Finance Minister Pravin Gordhan blamed slow economic growth and declining tax revenue for the conservative 2013/2014 budget he presented to Parliament on Wednesday.
Finance Minister Pravin Gordhan blamed slow economic growth and declining tax revenue for the conservative 2013/2014 budget he presented to Parliament on Wednesday.
Exports grew at just 1.1% while imports increased at 7.2 % which has led to a 6.1% budget deficit. “In simple terms expenditure in the South African economy exceeded the value of production and income by about R190 billion last year,” Gordhan says. This situation is partly a consequence of the violent disruptions in the mining sector and a reduction in mineral exports last year.
Gordhan emphasised the relation between the National Development Plan (NDP) and the proposed budget.
“The NDP is focused on uniting South Africa around a common vision: it proposes a social compact to reduce poverty and inequality, and raise employment and investment, recognising that progress towards a more equal society requires shared efforts across the public and private sectors.”
For the man on the street the most pressing issues are the ways in which Government plans to use the tax revenue to achieve the NDP goals.
“We face the challenge of inefficient, exclusionary divides between town and township,” says Gordhan. In light of this, municipal infrastructure grants will be re-aligned to facilitate integrated planning to better assistance to municipalities in rural areas.
The Eastern Cape will receive R59.6 billion most of it, has been earmarked for development in education, health and social welfare.
“A million young people leave school every year, and we need a package of reforms that will improve education, training and work opportunities for young people,” says Gordhan.
Gordhan stated, “Further education and training will continue to be extended and enhanced.” Subsequently, education, sport and culture will receive R233 billion.
Basic education will focus on improving numeracy, literacy and the expansion of enrolment in Grade R. An additional R23.9 billion has been made available to provincial education departments for infrastructure upgrades and maintenance over the next three years.
The total number of students expected to enrol in higher education institutions is estimated to increase from 910 000 to 990 000 by 2015.
Funding has been allocated for the construction of universities in Mpumalanga and the Northern Cape.
Therefore the total transfer to higher education will increase from R20.4 billion in 2012/2013 to R24.6 billion in 2015/2016.
Budget
In terms of service delivery; Treasury plans to expand the number of electrified households through an increased spending of R3.5 billion to R5.7 billion over the next three years. The money will be spent to connect an additional 645 000 households to the national electricity grid.
The Department of Water affairs budget lies at R38 billion over the 2013, 2014, 2015 period, an increase of R6.5 billion in relation to 2012 Budget estimate. Government aims to accelerate the delivery of water to households, agriculture and industry.
Government plans on creating 3.7 million jobs in the next phase of the Expanded Public Works Programme (EPWP), launched in 2004.
Two million of these will be full-time jobs, according to targets set out in the 2013 estimates of national expenditure.
For the upcoming financial year (2013/14), the target has been set to reach 1.2 million unemployed South Africans.
Gordhan was also quick to emphasise the importance of eradicating corruption. The National Treasury is in the process of establishing a Chief Procurement Office.
“A project team seconded from state agencies and the private sector has identified four main streams of work; involving immediate remedial actions, improving the current system, standardising the procurement of critical items across all government and the long-term modernisation of the entire system,” says Gordhan.
A quick glance at the 2013 budget
•Consolidated government expenditure: R1.15 trillion
•Economic growth projected at 2.7% in 2013
•Tax revenue for 2012/13: R16.3 billion below estimate
•Spending cuts of R10.4 billion over the next three years
•Budget deficit estimated to have risen to 5.2% of GDP
•Personal income tax relief of R7 billion
•Expenditure exceeds income by R190 billion
•Increase of 23 cents per litre in fuel levies in April
•Old age and disability grants increase in April from R1,200 to R1,260
•Foster care grant will increase from R770 to R800
•Child support grant will increase to R290 in April and R300 a month in October
•Increases in excise duties on alcohol and tobacco products of between 5.7 and 10%
