the one this House and the Government inherited in 1994. The facts speak for themselves! We have made immense strides in rebuilding a fragmented society and in opening opportunities to all South Africans.

Yet we still have an immense set of tasks and challenges facing us. We cannot just muddle through the next decade.

In fulfilling our aspirations in the Freedom Charter, we have a clear and comprehensive vision for South Africa in 2030, a plan for higher growth, decent work and greater equality.

As the first phase of implementing that vision we have a five-year plan and a medium term budget framework, so that step by step we can make a difference in the lives of all South Africans.

On these two foundations, we are able to offer bold and forthright leadership.

The next government will set out the details of its plans to deliver on the National Development Plan (NDP) after it takes office in May.

Let me explain.

The National Development Plan

As I already indicated, this administration has prepared a National Development Plan, drawing on expertise and advice from South Africans of all walks of life. The NDP reflects the priorities underpinning this budget, and prepares the ground for the next phase of our economic and social transformation.

Central to the NDP, Mister Speaker, is our commitment to partnership – to a social compact to reduce poverty and inequality, and raise employment and investment.

To make more rapid progress in creating jobs and reducing poverty, we have to grow our economy at 5 per cent a year or more.

To achieve this, and to establish a growth path that is inclusive and rapidly promotes black economic development, a wide range of initiatives are under way:

• Accelerated public infrastructure investment,
• New spatial plans for cities, improved public transport and upgrading informal settlements,
• Support for special economic zones and manufacturing incentives in the Industrial Policy Action Plan,
• A tax incentive to encourage youth employment,
• Further expansion of public works programmes,
• A renewed focus on accountability and quality in education,
• Phasing-in of National Health Insurance,
• Further investment in renewable energy and support for the transition to a low-carbon economy,
• Steps to professionalise the public service and overhaul procurement and supply chain management.

Yet I need to caution that success in implementing these plans depends on discipline, hard work, cooperation and sustained improvements in productivity, both in the public and the private sectors. Our present circumstances oblige us to live and spend modestly and keep a careful balance between social expenditure and support for growth.

And so in framing the 2014 Budget, Mister Speaker, we have reprioritised expenditure within the overall ceiling set in the October Medium Term Budget Policy Statement. The budget deficit will steadily decline over the period ahead.

Mister President, the next administration will inherit sound public finances, a platform for implementation of the NDP and a framework for collaboration with all stakeholders in driving social and economic transformation forward.

Government expenditure programmes

Now let me come to some of the programmes that government will implement to further change the lives of our people.

• Government has spent more than R100 billion on employment programmes over the past five years, including municipal and provincial spending. More than 4 million job opportunities were funded over this time. Allocations will continue to grow strongly, and 6 million job opportunities will be created over the next five years.
• We have spent R115 billion on higher education over the past five years, including R18.6 billion on the National Student Financial Aid Scheme (NSFAS). Allocations to the NSFAS amount to R19.4 billion over the next three years, and will assist over 500 000 students a year.
• We have spent R41 billion on HIV and Aids programmes over the past five years, and R43.5 billion is budgeted over the next three years. We have spent R39 billion on 1 879 hospital and other health facility projects, and R26 billion is allocated over the MTEF period ahead.
• Spending on social assistance has risen from R75 billion in 2008/09 to R118 billion this year. The number of grant recipients has increased from 13.1 million in 2009 to 15.8 million today.
• Spending on infrastructure amounted to R1 trillion over the past five years and will be R847 billion over the next three years.
• Spending on human settlement programmes amounted to R70 billion over the past five years, contributing to 590 000 houses being built. 850 000 households were connected to electricity over this period.
• Spending on industrial incentives amounted to R22 billion over the past five years. R21.8 billion is budgeted for the MTEF period ahead. 128 projects have been approved under the Automotive Investment Scheme, and more than 460 companies have benefited from the Clothing and Textiles Competitiveness Programme.

The spending plans contained in the 2014 Budget build on this administration’s progress since 2009. Reprioritisation of resources aims to give greater impetus to programmes with the greatest developmental impact and proven implementation capacity.

The Estimates of National Expenditure provide detailed information on government’s spending plans over the year ahead.

Job creation

Honourable Members, we know that job creation is a central priority of the National Development Plan. Bantu bakuthi masibambisane sakhe amathuba emisebenzi (Fellow South Africans, let us work together to create opportunities for employment.)

Since the low-point of the 2009 recession, employment has increased by approximately 1.3 million, as recorded in the Quarterly Labour Force Survey. But unemployment of 24 per cent of the work force is still far too high. And so Tshepo Sechele, a student at the Vaal University of Technology, quite rightly advises that “government should have clear strategies for youth development and employment for the next 5 to 20 years.”

