Tito Mboweni’s full Budget2020 speech
Finance minister Tito Mboweni arrives with his team ahead of delivering the budget speech in Parliament. Picture: ESA ALEXANDERsurvives and thrives when times are tough. It actually prefers less water. It wins even when it seems the odds are against it.
In the five years from 2003 to 2008, growth averaged about 5%, and SA was among the fastest-growing major economies. The unemployment rate improved 5 percentage points. Persistent electricity problems will however hold back growth. Over the next three years, we expect growth to average just more than 1%.Last year, the government embraced the ideas contained in the document “Towards an Economic Strategy for SA”. This is our plan, and it contains the following basic and fundamental pillars of our approach:
This budget means that a teacher who earns on average R460,000 a year, will see their taxes reduced by nearly R3,400 a year. Hard-working taxpayers, who earn on average R265,000 a year, will see their income tax reduced by more than R1,500 a year. There will be a renewed focus on illicit and criminal activity, including non-compliance by some religious public-benefit organisations. Religious bodies must operate within the strict boundaries of the law if they are to enjoy tax exempt status.We have increased excise duties to keep pace with inflation. From today:A 750ml bottle of wine will cost an extra 14c;A bottle of 750ml spirits, including whisky, gin or vodka, will rise by R2.89;A 23g cigar will cost an extra R6.73.
Total consolidated government spending is expected to grow at an average annual rate of 5.1%, from R1.95-trillion in 2020-21 to R2.14-trillion in 2022-23. This is mainly due to mounting debt-service costs. The planning and implementation of integrated public transport networks will consequently be suspended in the Buffalo City, Mbombela and Msunduzi municipalities.
Working with the public sector unions, we have over the past 15 years sought to improve the lot of public servants, and we have committed significant resources for compensating them every year even as we have tried to increase their numbers in recognition of their demanding workloads.However, at the same time government wages also increased significantly.
Organised labour understands where we are. They have made constructive proposals on a range of issues.Mr President, you have directed your government to deal with wasteful expenditure. This is a vital step in restoring the confidence of the public in the government. We must get more value for our money.
We would like to reiterate the current inflation target band of 6%-3% as the most appropriate monetary policy framework for a country such as ours. In line with that target, the moderate inflation outcomes for 2019 of 4.1% and the forecast for inflation to be about 4.5% over the next few years, has helped to lower the cost of capital to firms, households and the public sector.
Transfers to provinces support schooling for 13-million children and health care for 49.1-million South Africans. It is in this context that taking forward consultation on the NHI [National Health Insurance] is important.We shall commence work on the Pan African University for Space Sciences Institute at the Cape Peninsula University of Technology. Funding can come from the Africa Renaissance Fund.
Over the next three years the Development Bank of Southern Africa will package blended finance megaprojects of least R200bn. [The] government has committed R10bn over the next three years.Youth employment Changing the way we provide social grants has generated about R1bn per annum in efficiency savings, which will be partly used to raise the daily subsidy per child.Madam Speaker, the next component of our plan is to modernise network industries and to restructure the state-owned enterprises.[The] government will do whatever it takes to ensure a stable electricity supply. It is our primary task. We have allocated R230bn over ten years to achieve the restructuring of the electricity sector.
It is the very sincere hope of many that this intervention will lead to a sustainable airline that is not a burden to the fiscus.[The] cabinet approved the Economic Regulation of Transport Bill in November, which takes us towards a fairer process for third-party access to the rail network.In 2019, SA signed the African Continental Free-Trade Agreement, which comes into effect on July 1 2020. This agreement will open up new markets, promote regional integration and contribute to economic growth.
Madam Speaker, steps are being taken to address SA’s lagging productivity growth and reduce the cost of doing business. The BIZPortal for example will provide a streamlined way to register a new business with the CIPC [Companies and Intellectual Property Commission], Sars, the UIF and the Compensation Fund in one day.
An additional R500m is reprioritized over the medium term for the department to finalise land claims.Enforcing justiceThe NPA [National Prosecuting Authority], Special Investigating Unit and Directorate for Priority Crime Investigation get an additional R2.4bn in this budget. The state bank will be subject to the Banks Act, and will have an appropriate capital structure and performance parameters on investments and loan impairments.We will also consolidate the currently fragmented system of national and provincial development finance institutions.Mr President, a sovereign wealth fund is an important long-term tool for saving and investment for future generations. It can also contribute to strengthening the fiscal framework.
There are a variety of possible funding sources, such as the proceeds of spectrum allocation, petroleum, gas or minerals rights royalties, the sale of noncore state assets, future fiscal surpluses and money we set aside. Mr President, the National Treasury asked members of the public to provide tips to guide our thinking as we shaped this budget. Today we are joined by Akhona Mgwele from Gauteng who advised us to “support greater local economic development in municipalities”. We agree with her. I am therefore pleased to announce that local government is allocated R426bn from nationally raised funds over the medium-term expenditure framework.
The report about the Public Investment Corporation highlights important lessons, including the need to implement and adhere to governance and financial controls, and to reduce risk appetite.
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