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Letter of the President
23 February, 2007
On Wednesday 21 February, our Minister of Finance, Trevor Manuel, delivered his 2007 Budget Speech. He chose as his theme the important idea fundamental to the vision of our movement for the building of a people-centred society, contained in the words "Human life has equal worth".
In this context he quoted the British writer, Will Hutton, who wrote: "The foundation of human association is the idea that human life has equal worth and human beings are equally entitled to political, economic and social rights which allow them to choose a life they have reason to live."
He went on to say: "The idea, that human life has equal worth, and that this is the core value that unites us, invites us to ask whether we have done enough to give practical effect in South Africa today to our shared humanity. Have we acted in a manner that shows that human life has equal worth? Or do we still live in a society where the shadow of history dominates over the opportunities of an open society...
"The 2007 Budget strives to accelerate economic growth and work opportunities, modernise our public services and infrastructure and fight poverty and inequality, because we have a shared pledge to work together in action. We do this, consciously, as a choice of this government because without a powerful countervailing force, the shadow of history will dictate opportunities, entitlements and outcomes."
The Budget Speech completes the process of the presentation to the country of three inter-connected major statements that, since 1995, have been delivered at the beginning of the year, except on national election years. These are the January 8th Statement of the National Executive Committee of the ANC, the State of the Nation Address, and the Budget Speech.
Together these statements seek to give a clear picture to the nation about what our movement intends to do in the short to medium term to meet its commitment to persist in its pursuit of the goal of a better life for all our people. In this context, throughout our years of liberation, we have emphasised the central importance of the struggle to defeat poverty and underdevelopment.
To emphasise this, the ANC National Executive Committee designated 2007 as "The Year to Intensify the Struggle against Poverty as we Advance in Unity towards 2012 - Phambili". The January 8th Statement, which emphasised that we must further intensify the offensive against poverty in the next five years, leading to the Centenary of the ANC in 2012, said: "Clearly, the guiding principle of (our) roadmap must continue to be to move forward decisively to eradicate poverty and all other elements of the legacy of colonialism and apartheid...
"The key questions that we have to answer are how much impact have we made as a movement in changing the lives of the people and advancing the ANC's strategic objectives we outlined as we acceded to power; and what it is that we need to do in the last five years before our centenary to intensify and accelerate our work to push back the frontiers of poverty.
"In 2004, we received a clear mandate to lead the country to lift our economy to a higher growth trajectory, and position it more effectively to create work and push back the frontiers of poverty. In 2007, we must work even harder, together, further to implement this mandate."
Consistent with this, in the State of the Nation Address we said: "None of the great social problems we have to solve is capable of resolution outside the context of the creation of jobs and the alleviation and eradication of poverty, and therefore the struggle to eradicate poverty has been and will continue to be a central part of the national effort to build the new South Africa."
The Budget occupies a critical place among the major annual statements we have mentioned because it allocates public sector resources to address the objectives communicated in the January 8th and the State of the Nation Addresses. It also impacts on how the private sector and civil society respond to our national challenges. It is therefore always important to understand the broad policy framework that informs any Budget.
In this regard, the 2007 Budget Review, which is tabled in Parliament together with the Budget Speech and the Estimates of National Expenditure, says:
"Government's medium-term strategic framework defines the main priorities over the 2004-2009 period. It seeks to enhance the social and economic welfare of all South Africans as reflected in the following key objectives:
The 2007/8 Budget seeks precisely to address these strategic challenges. As the Budget Review says correctly, together these objectives constitute an important part of our response to the task to enhance the social and economic welfare of all South Africans - to achieve the goal of a better life for all. They respond to the fundamental value system of Ubuntu stated by Finance Minister Trevor Manuel in the words - "Human life has equal worth."
The central task of the national democratic revolution (NDR) is to construct a people-centred society that will, in practice, demonstrate that it values every human being on an equal basis, determined that each should enjoy a life of dignity, regardless of race, colour, gender, age or belief. All the Budgets approved by our democratic Parliaments since 1994, including the 2007/8 Budget, have been focused exactly on the attainment of this objective.
The more than 300 years of colonialism and apartheid that are part of our history left us with a deeply entrenched legacy that could not but help to dictate what our movement and democratic South Africa would have to do to respond to the imperative to develop our country according to the Ubuntu precept that "human life has equal worth".
