See: 2013 budget speech
Category Archives: Economics
Vice President Biden, Mr. Chief Justice, Members of the United States Congress, distinguished guests, and fellow citizens:
Each time we gather to inaugurate a president, we bear witness to the enduring strength of our Constitution. We affirm the promise of our democracy. We recall that what binds this nation together is not the colors of our skin or the tenets of our faith or the origins of our names. What makes us exceptional – what makes us American – is our allegiance to an idea, articulated in a declaration made more than two centuries ago:
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are Life, Liberty, and the pursuit of Happiness.”
Today we continue a never-ending journey, to bridge the meaning of those words with the realities of our time. For history tells us that while these truths may be self-evident, they have never been self-executing; that while freedom is a gift from God, it must be secured by His people here on Earth. The patriots of 1776 did not fight to replace the tyranny of a king with the privileges of a few or the rule of a mob. They gave to us a Republic, a government of, and by, and for the people, entrusting each generation to keep safe our founding creed.
For more than two hundred years, we have.
Through blood drawn by lash and blood drawn by sword, we learned that no union founded on the principles of liberty and equality could survive half-slave and half-free. We made ourselves anew, and vowed to move forward together.
Together, we determined that a modern economy requires railroads and highways to speed travel and commerce; schools and colleges to train our workers.
Together, we discovered that a free market only thrives when there are rules to ensure competition and fair play.
Together, we resolved that a great nation must care for the vulnerable, and protect its people from life’s worst hazards and misfortune.
Through it all, we have never relinquished our skepticism of central authority, nor have we succumbed to the fiction that all society’s ills can be cured through government alone. Our celebration of initiative and enterprise; our insistence on hard work and personal responsibility, are constants in our character.
But we have always understood that when times change, so must we; that fidelity to our founding principles requires new responses to new challenges; that preserving our individual freedoms ultimately requires collective action. For the American people can no more meet the demands of today’s world by acting alone than American soldiers could have met the forces of fascism or communism with muskets and militias. No single person can train all the math and science teachers we’ll need to equip our children for the future, or build the roads and networks and research labs that will bring new jobs and businesses to our shores. Now, more than ever, we must do these things together, as one nation, and one people.
This generation of Americans has been tested by crises that steeled our resolve and proved our resilience. A decade of war is now ending. An economic recovery has begun. America’s possibilities are limitless, for we possess all the qualities that this world without boundaries demands: youth and drive; diversity and openness; an endless capacity for risk and a gift for reinvention. My fellow Americans, we are made for this moment, and we will seize it – so long as we seize it together.
For we, the people, understand that our country cannot succeed when a shrinking few do very well and a growing many barely make it. We believe that America’s prosperity must rest upon the broad shoulders of a rising middle class. We know that America thrives when every person can find independence and pride in their work; when the wages of honest labor liberate families from the brink of hardship. We are true to our creed when a little girl born into the bleakest poverty knows that she has the same chance to succeed as anybody else, because she is an American, she is free, and she is equal, not just in the eyes of God but also in our own.
We understand that outworn programs are inadequate to the needs of our time. We must harness new ideas and technology to remake our government, revamp our tax code, reform our schools, and empower our citizens with the skills they need to work harder, learn more, and reach higher. But while the means will change, our purpose endures: a nation that rewards the effort and determination of every single American. That is what this moment requires. That is what will give real meaning to our creed.
We, the people, still believe that every citizen deserves a basic measure of security and dignity. We must make the hard choices to reduce the cost of health care and the size of our deficit. But we reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future. For we remember the lessons of our past, when twilight years were spent in poverty, and parents of a child with a disability had nowhere to turn. We do not believe that in this country, freedom is reserved for the lucky, or happiness for the few. We recognize that no matter how responsibly we live our lives, any one of us, at any time, may face a job loss, or a sudden illness, or a home swept away in a terrible storm. The commitments we make to each other – through Medicare, and Medicaid, and Social Security – these things do not sap our initiative; they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great.
We, the people, still believe that our obligations as Americans are not just to ourselves, but to all posterity. We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations. Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires, and crippling drought, and more powerful storms. The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition; we must lead it. We cannot cede to other nations the technology that will power new jobs and new industries – we must claim its promise. That is how we will maintain our economic vitality and our national treasure – our forests and waterways; our croplands and snowcapped peaks. That is how we will preserve our planet, commanded to our care by God. That’s what will lend meaning to the creed our fathers once declared.
We, the people, still believe that enduring security and lasting peace do not require perpetual war. Our brave men and women in uniform, tempered by the flames of battle, are unmatched in skill and courage. Our citizens, seared by the memory of those we have lost, know too well the price that is paid for liberty. The knowledge of their sacrifice will keep us forever vigilant against those who would do us harm. But we are also heirs to those who won the peace and not just the war, who turned sworn enemies into the surest of friends, and we must carry those lessons into this time as well.
We will defend our people and uphold our values through strength of arms and rule of law. We will show the courage to try and resolve our differences with other nations peacefully – not because we are naïve about the dangers we face, but because engagement can more durably lift suspicion and fear. America will remain the anchor of strong alliances in every corner of the globe; and we will renew those institutions that extend our capacity to manage crisis abroad, for no one has a greater stake in a peaceful world than its most powerful nation. We will support democracy from Asia to Africa; from the Americas to the Middle East, because our interests and our conscience compel us to act on behalf of those who long for freedom. And we must be a source of hope to the poor, the sick, the marginalized, the victims of prejudice – not out of mere charity, but because peace in our time requires the constant advance of those principles that our common creed describes: tolerance and opportunity; human dignity and justice.
We, the people, declare today that the most evident of truths – that all of us are created equal – is the star that guides us still; just as it guided our forebears through Seneca Falls, and Selma, and Stonewall; just as it guided all those men and women, sung and unsung, who left footprints along this great Mall, to hear a preacher say that we cannot walk alone; to hear a King proclaim that our individual freedom is inextricably bound to the freedom of every soul on Earth.
It is now our generation’s task to carry on what those pioneers began. For our journey is not complete until our wives, our mothers, and daughters can earn a living equal to their efforts. Our journey is not complete until our gay brothers and sisters are treated like anyone else under the law – for if we are truly created equal, then surely the love we commit to one another must be equal as well. Our journey is not complete until no citizen is forced to wait for hours to exercise the right to vote. Our journey is not complete until we find a better way to welcome the striving, hopeful immigrants who still see America as a land of opportunity; until bright young students and engineers are enlisted in our workforce rather than expelled from our country. Our journey is not complete until all our children, from the streets of Detroit to the hills of Appalachia to the quiet lanes of Newtown, know that they are cared for, and cherished, and always safe from harm.
That is our generation’s task – to make these words, these rights, these values – of Life, and Liberty, and the Pursuit of Happiness – real for every American. Being true to our founding documents does not require us to agree on every contour of life; it does not mean we will all define liberty in exactly the same way, or follow the same precise path to happiness. Progress does not compel us to settle centuries-long debates about the role of government for all time – but it does require us to act in our time.
For now decisions are upon us, and we cannot afford delay. We cannot mistake absolutism for principle, or substitute spectacle for politics, or treat name-calling as reasoned debate. We must act, knowing that our work will be imperfect. We must act, knowing that today’s victories will be only partial, and that it will be up to those who stand here in four years, and forty years, and four hundred years hence to advance the timeless spirit once conferred to us in a spare Philadelphia hall.
My fellow Americans, the oath I have sworn before you today, like the one recited by others who serve in this Capitol, was an oath to God and country, not party or faction – and we must faithfully execute that pledge during the duration of our service. But the words I spoke today are not so different from the oath that is taken each time a soldier signs up for duty, or an immigrant realizes her dream. My oath is not so different from the pledge we all make to the flag that waves above and that fills our hearts with pride.
They are the words of citizens, and they represent our greatest hope.
You and I, as citizens, have the power to set this country’s course.
You and I, as citizens, have the obligation to shape the debates of our time – not only with the votes we cast, but with the voices we lift in defense of our most ancient values and enduring ideals.
Let each of us now embrace, with solemn duty and awesome joy, what is our lasting birthright. With common effort and common purpose, with passion and dedication, let us answer the call of history, and carry into an uncertain future that precious light of freedom.
Thank you, God Bless you, and may He forever bless these United States of America.
Tonight, more than 200 years after a former colony won the right to determine its own destiny, the task of perfecting our union moves forward.
It moves forward because of you. It moves forward because you reaffirmed the spirit that has triumphed over war and depression, the spirit that has lifted this country from the depths of despair to the great heights of hope, the belief that while each of us will pursue our own individual dreams, we are an American family and we rise or fall together as one nation and as one people.
Tonight, in this election, you, the American people, reminded us that while our road has been hard, while our journey has been long, we have picked ourselves up, we have fought our way back, and we know in our hearts that for the United States of America the best is yet to come.
I want to thank every American who participated in this election… Whether you voted for the very first time or waited in line for a very long time.
By the way, we have to fix that.
Whether you pounded the pavement or picked up the phone… Whether you held an Obama sign or a Romney sign, you made your voice heard and you made a difference.
I just spoke with Governor Romney and I congratulated him and Paul Ryan on a hard-fought campaign.
We may have battled fiercely, but it’s only because we love this country deeply and we care so strongly about its future. From George to Lenore to their son Mitt, the Romney family has chosen to give back to America through public service and that is the legacy that we honour and applaud tonight.
In the weeks ahead, I also look forward to sitting down with Governor Romney to talk about where we can work together to move this country forward.
I want to thank my friend and partner of the last four years, America’s happy warrior, the best vice-president anybody could ever hope for, Joe Biden.
And I wouldn’t be the man I am today without the woman who agreed to marry me 20 years ago. Let me say this publicly: Michelle, I have never loved you more. I have never been prouder to watch the rest of America fall in love with you, too, as our nation’s first lady. Sasha and Malia, before our very eyes you’re growing up to become two strong, smart beautiful young women, just like your mom. And I’m so proud of you guys. But I will say that for now one dog’s probably enough.
To the best campaign team and volunteers in the history of politics… The best. The best ever. Some of you were new this time around, and some of you have been at my side since the very beginning.
But all of you are family. No matter what you do or where you go from here, you will carry the memory of the history we made together and you will have the life-long appreciation of a grateful president. Thank you for believing all the way, through every hill, through every valley.
You lifted me up the whole way and I will always be grateful for everything that you’ve done and all the incredible work that you put in.
I know that political campaigns can sometimes seem small, even silly. And that provides plenty of fodder for the cynics that tell us that politics is nothing more than a contest of egos or the domain of special interests. But if you ever get the chance to talk to folks who turned out at our rallies and crowded along a rope line in a high school gym, or saw folks working late in a campaign office in some tiny county far away from home, you’ll discover something else.
