ACDP: Statement by Steve Swart, MP, party spokesperson on finance

ACDP supports Budget in broad terms

ACDP MP and Finance Spokesperson, Steve Swart, today said he broadly supported the budget, with economic growth and revenue figures adjusted upwards, resulting in no tax rate increases, but limited personal tax relief and increases in indirect taxation. He also welcomed the focus on economic growth, job creation and poverty alleviation as well as details on increased expenditure on infrastructure development, health, education, fighting crime and corruption.

"The ACDP broadly supports today's budget which did not contain any major surprises, but welcome detail on government revenue and planned expenditure. Minister Gordhan has not departed from government's prudent, yet expansionary and counter-cyclical fiscal policy. This should calm foreign investors, who require certainty and predictability on economic policy and who are jittery about fiscal deficits in developed countries running into double digits.

The country's economic conditions are far better than last year this time. Economic growth is forecast to be in the region of 3.4% in 2011, which will result in increased revenue being collected. The budget deficit is forecast to be 5.3 of GDP or R143bn for 2010/11 (down from last February's forecast of 6.2% or R168.6bn), 5.3% or R154bn for 2011/12 (up from the forecast of 4.6% or R134.2bn) reducing further to 3.2% by 2013. Government expenditure is forecast to be R897bn in 2010/11 and R979bn in 2011/12, with revenue being R755bn and R824.5bn respectively. Rising budget deficits, which are funded by borrowing, are not sustainable in the long run and result in spiralling debt costs, in turn impacting service delivery and eventually tax rates. State debt costs remain the fastest growing area of national expenditure climbing from R67.6bn this year to R104bn by 2013/14, with net government debt set to reach an alarming R1.315 trillion by 2013/14.

We welcome the fact that the Minister did not, increase tax rates for individuals and companies, given the relatively healthy state of government revenues and the already high tax burden. In view of increased expenditure pressures on government, there will only be limited personal tax relief to address bracket creep. There will also be the standard increase in indirect taxation, such as the fuel and electricity levies and on cigarettes and alcohol. A further sharp increase in domestic fuel prices due to increases in the international fuel price as well as the weakening rand will place additional burdens upon motorists. Gauteng motorists also face exorbitant toll-road costs. These additional costs will no doubt be passed on to the consumer.

We support the significant amounts allocated to further stimulate economic growth. The Minister referred to the infrastructure development programme of R800bn, the extended Public Works Programme, as well as the new industrial policy to boost manufacturing capacity in accordance with the New Growth Plan. We are concerned about additional funds being allocated to the SETA's and National Youth Development Agency given their shocking track records.

Details about the R9bn job fund as well as the R20bn tax allowances to boost investment in the manufacturing sector announced by President Zuma to combat unemployment and poverty are also welcomed.  Ideally this should be in the form of wage subsidies for first time employees, alluded to by the Minister last year, but which was not supported by alliance partners.

Increases in social welfare grants and pensions to address increasing costs of living, are welcomed, but should have been larger, particularly the child care grant. Additional allocations to education, health, fighting crime and corruption, and rural development are also welcomed. The four main expenditure pressures highlighted during the Minister's 2010 medium-term budget policy speech are the completion of the social security reform, the implementation of the National Health Insurance scheme, the expansion and maintenance of the transport infrastructure and networks, and government's contribution to the New Growth Plan, including industrial development and job creation. The critical question is how government is going to finance these demands for greater expenditure.

The Minister's announcements to continue cutting down government expenditure and wastage, by reviewing programmes, addressing corruption, tender fraud and inflated bills, as well as extravagant spending (R30bn has already been earmarked as savings) are welcomed. Monetary policy issues to target a low and stable inflation rate and to support a more competitive exchange rate and reduced investment costs through lower real interest rates were also referred to by the Minister, without any departures from existing policy. Further details regarding loosening exchange controls will contribute to government creating a friendly environment for investors. 

The challenge facing the Minister has been to balance allocating limited resources to meet unlimited needs, particularly in view of the fact that parliamentarians have the power, as yet unused, to amend his budget proposals. In our view he has succeeded in meeting that challenge and consequently the ACDP supports the Budget in broad terms."

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ANC: Statement by national spokesperson, Jackson Mthembu:

ANC WELCOMES 2011 BUDGET

The African National Congress (ANC) welcomes the 2011 budget speech by Finance Minister Pravin Gordhan, which proposes a range of measures to addresses current socio-economic challenges facing the country, especially job creation.