Indeed we have such a strategy. It includes:

• Stepped up implementation of the expanded public works programme.
• Implementation of the Community Work Programme in every municipality by 2017.
• Introduction this year of the youth employment tax incentive, which in its first month has recorded 56 000 beneficiaries.
• Establishment of special economic zones, industrial incentives, and support for agriculture and labour-intensive sectors.
• Ramping-up of skills development and further education and training programmes.
• Housing investment, support for small and medium enterprises and the Jobs Fund partnerships with private and public sector development agencies.

Billions of rand have been allocated to these programmes.

And to support those who lose their jobs in difficult times, Minister Oliphant has introduced proposals to extend unemployment benefits from 238 to 365 days, on condition that claimants are actively seeking work.

Social assistance grants

The number of people eligible for grants is due to reach 16.5 million by 2016/17. The recent re-registration of grant recipients and the introduction of a new payment system have lowered the cost of administration. One million invalid beneficiaries were removed from the system. Social grants are meant for those who need them most.

Grant recipients will receive the following increases this year:

• The old age and disability grants will increase in April from R1270 a month to R1350,
• The foster care grant will increase from R800 to R830, and
• The child support grant will increase from R300 to R310 a month in April, and to R320 in October.

National Health Insurance (NHI)

This administration has also launched a far-reaching reform to make quality healthcare affordable to all South Africans. The Department of Health’s white paper on NHI and a financing paper by the National Treasury have been completed and will be tabled in Cabinet shortly. The unfolding of NHI is premised on two pillars being put in place. Improvements have to be made in public sector health delivery, and the high cost of private health care has to be reduced. This approach is supported by the World Health Organisation.

NHI pilot districts have been established in every province, supported by funding for NHI as a conditional grant. In addition to hospital and clinic building and refurbishment programmes, R1.2 billion has been allocated for piloting general practitioners’ contracts. An Office of Health Standards Compliance has been established to ensure that public healthcare provision meets the required standards. A new funding framework for the National Health Laboratory Services and associated research activities has been agreed.

But the improvements to this country’s health system over the past five years are best seen in our rising life expectancy, the reduction in infant, child and maternal mortality and the changed lives of 2.5 million people who now have access to anti-retrovirals. Over the period ahead, enrolment in the HIV treatment programme will expand by about 500 000 a year.

Education

We have also made strides in improving access to education over the past five years.

• In 2007, 5 million learners had access to free education; this year the number reached 8.8 million.
• Grade R enrolment has increased from 544 000 in 2009 to 779 000 this year.
• The national school nutrition programme now feeds 8.7 million children.
• The Funza Lushaka bursary scheme supported 3 950 graduates qualifying for placement as teachers in 2013.

Through the National Education Collaboration Trust, government, business, labour and civil society will pool resources and work together to restore schools and improve education outcomes in the period ahead.

The allocation to the National Student Financial Aid Scheme increases from R5.1 billion last year to R6.6 billion in 2016/17. This will increase the number of FET college bursaries to 292 000 and will assist over 236 000 students to attend university by 2016/17.

As is emphasised in the NDP, improvements in education are critical. Dashen Shivambu from Polokwane was one of many who wrote to me in support of Minister Nzimande’s plans: “I would like you to put more money on the table for Higher Education as more funding is required.” So the 2014 Budget again gives special priority to education.

Infrastructure investment

Mister President, under your leadership of the Presidential Infrastructure Coordination Commission, coordinated by Minister Patel’s department, we are now making progress in overcoming infrastructure backlogs and investing for more inclusive growth and development. Public infrastructure investment will amount to R847 billion over the next three years.

• The first unit of the Medupi power station is expected to be completed towards the end of this year.
• Transnet has increased capacity on its coal line. Plans are in place to further expand the coal, iron ore and manganese lines.
• The Passenger Rail Agency of South Africa refurbished 500 metrorail coaches last year, and its new rolling stock procurement programme will get under way this year.
• Spending on social infrastructure – which includes health, education and community facilities – will increase from R30 billion in 2012/13 to R43 billion in 2016/17. Priority will be given to programmes to eradicate school infrastructure backlogs and to refurbish clinics and hospitals.
• A programme to rehabilitate 35 dams has been completed, and work is in progress on the country’s five large water transfer schemes.
• In 2014/15, a total of R40 billion in infrastructure grants will be transferred to local governments for their water, sanitation, energy and environmental functions.

The private sector is also making an increasing contribution to infrastructure investment. Contracts for 47 renewable energy projects were concluded in 2012 and 2013, many of which are already under construction. These will add 2 460 MW of power capacity, and investment of R70 billion. A further R45 billion in investment will be contracted this year.

