Our Help to Buy subsidy helps first-time home buyers purchase a home. As a pilot, it gets R million over three years. In October, I emphasised the importance of the user pay principle. It is a principle that we should uphold. In any future negotiations, this should be borne in mind. Over the past couple of years South Africa has been grappling with corruption. We must root this out.
Strengthen the capacity and capability of the state to address the needs of the people My colleagues at provincial and municipal level are working as best as they can to deal with rising wage costs and reduced transfers. Provincial treasuries and the municipalities have a partner in the National Treasury to work with on their constitutional obligations.
Grants such as the Financial Management grant, and the Municipal Systems Improvement grant are available. Collecting the revenue due to the state is the underlying foundation of our democracy, of building a nation, and it is our duty to pay for services especially if we can afford to do so.
National Treasury will lead a process to encourage those, including government departments, who owe money to municipalities, to pay for services. We spend a lot on infrastructure. Four things will get us better infrastructure: First is to create a sensible project pipeline. Second, is streamlining the law to make it easier to build. Third, better information for everyone.
And finally, is to actually build. So far we are working on a wastewater treatment facility works in the Vaal, a solar water geyser programme and student accommodation. R million is allocated to the Development Bank of Southern Africa, the Government Technical Advisory Centre and the Presidential Infrastructure Coordinating Commission to strengthen project preparation in this context and on a speeded up basis, projects based on rural roads and water will be prioritised.
Details on several priority projects can be found on the Vulekamali portal. The infrastructure fund is a central pillar of the Budget and of reprioritisation. It will accelerate R billion worth of on-budget projects by bringing in the private sector and development finance institutions.
In several instances the private sector will design, build and operate key infrastructure assets. In addition, government will commit R billion over the next decade. The first is the rise of technology. Twenty-five years ago, the Budget was prepared on reams of paper, carefully stapled together. I reviewed this speech on my tablet, and you can keep track of the speech on Twitter right now.
By the way, it is at RSABudget. Our budget spending has to focus on getting our country ready for technology. The first step is to fix the education system. Government is rolling out a maths and science grant. The Governor of the South African Reserve Bank is driving an ambitious FinTech programme, together with colleagues from the other financial-sector regulators.
The sustainability challenge affects us all. Climate change is real. The steps being undertaken at Eskom will allow us to expand renewable energy, and the carbon tax will come into effect from 1 June The third challenge is rapid urbanisation. The final challenge is nationalism.
In many successful economies, immigrants have been a source of dynamism. Narrow nationalism often leads to stagnation. We need to redouble our efforts to attract highly-skilled people to South Africa. Their skills are complementary to our own. We need to free our entrepreneurs from stifling regulations and complicated taxes. Madam Speaker it is prudent to say that we are a shareholder in a number of multilateral institutions and this ensures that South Africa plays its rightful place on the continent and the world.
Before I conclude, my thanks to the President of the Republic for his leadership during this budget process. A word of appreciation to the National Treasury Director General and his team.
I recall Psalm We are taking tough steps to fix the fiscal position and state-owned enterprises. Our children are our future. Most of the spending goes to education, and we will strengthen early childhood development and support higher education for the most deserving.
On land, we have set aside money to help our people buy their own houses, support land reform, and transfer title deeds. On electricity, we face tough choices on Eskom. For ye shall go out with joy, and be led forth with peace: the mountains and the hills shall break forth before you into singing, and all the trees of the field shall clap their hands. Skip to main content.
You are here Home » Newsroom » Speeches. Today, I hereby table: 1. How do we make this renewal a reality? I turned to the Good Book for guidance.
It is time for us to sow the seed of renewal and growth. Today, I bring you a seed to prove that if we plant anew, we can return to those plum times.
Madam Speaker, our President has set us on a track of renewal. But today, I will leave the poetry and the singing to the President. I am here to speak about hard facts and figures. This Budget is built on six fundamental prescripts: 1. I said that we were at a crossroads, and that we could go either to heaven, or the other way.
These macroeconomic conditions have led to a weaker economic outlook. On their recommendations: 1. Madam Speaker, excise duties on alcohol and tobacco will be increased, as follows: 1. The ordinary taxpayer is fully tax compliant and pays their fair share.