Of particular importance is that the budget seeks to ensure sufficient funding for effective Government delivery in key priority areas identified in the ANC 2009 Election Manifesto and in this year's State of the Nation Address by President Jacob Zuma. Creation of decent work and sustainable livelihoods, education, health, rural development, food security and land reform and the fight against crime and corruption, are some of the key areas the budget seeks to address.

We are pleased that - as earlier announced by President Zuma - R9 billion has been set aside over the next three years for a Jobs Fund to co-finance innovative public and private sector employment projects. We believe that addressing youth unemployment and the critical skills development shortage in the country, are among key challenges facing society - areas the budget also talks to.

With R73 billion going towards the expanded public works programme over the next three years, to cover community-based projects, environmental and social programmes; and maintenance of roads and infrastructure - the budget will go a long way in creating more jobs for the unemployed. 

We also welcome the allocation of more funds towards education and the alleviation of the plight of students in need of financial assistance. Improving school infrastructure and problems of children learning under trees in some rural areas should be well covered by the R8.3 billion over the MTEF period.

The ANC calls on its cadres deployed to Government to step up efficiencies in budget spending to ensure improved service delivery to all South Africans, particularly the poor.

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COPE: Statement by Nic Koornhof, party finance spokesperson

CONGRESS OF THE PEOPLE RESPONSE TO THE 2010/11 BUDGET

We welcome the emphasis on youth development and fully support the youth employment subsidy to hopefully create 178 000 jobs over the next 3 years. The expanded access and financial assistance for further education is also welcomed.

We are of the opinion that the Minister has used the opportunity to show that he and the Treasury is in control of Fiscal Policy, however it appears that he was not so comfortable as in previous years. We are happy that the Treasury will maintain macroeconomic stability. The Minister's recommitment to inflation targeting and that Fiscal and Monetary policy will continue to work in partnership is welcomed. COPE is concerned about the rapid increase in food prices and energy costs which will fuel inflation and therefore the Minister's recommitment to inflation targeting is timeous.

COPE has warned last year and this year that our state debt and State Wage bill is too high. Debt servicing costs is now the single most highest cost item in the Budget - up from R77bn to R104bn, only in 3 years, making it the fastest riser of any other category. Add to this, the fact that the State Wage Bill has doubled in 5 years to R314bn (40% of total expenditure) - these two "terrible twins" are a real threat to economic growth. The call by the President to fill all vacancies in the civil service is unwise, unless it is focussed to create better service delivery. To fill vacancies just to tick off as "job creation" is dangerous.

The fact that the Minister is highlighting the "terrible twins" in his budget speech is commendable; we hope Cabinet will support him in doing something about this.

What COPE likes about the Budget:

• The Conditional Grant of R1.5bn to Provinces for road infrastructure.
• The phased implementation of social security and NHI reform - clearly showing that it is not affordable in one shot.
• Measures to curb corruption.
• Key Fiscal guidelines to create stability over the business cycle.
• The regulation of bank charges to ensure it is fairly set.
• Investment in infrastructure of over R800bn over the next 3 years.
• Personal income tax relief of R8.1bn.
• The extension of the learnership tax incentive for 5 years.
• Assistance to older people.
• Taxation on gambling winnings.
• The announcement of the possibility of incentives savings scheme for Housing or for Education is welcomed.

What COPE dislikes:

• The rise in the Current Account deficit to 5% in 2013 - up from 3.2%.
• The R3.6bn added for water infrastructure is not enough.
• The emphasis is still too high on a welfare state, rather than a developmental state.
• The deficit should rather be closer to 3% that 4% as projected in 2013/14.
• National Government net loan debt is a staggering R1.4trillion in 2013/14.
• Not enough said about the R20bn tax relief forms.
• The spending plans are too much focussed on the role of the State. To give small enterprise development initiatives and a focus on employment activation to NYDA is questionable.
• We dislike the warning of higher taxes and VAT to pay for the NHI.
• High levels of the "terrible twins" (debt servicing costs and the wage bill) is troublesome.
• Fringe benefit tax on the employer's contribution to the employees' pension fund.