Unlocking city development and municipal service delivery

Our development plans also focus on overcoming the spatial fragmentation of South Africa’s built environment, improved public transport and accelerated investment in human settlements.

An integrated city development grant has been introduced to strengthen long- term city planning and encourage private investment in urban development. It will amount to R814 million over the medium term.

The assignment this year of the human settlements function to metropolitan municipalities is a vital intervention in accelerating housing investment and integrated urban development.

Over the next three years, national government will allocate R105 billion to municipalities for free basic water, sanitation, electricity and refuse removal services.

In rural districts, Minister Nkwinti’s development initiatives are gaining momentum and water supply and sanitation programmes are in progress.

R3.9 billion has been allocated to capacity building programmes over the MTEF, targeted at small towns and rural municipalities. Special initiatives include:

• R3.7 billion in conditional grants to municipalities,
• R857 million for the Municipal Infrastructure Support Agency,
• R276 million for the human settlements Upgrading Support Programme in 53 municipalities,
• A new grant of R300 million a year to assist metropolitan municipalities in managing the human settlements function, and
• A further R180 million as part of the human settlements development grant earmarked for settlement upgrading in mining towns.

Measures to promote economic growth

Mister Speaker, our policy is inclusive growth – in the words of the NDP, to strengthen the “virtuous cycle of growth and development.” Over the medium term, several spending plans and tax measures are aimed at addressing structural economic challenges and promoting the stronger, more inclusive growth envisaged in the NDP:

• Manufacturing development incentives are allocated R10.3 billion over the next three years, in addition to tax relief offered through incentive programmes.
• The economic competitiveness and support programme will provide R15.2 billion to businesses to upgrade machinery and increase productivity over the MTEF period.
• Special economic zones are allocated R3.6 billion to promote value-added exports and generate jobs in economically disadvantaged parts of the country.
• In support of the digital broadcast migration programme, R620 million will be allocated in the adjustments appropriation this year, from funds to be surrendered to the National Revenue Fund by Sentech.
• Government is developing an agricultural policy action plan to support the NDP’s target of creating one million jobs in agriculture and land reform by 2030. Over R7 billion will be spent on conditional grants to provinces to support about 435 000 subsistence and 54 500 small holder farmers and to improve extension services.
• To boost domestic food production and reduce reliance on imports, the Fetsa Tlala initiative aims to bring an additional one million hectares into cultivation by 2019, creating 300 000 jobs. Meanwhile, the comprehensive agriculture support programme grant, which receives R1.6 billion per year over the medium term, aims to increase farm output, especially for the beneficiaries of land reform.

Small businesses and entrepreneurship

Mister President, you have rightly reminded us that employment creation is mainly the responsibility of the private sector.

I have again received many tips on the challenges faced by small and medium-sized businesses. Sharon Bosii, from Pretoria, suggests that government “must offer incentives … to help small businesses.” Sharon, we agree. This budget allocates R6.5 billion over three years to support small and medium enterprises.

We have also accepted two recommendations of the Judge Davis Tax Committee which will ease the compliance burden of small businesses:

• The turnover tax regime will be amended to further reduce the tax burden on micro-enterprises.
• Consideration is being given to replacing the graduated tax structure for small business corporations with a refundable tax compliance credit.

Amendments will be made to the venture capital company tax regime, and the rules related to access to foreign capital will be eased to enhance support for entrepreneurial development.

Subject to appropriate tax treatment, amendments will be made to the intellectual property rules as part of this reform.

In further support of entrepreneurial development, we propose to provide tax relief to organisations involved in small enterprise development through grant- making. As a complementary measure, grants received by small and medium- sized enterprises will be tax exempt, regardless of the source of funds.

Global situation

Mister Speaker, ultimately it is the state of the global economy and the dynamism and agility of the SA economy that shapes inclusive growth, job creation and development.

The global economy, with which SA is connected, is not yet on a path of sustained recovery. In the words of the G20 communique, “ the global economy remains far from achieving strong, sustained and balanced growth”.
Global growth gathered momentum in 2013, led by a recovery in the advanced economies. This recovery is expected to continue into 2014, to an expected 3.9 per cent in 2015.

The recovery in the United States has prompted the US Federal Reserve to taper its quantitative easing programme. We have already seen considerable swings in capital flows in South Africa and other emerging markets. Interest rates are likely to rise. Currencies will be weaker and volatile.

Growth in Europe, which is a major trading partner, remains subdued. Doubts about its banking system remain.

However, China still grows at a dynamic 7.5 per cent and India is expected to record 5.4 per cent this year. Brazil remains flat at 2.3 per cent.

