Cape Town - Finance Minister Pravin Gordhan on Wednesday urged South Africans to work together to radically change the economy.
“The new economic order we seek cannot just be a pact among elites, a coalition among stakeholders with vested interests. Nor can it be built on populist slogans or unrealistic promises,” he told the National Assembly during his 2014/15 budget speech.
“We have to work together to radically change our economy. This means working with our major businesses so that they sparkle across the globe.”
It meant working with black entrepreneurs to grow their companies across South Africa, and beyond, working with small and large businesses to build value-chain linkages that supported dynamic, export-oriented, competitive enterprises.
“It means bringing those who are marginalised into the mainstream of opportunity and activity. It means a better standard of living for all.
“It is time for a bold vision of our future, as set out in the National Development Plan. It is time for action and implementation. It is time to move South Africa forward to the next stage of our historic journey to more rapid growth, jobs and development -- time to leave behind poverty, joblessness and inequality.”
Gordhan said that while the global economic outlook remained unsteady, South Africa's economy had continued to grow, but more slowly than projected a year ago.
“We expect growth of 2.7 percent this year. A weaker exchange rate is a risk to the inflation outlook, but it supports exporters.”
Despite slower economic growth, the 2013/14 budget deficit was projected to be four percent of GDP, lower than projected in October.
The deficit would narrow to 2.8 percent over the medium-term, and net debt would stabilise at about 45 percent of GDP in 2016/17.
The budget provided R9.3 billion in income tax relief to households. Government would expand its employment programmes over the next three years and continue to support job creation by the private sector.
The budget allocated R6.5bn over three years to support small and medium enterprises.
The turnover tax regime would be amended to further reduce the tax burden on micro-enterprises.
Consideration was being given to replacing the graduated tax structure for small business corporations with a refundable tax compliance credit.
Gordhan said progress was being made in overcoming infrastructure backlogs and investing for more inclusive growth and development.
Public infrastructure investment would amount to R847bn over the next three years.
The first unit of the Medupi power station was expected to be completed towards the end of this year.
Transnet had increased capacity on its coal line. Plans were in place to further expand the coal, iron ore and manganese lines.
The Passenger Rail Agency of SA refurbished 500 Metrorail coaches last year, and its new rolling stock procurement programme would get under way this year.
Spending on social infrastructure, which included health, education and community facilities, would increase from R30bn in 2012/13 to R43bn in 2016/17. Priority would be given to programmes to eradicate school infrastructure backlogs and to refurbish clinics and hospitals.
In 2014/15, a total of R40bn in infrastructure grants would be transferred to local governments for their water, sanitation, energy and environmental functions.
The private sector was also making an increasing contribution to infrastructure investment. Contracts for 47 renewable energy projects were concluded in 2012 and 2013, many of which were already under construction.
These would add 2460MW of power capacity, and investment of R70bn. A further R45bn in investment would be contracted this year.
Consumer price inflation (CPI) was expected to come in at 5.7 percent for 2013, 6.2 percent this year, 5.9 percent next year, and 5.5 percent in 2016.
Gordhan said the number of people eligible for social grants was due to reach 16.5 million by 2016/17. The recent re-registration of grant recipients and the introduction of a new payment system had lowered the cost of administration.
“One million invalid beneficiaries were removed from the system. Social grants are meant for those who need them most.”
The old age and disability grants would increase in April, from R1270 a month to R1350; the foster care grant would increase from R800 to R830; and, the child support grant would increase, from R300 to R310 a month in April, and to R320 in October.
Increases in excise duties on alcoholic beverages and tobacco would add nine cents to the price of a 340ml can of beer and 68 cents to a packet of 20 cigarettes. Whisky would cost R4.80 a bottle more. These increases took effect immediately.
The general fuel levy would increase by 12 cents a litre on April 2, and the Road Accident Fund levy would increase by eight cents a litre.
Consolidated revenue for 2014/15 was expected to be R1.1trn and spending R1.25trn.
“We have achieved much over the past five years, in a very difficult post-recession climate. But there is more to do ahead, more to build, more to put right, more to learn, more to implement. We can only do this together,” Gordhan said. - Sapa