Budget 2022

7 ways govt will spend its money over the next 3 years

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Money. (Duncan Alfreds, News24)
Money. (Duncan Alfreds, News24)

Government spending will for the first time ever breach the R2trn mark by 2021/22, according to Treasury's medium-term budget policy statement.

Finance Minister Tito Mboweni delivered the mini budget in Parliament on Wednesday. Government intends to spend R5.9trn over the next three years.

"Spending will grow faster than inflation. This is a lot of money. We can do more with it," he told Parliament.

The bulk of government's spend will go towards health and education; social grants; and providing basic services such as water and electricity. These account for 60% of government expenditure.

Within these the largest component of expenditure is compensation, according to the medium-term budget policy statement. Treasury noted that the public-service wage bill remains the single largest driver of government expenditure, "crowding out other spending".

However, the wage bill is expected to decline slightly in its share of total spending over the medium term.

At a press briefing ahead of the mini budget Treasury Director General Dondo Mogojane said limiting spend is imperative to reducing debt.

Government's seven spending priorities for the next three years are:

Learning and culture

This function will receive the largest spending over the medium-term to improve the quality of education, build scarce skills and support inclusive growth.

In addition to other programmes, government will urgently address school sanitation through the eradication of pit latrines, while working with private sector companies and donors. The education infrastructure grant will receive R3.4bn.

Community development

Funds will be provided for water, sanitation, electricity and shelter for the poor.

Local government's equitable share to provide free basic services to low-income households will growth 9.4% per year over the next three years to R82.2bn by 2021/22.

Economic development

Over the medium-term spend will focus on agriculture; land reform; incentives for investment in manufacturing; and research and development.

Funds will also be reprioritised to the clothing and textiles production incentive from special economic zones. Funds will also be reprioritised to the South African National Roads Agency to support the rehabilitation of the non-toll road network.

Peace and security

Among the spend allocated to the security cluster, Treasury pointed out that the judicial commission of inquiry into state capture, which started in March 2018, will be extended to 24 months.

"Government will consider an allocation in the 2019 Budget to enable the commission to continue its work in 2019/20. The commission is central to efforts to eradicate corruption and improve governance," according to the policy statement.

Health

Government will prioritise the improvement of primary healthcare and extending health coverage to South Africans.

Apart from the implementation of a minimum wage for the Community Health Worker programme, as well as 2 200 new medical posts being created, funds will also be provided to expand the antiretroviral treatment.

Treasury is working with the Department of Health on a payment mechanism for National Health Insurance.

Social development

Government will continue to provide R500m per year for the early childhood development conditional grant.

Additionally, the National Food Relief Programme will be handed over to provinces as of April 1, 2020.

Savings at paypoints are expected to be generated as the South African Post Office takes over grant payments.

General public services

Funding has been reprioritised to build capacity in the new research and Policy Advisory Unit in the Presidency.

Funding has also been reprioritised to increase SA's contribution to the African Union.

 * Visit Fin24's 2018 mini budget hub  for all the news, views and analysis.

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