Speech by Mr Hennie Bekker MP
 Extended Public Committee

24 May 2007  

Chairperson,

Introduction

The IFP fully concurs with Treasury and SARS with regard to the economic outlook for South Africa. South Africa's macro-economic outlook has improved considerably over the last decade. Lower interest rates, strong investment and higher commodity prices contributed to rapid growth in most sectors of the economy. This provided significant additional employment over the last three years, broadening access to work and skills opportunities, reducing poverty and steadily drawing previously excluded people into the mainstream economy.

Treasury expects economic growth to strengthen over the medium-term as large-scale public and private infrastructure and investment spending intensifies. Construction and refurbishment of stadiums for the 2010 Soccer World Cup, the Gautrain and a series of local transport, commercial and residential projects will generate wide-ranging economic spin-offs and opportunities. Investment in freight, roads and public transport may help to lower costs in the economy and expand capacity.

But, we are somewhat concerned about the conflict between Treasury and the Gauteng Provincial Government about the Malaysian Monorail. This absolutely reflects on the disregard for provincial powers.

The IFP believes that these massive capital projects will further lead to a multiplier effect, which in turn will further boost the economy.

National Treasury

The Strategic Plan of National Treasury boldly states that improved economic performance by South Africa over the next decade would be built on four pillars. These are an increase in investment and savings, improvements in the quality of education and training, a poverty reduction strategy and development of markets, and support for entrepreneurs and rigorous monitoring of public service delivery.

The IFP applauds National Treasury's objectives which include promoting economic development, good governance and rising living standards through accountable, economic, efficient, equitable and sustainable management of public finance.

Treasury in this regard also seeks to advance economic growth and income redistribution and to prepare a sound and sustainable national budget and equitable division of resources between the three spheres of government.

SA Revenue Services

SARS have again raised substantially more revenue than budgeted and we believe that the same success will be applicable in the new financial year. The IFP believes that the time has arrived to seriously consider the lowering of Corporate Taxes, as well as Personal Income Tax, which with inflation, has caused substantial fiscal drag. We therefore believe that the time is ripe for a taxation summit in order to simplify the tax system and to thrash out the realities about taxation in South Africa, in order to make us a global economic player in the international world.

The IFP is grateful that the Minister has acceded to the IFP's request to abolish all taxation on investments by Pension Funds. We only trust that this saving will end up in the pockets of the pensioners and retiring persons.

New Income Tax Returns

The IFP has always stated that we would support all efforts to simplify and to deregulate red tape for business as well as for individuals.

The IFP therefore applauds SARS for initiating a process to simplify the tax system. We believe that the substantially shorter tax return form, as well as the new on-line electronic submission of tax returns would make matters much easier for the taxpayer as well as speeding up the administration system.

There will be two tax return forms for individuals. A standard or elementary form of only two pages for people earning a salary and who may qualify for a travelling allowance and elementary deductions. For individual taxpayers with a more complicated tax situation, with rental income or income from a business or farming enterprise, there will be a five page from called the IB12C. I take it that the elementary form IB12S stands for simple, whereas the IB12C is for complicated form.

Interesting though, the elementary form requests the taxpayer to indicate in which format communication should take place, whether by mail, telephone, fax or email. Ironically, there is no space for an email address and this class of taxpayer will probably receive a letter requesting him / her for an email address.

Stats SA

Stats SA receive a bit less money in this year's budget mainly because the Community Survey was concluded in the previous financial year.

The main role of any central statistical service is to provide government and other consumers with credible, time-sensitive information that can be used for accurate decision-making, planning and forecasting. In South Africa's case it is even more vital that official information is as accurate as possible so that state resources can be applied to the biggest social problems such as poverty and under-development.

Stats SA have had their problems with credibility and building trust in official statistics, but at least it is now clear that the steps taken in recent years to improve management and the relationship with the Statistics Council are bearing fruit and that performance has improved.

However, there are still some pervasive problems at Stats SA. In the previous financial year, the organisation failed to spend its full budget due to project delays and under-estimated recruitment and it also received four emphasis of matter from the Auditor-General.

