It is my privilege to introduce the third budget of President Zuma's administration. Mister President, you have given us a clear and historic challenge to "write a new story about South Africa - the story of how, working together, we drove back unemployment and reduced economic inequality and poverty. This budget has been crafted at a challenging but hopeful time. We have to say to our people that economic uncertainty will be with us for some time, yet we have a programme of economic change that can steadily roll back unemployment, poverty and inequality.
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It is my privilege to introduce the third budget of President Zuma? Mister President, you have given us a clear and historic challenge to? This budget has been crafted at a challenging but hopeful time. We have to say to our people that economic uncertainty will be with us for some time, yet we have a programme of economic change that can steadily roll back unemployment, poverty and inequality.
We have demonstrated excellent resilience during the post crisis. We now need to introduce a new dynamism among all South Africans. It requires an extraordinary national effort from all role-players, committed not just to identifying the barriers to progress, not just to proposing solutions, but also working together, over the long haul. Our new story, our period of transition, is about building modern infrastructure, a vibrant economy, a decent quality of life for all, reduced poverty, decent employment opportunities.
It is a story that must be written by all of us. Not just by government. Not just by business. Not just by unions. By all of us, South Africans from all corners of this country.
The legacy of our past is not only that of difficulty and despair. We can draw pride from the celebration of the ANC? The idea of unity in action, working together to realise practical goals, must be revived.
The idea of an active citizenry, drawn into motion by dedicated activists and inspired by a compelling vision of the future, has to be renewed. Every one of the last hundred years has seen our nation overcome obstacles that seemed insurmountable. Some may have been beyond our control, the result of changes to the environment to which we were compelled to adjust. Some were the result of our failure to act, even when the solutions were known to us. Others were the unintended consequences of our own successes.
A towering leader of our movement, Walter Sisulu, wrote from his prison cell on Robben Island,? In a certain sense, the story of our struggle is a story of problems arising and problems being overcome.
It is understandable that many of the problems should generate much controversy and emotion. However cool and detached we may strive to be in our analysis, the fact remains that we are deeply involved and interested parties and the solutions we adopt are solutions we ourselves have to implement.? We will not turn away from our challenges. We must confront them boldly, and with hope. In harnessing all the resources at our disposal, we have to do more, with less; we have to work smarter and harder.
South Africans must focus on our strengths and opportunities, to identify and activate the levers of economic and social change at our disposal. Mister President you have given effect to the wisdom of Walter Sisulu; through the work of the Planning Commission this country now has a 20 year vision, through your initiative we now have a massive infrastructure programme also extending over 20 years, which will increase the growth and job creating potential of our economy.
We remain steadfast in addressing the challenges of creating jobs, reducing poverty, building infrastructure and expanding our economy. Giving the budget practical effect cannot be a project of government alone. In Setswana, we say? Mabogo dinku a thebana? Government has supported the recovery from the recession, but as we expand infrastructure investment over the period ahead we have to see business investing in our future as well.
Government has expanded social assistance to households over the past decade, but employment and economic growth have to be the main future drivers of income growth and poverty reduction.
Government is responsible for developing effective municipalities and broadening access to services, but business, civil society and organised labour have to be partners in building cohesive communities and promoting social solidarity. And so Mister Speaker, in tabling the Budget we have to say: this is what we undertake to do, not just as government, but as a nation.
Our development requires every one of us to ask? Allow me to reflect briefly, Mister Speaker, on the global environment and the historic shift in economic power that is taking place. Financial commentator Martin Wolf recently wrote:?
Shaping this new world into a cooperative and flourishing order is going to prove extraordinarily challenging. History suggests that such times of transition, however inevitable and however just, are fraught with conflict and instability.
Today, the western dominance of at least two centuries is under severe challenge. This period of transition is unlikely to be any less fraught than those that preceded it.?
To succeed in this environment, we have to seize the opportunities presented by this changing world. As a major mining economy, we should be benefiting more from the continued buoyancy in commodity markets internationally.
We also need to take advantage of rising demand for agricultural and manufacturing goods. Some 85 million manufacturing jobs in China will shift to other countries over the years ahead.