The African continent is expected to grow at around 6 per cent a year over the next two years.

The G20, new global turbulence and emerging markets
The world would be a better place, Mister Speaker, if there were greater understanding of the power of cooperative action. We welcome the constructive tone emerging from the G20 meeting last weekend. We welcome the commitment to increase global output by $2 trillion and to increase jobs.

Nonetheless, we remain concerned about the self-justifying narrative from certain quarters in the developed world – the idea that emerging markets are the “problem”, that they must “get their houses in order” and that global cooperation for a more humane and sustainable future is a project for another day.

These are voices from precisely those places where huge regulatory failures led to the financial earthquake we have experienced. Geo-political gamesmanship is the order of the day, collaboration in addressing global challenges is deferred and global statesmanship is in retreat.

As Africa rises, building democratic institutions, expanding infrastructure and growing trade and employment, the central priority will remain overcoming poverty and inequality through initiatives that shape our own growth path, and partnerships that create our own destiny.

South Africa’s economic outlook

As global economic growth recovers there will be opportunities and risks for our economy. These developments have the potential to increase our exports.

Among our emerging market partners, growth remains strong but demand for mineral products has moderated and is unlikely to pick up soon. The prices of our largest sources of foreign earnings remain depressed.

However, the rand remains an effective shock absorber against global volatility. Recent movements of the currency have been supportive of export growth while reducing the country’s reliance on capital inflows.

We must ensure that our fiscal and monetary choices keep inflation low and maintain the recent gains in competitiveness. While we have made significant progress in accumulating reserves, there is scope for further improvement. This will support the stability of the currency.

We project growth to increase from 2.7 per cent this year, to 3.5 per cent in 2016. Investment is forecast to increase by about 5 per cent a year and the current account deficit will average 5.8 per cent of GDP over the medium term, while consumer price inflation will return to levels within the target band between 2015 and 2016.

Potential domestic risks to the outlook include further delays to the introduction of new infrastructure, particularly additional electricity capacity, higher inflation due to the weakness of the rand, and protracted labour disputes which could depress consumer and business confidence.

Boosting growth

The next phase of growth is about the dynamism and agility of private sector and the synergies created with government. Government will continue to provide an enabling environment for businesses to grow and create employment.

Over the past five years, we supported businesses by relaxing exchange control regulations to support those who wanted to invest in the African continent. We provided tax incentives for manufacturing businesses to expand operations, improve competitiveness and acquire new machinery. We also opened up opportunities for the private sector to build and run our renewable energy plants and introduced the employment tax incentive. The result was an increase in job creation. Now, this effort has to be scaled up to make a bigger impact on growth, jobs and development.

Removing constraints

Over the medium term we will:

• Add to electricity supply to improve the balance between available energy and the amounts required by businesses and households to thrive.
• Increase investment in economic infrastructure, including rail, water, roads and ports
• Pursue the exploration of shale gas to provide an additional energy source for our economy.
• Provide business support programmes and special economic zones that encourage industrialisation and improve local competitiveness.

Regulatory improvements

Government has been engaging business on specific steps that can be taken to make it easier to do business in our country. Arising out of that process, we will now streamline regulatory and licensing approvals for environmental impact assessments, water licenses and mining licenses. As announced by President Zuma, Parliament is finalising amendments to give effect to this very positive development which will cut the time it takes to start a mine from application to final approval to under 300 days.

There is further work in progress on lowering the cost structure of the economy, for example through improved efficiencies in freight logistics. Minister Carrim has published a new policy on broadband, which will in due course lead to modernisation of our communications capabilities. Several cities are bringing WiFi connectivity to their environs.

SARS is taking further steps to lower the cost of tax compliance in South Africa.

Africa

Investment into Africa has reached R36 billion a year, in a range of industries. South Africa is the second largest developing country investor on the continent. In 2013, 29 per cent of our exports were destined for Africa. In 2012, 12 per cent of our dividends came from Africa, up from just 2 per cent a decade earlier. Increasing these inflows will be crucial for closing the current account deficit. Foreign assets owned by South African firms are an important source of income, and reduce our vulnerability to future domestic downturns. In addition, 18 large African firms now have debt and equity listings on the JSE.

Today, further steps to simplify trade and investment with Africa are announced. The HoldCo regime for African and offshore operations will be extended to unlisted companies, and the limits for listed companies will be increased. This regime creates a simplified tax and foreign exchange framework for companies that trade with Africa.

South Africa is an important centre for financial services such as fund and asset management. We propose new “Foreign Member Funds”, which will simplify the foreign exposure rules. These funds will support South Africa as a hub for African fund management and provide a domestically-regulated channel for investors to obtain foreign exposure.

