MINI-BUDGET
Manuel allocates R78bn for social spending
Posted Wed, 26 Oct 2005
Government will spend an additional R78.3-billion over the next
three years on improving public services, infrastructure and
boosting the fight against crime, Finance Minister Trevor Manuel
announced on Tuesday.
According to his Medium-Term Budget Policy Statement (MTBPS)
tabled in the National Assembly, the revised growth outlook, robust
revenue performance and a steadily declining burden of debt service
costs again allows for substantial increases in spending plans over
the next three years.
Total spending will increase from the revised estimate of R415.8-
billion in 2005/06 to R474-billion in 2006/07, and R568.7-billion
in 2008/09.
Government investment spending on key transport networks —
road, rail, and ports infrastructure — will increase markedly in
2006 and beyond.
Stepped up investment in the residential and local built
environment — housing, community services, water and electricity —
has also been prioritised.
Following a period of considerable growth in income support to
the poor, the priority now shifts to strengthening and improving
health care and education.
Social assistance grants to the elderly, the disabled, and to
support vulnerable children, now reach more than 10 million
beneficiaries.
Social and welfare spending in 2006/07 is estimated at R82.2-billion, increasing to R97.2-billion in 2008/09.
Over the same period, spending on education is expected to rise
from R91.2-billion to R112.8-billion, and health from R53.5-billion to
R64.6-billion.
The budget for police, prisons and courts is expected to go up
from R51.5- to R60.8-billion, while the housing and community
development allocation goes from R25.1-billion to R30.6-billion.
The estimated budget for transport and communications rises from
the 2005/06 revised figure of R19.8-billion to R26-billion in
2006/07, and to R30.4-billion in 2008/09.
The document says GDP
growth is expected to moderate to just
above four percent in 2006, before increasing to between 4.4 and
five percent in 2007 and 2008.
This will be mainly on the strength of increased public
infrastructure investment and industrial expansion.
The current account of the balance of payments is expected to
record a deficit of 3.5 to 4.1 percent of GDP over the period
ahead.
Inflation is expected to rise to 5.6 percent in the first
quarter of next year, declining thereafter as oil prices abate.
Inflation reached a low point of 3.1 percent in February this
year, but increased to 4.8 percent in August, mainly because of the
marked rise in oil prices this year. However, inflation
expectations remain moderate.
The revised revenue estimate for 2005/06 is R400-billion — R30-billion more than the February budget estimate.
Tax receipts have been boosted by the overall vigour of the
economy, robust consumer spending, higher than
expected company
profits, and rapid growth in exports.
Debt service costs this year are expected to be R52-billion, or
R1.3-billion less than anticipated in February.
The revised estimate of total national budget spending of R416-billion results in an expected deficit of R15.7-billion, or one percent of GDP. The deficit is projected to average about 2.1 percent over the next three years.
The tax reform agenda for 2006/07 includes inflation adjustments
to monetary thresholds, including income tax brackets, transfer
duties, and the graduated rate structure of small businesses.
Tax reforms addressing retirement funds will also be considered,
as will making certain contributions, to conservation, environment
and animal welfare, tax deductible.
Sapa
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