While the spending cuts in the Medium-Term Budget Policy Statement (MTBPS) delivered to the National Assembly by Finance Minister Enoch Godongwana on Wednesday were not as severe as many had predicted, civil society organisations were left disappointed. 

Isobel Frye, the executive director of the Social Policy Initiative, said the MTBPS was indicative of a governing party about to go into an election.

“On one hand, you have a strong conservative macroeconomic policy being pursued by the National Treasury, which has had to be tempered by a political agenda of wanting to be seen responding to people’s needs,” Frye said.

Key issues Godongwana addressed included healthcare, education, the Social Relief of Distress grant and employment. 

Healthcare

In the February budget, Treasury allocated R259-billion to public healthcare. This was reduced by R24.1-billion in the MTBPS.

Matshidiso Lencoasa, a Budget Justice Coalition steering committee member, said the budget cuts in essential services would exacerbate inequality.

“Looking at [the] social spending element is deeply disappointing. There is an increased demand for public services such as public health, for example, because medical aid and private healthcare are becoming inaccessible because unemployment is rife. The tough economic outlook means that people have restricted income sources and have to rely on a public healthcare system that is already under-resourced and understaffed.

“The allocation towards the wage agreement can be welcomed because we do need a well-staffed public system. The problem is that there are essential areas like healthcare infrastructure that have been cut, HIV/Aids funding has been cut by a billion rand, as has the TB budget, which makes us wonder how the country will achieve its health goals in that context and protect the realisation of the right to healthcare for all people,” Lencoasa said.

“It just seems that with this budget it will be the people who most rely on public healthcare who will carry the burden of this weak economic outlook.”  

In a statement released on Wednesday, the Public Service Accountability Monitor said the spending reductions and reprioritisation gave rise to concern, given the socioeconomic conditions. 

“In light of this, we join partners in the Budget Justice Coalition and others who stand in staunch opposition to continued cuts to social budgets. The impacts of these budgets are too often disproportionately carried by vulnerable households, women and children. Proposals for alternatives to such reductions have been well-presented in recent years.”

The Public Service Accountability Monitor advocated “the adoption of the Procurement Bill with due regard for public inputs; strengthening of participation processes including the institutionalisation of Treasury’s piloted pre-budget participation process, which saw positive engagement from the public; and implementation of deeper, systemic reform for the prevention and detection of maladministration”.

Education

Equal Education’s head of research, Elizabeth Biney, said the only good news to come out of a “very underwhelming” MTBPS was that the education sector had been allocated a little more money to address wage costs.

“That is a good sign,” Biney said, “because that has always been one of the concerns around how we attract people, retain them and provide quality teaching in the sector.”

While there have been small victories, including the projection that the basic education budget will increase over the next three years, Equal Education has criticised Treasury for not increasing the education budget in line with inflation and reducing the school infrastructure budget by R1.7-billion   

Biney said, “Historically, school infrastructure has been one of the biggest divides in terms of the affluent and under-resourced schools and obviously creating that inequality gap that we have been struggling to bridge. So, with this budget taking away a huge chunk of the infrastructure budget because, quote, unquote, ‘provinces are not going to spend it all’ is very problematic because we still have very serious infrastructure issues that require money to address. So that was a big disappointment.”

Biney said that while the projected increase in the education budget in the next three years looked good on the surface, it was offset by issues like inflation and the growing number of learners.

“Treasury is not taking into consideration critical issues like the cost of goods and services, and inflation is not factored into this allocation. It is concerning because education is an immediately realisable right and we need to see a proper proactive commitment to address the realisation of this right.” 

SRD grant extension

R34-billion has been allocated to the extension of the Social Relief of Distress (SRD) grant for another year. However, the budget for the grant has been reduced, with only R34-billion allocated as opposed to the R40-billion the grant received in 2022. 

Nathan Taylor from #PayTheGrants said National Treasury continued to ignore the most vulnerable. “They have not only refused any increase to a pitiful R350, but again cut the overall budget,” he said. 

“Their strategy is simple to see: cut the budget, enforce stricter regulations, refuse to fix systemic problems, wait for [the] number of beneficiaries to drop, then cut the budget again.”

The lack of mention of the child support grant or other grants, as well as the cutting of the Department of Social Development’s ability to deliver social services was also of grave concern, Taylor said. 

The Social Policy Initiative’s Frye said, “On the one hand, when it comes to grants, we see the reluctant extension of the SRD grant but no commitment to increasing the value, which means the eligibility criteria will be manipulated, and the applications will be forced to fit the budgeted amounts rather than the need.”

The Institute for Economic Justice and #PayTheGrants announced in July that they had launched a court case aimed at addressing the unfair exclusion of millions of people living in poverty from receiving the SRD grant.  

Read more in Daily Maverick: SRD grant activists forge ahead with legal action against the state unopposed

In a statement on Wednesday, the Institute for Economic Justice and #PayTheGrants said that Godongwana had applied to intervene in the court case as a respondent.

“This means that the minister plans to oppose our efforts to get government to extend the grant to rightful beneficiaries facing desperate hunger. We do not yet know the arguments that the minister plans to advance against our case, including the issue we raise of about 50% of rightful beneficiaries currently being prevented from accessing the grant,” the statement said.  

Economic growth and employment

Kristal Duncan-Williams, the project lead at the advocacy campaign Youth Capital, welcomed Godongwana’s remarks on the urgent need for higher economic growth. 

“It’s important to remember that youth unemployment and the social crisis that South Africa continues to face need a basket of complementary solutions that can benefit the population by growing the economy and providing a safety net, but the budget is putting these solutions one against the other,” Duncan-Williams said.

“So, on the one hand, we welcome the one-year extension of the Presidential Youth Employment Initiative, although it’s still unclear what programmes have been retained and at what scale. However, the programme’s funding comes at the expense of funds from existing public employment programmes such as the Expanded Public Works Programme and the Community Works Programme.

“On the other hand, the budgeted amount for the SRD grant is reduced. Work experience and cash transfers go hand in hand to ensure that the most vulnerable in the country are offered at least some protection,” Duncan-Williams added.

During his address, Godongwana reiterated that the only way for South Africa to move forward was through economic growth, adding that the nation could grow by cutting state expenditure. 

However, Frye begged to differ. Frye said the Social Policy Initiative had demonstrated through modelling that a sure way to kickstart the economy is to redistribute income to people who are not active in the economy. Grants are part of the redistribution of income.

“It’s not just about big infrastructure projects that are going to save the economy. The way to save the economy is to start small, at an individual level of distribution, which then goes into improving community economies, which then improves demand, which will then go on and stimulate supply. And when a supply is there, then you get manufacturing, and then you get jobs,” Frye said.

“The most effective way of kickstarting the economy is to make everybody active economic agents.” DM

Read Finance Minister Enoch Godongwana’s Medium-Term Budget Policy Statement below: