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Address by hon Dikeledi Mahlangu (ANC) MP, debate on the MTBPS proposed fiscal framework report, in the National Assembly

28 November 2018

The Standing Committee on Finance considered the 2018 Medium-Term Budget Policy Statement for the proposed fiscal framework tabled by the Minister of Finance on 24 October 2018. The tabled MTBPS included the revised fiscal framework for 2017/18 and the proposed fiscal framework for the next three years. As per section 12, of the Money Bills Amendment Procedure and Related Matters Act, Act 09 of 2009, this is the report on the proposed fiscal framework.

In order to address the triple challenges of poverty, unemployment and inequality, not forgetting the skewed patterns of ownership and production, the ANC envisage a developmental state which would play a leading role by directly investing in underdeveloped areas and directing private investment.

The Committee notes that over the MTEF, to ensure that the expenditure ceiling remains intact, reprioritisation of R32.4 billion will take funding from non-performing areas to fund the upgrading of informal settlements and the Presidents' Economic Stimulus and Recovery plan. The resources for the Economic Stimulus and Recovery Plan will include a "combination of reprioritisation, changes to grant structures and in-year allocations amounting to more than R50 billion".

A reprioritisation of R15.9 billion will go towards infrastructure programmes, supporting industrialisation, and the Expanded Public Works Programme. An additional R16.5 billion will be allocated to various programmes, including funding to restore much-needed capacity at the South African Revenue Service. The Committee welcomes these allocations, especially to infrastructure and SARS. But the Committee wants to see an implementation plan. National Treasury is required to report on progress on this at its quarterly meetings with the Committee.

Despite the severe economic and financial constraints, we particularly welcome the fact that more than 60 per cent of expenditure will go to education, health, social development and community development over the next 3 years of the Medium-Term Expenditure Framework period.

However, the Committee is concerned about the misalignment of NDP goals and infrastructure spending outcomes in all three spheres of government. The Committee again urges government, including the National Treasury and the Presidential Infrastructure Coordinating Commission, and other stakeholders to address this far more effectively.

More than ever, the country needs economic growth. The Proposed Fiscal Framework and the MTBPS as a whole have to be evaluated in terms of the extent to which they contribute to investment, growth, job creation and the reduction of inequalities. The Committee believes that the government needs to, among other things, do far more to reduce political and policy uncertainty; address key structural challenges; revitalise and strengthen SARS; encourage job-creating investment; spend money more efficiently and effectively; act decisively against corruption; and tackle the illicit economy far more effectively.

The Committee believes that investment is crucial for economic growth, but global investors will be keener to invest if the domestic private sector does. We call on the domestic private sector, which is sitting on R1, 4 trillion, to invest in job-creating growth.

The Committee reiterates its views that government alone cannot ensure the necessary economic growth. Parliament, the private sector, the trade unions, other sections of civil society and the public at large all have a role to play. It is for government, however, to lead in this regard.

The submissions to the Committee from stakeholders and the public on the hearings mostly do not draw a distinction between the Revised and Proposed Fiscal Frameworks and none of them provides two separate submissions on the Revised Fiscal Framework and the Proposed Fiscal Framework. The matter of how to treat these two reports in future has been addressed in the amendments to the Money Bills Amendment Procedure and Related Matters Act to be finalised soon.

Over the years, increasingly, it is the powerful and well-resourced organisations that make oral submissions at MTBPS public hearings. This year the Committee was very pleased to receive oral submissions from pensioners from Msunduzi representing the Pietermaritzburg Pensioners Forum. While the Committee is empathetic with their concerns, the MTBPS does not deal with actual increases in grants.

The Committee expresses its appreciation to those who made submissions at the MTBPS public hearings. The Committees will incorporate the concerns that they have raised that are able to be acted on in our oversight and legislative roles.

We call on government and National Treasury, in particular, to manage public finances prudently. There is a need to leave room for the economy to grow and attract investment while managing the fiscal leakages that were exposed by the Auditor General, and fighting fraud and corruption. Government need to take tough decisions to address the rise in the debt-to-GDP ratio and low economic growth as these could lead to a loss of fiscal sovereignty and compel South Africa to borrow from the international multilateral financial institutions, which have stringent terms and conditions.

The current economic situation in which our country finds itself presents us with an opportunity to be bold and have broader discussions on fiscal policy. International experience tells us that there is no one size fits all when it comes to fiscal policy and as a country, it is though debates that we will be able to find a solution.

The Committee reiterates its belief that we need to be far more effective and efficient in our oversight role, and to the extent the executive fails to fulfil its responsibilities, this is, partly, a reflection of the failure of parliamentary committees to effectively fulfil our own responsibilities.

Hon members I thank you.

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