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DA: Statement by Dion George, MP, shadow minister of finance

Budget Speech: DA welcomes courageous implementation of youth wage subsidy

The Democratic Alliance (DA) warmly welcomes the inclusion of a youth wage subsidy in Minister Gordhan's budget speech today. The DA looks forward to studying the relevant discussion document and will be liaising with the minister to ensure its eventual implementation. South Africa's most pressing concern is the creation of jobs for unemployed young South Africans, and we believe this to be the most effective solution to start addressing this challenge.

The DA has been advocating for the implementation of this policy for several years now; we are excited to see that it has not been discarded, and that progress is now underway to implement it. A wage subsidy will stimulate growth, create jobs and place our country on the right path. In the face of union obstinacy, the minister has made a courageous decision.

The inclusion of this policy, and a R9 billion jobs fund, is a crucial step in the right direction towards the adoption of growth-oriented economic policies. It is interesting to note that these policies are not in step with the state-driven approach prescribed by Minister Patel in his New Growth Path. Three brief mentions of the New Growth Path by Minister Gordhan were clearly an attempt to placate egos in the cabinet, as the minister's budget differs on almost every count from the plan proposed by Minister Patel.

Youth wage subsidies and tax incentives for job growth are growth-oriented DA proposals that vehemently contradict the state-driven approach espoused in the New Growth Path. Viewed through the budget, Minister Gordhan has made the New Growth Path provisions irrelevant.

The DA supports the various initiatives by Minister Gordhan that would help strengthen the productive capacity of our economy. These include the initiative to invest in the green economy, to increase access to tertiary education for poor matriculants by increasing NSFAS funding, increasing funding to FET colleges, increasing spending on schools and teachers' salaries, giving tax relief to jobs-intensive industries, improving homes in informal settlements and increasing the number of police personnel. These are all similar to many of the proposals contained within our own alternative budget for 2011/2012.

There are, however, also some proposals with which we are concerned. The DA disagrees with a R1.2 billion appropriation for the National Youth Development Agency over the next three years. This is unproductive spending. We disagree with increasing spending on SETAs. These should be scrapped and the funds diverted to FET colleges. We are also disappointed to learn that the public wage bill has doubled in the last five years without any corresponding improvement in service delivery.

The commitment to a National Health Insurance scheme, which would be prohibitively expensive and which would not address our country's primary concerns with health, is also questionable. The minister has not provided any details on how such a scheme would function, how it would be paid for or when it would be implemented. We cannot continue to address an issue of such manifest importance in this vague manner. The minister and president should provide the country with more details on this scheme immediately.

We believe the minister has also missed some key opportunities to address outstanding issues. The minister failed to address the massive backlog in road maintenance, which will require billions to address in the coming years. He has also missed an opportunity to implement a zero rate VAT on books, which would make books more affordable to pupils. And, perhaps most seriously of all, the minister, just like the president, failed to adequately address the issue of nationalisation. This issue continues to stoke uncertainty about South Africa's credentials as a stable investment-friendly country, and as such, the president and relevant ministers should speak clearly about this issue.

Finally, we will need to look carefully at possible increasing stealth taxes being imposed, as well as the clear indication given by the minister that if certain proposals are implemented, the tax burden will be increased significantly. This needs to be analysed in greater detail.

On the whole, the DA welcomes the new budget for the year. The most important aspect is the commitment to industry-led growth through wage subsidies, the R9 billion jobs fund and targeted tax cuts to help job creation. These are all proposals we have endorsed and advocated in the past; if implemented, they will go a long way to addressing unemployment and poverty in South Africa.

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DA Youth: Statement by Makashule Gana, Leader

Budget speech: DA Youth welcomes movement on wage subsidy

The DA Youth applauds Minister of Finance Pravin Gordhan's decision to move forward with a R5 billion youth employment subsidy.

In last year's budget speech, Minister Gordhan pledged to ensure that a discussion paper on the subsidy would be finalised by March 2010; although the paper is being tabled eleven months behind schedule, we are delighted to see that policy has not been abandoned, and that the minister understands the immense value of this policy.

The state of unemployment in South Africa is quite precarious. The majority of South African youths are unemployed, and one in three working age South Africans is unable to find work. A wage subsidy programme will serve to create work directly and will use the efficiencies of the market to drive skills development. A wage subsidy programme will also reduce the cost of production, which boosts our performance on export markets, and insofar as it generates wage income, it creates demand-side stimulus in the economy.