You’ll hear the determination in the voice of a young field organizer who’s working his way through college and wants to make sure every child has that same opportunity. You’ll hear the pride in the voice of a volunteer who’s going door to door because her brother was finally hired when the local auto plant added another shift. You’ll hear the deep patriotism in the voice of a military spouse whose working the phones late at night to make sure that no one who fights for this country ever has to fight for a job or a roof over their head when they come home.
That’s why we do this. That’s what politics can be. That’s why elections matter. It’s not small, it’s big. It’s important. Democracy in a nation of 300 million can be noisy and messy and complicated. We have our own opinions. Each of us has deeply held beliefs. And when we go through tough times, when we make big decisions as a country, it necessarily stirs passions, stirs up controversy.
That won’t change after tonight, and it shouldn’t. These arguments we have are a mark of our liberty. We can never forget that as we speak people in distant nations are risking their lives right now just for a chance to argue about the issues that matter, the chance to cast their ballots like we did today.
But despite all our differences, most of us share certain hopes for America’s future. We want our kids to grow up in a country where they have access to the best schools and the best teachers. A country that lives up to its legacy as the global leader in technology and discovery and innovation, with all the good jobs and new businesses that follow. We want our children to live in an America that isn’t burdened by debt, that isn’t weakened by inequality, that isn’t threatened by the destructive power of a warming planet. We want to pass on a country that’s safe and respected and admired around the world, a nation that is defended by the strongest military on earth and the best troops this – this world has ever known.
But also a country that moves with confidence beyond this time of war, to shape a peace that is built on the promise of freedom and dignity for every human being. We believe in a generous America, in a compassionate America, in a tolerant America, open to the dreams of an immigrant’s daughter who studies in our schools and pledges to our flag.
To the young boy on the south side of Chicago who sees a life beyond the nearest street corner. To the furniture worker’s child in North Carolina who wants to become a doctor or a scientist, an engineer or an entrepreneur, a diplomat or even a president – that’s the future we hope for. That’s the vision we share. That’s where we need to go – forward. That’s where we need to go.
Now, we will disagree, sometimes fiercely, about how to get there. As it has for more than two centuries, progress will come in fits and starts. It’s not always a straight line. It’s not always a smooth path. By itself, the recognition that we have common hopes and dreams won’t end all the gridlock or solve all our problems or substitute for the painstaking work of building consensus and making the difficult compromises needed to move this country forward. But that common bond is where we must begin. Our economy is recovering. A decade of war is ending. A long campaign is now over.
And whether I earned your vote or not, I have listened to you, I have learned from you, and you’ve made me a better president. And with your stories and your struggles, I return to the White House more determined and more inspired than ever about the work there is to do and the future that lies ahead.
Tonight you voted for action, not politics as usual. You elected us to focus on your jobs, not ours. And in the coming weeks and months, I am looking forward to reaching out and working with leaders of both parties to meet the challenges we can only solve together. Reducing our deficit. Reforming our tax code. Fixing our immigration system. Freeing ourselves from foreign oil. We’ve got more work to do.
But that doesn’t mean your work is done. The role of citizens in our Democracy does not end with your vote. America’s never been about what can be done for us. It’s about what can be done by us together through the hard and frustrating, but necessary work of self-government. That’s the principle we were founded on.
This country has more wealth than any nation, but that’s not what makes us rich. We have the most powerful military in history, but that’s not what makes us strong. Our university, our culture are all the envy of the world, but that’s not what keeps the world coming to our shores. What makes America exceptional are the bonds that hold together the most diverse nation on earth.
The belief that our destiny is shared; that this country only works when we accept certain obligations to one another and to future generations. The freedom which so many Americans have fought for and died for come with responsibilities as well as rights. And among those are love and charity and duty and patriotism. That’s what makes America great.
I am hopeful tonight because I’ve seen the spirit at work in America. I’ve seen it in the family business whose owners would rather cut their own pay than lay off their neighbours, and in the workers who would rather cut back their hours than see a friend lose a job.
I’ve seen it in the soldiers who reenlist after losing a limb and in those SEALs who charged up the stairs into darkness and danger because they knew there was a buddy behind them watching their back.
I’ve seen it on the shores of New Jersey and New York, where leaders from every party and level of government have swept aside their differences to help a community rebuild from the wreckage of a terrible storm.
And I saw just the other day, in Mentor, Ohio, where a father told the story of his 8-year-old daughter, whose long battle with leukemia nearly cost their family everything had it not been for health care reform passing just a few months before the insurance company was about to stop paying for her care.
I had an opportunity to not just talk to the father, but meet this incredible daughter of his. And when he spoke to the crowd listening to that father’s story, every parent in that room had tears in their eyes, because we knew that little girl could be our own.
And I know that every American wants her future to be just as bright. That’s who we are. That’s the country I’m so proud to lead as your president.
OBAMA: And tonight, despite all the hardship we’ve been through, despite all the frustrations of Washington, I’ve never been more hopeful about our future.
I have never been more hopeful about America. And I ask you to sustain that hope. I’m not talking about blind optimism, the kind of hope that just ignores the enormity of the tasks ahead or the roadblocks that stand in our path. I’m not talking about the wishful idealism that allows us to just sit on the sidelines or shirk from a fight.
I have always believed that hope is that stubborn thing inside us that insists, despite all the evidence to the contrary, that something better awaits us so long as we have the courage to keep reaching, to keep working, to keep fighting.
America, I believe we can build on the progress we’ve made and continue to fight for new jobs and new opportunity and new security for the middle class. I believe we can keep the promise of our founders, the idea that if you’re willing to work hard, it doesn’t matter who you are or where you come from or what you look like or where you love. It doesn’t matter whether you’re black or white or Hispanic or Asian or Native American or young or old or rich or poor, able, disabled, gay or straight, you can make it here in America if you’re willing to try.
I believe we can seize this future together because we are not as divided as our politics suggests. We’re not as cynical as the pundits believe. We are greater than the sum of our individual ambitions, and we remain more than a collection of red states and blue states. We are and forever will be the United States of America.
And together with your help and God’s grace we will continue our journey forward and remind the world just why it is that we live in the greatest nation on Earth.
Thank you, America. God bless you. God bless these United States.
It is my privilege to introduce the third budget of President Zuma’s administration.
Mister President, you have given us a clear and historic challenge to “write a new story about South Africa – the story of how, working together, we drove back unemployment and reduced economic inequality and poverty.”
This budget has been crafted at a challenging but hopeful time. We have to say to our people that economic uncertainty will be with us for some time, yet we have a programme of economic change that can steadily roll back unemployment, poverty and inequality.
We have demonstrated excellent resilience during the post-2008 crisis. We now need to introduce a new dynamism among all South Africans.
It requires an extraordinary national effort from all role-players, committed not just to identifying the barriers to progress, not just to proposing solutions, but also working together, over the long haul.
Our new story, our period of transition, is about building modern infrastructure, a vibrant economy, a decent quality of life for all, reduced poverty, decent employment opportunities. It is a story that must be written by all of us. Not just by government.
Not just by business. Not just by unions. By all of us, South Africans from all corners of this country.
The legacy of our past is not only that of difficulty and despair. We can draw pride from the celebration of the ANC’s centenary, and build on this past to get things done today. The idea of unity in action, working together to realise practical goals, must be revived. The idea of an active citizenry, drawn into motion by dedicated activists and inspired by a compelling vision of the future, has to be renewed.
Every one of the last hundred years has seen our nation overcome obstacles that seemed insurmountable. Some may have been beyond our control, the result of changes to the environment to which we were compelled to adjust. Some were the result of our failure to act, even when the solutions were known to us. Others were the unintended consequences of our own successes.
A towering leader of our movement, Walter Sisulu, wrote from his prison cell on Robben Island, “In a certain sense, the story of our struggle is a story of problems arising and problems being overcome. It is understandable that many of the problems should generate much controversy and emotion. However cool and detached we may strive to be in our analysis, the fact remains that we are deeply involved and interested parties and the solutions we adopt are solutions we ourselves have to implement.”
We will not turn away from our challenges. We must confront them boldly, and with hope. In harnessing all the resources at our disposal, we have to do more, with less; we have to work smarter and harder. South Africans must focus on our strengths and opportunities, to identify and activate the levers of economic and social change at our disposal.
Mister President you have given effect to the wisdom of Walter Sisulu; through the work of the Planning Commission this country now has a 20 year vision, through your initiative we now have a massive infrastructure programme also extending over 20 years, which will increase the growth and job creating potential of our economy.
Overview of the 2012 Budget
We remain steadfast in addressing the challenges of creating jobs, reducing poverty, building infrastructure and expanding our economy.
In brief, Mister Speaker, today’s budget advises the following:
The global environment remains highly uncertain. While there are signs of a revival in the US economy, much of Europe is in recession, and significant financial risks cloud the global economic outlook.
South Africa’s finances are in good health. A budget deficit of 4.6 per cent of GDP is projected in 2012/13. We plan to reduce the deficit to 3 per cent of GDP in 2014/15, and public debt will stabilise at about 38 per cent of GDP.
An expansion in infrastructure investment is one of the central priorities of the 2012 Budget.
Special emphasis is given to improving competitiveness in industry, investment in technology, encouragement of enterprise development and support for agriculture.
Total spending will reach R1.1 trillion next year, representing some 32 per cent of GDP.
Education, health and social assistance will remain the largest categories of expenditure, sustaining and expanding the social wage over the MTEF period ahead. Investment in people is at the centre of our growth and development strategy.
The budget continues to support job creation, with a particular focus on unemployed youth.
The budget provides for personal income tax relief of R9.5 billion, with further measures to increase tax compliance.
Measures are proposed to invigorate household savings.
We will strengthen financial management in the public sector, pursue value for money with the greatest possible vigour and ensure that taxpayers’ money is well used.
Fraud and corruption will be combatted through changes to procurement policies and practices and tough enforcement of the law.
Giving the budget practical effect cannot be a project of government alone. In Setswana, we say “Mabogo dinku a thebana” meaning “we have to work together to achieve more”. Government has supported the recovery from the 2008 recession, but as we expand infrastructure investment over the period ahead we have to see business investing in our future as well. Government has expanded social assistance to households over the past decade, but employment and economic growth have to be the main future drivers of income growth and poverty reduction. Government is responsible for developing effective municipalities and broadening access to services, but business, civil society and organised labour have to be partners in building cohesive communities and promoting social solidarity.
And so Mister Speaker, in tabling the 2012 Budget we have to say: this is what we undertake to do, not just as government, but as a nation. Our development requires every one of us to ask – what can I do for my country, my people, our future!
