Nene trims fat, tackles bread and butter issues

2014-10-22 14:39

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More spending for universities, service delivery, social grants, and teachers; and less spending for government consumption. This is the mini-budget Finance Minister Nhlanhla Nene unveiled in Parliament today.

Officially known as the medium-term budget policy statement, the document showed that Treasury proposes to spend R4.3 trillion on government expenditure in the next three years.

Post-school education and training would register the highest rate of growth at 8.5% each year, with almost R200 billion going towards the sector. It was included in one of three priority spending areas, lumped in with skills development in an R800 billion plan to expand the country’s skills base.

A Treasury official said the National Students Financial Aid Scheme (NSFAS), would be partly responsible for the largest share of this spending as it was funded by the Department of Higher Education and Training.

This is welcome news as student protests rocked campuses earlier this year after NSFAS ran out of money. The scheme said more students were enrolling than it could cover.

The 2014 Estimates of National Expenditure showed the scheme’s parent department received R36.8 billion, of which R6.5 billion went to NSFAS. Projections for 2016/17 are that NSFAS will receive R6.8 billion, allowing for 116 000 university enrolments. The figures for 2017/18 are still being estimated, said the Treasury official.

Service delivery protests also made headlines this year, and Nene has reacted by making R560 billion available to address this, along with municipal infrastructure development and housing over the next three years. This will increase 8.1% a year, driven mainly by investments in commuter rail transport.

Other big-cheque items are social protection (R500 billion over three years, a 7.1% annual increase), with social grants making up most of this spending; health (6.4% to R500 billion), most of which covers the delivery of anti-retroviral drugs reaching 2.7 million people; and basic education (6.3% to R640.4 billion), most of which would go towards teacher salaries.

“There will be real growth in spending on local development and social infrastructure,” said Nene. “As in the past, the largest allocations will go to education health and social protection.”

But the cost of servicing the government’s debt is expected to grow faster than the entire budget. Accounting for the largest expected increase on the consolidated expenditure statement at 9.3%, these will cost government R415.6 billion over the medium term.

“Rising debt levels, if left unchecked, would absorb more and more of our spending,” said Nene.

“The end result would be less money to spend on improving the lives of our people.”

Over the next three years, government’s gross debt stock is projected to increase by R590 billion, bringing total debt to R2.4 trillion.

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