Budget Speech, 2013

The NDP recognises that reducing the cost of living is essential for broadening economic participation and eliminating poverty. Alongside the "economic wage" earned through work, the "social wage" provided by government is a steadily rising contribution to the living conditions of working people and their families.

Substantial growth in social spending over the past decade has financed a threefold increase in the number of people receiving social grants, a doubling in per capita health spending, construction of 1.5 million free homes and the provision of free basic education to the poorest 60 per cent of learners. The impact is evident in improved living standards, expanded access to basic services and the changing landscape of both urban and rural areas.

Mister Speaker, the social assistance budget has increased by an average of 11 per cent 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 R120 billion next year.

It is also proposed that the old age grant means test should be phased out by 2016, accompanied by offsetting revisions to the secondary and tertiary rebates. All citizens over a designated age will be eligible for the grant, which will simplify its administration and address the disincentive to save that arises from the present means test.

Alongside social assistance, access to health care is a vital element in the social wage. There has been progress in reducing mortality and improving our HIV and TB programmes, and an expansion in medical and nurse training capacity is under way.

Pilot national health insurance projects have been initiated this year in ten districts, and will include improvements to health facilities, contracting with general practitioners and financial management reforms. A new conditional grant is introduced this year to enable the national Department of Health to play a greater role in coordinating these reforms.

The initial phase of NHI development will not place new revenue demands on the fiscus. Over the longer term, however, it is anticipated that a tax increase will be needed. 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.

Government’s contribution to housing and basic municipal services is a substantial component of the social wage. The budget for housing and community amenities has increased by over 16 per cent a year since 2008.

Progress continues to be made in extending access to housing, electricity, water, sanitation and refuse removal services. The main contribution of the national budget to the financing of household amenities is the local government equitable share. A new equitable share formula is proposed in this Budget, which will provide a subsidy of R275 for every household with a monthly income less than R2 300, or about 59 per cent of all households.

We also recognise that many businesses provide their employees with housing assistance or home loans. However, the current fringe benefit tax is unduly burdensome in cases where an employer transfers a house to a low-income worker at a price below market value. Tax relief is proposed to address this difficulty.

Mister Speaker, the social wage complements employment earnings and contributes to a more equitable and inclusive economic growth path. National health insurance and further steps in social security reform will also reinforce social solidarity and the decent work agenda.

Social spending, however, is not a substitute for job creation.

One of our most pressing development challenges is to expand work opportunities for young people. There has been extensive debate on how this should be done. The answer is that a wide range of measures are needed, including further education, training, public employment opportunities and support for job creation in the private sector.

To complement existing programmes, a tax incentive aimed at sharing the costs of employing young work-seekers will be tabled for consideration by Parliament. It will help young people enter the labour market to gain valuable experience and access career opportunities. A similar incentive is proposed for eligible workers of all ages within special economic zones.