Bulk of Reallocated Funds Goes to Higher Education

Finance Minister Pravin Gordhan

The biggest winner in this year’s budget was higher education, which scored R16bn of a total R21bn that was made available for reallocation over the next three years.

Apart from debt service costs – which now consume 13c of each tax rand and is the fastest-growing item on the budget – higher education grew the most of any spending category, up 9.2% over the medium term.

After higher education, the second-biggest beneficiaries of the reallocation, indirectly, were public servants, because an extra R1,6bn was set aside for post-retirement medical aid subsidies arising from the 2015 wage settlement.

The third-biggest winner was the HIV/Aids and tuberculosis grant which received an additional R1bn to expand anti-retroviral treatment. SA’s ARV programme now reaches 3.5-million people and is the largest public ARV programme in the world.

Spending allocations in this year’s budget are tight, with the expenditure ceiling lowered by a further R26bn since last February’s budget, mainly as a result of lower-than-expected revenue. The lowered ceiling also made it necessary to cut several budgets.

National government departments will be required to reduce their personnel budgets by R1,4bn over the medium term and their goods and services budgets by R2bn – a 1% reduction on the baseline.

“The proposals will reduce national departments’ spending on non-core goods and services such as travel, subsistence and catering,” the Budget Review states.

The biggest losers, though, are government agencies – SARS; the Passenger Rail Agency of SA; South African National Roads Agency; Sassa; the National Housing Finance Corporation and the Water Trading Entity all face cuts to their operating budgets.


Carol Paton
is a journalist at businesslive.co.za.

 This is an extract of an article that appeared in businesslive.co.za on 23 February 2017

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