And a commitment to deliver more’
R1600 a month. Foster care grants increase by R30 to R920 a month. The child support grant increases by R20 to R380 a month.
Public procurement Public procurement will amount to about R1.5 trillion over the next three years. We will pay about R500bn a year for the delivery of goods and services. Not transfers, or hand-outs, or cash distributions.
The purpose is to acquire the infrastructure and operational inputs required for effective service delivery. Public procurement is also an important strategic vehicle for developing local industries, broadening economic participation and creating work opportunities. Last month we gazetted new preferential procurement regulations to achieve the following:
Where large firms are awarded tenders of R30m or more, 30 percent of the contract value must go to small or black-owned enterprises, where feasible.
Procurement authorities are now empowered to set clear targets to promote black-owned and womenowned businesses, participation of youth and disabled persons and opportunities for rural enterprises and co-operatives.
South African suppliers will enjoy preference in respect of goods with significant local content, thus supporting job creation.
There will be further procurement reforms this year.
A draft Public Procurement Bill will be published shortly. It will establish a single procurement authority and will consolidate the currently fragmented regulatory environment, in keeping with section 217 of the constitution.
The central supplier database is now fully operational. It has made doing business with the state much easier and cost effective. It enables government to know who it is doing business with and to use technology to reduce opportunities for fraud and corruption. Already, large numbers of transactions have been identified for further investigation:
Public service employees who appear to be doing business with the state.
Supply agreements that reflect the identity numbers of deceased persons.
Payments to bank accounts other than those of the relevant suppliers.
Where fraud or corruption is identified, action must be taken. Letsogo la molao ke le letelele. The law will catch up with you. Molato ga o bole…
The OCPO currently manages 71 transversal contracts covering over 23 000 items worth R61bn. Good progress is being made to find better value for money while expanding and diversifying the number of suppliers.
Savings of R675m in 2016/17 on cellphones and vehicle contracts. The vehicle contract alone is expected to save the state between R1bn and R1.5bn per year over the medium term.
In the property leasing sector, we expect savings of between R2bn and R3bn to be realised, while releasing resources for greater employment and contracting in building maintenance and services.
Collaborative efforts between Sita and the National Treasury have led to savings of R2.5bn over the next three years in the 10 largest ICT equipment contracts.
Working with the Department of Basic Education on cost-effective standards for building design, we have reduced the average cost of new schools from R70m for 7 500m² to R34m.
I need to emphasise again that suppliers who have met their delivery obligations are entitled to payment within 30 days. We will continue to monitor progress in meeting this commitment.
Financial sector Since the global financial crisis in 2008, we together with our partners in the Group of 20, have been on a long journey to make the banking system safer, and prevent the type of economic crisis that systemically important banks can trigger. The cabinet approved the shift to the Twin Peaks regulatory system to make the financial sector safer and serve South Africa better, introducing the following structural reforms to our regulatory system:
In 2012, the new Financial Markets Act introduced a framework for unlisted derivatives, which caused so much damage in the 2008 global financial crisis.
In 2013, the Banks Amendment Act brought in requirements for increased capital and better liquidity management.
In 2013, the government took steps to deal with household over-indebtedness starting with abuses in emolument attachment orders, also known as garnishee orders.
In 2015, then finance minister Nhlanhla Nene tabled the Financial Sector Regulation Bill to give effect to the Twin Peaks system. As soon as this bill is enacted, we will be able to establish a dedicated market conduct regulator to protect customers and ensure they are treated fairly.
Earlier this year, together with Trade and Industry Minister Rob Davies, new restrictions on credit life insurance were implemented, preventing the sale of retrenchment insurance to people without jobs, for example.
As an employer, the national government has investigated 135 000 emolument orders against state employees and reduced the number of deductions by 49 000. We hope all employers will assist their employees in the same way.
As we have seen recently with the Competition Commission investigation, there is evidence of a collusive culture at trading desks in banks. It is precisely to deal with such abuses that we have proposed a dedicated market conduct regulator, and we hope parliament will pass this bill as soon as possible.
Collusion must be stamped out whether it is in banking, construction or the bread industry. But banks need tougher rules to cover financial market abuses, and the Reserve Bank and National Treasury have initiated work on a more comprehensive Financial Markets Review under the leadership of former deputy governor James Cross, to build on the review conducted in 2014.