Thuma Mina. Paying your taxes is the right thing to do. Expenditure Let me turn to our spending projections. State-owned enterprise restructuring Madam Speaker, I said in October that we would have no holy cows when it comes to our approach to state owned enterprises.
Eskom In the State of the Nation Address, the President announced a clear and executable plan for electricity. Pouring money directly into Eskom in its current form is like pouring water into a sieve.
Other state-owned enterprises On other state-owned enterprises, we are reviewing our framework for state-owned enterprise support. Financial support will be budget neutral as far as possible. During this past financial year, total guarantee utilisation increased by R These rules should also apply to all SOEs. Cabinet is considering a proposal to end the issuing of guarantees for operational purposes. The consolidated fiscal framework To summarise: in this coming year, we expect revenues of R1.
We are masters of our own destiny. Our determination to regain our fiscal prudence will form the basis of our economic recovery. We will be on our way back to the plum years. But it can be done. Division of revenue Madam Speaker, the Budget remains redistributive. Wage bill adjustments The public wage bill is unsustainable.
The President set us these five tasks: 1. Mr President, let me illustrate how the Budget talks to your priorities. Accelerate inclusive economic growth and create jobs The private sector is the key engine for job creation. Start-ups will ignite the economy. The tax system supports them in a number of ways, including the preferential small business tax regime, the VAT registration threshold and the turnover tax. We will review these to improve their effectiveness while at the same time reducing the scope for fraud and abuse.
To support the property market, the threshold for transfer duties is adjusted. Property costing R1 million or less will no longer be subject to transfer duty. There will be a renewed focus on illicit and criminal activity, including non-compliance by some religious public benefit organisations. Religious bodies must operate within the strict boundaries of the law if they are to enjoy tax exempt status.
The annual tax free savings account contribution limit rises to R36 We have increased excise duties to keep pace with inflation. From today:. I am again happy to report that there is no increase in the price of sorghum beer. In line with Department of Health policy, we will start taxing heated tobacco products, for example hubbly bubbly.
The rate will be set at 75 per cent of the rate of cigarettes. Electronic cigarettes, or so-called vapes, will be taxed from To adjust for inflation, the fuel levy goes up by 25 cents per litre, of which 16 cents is for the general fuel levy and 9 cents is for the Road Accident Fund levy. We need to take urgent steps to reduce this risk to the fiscus and bring about a more equitable way of sharing these costs. One option is to introduce compulsory third-party insurance.
The carbon tax and other measures will help green the economy, and will bring in R1. This will be complemented by more focussed spending on climate change mitigation. We remain extremely concerned about plastic bags throughout the length and breadth of our country.
In this regard, we have increased the plastic bag levy to 25 cents. Reducing structurally high spending Madam Speaker, our measures will support growth. But fiscal sustainability must be uppermost in our mind. Our Aloe Ferox can withstand the long dry season because it is unsentimental.
It sheds dead weight, in order to direct increasingly scarce resources to what is young and vital. Total consolidated government spending is expected to grow at an average annual rate of 5.
This is mainly due to mounting debt-service costs. Non-interest spending declines on average over the MTEF in real terms. As a major step towards fiscal sustainability, today we announce a net downward adjustment to main budget non-interest expenditure of R The total reduction is mainly the result of lowering programme baselines and the wage bill by R billion.
These are partially offset by additions and reallocations of R billion. Programme Spending Adjustments Let me unpack the R billion in baseline spending reductions. The first part is adjustments on programme spending of about R billion. Adjustments are mainly in conditional grants for provinces and municipalities. For human settlements, adjustments amount to R There are also adjustments of R2.
Over the three years, public transport spending is adjusted by R The planning and implementation of integrated public transport networks will consequently be suspended in the Buffalo City, Mbombela and Msunduzi municipalities. Education infrastructure allocations are adjusted by R5.
While some of these savings are good for the fiscus, in many cases we are also making difficult and painful sacrifices. It is therefore important that we direct our constrained resources to areas that have a high social impact and have the largest economic multipliers.
