ANC policy proposals
The Budget has been tabled in a year that the ANC has declared as one of Decisive Action to Advance the People’s Interests.
In delivering the State of the Nation Address (SONA) on the 9th February 2023, the President aligned government’s programme for 2023 to these priorities; to accelerate the resolution of the energy crisis to end load-shedding; economic reconstruction and recovery in order increase job creation, investment and empowerment; improve the delivery of basic services and maintenance of
infrastructure; strengthening the fight against crime and corruption and to assist in building a better Africa and world.
The Budget 2023, therefore, provides the resource plan for these policy priorities, aimed at advancing the people’s interests, in particular the poor and to provide stimulus to the economy for growth and development.
The overall context in which the Budget is tabled
The challenges of previous years in advancing a resource plan for government priorities have had serious constraints both domestically and globally. It is clear that all indicators suggest that the global economy is slowing, brought about by policy choices, the conflict between states, and severe impacts of climate change.
Domestically whilst still trying to emerge from the effects of a Covid-19 affected economy, load shedding has become the biggest constraint to any prospect of meaningful growth. The Budget suggests a 0,9% growth for this year and an average 1,4% over the next three years. This growth rate is far lower than we had hoped for a meaningful impact on unemployment and poverty.
Faced with these challenges Budget 2023 responds to the concrete conditions the country faces and sticks to policy priorities. The budget is overall pro-poor and premised on cushioning the poor, working people and pensioners to withstand the rising cost of living through increasing tax thresholds and increasing social grants for the vulnerable at an inflation-linked rate.
The ANC Parliamentary Caucus welcomes the extension of diesel fuel refunds to manufacturers and the decline in fuel prices as that will help to reduce food prices.
We are pleased that the budget allocates 60% of non-interest expenditure on the social wage, which is fundamental for the social transformation of the country as it advances equitable socio-economic development to address inequality. These interventions and advancements will help to reduce the high cost of living.
Responding to the State of the Nation Address (SONA)
The Budget respond to SONA through the proposed debt relief package for Eskom to address its weak financial position and to enable it to carry out both new investment and planned maintenance as well as emergency maintenance.
The investment is also to support the restructuring programme and establish an electricity market, a long-standing proposal that goes back a number of years. The design of these financed proposals will return the economy to a stable and uninterrupted supply of energy by allowing Eskom to focus on the maintenance of existing generation fleet to improve the availability of electricity.
The ANC Parliamentary Caucus believes that businesses and households should welcome the introduction of a new tax incentive for individuals to install rooftop solar panels. The fact that individuals will be able to reclaim a rebate of 25% of the cost of panels up to a maximum of R15,000 is an attractive incentive.
We welcome the bold interventions to address the electricity by appointing a Minister of Electricity who should focus on ending load-shedding. The expansion of transmission and distribution will be critical in enabling low-carbon energy generation development as we undertake a Just Energy Transition towards a low-carbon economy.
The incentives aimed at reducing the base load demand through the renewable energy tax incentive for industries and rooftop solar tax incentives for households will also contribute to addressing the electricity supply crisis.
With regards to the debt of municipalities to Eskom, work between the National Treasury and Eskom on the R56 billion debt will provide incentivised relief to municipalities whose debt is unaffordable.
We believe that the installation of prepaid meters strengthens the user pay system of the government and management of electrify use by households and businesses.
We welcome the announcements on infrastructure investment that include the Public sector spending of R903 billion on infrastructure over the medium term of which R448 billion will be spent by State Owned Enterprises, public entities and through public-private partnerships.
Transport and logistics will spend R351 billion including SANRAL to improve the road infrastructure network. On Water and Sanitation, we welcome the R132 billion allocated over the next three years mainly by the water boards.
With regards to small business and local economic development, budget 2023 prioritises township and rural economic development by allocating 2.8 billion to support 120 000 enterprises to the township and rural Township and Rural Entrepreneurship Fund. An allocation for 16 industrial parks, special economic zones and 300 clothing and textile firms over the medium term will ignite investment in various provinces, thus contributing to employment.
The Budget assesses that fiscal consolidation adopted since 2013, has restrained growth in consumption expenditure whilst higher than expected revenue has been used in part to address the fiscal deficit but also provide relief under Covid 19 and other disasters.
