Budget 2012


The money allocated for infrastructure and growth is not good enough, the Democratic Alliance said on Wednesday, after Finance Minister Pravin Gordhan tabled the 2012/13 Budget.

"I don't think we got it today, but let's give the minister credit because he managed to bring the budget deficit down," DA finance spokesman Tim Harris said.

"The fact that he managed to do that shows us that we have more space to be bold on growth and on infrastructure particularly.

"I mean the growth number that he [announced] today is projected to grow at 2.7 percent and that's with the globally economy growing faster... and Africa growing even faster... We want to see far more on growth. Those numbers aren't good enough."

The budget showed that this year less would be spent on infrastructure, he said.

"Last year, we were projecting to spend around 8.1 percent... that number has now gone down to 7.8 percent, so actually we are spending less on infrastructure."

Harris said Gordhan was alluding to amounts he wanted to spend after 2015, when there was a substantial deficit on infrastructure right now.

"We want to see bolder numbers," he said.



Union federation Fedusa on Wednesday said it was "cautiously optimistic" about Finance Minister Pravin Gordhan's budget.

However, it was concerned with unemployment, lack of public expenditure, public service capacity, road tolling, fraud and corruption.

"While Fedusa welcomes the finance minister's projected economic growth rate increase from of 3.6 percent in 2013 to 4.2 percent in 2014, the excessively high unemployment rate of 23.9 percent remains a great concern," general-secretary Dennis George said in a statement.

Fedusa was cautiously optimistic about the R3.2 trillion to be spent on 43 major infrastructure programmes. However, funding needed to be specified in greater detail. The government's implementation of projects needed to improve.

"Also, a lot is being said about new infrastructure but... government has proven to be extremely weak at maintaining the often excellent infrastructure inherited from the previous regime."

It welcomed the government's contribution to reducing the toll road debt, but was concerned that despite public protest, the Gauteng tolling system would be implemented from April 30.

The National Education, Health and Allied Workers' Union (Nehawu) maintained its stance "in rejecting the freeway tolling system". The union did not believe the Treasury had listened to public concerns about the system.

"The proposed 'appropriation of R5.8 billion' does not address the workers' demands as far as the Gauteng freeway tolling is concerned," Nehawu general secretary Fikile Majola said.

Fedusa said on financial management, the government's apparent failure to embrace Treasury's proposal that South Africa adopt a set of fiscal rules to enforce fiscal discipline, was of concern.

The appointment of a chief procurement officer however "was a step in the right direction".

The federation welcomed the announcements associated with small businesses and the tax regulatory framework.

Fedusa intended monitoring the National Health Insurance (NHI) pilot projects, and wanted clarity on how expenditure would be made productive and successful.

Nehawu welcomed announcements on the public works programme, university infrastructure and allocations for the NHI pilot projects.

However, the union was concerned with the pursuit of an extremely low budget-deficit and public-debt strategy, including use of fiscal policy to fight inflation, in an economy which had not yet recovered a big chunk of the jobs lost since 2008.

Nehawu said the public service wage bill was sustainable. It would "vehemently oppose" attempts by the Treasury to bring about "wage moderation" in the public service.

The union was concerned the Treasury would undermine the ANC's proposed funding mechanism for the NHI. It rejected any consideration of VAT and "user-charges" as part of funding mechanisms for the NHI.

Nehawu reiterated its rejection of the proposed youth wage subsidy. It said this subsidy was no more than a corporate welfare scheme and part of the Treasury's commitment to a two-tiered labour market.



The government must prove it can deal with the new Budget, Cope said on Wednesday.

"Government must lead the way. They must show that they can spend taxpayers' money properly," Congress of the People MP Nick Koornhof said after the 2012/13 budget was tabled by Finance Minister Pravin Gordhan.

"We are all in this, all South Africans. I think we must do it together."

He said it was important for the Congress of SA Trade Unions to support the budget.

"It is very important that Cosatu supports him [Gordhan] now. If they don't do it, we are going to have trouble with regards to the state wage bill."

Various anti-corruption measures would help save government funds.

"If his [Gordhan's] anti-corruption measures work, we can save up to a hundred billion rand. That is a lot of money," Koornhof said.



The Congress of SA Trade Unions has vowed to press ahead with a strike against toll fees in Gauteng, despite Finance Minister Pravin Gordhan announcing lower tariffs in his budget speech on Wednesday.

