#MidTermBudget: Where government prioritises spending
National Treasury is shifting money to fill gaps in education, social services and health care.
|||Pretoria - As National Treasury seeks to clamp down even further on government spending, it is also shifting money to fill gaps in education, social services and health care.
However, government continues to feel spending pressures, which National Treasury says in the Budget Policy Statement are mounting across public finances. Among these is that the 2015 wage settlement, which ends in March 2018, continues to limit the availability of funds for crucial public services.
National Treasury adds that, in the health sector, higher salaries, increasing use of services and higher import prices for medicines are straining budgets. In addition, funding for free basic water and electricity for the poor is being stretched more thinly as utility price increases outpace inflation.
Congestion is growing on the national road network and the condition of many provincial roads is deteriorating, but there is uncertainty about the funding model for expansion and maintenance, says National Treasury.
The document notes most of the spending growth will go towards core programmes such as social services and infrastructure in a bid to boost economic growth. Gross domestic product growth is projected to come in at 0.5 percent this year, down from the 0.9 percent Finance Minister Pravin Gordhan predicted in February. It is expected to reach 2.2 percent in 2018.
Additional cash
Additional allocations to post-school education and training will be the fastest growing element of the budget. University subsidies will grow at an annual average rate of 10.9 percent and allocations to the National Student
Financial Aid Scheme (NSFAS) at 18.5 percent, providing support to underfunded university students, many of whom have taken to the streets in the #FeesMustFall campaign.
An additional R17.6 billion is needed for higher education.
Public works programmes that contribute directly to employment will also continue to grow rapidly, says National Treasury.
It adds that grants that support people living with HIV/AIDS will increase by an annual average of 13.6 percent each year. "Greater emphasis will be placed on improving spending quality and implementing cost-containment measures."
Additional funding requirements also include a higher allocation to the national school nutrition programme grant to offset the rising price of food.
In addition, the child support grant is being raised by R10, to R360, to keep pace with inflation.
Total government spending is expected to grow at 7.6 per cent in nominal terms over the next three years.
Funding
To fund critical requirements and stay within the reduced expenditure ceiling, government will have to make available R16.7 billion in 2017/18 and R23.2 billion in 2018/19 from existing budgets.
"A drawdown on the contingency reserve will contribute to these requirements, and a number of provisional allocations made in the previous budget will be rescinded. A portion of the resources to support university students will be found elsewhere from within the post-school education system."
National Treasury says reductions to baselines will make R18.7 billion available over the next three years. Government also proposes to reduce the operating budgets of all national departments by 1.1 per cent. Transfers to some public entities that receive more than R300 million per year from the budget are also to be cut, contributing R5.6 billion over the medium term.
Government is proposing reductions to the spending ceiling of R10 billion in 2017/18 and R16 billion in 2018/19 and headcounts will also be moderated through attrition and freezing posts.
IOL