It is a proposal backed by numerous development economists, including Harvard's Centre for International Development, which looked into ways of addressing South Africa's unemployment crisis in late 2007 and early 2008. Prof. James Levinsohn of the Ford School of Public Policy identified it as one of two most critical reforms to the South African economy needed to stimulate job creation.

The DA has consistently backed the idea of a wage subsidy over the last decade; the DA Youth last year released a discussion document called ‘Fixing the Future', in which we argued that the introduction of a wage subsidy would be a crucial market-driven reform that would help to deliver valuable skills and work experience to the millions of unemployed young South Africans. In addition to this, we handed over a memorandum and petition signed by young South Africans across the country to the Speaker's office in November last year, calling for the exact reform the Finance Minister has announced today.

Minister Gordhan is likely to come up against fierce pressure from the unions. The response of the unions to the notion of a wage subsidy is quite predictable - it is not in their short-term interest to see a wage subsidy passed, because subsidized workers are non-unionised. We can, and presumably will, now engage in a lengthy debate about the merits of this proposal with the unions. What we should not lose sight of is the fact that the unions, so frequently labelled ‘pro-poor', are standing in the way of a multi-billion rand initiative to address poverty in this country.

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FF Plus: Statement by Dr. Pieter Mulder, party leader and Deputy Minister of Agriculture

FF PLUS' REACTION TO THE BUDGET SPEECH 2011/12

The government is with great difficulty going to reach the target of 5 million job opportunities if the growth rate for next year does not dramatically increases. In order for 5 million job opportunities to be created, South Africa will have to maintain a growth rate of 6% to 7% for the next ten years. The current growth rate is 2,8% and the Minister of Finance is projecting that it could grow to 4% in future. This is not enough.

The budget also did not contain any imaginative incentivising measures which would lead to employers creating large number of new jobs. The tax relief for small enterprises is welcomed but without for example imaginative slacking of dampening labour legislation for these businesses it will not really lead to the creation on a large scale of new job opportunities.

As a result of the recession the government last year collected R70 billion less than what was expected. The tax income this year largely recovered without it having been necessary to announce drastic tax measures, as was the case in many other countries. For this and the way in which the Minister of Finance had gotten South Africa through the recession in 5 quarters, the Minister of Finance can be thanked.

The FF Plus regrets that no specific measures were announced to protect senior citizens against the current low interest rates while inflation over the same period had increased with 12%. The investigation into bank fees is however welcomed by the FF Plus and this may assist senior citizens.

The Minister of Finance avoided issues which are difficult to implement, such as the National Pension scheme and the health insurance scheme by every time announcing that consultations will still be taking place about it. A couple of million taxpayers in South Africa are at present carrying 50 million people living in South Africa. The FF Plus believes that until the South African tax basis is bigger, these schemes will remain unaffordable luxuries for the country.

The increase of the police force from 190 000 to 202 000 is welcomed. It will however not resolve the crime problem in the country. What South Africa needs is better trained police members, specialist units, better forensic services and detective services. Larger number of police members alone will not be the answer.

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ID: Statement by Lance Greyling, MP, party spokesperson on finance

Independent Democrats Spokesperson on Finance, Mr Lance Greyling responds to the Budget Speech as read by Finance Minister Pravin Gordhan on Wednesday, 23 February 2011.

‘Broadly speaking, the ID welcomes this budget as it does prioritise the goal of job creation. We do, however, have concerns that it is in some instances entrusting the wrong institutions to create jobs. We certainly do not support the National Youth Development Agency receiving over a billion rand over the next three years as we don't believe they can activate employment. We also disagree with the R20-billion going to SETAs as many of them have been under-performing,' states Greyling.

‘Unfortunately, the issue of a youth wage subsidy has still not been settled and we have a discussion paper as opposed to a firm budget commitment. The R5 billion that the Minister has put aside for it over the next three years is also not sufficient to properly drive youth job creation.

‘We welcome the fact that State Owned Enterprises are no longer drawing down huge amounts of money from the fiscus, but we still need firm details on how they intend to fund their infrastructural build programmes.

‘The ID is delighted that a dedicated fund has finally been set up to deal with the looming crisis of Acid Mine Drainage and we hope that a plan can now be implemented urgently,' says Greyling.