Democratic South Africa inherited a difficult legacy that included:
Ever since the masses of our people voted our movement into power in 1994, our government has sought to address the entirety of this legacy of colonialism and apartheid, consistent with the fundamental goal of the national democratic revolution to build a people-centred, democratic, peaceful, non-racial, non-sexist and prosperous society that inspires every citizen actually to experience the reality that South Africa belongs to all who live in it, black and white.
Accordingly, any analysis of our public finances, including our Budgets from 1994 to date, would show that we have never wavered from the pursuit of the central goal of the NDR. In this regard, the Minister of Finance once again drew attention to the benefits our country continues to derive from the implementation of the decision in the Reconstruction and Development Programme (RDP) policy document that our government must ensure that we grow and develop our economy within the context of the correct macro-economic balances. He said:
"Debt interest costs continue to fall as a share of GDP and are set to reach 2.1% by 2010. Madame Speaker, the savings on interest that we have seen since 2001 provides an additional R33 billion a year to spend on services and infrastructure, money that we would not have had if we kept on borrowing at the level it was in 1994.
"In 1994, we had a choice, to expand spending by borrowing, or reprioritise while reducing dependence on debt. The choices that we have made, consciously made, provide us with the fiscal space to spend more on education, on health, on public transport. It has also provided us with the policy room to contemplate long-term reforms to our social security system that will benefit all South Africans."
Accordingly government expenditure, including in the current financial year, will increase across the board, even as we have continued to reduce the tax burden on the lower to middle income earners. This will include expenditure on all infrastructure associated with the 2010 FIFA Soccer World Cup. During the fiscal years 2006/7 - 2009/10 expenditure in education will increase by 11%, health by 10.5%, welfare and social security by 9.8%, housing and community development by 18.1%, police, prisons and courts by 19.9% and economic services by 14.3%.
The Budget and Budget Speech also contain a whole range of funded interventions to address the challenges of access to education, urgently needed social, science and economic skills, and increasing the number of qualified artisans which, among other things, will help us to address the challenge of unemployment.
This, of course, is accompanied by other funded interventions focused on the further expansion of our economy, as visualised in Accelerated and Shared Growth Initiative (ASGISA), the Industrial Policy Framework, the Expanded Public Works Programme (EPWP), and other programmes, which will both increase our country's wealth and help us further to accelerate the reduction of our unemployment levels and therefore our levels of poverty.
Thus, in his Budget Speech, the Minister of Finance could say: "In concert with the task of growing the economy and creating new opportunities for work, we have been hard at work since 1994 to push back the frontiers of poverty, recognising that no people can be truly free until they have cast aside the shackles of poverty and underdevelopment."
In the January 8th Statement our National Executive Committee said: "Through our joint efforts as a nation we have built up momentum for stronger economic growth and development. But we need to act with even greater determination and focus to realise the potential of our economy to meet the needs of the poor in urban and rural areas. We need to act in unity, in a people's contract, to ensure that this progress is not only sustained, but elevated to a higher level during the course of the year.
"This places a responsibility, first and foremost, on the cadres of our movement, wherever they are deployed, to take the lead in ensuring that growth is both accelerated and shared. Our key challenge is to sustain this growth, broaden participation in the economy and extend opportunities to all, to deepen the quality of social development. Sustained and broad-based growth depends on additional progress in our industrial sector, on export growth and trade performance, and on improving education, skills and productivity...
"Government alone cannot resolve the challenges of inequality and poverty. Rather they require that we unite South Africans in a 'peoples contract to create work and fight poverty'. We must seek concerted action on our development approach, involving the whole of our society...
"And therefore in all our efforts as we advance with our mission to eradicate poverty we have to ensure continued participation of the masses of our people in the struggle against poverty...
"Now that the reviled system of apartheid has been overturned, we should continue to seek the mobilisation of the broadest range of forces in society to overcome the poverty, unemployment and underdevelopment that continue to afflict many of our people.
"As we resolved at the 2002 Stellenbosch Conference of our movement, one of our key tasks for 2007 should therefore be to continue to work to bring together as many people and groupings as possible into a common struggle to build a better life for our people..."
Our movement must indeed vigorously take up the challenge to mobilise the greatest number of our people to join the broad front for development, in keeping with our vision of a people-driven process of change.
This page was last updated on Friday February 23, 2007