The global environment
Allow me to reflect briefly, Mister Speaker, on the global environment and the historic shift in economic power that is taking place.
In 2012, global output is projected to expand by 3.3 per cent. Advanced economies are expected to grow 1.2 per cent, while developing Asia will grow by 7.3 per cent during 2012, and Sub Saharan Africa by 5.5 per cent.
Negative growth is forecast for the Euro area, impacting on trade in many other economies.
In the last 5 years, the Chinese economy has expanded by 60 per cent and India by about 45 per cent. Advanced economies barely show positive growth. A recent World Bank study argues that “new growth poles are redefining the global economic structure”. This study predicts that emerging economies will grow on average by 4.7 per cent a year, while advanced economies will grow by about 2.3 per cent between 2011 and 2025.
The speed of transformation is unprecedented and places emerging economies at the centre of the global economy. Emerging market multinationals are playing an ever increasing role in reshaping global industry, including marked increases in South-South investment and foreign direct investment.
The evolving world we face presents us with both challenges and opportunities.
Financial commentator Martin Wolf recently wrote: “Shaping this new world into a cooperative and flourishing order is going to prove extraordinarily challenging. History suggests that such times of transition, however inevitable and however just, are fraught with conflict and instability. Today, the western dominance of at least two centuries is under severe challenge. This period of transition is unlikely to be any less fraught than those that preceded it.”
To succeed in this environment, we have to seize the opportunities presented by this changing world.
As a major mining economy, we should be benefiting more from the continued buoyancy in commodity markets internationally. We also need to take advantage of rising demand for agricultural and manufacturing goods. Some 85 million manufacturing jobs in China will shift to other countries over the years ahead. Do we have the right policies, conditions and boldness to enable South African businesses to gain from these immense shifts in the patterns of production and trade?
There are expanding opportunities on our own continent. Africa is the second fastest growing region in the world. This growth is sustained by high commodity prices, but also reflects a youthful, increasingly educated population, rapid urbanisation and a new entrepreneurial spirit. Ten years ago there were fewer than 10 million internet users on the continent. Today they number almost 100 million.
As well as developing South African business interest in the continent, we should use the strength and sophistication of our financial system to turn our country into a true gateway for investment into, and development of, Africa.
Both the National Development Plan and the New Growth Path recognise that to compete in the global economy requires flexibility, innovation and leadership, in government and the private sector. We have to build a more adaptable economy. This requires more effective and dynamic partnership between government, the private sector and civil society.
At the same time, the crisis and its aftermath have revealed intractable problems in the old system. Growing inequalities in income and wealth have undermined economic growth and social well-being. The difficult task of moderating and reversing inequality requires active government intervention. Unregulated capitalism is clearly in crisis.
In building partnerships that will take us through this crisis, Mister Speaker, we have to implement a strategy for faster and more inclusive economic growth. We are not doing well enough in growing our economy and creating jobs for our young people.
The South African economy has averaged about 3 per cent growth a year since 2009. Against the background of the slowdown in the global economy, real GDP growth is likely to fall to about 2.7 per cent in 2012.
We expect a recovery to 3.6 per cent and 4.2 per cent growth in 2013 and 2014, but these are modest rates of expansion relative to the social and developmental challenges we face and the opportunities that our mineral wealth and human capabilities offer.
On present trends, the deficit on the current account of the balance of payments will widen from 3.3 per cent in 2011 to 4.4 per cent GDP in 2014.
There was a welcome recovery in job creation during 2011, but employment has not yet returned to its 2008 peak and the unemployment rate remains high at 23.9 per cent.
Vision for the economy in 2030
Mister President through your leadership we are able to say to South Africa and the world that we have a vision for our country and our economy – where we want to get to in the next 20 years.
Our New Growth Path recognises that special employment initiatives have to be a priority in our present circumstances, while in the longer term growth in agriculture and manufacturing, and investment in a knowledge-based economy must be prioritised.
The draft National Development Plan identifies several key objectives:
Lowering costs for both households and business
Increasing public infrastructure spending
Growing our manufacturing and agricultural sectors
Raising mining output
Improving the functioning of the labour market, particularly to help young people access work; and
Raising competitiveness and exports.
In each of these areas there are steps proposed over the three-year period ahead.
Our development strategy requires a capable state, and active citizens. We need parents to work with the state to deliver quality education, community leaders that will help protect neighbourhoods; business leaders and trade unions to grow the economy; investors to create jobs. In isiZulu, “Uzothola kanjani hleli ekhoneni” meaning how far will you get if you are sitting in your corner.
The levers of economic change
Mister Speaker, if we are to succeed in putting our economy on a more rapid and inclusive growth path to 2030, we need to effectively direct and manage the levers of change – levers that activate both public and private sector energies and capabilities.
Our public-sector infrastructure programme
Support for industrial development and special economic zones
Investment in science and technology
Support for emerging farmers and land reform beneficiaries
Expansion of employment programmes
Improvements in further education and skills development.
The fiscal framework
A sustainable fiscal framework, based on the principles of counter-cyclicality, debt sustainability and intergenerational equity underpins our growth strategy.
Mister Speaker, we can be proud of the collective wisdom and will of our government in making the tough decisions that have kept our fiscus on a sustainable track.
Reprioritisation, savings, haircuts – these have been executed with singular determination.
The consolidated resources available to the state over the MTEF period amount to some R4.5 trillion, taking into account the investment plans of state enterprises and development finance institutions. Key features of the budget framework include:
Real growth in non-interest expenditure averaging 2.6 per cent over the medium term, bringing spending in line with long-term revenue trends.
Additional allocations of R55.9 billion over the next three years, including R9.5 billion for an economic support package.
Tax revenue stabilising at about one-quarter of GDP.
A reduction in the budget deficit from 4.8 per cent in 2011/12 to 3 per cent in 2014/15.
A public-sector borrowing requirement of 7.1 per cent of GDP in 2011/12, declining to 5 per cent in 2014/15 before rapidly rising again as the infrastructure programme of government accelerates.
By phasing in our fiscal consolidation over the medium term, we avoid the social and economic dislocation associated with more rapid adjustments, while still stabilising the fiscal position without burdening the economy and future generations with excessive debt.
Funding of infrastructure
The Presidential Infrastructure Coordinating Commission has made considerable progress in identifying projects and clarifying long-term investment plans to drive economic change.
The Budget Review lists 43 major infrastructure projects, adding up to R3.2 trillion in expenditure. Over the MTEF period ahead, approved and budgeted infrastructure plans amount to R845 billion, of which just under R300 billion is in the energy sector and R262 billion in transport and logistics projects.
These projects are funded in various ways:
The fiscus meets the costs of public-service facilities such as schools and courtrooms, hospitals and rural roads.
Public entities such as Eskom and Transnet finance their investments from internally generated surpluses and borrowing from the capital market. This means they have to generate sufficient revenue from tariffs and charges to repay debt over time, and cover operating and maintenance costs.
In some cases, a mix of tax finance and cost recovery is appropriate – we make budget contributions to the costs of commuter transport services and electricity and water service delivery to low-income communities, for example.
Private sector investment plays a substantial role in several sectors. Access to telecommunications services is financed by private operators, and our airlines industry has several private sector players. The first round of over 1 200MW of renewable energy projects was recently successfully tendered to independent power producers. Private sector capacity can also be through construction and operating concessions, for example in the management of industrial development zones, freight logistics and ports operations.
The Development Bank of Southern Africa will play a coordinating role in raising finance, in partnership with multilateral finance institutions, foreign investors and other investment funds. The Industrial Development Corporation similarly invests directly in income-generating projects, in partnership with other investors.
South Africa has deep and liquid capital markets, through which long-term capital can be raised at competitive rates by government, state enterprises and the private sector.
Our development finance institutions are capable of raising capital and co-financing investments of the private sector, state entities and municipalities. These are considerable strengths – they mean that we do not have to rely on expensive external finance or complex structured arrangements.
But the key consideration, Mister Speaker, is the impact and economic viability of our infrastructure investments. The PICC will ensure expert project assessment, subject to appropriate standards of review and public accountability – a critical requirement before investment decisions are taken.
No good project will be short of funding.
We are aware of several weaknesses in the state’s infrastructure capacity. In the past, spending has lagged behind plans. Our estimate is that in 2010/11, R178 billion was spent out of a planned R260 billion, or just 68 per cent. We have to do better than that – state enterprises, municipalities and government departments all need to improve their planning and management of capital projects.
In addition to long delays, we have often experienced significant cost over-runs in infrastructure projects. So we shall step up the quality of planning, costing and project management, so that infrastructure is delivered on time, and on budget.
This means that government departments and municipalities that do not spend, under-spend or misspend their allocated funding, will be at risk of losing the allocations. The relevant officials will also be held liable for such misdemeanours. National Treasury will be pro-actively monitoring the spending of grants to ensure value for money, adherence to Expanded Public Works Programme (EPWP) targets and implementation of operational and maintenance programmes.
Several measures are in place to improve infrastructure project implementation and build management capacity.
Within state-owned entities, development finance institutions and the private sector, considerable capacity is already mobilized in project planning and management.
The Infrastructure Development Improvement Programme assists national and provincial departments, focused largely on education and health projects and support for provincial public works departments. The Construction Industry Development Board has played a key role in developing standards and procedures for government tenders.
A new Cities Support Programme will get under way this year, initially in eight metropolitan authorities, focused on improved spatial planning, public transport systems and management of infrastructure utilities.
The Municipal Infrastructure Support Agency will be established by Minister Baloyi this year, focused on rural municipalities that lack planning capacity.
Technical assistance to municipalities is also provided through the neighbourhood development programme, which supports over 220 projects aimed at catalysing business investment in township partnership projects.
The infrastructure skills development grant supported 150 graduate interns in engineering and spatial planning in 2011/12, and will be extended to a further 43 municipalities over the period ahead.
Special attention will be given to the procurement processes for major infrastructure projects, to ensure both value for money and development of local suppliers and support industries.
Training and mentorship programmes have a critical role to play in addressing capacity constraints of departments and municipalities. But professionalism, hard work and commitment to value for money are preconditions for successful project delivery.
There can be no compromise on the basic principles of sound financial management in ensuring that resources are mobilised efficiently to serve our people.
A capable state focussed on delivery requires a passionate and patriotic public service – without those few individuals whose only desire is to profit from the state.
Revenue estimates and tax proposals
I turn now, Mister Speaker, to the revenue estimates and tax proposals. The underlying principles are that the tax system should be fair, efficient, transparent certain – and, where possible, uncomplicated.