The wage bill The second part is adjustments on the wage bill by about R billion over the medium term. Public servants do crucial work for our country, often in trying conditions.
The governing party is a firm believer in the critical role of the state in development. For this reason, we need qualified, motivated and effective staff. Working with the public sector unions, we have over the past 15 years sought to improve the lot of public servants, and we have committed significant resources for compensating them every year even as we have tried to increase their numbers in recognition of their demanding workloads. However, at the same time government wages also increased significantly.
Madam Speaker, we cannot go on like this. Classroom sizes are growing, hospitals are getting fuller and our communities are becoming increasingly unsafe. Once we get wage growth, corruption and wasteful expenditure under control, we will focus our attention on hiring in important areas such as education, police, and health care.
We can hire strategically, and better match skills with opportunities. The employer has tabled an agenda item on the management of the public service wage bill at the Public Service Coordinating Bargaining Council, the focus is to discuss containment of costs in the final phase of implementation of the current wage agreement. We aim to save R There is more than one way in which this goal can be achieved.
Organised labour understands where we are. They have made constructive proposals on a range of issues. Wasteful expenditure and corruption Mr President you have directed your government to deal with wasteful expenditure. This is a vital step in restoring the confidence of the public in the government. We must get more value for our money. We are moving forward with reforms to the procurement system with a focus on value for money and maximising the quality and quantity of services.
Cabinet approved the publication of a new Public Procurement Bill. We will accelerate merging and consolidating public entities. We will propose a new law to stop excessive salaries in these public entities. We must also deal decisively with the excessive high cost of leasing government buildings.
We are already acting on fruitless and wasteful expenditure. Refer matters to a public body for investigation and prosecution 2. Take binding remedial actions 3. Recover money directly from the responsible culprits To show the determination of the executive to deal with runaway costs, we will implement a number of steps. These include: 1. Abolishing the current wasteful subsidence and travel system 2. Replacing the cell phone policy 3. Requiring economy class travel for all domestic flights, except for exceptional circumstances.
Closing and merging some missions 2. Downgrading the level of representation 3. Reducing the number of officials 4. Establishing a fully-fledged Diplomatic Academy 3. Appropriate monetary policy The twin of our fiscal framework is appropriate monetary policy. Regular consultation on fiscal and monetary policy is critical to the sustainability of our fiscal accounts, to the balanced growth of the economy, and to protecting the welfare of our people.
We would like to re-iterate the current inflation target band of 6 to 3 per cent as the most appropriate monetary policy framework for a country like ours. In line with that target, the moderate inflation outcomes for of 4. The South African Reserve Bank will continue to undertake its duties in line with section of the Constitution which is to perform its functions independently without fear, favour or prejudice in the interest of balanced and sustainable growth in the Republic.
Aligning spending priorities to the economic growth plan For our Aloe Ferox to grow to its full potential, we need to do things that will help it in the medium to long-run — for example, augmenting the soil with the right amount of organic manure, providing the right amount of sun and the correct amount of water.
For a fast-growing economy we need to make sure our children are well educated, our people are healthy and our money is invested properly. Learning, health and social development Consequently, the largest spending areas will be learning and culture, which receives R billion followed by health R billion, and social development with R billion.
In the education sector, investment goes to new schools, replacing schools constructed with inappropriate materials, and providing them with water, electricity and sanitation. Transfers to provinces support schooling for 13 million children and healthcare for It is in this context that taking forward consultation on the NHI is important. President Ramaphosa has been elected Chairperson of the African Union.
Funding can come from the Africa Renaissance Fund. The Department of Higher Education and Training will reallocate existing funds to undertake a feasibility study for the establishment of a new university of science and innovation in Ekurhuleni. Over the next three years, R million has been provisionally set aside for disaster management to respond to the impact of recent floods and the ongoing drought.
This is our first reason for hope. Main budget revenue is projected to be R1. This rises to R1. At the same time, non-interest spending will remain steady at approximately R1. I requested tips from the public to help craft this Budget. Many tips spoke about the limits to increased taxation. We agree that tax increases must be kept to a minimum as we stabilise our public finances.
