BUDGET 2006/07
Budget 2006: the people's guide
15 February 2006
South African Finance Minister Trevor Manuel announced his National Budget for 2006/07 to Parliament on Wednesday. With the theme Towards Accelerated and Shared Growth, the Budget details plans to for greater investment in the country's infrastructure, health, social grants and education - as well as the expected annual increase in "sin taxes".
Manuel pointed out that the South African economy is currently growing at 5% a year, contributing to both job creation and rising incomes. Inflation will remain at about 4.5% on average over the next three years, protecting the buying power of South Africans - particularly the poor.
Various reforms and programmes to achieve more rapid growth and broad-based empowerment are being put in place through the Accelerated and Shared Growth Initiative (Asgisa), led by Deputy President Phumzile
Mlambo-Ngcuka.
This initiative looks at how to achieve increasing investment, improved productivity and skills development. More investment will help to improve the standard of living of South Africans, as it creates jobs, reduces poverty and increases the number of South Africans who participate in the economy.
More revenue, more expenditure
Revenue collection in 2005/06 was R41.2-billion more than expected, Manuel said. High revenue collection means more resources are available for spending on key social and economic priorities. The 2006/07 Budget increases expenditure by R106-billion over the next three years.
The 2006/07 Budget provides additional funds for the following:
- Improvement of Further Education Colleges and the introduction of no-fee schools;
- Fixing of hospitals and acquisition of medical equipment;
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Expanding social welfare services and better management of social grants;
- Building houses and community facilities and improving municipal infrastructure;
- Provision of safe and efficient transport by investing in the passenger rail network;
- Investment in transport infrastructure and better management of roads;
- Improvement of service delivery at public administration centres;
- Increased capacity to fight crime and improve the effectiveness of the courts; and
- Improving municipal facilities to deliver basic services to communities.
The division of nationally collected revenue this year takes special account of the need to improve local economic development, education, health and welfare services. With the establishment of the South African Social Security Agency, responsibility for social grants payments shifts from provinces to national government. In 2006/07, provinces will receive 42.3% of government revenue. National Departments will
receive 51.4% and local government will receive a total allocation of R26.5-billion.
Better management of social grants
Manuel said the government is committed to protecting the most vulnerable through monthly income support from the grant system. This helps to reduce poverty and improve the standard of living of poor South Africans.
The South African Social Security Agency has been established to make the payments of social grants more efficient and predictable. The agency will also work towards reducing corruption and ensuring that social grants reach those who need them the most.
In 2006, it is expected that the number of those who receive social grants will increase to 11-million, the minister said. The 2006 Budget also provides for an increase in social grants payment of more than the inflation rate, giving recipients a real income increase.
From April 2006, the old age pension and the disability grant will increase to a
maximum of R820 a month. The child-support grant, covering children up to age 14, will go up to R190 a month.
More public spending
The improvement of local service delivery is particularly important, Manuel said, as it is at the heart of service delivery for government. The 2006 Budget has prioritised municipal services and community infrastructure by allocating R28.4-billion over the next three years.
These services will include improving basic municipal infrastructure - including the provision of water and sanitation - as well as building houses and upgrading of informal settlements.
Training programmes to improve the administration of municipalities remain a priority, Manuel said, with the government making local transport infrastructure a priority. Some R1.3-billion has been allocated to improving commuter rail services and local public transport.
Infrastructure spending
The Budget confirmed
that investment in economic infrastructure - the key to economic growth and job creation - is one of the government's main priorities.
Over the next the years, the government will increase spending on infrastructure by R33-billion. These funds will be used for refurbishing hospitals, improving transport infrastructure, supporting for the Gautrain Rapid Rail Link, building World Cup stadiums and allocating resources to national, provincial and local roads.
State-owned enterprises reinforce the government's commitment to infrastructure, Manuel said, by planning R123.4-billion in economic infrastructure spending over the next three years. This includes R32-billion investment spending on rail and ports infrastructure, which will contribute to efficient and effective transportation of goods, as production by our mines and factories increase.
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