"We are not cash cows that can be held up on behalf of foreigners who want to make money off us by using our public goods," Cosatu general secretary Zwelinzima Vavi told SABC news.

He was responding to Gordhan's announcement that a special R5.8 billion appropriation had been included in the 2011/12 budget to ease the toll burden in Gauteng.

The new fees would see drivers of ordinary vehicles pay 30 cents a kilometre, instead of 66 cents as originally planned. Vavi said this was not good enough.

"The strike continues on the 7th of March and we probably will have another strike by the 30th of April, the day that he [Gordhan] says they will start introducing or enforcing this e-toll gate in Gauteng. We will not compromise."



The allocation of funds for infrastructure outlined in Finance Minister Pravin Gordhan's Budget speech were welcomed by the Chamber of Mines on Wednesday.

The WWF welcomed government support for business growth initiatives, particularly as small business development would stimulate job creation, chief executive Bheki Sibiya said in a statement.

"The minister's speech is further encouraging in his recognition of the fact that to compete in the global economy requires flexibility, innovation and leadership," he said.

The presidential infrastructure co-ordinating commission would help clarify long-term investment plans that would enable growth of the mining industry and address economic change.

Sibiya pledged that the chamber would work with the government to reduce unemployment and inequality. It also eagerly awaited the second round of public comment on carbon taxation and the creation of new economic development zones.

"The minister's speech has made a contribution towards improving investor confidence," Sibiya said.



Finance Minister Pravin Gordhan's Budget on Wednesday was credible and balanced, Business Unity SA (Busa) said.

"Busa sees the budget strategy as credible, broadly balanced and confidence building," it said in a statement.

Busa welcomed the infrastructure allocation and the announcement of 43 major infrastructure projects.

"This initiative should not only aid in building modern infrastructure, but will also reduce poverty, create decent work and expand employment opportunities."

It was looking forward to the infrastructure summit planned by the president.

Tax relief and the simplified tax regime for small and micro enterprises were a welcome move.

"It is the small and emerging business sector that has the greatest potential for job creation."

Gordhan was correct in emphasising that as a major mining economy South Africa should be taking advantage of the buoyancy in commodity markets internationally, Busa said.

"This echoes the focus suggested by the accelerated beneficiation strategy, which was mentioned at the state-of-the-nation address recently."

The association was pleased that the introduction of carbon tax would not take place until there had been further consultation.

"We are also glad to hear that the government will engage further before implementing the carbon tax, especially given the recent electricity price hikes."

Busa welcomed Gordhan's announcement on the reduction of the cost of tolls in Gauteng, saying it would reduce the programme's impact on the economy.

Gordhan said a special R5.8 billion appropriation would be paid to the SA National Roads Agency Limited to ease the toll burden in Gauteng. Motorists would now pay 30 cents/km, instead of 66 cents as originally proposed.



A R4 billion allocation for new rolling stock in Finance Minister Pravin Gordhan's budget speech was a victory, the Passenger Rail Agency of SA (Prasa) said on Wednesday.

"It is a victory for the commuting public who have been travelling like cattle and having to put up with unreliable trains as a result of old infrastructure," said chief executive Lucky Montana said in a statement.

Gordhan also allocated R1 billion for new train depots and signalling infrastructure.

These provisions, combined with commitments to Prasa last year, indicated the government was prioritising passenger rail as the primary means of public transportation.

"Prasa is working hard to build a passenger rail system that will ensure all South Africans, black and white, travel with dignity on a reliable world class rail system," Montana said.



Finance Minister Pravin Gordhan's 2012/2013 Budget was predictable, with insufficient emphasis on economic growth, the Inkatha Freedom Party said on Wednesday.

"Much will depend on whether or not, this time around, declarations of policy will materialise into programmes of action," party leader Prince Mangosuthu Buthelezi said.

"The measures taken are still mild when drastic measures are needed."

He said promises aimed at curtailing inefficiency, ineffectiveness and corruption were "excellent". But similar statements had been made in budget speeches over the past three years.

"The most concerning aspect is the insufficient emphasis on economic growth.

"Our present rate of economic growth below three percent is largely the product of government funding and subsidies, and may not be sustainable."

Buthelezi noted that success in everything depended on South Africa's capability of generating income.

"[We] welcome emphasis on infrastructural development [but it] still does not address this fundamental problem."



