This year’s Budget, Honourable Speaker, is focused on fiscal consolidation. We cannot spend money we do not have. We cannot borrow beyond our ability to repay. Until we can ignite growth and generate more revenue, we have to be tough on ourselves.

A central objective is to stabilise debt as a percentage of GDP. To achieve this, the new budget framework sets deficit targets for the next three years which are lower than the October Medium Term Budget Policy Statement projections. Spending plans are reduced, a higher revenue target is set and net national debt is projected to stabilise at 46.2 per cent of GDP in 2017/18, and to decline after that.

These budget proposals signal government’s commitment to a prudent, sustainable fiscal policy trajectory, and respond directly to the changed circumstances since the 2015 MTBPS was tabled.

Honourable Members, we have had to take into account the slowdown in revenue associated with slower economic growth over the past year. In last year’s Budget we projected total tax revenue of R1 081 billion. The revised estimate is R11.6 billion short of this total, but nonetheless about 8.5 per cent more than the 2014/15 outcome. This is a most commendable effort in the circumstances: all South Africans have contributed, and the 14 000 staff of the Revenue Service have done a sterling job.

A consolidated revenue target of R1 324 billion is set for 2016/17, or 30.2 per cent of GDP. Expenditure will be R1 463 billion, leaving a budget deficit of R139 billion, or 3.2 per cent of GDP. The deficit will decline to 2.4 per cent in 2018/19.

Details of the proposed adjustments are set out in the Budget Review. I have highlighted key spending priorities already. I need to emphasise that additional spending on higher education, small business development, and amounts set aside for responding to the drought and other contingencies, are accommodated through stringent cost containment measures across all departments.

These include:

Initiatives of the Chief Procurement Officer will be extended to include monitoring of state-owned companies’ procurement plans and supply chain processes, and reviews of contracts above R10 million to ensure value for money. Centrally negotiated contracts will be mandatory with effect from April 2016.

As Ms Nobuntu Mbelle advised me: “Minister, government should also tighten its belt.”

The OCPO’s mandate is to achieve savings of R25 billion a year by the third year of the current MTEF period, out of a government procurement budget of about R500 billion a year. Our reform proposals draw on a consultation programme last year that reached over 7 000 suppliers and 2 500 supply chain practitioners, and attracted over 27 000 responses to a national survey.

It is clear that we can achieve considerable savings to government, while also ensuring that procurement processes are streamlined and service providers are paid on time.

I need to acknowledge the valued cooperation of Minister Ramatlhodi in addressing our personnel management challenges. Government procurement reforms also rely on collaboration with my colleagues and their respective departments: Minister Nxesi at Public Works, Minister Davies and Minister Zulu in respect of industrial participation, supplier development and black economic empowerment, and Minister Cwele on telecommunications and the rollout of broadband services, which is both an area of cost-saving in itself and an enabling condition for more efficient procurement systems and electronic communication.

In saying this, Members of the House, I want to draw attention to the broader opportunities that well-managed public administration reforms offer. Investments by telecommunication partners in fast internet connectivity for schools, clinics and government buildings brings down the costs, over time, for internet connectivity for neighbouring homes and businesses. When government office accommodation projects are well planned, they create opportunities for commercial and residential development in the surrounding precinct. And government as an employer contributes to training and organisational development across the wider economy. Inclusive growth is in part about these linkages between public and private sector development.