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Thank you, chairperson.
Government exists to deliver service to the people. It collects tax, generated from economic activity, to do this. After 1994, South Africa enjoyed the dual benefits of being fully integrated into the global economy and the rising tide of global economic growth. Under these conditions, the national treasury was able to pursue prudent macro-economic policies that eventually resulted in the budget surplus and relatively low levels of debt that existed before the global economic crisis hit home.
During this time of relative plenty the opportunity arose for government to apply our money to develop effective, people centred departments that would focus on service delivery. But the opportunity was lost. A recurring theme during the current budget debates is government's failure to deliver service and the need for departments to be turned around, for public enterprises to be rescued and for a renewed commitment by public servants to actually service the public. The people have not received value for their money. As economic activity reverses into recession, so too does the tax revenue stream.
Under these conditions, National Treasury must ensure that government departments understand the need for appropriate austerity budgets that should be reflected in the adjusted estimates of national expenditure in October.
National Treasury aims to promote economic development. To appease its alliance partners, government has now established an entire ministry for economic development but without a budget, without resources and a duplicate mandate. At a time when the national budget is already in deficit, that is likely to widen, the question must arise of why this additional expense is required and how it will be funded. The impact on the National Treasury must also be clarified.
National Treasury has already raised its concern that skilled resources are in limited supply and that the remuneration of its technical experts does not match that offered in the private sector. Despite this, and unlike many other government departments, the team is functional and ably led. Destabilising the National Treasury team at a time when extreme pressure exists in the wake of the recession must be avoided. National Treasury needs to provide a reality check in terms of public spending. It cannot do this as a weakened and fragmented unit.
It also needs to focus on accurately modelling the likely impact of the recession on our economy and the most appropriate fiscal response, and not be distracted by having to negotiate in-built structural tensions.
Uncertainty is not good for our economy and clarity is required on the unfolding experiment of the Developmental State. In response to the DA's question on the nature of the Developmental State, former Minister Fraser-Moleketi responded that, quote: "There is no simple plan that delineates progress towards the attainment of the ‘developmental state' and South Africa cannot be said to base its approach on any existing model".
At the heart of the concept, lies a belief that developmental goals will be driven by the public service under the commanding hand of the state. The response goes on to say, quote "The state therefore requires a capable and effective public service in order to plan and guide the implementation of its national development plan." Unquote.
We have already experienced the inefficiency of the public service, we just need to visit a public hospital or home affairs office to see the consequences of dysfunctional public service delivery. Our public enterprises lurch from one financial crisis to another, draining our scarce financial resources, yet they are viewed as entities through which the developmental state agenda will be driven. The last thing our economy needs is the creeping hand of public service inefficiency clutching at its throat.
South Africa cannot afford to experiment with its economic future. A model that places the state at the centre of the economy, as a controller of resources and a dispenser of patronage denies the economic freedom that should follow from the long and painful struggle for political freedom. Command economies across the world did not work, because they denied this human right.
Policy choices must focus on unlocking the opportunities for all members of our society. The DA's vision of an Open Opportunity Society remains rooted in an unwavering belief in the empowerment of the individual, with a focus on boosting the economic engine room that delivers the revenue for government to function. This is where government should focus its intervention.
Following the global economic crisis, governments across the world have been scrambling to put in place rescue packages to bail out industries and even whole banking groups. There is, however, a very clear understanding that when this crisis passes, as it most certainly will, the hand of government intervention will retract so that the real drivers of economic growth and revenue generation, that is, business and entrepreneurs, can thrive.
The South African response to the crisis is complicated by the outdated view that government can centrally command an economy. There remains a strong belief in government and amongst its alliance partners that, following intervention, the hand of government must remain firmly in command of the economy. Thus, under the guise of response to the recession, there exists a danger that government will command a far greater role for itself and never ease its hand.
This will have consequences when the recession eases and economic growth returns to our economy. We know that our economy will recover, we just don't know when and by how much. If the poison of government paralysis is injected too far into the veins of our economy, our ability to survive the recession, the possibility of an early recovery and the hope of a significant upturn will be severely constrained.
When economies contract, and households experience financial pressure, their attention often turns to investment schemes that promise to deliver them from their financial hardships. This is fertile hunting ground for predators and the Financial Services Board needs to become more vigilant over unregulated activities in the non-banking financial services industry. In particular, it needs to educate consumers that when returns appear too good to be true, they are. The FSB also needs to respond more rapidly when alerted to potential scams.
The South African Revenue Services plays a crucial role in ensuring that revenue required for government activity is collected. It does need to align its operation to the complexity of our economy. At the one extreme, it needs to ensure that the so-called informal economy is included in the tax net. To do this it needs to have a clear understanding of what economic activity is taking place and ensure that the registration process is easy and cost effective and that the activity is appropriately taxed.
At the other extreme, it needs to ensure that sophisticated schemes do not exist to deprive the treasury of the tax revenue to which it is legally entitled. Tax practitioners have for some time commented that our tax regime is overly complicated and that amendments on amendments have created uncertainty to the extent that taxpayers are non-compliant through misinterpretation rather than mischief. A conversation on the increasing complexity of our tax regime is required and should be initiated to ensure that the social contract between the taxpayer and SARS does not become unnecessarily strained. SARS has successfully streamlined its revenue collection from salaried employees and can now focus on less captive tax payers.
Information creates certainty. The role of Statistics SA is to provide information to all participants in the economy. Questions raised regarding its active role in the pursuit of job creation and poverty alleviation indicate that it is viewed by some as a participant in, rather than as a recorder of, economic activity. In the future, Stats SA will report to the Minister of National Planning. It is not clear how parliament will be able to hold it to account within this reporting structure, under conditions of relentless centralisation. It is, however, vital that Stats SA does account to parliament given its crucial role in providing the information that informs the allocation of available resources. Census 2011 is an expensive and time consuming exercise and we cannot accept an undercount of between 10 and 17% as previously experienced.
Stats SA must be permitted to report it findings without political manipulation of the results. It also needs to focus on how it presents its findings to ensure that its message and methodology is properly understood. The uproar following the release of unemployment statistics in March this year demonstrated this need.
Major macroeconomic indicators point to the fault lines now evident in our economy. Economic activity is receding, unemployment is climbing, prices continue to increase, our current account deficit is widening, the rand is volatile and poverty levels remain unacceptably high. Last year the International Panel on Growth made numerous workable suggestions on how to eliminate the binding constraints on growth. Unfortunately their message was drowned in the noise following Polokwane. There is no reason why the findings cannot be properly considered now.
The National Treasury, SARS and Stats SA perform a valuable role in our economy and their efforts are appreciated.
In conclusion, Hon Minister Gordhan, Hon Deputy Minister Nene and committee chairperson Hon Mufamadi, congratulations on your appointments. With our economy in recession your jobs are much more difficult than they would be under more favourable circumstances. The DA wishes you wisdom and strength and assures you of our support and rigorous participation in the process of guiding our economic recovery through the most appropriate macro-economic policies.

Mr. Micawber, in Charles Dickens' David Copperfield, summed it up in his observation that, quote:

"Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery". Unquote

We can't avoid a miserable result now, but our actions can determine whether happiness returns. The DA remains focused on this outcome.
Thank you, chairperson.