By accepting the e-tolling system, government has missed an opportunity to look at more cost-effective methods of financing the country's roads, AfriForum said on Wednesday.

"Even though the measures for reducing the toll fees may bring some relief for overburdened taxpayers, it is senseless to retain an expensive recovery method like toll fees which coincides with unnecessary overhead expenses," AfriForum chief executive Kallie Kriel said in a statement.

Finance Minister Pravin Gordhan said in his budget speech that electronic tolling fees on light motor vehicles had been reduced from 66 cents/km to 30 cents.

This was due to a special R5.8 billion appropriation included in the 2011/12 budget to ease the toll burden.

"The specific allocation of fuel levies to finance the improvement of the country's infrastructure would have protected road users from having to keep on paying for the unnecessary administrative expenses that occur when toll tariffs are imposed," Kriel said.

"The decision to exempt taxis from toll fees while motorists have to pay, reduces ordinary motorists to the milk cows of the new tolling system."

Democratic Alliance MP Jack Bloom said he welcomed the R5.8bn appropriation, but warned it would not help the public to accept the system.

"This actually makes the case against the e-toll collection system even stronger, as it will cost about R1bn a year to collect a smaller amount," he said.

"It is also administratively complex and difficult to enforce. Many motorists will simply refuse to pay."

He said the party feared the toll reduction was temporary, and that it could be raised once the system was operational.

"The DA will continue to oppose the tolls, including legal action to stop its implementation," Bloom said.



The solution to the Gauteng tolls announced in the Budget on Wednesday was not ideal, the National Association of Automobile Manufacturers of SA (Naamsa) said.

"The automotive industry would have preferred to see freeway improvement programmes being financed through an administratively more efficient and less costly fuel levy," Naamsa president David Powels said in a statement.

Naamsa, however, welcomed Finance Minister Pravin Gordhan's announcement that a special R5.8 billion appropriation would be paid to the SA National Roads Agency Limited to ease the toll burden in Gauteng.

Motorists would now pay 30 cents a kilometre, instead of 66 cents as originally proposed.

Naamsa had in general welcomed the Budget given the slower growth in the domestic economy and uncertain global economic outlook.

"The minister had tabled an appropriate and disciplined set of budget proposals intended to support growth, employment and poverty alleviation through targeted interventions," Powels said.

"Particularly noteworthy was the substantial expenditure earmarked for competitive enhancing capital infrastructure development focusing on projects in the energy, transport and logistics sectors."

The R9.5 billion in personal tax relief would have a positive impact on consumer sentiment and demand, which could in turn help vehicle sales.

However, Naamsa was concerned that the increase in capital gains taxes for individuals and companies was unexpected and could prove counterproductive in promoting investment.

The association endorsed the public sector infrastructure programme, support for industrial development and economic zones, the rollout of employment programmes and the investment in further education and skills, Powels said.

Of concern was the funding for the proposed national health insurance system.

"These matters required careful evaluation, including detailed impact assessment, so as not to prejudice future consumer demand and economic growth in South Africa," Powels said.



The increase in the cost of tobacco products falls within "reasonable levels", British American Tobacco SA said shortly after Finance Minister Pravin Gordhan tabled the 2012/2013 Budget.

"For us [this] is an acknowledgement by government of the significant problem of the illegal trade in cigarettes," spokeswoman Leslie Rance said.

"This is also to blame for approximately R4 billion loss in government revenue due to evasion of taxes on illegal cigarettes."

He said trade in illegal cigarettes remained a major concern in South Africa.

"Around 28 percent of cigarettes sold in South Africa are illegal."

The retail price of a 20s packet of Peter Stuyvesant, the company's biggest-selling brand, would increase by R1 from Monday.



Finance Minister Pravin Gordhan's Budget presented on Wednesday was a pleasant surprise, African Christian Democratic Party MP Steve Swart said.

"All in all [it was] a very positive budget in difficult circumstances," he said after the Budget was delivered in Parliament.

Swart said he was pleasantly surprised given the global economic crisis and prospect of reduced economic growth in South Africa.

He was particularly pleased that the Budget focused on the productive side of the economy, namely infrastructure development, instead of on the consumer economy.

If the money allocated on infrastructure was well spent it would stimulate the economy and create jobs, he said.

A downside was the increase in the fuel levy by 20 cents a litre of petrol and diesel from April 4, as this would be inflationary, he said.