Madame Speaker, 

1. COMMITTEE REPORT

I would like to start by commenting on the report of the Portfolio Committee on Finance on the Appropriation Bill 2008 / 09 dated 12 March 2008. The IFP agrees with the Committee's recommendations that more details are needed on how government will fund Eskom with R60 billion over the next five years and perhaps the Minister could furnish us with those details in his reply tomorrow.

We also want to associate ourselves with the input by the Black Sash that felt that the budget could have been more pro-poor. I will touch on this again a bit later, but for now let me say that the IFP is very concerned about food price inflation as it hits the poorest where it hurts the most - in their daily struggle for survival.

What we must remember is that Mr Motsepe and Mrs Khumalo pay exactly the same for a loaf of bread or any other necessary food item, the prices of which have increased over the last year by double-digit figures. The difference is that Mr Motsepe can absorb the increase because he is rich, but Mrs Khumalo cannot as she has limited resources and all her expenses have been going up over the past year. She can simply no longer make ends meet.

To make a meaningful difference to the levels of poverty in our country, government must do more for the Mrs Khumalo's with more pro-poor policies.

2. PRO-POOR

In general, however, the IFP welcomes the 2008/09 Budget as it maintains the balance between pro-poor interventions and continued stimulation of the economy through reduced company tax rate, increased infrastructure spending and incentivisation of small businesses.

While we generally welcome the PRO-GROWTH aspects contained in the budget, we are disappointed that the PRO-POOR side could not be equally matched.

We appreciate the increase in old age grants to R940, but this still falls short of our expectation of at least R1000 per month. We welcome the increase of R20 in the child support grant by October, but in our opinion this is still far too low.

We had hoped that the equalisation of the old age pension age would occur faster, but it now transpires that full equalisation will only occur by 2010. This is very disappointing to the IFP. At the same time we have to agree that the means test and its application have to be reviewed on an urgent basis to enable more people to benefit from social grants.

In saying this, as the IFP we do not want to see a culture of dependency unfold in our country. Sustainable jobs need to be created to face the challenges of unemployment, especially among the youth. Therefore, additional support for small businesses must continue and the concepts of self-help and self-reliance must be promoted and supported.

If government is truly serious about the situation in our country deserving a "business unusual" approach, then the IFP asks why not "incentives unusual" to help the poor with their plight in the face of extremely unusual economic circumstances, both internationally and locally.

As I mentioned earlier, the IFP is very concerned about increasing food price inflation. A study by the National Agricultural Marketing Council found that retail food prices have on average increased by more than 16% between October 2006 and October 2007. This rate is almost 4% higher than the official rate reported by Stats SA.

What is even more concerning is that rural people are hit worse by high food price inflation. As an example, a 5kg bag of maize meal cost R4 more than the same bag in urban areas, while other basic commodities such as bread show the same price bias in the rural areas.

Extreme poverty occurs mostly in the rural areas of our country and the higher food inflation rates, there, than in urban areas, clearly show that government must take unusual and drastic steps to address rural poverty via development.

3. INTEGRATED RURAL DEVELOPMENT

Turning then to integrated rural development. This budget, we believe, does not deal adequately with a proper framework to accomplish rural development and alleviating extreme poverty in rural areas.

Yes, the Minister will say that government had identified certain nodes for development, but the IFP says this does not go nearly far enough.

What we need is real integrated rural development where agriculture, land reform, land restitution, infrastructure development, local business opportunities and job creation can all be tied in together in a master plan to uplift rural areas.

If we are serious about addressing crushing poverty in the rural areas, the National War Room to fight poverty must focus not just on urban communities, but also the poorest of the poor in the rural areas. This is a national imperative.

Not only will rural upliftment alleviate extreme levels of poverty it will also address the "bright lights" syndrome where rural dwellers flock to the cities in search of jobs, only to find that they are most often worse off than in the rural areas.

4. TAXPAYER CONFIDENCE

Whilst, the IFP welcomes the increased allocation of R46 billion over the next three years to the provinces, and believe that service delivery should take place at the lowest levels of government; we are concerned with unspent grants and the lack of proper monitoring at provincial level.

KZN Department of Agriculture

A case in point is the KZN Department of Agriculture where an amount of R80 million remains unaccounted for due to missing documentation. Mismanagement by the former Head of Department resulted in the largest volume of overspending in the history of KZN; some R160 million. Even now, the report of the forensic investigation into the Department's overspending, fraud and corruption, is being withheld from the provincial legislature.

The KZN SCOPA was seized with probing the mismanagement at the Agriculture Department and when things got hot for certain people, the chair of SCOPA was removed by the majority and replaced. Does this represent good governance and political accountability?

Mr Minister, these are the kinds of things we must prevent at all costs from occurring at all levels of government.