Tax revenue recovered during 2010/11 and 2011/12, following a decline in 2009/10 during the global recession. Although tax revenue is slightly lower than our estimate in February last year, the revised estimate for 2011/12 of R739 billion is R10 billion higher than projected in last year’s Medium Term Budget Policy Statement.
This year’s tax proposals are as follows.
Personal income tax relief
Personal income tax relief of R9.5 billion is proposed, which takes account of inflation and provides modest real tax relief.
Tax treatment of medical expenses
As from 1 March 2012 the tax credit for contributions to medical schemes will be introduced, at a rate of R230 a month for the first two beneficiaries and R154 each for additional beneficiaries. Taxpayers 65 years and older and people with disabilities will be included in the second phase of this reform, which will be implemented in 2014.
These reforms will significantly improve the fairness of the personal income tax system.
Retirement funding and savings
Reform of the tax treatment of contributions to retirement funds is also envisaged, to take effect in 2014.
To encourage voluntary savings, consideration is being given to the introduction of tax-exempt short and medium-term savings products. The proposal is that individuals should be permitted to save up to R30 000 a year, with a lifetime limit of R500 000, in registered savings or investment products that would be free of tax on interest, dividends or capital gains. The current tax free interest income thresholds will be reviewed and possibly phased out as part of this reform.
Full details of the proposals are in the Budget Review.
The secondary tax on companies will be terminated on 31 March 2012 and a withholding tax on dividends will be implemented on 1 April 2012. This will align South Africa’s tax treatment of dividends with that in most other countries. Pension funds will benefit from this transition as they will receive dividends tax free. The dividend tax will be introduced at 15 per cent.
Capital gains tax
The introduction of capital gains tax in October 2001 was an important step in broadening the tax base.
In order to reduce the scope for tax arbitrage and broaden the tax base further, the CGT inclusion rate for individuals and special trusts will be increased with effect from 1 March 2012 from 25 to 33.3 per cent, and for companies and other trusts from 50 to 66.6 per cent. To mitigate the impact on middle-income earners, the various exclusion thresholds are increased.
Relief for small businesses
Mister Speaker, I am pleased to advise that there will be further tax relief for small businesses and micro-enterprises.
The tax-free threshold for small business corporations is increased to R63 556, the 10 per cent rate is reduced to 7 per cent and the threshold up to which this rate applies is increased to R350 000. For taxable income above R350 000, the normal 28 per cent corporate rate applies.
With effect from next month, qualifying micro-businesses (within the R1 million turnover limit) will be able to pay turnover tax, VAT and employees’ tax twice a year. This means that the number of returns and payments a year will be reduced from about 18 to just two.
Corporate tax measures
Several measures are set out in the Budget Review to improve the corporate tax environment, Mister Speaker:
Further steps will be taken to limit excessive debt financing
Amendments to the mark-to-market taxation of foreign currency and other financial instruments will be phased-in
The governance and tax treatment of property loan stock entities will be aligned with the present treatment of regulated property unit trusts
Tax relief is proposed for housing developers and employers who provide housing below R300 000 a unit.
Special economic zones
The Minister of Trade and Industry has published draft legislation to provide for the creation of special economic zones. Tax relief is under consideration for businesses that invest in these zones, including a reduction in the corporate income tax rate and support for employment and training expenses.
A revised policy paper on a carbon tax will be published this year for a second round of public comment and consultation. As set out in the Climate Change Response White Paper approved by Cabinet in 2011, the need to price carbon emissions and the phasing in of a tax instrument for this purpose are accepted.
The levy on electricity generated from non-renewable sources will increase by 1c/kWh as from 1 July 2012 and will replace the current funding mechanism for energy-efficiency initiatives such as the solar water geyser programme. There should be little overall impact on electricity tariffs.
The general fuel levy on petrol and diesel will be increased by 20c with effect from 4 April 2012, and the Road Accident Fund will increase by 8c to 88c/l.
Square Kilometre Array
Members of the House will know that under the guidance of the Minister of Science and Technology, South Africa is bidding to host the Square Kilometre Array (SKA), an international collaboration to build the world’s largest radio telescope. I am happy to confirm that the project will qualify for VAT relief, which will surely give Minister Pandor the winning edge in this contest.
Tax on gambling
Following the 2011 Budget proposal on gambling, it is proposed that a national tax based on gross gambling revenue should be introduced effective from 1 April 2013, as an additional 1 per cent levy on a uniform provincial gambling tax base. A similar base will be used to tax the national lottery.
Excise duties on tobacco and alcohol products
Dhiveshan Naicker has offered the following tip, Mister Speaker: “Raise the tax on alcohol and cigarettes so that people will stop drinking and smoking too much”. This is good advice. The increases in duties on tobacco products will be between 5 and 8 per cent this year.
In respect of beer and spirits, an increased benchmark tax burden is proposed, to be phased in over two years. The excise on spirits will increase by 20 per cent to R36 for a 750 ml bottle this year, the tax on beer goes up by 10 per cent to R1.01 for a 340 ml can and wine will contribute 8 per cent more to the fiscus.
Tax on financial transactions
South Africa has a financial transaction tax on securities transfers, at a rate of 0.25 per cent. It is proposed that the current exemption for brokers should be abolished. Transactions for the broker’s benefit will be taxed at a lower rate. The inclusion of financial derivatives in the base of the securities transfer tax is also under consideration.
Ad valorem excises
With effect from October this year, an ad valorem excise duty at a rate of 7 per cent will apply to small aeroplanes and helicopters with a mass below 5 000 kg. A duty of 10 per cent will apply to motorboats and sailboats longer than 10 metres.
Mister Speaker, whereas several nations around the world are confronting severe austerity measures and significantly higher taxes, we are able to propose tax relief of R2.3 billion overall, in part because of the strength of our tax policy and administration, and in part because millions of South Africans pay their taxes and duties in full and on time.
The recent Voluntary Disclosure Programme has attracted approximately 18 000 applications, and has yielded almost R1 billion in additional tax so far. It has also provided useful insights into areas of non-compliance that will receive focused attention, including:
Under-declaration of income such as rental and foreign income and capital gains
Claiming of excessive income deductions
Under-declaration of VAT outputs and inflating of VAT inputs
Abuse of share incentive schemes by corporate executives
Abuse of benefits granted to foreign persons employed in South Africa
Non-payment of PAYE and failure to submit PAYE returns by employers.
Poor tax compliance is also apparent in respect of trusts and in parts of the construction sector, and the role of tax practitioners and other intermediaries will come under scrutiny. Analysis of compliance among the country’s 34 000 tax advisors shows practitioners owe over R260 million in outstanding taxes and have more than 18 000 income tax returns outstanding in their personal capacity. If that is their attitude to their own tax compliance, one shudders to think what advice they are giving to their clients!
Within the trade environment, customs officials will continue to focus attention on under-valuation of imports, especially in textiles, using a reference price database which industry is helping to update. During the current financial year, SARS has already confiscated 3.4 million articles of clothing and footwear valued at almost R580 million.
In addition SARS has seized drugs worth R139 million and 683 million sticks of cigarettes valued at R180 million. Since April over 230 taxpayers have been successfully prosecuted for a range of tax-related offences resulting in sentences totalling 370 years and nearly R5 million in fines. A further 1 500 tax-related cases are awaiting prosecution with the National Prosecution Authority.
Since 1 April 2011 SARS has issued over 700 000 taxpayers with administrative penalties for failing to submit an income tax return on time as required. These and other measures have helped increase the proportion of on-time submission. SARS received almost 5 million returns during the most recent tax season – a 23 per cent increase over the year before.
The Tax Administration Bill has been approved by Parliament. It incorporates the common administrative elements of current tax law into one piece of legislation, and makes further improvements in this area. The bill is expected to be promulgated and most of its provisions brought into force in 2012.
During 2012, South Africa will establish a dedicated ombud for tax matters. The office is intended to provide taxpayers with a low-cost mechanism to address administrative difficulties that cannot be resolved by SARS.
Mister Speaker, in preparing for the budget, various consultations occur (including a wide range of tips from the public). This year, a pre-budget consultation was held with the Nedlac constituencies. Issues raised included:
The need to shift expenditure towards investment, rather than consumption activities
Sustainability of increases in the public-sector wage bill
Rapid increases in administered prices
Reinforcing taxes on luxury goods and more effective taxation of the super-rich
Budgetary support for rural development and more effective strategies for eliminating poverty
Financial transactions tax
Improving financial management
Support for the community works programme
Responding to rising food prices.
Many of these recommendations find resonance in the contents of the budget and our spending proposals.
Medium-term expenditure proposals
In our spending recommendations, Mister Speaker, we have taken advice from Amanda Mzulwini. “I think that you should spend money on things that matter, like improving healthcare, building more schools in the rural areas and building clinics”.
Job creation is a central priority of government. An additional R4.8 billion over the 2012 MTEF period is provided for the expanded public works programme, bringing its allocations to a total of R77.8 billion.
The community work programme receives an additional R3.5 billion, which gives it a total of R6.2 billion, enabling the number of people employed to increase to 332 000 in 2014/15 from 90 000 in March 2011. We will continue to increase allocations to this programme over time.
Working for Water and Working on Fire receive an additional R1.1 billion (a total of R7.7 billion) providing for a total of 135 000 jobs over the medium term.
The non-state sector programme receives an additional R345 million (a total of R1.1 billion).
The National Rural Youth Service Corps receives an additional R200 million (a total of R900 million) over the next three years
R300 million is added to the arts and culture sector for job creation.
Spending on education will grow from R207 billion in 2012/13 to R236 billion in 2014/15. Additional allocations of R18.8 billion over the medium term are accommodated, including equalisation of learner subsidies for no-fee schools and expanded access to grade R. An amount of R235 million is added to the baseline of the national department over the three-year spending period to extend the national assessments system. An additional R850 million is allocated to improve university infrastructure, including student accommodation facilities.
Health and social protection
Medium-term priorities in health spending include hospital infrastructure, the comprehensive HIV and Aids treatment and prevention programme, and expanding health professional training. Progress in these areas will strengthen the public health system, paving the way for the introduction of national health insurance.
The health sector is allocated an additional R12.3 billion over the next three years. R1 billion is allocated for national health insurance pilot projects and increasing primary health care visits. To improve health infrastructure, R450 million has been provided to upgrade about 30 nursing colleges. A further R426 million is allocated for the initial work on rebuilding five major tertiary hospitals. To accommodate provision of antiretroviral treatment at the CD4 threshold of 350, an additional R968 million is made available over the medium term.
Social welfare priorities include early childhood development programmes and the Isibindi childcare and protection programme. These are initiatives which have strong community-based employment benefits, and they are allocated an additional R1.4 billion over the MTEF.
