11 June 2025, Cape Town International Convention Centre
Dr Joe Maswanganyi
Speaker
Ministers and Deputy Ministers
Honourable Members
Ha mi losa
Honourable Speaker, on 21 May 2025, the Minister of Finance, Mr. Enoch Godongwana, presented the budget before Parliament in accordance with the relevant legislation. This is the Minister’s third budget presentation, underscoring a steadfast commitment to fiscal responsibility and transparency.
The budget adoption process within a coalition government can be quite complex due to the multitude of interests involved. Coalition partners often bring diverse priorities, ideologies, and agendas to the table, which can complicate consensus-building efforts. Many countries, such as those in the Benelux region, the Nordic nations, and Germany, frequently encounter similar challenges in budget adoption under coalition governance. A noteworthy example is Belgium, which, from 2007 to 2011, functioned under a caretaker government, unable to form a coalition government and thus facing significant difficulties in adopting a budget. For anyone calling for the Minister’s head for the budget delay, is out of tune with coalition government dynamics all over the world.
Honourable Speaker, this budget is presented within the context of the ANC and the country celebrating the 70th anniversary of the Freedom Charter, adopted at Kliptown on June 26, 1955. We honour our forebearers by ensuring that this budget reflects the aspirations for equality and justice outlined in the Charter. We must prioritise policies that enhance access to education, healthcare, and economic opportunities, fostering a more inclusive and equitable society aligned with the vision of the Freedom Charter.
The Committee acknowledges the challenges presented by the 2025 Budget in a constrained economic context marked by global risks, stagnant growth, and domestic structural issues. The current geopolitical climate, characterised by trade tensions and the impacts of climate change, presents significant hurdles to achieving the UN Sustainable Development Goals and fostering global peace. Considering these realities, particularly the tariffs and trade conflicts initiated by the US, it is imperative to adopt a forward-looking approach in formulating the next five-year plan. Careful planning is crucial to navigate potential adverse scenarios and enhance economic resilience.
Honourable Speaker, I would like to put it categorically that this is not an austerity budget. The budget has garnered praise for being both pro-poor and pro-growth. The budget prioritises economic development and addresses the needs of the poor and vulnerable, all while promoting fiscal discipline and accountability. Let us commend the numerous progressive advancements reflected in the budget—R23.4 billion is allocated to the Public Service Wage Agreement, providing much-needed relief to struggling public servants. The budget is indeed pro-poor, allocating substantial funds for social services: R20.8 billion for healthcare (employment of doctors and other health workers), and R19.5 billion for provincial education, which ensures the safeguarding of teachers’ positions and improves access to quality early childhood development (ECD). Moreover, the allocation for social grants has been increased beyond the inflation rate, with R32.2 billion earmarked to extend the SRD Grant.
On the pro-growth front, the budget designates R1.03 trillion for infrastructure investment. This includes significant funding for roads (R402 billion), energy (R219 billion), water and sanitation (R156 billion), public transportation, and rail infrastructure, all aimed at fostering economic growth and job creation.
Honourable Speaker, on 27 May 2025, the Committee gathered valuable insights on the 2025 fiscal framework and revenue proposals from the Parliamentary Budget Office (PBO) and the Financial and Fiscal Commission (FFC). The following day, on 28 May 2025, the Committee hosted public hearings, encouraging public participation by receiving both written and oral submissions from various stakeholders. By acting as a vital link between the public and Parliament, the Committee fosters an inclusive budget process and ensures public perspectives are considered in legislative discussions.
From the submissions received, the stakeholders welcomed the withdrawal of the VAT increase and additional allocations to SARS. The stakeholders, however, raised concerns about the proposed adjustments to the fuel levy, the lack of adjustment to PIT brackets, above-inflation increases in excise duties, the withdrawal of zero-rated food items, and the NT’s failure to increase SRD grant allocations.
