New Finance Minister Tito Mboweni had a tough job balancing his mini-budget on Wednesday, but had some good news for consumers.
Tabling the medium-term budget policy statement in Parliament on Wednesday, he announced:
* There was no change to the VAT and tax rates, but the value-added tax on white bread flour, white cake flour and sanitary pads will be zero-rated from 1 April next year.
* Housing subsidies amounting to R1 billion will be centralised to help low to middle-income households acquire affordable home loans.
* More than 3.1 million South Africans live in informal settlements and government has plans to upgrade these by extending municipal services.
* Treasury is immediately reprioritising R350m to recruit in excess of 2 000 health professionals into public health facilities.
* It is also reprioritising R150m to purchase beds and linen for hospitals where the need is most dire.
* He announced bail-outs for four struggling state-owned entities but said the time had come to reconfigure parastatals with the help of the private sector. South African Airways is to receive R5bn, SAA Express R1.2bn, the SA Post Office is to get R2.9bn and Prasa R5.8bn.
He also lamented the high public sector wage bill, which accounts for about 35% of consolidated spending.
He said Treasury will not allocate any money to fund shortfalls following the higher-than-expected salary increases.
Government budgeted R212.5bn over the medium term for the increases, but a wage deal in June took this to R242.7bn, creating an R30bn shortfall.
In addition, the minister added if consulted on the subject by Ramaphosa, he would propose trimming Cabinet to at most 25 ministers, because there was no political or financial justification for having an executive of 35 ministers.
Mboweni warned that South Africans were under pressure with rising fuel prices and electricity and that “the economy has not performed as expected”.
He said the economy would grow at less than 1%, the revenue will still have a shortfall of R27bn and the debt would only stabilise in 2022/23.
Political parties slammed the mini-budget as weak, saying it did not provide the medicine required to fix the ailing economy.
Alf Lees of the Democratic Alliance said the R5bn bail-out for SAA could have been used to increase the child support grant by R34 per month from R410 to 444 per month.
Cosatu general secretary Bheki Ntshalintshali said Mboweni wasted time talking about the huge public sector wage bill.
“I think he is attacking the wrong people. He should have started at the top with ministers, with MPs.
“That is where the money goes, not the poor people who can’t afford to have houses, who do double jobs,” Ntshalintshali said.