Expenditure on social grants will grow from R105 billion in 2012/13 to R122 billion in 2014/15. At present, nearly 16 million South Africans receive social grants. With effect from April:
The monthly state old age pension and the disability and care dependency grants will rise by R60 a month to R1 200, or R1 220 for pensioners over the age of 75,
Foster care grants will increase by R30 to R770,
The child support grant will increase to R280.
We are mindful that these increases may need to be reassessed if inflation continues to rise.
Transport, Energy and Communication
The budget for transport, energy and communication services increases from R84 billion in 2012/13 to R98 billion in 2014/15, rising by an annual average of 8.4 per cent. A devolution of public transport services to metropolitan municipalities will be phased in over the period ahead, allowing for better integrated public transport networks including rail and bus rapid transit systems.
An additional R4 billion is allocated to the Passenger Rail Agency of South Africa to begin purchasing new coaches. The agency also receives R1 billion to build three depots and upgrade signalling in Gauteng, KwaZulu-Natal and the Western Cape.
Sentech will receive funding over the MTEF period for the dual illumination of analogue and digital television, and for digital broadcasting infrastructure.
In energy, the focus is on demand-side management to address the impact of limited supply until new generation capacity comes online. An additional R4.7 billion is allocated to complete the installation of one million solar water geysers. R600 million goes to municipalities to install low-energy lighting and equipment. R300 million is rovided for the electrification of informal settlements.
Human settlements and community amenities
Investment in municipal infrastructure and human settlements will grow from R120 billion in 2012/13 to R139 billion in 2014/15. Additional allocations of R9.9 billion over the medium term are proposed, including informal settlement upgrading, a wastewater treatment plant in Sedibeng, bulk water systems in Sekhukhune and water systems in the OR Tambo district.
Financial support for housing development is expanded over the period ahead, additional funding is allocated for the finance-linked individual subsidy programme, and further capitalisation of our housing finance institutions is proposed. A mortgage support facility is under consideration.
Economic services and environmental protection
Additional allocations of R15.8 billion are provided over the MTEF period for economic services and environmental protection.
The Department of Trade and Industry receives the bulk of this funding – R5.8 billion for the manufacturing competitiveness enhancement programme and R2.3 billion for industrial development and special economic zones.
Additional funds go to SANParks for tourism infrastructure, and to the National Metrology Institute for equipment.
An additional R1.9 billion goes to the Department of Agriculture, Forestry and Fisheries to improve agricultural support services. The Land Bank receives R1 billion to conclude its recapitalisation. R150 million is made available for provincial and municipal agricultural colleges. The Department of Rural Development and Land Reform has prioritised the settlement of 4 000 restitution claims over the MTEF period.
Science and technology
Total expenditure on science and technology increases over the MTEF period to R12.1 billion in 2014/15. Additional funding is proposed for the Agricultural Research Council for vaccines research and support for extension services, and for science council initiatives in support of industry and mining development.
General public services
The Department of Home Affairs receives additional funding for an integrated information technology system and upgrading border post infrastructure and housing.
An amount of R350 million is earmarked for transfer to Alexkor for the finalisation of obligations to the Richtersveld Community joint venture.
Defence, public order and safety
Spending on defence, public order and safety has increased by 9.7 per cent a year from 2008/09 to 2011/12, and will grow from R140 billion in 2012/13 to R158 billion in 2014/15. The sector receives additional funding of R7.6 billion over the MTEF period
to cater mainly for improved conditions of service, additional personnel and infrastructure.
Additional funding of R300 million is allocated for court infrastructure, including new high courts in Polokwane and Nelspruit. The Office of the Public Protector and the Independent Police Investigative Directorate are allocated additional funds to expand capacity. Funds are provided to the defence force to increase personnel deployment for border protection. The budget includes R700 million in 2012/13 to recapitalise Denel Aerostructures.
National health insurance
National health insurance is to be phased in over a 14-year period beginning in 2012/13. The new system will provide equitable health coverage for all South Africans. Over time, the new system will require funding over and above current budget allocations to public health. Funding options include an increase in the VAT rate, a payroll tax on employers, a surcharge on the taxable income of individuals, or some combination of the above. Alongside options for increased tax revenue, the role of user charges is also being investigated.
It is expected that an additional revenue source will be needed in 2014/15 amounting to about R6 billion in that year, which is not currently provided for in the MTEF.
Achieving an appropriate balance in the funding of national health insurance is necessary to ensure that the tax structure remains supportive of economic growth, job creation and savings. A discussion paper will be published by end-April 2012.
Gauteng Freeway Improvement Programme
Mister Speaker, I am mindful that the introduction of tolling to finance the Gauteng Freeway Improvement Programme has caused considerable public reaction. We have listened carefully to the various suggestions and appreciate the difficulties that might be faced.
The total debt associated with the project is R20 billion. In order to contribute to a further reduction in the toll burden, a special appropriation of R5.8 billion is now proposed, to be included in 2011/12 expenditure. This will reduce the debt to be repaid through the toll system, and will make a steeper discount possible for regular road users.
It is important to remember that road-user charges also serve an important demand management function on roads that are heavily congested. Users benefit through lower vehicle operating costs, time savings and improved safety. In addition, improved maintenance of regional and provincial roads is made possible by the additional revenue that our toll roads generate.
Going forward, government will carefully evaluate future road infrastructure funding. In addition, the further development of efficient and cost-effective public transport systems will receive the urgent attention of the Department of Transport.
Financial management and combating fraud and corruption
Following on the announcements made previously to introduce measures to improve financial management and help combat corruption, I can report that there has been progress on several fronts.
The National Treasury has already issued new regulations which require departments to submit annual tender programmes, limit variations to orders, and require disclosures of all directives.
Significant progress is being made in identifying and dealing with those who have abused the system and whose activities fall within the category of priority crimes. The JCPS made an announcement on priority crimes and corruption statistics earlier this week. I want to thank Ministers Mthetwa and Radebe for the cooperation of departments and agencies under their control. Our joint multi-disciplinary approach to investigations is bearing fruit.
I also want to express support for the Cosatu initiative, CorruptionWatch. We call on ordinary South Africans not to sit back and accept bribery when you come across it, whether in the public or the private sector. Contact the hotlines in government departments. Contact CorruptionWatch. Don’t accept bribery. Don’t become part of corruption.
There are further steps National Treasury will soon take to improve our procurement capability.
We will strengthen fragmentation in the system and strengthen the national procurement architecture.
National Treasury will appoint a Chief Procurement Officer who will have overall responsibility for monitoring procurement across government.
We will review the competencies and capabilities required to perform the procurement function and as said by the President, there will be strict vetting of all the procurement officers to be appointed.
National Treasury plans to develop a national price reference system, to detect deviations from acceptable prices.
The tax clearance system will be strengthened to ensure that those who have defrauded the state cannot do business with the state.
The Minister of Public Works and I have agreed to undertake a joint review of the validity and cost effectiveness of all government property leases.
Steps will also be taken to improve the ability of departments to set the specifications for tenders.
During the past year, Mister Speaker, it has been necessary to take steps to address financial management weaknesses that have undermined service delivery and put financial sustainability at risk in several provinces.
The interventions in all three provinces are underway. The cash crises have been averted, I hope. We shall continue to work hard at building institutions and systems where weaknesses have been identified. We must do this in order to restore the trust of our people in our capacity to govern.
There are several lessons of general application from these interventions. We need stronger rules, as government, to ensure that legitimate creditors are paid within the legally prescribed 30 day period. We need better procedures to ensure that staff appointments are not made without the necessary budget allocations, and we need to reduce administrative staff in favour of frontline teaching, nursing and service delivery personnel. We need to improve financial management capability across national and provincial departments. We need stricter oversight of supply chain management processes.
I wish to acknowledge the efforts of Cabinet colleagues who are addressing these challenges in their respective areas of responsibility, in collaboration with provincial MECs. They will report further on progress in their respective budget votes.
Financial sector development
Mister Speaker, I am pleased to report that progress is being made on several financial sector reforms.
There is now agreement between stakeholders on enhanced targets for empowerment financing and access to financial services. A revised financial sector charter code will be gazetted shortly for public comment by the Minister of Trade and Industry.
More appropriate and balanced capital adequacy and liquidity standards are being phased in for banks, and similar reforms are planned for the insurance sector.
As announced last year, we intend to shift towards a twin peaks system for financial regulation, where we separate prudential from market conduct supervision of the financial sector. Consultations will continue this year, with a view to tabling legislation in early 2013.
Proposals will be published for simplifying and modernising procedures for cross-border investments in and out of South Africa. After taking public comments, treasury recognizes that some of the barriers identified also apply to domestic investors; we intend to consult further to explore how we can lower costs and barriers to all investment in South Africa.
A series of discussion papers will be released this year on promoting household savings and reforming the retirement industry. Consultation with the industry, employers and trade unions will take place on these reforms.
Among the issues are improved governance over pension funds, including more effective interventions to eliminate corruption and fraud and ways to improve preservation of retirement fund assets to ensure higher levels of income in retirement.
Fees for many products in the financial sector remain too high. High costs in savings products undermine the national objective of getting our people to save more. The financial industry must take more urgent steps to reduce costs and introduce more appropriate and transparent saving and investment products, including annuities.
There is also much to be done to improve market conduct practices in the financial sector. The “treating customers fairly” initiative will be accelerated to protect customers more vigorously.
Our financial institutions should also recognize the important role of women in our economy. This progress needs to be more transparently reported.
We must all invest in our future. Vele hande maak ligte werk.
Support for business sector growth
Allow me to return briefly, Mister Speaker, to the central policy challenges we face – growth of our economy, more rapid job creation and reducing poverty.
Initiatives in progress to strengthen support for business sector growth include the following:
Small enterprise financing has been consolidated is a new subsidiary in the Industrial Development Corporation. In October 2011, a Procurement Accord was signed with business and labour. Government procurement rules include incentives for both black economic empowerment and designated local supply sectors.
The tax regime for small businesses has been simplified.
A new competitiveness enhancement programme has been initiated as part of the industrial policy action plan, building on existing production incentives in the automotive and clothing and textile sectors. A support programme is being developed in the capital goods sector, leveraging large state procurement programmes.
The National Tooling Initiative is under way, in support of accelerated apprentice training.
A draft policy framework and legislation have been published for special economic zones.
Technology investment is supported both through partnerships between science councils and industry and through R&D tax incentives.
A venture capital incentive is available for junior mining companies. Recognising that assistance to the private sector goes beyond the provision of incentives, government is looking at wider interventions to lower the cost of doing business. Improvements are being made to economic infrastructure such as ports, roads and electricity generation to cater for the needs of business. In addition, operational efficiency in ports and rail has been prioritised. There is a review of the regulatory regime and its effect on businesses in a number of sectors, as well as interventions in some institutions to speed up the issuing of licences and to improve transparency in government processes. Various strategies are also in place to deal directly with sector-specific issues.
