Key principles focused on in the budget speech

By Cindy Witten
11 February 2009

In this years’ Budget Speech, Finance Minister, Trevor Manuel focused on five key principles, namely:

- Protecting the poor
- Job creation
- Investing in infrastructure
- Promoting competitiveness
- Sustainability of public finances

Protecting the poor

Government has allocated R25 billion to the budgets of provinces. This money is to be used for education and health care. A further R13 billion is allocated for social assistance. R4 billion is set aside to the school nutrition programme, while R2.5 billion is allocated to municipalities for basic services.

However, Manuel said that no matter how much funding is pumped into these programmes, government can only be satisfied once the quality of life of the poor has improved.
“… that children are being properly educated, that learners have access to food in schools, that mothers visiting clinics get proper and dignified treatment, that the criminal justice system is putting those who rob and thieve behind bars,” said Manuel.


Job creation

Manuel says that government plans to work with businesses and organised labour to accelerate skills development. R3.7 billion has been allocated for low-income housing projects and R4.1 billion for the second phase of the expanded public works programme.



Investing in infrastructure

R787 billion will be spent on investments in infrastructure. According to Manuel these investments are the “cornerstone of our (governments) development contract with business, organised labour and other social partners”. The budget for public transport, roads and rail networks is R6.4 billion. R4.1 billion has been allocated for the building of schools, clinics and other provincial infrastructure projects and R5.3 billion will be spent on municipal infrastructure and bulk water systems.

“Major investments in power generation, transport networks and telecommunications are in progress, building an environment within which mining and industrial development, tourism and our services economy will prosper, even if the short term outlook is poor,” Manuel said.

Promoting competitiveness

In order to sustain long-term growth, affected industries and interest groups will enter ongoing consultation with government. R1.8 will be spent on rural development and small farmer support, while R1.6 billion is budgeted for industrial development and small enterprise support programmes. Manuel said that R1 billion will be allocated to better manage the increasing electricity demand and tax incentives for investment in energy-efficient technologies. Lastly, over the next three years R870 million will be spent on a new automotive production and development programme.

Sustainability of public finances

In light of the global financial crisis, Manuel says that government does not intend to put our economy at risk borrowing excessive funds.
“Though there may be a role for public funds in support of businesses in difficulty, we need to ensure that an undue capitalisation of private wealth does not result in a financial burden of debt of future generations,” he said.