Honourable Speaker, in tabling the budget, the Minister made it clear that Public Private Partnerships (PPPs) are a vital concept. The Committee supports the implementation of PPPs. It is crucial to understand that the PPP model is not synonymous with privatisation. This framework is designed to harness the expertise and capital of the private sector to enhance public services, all while preserving essential public ownership and oversight. Major economies such as China, India, and the Asian Tigers have successfully adopted the PPP model for their infrastructure projects, demonstrating its effectiveness and potential. 4 Rhetorical gimmicks and populist rhetoric won’t propel our economy forward. What we truly need are dynamic, data-driven solutions that can supercharge resource allocation, streamline processes, and elevate the efficiency of our economic policies. Let’s embrace innovation and make impactful changes that drive real progress.
COMMITTEE’S OBSERVATIONS AND RECOMMENDATIONS
The Committee notes NT’s response that a permanent and inflation-adjusted Social Relief of Distress cost would be significant. While recognising fiscal constraints, the Committee recommends that NT make a presentation on converting the SRD grant to the Basic Income Grant. The Committee notes that the public sector wage Bill accounts for a larger proportion of the total government budget. The committee welcomes the focus on the public service audit to identify and resolve the “ghost” employees in the public service payroll.
While NT states that spending reviews alone will not resolve fiscal challenges, the Committee considers these reviews as a necessary step toward improving expenditure efficiency in the current constrained fiscal environment. The Committee notes NT’s response that the historical spending reviews are being published.
The Committee remains concerned that the gross loan debt remains significantly high. It is argued that South Africa does not have the highest debt-to-GDP ratio by world standards. Japan stands at 255% of GDP, Sudan is at 256% of GDP, Argentina is at 155% of GDP, and the US public debt stands at 120% of GDP, approximately $36 trillion. The current system is flawed, with high debt service costs diverting resources away from development needs. The government should renegotiate the debt terms with lenders/creditors. The Committee remains concerned that the contingent liabilities remain high, mainly due to SOEs, and that if these liabilities materialise, the debt-to-GDP trajectory could worsen. While the May 2025 Budget maintains the government’s stance of not bailing SOEs, the Committee recommends that NT should provide details on how the new PPP model would function and ensure that SOEs are more effective, inclusive, transparent and aligned with policy goals.
SARS and Revenue Proposals
The Committee welcomes the additional R7 billion allocations to SARS over the medium term to support SARS’s efforts to tackle compliance, evasion and modernisation of the institution. The Committee notes that NT maintains its decision not to adjust Personal Income Tax brackets for inflation, generating R16.7 billion in additional revenue in 2025/26. The Committee recommends that NT consider a differentiated approach when developing tax proposals to protect low-income and middle-income households.
The Committee notes the proposed inflationary adjustments to the fuel levy, which are expected to generate R4.1 billion over the next three years. The Committee also notes the stakeholders’ rejection of this proposal, mostly citing its impact on the business sector, poor people and the low- and middle-income households who spend the bulk of their earnings on food and transportation. While the Committee notes the pressure on the RAF, the Committee calls for a continuation of a full review of the fuel levy.
The Committee acknowledges the concerns expressed by the alcohol industry regarding the impact of above-inflation excise tax increases. In light of this, the Committee encourages the National Treasury and SARS to enhance their dialogue with the industry and provide updates on their progress to Parliament.
Conclusion
With this budget, the government will make more efforts to improve people’s lives and livelihoods, because for the ANC-led government, people come first. This budget is a blueprint for identifying what better suits the reality of a country and what better caters to people’s needs, as well as to advance social fairness and improve the well-being of the people.
The challenges we face are immense, but they are not insurmountable. President Mandela once said, “It always seems impossible until it is done”. Let us adopt this budget to build an inclusive economy, heal our country from racial divisions, fight unemployment, poverty and inequality and create opportunities for all.
The report was accepted by the majority of the Committee members, who understand that the continued impasse was going to cripple the country.
Honourable Speaker, I therefore move for the adoption of the Fiscal Framework and Revenue Proposals Report.
Nda Khensa !!