Given the current global economic context, there is understandable caution in the business sector about investment and future growth prospects. Many firms have accumulated large cash balances instead of investing them or distributing to shareholders. The time has come to confront uncertainty – from government’s side, we are committed to an environment that will encourage business investment; from the side of business, we seek investment for the long term, enhanced competitiveness and training commitments.
Support for job creation
In respect of job creation, a wide range of government programmes and policies have come under scrutiny over the past year. Expansion of further education and skills development is a key long-term priority, alongside improving the quality of basic education and broadening access to adult education programmes.
At this time last year, funding was allocated to a new Jobs Fund, aimed at supporting innovative public or private sector projects with potential to create sustainable job opportunities. The Fund began operating in June, and received over 2 500 applications in its first call for proposals. Project allocations of over R1 billion have been committed, and a second round of project applications will be announced shortly.
We released a discussion paper proposing a youth employment incentive last year. It is under discussion at Nedlac, where the labour constituency has expressed reservations. In our view these concerns can be addressed in the design and implementation of the incentive. We would all like to see greater urgency in resolving this matter.
There are many ways in which job creation for young people might be accelerated. Last year I asked the Nedbank/Old Mutual budget speech competition winners to participate in a second mini-contest, on the question how we might reduce youth unemployment. Several great ideas emerged. Salma Kagee argued that students should be offered practical internships as part of their curriculum, to narrow the gap between education and the work place. Mpho Mashishi suggested using communities to arrest youth unemployment by revitalising townships through gyms, sporting teams and leagues, tutoring projects and clean-up operations. Ian Mrozek offered an interesting variation on the idea of a youth subsidy – he proposes that it should go to new business start-ups as a tax incentive, which would encourage entrepreneurs and business innovation.
It is right that we should look for many ways of supporting enterprise development, in many different settings and circumstances – in urban and rural areas, in agriculture, manufacturing and service sectors. We have to move beyond debate, and find the policy levers that will make a difference to the pace and dynamics of job creation across the whole of our economy.
Addressing poverty and inequality
Reducing unemployment is the centrepiece of our approach to reducing poverty, Mister Speaker, but it is not the only measure.
Social spending comprises 58 per cent of government expenditure next year, up from 49 per cent a decade ago. The budget provides social grants to almost a third of the population, it pays for largely free services at public health facilities and no-fee schools for 60 per cent of learners, and it pays for housing, water and electricity in poor communities. The average value of the “social wage” for a family of four in 2012/13 is about R3 940 a month. This represents a substantial investment in household living conditions, financed through a broadly progressive tax structure.
Social security reform and the phasing in of national health insurance will improve the effectiveness and coherence of redistribution through the fiscus. But of course, redistribution is not a substitute for economic growth and job creation. And so the quality of the poverty reduction we achieve over the decades ahead will depend on our success in broadening development to include historically disadvantaged sectors and communities, as envisaged in our New Growth Path and draft Development Plan.
Mister President, we have a budget that gives effect to the challenges you have set us – to accelerate growth, expand investment, support economic development and confront poverty and inequality.
My profound appreciation goes to President Zuma and Deputy President Motlanthe for their support and wise counsel in finalising the Budget and throughout the year.
I thank Cabinet colleagues for their backing, even when further haircuts have been proposed. The Budget is our collective statement, and it has benefited from many constructive contributions.
Members of the Ministers’ Committee on the Budget have engaged with the policy choices that had to be made with vigour and wisdom. This has been a great team effort.
Deputy Minister Nene has taken on an expanded set of responsibilities over the past year, and is an indefatigable Deputy!
I am grateful for the efforts and support of the MECs for Finance, who oversee over 40 per cent of our spending. They know they have much to do!
Our thanks also go to:
Governor Gill Marcus and the Deputy Governors of the South African Reserve Bank, for steadily managing the mandate of the Bank.
Commissioner Oupa Magashula and the staff of the South African Revenue Service, for the excellent work they continue to do to sustain our fiscal sovereignty.
Jabu Moleketi, chair of the DBSA, and CEO Paul Baloyi, who have a major contribution to make to the infrastructure programme.
The Financial and Fiscal Commission and its acting chair Bongani Khumalo, for their useful advice.
The leadership of the Public Investment Corporation, the Land Bank, the Financial Services Board, the Financial Intelligence Centre and the Government Pension Administration Agency.
NEDLAC, its Managing Director, Alistair Smith, and representatives of the business, labour and community constituencies on the Public Finance and Monetary Chamber.
The Honourable Thaba Mufamadi and Charel de Beer who chair the Standing and Select Committees on Finance respectively, and the chairs of the Appropriations committees, the Honourable Elliot Sogoni and Tebogo Chaane, who continue to maintain rigorous oversight and encourage very constructive public participation.
Our new Director-General Lungisa Fuzile, of Mnqanduli who has provided refreshing and frank leadership during his first budget!
The National Treasury team, whose hard work makes the high standards of our budget documentation remain our pride.
Staff of the Ministry who work absurd hours with unfailing good cheer. Allow me also to thank my family, whose support is invaluable!
My sincere appreciation also goes to the many South Africans who provide the encouragement, criticism and ideas that keep us alert, and assist in making government work better and differently!
In former President Mandela’s words, “The future of our country is in your hands. It will be what you make of it today. In the competitive international market place to which we are opening our economy, success and even survival of the nation will depend on you”
President Jacob Gedleyihlekisa Zuma appoints commission of inquiry into the Strategic Defence Procurement Packages
President Jacob Zuma has decided, in terms of section 84 (2) (f) of the Constitution, to appoint a commission of inquiry to investigate allegations of wrongdoing in the Strategic Defence Procurement Packages, generally known as the “arms deal”.
In 2009, legal proceedings were instituted in the Western Cape High Court asking the Court to direct the President to appoint an independent judicial commission of inquiry into allegations of wrongdoing or to require him to reconsider his refusal to do so. It later transpired that the Western Cape High Court was the wrong forum to hear the matter. An application was then brought in the Constitutional Court. The matter is set down for hearing on 17 November 2011.
President Zuma assumed office when the matter was already pending in the courts of law. He had previously taken a view that since the matter was the subject of litigation in a court of law, he should allow the legal process to take its course.
However, he has since taken into account the various developments around this matter and also the fact that closure on this subject will be in the public interest.
The President will soon announce the terms of reference and the composition of the commission including the time frames.
The President has requested the Minister of Justice and Constitutional Development to take the necessary steps to implement this decision.
Issued by: The Presidency
Address by the former President of South Africa, Thabo Mbeki to the students of Stellenbosch University, Stellenbosch.
Chairperson of the SRC,
Chairperson of SASCO,
Vice Chancellor, leaders, staff, students and workers of Stellenbosch University,
Ladies and gentlemen:
I would like to thank you for inviting me to return to this important centre of learning to reflect on what is obviously an important and relevant topic.
In its invitation letter to me the SRC said the Council had “identified as some of (its) goals to stimulate dialogue, encourage critical thinking and reach for a more transformed campus.”
I would like to commend the SRC and the student body as a whole for setting these important goals. I hope that indeed that you have given yourselves time critically to assess the historic events in North Africa to come to some conclusions about what they mean for Africa and for the African Students.
What can we say about these events, restricting ourselves, for now, to Egypt and Tunisia?
We will return later to the case of Libya.
With regard to everything we will say, please remember that the youth constitute the overwhelming majority of the population in all the countries we are discussing. In Egypt, for instance, two-thirds of the population is under 30, while youth unemployment stands at least at 25%.
Given the topic you have asked us to address, I hope you will agree that necessarily we will have to spend some time reflecting on the events in North Africa so that together we are better able to assess the potential role of the African students in this regard.
There is no doubt that what we saw in Egypt and Tunisia were genuinely popular and peaceful Uprisings aimed at the democratic transformation of these two African countries, starting with the overthrow of the ruling groups.
Accordingly, the Uprisings aimed to achieve the fundamental transformation of their societies, and not only their political systems.
It is also clear that in both instances the youth and students exercised leadership by being the first to take to the streets and by their persistence until the first objective of the Uprising, the overthrow of the ruling groups, was achieved.
It is also important to understand that this objective was achieved because the people as a whole joined the youth and students, transforming the rebellion of the youth and students into a National Uprising, which more or less guaranteed its success.
Equally we have to understand that what also facilitated this success was that the Armed Forces in both countries refused to suppress the Uprising and therefore to protect the governments of the day. On their own, the Police and other security organs could not defeat the Uprisings, regardless of the amount of force they used.
It is also clear that the Uprisings were an indigenous affair, carried out without any significant interference by foreign powers to help direct what were authentic African endeavours.
It is also significant that the governments of both Tunisia and Egypt collapsed within a very short time after the start of the Uprisings, marked in particular by the resignation of the Heads of State, Zine El Abidine Ben Ali and Hosni Mubarak respectively.
This could only mean that such was the degree of social rot over which these Heads of State presided, and such was the isolation of their governments from the masses of the people that it would not take too much pressure to topple them, as actually happened.
The April 6 Movement was one of the most prominent of the youth and student formations which played a critical role in the Egyptian Uprising, which incidentally named itself after a brutally suppressed workers’ strike which had started on April 6, 2008.
In a Statement this Movement issued on February 6, 2011, and reflecting the extent to which the Mubarak regime had lost the confidence of the people, it said:
“We will complete what we started on the 25th of January. We the Egyptian youth will not be deceived by Mubarak’s talk, which aimed to manipulate the emotions of the Egyptian people and under-estimated their intelligence as he has become accustomed to doing for thirty years in speeches, false promises, and mock election programs that were never meant to be implemented. Mubarak resorted to this misleading talk, thinking that Egyptian people could be deceived yet again.”
The youth and students and the people of Tunisia took exactly the same position with regard to their then President, Abidine Ben Ali.
By the time he was forced to leave office, Ben Ali had served as President of Tunisia for just over 23 years. Hosni Mubarak of Egypt had served in the same position for 29 years.
Again as all of you know, both of them held onto these positions through what were described as democratic elections.
The reality, however, is that these elections were not democratic by any stretch of the imagination, and therefore that both Presidents and the groups they led clung to power depending not on the will of the people, but resort to other means which deliberately sought to frustrate the will of the people.
These were fraudulent elections and the maintenance of an extensive machinery of repression. Many in the Arab world claim that Tunisia had the most repressive state machinery of all countries in the region, making it what is correctly described as a police state.