But, the biggest problem is the continued vacancies. At end March 2006, 253 vacancies existed which included 61 statisticians and 23 IT specialists. Clearly, no statistical body can afford these vacancies in critical skills areas. By end March 2006, the organisation's overall turnover rate was 8, 6% and in critical occupations it was 12%. Most employees who left the organisation did so by resigning. One would have to ask why this is the case.

The IFP understands that Stats SA cannot be blamed for the small numbers of statisticians graduating from tertiary institutions or for the lack of such skills in the market. We therefore support the organisation's endeavours in this regard with tertiary institutions and other stakeholders, and we look forward to improvements in the coming year in the recruitment and retention of skilled employees.

Provinces

The financial allocations made by the Division of Revenue Act, although of paramount importance to provinces, are sometimes misappropriated by one or two provinces. The Hon Minister suggested that for more effective financial management of provinces, consideration should be given to rationalise and possibly reduce the number of provinces in South Africa. I have no doubt that the Minister made his suggestion in a sincere and open way to indeed improve public administration.

What the Minister probably did not realise at that time was that some of his colleagues would jump on the bandwagon and for totally different reasons.

It is clear that the ANC is no longer having its own way in the Western Cape and KwaZulu-Natal. One striking example of this is the by-election victory of the IFP in Meerbank in Ethekwini yesterday where the IFP won this particular ward for the first time!

Furthermore, the IFP yesterday took control of the Newcastle Municipality after a vote of no confidence in the ANC.

The only way to protect and to maintain ANC rule in these provinces would be to shift boundaries or to combine provinces. I am sure the Hon Minister would agree that these underhanded efforts would indeed be detrimental and devastating to democracy in SA.

Similarly, the ANC was earlier cautioned about its cross-border municipalities and the shifting of communities from one province to another. The bitter fruits of this short-sightedness of government policy clearly translate itself in the present chaos in Khutsong and Matatiele. I hope that Government has learnt some bitter lessons from this.

Baie belangrik Agbare Minister - leer u kollegas om NIE te krap waar dit nie jeuk nie!

General

The IFP stated before that we must have a much higher, sustainable economic growth rate than the present 5% and we will support all Government endeavours to achieve this higher growth. Government must however realise that only the private sector can create the necessary permanent jobs and sustain them. Much greater cooperation between government and the private sector must be facilitated.

The IFP applauds the extension and improvement of the system of Welfare grants and the future introduction of a subsidy for low income earners; together with the improvement of other social grants and the introduction of a form of a compulsory savings scheme, even of some sort of Government pension scheme. The IFP will however study the details as we are apprehensive of the creation of a 'honey pot' which can be creamed off by corrupt politicians and civil servants.

Chairperson,

The IFP is in full support of Treasury and the Minister's initiative to combat corruption in the financial sector. We are proud that the IFP was at the forefront in calling for action against the fraudulent asset management company Fidentia.

The IFP however remains concerned about fraud and corruption in the public sector and the civil service and we would like to refer Hon Members to the African Bank report of 2005. I would like to quote the following paragraphs from the report:

"In Africa, lack of accountability and corruption has become pervasive in many public services. A widespread form of bureaucratic corruption is appointment and promotion on the basis of connections, as opposed to merit.

Despite the fact that many African countries have taken some initiatives to combat corruption, more committed efforts and greater political will are needed to address the problem of corruption. The sectors most prone to corruption in African economies include: public works contracts and construction; arms and defence, power, including petroleum and energy; industry; healthcare and education, and customs.

Political corruption is essentially linked to access to, and control of, power and the way in which such power is exercised. Thriving areas for corruption include award of government contracts, use of political positions to leverage kickbacks or illicit payments and appointments to high offices, use of public resources to fund election campaigns, and donations to political parties in the expectation of undeserved benefits." Does this not sound very very familiar in our own SA situation?

Nevertheless, the IFP will support the budget vote for National Treasury, SARS and Stats SA.

Thank you