Govt to focus on identified priorities

Tuesday, October 27, 2009

Cape Town - Government has sent a clear signal to all that it will focus more of its efforts on improving service delivery and creating jobs, while cutting down on wasteful expenditure as the world still reels from the effects of the global financial crisis.

Presenting his Medium Term Budget Policy Statement speech in Parliament today, the Minister of Finance Pravin Gordhan outlined government's key focal points, which included the five priority areas of creating more jobs, enhancing the quality of education, improving health, developing rural areas and fighting crime and corruption.

Gordhan said government would endevour to do things differently amid the current economic climate which had seen 500 000 people lose their jobs this year, while the Unemployment Insurance Fund had seen monthly claims double since April last year.

There were however signs that an economic recovery was under way with the leading business cycle indicator having improved by 6.8 percentage points since its low-point in March and with a renewed buoyancy in the markets, he said.

Consolidated budget revenue had dropped from R692 billion last year to R658 billion for the 2009/10 financial year, while government expenditure is expected to rise from R715 billion last year to an estimated R841 billion this year.

The net result is a widening borrowing requirement with the budget deficit set to amount to R184 billion in 2009/10, or 7.6 percent of Gross Domestic Product (GDP).

Key to reducing costs would be the ministerial task team headed by Gordhan, which is aimed at cutting down on wasteful expenditure and would aim save an estimated R27 billion a year.

"We cannot spend money on wasteful extravagances and golf-days, we cannot tolerate unnecessary bureaucratic structures, and we must achieve greater value for money in contracting for goods and services."

He said national departments had identified savings of R14.5 billion over the next three years, and an estimated R12.6 billion would be reprioritised from redundant, ineffective or over-priced activities in provincial departments to finance core education, health and infrastructure requirements.

"In municipalities and government agencies, similarly, spending on unnecessary travel and entertainment, unfocused consultant contracts, procurement supplies at uncompetitive prices and layers of administrative paperwork that interfere with getting the job done, will be cut," he said.

Gordhan said government was "particularly concerned" about the number of government tenders, in all three spheres of government, that are tainted by corruption.

"Corrupt officials stand on one side, while on the other stand corrupt business people. A culture of gifts, wining and dining, and all manner of enticement has become pervasive. We must act decisively against such a tendency, and we must do so together," he said

Cabinet would also scrutinise government programmes to ensure that spending was going to creating enough jobs.

Gordhan said the economic crisis challenged South Africans to construct a "new deal" for young people including new opportunities for school-leavers, a new partnership between
workseekers and employers, and responsible leadership in public service.

Cabinet would also look at ways investments could reduce poverty, how the country could best take advantage of changing global trade opportunities, address its energy needs and how the country can reform its economic regulatory framework - in banking, social security, financial services, health care, agriculture and food security.

"We need to pursue options through a dialogue that respects a diversity of views and a plurality of methodologies. We need the humility to be open to different paradigms," said Gordhan.

He said there were both new initiatives and established programmes on which to build.

In the Presidency a "fresh approach" to planning had been adopted with the new urgency of measuring progress in service delivery, under the guidance of Ministers Trevor Manuel and Collins Chabane.

Minister of Public Works Geoff Doidge had been involved in getting municipalities and government agencies to participate more in the Expanded Public Works Programme.

He said Ministers Richard Baloyi and Sicelo Shiceka had signaled that failures in public service management would not be tolerated - whether at national, provincial or local level.

Gordhan said the government needed to explore options for promoting the development of the country's mining industry, lower the costs in telecommunications and transport, expand tourism, enhance technology and develop further trade opportunities, drawing where appropriate on international experience.

Funding for government employment programmes would be stepped up in several areas.

While R2.4 billion has been set aside by the National Skills Fund and the Unemployment Insurance Fund for the training layoff scheme, allocations for the next phase of the Expanded Public Works Programme are included in funding flows to municipalities and various departments, aimed at creating 4.5 million job opportunities over the next five years.

Funds have been set aside for local community works projects in rural villages.

Government was also considering ways to boost job creation by the business sector, through the better use of existing incentive programmes, government funds, small business support agencies and tax incentives.

Education, government's largest budget commitment, comprising over R140 billion this year, would increase to R185 billion by 2012/13.

The budget framework for next year will provide for extension of the child support grant up to the age of 18, over the next three years.

Public health expenditure is set to rise from R90 billion this year to R115 billion in 2012/13.
At provincial level, total spending on rural development is projected to rise from about R6 billion at present to about R8 billion in 2012/13.

An additional R1 billion will go to the housing grant programme, and R2.5 billion is proposed for municipal infrastructure grants.

Government's total expenditure on housing and community amenities will rise from R69 billion this year to over R98 billion in 2012/13.

The public order and safety budget would grow from R78 billion this year to R100 billion in the next three years. This would help provide for an additional 22 400 police personnel, aimed at strengthening detective services and crime intelligence.

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