South African Institute of Race Relations Comments on the 2011/12 Budget

NGO Budget 2011
Thursday, 24 February, 2011 - 15:24

Finance Minister Pravin Gordhan’s 2011 Budget shows why South Africa is rated as the most transparent government in accounting for its expenditure, as the document openly addresses pressing issues facing South Africa. The three biggest areas of spending are education, social protection and health. A notable inclusion is funding for the environment 

Finance Minister Pravin Gordhan’s 2011 Budget shows why South Africa is rated as the most transparent government in accounting for its expenditure, as the document openly addresses pressing issues facing South Africa. The three biggest areas of spending are education, social protection and health. A notable inclusion is funding for the environment.

Education receives the biggest budgetary allocation - R190 billion, as education is crucial to creating jobs. Gordhan emphasises the seriousness of having 42 percent of young people between the ages of 18-49 unemployed. A new development index released by the South African Institute of Race Relations (SAIRR) corroborates the fact that joblessness is hindering economic growth. South Africa’s GDP and GDP per capita has grown quarter-on-quarter since 2009’s recession but unemployment has continued to rise, indicating that the unemployed are being left behind those who are working and becoming more productive. It is hoped that greater employment - an estimated two percent a year - will raise disposable incomes, supporting household consumption and investment. R150 billion allocated for job creation, training, and skills development adds substance to this commitment.

Social protection receives the second biggest budgetary allocation - R147 billion in 2011/12, rising to R172 billion in 2013/14. This is a lot of money, but social grants go to those in greatest need. Pensioners get 38 percent of the allocation, children in poor households get 35 percent of the allocation, and the disabled get 19 percent of the allocation.

The health sector gets R113 billion as South Africa attends to its growing HIV/AIDS infection rate. It is hoped that treatment and prevention programmes will see South Africa’s HIV/AIDS infection rate decline. Total expenditure on the Comprehensive HIV/AIDS conditional grant will be R26.9 billion over the medium-term economic framework (MTEF) period.

As an emerging market and host of the 2011 UN Framework Convention on Climate Change (UNFCCC) summit in Durban later this year, Gordhan is conscious of reducing South Africa’s carbon footprint. Consequently, he has allocated R800 million over three years for “green economy” initiatives. This is a relatively small amount of money, but nevertheless shows South Africa’s intention to be a responsible global actor.

The tone of the budget is one of responsibility. It takes on the concerns of pensioners, suffering “undue hardship” because of high bank charges. Additionally, it warns against South Africans passing an unmanageable debt onto their children. Concern for the elderly and the next generation is an ethical stance from which the National Treasury should not deviate. It is also encouraging to hear Mr Gordhan advise that Government save while times are good and spend when times are bad. For this he has thanked his predecessor, Mr Trevor Manuel, for setting a precedent of saving in the boom years of the early 2000s so that the Government can spend extra when revenue is lower.

However, Mr Gordhan warns against price increases in the oil market, which are beyond his department’s control. Although inflation is expected to remain within the target range of three to six percent, volatility in the oil market could threaten the target band. Instability in the Middle East and north Africa has seen the price of Brent crude increase to US$107 a barrel on Tuesday - its highest level since 2008. Nevertheless, it is hoped that Mr Gordhan’s responsible approach will balance uncertainties in the market.

Ashwin Pienaar
Researcher
South African Institute of Race Relations
www.sairr.org.za 

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