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ANC Caucus response to the 2018 budget

21 February 2018

In the face of challenging global and domestic economic conditions, the ANC Parliamentary Caucus welcomes the very adroit budget tabled by the Minister of Finance, comrade Malusi Gigaba, today. This 2018 Budget carefully and sensitively balances the need to stimulate economic growth, reduce wasteful expenditure, contain debt, increase revenues and protect the poor.

Implemented effectively, this budget provides a platform for renewal, inclusive growth and job creation; directs spending to our most pressing national priorities; that of educating our youth, protecting the vulnerable and investing in enablers of inclusive growth.

We agree with Minister Gigaba that transformation "calls for more than growth alone, it requires a fundamental shift in the way the wealth is created and shared" and we fully support the deconcentration of the economy as part of the transformation.

We need to build on the improvements in the value of the Rand, business and consumer confidence, the recovery of commodity prices, and the marginal reduction in the unemployment in the last quarter. While the projected GDP growth rate of 1% in the new financial year is still too low, at least it is an improvement on the MTBPS 2017 projection that it will be 0.7%. We note the Budget anticipates a growth of 1,5% in 2018 rising to 2,1% in 2020.

We welcome the focus on youth, which reflects the largest reallocation of resources towards government's priorities is on higher education and training, including the R57 billion to fee-free higher education over the next 3 years. This is a major step forward towards guaranteeing access to higher education and training for all South Africans.

Over the medium term, R3.8 billion will be allocated to the School infrastructure backlogs grant replacing 82 inappropriate and unsafe schools, and provide water to 325 schools and sanitation to 286 schools. The Education infrastructure grant is also allocated R31.7 billion over the medium term to build new schools, upgrade and maintain existing infrastructure, and provide school furniture. Meals will be provided at 19 800 schools for about 9 million learners each school day through the National school nutrition programme grant, which is allocated R21.7 billion over the medium term.

We note that over the past decade government has spent about R2,2 trillion on economic and social infrastructure and welcome the commitment to accelerate infrastructure development, including through the new Budget Facility for Infrastructure.

We note the increase in VAT by 1% to 15%. We are interested to see an impact study on the effect of this on the poor and low income earners, as it is they who usually bear a disproportionate burden of VAT. We feel that more basic foodstuffs and other items should be zero-rated. We welcome the higher than normal increases in welfare grants and the tax relief for lower income earners to cushion the effect of the VAT increase on the poor. Parliament needs to engage with National Treasury, the trade unions, civil society organisations, business, experts and others to address this concern.

We welcome the increase in excise duties on luxury goods and estate duty on wealthy individuals.

On accelerating land reform, R4.2 billion has been set aside for the acquisition of about 291 000 hectares of strategically located land. Over the medium term, the Department of Rural Development and Land reform, will finalise 2,851 settle restitution claims at a budgeted amount of R10.8 billion.

We would like to see swift progress on the CEO-Initiative programme on SMMEs that has been allocated R1,4 billion and the government's early start-up phase support programme that has been allocated R2,1 billion.

We also welcome the R100 billion Black Business Growth Fund in the financial sector, the R18,8 billion for industrialization incentives and the R3,3 billion for the economic competitiveness and support package.

We urge that the Financial Sector Summit emerge with clear decisions to transform the sector and takes into account the recommendations in parliament's Financial Sector Transformation Report that was adopted after the extensive public hearings.
We welcome the stress on ensuring that State-Owned Companies (SOCs) function effectively through a variety of transformative measures. Parliament will vigorously hold the government to account for this.

It is utterly crucial that public confidence in SARS is restored and that it performs far more effectively and we urge that the Commission of Inquiry into tax administration and governance at SARS be established soon. We also believe that the Office of the Tax Ombud needs to be strengthened as soon as possible and it should have greater autonomy from SARS.

Despite the economically adverse climate, this budget offers significant potential to advance the socio-economic transformation of our country. To ensure this, all of us, including government, parliament, business, labour, civil society and the public generally need to play an effective role. The ANC Caucus in Parliament will closely monitor and offer the necessary support to ensure the full implantation of these programmes.

Issued by the Office of the ANC Chief Whip

Nonceba Mhlauli

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