Value for money

The IFP is acutely aware that taxpayers deserve value for their contributions to the national fiscus and we therefore demand that the budget allocations to government departments are properly spent to improve service delivery, alleviate poverty and stimulate economic growth and job creation.

The IFP also wants to see closer monitoring of spending by government departments to ensure full value for money. This would go a long way to improving taxpayer confidence in government.

Even the Honourable President of the Republic over this past weekend acknowledged that departments returning billions of Rand to Treasury because they could not spend it, was a national disaster. The IFP agrees with the Honourable President and calls on Treasury to in the future directly intervene in cases where it becomes obvious that a department cannot spend its allocations.

Government must use the constitutional tools at its disposal to force departments to spend their budgets for improved service delivery. If they cannot spend the money, Treasury must intervene.

Land Bank

A case in point where financial and management accountability is sorely needed to be strengthened is the Land Bank.

Last year, the Land Bank became embroiled in controversy as its board at the time was dissolved amidst allegations of misspending about R1 billion. At the time the IFP applauded Cabinet's decision to launch a forensic investigation into the board's actions.

Recently, the Minister of Agriculture and Land Affairs appointed a new board for the Land Bank, but what is of great concern is that 6 members of the previous board were re-appointed. The IFP questions the wisdom of this step.

Surely, a board that had to be dissolved should not provide any members to a future board?

What is even more disconcerting is the fact that the new board appears to lack persons with experience and knowledge of agricultural matters. The IFP welcomes the fact that some of the new members are banking specialists, but we have to question why there is no one from the agricultural community on the board.

Even AgriSA, representing commercial farmers, did not succeed in getting its nominee appointed to the board.

These developments come against the background of ratings agency Fitch stating that there is a risk that the Bank's financial position might deteriorate even further because of the absence of a turnaround strategy and new senior personnel being employed. The Bank is, for instance, still without a CEO. Fitch also expressed concern that the Bank's financing deals are increasingly becoming short term in nature.

To add insult to injury, it was reported this past Sunday that the police have begun investigating a R100 million loan guarantee provided by the Bank for the development of an industrial park in Durban. This forms part of the roughly R1 billion that is involved in schemes initiated by the Bank's former CEO.

Clearly, the Land Bank finds itself in a precarious position that could have numerous negative long-term effects on the agricultural sector, including compromising the positive role it could play in land reform and support programmes for those persons to whom land has been restored to them and who want to farm them.

The IFP therefore demands that a turnaround strategy that would place the Bank on a sound financial footing be implemented immediately, enabling it to serve its core constituency - the farmers of South Africa. The Board also needs to expedite the appointment of a new CEO. These two steps would go a long way to restoring public confidence in the bank.

Road Accident Fund

Another grave concern for the IFP is the crisis at the Road Accident Fund. Every year, South African motorists plough billions and billions of Rand into the Fund and this year the RAF fuel levy will again increase on 1 April.

Yet, the CEO of the Fund told the Portfolio Committee on Transport recently that the Fund "had reached a precipice", meaning that it is again in crisis, which appears to be par for the course over the last number of years.

Once again, the Fund has launched a so-called rescue plan to overcome what it euphemistically terms "challenges".

These challenges are the same as last year, and the same as the year before that and so on, and include in the Fund's own words:

. Inability to effectively process claims leading to massive backlogs

. High costs associated with administration

. Fraud and corruption, and

. Dissatisfied and disillusioned stakeholders

Madame Speaker,

It is quite obvious to the IFP that the umpteenth rescue plan from the RAF will not achieve the desired results and we therefore call on government to privatise this entity immediately so that the public can get the Fund they deserve for funding it so loyally.

IF THERE'S ENOUGH TIME LEFT

The IFP is pleased with the provision in the budget that Eskom will receive R60 billion over the next five years for its expansion programme and that R2 billion over the next three years will be allocated to support programmes aimed at encouraging more efficient use of electricity generation.

The IFP also would like to see Eskom top management becoming more aware of their shortcomings and forego performance bonuses. Just recently it was announced that Eskom top management would receive about R10 million in bonuses. The IFP rejects this. No company in the world that suffers from poor planning and management - witness the coal stock fiasco of earlier this year - would ever reward its management for failing in their duty. The same principle must be applied to Eskom.

CONCLUSION

Madame Speaker,

In conclusion, the IFP wanted to see more pro-poor initiatives in this year's budget. Some positive steps have been taken, but considering the levels of poverty in our country, more could and should have been done.

The IFP insists on taxpayers getting full value for their contributions to the national fiscus. This can only happen if budget allocations are properly spent on service delivery and if this expenditure is constantly monitored to ensure that true value is unlocked. Strict monitoring and insistence on political and financial accountability will go a long way in restoring the taxpayers' confidence in government's ability to deliver. .

Thank you.