Madam Speaker,

This Budget provides for the carry-through costs of the 2022/23 wage increase. In addition, the Budget includes pay progression, a housing allowance, and other benefits for civil servants.

The Budget also provides additional funding for safety and security, education and health. In health, the funds are to hire new staff, address shortfalls in compensation budgets, and retain additional health workers appointed during the pandemic, as well as to clear the backlog in health services.

As for the wage negotiations that just commenced, the budget does not pre-empt the outcomes.

Nevertheless, this and future wage negotiations must strike a balance between fair pay, fiscal sustainability, and the need for additional staff in frontline services.

An unbudgeted wage settlement will require very significant trade-offs in government spending because the wage bill is a significant cost driver.

It will mean that funds must be clawed back in other ways.

Mainly, this will mean restricting the ability of departments and entities to fill non-critical posts. It will also mean achieving cost-savings from major rationalisation of state entities and programmes.

As indicated by the President in the SONA, the National Treasury has already identified where large savings can be achieved.

In this regard, during the upcoming financial year, the National Treasury will work with the Presidency on concrete proposals to achieve savings by rationalising or closing public entities. Recommendations will be made to the President and Cabinet and should form part of the next budget.