BUDGET 3.0 GROW THE ECONOMY @KASIBC_NEWS

BUDGET 3.0 GROW THE ECONOMY @KASIBC_NEWS 

On Wednesday, 21 May 2025 the Minister of Finance, Enoch Godongwana, will table a revised Budget reflecting the withdrawal of his March proposal to increase VAT. In his statement on 24 April announcing the withdrawal of VAT, he mentioned that the new Budget must plug a R75-billion revenue hole.

It is likely that the hole has grown because the GDP growth outlook has been revised down from 1.8% to 1%, with an expected direct impact on the amount of taxes the SA Revenue Services (SARS) is able to collect. Therefore, we expect the new Budget to have a direct and negative impact on some frontline services and key expenditure priorities, such as:

• R29-billion earmarked for Basic Education
• R29-billion for health
• R46-billion for infrastructure, including the R19-billion marked to install signalling equipment on the Passenger Rail Agency of SA’s (Prasa’s) network to make more trains available, and the R11-billion for Window 8 infrastructure projects

While we are yet to see if, and how much these allocations will be cut – there is little doubt that they will have an adverse impact on many South Africans. For example, the Departments of Basic Education and Health allocate only between 4% and 5% of their respective budgets on capital expenditure – the expansion of services to South Africans who desperately need them. Such allocations are not enough even without budget cuts. South Africans demand and deserve more, but the fiscal limitations cannot be wished away.

RISE Mzansi has consistently stated that South Africa’s fiscal challenges are largely political in that there is little or no appetite to change the composition of expenditure so that more money can be dedicated to growth enhancing measures. There is also an urgent need to change the culture of spending in government, which allows waste and theft.

Out of South Africa’s R1.855-trillion revenue collected in 2024/25, the March budget allocated:

R823-billion to salaries

R442-billion to social grants

R423-billion to debt service costs at R1.2-billion interest payments per day

Only a growing economy can produce jobs and a bigger, sustainable tax base. The composition of expenditure almost guarantees that economic growth will get crumbs. South Africa cannot compete globally if the billions we spend on Basic Education do not produce the skills needed to produced goods and services other countries need. We cannot grow the economy with crumbling infrastructure in which we invest peanuts, and allow corruption to continue.

Businesses cannot grow in collapsing, corrupt municipalities with crumbling infrastructure and crime. South Africa’s Parliament cannot continue to tinker around the edges, and accept a scenario where everything is a priority while we continue to achieve little to nothing, and deadlock for months over marginal budget allocations.

We must change the composition of expenditure such that capital expenditure amounts to at least 8% of budget allocations, and the government is restructured to reflect the efficient expenditure our constitution demands.

In my role as Chair of the Standing Committee on Public Accounts (SCOPA), I will be working with all political parties represented therein, and other Portfolio Committees, to drive tough measures to reduce financial waste, improve governance and prevent corruption. As I said in February, there is no possibility that we will turn South Africa around without tough choices – and the time has come for maturity and resolve to effect the reforms we need to grow an inclusive economy.