10 June 2025

Fiscal policy as a redistributive instrument to tackle structural inequality, unemployment and poverty

The African National Congress supports the report before the National Assembly of the Standing Committee on Finance on the Fiscal Framework and Revenue Proposals. This is a second fiscal framework being considered by this house. The ANC commends the cooperation from various political Parties within and outside the Government of National Unity for their support for the first fiscal framework report. The resolution of the Budget impasse caused by the VAT proposal is a testament of our ability to build consensus despite contradicting views as Public Representatives in Parliament and National Executive.

A failure of this Parliament to pass the budget will not advance the aspirations of the people and the public services required by the people. The Fiscal Framework and Revenue Proposal provides the content our countries fiscal policy. Fiscal Policy is a critical macroeconomic policy instrument with implications for our development as a country, the economy, the functioning of government and social eservices provided by government and this Parliament ought to not be complicit on such a critical process of passing the Money Bills.

The ANC in its Manifesto committed to advance and implement a developmental macroeconomic framework which prioritizes fiscal expansion to respond to accelerate our development agenda while maintaining fiscal stability.

For the ANC, the Fiscal framework is about advancing our social transformation agenda as fiscal policy has a redistributive effect of assets and income. South Africa remains the most unequal society and without a prioritization of the provision of a safety net, over 18 million South Africans will be in sever distress. Hence, the ANC affirms that this fiscal framework is pro -poor as it increases the social grants above the inflation rate which will alleviate the cost of living for the poor and have a positive aggregate demand impact on the economy.

The ANC believes the Social Relief of Distress should serve as a basis for the introduction of the Basic Income Grant as part of our comprehensive social security system which will ensure no one is left behind.

We support the fiscal framework because it supports the expansion of the Public Employment Programmes which created 1.8 million opportunities for the youth in the sixth administration. We further call on the Minister to ensure adequate fiscal allocations are made to achieve the public employment target of 6.5 million as per the Medium-Term Development Plan of the ANC Led- Government of National Unity.

Over the 31 years of Democracy the ANC. Has embedded education as a number one priority to invest in the people. The first and foremost task of empowering the people for self-liberation is education. The fiscal framework has continued to prioritize education through and an allocation of 19.5 billion for provincial education compensation costs for 5000 educator posts and to improve the ECD subsidy per child from R17 to R24 and expand access for an additional 700 000 children up to the age of 5 years for early childhood development. The prioritization of Early Childhood Development and the Implementation of the BELA Act through compulsory Grade R, are measures for fundamental transformation as this will change the level of cognitive development of generations to come.

These are measures that propel the creation of an equitable society with equal opportunities.

Unemployment remains a crisis that requires all social partners to resolve. We welcome the allocation of over 1 trillion for infrastructure development as a major catalyst for economic growth. Empirical evidence does demonstrate that infrastructure has a high employment creation effect and creates opportunities for low-skill workers who constitute a significant component of the unemployed.

The level of private investment in the South African Economy has not led to the bolstering of the required economic growth whiles we have one of the deepened financial sector that has a Johannesburg Stock Exchange with a capitalisation of 22 trillion Rand. As a country we should harness our national resources for the advancement of our national development objectives.

The Standing Committee of Finance has recommended a focus on asset allocation by various institutional financiers such as Banks, Pension Funds, Insurance Funds, Development Financing Institutions to support the domestic real economy through increasing exposure to domestic assets and infrastructure.

The ANC has acknowledged that fixing local government and resolving basic service provision such as water, waste collection, electricity, and access to serviced sites are critical to improve the quality of life for all particularly the historically disadvantaged. We welcome the focus of Operation Vulindlela on local government. The efficiency of local government also has an impact of the overall economy, as activities and inputs to enable productivity of commerce require municipalities. Building a capable local government and resolving the funding disparities through the review of the White Paper will enhance the resourcing of local government as a coalface of government.

The ANC affirm the importance of fiscal stability yet recognizing that the country is not facing a fiscal crisis. The ANC has led the discussions on finding alternative revenue sources to enhance our fiscal position and will continue to engage various stakeholders and the public on our fiscal policy as a country and have drawn lessons from the 2025 budget impasse. We believe the National Treasury can identify alternative progressive taxation measures to enhance our fiscal position such as the funding of SARS to collect its debt and tackle illicit financial flows and introducing tax measures that are redistributive and protect the poor, low-income earners and the middle strata. We welcome the focus of the South African Reserve Bank on how Monetary policy can have a debt stabilizing effect and call on for enhance coordination of fiscal and monetary policy to achieve other developmental objectives such as employment, industrial development and economic growth.