In addition to the monopolisation of political power by a few, this meant that this tiny minority, as in Egypt, had every possibility to abuse its illegitimate power to enrich itself by corrupt means.
In a January 28 article this year, The Washington Post reported that:
“The Ben Ali and Trabelsi families, (Leila Trabelsi being his wife), controlled a vast number of companies and real estate, sometimes taken by force. Even distant relatives seemed above the law. Tunisia was their personal treasure chest.”
It is said that the Ben Ali and Trabelsi families controlled between 30% and 40% of the Tunisian economy.
One commentator, Professor Juan Cole, said “the U.S. leaked cables from WikiLeaks suggest that 50 percent of the economic elite of (Tunisia) was related in one way or another to the president or to the first lady, Leila Ben Ali, and her Trabelsi clan.”
We must expect that in time credible information will also come out which will also demonstrate that the Mubarak family and its associates also accumulated a great deal of wealth by corrupt means.
At the same time as the ruling groups in Egypt and Tunisia were enriching themselves, millions among their people faced challenging socio-economic conditions, characterised by high rates of poverty, unemployment, and an unaffordable cost of living.
This meant that not only were millions languishing in poverty, but also that the situation was made worse by glaring disparities in standards of living between the rich at the top and the poor at the bottom of the proverbial pyramid.
But what about the students and the intelligentsia?
In an article headed, “Students Spark Tunisian Uprising”, and published on January 18, Toufik Bougaada wrote:
“After four weeks of street protests in Tunisia, triggered by angry unemployed university graduates, Tunisians have ousted President Zine al-Abidine Ben Ali, who ruled for nearly a quarter of a century.
“The protests started on 18 December 2010 when Mohamed Bouazizi, an unemployed university graduate working as a street vendor, committed self-immolation in protest after police confiscated his stock of fruits and vegetables.
“This sent ripples through society, with many academics decrying day-to-day life, which is rife with corruption, unemployment and hikes in food prices…
“Unemployment is even higher amongst university graduates, with almost 25% of graduates failing to find work…Despite having a better education system than its North African neighbours, the high rate of graduate unemployment in Tunisia means many young people shun third-level (tertiary) education.”
As you know, and as we have just mentioned, the Tunisian Uprising was sparked by the disturbing event when an unemployed graduate, who made a living by selling fruit and vegetables as a street hawker, burnt himself to death.
In this context we should also note that even in Egypt, in part the Uprising was sparked by the death of yet another university graduate, Khaled Said, who was killed by the police in Alexandria.
Early last month, in an article entitled “Brains unused”, Rania Khallaf of Al Ahram reported on a sit-in by university graduates at the Academy of Scientific Research in Cairo. These were unemployed graduates who were demanding to be taken on as lecturers in the Egyptian universities, with some of them, including PhD’s, having been unemployed for seven years after they had graduated.
So acute is the problem that Khallaf’s article concluded with the words; “What is needed is an in-depth review of the problems facing higher education in Egyptian universities and an ambitious plan to make use of Egypt’s brainpower. Again, if there are not enough job vacancies in Egyptian universities, it is high time for the government to find ways to benefit from this brilliant, highly promising manpower.”
Responding to this situation, a February 4 Communiqué of the January 25th Youth (Movement), named after the day the Uprising began, said:
“Egypt’s youth went out on the 25th of January with a strength, courage, boldness and heroism that had been unprecedented for the people of Egypt and completely unexpected;
“So that there would be no difference between the graduates of professional schools and those with lesser degrees;
“To confront the unemployment that has destroyed the lives of Egyptian youth;
“So that 472 youth no longer drown weekly in the Mediterranean Sea, their only crime (being) that they seek work and food to lessen the burden their families bear;
“We came out to protest the lines for (even) propane (gas) bottles and bread;
“We came out to demand an education that allows us to compete among the nations of the world, not an education that allows the world to mock us;
“We came out for the sake of the 52% of our people that are illiterate;
“We came out for the sake of national goals that unite all of us and would allow us to dispense with idling our time in cafes…”
I hope that what I have said so far is sufficient to indicate, among others, the principal objectives of the Uprisings in Tunisia and Egypt, including issues relating to the students and the intelligentsia.
As I said earlier, it is clear that these Uprisings had as their fundamental objective the victory of the democratic revolution in both countries. However, as the people who constituted the heart of the Uprisings admit every day, the democratic revolutions have not as yet emerged victorious.
It was therefore always a misnomer to describe the Uprisings as Revolutions.
To indicate the challenges facing the democratic forces in Egypt, concerning the fundamental changes for which they fought and are fighting, I will present to you observations made by some Egyptians, which comments speak for themselves.
What I will present to you henceforth will include relatively extensive quotations by various individuals and institutions. I must confess that I chose to rely on these citations to avoid the accusation that I have sought only to convey my partisan views.
In an article published at the beginning of this month, entitled “Time to get serious”,
Salama A. Salama of Egypt says:
“The brief honeymoon that followed the 25 January Revolution, when the army and the people were said to be “one hand,” has ended in mistrust and misunderstanding that the recent reshuffle of the Essam Sharaf government failed to address…
“As it turned out, Sharaf is now catching flak from all sides, with people blaming him for slowing down the revolution, failing to address security, or failing to speed up the trials of former officials…
“Turning to the revolutionaries, we have to admit that they are still a motley crew of well-intentioned but disunited groups and alliances, hard to enumerate or figure out. They have no leadership to negotiate on their behalf or a set of suggested policies to follow. But what this country needs right now is policies that take domestic as well as external considerations into account. We need a government that knows how to tend to economic and social demands while keeping at bay those powers, Arab and non-Arab, that do not wish to see democracy take root in Egypt.”
Towards the end of May this year, Khalil El-Anani published an article entitled “Egyptian Revolution Reconsidered”. He said:
“Although the Egyptian revolution succeeded in ousting the Mubarak regime, it has not yet managed to uproot the ills of its culture, value system and prevailing modes of behaviour. In this sense, therefore, it remains “half a revolution”, or more precisely, a “revolutionary act” that still needs follow-through towards completion…The “heart”, or foundation, of (the Egyptian) state remains unchanged…Change at both levels – the political system and society – is a prerequisite for the completion of any revolution.
“Of course, there is no denying that the Egyptian revolutionary act was sudden and very powerful. However, its major thrust emanated from and remained largely restricted to a particular stratum of society, namely the middle to upper- middle class. It has yet to spread to other strata of society, which remain essentially the same as they were before the revolution. This phenomenon is not peculiar to Egypt. Other countries have experienced similar popular uprisings that succeeded in overturning regimes but did not go as far as to engender radical change in the prevailing values, culture and structures of society…
“The Egyptian revolution can, therefore, be described so far as a minimal revolution – it achieved the minimal level of the dream of the majority of Egyptians, which was the overthrow of the old regime and the prosecution of its leaders and most prominent figures. However, it remains a considerable way off from the upper level, which involves the transformation of social and institutional structures and value and behavioural systems so as to enable society to regain its health and proceed towards the realisation of human development and prosperity…
“Not every outburst of collective anger and frustration is a revolution. Not every defiance and overthrow of an old regime and its legal edifice is proof of a successful revolutionary act. The sole guarantor of the success of a revolution is society itself. Herein lies the crux of the dilemma: the performer of the revolutionary act (the agent) needs a revolution so that the act and the agent can be brought into harmony, and so that the results are consistent with the beginnings.”
Let me conclude these quotations with one from Fatma Khafagy, a women’s rights activist and a board member of the Alliance for Arab Women, extracted from a February article headed “Now for the Gender Revolution”.
She wrote: “I want to see the opposite of what has always happened after revolutions take place, now in Egypt. History tells us that women stand side by side with men, fight with men, get killed defending themselves and others along with men, and then nurse the wounded, lament the dead, chant and dance when the struggle is victorious and help to manage the aftermath when it is not. However, history also indicates that after the success of a political struggle, women are too often forced to go back to their traditional gender roles and do not benefit from the harvest of revolution.
“I am sure the Egyptian revolution will not allow this to happen…
“The Egyptian revolution, as I witnessed every day and night in Tahrir Square, was not only about getting rid of a political system. It was also about creating another more beautiful and just Egypt that would guarantee human rights to all its citizens. I saw young women discussing with young men what kind of life they wanted to achieve for Egypt. I feel sure that the gender equality that was witnessed in Tahrir Square and elsewhere in Egypt will now prevail because we need it to create a better Egypt.”
I am certain that the observations made by the three Egyptian commentators I have just quoted would apply in similar manner to Tunisia.
Libya was and is of course a completely different kettle of fish.
In this case, it is obvious that the major Western powers decide to intervene to advance their selfish interests, using the instrumentality of the UN Security Council.
I am certain that many of us here will at least have heard of the independent non-governmental organisation, headquartered in Brussels, the International Crisis Group, the ICG, which focuses on conflict resolution.
Its current President and CEO is the Canadian Judge Louise Arbour, former UN High Commissioner for Human Rights and former UN Chief Prosecutor for the International Criminal Tribunals for the former Yugoslavia and Rwanda.
I mention all this to make the point that neither the ICG nor its President and CEO were, or are, or can justly be accused of being in any way sympathetic to the Libyan Gaddafi regime.
But yet, in a Report on Libya issued on June 6 this year, the ICG said:
“Much Western media coverage has from the outset presented a very one-sided view of the logic of events, portraying the protest movement as entirely peaceful and repeatedly suggesting that the (Libyan) regime’s security forces were unaccountably massacring unarmed demonstrators who presented no real security challenge. This version would appear to ignore evidence that the protest movement exhibited a violent aspect from very early on…
“Likewise, there are grounds for questioning the more sensational reports that the regime was using its air force to slaughter demonstrators, let alone engaging in anything remotely warranting use of the term “genocide”. That said, the repression was real enough, – and I would, as an aside, add, as was the case in Tunisia and Egypt – and its brutality shocked even Libyans. It may also have backfired, prompting a growing number of people to take to the streets.”
Similar observations had been made earlier by Alan K. Kuperman on April 14, writing in the US newspaper, The Boston Globe. In an article headed “False pretense for war in Libya”, he wrote:
“Evidence is now in that President Barack Obama grossly exaggerated the humanitarian threat to justify military action in Libya. The president claimed that intervention was necessary to prevent a “bloodbath’’ in Benghazi, Libya’s second-largest city and last rebel stronghold…
“Obama insisted that prospects were grim without intervention… Thus, the president concluded, “preventing genocide’’ justified US military action.