‘The ID doesn't support the two increases on the different fuel levies as we believe that this is going to have a major inflationary effect on our economy and hit consumers hard. This is particularly a problem, given that the global price of oil is steadily increasing.

‘In terms of the "green economy", it seems that only the rhetoric has shifted and not the resources. Only R800-million has been set aside over the next three years for green economy initiatives which is pitifully small.

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IFP: Dr Mario GR Oriani-Ambrosini MP, finance spokesperson

BUDGET 2011: BEAUTIFULLY PUT BUT JUST A LITTLE MORE OF THE SAME

There is national consensus on the country's priorities and we welcome that this year's budget spends more money in achieving them. In this sense it is an improvement on last year's.

However, the budget does not break away from a fiscal paradigm which cannot work in the long run. South Africa is a welfare state which dreams of becoming a developmental state. This is a legitimate dream but the budget doesn't yet concretize this into plan. Conversely it continues to extend the welfare state to industries. Instead of stimulating the creation of viable industries which generate sustainable jobs, the government is spending money to keep existing industries viable.  This is done both with subsidies and with many forms of indirect taxation which we all pay for in the form of higher prices for goods and services we consume.  This is not sustainable.

In its aggregate government expenditure remains ineffective. Government is spending too much money merely to run and sustain itself with only a small portion translating into goods and services delivered to the nation. The doubling of government's payroll puts at 40%, of the entire expenditure, the cost of administering the State against a private sector's standard of 12%. This does not include the plethora of consultants necessary to rectify ineptitude. None of this is sustainable.

Against this background one must doubt the success of sweeping new policies, which the IFP endorses in principle. We are in favour of the National Health Insurance, compulsory retirement funds and national social security. But it is an easy predication that programs of this nature administered by a state apparatus, which is both dysfunctional and corrupt, will be a disaster. We need radical measures to reform the State before their implementation. In addition, such reforms should be implemented not through the State but through the private sector so that their actual delivery can rely on private companies, private hospitals and private services which the State should make accessible to all citizens by means of vouchers and indirect payments.

The social safety nets are still insufficient. Nobody can raise a child on R270 per month and a R10 increase of the child grant is lesser than an adjustment to inflation. For food price increases have been higher in percentage than the increases of prices of other products in the inflation basket. The money allocated to HIV/Aids is still insufficient even though one praises the expenditure increase. We also praise the Minister for having found R30 billion worth of government waste, which is still a drop in the bucket of savings that one could bring about by cutting fat and waste in government. Yet one would have expected this R30 billion to go straight into increasing the allocations for social safety nets.

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NEHAWU: Statement by Secretariat Office

NEHAWU WELCOMES THE BROAD THRUST OF GOVERNMENT'S SPENDING PRIORITIES.

The National Education Health and Allied Workers' Union (NEHAWU) welcomes the broad thrust of the government's spending priorities set out for 2011-12 financial year as outlined by the Minister of Finance, Pravin Gordhan, in Parliament this afternoon. We are happy that job creation and the implementation of the five national priorities set out in the electoral mandate of 2009 remain at the centre of the government spending priorities.

NEHAWU however condemns the Treasury's persistence with the current macroeconomic stance of a monetary policy fixated on inflation targeting and a restrictive fiscal policy geared at keeping budget deficit to around 3%. Consequently, in the stated fiscal framework there would only be about R20.7 billion added to the baseline in the current financial year and a mere 2.8% average real growth in government non-interest spending over the next three years.

This government's countercyclical fiscal policy stance will only help to maintain economic growth at a low level, which is unlikely to help in creating the necessary number of jobs per year to keep up with the target of 5 million jobs over the next 10 years. We also reiterate our condemnation of the ongoing exchange controls relaxation announced during the Medium Term Budget Policy Statement (MTBPS). Ironically, hardly six months since the start of the implementation of these measures the Finance Minister is already expressing fears and concerns about the resultant volatility in the capital flows and in the external value of the currency in this Budget Speech.

NEHAWU considers this straight-jacketed ideological commitment to the liberalisation of our economy to be part of pre-emptive policy decisions, including wage subsidies for bosses, taken to forestall discussions on the new growth path with social partners.

