2013/14 Mid-Term budget delivered in Parliament today

Mluleki Mrwebi
23 October 2013

Finance Minister Pravin Gordhan today delivered the Mid-Term budget in Parliament.

The mid-term budget sets out the outcomes for 2012/13 and estimates for 2013/14.The revised estimate of expenditure in 2013/2014 is R1, 05 trillion, represents a nominal increase tabled in expenditure of 9 percent compared with the outcome for 2012/13.    

The expenditure from the national revenue fund in 2012 /2013, including transfers to provinces and municipalities amounted to R 963 billion, which was R 6,4 billion lower than the original budget estimate of R 969,4 billion and R 4 billion lower than the February 2013 revised estimate of R 967 billion.    

The provincial equitable share and other direct charges, spending by national departments amounted to R 538.7 billion in 2012/13. In the first six months of 2013/14, R 278.8 billion was spent.

Transfers and subsidies from the largest economic category of national government expenditure, this includes transfers to provincial and local government through conditional grants, payments for social grants, housing subsidies and transfers to higher  education institutions, science councils and public entities.   

Finance Minister Pravin Gordhan said higher than expected inflation pushes up medium term bill, over the next three years, provincial budgets grow from R 415.8 billion to R 507 .8 billion. Provincial baseline allocations increase by a net R 11.2 billion. A total of R 1 billion has been set out to assist 8 metros for infrastructure damaged by floods, these metros include, Limpopo, Mpumalanga, Kwazulu Natal, Eastern Cape and the Western Cape.  Local government received R 84.8 billion and this is expected to increase to R 106.7 billion by 2016/17. R 934 million has been allocated for regional bulk water projects. Finance Minister said a new local government equitable share formula is being phased in from 2013/14. 

The Minister said the Defence, public order and safety function at an average annual rate of 6,1 per cent to R 184.4 billion in 2016/17.This function is highly labour intensive, with compensation for employees constituting 63 percent of expenditure. The Department of Correctional Services has reprioritised funds for the electronic monitoring system to ease prison overcrowding.

The Economic Infrastructure: Transport and Energy, communications, R 2.5 billion has been reprioritise through the fiscus to support infrastructure modernisation projects. Gordhan said the baseline of the transport, energy and communication function grows by an average annual rate of 7.9percent to R 105.8 in 2016/17. Additional funding will support the Passenger Rail Agency of South Africa’s procurement of rolling stock, which the initial delivery is expected in 2015/16.

Minister Gordhan said the National Development Plan recognises the importance of education in addressing poverty and building a more capable workforce. Education is the largest category of government expenditure. The function’s baseline increases by an annual rate of 7percent over the MTEF period to R 286.5 billion in 2016/17.   

The employment and social security has been allocated R 74.6 billion, over the mid-term. The Minister said due to additional and increased expenditures, additional money is also made available for employment programmes and labour in 2016/17. The Public Works and National Youth Development Agency has been allocated R 71 billion with a baseline at an annual rate of 4.6 percent.

The Health and Social protection function group’s baseline grows at an average annual rate of 7, 3 per cent to R 328.4 billion in 2016/17. Gordhan said health is a labour-intensive function and receives additional funding to accommodate wage pressures. A further R 2.2 billion has added to the function’s indicative baseline in 2016/17 for antiretroviral treatment and social grants. The Department of Health will introduce a new vaccine to reduce incidence of cervical cancer.

The local government, housing and community amenities function received additional resources over the spending period for capital infrastructure projects. The function’s baseline grows by an annual average rate of 8.4 per cent to R 13.2 billion in 2016/17.

The Science and Technology and Environmental Affairs function grows by an average annual rate of 5.2 per cent to R 19.5 billion in 2016/17. Minister Gordhan said government will give a substantial support to the Square Kilometre Array and biotechnology.

Finance Minister Pravin Gordhan added that the mid-term budget framework shows how government has adapted its plans in a challenging economic and fiscal environment. While maintaining an expenditure ceiling, government continues to fund core economic and social priorities. Economic infrastructure, local community development and job creation will receive support over the spending period ahead. To fund other priorities in future, government will have to divert funds from non-performing or non-essential programmes, and eliminate wasteful expenditure.

The Treasury has put measures in place to cut down on budget, some of the measures include purchasing cars in bulk, renegotiating travelling expenses with airlines, accommodation for government officials and reduce the number of experts that accompany Ministers on their tasks.

Minister Gordhan emphasised that from now onwards all the government officials will not be allowed  to have credit cards, and there will not be any alcohol to be purchased with tax payers money in government events unless otherwise and all that is part of the budget cuts.