Donwald Pressly
Big ticket items, including the funding of the National Health Insurance (NHI) programme, the burgeoning cost of social welfare grants and the cost of public servants are putting pressure on the fiscus.
Finance Minister Pravin Gordhan made no bones about the likelihood that “over the longer term” it was anticipated that a tax increase “will be needed” once the NHI programme grew. Currently the NHI was restricted to pilot projects and would not place new revenue demands on the fiscus, the minister reported in his Budget speech.
“The National Treasury is working with the Department of Health to examine the funding arrangements and system reforms required for NHI.
“A discussion paper inviting public comment on various options will be published this year,” he said.
The social grant beneficiary numbers have rocketed from 13.7 million in 2009/10 to 16.5 million this year and a projected 17.1 million by 2015/16. These cost the fiscus R79 billion in 2009/10, R104bn in 2012/13 and are projected to cost R113bn this year rising to just short of R130bn in 2015/16.
Gordhan noted that the social assistance budget had increased by an average of 11 percent a year since 2008/09 in part due to the extension of the child support grant to the age of 18.
“Spending on social assistance will rise to R120bn next year,” he noted.
Total main budget expenditure was set at R966bn in the 2012/13 fiscal year, rising to R1.055 trillion in 2013/14, meaning that about one rand in 10 is spent on social assistance.
The minister announced that the old age and disability grants would increase in April from R1 200 a month to R1 260, the foster care grant would increase from R770 to R800 and the child support grant would increase to R290 a month in April and R300 in October.
At a press briefing yesterday morning ahead of his Budget speech, Gordhan said he wished to pre-empt questions about the sustainability of the social assistance programme.
Acknowledging that there were “so many grant recipients”, Gordhan said that it was the government’s intention to develop a society “where most people earn their income through work”.
However, given the history of the country “and recognising the inequities of the past and where we come from… the inequities that exist today” there was a need to “do the right thing” to ensure that the poor were provided for while society was transformed.
Director-general Lungisa Fuzile said in the Budget Review that the government was committed to moderating growth in the public sector wage bill and aligning it with improvement in productivity. He noted that the government had negotiated a three-year wage agreement, which improved predictability of growth in the wage bill over the medium term.
In the Budget Review, compensation of employees had been estimated at R371bn in 2012/13 but the revised estimate was R376bn.
The budgeted amount for the 2013/14 fiscal year was set at R406bn, rising to R432bn in 2014/15.