Bua Briefs 119

7 March 2008

Energy emergency

Government, business, labour and civil society recognise that the country faces a shortfall in electricity supply that is likely to persist for the next few years. All social partners agree to the basic strategy laid out in the National Electricity Response Plan [PDF] 178 kb that requires that:

  • All households and enterprises must take vigorous action to save energy to avoid rolling black-outs as far as possible. At the same time, the industry and Eskom are developing new sources of electricity as rapidly as possible.
  • We must ensure that everyone contributes to the conservation of electricity. A change of mind-set and an alteration of behaviour with regard to energy consumption will go a long way to ease the impact of rolling black-outs.

Everyone can help avoid rolling black-outs, improve prospects for economic growth, protect employment and save on electricity bills by:

  • turning off lights that are not in use, especially at home and in businesses and office buildings
  • switching to low-energy CFL bulbs
  • switching off geysers at home after getting up and switching them on at bedtime
  • switching off other appliances when not in use.

The parties and all relevant stakeholders agreed to work together to ensure, as far as possible, that:

  • emergency services are protected
  • savings do not add to the burdens on poor households or undermine the programme of electrifying historically deprived communities
  • measures to reduce electricity use do not lead to employment losses; but instead, as far as possible, maintain shared growth through, among other things, energy-saving practices, the development of new sources of electricity and the production of energy-saving technologies.

Decisions on electricity policy and specific measures to reduce electricity usage must be made in a co-ordinated way in consultation with stakeholders.

All partners in the energy sector will work together to accelerate investment in new sources of electricity, including solar energy in households and workplaces, increased output from Eskom, co-generation and production based on biomass and other innovative technologies from industry.

We call on the media as communication partners to support the campaign by reporting regularly and factually on measures to save energy.

Let's resolve to work together to minimise the costs of the electricity emergency, especially to poor communities, and to share economic growth


Highlights from the Budget Speech

The macroeconomic policies put in place since 1996 and the fiscal stance in operation will enable South Africa to weather the global economic storm.

  • Our share of gross domestic product (GDP) has risen from about 15% to 21%.
  • Our economy has grown at an average of 5% a year.
  • DP per person has increased by over 20% since 2000.
  • During the past five years, employment has increased at a faster pace than at any point in the past 20 years, adding over 1,5 million jobs.

Poverty reduction and social security

The social grant increases in 2008 will match or exceed inflation, and take into account the disproportionate impact of price increases on the poor.

  • The maximum values of the disability and old-age grants will increase by R70 a month to R940 in April this year.
  • The Child Support Grant increases by R10 in April and by a further R10 in October, to R220 a month.
  • The additional social assistance cost amounts to R12 billion over the next three years.
  • The total number of grant beneficiaries is 12,4,million, and expenditure on social assistance will total R75,3 billion in 2009.
  • It is proposed that the qualifying age for men for old-age pension be reduced from 65 to 63 this year, to 61 in 2009 and to 60 by 2010.
  • The Child Support Grant will be extended to include children up to their 15th birthday, with effect from January 2009.

Education and skills development

  • Provinces will spend over R18 billion on school infrastructure and equipment, to eradicate unsafe schools.
  • A total of 600 000 more children will be put through basic pre-school education within reach of even the poorest of households.
  • In 2007/08, education spending in total exceeded R105 billion.

Intensifying the fight against crime

  • Over R10 billion will be invested to expand police numbers to reach over 200 000 in 2010/11, and to increase the number of prosecutors, judges and magistrates. This will also include further investment in forensic science laboratories.
  • More will be invested in the building of 40 police stations and the construction of 18 000 additional prison spaces.

Infrastructure investment

  • A total of R17 billion is added to the budgets of the departments of housing, provincial and local government, water affairs and forestry, sport and recreation, and transport over the next three years.
  • The public transport infrastructure systems grant will increase to R11 billion over the next three years for programmes aimed at modernising public transport.
  • Transnet will invest in excess of R78 billion in infrastructure in rail transport. About 45% will be spent on improving freight rail infrastructure and rolling stock.

Investment in energy

  • Over the next five years, energy utility Eskom’s capital expansion plans will amount to R343 billion, with about 73% earmarked for power generation projects.
  • The return-to-service of previously mothballed power-stations, Camden, Grootvlei and Komati, will add a combined 3 677MW of generating capacity by 2011 and other smaller projects will produce about 2 000 MW.
  • Two major new coal-fired plants, Medupi in Lephalale, and Bravo, near Witbank, will each cost in excess of R80 billion and produce about 4 500 MW each.
  • It is proposed that up to R60 billion should be provided to support the financing of Eskom’s investment programme, on terms structured to assist in meeting cash-flow requirements.

Peacekeeping and development in Africa

Revenue estimates and tax administration

  • Consolidated national revenue of R580 billion is expected in 2007/08 – about R15 billion more than the budget estimate a year ago and 15,7% more than the 2006/07 outcome.
  • Personal income tax has outperformed expectations this year, increasing by nearly 20% year-on-year.
  • A record number of tax returns were submitted by the deadline, including more than 750 000 taxpayers who submitted electronically this year.

Tax proposals

  • The estimate of main budget revenue before tax proposals for 2008/09 is R636 billion.
  • The tax proposals for 2008 provide net relief of R10,5 billion, bringing the projected main budget revenue to R625 billion, which is 12,1% more that the 2007/08 revised estimate.

Personal income tax

  • Adjustments to the personal income tax schedules will provide direct relief of R7,2 billion, fully compensating for the effects of inflation.
  • About one-third of the benefit goes to those whose taxable income is below R150 000 a year, and 28% benefits those in the R150 000 to R250 000 income bracket.
  • No income tax will be payable by those who earn less than R46 000 a year, and the tax threshold for people over the age of 65 rises to R74 000 a year.
  • The monthly monetary caps for tax-free contributions to medical schemes will rise from R530 to R570 for the first two family members, and from R320 to R345 for each additional beneficiary.
  • Increases in the tax-free thresholds for interest and dividend income are proposed, from R18 000 to R19 000 for individuals under the age of 65 and from R26 000 to R27 000 for those over 65.
  • The annual exclusion threshold for capital gains or losses will rise from R15 000 to R16 000.

Support for small- and medium-sized (SME) businesses

  • The 2008 Budget reduces the administrative burden on small businesses by introducing a presumptive turnover tax as an alternative to income tax and VAT for businesses with a turnover of less than R1 million a year.
  • The threshold for farmers and businesses who submit VAT returns every six months or four months, respectively, will be raised from R1,2 million to R1,5 million.
  • The VAT registration threshold will be raised from an annual turnover of R300 000 to R1 million.
  • Government will support greater access to equity finance for SMEs in high-tech sectors and junior mining exploration companies, with a tax incentive amounting to a 30% up-front deduction for venture capital investments in non-mining companies, and a 50% deduction for investments in junior mining exploration companies.


All hands on deck to speed up delivery