NEHAWU wants to respond to the following specific proposals contained in the Budget Speech:

We welcome the fact that the 2011 Budget makes available an additional R8 billion as the first step in establishing the National Health Insurance{NHI} and it sets the health infrastructure grant, it includes the additional funding for the adoption of the family health approach to primary health care and makes additional money available for the training of medical doctors and nurses. We however reject any consideration for a general increase in the VAT rate as part of the mechanism to finance the NHI. Rather, we call for a consideration of the imposition of an earmarked levy on luxury imported items.

We welcome the increased education budget, including the R9.5 billion to expand the Further Education and Training Colleges {FETC} sector and the allocation of additional funds for student financial assistance and also to finance a new school building programme.

We are happy with the announcement that the Passenger Rail Agency of South Africa will be embarking on an 18-year programme to replace the signaling infrastructure, the coach and locomotive fleet. However, NEHAWU believes that this falls short from constituting a comprehensive programme for the recapitalisation and expansion of our commuter rail transport. We believe that increased investment to expand commuter rail network would be key in the transformation of the apartheid urban geography, in reducing the high costs of commuting experienced by workers and in reducing the greenhouse gas emissions on our roads. Even more so against the background of the introduction of the misguided toll-road system in the main arterial freeways of the Gauteng urban centres and the rising price of fuel.

Such a major programme of expansion of the commuter rail system will be difficult to undertake in the light of the delegation of the management of rail to municipalities announced in this Budget Speech. Municipalities are already struggling to undertake their current limited function of service delivery. NEHAWU calls for the cancellation of the private-public-partnership that has led to this debacle of the Gauteng toll-road system.

NEHAWU reiterates its rejection of the proposed R5 billion wage-subsidies for youth employment. In our view, this is not a job-creation initiative but corporate welfarism where hard-earned tax-payers money is given to the bosses as grants. This is a growing tendency in the light of the current global capitalist crisis whereby governments are dishing out grants to the industrial and banking bosses in the name of responding to the crisis.

In South Africa, this policy of wage-subsidies for the bosses comes from the same Treasury that has been prevaricating on the NHI and claiming that the fiscus cannot afford the Basic Income Grant whilst millions of the people with no incomes and who cannot access the current social grants suffer from hunger. In this same Budget Speech, the minister proclaims that "our aim is to put development first and not dependence on welfare" yet we know that the wage-subsidy is going to be used to terminate the employment of people older than the designated youth category as employers hire and fire in a revolving door just to obtain the provided tax credit. NEHAWU believes that youth unemployment is a complex challenge which in our view is fundamentally a crisis caused by the lack of opportunities and access to higher education and other post-schooling skills development avenues.

NEHAWU is concerned that the budget has failed to reflect the lessons learnt during the 2010 public service strike. In terms of the Resolution 6 of 2010 of the Public Service Collective Bargaining Chamber (PSCBC), as a way to avoid unnecessary wage disputes and strikes in the public service, government has committed itself to initiate and complete wage negotiations with labour in the public service before the budget envelop is finalised in February.

To date, this has not happened and yet in this budget, the Treasury is already fixing the combined increase of the public service wage bill and the costs of additional employment in the public service to a 6.6% annual growth over the MTEF period, based on a projection of a 5. 2% inflation. NEHAWU regrets that this projected increase in the public service wages is completely far off the mark in terms of the mandate we are receiving from our members.

At this very earliest opportunity, NEHAWU wishes to call on government to review this position, especially in the light of the fact that the Budget Speech itself noted the risks associated with the expected increase in the food and oil prices in terms of the inflation outlook.

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Solidarity: Statement by Dirk Hermann, deputy secretary general

Government's job creation plans lacklustre according to Solidarity

Solidarity today described as lacklustre the efforts of the Minister of Finance, Pravin Gordhan, to encourage job creation in his budget. The government's plans to invest approximately R150 billion in job creation projects will not bring about a significant improvement in the number of job opportunities for South Africans.

Solidarity wants to stress that the expenditure which is earmarked for job creation projects is indeed expenditure made towards struggling institutions. "The expenditure of R14 billion on FET colleges, R20 billion on SETAs and R5 billion on the National Skills Fund will not increase job creation. Over the past few years these institutions have been heavily criticized because of their inefficiency and even corruption. Although not all FETs and SETAs are inefficient, further money injections in this area do not provide direct encouragement for job creation," Dr Dirk Hermann, Solidarity's deputy secretary general, explains. Solidarity also criticised the fact that no further clarity was given with regard to the R9 billion set aside for the Jobs Fund.