Although progress has been made in transforming the financial sector, more needs to be done to broaden access through more affordable financial services, improve market conduct, ensure employment equity at top management levels, provide procurement opportunities and transform ownership. We live in an era of rapid technological change.
Three new banks have been granted provisional licences, including the Postbank, and two new stock exchanges. Their business models are based on technological innovation with potential to bring services more cost effectively to more people. I am pleased to announce that we will work with partners at Nedlac who have requested that a Financial Sector Summit take place in 2017 to consider transformation in this sector.
The 2017 Budget has been prepared with a view t o strengthen both our economic growth and the transformation of our society.
This year’s Budget Review sets out our point of departure: “To achieve the vision of the constitution, South Africa needs transformation that opens a path to inclusive economic growth and development. Transformation without economic growth would be narrow and unsustainable.”
Redistribution In December last year, the economics profession lost one of its great champions of redistribution as a public policy priority. Tony Atkinson was both a leading author and academic in the field of public economics, and an expert in the study of the distribution of income and wealth.
He provided compelling evidence that, in his words, “less inequality is associated with greater macroeconomic stability and more sustainable growth”. He argued strongly for active policies to address inequality.
The evidence supports our insistence on a progressive income tax structure, our ongoing work on health insurance and social security reform, our focus on further education and training and our recognition of the structural and technological dimensions of our employment challenge all find resonance in Atkinson’s policy proposals.
On one important reform, we have taken a giant step forward. We have agreed to implement a minimum wage of R20 an hour with effect from next year.
We are at a crossroads now. We need to act urgently to build confidence and support investment. We need to bring all stakeholders on to an inclusive growth and transformation path. We have proved that we can change course through negotiation, participation and partnership.
We have the resilience needed to move forward confidently even in uncertain times. Last year, impetus was given to several initiatives under Mr Jabu Mabuza’s business sector leadership:
A fund to support small and medium enterprises has been established.
A youth employment service programme has been initiated, with the aim of creating a million work opportunities over the next three years.
Strategic interventions to support black participation in agriculture have been developed. In the year ahead our focus must be on inclusive growth and a transformation action plan.
Bold and ethical leadership is needed from all sectors of society.
I believe that all of us can commit to doing more to make the lives of fellow South Africans better. Obstacles there will be many. Overcome them. Detractors abound. Disprove them. South Africans, wherever you are… Defend your gains; demand accountability. Be an active agent for change. Umanyano Ngamandla (Unity is power.)
If we make the right choices and do the right things we will achieve a just and fair society, founded on human dignity and equality.
This is the time for activists, workers, business persons, the clergy, professionals and citizens at large to actively engage in shaping the transformation agenda and ensuring that we do have a just and equitable society. We also need to consider, in the face of such intractable economic hardships and disparities, whether we should supplement our Constitutional Bill of Rights with a “Charter of Economic Rights” – a charter that would bind all of us to an economy which:
Provides access to decent and well remunerated jobs.
Facilitates training and retraining of citizens in the face of technological change.
Creates a supportive environment for micro, small and medium businesses and co-operatives.
We can draw inspiration from Inkosi Albert Luthuli, when he said: “I believe that here in South Africa with all our diversities of colour and race, we will show the world a new pattern for democracy”. There is a challenge for us. Ours is the collective responsibility, despite many distractions, to live up to the expectations of Oliver Tambo, Walter Sisulu, Beyers Naudé, Nelson Mandela, Albert Luthuli, Yusuf Dadoo, Lilian Ngoyi and many others.
In this way we will honour the confidence and trust of our people. In this way our transformation efforts will serve all South Africans. In his tribute to the South African soldiers who lost their lives with the sinking of the SS Mendi, the poet SEK Mqhayi wrote: “Kukhonza mnye ukuze kuphile abanye,” Somebody has to serve, so that others can live.
Can we, in this spirit, say: we have built a better South Africa, with a more inclusive economy, and all citizens living in dignity, advancing economically, over generations to come. Ke-a-leboha Na Khensa Ndia-livhuwa Ngiyathokoza.
This is an edited copy of Finance Minister Pravin Gordhan’s speech.