Budget Speech 2018 Medium term expenditure and the division of revenue

 

Honourable Speaker,

 

Allow me to now deal with how government will be spending its limited resources.

 

Consolidated spending will increase from R1.67 trillion in 2018/19 to R1.94 trillion, representing a nominal annual average growth of 7.6 per cent, or 2.1 per cent in real terms.

 

In aggregate, government will be spending R792 billion on basic education, R668 billion on health and R528 billion on social grants, over the medium term.

 

This coming fiscal year alone, government has allocated over R200 billion for peace and security and another R200 billion for economic development to build a safer country and to grow our economy inclusively.

 

The largest reallocation of resources towards government’s priorities was on higher education and training, amounting to additional funding of R57 billion over the medium term.

 

As a result, this is the fastest-growing spending category, with an annual average growth of 13.7 per cent.

 

Accordingly, this government is proud to implement a major step forward towards our ultimate goal of guaranteeing access to higher education and training for all South Africans who qualify based on merit, not class position.

 

This follows former President Zuma’s response to the Heher Commission of Inquiry into Higher Education and Training.

 

Government will phase in fee-free higher education and training to students from poor and working-class families.

 

This means that all new first-year students with a family income below R350 000 per annum at universities and TVET colleges in the 2018 academic year will be funded for the full cost of study.

 

This will be rolled out in subsequent years until all years of study are covered.

 

Returning NSFAS students at university will have their loans for 2018 onwards converted to a bursary.

 

This is an important step forward in breaking the cycle of poverty and confronting youth unemployment, as labour statistics show that unemployment is lowest for tertiary graduates.

 

Higher and further education and training is being made accessible to the children of workers and the poor.

 

Basic education remains a key focus in the 2018 Budget.

 

Over the medium term, R3.8 billion allocated to the School infrastructure backlogs grant will replace 82 inappropriate and unsafe schools, and provide water to 325 schools and sanitation to 286 schools.

 

The Education infrastructure grant is also allocated R31.7 billion over the medium term to build new schools, upgrade and maintain existing infrastructure, and provide school furniture.

 

Meals will be provided at 19 800 schools for about 9 million learners each school day through the National school nutrition programme grant, which is allocated R21.7 billion over the medium term.

 

39 000 Funza Lushaka bursaries, disbursed via the National Student Financial Aid Scheme, at a cost of R 3.7 billion for prospective teachers in priority subject areas such as mathematics, science and technology will be provided over the next three years.

 

Our social protection systems continue to protect the poorest and most vulnerable and government has continued progressively on the path towards National Health Insurance (NHI).

 

Over the medium term, the NHI is allocated an additional R4.2 billion, funded through an amendment to the medical expenses tax subsidy.

 

Overall, government will be spending R205 billion on health in 2018/19 growing to R240 billion by 2020/21.

 

Government has taken deliberate steps to adjust social grant values above inflation to at least partially cover for the proposed increase in VAT, therefore:

 

These adjustments resulted in social protection spending increasing by 7.9 per cent per year, much above inflation.

 

As highlighted by the President in the State of the Nation Address, government will ensure that social grants will continue to be paid without disruption.

 

The 1st round of projects for the budget facility for infrastructure was received in 2017. The facility received 64 projects with an estimated funding requirement of R139 billion.

 

Of the projects received, 38 met the requirement for evaluation. The evaluation process is currently being finalised and projects that meet the criteria are expected to receive approval for funding in the 1st quarter of 2018/19.

 

The BFI should also assist us in attracting private investment for projects.

 

Government continues to support South African companies to grow and to become more competitive through incentives in the form of grants, loans and tax allowances.

 

R18.8 billion is allocated for industrialisation incentives over the medium term of which an additional allocation of R3.3 billion is allocated for the Economic Competitiveness and Support Package to support growth and job creation in support of the Industrial Policy Action Plan.

 

Government is spending a significant amount on small business support in the medium term.

 

This money aims to foster and support entrepreneurs like Ayanda and Siyanda who are here today as our special guests.

 

I would like to invite them please to stand up wherever they are.

 

They have founded a clothing label called PEX Lifestyle, and describe themselves as “true hustlers, not waiting for government programs or handouts.”

 

We salute your enterprising spirit and call on the public to support them and others like them.

 

Of the incentives budget, R4.9 billion is allocated for industrial infrastructure projects over the medium term for special economic zones, government-owned industrial and critical infrastructure projects to promote industrial development and  increase investment and exports of value-added commodities.

 

To strengthen global market access for South African agricultural products the Department of Agriculture, Forestry and Fisheries received an additional allocation of R40 million over the MTEF to upgrade infrastructure and equipment for analytical services laboratories.

 

This will provide assurance to global trading partners that South African agricultural products meet internationally recognized standards for human safety, thereby facilitating our ability to export unhindered.

 

In line with the outcomes of Operation Phakisa on Agriculture, Rural Development and Land reform, the Department of Agriculture, Forestry and Fisheries aims to create and support 450 sustainable and profitable black commercial producers participating in prioritised value chains over a five-year period.

 

An estimated R581.7 million is expected to be reprioritised for the black producer commercialisation programme.

 

By creating opportunities for black agricultural producers, we are radically transforming the agricultural sector of our economy.

 

Over the medium term, the Department of Rural Development and Land reform, intends to accelerate the settlement of restitution claims with plans to finalise 2 851 claims at a budgeted amount of R10.8 billion.

 

Accelerating land reform has become urgent and the Department of Rural Development and Land reform has set aside R4.2 billion for the acquisition of about 291 000 hectares of strategically located land.

 

The Judicial Commission of Inquiry into State Capture is ready to commence with its work.

 

Budget allocation for the Commission will be considered during the 2018 Adjustment Budget once its costing is finalised.

 

The preparations for the 2019 elections are well ahead, supporting one of the crucial pillars of our young democracy.

 

The challenges relating to the address harvesting and to record proper addresses of eligible voters as prescribed by the Constitutional Court are being resolved and will be concluded in the first quarter of the 2019 financial year.