“But intervention did not prevent genocide, because no such bloodbath was in the offing. To the contrary, by emboldening rebellion, US interference has prolonged Libya’s civil war and the resultant suffering of innocents…”
Later in its Report, the ICG said:
“The prospect for Libya, but also North Africa as a whole, is increasingly ominous, unless some way can be found to induce the two sides in the armed conflict to negotiate a compromise allowing for an orderly transition to a post-Qaddafi, post-Jamahiriya state that has legitimacy in the eyes of the Libyan people. A political breakthrough is by far the best way out of the costly situation created by the military impasse…
“Instead of stubbornly maintaining the present policy and running the risk that its consequence will be dangerous chaos, (the international community) should act now to facilitate a negotiated end to the civil war and a new beginning for Libya’s political life…
“To insist that, ultimately, (Qaddafi) can have no role in the post-Jamahiriya political order is one thing, and almost certainly reflects the opinion of a majority of Libyans as well as of the outside world.
“But to insist that he must go now, as the precondition for any negotiation, including that of a ceasefire, is to render a ceasefire all but impossible and so to maximise the prospect of continued armed conflict.
“To insist that he both leave the country and face trial in the International Criminal Court is virtually to ensure that he will stay in Libya to the bitter end and go down fighting.”
Bitter facts on the ground, showing the loss of African lives and the destruction of property in Libya, demonstrate that the ICG was absolutely correct.
The naked reality is not that the Western powers did not hear what the ICG said. Rather, they heard but did not want to listen to anything informed by the objective to address the real interests of the African people of Libya.
They were and are bent on regime-change in Libya, regardless of the cost to this African country, intent to produce a political outcome which would serve their interests.
Earlier this year, on March 2, a senior journalist on the London Guardian newspaper, Seumas Milne, said:
“The “responsibility to protect” invoked by those demanding intervention in Libya is applied so selectively that the word hypocrisy doesn’t do it justice. And the idea that states which are themselves responsible for the deaths of hundreds of thousands in illegal wars, occupations and interventions in the last decade, along with mass imprisonment without trial, torture and kidnapping, should be authorised by international institutions to prevent killings in other countries is simply preposterous…
“The reality is that the Western powers which have backed authoritarian kleptocrats across the Middle East for decades now face a loss of power in the most strategically sensitive region of the world as a result of the Arab uprisings and the prospect of representative governments. They are evidently determined to appropriate the revolutionary process wherever possible, limiting it to cosmetic change that allows continued control of the region…
“(Foreign) military intervention wouldn’t just be a threat to Libya and its people, but to the ownership of what has been until now an entirely organic, homegrown democratic movement across the region…
“The Arab revolution will be made by Arabs, or it won’t be a revolution at all.”
Later, on March 23, he wrote: “As in Iraq and Afghanistan, (with regard to Libya, the Western powers) insist humanitarian motives are crucial. And as in both previous interventions, the media are baying for the blood of a pantomime villain leader, while regime change is quickly starting to displace the stated mission. Only a Western solipsism that regards it as normal to be routinely invading other people’s countries in the name of human rights protects NATO governments from serious challenge…
“For the Western powers, knocked off balance by the revolutionary Arab tide, intervention in the Libyan conflict offers both the chance to put themselves on the “right side of history” and to secure their oil interests in a deeply uncertain environment.”
Seumas Milne’s colleague in the same newspaper, Simon Jenkins, wrote only three days ago, on August 23:
“If (British Prime Minister) Cameron wants to take credit for the removal of Gaddafi, then he cannot avoid responsibility for the aftermath. Yet that responsibility strips a new regime of homegrown legitimacy and strength. This is the classic paradox of liberal interventionism…
“Britain remains enmeshed in the Muslim world. It made a mess of Iraq and is trapped in Afghanistan. It hardly needs another costly and embarrassing client state to look after in this surge of neo-imperial do-goodery. We may applaud the chance of freedom about to be granted to a lucky group of oppressed people, but that doesn’t justify the means by which it is achieved, in another fury of great-power aggression. The truth is that Gaddafi’s downfall, like his earlier propping up, will have been Britain’s doing. A new Libyan regime will be less legitimate and less secure as a result.”
In this regard, four days ago, on August 22, the veteran Guardian correspondent, Jonathan Steele, had said: “Thanks to its crucial role in tipping the military scales in Libya, Nato and the rebels are inextricably linked. Gaddafi had few supporters in the Arab world but there is a justified perception on the Arab street that the rebels are over-reliant on Western support and that the overriding Western motive is access to Libya’s oil…
“The best revolutions are homegrown as they were in Tunisia and Egypt. Those who took to the streets in Tunis and Cairo’s Tahrir Square wanted to regain their country’s national dignity after decades of seeing their rulers doing the bidding of France and the United States…
“The new rulers in Libya face a long road ahead in establishing their legitimacy on the Arab and African stage.”
And indeed they do!
At the end of everything I have said, relating to Tunisia, Egypt and Libya, what should the African students do, including you, students at Stellenbosch University!
I am certain that the totality of my comments will have confirmed the reality of which you are aware, that the recent and contemporary processes in North Africa are indeed truly complex.
The first suggestion I would therefore like to convey to you is that in order for you to play a meaningful role in this regard, and indeed in the context of all other significant developments in Africa, you must make the effort to study and understand these developments.
You have the unique advantage that you are students. As a former university student, I know that your principal task is to study. If you do not do this, it would be incorrect to describe, respect and honour you as students!
Further, as my second suggestion, I would like to believe that you will seek to understand African reality not for the pleasure merely of knowing, but because you would want to do what you can to help change our Continent for the better.
In this regard you would, of course, be inspired by what your peers have done in Tunisia and Egypt, who took the lead in the popular Uprisings in their countries, which have served to advance the African democratic revolution.
At the same time you will have been motivated to follow the heroic example set by your South Africans predecessors, such as those who participated in the 1976 Soweto Uprising, and others of our students, before and since.
Quite correctly, you see yourselves as part of the greater family of the millions of students in Africa, determined to act together with your colleagues to reshape our Continent into the kind of homeland you wish to inherit.
In this context, and as my third suggestion, I would like to propose that you make a determined effort to study various documents which constitute all-Africa policy by virtue of having been adopted by the OAU, the Organisation of African Unity, and its successor, the African Union, the AU.
In the context of the topic the SRC asked me to address this afternoon, I would suggest that you give yourselves time to study and debate, among others:
• the Constitutive Act of the African Union;
• the African Charter on Human and Peoples’ Rights;
• the Protocol to the African Charter on Human and People’s Rights on the Rights of Women in Africa;
• the African Union Convention on Preventing and Combating Corruption;
• the Protocol Relating to the Establishment of the Peace and Security Council of the African Union;
• the African Charter on Democracy, Elections and Governance;
• the African Youth Charter;
• the Charter for African Cultural Renaissance;
• the various documents on Human Resources, Science and Technology;
• the NEPAD Founding Document (2001); and,
• the African Peer Review Mechanism.
I mention these particular documents, all of which have been adopted by all the African governments, because they address directly the many political, economic, security and social issues which have arisen in the context of the North African struggles we have convened to discuss, and which, if implemented, would have addressed the concerns of our North African brothers and sisters.
As you study and debate these documents, as my fourth proposal, I would suggest that you ask yourselves and strive to answer two important questions:
• what should be done to position the African Union so that it has the ability to help ensure that all our Member States actually respect the objectives defined in these documents; and,
• what should the African student movement do to help achieve this outcome?
The fifth suggestion I would like to make relates to what has happened in Côte d’Ivoire and what is happening in Libya.
Specifically, in this regard, you should debate what Africa should do, and what Africa’s students should contribute in this regard, to defend and advance our right as Africans truly to determine our destiny, as a sovereign people.
I have been told that some of the intellectuals at our Universities reject the claim we make regularly – to find African solutions to African problems!
The only way I can explain this very strange posture is that these are Africans who have lost respect for and confidence in themselves, as Africans, and who therefore feel obliged to adopt positions which question ours and their right and capacity to solve our problems.
Certainly I have never come across any Europeans or Americans or Asians who would even so much as find it odd that they should assert that they have every right to find solutions to their problems!
I am also convinced, and as I said earlier, that the Stellenbosch University SRC was correct to set as one of its tasks the achievement of what it called “a more transformed campus”.
As a member of the Convocation of this University, I know that certainly under the leadership of our Principal and Vice-Chancellor, Professor Russell Botman, you have been discussing what this means.
Placed within the larger African context, this must surely mean that we strive to ensure that this University does its best not to produce the “Unused brains” to which an Egyptian commentator referred, and that our country, as well, “finds ways to benefit from (the) brilliant (and) highly promising human power” of those who graduate from Stellenbosch University.
Thus should you, the students, together with the rest of the University community, which is my sixth suggestion, continue to engage the critically important issue of how the University should persist in the effort to transform itself so that as an African centre of learning, teaching and research, it also serves as a vital intellectual centre for the progressive fundamental transformation of our Continent, and therefore its renaissance.
I am also very pleased that as students here at Stellenbosch you see yourselves as having shared obligations towards our Continent with the larger collective of other African students.
As my seventh suggestion, I would therefore like to suggest that through formations such as SASCO and other societies, and indeed through the SRC, you should do everything you can to strengthen your links with your African peers, including through a strengthened and more active and correctly focused All-Africa Students Union.
The recent and current events in North Africa have confirmed that Africa’s students remain one of the most vital and courageous forces for the progressive transformation of our Continent, which entirely healthy reality we also know from our own history.
To conclude, and as my eighth proposal, I would like to appeal to you always to remember that you have an obligation to take advantage of the opportunity you have as university students, and therefore Africa’s nascent intelligentsia:
• to empower yourselves to become the quality intelligentsia our Continent needs, by diligently applying yourselves to the exciting task of studying;
• to act to ensure that as you inherit the future as leaders of the peoples of Africa, you will have done your best to help build a better Continent;
• always to honour the truth, to respect ‘the great unwashed’ who are our mothers and fathers, and to have the courage fearlessly to stand up for what is right and just, ready to present reasoned arguments in this regard;
• always to question and challenge even what is conveyed to you by all and sundry as established truths, including what I have said today, acting both as young people and as students who have the opportunity to re-discover anew all truths about the human and material worlds we inhabit;
• never to abuse the fact of your greater access to knowledge to position yourselves as a corrupt and parasitic segment of African society; and,
• never to be tempted to use your learning to sugar-coat a deadly virus of false knowledge you can impart to the Africans, in what our Nigerian fellow Africans would describe as giving poisoned kola nuts you offer to friends, pretending that these were but the traditional African gifts of friendship.
The eminent Irish playwright, George Bernard Shaw, once said – Youth is a wonderful thing. What a crime to waste it on children!
By their actions, your peers, comrades and friends, the youth and students of North Africa, have challenged this provocative observation.
Through your own bold and principled actions, please continue to challenge it!