Promoting Investment

Increased investment in the economy by both the private and public sector is at the heart of creating jobs and growth.

Government is committed to providing policy certainty for domestic and foreign investors. Working together with Minister Davies and the Department of Trade and Industry, a holistic framework for investment is being finalised. This framework flows from the National Development Plan, which places investment at the centre of our economic growth plan.

We have a number of incentives in place, which have provided substantial benefits to both foreign and domestic investors. Moreover, under the guidance of Minister Davies, a new Promotion and Protection of Investment Bill has been released for public comment. This entrenches the rights of all investors, ensuring that property rights are protected, in line with the Constitution.

The fiscal framework and long-term sustainability

Mister Speaker, in last year’s Medium Term Budget Policy Statement we targeted revenue of 28.6 per cent of GDP, consolidated spending of R1.2 trillion and a deficit of 4.1 per cent in 2014/15.

Since then, the rand has weakened and inflation has picked up. Long-term interest rates have continued to rise moderately, and the Reserve Bank has increased the repo rate by 50 basis points.

These trends reinforce the need to moderate public expenditure, lower the budget deficit and ensure that public sector debt stabilises relative to GDP.

A key pillar of the current framework remains the main budget expenditure ceiling. Non-interest expenditure plans are unchanged over the medium term, resulting in real expenditure growth of about 2 per cent per annum. Within the expenditure envelope, the composition begins to shift from consumption spending towards infrastructure investment. The unallocated contingency reserve amounts to R3 billion, R6 billion and R18 billion over the medium term.

Over the last decade, government spending has doubled in real terms, funding a large expansion of the social wage which now stands at 57 per cent of consolidated expenditure. This progress must be sustained. Our Constitution requires government to devote increasing resources to a rising floor of social and economic rights.

In a period of weak economic growth, the sustainability of the public finances is inevitably tested. Over the last five years government has borrowed more than R1 trillion. Rising global interest rates make it increasingly costly for government to borrow. Lower commodity prices dampen the growth of revenues. A weak rand raises the price of capital goods that government needs for its investment programme, while inflation raises the amount we must pay for goods, services and wages.

Our debt portfolio is well structured, with foreign currency denominated debt limited to about 10 per cent of the total. Our debt markets remain highly liquid and competitive, which means that the impact of short-term swings in capital markets can be absorbed over time. Our first sukuk (Islamic) bond will be launched this year.

Broader public-sector sustainability is supported by large social security fund surpluses, a fully funded government employee pension system, and the improving balance sheets of state-owned companies.

With these pressures in mind, government has adopted a balanced fiscal stance that continues to provide support for the economy, but charts a stronger course towards fiscal consolidation.

Tax policy, savings and small business support

In 1996, Mister Speaker, the RDP White Paper stated that: “the expansion of the South African economy will raise state revenues by expanding the tax base.”

Over the last 20 years we have achieved exactly that. In 1994, tax revenue amounted to R114 billion. Revenue collected next year will exceed one trillion rand. This is nearly a tenfold increase in nominal terms. This was achieved while reducing the tax rate for companies from 40 per cent in 1994 to 28 per cent and the top marginal rate for individuals from 45 per cent in 1995 to 40 per cent.

During this period the contribution of corporate income tax as a proportion to total revenue has nearly doubled.

We have also improved the fairness of the tax system by taxing residents on their worldwide income and taxing capital gains. These changes have brought the South African tax system more in line with international principles and have substantially broadened our tax base.

Despite moderate economic growth, tax revenues have remained buoyant over the past year. In 2013/14, we will collect R899 billion. This is R1 billion more than we projected last February, and R4 billion above the estimate presented at the time of the 2013 Medium Term Budget Policy Statement. For the first time since the recession, corporate income tax revenues will exceed the 2008/09 peak of R165 billion.

The main tax proposals for the 2014 Budget are as follows:

• Personal income tax relief amounts to R9.25 billion. About 40 per cent of the relief goes to South Africans earning below R250 000 per year.
• An increase in the tax-free lump-sum amount paid out of retirement funds from R315 000 to R500 000 is proposed, benefiting especially lower income members who did not benefit from deductible contributions.
• Increases in excise duties on alcoholic beverages and tobacco products are proposed, adding 9 cents to the price of a 340ml can of beer and 68 cents to a packet of 20 cigarettes. Whisky goes up by R4.80 a bottle. These increases take effect immediately.
• In recognition of recent increases in the imported cost of fuel, the general fuel levy increase is limited to an inflation-related 12 cents per litre on 2 April 2014, and the road accident fund levy will increase by 8 cents per litre.

