Vital for Government to Provide Social Security Net for Long-Suffering Poor

Cape Times (South Africa), November 7, 2007 | Go to article overview

Vital for Government to Provide Social Security Net for Long-Suffering Poor


BYLINE: Kate Lefko-Everett

On OCTOBER 30, Finance Minister Trevor Manuel released the Medium-Term Budget Policy Statement (MTBPS) for 2007, which provides a roadmap for national government's spending priorities over the next three years.

This year's MTBPS was explicitly described by Manuel as "pro-poor" in its expenditure framework for the next three years. Major emphasis is placed on the targets of halving poverty and unemployment by 2014, in keeping with the Millennium Development Goals (MDGs).

The MTBPS articulates a strategy for achieving the MDGs that is based on achieving growth of 6% from 2010 to 2014. However, this is in the face of global uncertainty and volatility, brought on by sluggish growth in some developed countries, and events such as the sub-prime mortgage crisis in the United States.

To a large extent, prospects of achieving this growth rate have been pegged to economic and infrastructure investment.

Expenditure in these areas will increase at an average nominal rate of 12%, from R114.4 billion this year to R159.6bn in 2010/11. Spending on transport and communications will increase most sharply, at a nominal average rate of 18%.

The Treasury has also referred to the role of state-owned enterprises (SOEs) in "underpinning economic growth". Although some are languishing, the special adjustment appropriations tabled in September show significant allocations to SOEs in 2007/08: R222 million will go to Denel; R1.8bn to the pebble bed modular reactor project; R500m to Sentech; and R44.7m to Alexcor.

Education, training and human capital development feature prominently in the MTBPS. Increased expenditure will benefit the social wage, while attempting to overcome skills gaps, and generally contribute to cutting poverty and unemployment.

Overall spending on education is set to increase nominally by about 12%, from R106.4bn this year to R148.6bn in 2010/11. Funding for higher education will increase from R13.3bn in 2007/08 to R19.1bn in 2010/11.

Manuel has lamented the poor financial performance within the sector education and training authorities (Setas), but says that, with adequate funding, "other parts of our higher and further education system are ready to expand enrolment and step up their contribution to human investment".

If South Africa is able to halve poverty and unemployment through the growth strategy the MTBPS proposes, we may indeed confirm that the fiscal policy direction for the medium term has been "pro-poor".

But in the short term, it seems many South Africans will not be loosening their belts anytime soon.

Social grant amounts will be increased, but only to ensure steady purchasing power in line with inflation. Children will still only be eligible for child support grants up to 14.

When asked at a parliamentary briefing on October 31 about extending this to 18, Manuel warned of the tragedies of governments that make commitments they cannot keep.

The unemployment rate has barely inched down from 25. …

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