There was no gravy in Tito Mboweni’s national budget. In fact, there was no meat or potatoes either.
Border-Kei Chamber of Business (BKCOB) president Chris Ettmayr said several things in the budget puzzled him but his biggest concern was that while Mboweni had announced a few positives, how could business be certain that by Friday the cabinet would not do an about-face, as it had done repeatedly with Eskom?
Ettmayr said: “As a chamber, our members need a concrete commitment. Last night across the country boards would have met to discuss strategies to make the best use of the budget. I hope they have not wasted their time.”
In his speech, the finance minister has given with one hand and taken away with the other, allocating R2.1bn in the budget for a three-month extension of the special Covid-19 social relief of distress grant, but cutting welfare grants for the first time in more than a decade.
In a move set to increase hardship among SA’s poorest households, the National Treasury has allocated increases to the welfare grants that do not keep pace with inflation, which it estimates will be 3.9% in 2021-2022.
SA has an extensive welfare grant system that covers more than 18 million of the country’s most vulnerable people, including children, pensioners and people with disabilities.
This welfare net excludes working-age adults who are unemployed, therefore in 2020 the government established several short-term relief measures to try to cushion the economic hardship triggered by the lockdown it imposed in response to the coronavirus pandemic.
These measures included a R350 per month social relief of distress grant for jobless people who were not eligible for unemployment insurance, which was slated to expire at the end of January but was extended until the end of April by President Cyril Ramaphosa in his state of the nation address in early February.
The government also topped up the child support grant by R500 per caregiver, and the old age pension by R250 per month between May and October 2020.
The Treasury estimates the government will have spent R20.5bn on the social relief of distress grant by the end of April.
This year’s budget sees the child support grant increase from R445 to R460 a month, a nominal increase of 3.4%; the care dependency, old age, and disability grants grow from R1,860 to R1,890 a month, a nominal increase of 1.6%; the grants for war veterans and people over the age of 75 rise from R1,880 to R1,910, a nominal increase of 1.6%; and the foster care grant rises from R1,040 to R1,050 a month, a nominal increase of 1%.
Over the medium term, the social grants budget is reduced by 2.2% even as the total number of beneficiaries is expected to increase by 300,000.
Social grants spending is to be reduced by R5.8bn in 2021/2022, R10.7bn in 2022/2023, and R19.5bn in 2023/2024.
The speech did not waver from the hard line taken by the Treasury on the three-year wage freeze faced by public-sector workers.
It said it would ensure future wage negotiations are done in line with the country’s prevailing economic conditions.
Ian Scott of Momentum Investments said that there were many positives in Mboweni's budget speech, such as easier access to bonds and a Land Bank bailout of R5bn in year one and R1bn in the following two years.
“However, implementation, as always, will be key,” Scott said.
Scott’s colleague, Sonja Saunderson, said she appreciated Mboweni’s regular reminders of the importance of public and private partnership required for these plans to work.
“Corporate SA has an important role to play. Government is asking the investment industry to support infrastructure development and the private and public partnership is posing a lot of opportunities.”
“The increased focus on youth employment will support our unemployment and skills deficit,” said Drayton Brown, who works with Ettmayr at BKCOB.
He said India was set to grow at 11%, China at 8% but SA was projected to expand at just 3%, and “that might be optimistic”.
“We need to do something that is right out of the box. With debt at 88% of GDP, we can’t shuffle deckchairs around the Titanic.
“At least 60% of our youth do not have jobs, and while there is mention of plans to improve this, it cannot be the same old song.”
His primary concern was that patience among young people was eroding fast.
“The minister spoke of Archbishop Emeritus Desmond Tutu’s phrase of ‘hope being light’ and of a ‘clear sky beyond the clouds’.
“Young people are not seeing the light. It is time to forget [about] bailing out SOEs and start putting that cash in massive youth job-creation programmes.”
Treatment Action Campaign general secretary Anele Yawa and DA MPL Jane Cowley said the speech was scanty in detail considering the many crises faced by the Eastern Cape health system.
Yawa said: “In January, about 600 nurses were told the would not be hired. This lack of filling vacant funded posts, and corruption, are some of the problems facing the province.
“How are we going to provide [additional] human resources? Most people have to fend for themselves in order to get to the nearest hospital because there are not enough hospitals.
“The majority of hospitals in EC are in a state of collapse.”
He said Mboweni should have detailed how they were to be funded.
Yawa said: “We thought the minister of finance would prioritise healthcare services more than other portfolios.
“All the other provinces are in the same position as the Eastern Cape.”
Yawa said the diversion of funds from the HIV/Aids programme budget to fighting the Covid pandemic had resulted in fewer people testing for HIV and a lag in medication for some Eastern Cape patients.
The Dispatch previously reported that as a direct result of the non-filling of posts, HIV testing had dipped from a targeted 874,246 tests to 713,513, and condom distribution fell from a projected 46- million to 26-million units in 2020.
“Now he doesn't mention a thing about that money,” Yawa said.
Cowley, who sits on the provincial health committee, said the province could get in excess of R1bn from the additional funds announced by Mboweni.
Cowely said a tight lid needed to be kept on that money.
She said the speech wasn’t detailed enough, but she was pleased of the increase to the equitable share for provinces.
She said this should assist officials for “proper preparation for the third wave” of Covid-19 infections. — Additional reporting by Claudi Mailovich and Tamar Kahn
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