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Budget Speech 2006

Minister of Finance - Trevor A Manuel

South African Government

15 February 2006

The 2006 Budget documents are available on the Internet at:
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Madam Speaker

In tabling the 2006 budget proposals for the further consideration of this House, we also place before the nation an account of the mountains we have climbed and the frontiers before us. Our budget proposals are closely bound up with this journey, with our conception of democracy, with the progressive realization of social and economic freedoms to which we aspire, with our understanding of the service delivery obligations of government alongside the development impetus of active citizenship, our faith in these joys and these challenges.

We are able to report that the economy expanded by about 5 per cent last year, and we anticipate continued growth of about 5 per cent a year over the period ahead. Business confidence is strong, investment and employment creation have gained momentum, inflation and interest rates remain moderate. The revenue outcome for 2005/06 will be about R41 billion more than we expected this time last year, creating room for both expenditure growth and tax relief in this year’s budget.

“Umnotho ukhulile, asivuneni, inala ifikile!” Nhlanhlayenkosi Mhlungu writes: “This is the year of plenty, when all South Africans will reap the fruits of economic growth!” TLALA O KOTSING!

We have, as always, received a great deal of advice on what might be done in these happy circumstances. Government departments have tabled a thousand new service delivery proposals and expanded spending plans. Taxpayers have promised to invest more and work harder if more money is left in their hands. Citizens and civil society organisations have again been generous in providing tips for Trevor, highlighting frankly and precisely what the frontiers and challenges are that have yet to be addressed, that all possible joys may be uncovered. Sipho Makola proposes, for example, a tax deduction on dating expenditure: “It’s really difficult lately to find a woman without first dating her and such expenditure is sometimes beyond our budgets. We either date or forever remain bachelors…”

Madam Speaker, to budget is to choose. Democracy and freedom have laid on this House the solemn duty of safeguarding the transparency and integrity of these choices.

The budgetary choices we make give life and meaning to the Age of Hope of which President Mbeki so rightly spoke in the State of the Nation Address. The budget tabled here today gives practical effect, Mr President, to our programme of social cohesion, and in particular to prioritising the needs of the poor, for that is what it means for rich and poor to share the privilege of a common nationhood.

There is no simple index of fiscal solidarity that measures progress along this redistributive trajectory. The “social wage” comprises many overlapping areas of public investment and service delivery.

This is a mountain to be climbed in stages, joys to be reached step by step.

I refer, for example, to the growth in income support to vulnerable households through social security and social assistance grants. This has been the fastest growing category of government expenditure since 2001, and now amounts to R70 billion a year, 3,4 per cent of GDP, and reaches more than 10 million beneficiaries. Social grants contribute more than half of the income of the poorest 20 per cent of households, and have doubled in real terms over the past five years. Recent survey data has provided clear empirical evidence of significant improvements in child nutrition associated with the child supportgrant, which in turn positively affect cognitive ability and school outcomes. TLALA O KOTSING!!

I refer also to the expansion of primary health care since 1994. More than 1300 clinics have been built or upgraded, 2300 have seen new equipment installed, childhood immunization programmes have been extended, and our health services receive 101 million patient visits a year – about 8 or 9 visits per family. HIV treatment programmes are in place at 192 health facilities. Over the MTEF period ahead, 46 hospitals will undergo physical rehabilitation and administrative overhaul as part of the nationally coordinated Hospital Revitalisation Programme.

I refer to steady progress in school enrolment, to the fact that 64 467 classrooms have been built in the last 10 years, that 114 000 study awards were made by the National Student Financial Aid Scheme in 2005, that 207 497 young people have registered for learnerships since the introduction of the skills development programme, funded in part through tax subsidies. School fees will be phased out in low-income communities this year, and Minister Pandor confirms that in three weeks time the last remaining seventeen trees will no longer substitute for classrooms.

I refer to the fact that 3Ѕ million homes have been connected to the electricity grid since 1994, water supply infrastructure now reaches some 90 per cent of the population and the sanitation backlog is steadily declining. R23 billion will be spent on government subsidies for 500 000 housing units over the next three years, complemented by rising expenditure on community sports facilities, police stations, transport infrastructure and administrative services.

I refer to our commitment to ensure that no household is denied the simple dignity associated with basic water, sanitation and energy supplies. Data supplied by the Department of Provincial and Local Government indicate that 165 water service authorities currently provide 3,9 million poor households with free basic water, and free basic electricity reaches 2,9 million households.

In 2005 the government spent R4800 a year, per person, on community and household services and income transfers, compared with R2000 a decade ago – an increase of nearly 50 per cent in real terms.

What has made this possible? There are no joys without mountains having been climbed…

Part of the answer lies in financial policy and debt management: in 1998, for every rand of revenue collected, 24 cents was spent on servicing state debt; in 2005 the debt cost 14 cents, and by 2009 it will be 10 cents.

Part of the answer is in the substantially improved growth of the economy on the strength of sound macroeconomic, fiscal and monetary policies. Part of it is in the considered reprioritisation and forward-looking policy reforms that underlie our budget choices.

But the greater part is in the quality and energy of people working together, citizens and civil servants, community activists and businesspeople, workers and managers. It is not the rand cost of public services that counts in the daily experience of women and children, workseekers, victims of crime, the elderly or those with disabilities. It is the quality of care in the paediatric ward, the time it takes to process a business application, the effectiveness of court processes, the attention to special learning needs in the classroom, that make a difference to people’s lives and well-being. As we celebrate the progress made in meeting household and community needs, we are also conscious of the work that lies ahead. Quality of care and efficient public services still require greater effort from all of us: improved public administration, and also the kind of citizen activism that contributes constructively to community development. As we give consideration to another expansionary budget framework for the period ahead, we need to pay tribute to the special character of selflessness that lies behind social progress and development – people working together, because that is what is needed to get things done.

I have in mind people like the 22-member team known as the Madida Hotshots, led by Christopher Kasayi from Jansenville in the Eastern Cape, formerly unemployed and now skilled and dedicated firefighters in our Working on Fire programme, who joined their counterparts from the Western Cape in bringing under control 17 forest fires in the Boland and Table Mountain areas during the past month, under difficult and hazardous conditions.

I have in mind 63-year old court maintenance officer Hester Kok, and her network of community workers in Kalahari communities such as Askam, Rietfontein, Philandersbron and Loubos. Through the efforts of local volunteers like Gwendolene Gooi of Rietfontein, also known as “Blommetjie”, people in these very remote settlements are assisted to receive maintenance payments on predetermined dates and without the exorbitant expense and huge inconvenience of a monthly taxi trip to Upington.

I have in mind people like Jabulisile Gumede, one of the founders of the Inanda Greening Project, which has established mini-nurseries at 30 schools in the areas of Inanda, Kwa-Mashu and Ntuzuma, contributing to local vegetable gardens for school feeding and income generation.

I have in mind Galeshewe community member Peter Nkota, who assists the police in visiting schools in the area twice a week to alert children to the risks of alcohol and sexual abuse, and has worked with youth leaders and justice officials to create a new mobile court to deal more promptly with local crime.

As we reflect on our macroeconomic performance, tax proposals and aggregate spending plans for the MTEF period ahead, Madam Speaker, I know that Members of the House, and others listening at home or in places of work, will join me in remembering the special efforts of ordinary citizens, and the dedicated work of our teachers, doctors and nurses in weekend casualty wards, police men and women fighting crime, administrators creating order out of chaos: those who every day live the nightmares that precede our joys, and turn them into light.


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