SACP+Statement+on+2006-7+Budget

PRESS RELEASE!!

 * 15 February 2006**


 * SACP Statement on 2006/7 Budget**

The SACP welcomes the principal features of the 2006/7 Budget as announced by the Minister of Finance, cde Trevor Manuel in Parliament this afternoon. In particular, this is a budget that begins to give substance to the vision of accelerated shared growth, as outlined in the President’s State of the Nation Address. It is a budget that generally resists the temptation of sending short-term “positive” signals to the markets, and it concentrates more substantially on the systemic issues that are required to ensure sustained and shared growth.

It is a budget that places the emphasis on infrastructural investment. There is also much greater financial and capacity resourcing for local government, so that municipalities are able to play a leading role in local economic development. The SACP also welcomes the sustained increases of spending on education and training, and measures to further encourage learnerships. Addressing skills and job creation is a key component of ensuring that we are, indeed, able to sustain shared growth.

The Budget also underlines the importance of social grants. In his speech Minister Manuel indicated that the R70 billion spent on social grants in the past financial year provides around half of all income to the 20% poorest households in our country. On the one hand, this is a sobering reality. However, it is also clear that, apart from buoyant international primary commodity prices, domestic demand has been the other key driver of our current 5% growth. While growth cannot be sustained simply on demand factors, we should not underestimate domestic demand as an important contributor to growth, and this includes demand stimulated by social grant transfers to the poorest households. Social grants can be (and, we believe have been) a stimulator of growth, and not a subtraction from it.

The SACP welcomes the fact that the Minister of Finance has resisted a very powerful campaign in the past weeks for a reduction of company tax. It is not that this is a budget that is unfriendly to private corporates, but it seeks to channel the benefits of sustained growth over the past decade into sustainable investments, and not simply into tax relief for the richest. We would have like to see a marginal raise in Companies tax, in line with e Presidents call that since business has benefited from the First Decade of Freedom, they need to plough back into the developmental priorities of our country.

As the SACP, during this tenth anniversary of the adoption of the constitution we call upon government to pass the necessary legislation as required by section 77 (2) of the constitution to allow parliament to amend money bills. Such legislation would enable the budget process to be more transparent than it is now and for public representatives to have a say on the budget.


 * Issued by the SACP

For more information Contact:

Malesela Maleka SACP Spokesperson Tel: 011 339 3621 Fax: 011 339 4244 Mobile: 082 226 1802 E-mail: malesela@sacp.org.za Website: [|www.sacp.org.za]**

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