With this framework we provide the budget for South Africa's vaccination campaign. This campaign allows us to emerge from the restrictions to economic activity. We are allocating more than R10 billion for the purchase and delivery of vaccines over the next two years. We increase the contingency reserve from R5 billion to R12 billion to make provision for the further purchase of vaccines and to cater for other emergencies.
With this framework we are on track to achieve our goal of closing the main budget primary deficit. This important achievement will coincide with the end of this sixth Parliament.
Most importantly, we will stabilise government debt at This is a significant improvement to the framework we presented in October last year and creates a sound platform for sustainable growth.
Total consolidated spending amounts to R2 trillion each year over the medium term, the majority of which goes towards social services.
Honourable members, getting our fiscal house in order is the biggest contribution we can make to support our Economic Reconstruction and Recovery Plan. Continuing on the path of fiscal consolidation during the economic fallout was a difficult decision. However, on this, we are resolute. We remain adamant that fiscal prudence is the best way forward. We cannot allow our economy to have feet of clay. High government debt levels increase the cost of borrowing across the economy. The rising debt leads to higher future taxation and uncertainty.
Servicing this rising debt takes away resources that could have been invested in infrastructure and frays our social solidarity. Global economic growth is expected to rebound to 5. China is expected to grow at 8. In this context, the South African economy is expected to rebound by 3. Progress on Economic Reforms Madam Speaker, honourable members, I am also hopeful because we are making meaningful progress in the implementation of our structural economic reforms. Our structural weaknesses limit the rate at which our economy can grow.
Our structural reform agenda, as articulated in the Economic Reconstruction and Recovery Plan, is aimed at removing these brakes on growth. Operation Vulindlela, which I introduced to you last year, has already made demonstrable progress in accelerating the pace of implementation of high-impact structural reforms.
I want to thank my Cabinet colleagues for their support of Operation Vulindlela and assure members that Deputy Minister Dr David Masondo and the team from the Presidency and National Treasury remain hard at work together with the relevant departments to ensure that implementation of the remaining reforms is appropriately funded and accelerated.
We will not rest until we have fundamentally altered the structure of this economy by lowering barriers to entry, broadening ownership patterns, raising productivity and lowering the cost of doing business. We face many challenges as a developing country. We are confronting these head-on. Our country has a network of highways and byways which are the envy of many.
The mighty N1 from Cape Town to Beitbridge, the scenic R71 that meanders through the misty mountains of Makgoebaskloof and delivers us to the Kruger National Park, and the expansive N4 that stretches from Botswana across our country into Mozambique. They are part of the lifeblood of the regional economy. Our great dams, bridges and railway lines have supported our economy for decades. However, much of this infrastructure now needs repair or replacement.
Government has committed to a R We are already partnering with the private sector and other players to rollout infrastructure through initiatives such as the blended finance Infrastructure Fund. However, all these efforts to expand infrastructure will be wasted if the end user does not pay a cost-reflective tariff for usage. Medium Term Spending Plans and Job Creation Madam Speaker, my fourth reason for hope is that this Budget explicitly supports economic transformation and job creation.
Our R6. This is not an austerity Budget. Our fastest-growing area of spending is our investment in the future-capital payments.
The Minister for the Department of Public Service and Administration, Minister Senzo Mchunu, is working with our partners in organised labour to achieve a fair public-sector compensation dispensation when negotiations on a new multi-year wage settlement begin later this year. We have cumulatively made R We are now augmenting this by R11 billion for the Presidential Youth Employment Initiative, taking the total funding for employment creation to nearly R billion.
This is in response to the job creation targets for young people. Government plans to finalise restitution claims at a cost of R9. This will include the recruitment of approximately 10 experienced extension officers.
This amount will not affect the expenditure ceiling but will be offset through an expenditure reprioritisation process. Any support to state-owned companies and public entities will have to be done through budget reprioritisation as outlined in the MTBPS. The Department of Small Business Development has allocated R4 billion over the medium term to township and rural enterprises, including blended finance initiatives. The Department of Tourism has reprioritised R million over the medium term to establish the Tourism Equity Fund TEF as one of the measures to support the tourism sector recovery.
The fund will acquire equity stakes in existing tourism enterprises, support expansion of operations and development of new operations.
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