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The finance minister emphasised jobs creation and skills development in his budget. He was upbeat, saying South Africa had emerged from the global economic upheavals of the past few years.

UNEMPLOYED and unskilled Joburgers should be chuffed that the focal point of Finance Minister Pravin Gordhan’s R979,3-billion budget was on accelerating job creation, skills development and expenditure on infrastructural projects.

Finance minister Pravin Gordhan delivers his Budget Speech (Photo: GCIS website)
Finance minister Pravin Gordhan delivers his Budget Speech (Photo: GCIS website)
Gordhan tabled his budget in parliament on Wednesday, 23 February amid concerns about a huge unemployment rate and unsteady economic growth following a global recession less than a year ago in which over a million jobs were lost.

However, low income earners, especially those on the City’s indigent register, should be pleased that they will get an R8,1-billion tax relief, 50 percent of which will be directed to people earning R270 000 a year and less, 33 percent to those earning between R270 000 and R580 000, and 12 percent to those with salaries of between R580 000 and R1-million.

Gordhan said the recovery in tax revenue, to a revised estimate of R672-billion, came largely from personal income tax, VAT and customs duties. Joburg is a major gambling attraction,  making pertinent Gordhan’s announcement that gambling winnings – which include the national lottery – would be taxed from next year.

Starting from next month, tax will be payable only on income above R59 750 for taxpayers below 65 and R93 150 for those who are 65 years and older. Gordhan assigned about R5-billion to a youth wage subsidy, which will be debated further at the National Economic Development and Labour Council on Friday, 25 February.

Expenditure
Government spending is expected to increase over the next three years, although at a sluggish rate. Its net debt is set to rise from R526-billion at the end of 2008/09 to over R1,3-trillion by 2013/14. The impact of a slightly slower growth in revenue and additional expenditure was that the deficit for next year was half a percentage point of gross domestic product (GDP) higher than was initially projected.

“This reduction in the deficit over the next three years is consistent with stabilising the growth in our debt and the conduct of a countercyclical fiscal policy,” he explained.

The minister announced direct government spending of R100-billion on employment and skills training campaigns and an additional R800-billion on infrastructure. Such plans are aligned with the government’s New Growth Path, which aims to create at least five million jobs in the next 10 years. It is also aligned with President Jacob Zuma’s state of the nation speech on 10 February, in which he announced a new R9-billion job fund.

Housing
The homeless will also benefit
“This budget reflects the collective determination of the government to address with energy the challenges of creating jobs, reducing poverty, building infrastructure and expanding our economy,” said Gordhan.

Total spending on the housing, water and community amenities social wage would amount to R122-billion in 2011/12, rising to R138-billion in 2013/14. A further R3,6-billion was added for water infrastructure and services, including funding for the acid water drainage threat to cities on the Reef, such as Joburg, associated with abandoned underground mines.

Human settlements upgrading and municipal services would get R4,9-billion and two new grants to provinces and municipalities were proposed under the oversight of Sicelo Shiceka, the minister of co-operative governance and traditional affairs, to respond more rapidly to disasters.

A further R1,8-billion would go towards flood-ravaged municipalities and about R600-million to a longer-term recovery plan.

Infrastructure
Spending on economic and social infrastructure of more than R800-billion was projected over the next three years. Over R8-billion was to be added to specific health service interventions, laying the foundations for the National Health Insurance.

This included R1,2-billion to introduce family health care teams; R2,9-billion to improve quality in health facilities, medical equipment and hospital systems; and R1,4-billion for improved district-based maternal and child health services.

“The phasing in of National Health Insurance will require substantial reforms to address imbalances across the public and private sectors and expand health professional training,” the minister said.

About R808-billion would be allocated between national, provincial and local government in 2011/12, up from R743-billion in 2010/11. Of this, municipalities would have to share just under 9 percent. Additional allocations of R10,3-billion were made for transport infrastructure and services and a further R2,5-billion would go to municipalities for public transport systems and infrastructure.

Some R9,5-billion would be provided for expanding further education and training colleges and skills development. Colleges would receive R14-billion and sector education and training authorities over R20-billion; the National Skills Fund received R5-billion. Unemployed Joburgers will benefit from about R73-billion earmarked for the Expanded Public Works Programme (EPWP).

 

Health
Family health care teams will be introduced
Gordhan confirmed that South Africa was indeed out of the global economic meltdown. “Strong commodity prices, low interest rates and faster global growth, have been the main forces behind our economic recovery,” he said.

 

Growth
Substantial GDP growth was projected to reach 3,4 percent in the current fiscal year, 4,1 percent in 2012 and 4,4 percent in 2013. Nonetheless, he said the 7 percent growth rate envisaged by opposition political parties, unions and doomsayers to enable the government to reach its target of five million jobs by 2020, could be unlikely.

The fiscal and monetary policy would continue to work in partnership and focused on the 2011 budget speech, with targets to control inflation, and keeping the fiscal policy countercyclical within a sustainable long-term framework.

Inflation was forecast to remain within the target range of 3- to 6 percent, edging towards the upper end of the range in 2013 as the economy strengthened. Increasing food and oil prices represented risks to the inflation outlook, he said.

Gordhan said about R150-billion would go towards direct and indirect investments to help fulfil the government’s objectives. Half of that sum would be directed to short-term job opportunities provided by the EPWP in local communities, and a third would come in the form of tax breaks and other incentives to entice the private sector to hire more workers.

He admitted that the 42 percent rate of unemployed 18- to 29-year-olds was still a challenge; however, a youth wage subsidy would be introduced in April next year to deal with the quandary. “We must offer young work-seekers real hope where at present there is despair.”

Companies employing first-time job entrants would receive up to 50 percent of employee salaries for new workers or 20 percent for existing workers. “In response, we must take measures to ensure that our young people can look forward to decent work in productive, competitive enterprises.”

He said the government needed to ensure that macroeconomic stability was maintained, with necessary adjustments supporting enterprises and job creation.

Consolidated expenditure is projected to increase from R897-billion in 2010/11 to R1,2-trillion in 2013/14, with non-interest spending on public services growing by an average of 8 percent a year. “Our aim is to put development first and not dependence on welfare.”

Education

Education
Education will benefit from increased government spending in the next three years
Teachers would also benefit from adjustments in their remuneration, with an allocated budget of R24,3-billion to be added to education and skills spending over the next three years, which would rise from R190-billion next year to R215-billion in 2013/14.

Consolidated government transport spending would amount to R66-billion next year, rising to R80-billion by 2013/14. Total spending on the integrated national electrification programme would increase to R3,2-billion in 2013/14.

With effect from April, the monthly state old age grant and the disability and care dependency grants would rise by R60 a month to R1 140; for pensioners over the age of 75, the old age grant would rise by a further R20 a month to R1 160; foster care grants would increase by R30 to R740 and the child support grant would increase from R250 to R260, and to R270 in October.

The levy on electricity generated from non-renewable and nuclear energy sources would increase by 0,5c/kWh to 2,5c/kWh from April 2011. The increase should not affect electricity tariffs, as it had already been taken into account in the National Energy Regulator’s approved tariff structure, he elaborated.

“I am pleased to report that tax revenue has recovered during 2010/11. The revised estimate is R672-billion or 12,3 percent higher than last year. Personal income tax has increased strongly as have VAT receipts and customs duties,” said Gordhan.

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