Legislation to allow for tax-exempt savings accounts will proceed this year, to encourage household savings.

Complementing this tax reform, a new top-up retail savings bond will be introduced by the Treasury this year, allowing for regular deposits into a government retail bond. It will also be accessible to community savings groups, such as stokvels. Options for introducing a sukuk retail savings bond are also being explored.

The Income Tax Act currently requires philanthropic foundations to distribute 75 per cent of the money they generate within a year. This requirement is unduly restrictive and will be relaxed, while ensuring that accumulated capital is distributed to worthy causes within a reasonable period.

Regulatory and other measures have been put in place to address the environmental consequences of acid mine drainage. To complement current efforts and ensure that the mining sector makes its fair contribution towards continuing acid mine drainage expenses, consultations will be initiated on an appropriate funding mechanism.

Following public consultation, the National Treasury and the Department of Environmental Affairs have agreed that a package of measures is needed to address climate change and to reduce emissions. This will include the proposed carbon tax, environmental regulations, renewable energy projects and other targeted support programmes. To allow for further consultation, implementation of the carbon tax is postponed by a year to 2016.

Reforms to the tax treatment of risk business for long-term insurers are also proposed. Profits from the risk business of a long-term insurer will be taxed in the corporate fund, similar to the way short-term insurers are taxed.

In July last year I appointed a Tax Review Committee, headed by Judge Dennis Davis, with a broad brief to make recommendations for possible reforms.

The Committee’s first recommendations relate to small and medium enterprises. These proposals are taken forward in this Budget. The committee has also started working on base erosion and profit shifting – trends that are under scrutiny internationally. During 2014, work will be undertaken on the impact of the tax system on economic growth and job creation, and aspects of VAT, mining taxes and estate duties.

Tax administration

Mister Speaker, there are still great opportunities for the tax system to work for our people.

In the past five years, the tax register of individuals grew from 5.5 million to over 15 million to include all known economically active individuals. Companies on the tax register now stand at more than 2.3 million. The number of employers registered for pay-as-you-earn is nearly 404 000.

In the next fiscal year SARS will implement single registration of taxpayers and traders for the main taxes.

SARS is already working closely with other government agencies to share non-confidential electronic data. Without compromising privacy and confidentiality, this will contribute to reducing identity fraud, lower administration costs and enhance compliance.

New global tax policies are being devised to counter harmful tax practices and treaties are being designed to allow for the automatic exchange of information. SARS currently chairs the 121-country Global Forum for the Exchange of Information for Tax Purposes.

Since the Tax Administration Act came into effect, SARS has recognised 11 bodies to which tax practitioners must belong and 15 000 tax practitioners are now registered with them. Taxpayers are advised to only use tax practitioners that are recognised by SARS.

Over the last two years the Voluntary Disclosure Programme has realised almost R5 billion from income that was not previously declared.

Customs administration

SARS overhauled its customs management system in August 2013. The new system is fully electronic and significantly reduces the administrative burden on importers and exporters while improving our ability to detect high-risk transactions and goods.

Since its introduction, the system has processed goods valued at more than R1.7 trillion.

Border management cooperation that started during the 2010 World Cup has deepened. For example, one of the South African ports of entry is being prepared as a pilot for seamless border management, which will lead to enhanced border control and trade facilitation. The one-stop border post at Lebombo will become operational shortly, once the remaining formalities have been concluded.

During 2013 about R1 billion worth of tobacco and cigarettes was seized from 15 non-compliant entities. Twelve criminal cases are being pursued.

During the same period, SARS detained 400 containers holding suspected counterfeit clothing, footwear and textiles.
Improving the quality of public services and cutting waste
Mister Speaker, this is a Budget in which circumstances dictate that we cannot add resources to the overall spending envelope. The emphasis falls therefore on ensuring that expenditure is allocated efficiently, enhancing management, cutting waste and eliminating corruption.

A series of initiatives are focused on these concerns:

• Spending reviews are under way to examine programme performance and value-for-money, conducted by the National Treasury and the Department of Performance Monitoring And Evaluation, and by provincial treasuries.
• The Office of the Accountant-General has stepped up efforts to strengthen the financial control environment, and has undertaken 27 forensic reviews over the past 12 months, leading to both criminal investigations and internal disciplinary action.
• As part of efforts to combat waste, cost-containment instructions were issued in January 2014. Budgets for consultants, travel, accommodation and venue hire have been urtailed, which will contribute to savings over the next three years.
• Forthcoming regulations will strengthen the National Treasury’s oversight of public entities by requiring compliance with reporting requirements for expenditure, revenue, borrowing and performance.