In particular, the higher revenue has assisted with social wage support and the infrastructure programme.
With regard to the deficit, the ANC Parliamentary Caucus is pleased that it will continue to decline over the next three years. Gross loan debt will stabilize at 73% of GDP in 2025/26 (which incorporates the Eskom debt-relief programme).
Total consolidated spending over the next three years will be just over R7 trillion of which 51% or R3,6 trillion is allocated to the social wage, a crucial government policy framework to support the poor and reduce the impact of poverty.
The ANC Parliamentary Caucus is pleased that R30 billion will be spent for inflation-linked increases for social grants covering old age and disability, child support grants and foster care grants.
R23 Billion and R22 Billion will be allocated to health and education respectively to cover the shortfall in compensation budgets and improve services.
The ANC Parliamentary Caucus is also pleased that funds in the 2023 Budget are targeted for the Social Relief of Distress Grant, as this represents progressive and incremental shift towards a Basic Income Grant.
Secondly to improve local and provincial government infrastructure as part of financing basic services and ensuring adequate maintenance. Thirdly financing safety and security and in particular the increase of numbers of SAPS as part of the visible policing programme.
Fourthly Education both Basic and Higher, allocated R1,4 trillion over the next three years and at 24% the largest proportion of allocated spending. Fifthly financial support is provided to the health care system.
Also, in line with government policy priorities and the theme of 2023, community development is the fastest growing function averaging 8% annually over the next three years and is dedicated to addressing the concerns around the local government equitable share and infrastructure both build and maintenance.
The Budget provides huge increases in transport to address the interests and needs of road maintenance, the rail network, and dealing with the transport corridors and port congestion. These are all indicators of Budget 2023 responding to policy priorities.
The ANC Parliamentary Caucus welcomes the allocation to SAPS of almost R8 billion to appoint 5,000 police trainees per year and the National Prosecuting Authority R1,3 billion for the implementation of the State Capture Commission’s recommendations and the Financial Action Task Force.
We are pleased with the support for the additional appointments of 120 new employees for the National Prosecutions Services and 107 specialised staff for the Financial Intelligence Centre to tackle complex financial crimes and organised crime in various sectors.
On Infrastructure Development and Maintenance to accelerate economic reconstruction and recovery, infrastructure development and maintenance are critical to improving the quality of life for all by providing basic services. The efficient infrastructure of water and sanitation, housing, roads, waste collection facilities and rail is critical.
We welcome the R10 billion increase for public transport, the R4.7 billion increase for regional and local water and sanitation services and the 1% increase of the equitable share to local government, which is at the coal face of service delivery, as this will improve the provision of basic services.
Municipal debt relief is a critical intervention for the financial sustainability of several local municipalities, which will enhance their capacity to provide basic services.
We call on households with an income to pay for services as part of responding to their service delivery needs which require sustainable municipalities.
Onthe Doors of Learning, we welcome the Higher Education and Training budget of R3.1 billion, which has increased student funding to open the doors of learning, with NSFAS provisionally funding over 1 million students. The budget further supports basic education to expand infrastructure development and early learning.
Gross Tax Revenue is expected to reach R1,7 trillion almost R94 billion higher than the 2022 budget estimate. Tax relief as indicated in the State of the Nation Address totals R13 Billion for the clean energy transition; limiting the impact of consistently high fuel prices and inflation related adjustments to personal income tax.
The proposals are in line with the broad-based tax system which keeps taxes at a level consistent with promoting economic growth. South Africans should appreciate that no tax increase is proposed for 2023 largely as a result of higher-than-expected revenue income in personal and corporate tax income.
On energy, the ANC Parliamentary Caucus welcomes the two tax measures to encourage businesses and individuals to invest in renewable energy and increase electricity generation. This will see businesses being able to reduce their taxable income by 125% of the cost of investment in renewables.
There will be no threshold to the size of projects to qualify and the incentive will be available for two years.
The country will also benefit from the research and development tax incentive that will be extended for another 10 years and the Urban Development Zone Tax incentive will be extended for two years.
Issued by the Office of the Chief Whip, Hon. Pemmy Majodina
For further enquiries, contact:
Office of the Chief Whip
076 385 1440 or 082 676 6247