South Africa’s money man, Finance Minister Pravin Gordhan, has spoken, and everyone, including the fat cats in government, will have to tighten their belts.
The Medium-term Budget Policy statement was presented in Parliament yesterday and a stern Gordhan instructed MPs to lead by example and cut down on expenses because there’s less money to go around this year.
In a surprise move, Gordhan had some good news for social grant beneficiaries, announcing a R10 increase in the old age pension, child and disability grants, effective immediately, “due to an increase in food prices”.
But mense should brace themselves for a tax hike in February as government continues to grapple with a stagnant revenue base and a need to trim its debt.
There are no details as to whether this will come in the form of an increase in VAT, which hasn’t been raised since its introduction in 1993, corporate tax, private tax, sin tax or in the fuel levy.
And while students protested outside Parliament for free education, Gordhan committed more money to the Department of Higher Education for needy students.
He says: “In addition to the R16 billion added to higher education funding in the February budget, we therefore propose a further R9 billion for the National Student Financial Aid Scheme over the period ahead, raising its funding by over 18 percent a year.”
“Over R8 billion [is being budgeted] to meet the costs of fee increases for students from households with incomes up to R600 000.”
DA leader Mmusi Maimane welcomed the bigger budget for universities but adds corrupt government officials must be dealt with.
“Those who are intent on stealing money must be dealt with,” says Maimane.
Economic Freedom Fighters leader Julius Malema said: “We don’t agree with his budget, he didn’t declare free education and we’re not happy with that.”
The Congress of South African Trade Unions (Cosatu) has criticised Gordhan’s mini-budget, saying it would not alleviate conditions for the poor.
Matthew Parks, Cosatu’s parliamentary deputy co-ordinator, said: “For workers, you’ve had an economic crisis for 40 years with one out of three workers unemployed. We are not sure what is different with this budget which is going to resolve that massive crisis.”
Cosatu was also disappointed that Gordhan’s budget was silent on the foundations of the National Health Insurance scheme and retirement reforms, despite promising in February to finalise it.
ANC Secretary General Gwede Mantashe complimented Gordhan on his budget, saying: “He has done relatively well under the circumstances, cutting costs and I am impressed by the big increase to higher education and education.”