Minister Speaker, I referred in 2012 to an initiative to be undertaken jointly with Minister Nxesi and his department to review the validity and cost effectiveness
of all government property leases. The exercise has exposed several deficiencies:

• Accommodation that is unoccupied but being paid for;
• Accommodation occupied by non-governmental entities;
• Discrepancies between the size of accommodation occupied and what is paid for;
• Marked divergences from market rates per square metre;
• Procurement through inappropriate non-competitive procedures;
• Missing or invalid lease agreements and unsubstantiated payments to landlords.

The intervention also identified a backlog of more than half of the lease portfolio reviewed. As a result of this initiative, DPW now has a turnaround strategy that will enable it to regularise the lease portfolio, while ensuring continuity of services to client departments.

Procurement reforms

The Chief Procurement Office has been established, and has made progress on several fronts:

• Development of a standard lease agreement to address defects in government property transactions,
• Standardisation of infrastructure procurement processes and documentation,
• Creation of an inspectorate to monitor procurement plans and audit tender documents,
• Enhanced processing of vendors’ tax clearance certificates to ensure compliance,
• Centralised procurement of health equipment, drugs and medicines to effect savings, and
• Analysis of the business interests of government employees.

We are also mindful of the importance of government procurement in supporting local industry and black economic development. This requires a database of South African products and black-owned businesses so that the system can foster economic empowerment and dynamically contribute to growth. And further, tougher measures are being considered to enforce the rule that small businesses in particular must be paid within 30 days.

Indebtedness, savings and retirement reform

Mister Speaker, this administration has recognised the need to protect and improve the financial wellbeing of households, to make them less vulnerable to a sudden loss of income in bad times. We recognise that households must be encouraged to invest in their future, including investment in homes or productive assets, and saving for retirement or business purposes.
South Africa has made good progress towards achieving the NDP’s goal of 90 per cent access to financial services by 2030. Some 79 per cent of adult South Africans were using regulated financial services in 2013.

Many more households have access to affordable credit, which is of great benefit when used productively, but bad when used to fund excessive consumption.

Government is concerned about the level of over-indebtedness of households. Cabinet has therefore approved a number of measures to assist such households to reduce their debt burden, and to stamp out abusive and fraudulent activities of reckless lenders and unscrupulous debt collectors. Working jointly with the Ministers of Trade and Industry and Justice, we will shortly commence actions against abusive and unsustainable practices.

With regard to retirement, there will be further reforms over the period ahead. Legislation has already been passed by Parliament to improve governance over pension and provident funds, and to align the rules and tax treatment of pension and provident funds, while at the same time protecting vested rights.

We still seek improved coverage and preservation of retirement funds, and lower costs in the system. We are currently consulting within NEDLAC on measures to cover the 6 million employed South Africans who do not enjoy access to an employer-sponsored retirement plan. We intend to move progressively towards a mandatory system of retirement for all employed workers.

Agreement has been reached with the Association of Savings and Investment of South Africa on a way forward to reduce the level of charges for retirement savings products. Draft regulatory reforms will be published shortly.

Conclusion

Mister President, since 1994, there has been substantial progress in transforming the lives of citizens:

• The average income of South Africans has increased by over 30 per cent, and will continue to rise in the years ahead.
• More than 5.9 million jobs have been created since 1996.
• Near-universal school enrolment and the steady increase in average years of education for both men and women have improved the life prospects of millions of South Africans.
• Access to basic services has grown rapidly across the country. More people than ever have access to housing, education and services.
• Black participation in the economy has expanded and there has been a transformation of the middle class.

These are considerable achievements. But they are not enough. There are still fault-lines that run deep in the social fabric of our communities and tendencies in the political landscape.

Black economic participation remains incomplete. The economy must provide many more opportunities and the state and the private a lot more support to enterprises and entrepreneurs.

The structure of the economy also needs to transform in order to meet the demands of a 21st century global economy and a fast evolving continent.

In some instances, governance has been weak, corruption has taken hold, and service delivery has faltered. Puso e utlwa dillo tsa maAfrika Borwa! Ons het gehoor! Korrupsie moet gestop word! MaAfrika Borwa deserves better. Re tlile go tokafatsa ditirelo tsa puso. We have heard your pleas! And we will improve our service delivery mechanisms.

Mister President, in your State of the Nation address you observed that the community protests are a sign that our people want government to quicken the pace of delivery of housing, water, and sanitation.

• More must be done to improve management and accountability at all levels of government.
• The labour relations environment needs more stability.
• The high indebtedness of many vulnerable workers must be addressed.

Going forward, these challenges give us focus. We know what must be changed to meet the expectations of all South Africans. Service delivery must be enhanced and supported by the necessary infrastructure. Public servants must be accountable, and effective. Government is committed to tackling these issues in a transparent manner, with a view to building a more rapid and inclusive growth path.

