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Budget Speech 2019

Medium-term spending plans


Let me start my presentation on government’s spending priorities by taking you through the key interventions government is taking to reduce compensation spending.


Wage bill adjustments


The public wage bill is unsustainable. We must shift expenditure to investment. National and provincial compensation budgets will be reduced by R27 billion over the next three years.


The first step is to allow older public servants who want to do so, to retire early and gracefully.


This will save an estimated R4.8 billion in 2019/20, R7.5 billion in 2020/21 and R8 billion in 2021/22. In time this will be complemented by limits on overtime and bonus payments as well as pay progression. The system of staffing our diplomatic missions is unjustified and should be reviewed urgently.


As a gesture of goodwill, members of Parliament and provincial legislatures and executives at public entities will not be receiving a salary increase this financial year.


My colleague, Minister Ayanda Dlodlo will outline the details of the early retirement framework during the course of the week.


Fulfilling government’s programme of action


The budget proposes total non-interest spending over the next three years of R5.87 trillion.


This after taking into account measures taken over the three years to consolidate the public finances. The largest allocations are R1.2 trillion for learning and culture, R717 billion for health services (including National Health Insurance) and nearly R900 billion for social development.


The President set us these five tasks:

1. Accelerate inclusive economic growth and create jobs.
2. Improve the education system and develop the skills that we need now and into the future.
3. Improve the conditions of life for all South Africans, especially the poor.
4. Fight corruption and state capture.
5. Strengthen the capacity and capability of the state to address the needs of the people.


Mr President, let me illustrate how the Budget talks to your priorities.


Accelerate inclusive economic growth and create jobs


The private sector is the key engine for job creation. Government’s policy actions aim to end the uncertainty that has undermined confidence and constrained private sector investment.


The R300 billion worth of pledges made at the Investment Conference last year demonstrate that there is pent-up private sector demand if we grab hold of the opportunity.


Visa requirements are being relaxed to make it easier for tourists to visit and invest in South Africa.


We have also increased the income eligibility thresholds for the highly successful employment tax incentive scheme. Jobs for 1.1 million young people are supported by this programme.


Data costs must fall!


My fellow Minister will shortly be issuing policy direction to ICASA for the licensing of spectrum.


I will work relentlessly with the Minister until this matter is resolved. This includes resourcing ICASA for this mandate.


Government has allocated R19.8 billion for industrial business incentives, of which R600 million has gone to the clothing and textile competitiveness programme. This will support 35 500 existing jobs and create about 25 000 new jobs over the next three years.


The Jobs Fund is a vital complement to private sector job creation. The Fund has disbursed R4.6 billion in grant funding, and created well over 200,000 jobs since inception. The allocation to this Fund will rise over the next three years to R1.1 billion.


R481.6 million is allocated to the Small Enterprise Development Agency to expand the small business incubation programme.


A robust debate on land is taking place in South Africa. We are supporting private sector investments in agriculture by emerging farmers. R1.8 billion is allocated for the implementation of 262 priority land-reform projects over the next three years. R3.7 billion is set aside to assist emerging farmers seeking to acquire land to farm.


The Land Bank will support smallholders, and leverage partnerships with other financial institutions. It aims to disburse R3 billion in the next fiscal year.


Improve the education system and develop the skills that we need


Learning and culture receives the largest share of spending as Government continues to provide access to quality basic and higher education, develop skills, provide training and contribute to social cohesion.


Over R30 billion is allocated to build new schools and maintain schooling infrastructure. An additional R2.8 billion is added to the School Infrastructure Backlogs grant to replace pit latrines at over 2 400 schools. But to make certain these schools are effective centres of learning will also require parents to be a visible and constructive part in the governance of schools.


Fully subsidised education and training for the poor is government’s flagship higher education intervention. Over the medium term government will spend R111.2 billion to ensure that 2.8 million deserving students from poor and working class families obtain their qualifications at universities and TVET colleges.


Finally, the global renown of South Africa’s art and culture is an expression of our soft power and our heritage. Our public finance choices should reflect an intention to preserve and add to our cultural canon. Officials from the National Treasury and the Department of Arts and Culture will consider proposals for the development of a new national theatre, a new national museum, and also consider financial support for the National Archives, a national orchestra and ballet troupe.


Improve the conditions of life for all South Africans, especially the poor


In the fight against poverty and inequality, Government has allocated R567 billion for social grant payments. In 2019, the grant values will increase as follows:

R80 increase for old age, disability, war veterans and care dependency grants.
R40 increase for the foster care grant to R1 000.
The child support grant will increase to R420 in April and to R430 in October.


Health services


In health, we need simple, effective interventions. We need more doctors and nurses. R2.8 billion has been reprioritised to a new human resources grant and R1 billion for medical interns. R1 billion has been added to raise the wages of community health care workers to R3500 per month. Finally about R319 million is allocated to eliminate malaria in South Africa.


Access to housing


Government continues to focus on supporting people to own their own homes. Funding totalling R14.7 billion over the two outer years has been reprioritised to two new conditional grants for informal settlements upgrading which will enable these households to have access to basic amenities.


Our Help to Buy subsidy helps first-time home buyers purchase a home. As a pilot, it gets R950 million over three years.


Economic infrastructure


The South African National Roads Agency is allocated an additional R3.5 billion over the next 3 years to improve non-toll roads. In October, I emphasised the importance of the user pay principle. It is a principle that we should uphold. In any future negotiations, this should be borne in mind.


Combating crime and corruption


Over the past couple of years South Africa has been grappling with corruption. We must root this out. National Treasury and the Department of Justice will work swiftly to support the establishment of the new Investigating Directorate in the NPA.


Strengthen the capacity and capability of the state to address the needs of the people My colleagues at provincial and municipal level are working as best as they can to deal with rising wage costs and reduced transfers. Provincial treasuries and the municipalities have a partner in the National Treasury to work with on their constitutional obligations. Grants such as the Financial Management grant, and the Municipal Systems Improvement grant are available.


The Public Audit Excess Fee Bill tabled today strengthens the Auditor General’s role in municipalities.


We need to build a strong culture of payment in our country.


Collecting the revenue due to the state is the underlying foundation of our democracy, of building a nation, and it is our duty to pay for services especially if we can afford to do so.


National Treasury will lead a process to encourage those, including government departments, who owe money to municipalities, to pay for services.


Finally, service providers must build what they promised at a reasonable rate.


Thuma Mina. Pay your municipal bills on time.