25 February 2021
The ANC Parliamentary Caucus, in responding to the 2021 Budget, is deeply conscious that the country and the economy is facing very challenging times.
We acknowledge that it requires economic foresight, a depth of understanding complex issues which underpin the economy and above all, responding to the needs of the people especially the poor. In its approach and alignment, the Budget has to respond to both government policy and the needs of the people, a matter that is mutually reinforcing.
On the balance of evidence as outlined in the Budget Review document, Caucus believes a balance has been struck. One which foresees where ANC policy drives government in-terms of inclusive economic growth and development whilst balancing the management of the economy, stabilising public finances for economic recovery.
It is a Budget that deals with the reality of the impact of Covid-19 on the economy but one which sees beyond the period Covid-19. In this regard it emphasises short term direct support to the economy with sustainability in the medium term. It is a Budget that moves towards supporting economic activity ravaged by the impact of Covid-19.
In protecting the immediate needs of the nation and frontline workers in the Public Service, the Budget provides R10 billion for the purchase of vaccines and R2.4 billion allocated to provincial departments of health to administer the Covid-19 vaccine programme. Significantly and mindful of possible mutations that may lie ahead the Contingency Reserve has been increased from R5 billion to R12 billion for future emergencies.
Mindful of the impact of Covid on the economy and how this has impacted upon the employed, tax increases have been kept to a minimum, something that many had asked for.
In response to the impact of Covid-19 and how it has exposed the reality of South African society, total consolidated spending of R2 trillion each year, over the medium expenditure framework, has been outlined the majority of which goes towards social services.
The structural reform agenda, as articulated in the Economic Reconstruction and Recovery Plan, is aimed at removing obstacles to economic growth. Operation Vulindlela is supported by the Budget in work with the relevant departments and is funded through reprioritisation. Key to this programme is the change in part to the structure of the economy, by broadening ownership patters, by lowering barriers to entry, by raising productivity and by lowering the cost of doing business.
With regards economic growth and development, this must remain our concern. We are mindful that our recovery is on the back of a -7% decline of 2020 and so the 3,3% predicted for 2021, whilst welcome, should remind us that it is estimated that it will take probably until the first quarter of 2023 to get back to the point we were at before Covid-19 in terms of growth.
We welcome the commitment in the Budget to employment. R83.2 billion to public employment programmes and R11 billion for Presidential Youth Employment Initiative. This is critical for many reasons, overall, it helps to build the demand side of the economy which has its own positive knock-on effects.
On agrarian transformation, the Budget puts aside R9.3 billion for land restitution to deal with for over 1,400 claims and R896 million for the post settlement support programme. Critically and a matter that the ANC Caucus in its oversight work has raised, is the inclusion of recruitment of approximately 10 000 experienced extension officers. Again, the oversight work of the ANC in Parliament has called for the Land Bank to be restructured and given a developmental mandate. The MTEF allocation of R7 billion is meant to sort out its current default and put it on a developmental mandate.
ANC policy on local economic development sees townships and rural enterprises receiving an extra R4 billion.
We welcome the ongoing infrastructure commitments which are a major part of the Economic Reconstruction and Recovery Plan. Our oversight work has revealed that much of the infrastructure that supports the economy requires maintenance and replacement.
The Budget responds to this in committing R791 billion in an infrastructure investment programme. The private sector is part of this rollout of the infrastructure initiative.
The R6.2 trillion spending over the Medium-Term Expenditure Framework gives expression to the Economic Reconstruction and Recovery Plan.
With regards taxation, we note the move to support economic recovery, by not raising any additional tax revenue in this budget. The personal income tax brackets and rebates both increase above the inflation rate of 4% at 5%, with R2,2 billion tax relief on lower and middle-income groups. This is relief for the employed and money into the pockets of the employed.
With regards social security support, we welcome the R3,5 billion to Provinces to improve access to early childhood development services.
We welcome the R6.3 billion allocated to extend the special Covid-19 social relief of distress grant until the end of April 2021 as well as and as a result of social mobilisation, R678.3 million earmarked for provincial departments of social development and basic education to continue rolling out free sanitary products for learners from low-income households.
On tackling corruption, we welcome SARS, SARB and the Financial Intelligence Centre (FIC) working jointly on combating criminal and illicit cross-border activities through an inter-agency working group. The work of the ANC initiated Parliamentary process in 2016 on transfer pricing and illegal tax base erosion, sees today customs and excise operations reducing the illicit movement of goods across borders, transfer pricing and tax base erosion.
On local government, we are aware that financial governance remains a challenge for many municipalities, money that is owned to municipalities and money owned by municipalities. Therefore, it is welcomed that the Municipal Systems Improvement Grant is extended for the rollout of the District Development Model.
On NSFAS, our concerns have been expressed and we note in the Budget Speech that the National Treasury is working with the Department of Higher Educationon policy and funding options that will be detailed in the MTBPS.
With regards to our concerns on the urgent need for the finalisation of the Public Procurement Bill, we welcome the announcement that Treasury is fast tracking the Bill as an important intervention to address fragmentation in procurement legislation and we look forward to receiving this Bill by the end of this year.
Issued by the Office of the Chief Whip, Hon. Pemmy Majodina
Enquiries:
Sinetemba Jakavula
ANC Caucus Communications Officer
0648600499