South Africa

Budget 2015: Where’s the money at?

By Rebecca Davis 26 February 2015

Finance Minister Nhlanhla Nene’s maiden budget produced some nasty news for better-off South Africans. In terms of provinces, government departments and entities, though, who gets which slice of the pie? REBECCA DAVIS takes a look at some of the stand-out – or just slightly interesting – facts and figures.

National government > provincial and local government

The 2015 Budget allocates 49,7% of “nationally raised funds” to national government. 43.1% goes to provincial government, and just 9% to local government.

Biggest provincial winner: KwaZulu Natal. The provinces get their slices based on population growth and demand for services. KZN will receive R82.25 billion, with Gauteng in second place at R73.41 billion. The province which takes home the least is the Northern Cape, given R10.73 billion this year.

Did you know: “Over half of the revenue generated by provinces is from motor vehicle licenses”?

The single function government spends most on is basic education. Spending on basic education over 2015/16 is estimated at R203 468 billion. Over the next three years, roughly R640 billion will go towards basic education.

Does that mean kids will have textbooks? Hopefully. From January 2016, the delivery of all books to schools will be managed centrally. This is part of an attempt to improve supply chain management in the public sector. Some 170 million workbooks are also being distributed to learners in 23,562 public schools.

Health is the second most-funded single function. Consolidated government expenditure on health for 2015/16 is estimated at R157,3 billion. R1,5 billion of that is going to the National Institute of Communicable Diseases.

What’s happening with the National Health Insurance? Not much. Nene announced that there had been “progress” over the past year in preparing for the NHI, but it’s not directly catered for in the budget, suggesting its implementation is still some way off, though Nene indicated that Treasury would be releasing a “discussion paper on financing options” shortly.

VAT’s not going up, right? No, it’s still at 14%. But it could still go up in future. Asked if government was ringfencing a potential VAT increase to fund the transition to the NHI, Nene said it was “too early to say”.

We’re spending a lot servicing our debt. R126,4 billion, to be precise. The total state debt is expected to rise to 42,5% of GDP this year. If we don’t deal with the debt issue, Nene said, “by 2016 we’ll be paying more interest then [spending on social grants”.

16,4 million South Africans will benefit from the increase in monthly social grant payments. There were 16,4 million registered social grant beneficiaries registered as of December 2014. In total, government spending on social protection should reach R155,3 billion this year. Nene also indicated that social grant amounts would be re-assessed in October.

Most of our defence, public order and safety funding is going on police. Roughly 48% of the spending in this regard – R82,7 billion – will be allocated to police services. R492 million is going towards making courts more efficient and effective, including hiring more court support personnel, public defenders and prosecutors.

The office of the Chief Justice is becoming a new department. This is aimed at strengthening the independence of the judiciary, Nene said. From 1 April 2015, it will operate with a budget of R5,2 billion.

Military veterans are about to benefit. R834 million of the defence budget has been earmarked for giving military veterans health care and housing services.

Fracking hasn’t started yet and it’s already costing us R108 million. This amount has been allocated for researching and regulating the licensing of “shale gas exploration and hydraulic fracturing”.

Thuli’s finally getting (a bit) more money. Public Protector Thuli Madonsela’s institution was budgeted R199, 2 million for the last financial year, but their spending came to R226 million. Madonsela’s pleas for a budget increase appear to have been (somewhat) heard. This year, the chapter 9 institution is getting R246,1 million.

Speaking of Chapter 9 institutions which only have the power to make ‘recommendations’: The South African Human Rights Commission has been granted R226 million this year.

Charity may begin at home, but…R7,1 billion is budgeted for “external affairs and foreign aid”.

The South African government has an impressive international property portfolio. The Department of International Relations owns 133 properties internationally and rents 800 further properties. Renting is a false economy for us: “Presently, the department spends approximately R575 million per year on leases in countries where it does not own properties”, the Budget notes.

What did the two largest opposition parties have to say about the Budget after the speech?

The DA’s Mmusi Maimane acknowledged that this was a “very difficult Budget”, but accused the government of passing more and more of the deficit burden on to ordinary South Africans. He added that the party would have liked to see an announcement that Eskom was being “broken up”, and an announcement that Cabinet – “too big” – was to be cut down in size.

The EFF’s Julius Malema told journalists that the Budget was a classic example of a “government in cahoots with capital”, never acting out of the interests of working-class South Africans. Malema said that the EFF would have liked to see an increase in corporate tax rather than in personal income tax, in order to “relieve individuals’ burden”. DM

Photo: Minister Nhlanhla Nene delivering his 2015 Budget Speech held in the National Assembly, Parliament, Cape Town. 25/02/2015, Ntswe Mokoena, DoC

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