According to Hermann government should rather have implemented drastic measures aimed at encouraging entrepreneurship and should have exempted small businesses from unnecessary regulations that ultimately hinder job creation. "By relieving the tax and administrative burden on entrepreneurship and small businesses job creation would result as a matter of course'" Hermann contends. "The government has so often reiterated that job creation is its main priority, yet it was not clearly reflected in today's budget speech. It rather decided to pump more money into state institutions which, to date, have shown little success. Although government is emphasising the importance of small businesses in job creation, in reality there is very little support for this sector. According to Gordhan small businesses are responsible for more than 68% of employment in the private sector."

Meanwhile, Solidarity emphasised that the increase in the fuel and road accident fund levies of eight and ten cents respectively a litre will have a negative effect on South Africans. "These levy increases come at a time when a storm is still raging about toll tariffs, which are likely to be implemented as soon as June and which will place tremendous pressure on motorists and the cost of service delivery in Gauteng," Hermann states.

According to Solidarity today's budget speech again highlights the unsustainability of job creation in the civil service. Over the past five years the public service salary bill has doubled, according to Gordhan. "During the past year, incredibly high job creation levels have been announced in the civil service, but it is no doubt true that this form of job creation is not sustainable for the cost is still carried by the tax payer." According to Gordhan this expenditure increased from R156 billion to R314 billion over the past five years.

Solidarity welcomed the planned expansion of the police service with some reserve, emphasising that the solution for South Africa's crime problem is not a matter of increasing the number of police members, but rather lies in the improvement of the police's efficiency.

Meanwhile, the trade union re-iterated its view that government's plans to spend approximately R800 billion on infrastructure must now urgently be implemented, in order to encourage job creation in the construction sector. The promises about investment in large infrastructure projects have been around for a long time, while growth and job creation in this sector have come under pressure.

According to Hermann some aspects of the budget speech can however be regarded as positive. Solidarity welcomes the government's plans to ensure that banking costs remain fair and transparent as well as plans to make funding available for the maintenance of roads used to transport coal. In addition, the retention of the current monetary policy framework, as well as the focus on training of doctors and nursing staff are to be welcomed.

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SACP: Statement by spokesperson Malesela Maleka

SACP STATEMENT ON THE 2011 BUDGET SPEECH

The SACP notes and welcomes the general thrust of the Budget presented by the Minister of Finance today. The budget signals an important commitment and movement by government towards funding our five priorities. It further signals a strong intention to align government expenditure to the New Growth Path that government is pursuing.

The funding set aside to increase expenditure in education and skills development must be greatly welcomed.  This signals a dedicated focus on youth and addressing the challenges of unemployment facing our country and the youth specifically. Our country has a huge challenge in unlocking the problems encountered by many young people who are in transit between the schooling system and finding employment. In solving this crisis we note the announcement of funding set aside for a youth employment subsidy.

The Minister of Finance is correct this time around to say that the proposed wage subsidy will be implemented subject to consultations and discussions in various forums including NEDLAC. The SACP fully agrees with the concern raised by unions about a possible substitution of full time workers with younger workers who are on subsidy and the termination of their employment once they don't qualify for the subsidy anymore. A wage subsidy can be subject to abuse by the employers and if we are to ever implement such measures we must have developed a system that cannot be abused by profit chasing capitalists.

We further welcome the commitments made towards the introduction progressive introduction of the National Health Insurance and expenditure on other measures in so far as social policy is concerned. This signals cabinet is taking serious the implementation of the NHI. We wish to state upfront as the SACP that as part of the options put forward around financing the NHI a consideration of VAT is not a desirable option as it will have a negative impact on the poor.

We welcome the measures announced around curbing corruption in the process of government procurement.  The SACP calls on government to further consider our proposal that shortlisted companies bidding for tenders must be made public with reasons why they have been shortlisted and why the winning bidder has been chosen over and above the measures announced today. We hope measures announced today around revitalisation of housing infrastructure and improvement of informal settlements will not just be an extension of a terrain for tenderpreuners to scavenge on these good intentions but that it will be used to mobilise communities as agents of their own change.

The SACP is also worried that there is no substantial shift from the logic of improving our infrastructure and transport logistic for lowering the cost of doing business as opposed to aligning such to our developmental objectives and social needs. We are further more worried by the resistance to move away from pursuing inflation targeting bluntly and not expanding a differential approach of various interventions which amongst others are not just obsessed with low inflation rate whilst unemployment and inequality remains excessively high.