Mister Speaker,

On his inauguration as South Africa’s first democratic President, Nelson Mandela said, “Let there be work, bread, water and salt for all”.

This year, five hundred thousand South Africans will celebrate their twentieth birthday. These are the first of our sons and daughters to have breathed only the clean air of a new nation. These children of our freedom mark the progress we have made. In their diversity; in their dynamism and their enthusiasm; in their non-racialism and in the determination with which they demand the rights of free citizens; in their optimism and fearlessness; in all this they represent the hope that millions struggled for, and for which so many paid the ultimate price. They are a generation whose future is brighter than their parents could have dreamed. They are better educated, better nourished, stronger and more resilient.

But they also bear the burden of the challenges we have yet to resolve. Too many will struggle to find work. Too many live in poverty and want. Like their parents they can see the fault-lines that still divide our society. They can see the gap between rich and poor.

For their future, we have an obligation to begin a new and far-reaching phase of our democratic transition; a phase that calls for bold and decisive steps to place the economy on a qualitatively different path to eliminate poverty and unemployment, create sustainable livelihoods and substantially reduce inequality.

The National Development Plan lays the foundation for fundamental transformation. It is a platform on which we need to mobilise our youth, and bring together all South African citizens. Each of us has a part to play. Each of us has an obligation to meet.

Mr President, thank you for your leadership and for the opportunity to serve government and the people of South Africa. Mr Deputy President, Thank you for your guidance and support.

My colleagues in the Ministers’ Committee on the Budget have provided invaluable counsel and make courageous decision in advising Cabinet on our budget priorities.

Thank you!

My appreciation to Cabinet colleagues who collectively own this budget and the programmes that they implement.

Deputy Minister Nene has been an invaluable partner in managing huge responsibilities during a challenging term of office; thank you for your invaluable role.

Governor Marcus and the Deputy Governors of the Reserve Bank have wisely steered monetary policy in a volatile environment.

Our thanks and appreciation also go to:

• The Provincial MEC’s and Municipal mayors who collectively spend 50 per cent of a trillion rand!
• Director-General Lungisa Fuzile and Mrs Fuzile for his dedication to public service, his frank and wise advise, and for continuality to build a very capable Treasury for future generations.
• Senior managers and staff of the National Treasury who have risen to the challenges of a post-recession South Africa and remain committed to excellence in the Public Service.
• The acting Commissioner of SARS, Mr Ivan Pillay, whose leadership and solid commitment to institutional building has served SA well.
• The senior management and staff of SARS who keep millions of taxpayers happy with their service, and a few others compliant with the law!
• The Finance and Fiscal Commission, NEDLAC and its constituencies, for their contributions and constructive engagement with the Treasury.
• The Chairpersons, Boards, CEO’s and staff of the DBSA, Land Bank, PIC, Financial Services Board, Financial Intelligence Centre and the Government Pension Administration Agency for their excellent work.
• The Honourable Mr Mufamadi and Mr de Beer, who chair the Standing and Select Committees of Finance, and, the Honourable Mr Sogoni and Mr Chaane who chair the Appropriation Committees, for their pivotal role in holding us to account and providing a forum in Parliament for vibrant public participation.
• Mr Dondo Mogajane, Ministry staff and advisors whose diligence, professionalism and hard work are invaluable.
• My family for their constant caring and support and their passion for building a better South Africa for all.

I also thank all members of this house and the Presiding Officers of Parliament for their cooperation and support.

Once again, I must convey my gratitude to South Africans for all walks of life, and many friends of South Africa abroad, for the goodwill and encouragement.

Honourable Speaker, I hereby table before the House this afternoon:

1. The Budget Speech

2. The Budget Review 2014

3. The Division of Revenue Bill tabled in terms of section 10(1) of the Intergovernmental Fiscal Relations Act, 1997 (Act No 97 of 1997);

4. The Appropriation Bill, and

5. The Estimates of National Expenditure.

Honourable Speaker, I table this budget in the hope that as a nation we will be able to rise above our sectional interest, and, as you said Mr President, prevail with greater maturity, pull together and take this country forward.

I want to leave with the words of Yusuf Dadoo, another great South African leader and unifier, who once said: “The hour has struck for serious and hard work. The time has come when on this policy we must go forward. That is the only policy which at the present moment can meet the dangers which face us in this country… We have the strength and power in our hands if we act rightly. It may entail suffering and sacrifice and plenty of hard work… In the present circumstances, either we hang together or we hang separately. That is the question before South Africa.”

I thank you.

Issued by: National Treasury