Do we have the right policies, conditions and boldness to enable South African businesses to gain from these immense shifts in the patterns of production and trade? There are expanding opportunities on our own continent. Africa is the second fastest growing region in the world. This growth is sustained by high commodity prices, but also reflects a youthful, increasingly educated population, rapid urbanisation and a new entrepreneurial spirit. Ten years ago there were fewer than 10 million internet users on the continent.
Today they number almost million. As well as developing South African business interest in the continent, we should use the strength and sophistication of our financial system to turn our country into a true gateway for investment into, and development of, Africa. Both the National Development Plan and the New Growth Path recognise that to compete in the global economy requires flexibility, innovation and leadership, in government and the private sector.
We have to build a more adaptable economy. This requires more effective and dynamic partnership between government, the private sector and civil society. At the same time, the crisis and its aftermath have revealed intractable problems in the old system.
Growing inequalities in income and wealth have undermined economic growth and social well-being. The difficult task of moderating and reversing inequality requires active government intervention. Unregulated capitalism is clearly in crisis. Economic outlook In building partnerships that will take us through this crisis, Mister Speaker, we have to implement a strategy for faster and more inclusive economic growth.
We are not doing well enough in growing our economy and creating jobs for our young people. Mister President through your leadership we are able to say to South Africa and the world that we have a vision for our country and our economy? Our New Growth Path recognises that special employment initiatives have to be a priority in our present circumstances, while in the longer term growth in agriculture and manufacturing, and investment in a knowledge-based economy must be prioritised.
The draft National Development Plan identifies several key objectives:. Our development strategy requires a capable state, and active citizens. We need parents to work with the state to deliver quality education, community leaders that will help protect neighbourhoods; business leaders and trade unions to grow the economy; investors to create jobs. In isiZulu,? Uzothola kanjani uhleli ekhoneni? Mister Speaker, if we are to succeed in putting our economy on a more rapid and inclusive growth path to , we need to effectively direct and manage the levers of change?
A sustainable fiscal framework, based on the principles of counter-cyclicality, debt sustainability and intergenerational equity underpins our growth strategy. Mister Speaker, we can be proud of the collective wisdom and will of our government in making the tough decisions that have kept our fiscus on a sustainable track. Reprioritisation, savings, haircuts? Key features of the budget framework include:. By phasing in our fiscal consolidation over the medium term, we avoid the social and economic dislocation associated with more rapid adjustments, while still stabilising the fiscal position without burdening the economy and future generations with excessive debt.
The Presidential Infrastructure Coordinating Commission has made considerable progress in identifying projects and clarifying long-term investment plans to drive economic change. The Budget Review lists 43 major infrastructure projects, adding up to R3.
Over the MTEF period ahead, approved and budgeted infrastructure plans amount to R billion, of which just under R billion is in the energy sector and R billion in transport and logistics projects. South Africa has deep and liquid capital markets, through which long-term capital can be raised at competitive rates by government, state enterprises and the private sector.
Our development finance institutions are capable of raising capital and co-financing investments of the private sector, state entities and municipalities. These are considerable strengths? But the key consideration, Mister Speaker, is the impact and economic viability of our infrastructure investments. The PICC will ensure expert project assessment, subject to appropriate standards of review and public accountability?
We are aware of several weaknesses in the state? In the past, spending has lagged behind plans. We have to do better than that? In addition to long delays, we have often experienced significant cost over-runs in infrastructure projects.
So we shall step up the quality of planning, costing and project management, so that infrastructure is delivered on time, and on budget.
This means that government departments and municipalities that do not spend, under- spend or mis-spend their allocated funding, will be at risk of losing the allocations. The relevant officials will also be held liable for such misdemeanours. Several measures are in place to improve infrastructure project implementation and build management capacity. Training and mentorship programmes have a critical role to play in addressing capacity constraints of departments and municipalities.
But professionalism, hard work and commitment to value for money are preconditions for successful project delivery. There can be no compromise on the basic principles of sound financial management in ensuring that resources are mobilised efficiently to serve our people. A capable state focussed on delivery requires a passionate and patriotic public service? I turn now, Mister Speaker, to the revenue estimates and tax proposals.
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2012 Budget Speech by Minister of Finance Pravin Gordhan