The Minister has correctly pointed out to there will be global inflationary pressures as a result of soaring oil and food prices and that some of the pressures exerted on our currency have been reversed since December last year. We welcome the Ministers commitment that government will continue to explore the possibility of imposing a tax on capital inflows and outflows, especially the outflows. Whilst speculative capital is no longer flowing in and out of the country as rapidly as it was in the recent past, the SACP strongly believes that taxing capital inflows and outflows to discourage rapid inflows and outflows is a desirable policy option. We have clearly missed the boat on this front but going forward this must be strongly considered.

The SACP further welcomes the announcements on the funding of the implementation of IPAP2. We also welcome the announcement in so far as the setting up of the Development Finance Institutions Council. In order to realign the mandate of the DFI's to our developmental goals and objectives the SACP reiterates its call for a Financial Sector Summit, which includes both the private financial institution and public finance institutions to discuss this critical issue of financing development.

The SACP celebrates as one of the outcomes of our Financial Sector Transformation Campaign the announcement made by the Minister that it is now time "put in place measures that will ensure that banking charges are fairly set, are transparent and do not create undue hardship".  For far too long the private banks have been allowed to run away with murder and unfairly milk money from our people through a complex banking charges structures.

In order to achieve our developmental goals and to make progress in the improvement of the lives of our people in the priority areas we have all agreed to, mass mobilisation remains very critical. The SACP will continue to mobilise the working class and the poor for the achievement of the positives mentioned in the budget and the implementation of our proposals.

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YCLSA: Statement by Gugu Ndima, national spokesperson

YCLSA STATEMENT ON THE BUDGET SPEECH

The Young Communist League of South Africa (UFasimba) notes the budget speech delivered by the Minister of Finance, Pravin Gordhan. This in our view, is a youth oriented budget which has taken into consideration  the millions of young South Africans despondent as a result of the socio-economic disparities, still characterising the South African Economy. As the Minister said in his own words "there are millions of young people who cannot see a realistic prospect for a decent life".

We firstly welcome the Minister's proposed measures, which will be put in place to accelerate Job creation and Skills development. An amount of almost R150 billion has been allocated specifically for Job Creation and skills development. This affirms the commitment of our government on employment and training of young people. We welcome specifically the R14 Billion allocated to further education and Training colleges which were normally neglected in the past, to assist thousand of students in need of financial assistance. The money will go a long way in realising our call as the YCLSA for the training of 100000 artisans and training of young people in various technical driven skills-jobs which will enable them to be absorbed in the market.

The R6 Billion allocated to NSFAS in our view should be able to flow directly to the thousand of students in institutions of higher learning; this will also bring the realisation of free education sooner than anticipated. We call for the capacitating of the NSFAS Office and more importantly local offices which are expected to deliver to students in Institutions of higher learning, promptly.

The YCLSA is pleased that measures have now been put in place for the implementation of the NHI; the quality of the Public Health sector remains a key driver for the success of the NHI. We believe that the budget allocation will ensure the swift roll out of the NHI programme.

The Minister has also committed government in lowering bank charges and holding financial institutions accountable; this will assist in getting money back into the pockets of the poor who have been exploited and defrauded by banks through inflated pricing.

We express our concern that the entire economic budget falls within the macro economic paradigm where the major objective is inflation targeting and the lowering of interest rates. We hope that the Alliance summit which is scheduled to start tomorrow, will look into policy issues which remain neo-liberal and market driven.

We are very concerned with the high levels of Social Security expenditure which has taken 20% of the budget.  This 20% could be used to stimulate active participation of millions of South Africans in the mainstream of the economy.  The Minister should review this in the next MTBP and see what alternatives can be put in place to curb dependency on the state by millions of South Africans.

The affirmation of rooting out corruption remains vital to the success of government and ensuring efficient service delivery. We welcome the proposed review of the procurement system of government and believe that it will assist in routing out unbecoming civil servants who see the government as a cash cow.  This will further restrict government officials in doing business with government or at the expense of government 

As part of the process of consultation on the Proposed Youth Subsidy, we will continue to oppose it. We will look into the various ways in which the money set to be allocated for it ,can be used or directed towards youth initiatives .

All issued on February 23 2011

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