The Supplementary Budget announced by Minister of Finance Tito Mboweni on 24 June 2020, including a revised fiscal framework and spending plans, reveal that only R36 billion of the much lauded R500 billion economic relief package is new money allocated in the fiscus this financial year. According to Budget Justice Coalition (BJC), this is not even close to a “stimulus” or even an adequate relief package, at a mere 2% of non-interest expenditure (proposed in the February budget). In fact, in many cases, social sectors like basic education have less money to spend than was allocated to them in February, despite the additional burdens placed on them by the pandemic.
While the lockdown slowed the initial rate of COVID-19 infection and provided space for the country to prepare for rising numbers of cases, families, workers, businesses and communities have been left to face immense economic hardship with minimal government support.
Incredibly, only R2.9 billion of net additional funding is provided to the entire health sector to cope with the pandemic. This is less than half of the new funding allocated to the South African National Defence Force and South African Police Services (R6.7 billion), highlighting how draconian and misdirected the overall response by the government has been, especially in townships.
At the same time, this budget deepens austerity by proposing wide ranging cutbacks in critical government programmes. Infrastructure spending, which has among the most positive “economic multiplier” effects, has been further reduced, which will deepen the recession, hamper service delivery, and slow the recovery.
No solidarity tax measures on high incomes, wealth or financial assets to help plug the revenue shortfall were announced. And yet, at R25 billion in new funding, the additional budget for social grants is less than half of the R50 billion that was promised in the original economic relief package. Poor administration and exclusionary criteria mean that the COVID-19 special grant is not reaching millions of people, who desperately need it – including unemployed foreigners residing in South Africa and unable to return home. Government should consider an administratively simpler basic income grant instead, funded by progressive taxation of wealth, high incomes and income from wealth.
Other commitments made in the economic relief package are also not reaching the people that need them. For example, of the R100 billion promised for job protection and small businesses, only R6 billion has actually been allocated this financial year.
Despite the President’s recent highlighting of a “second pandemic” of violence against womxn and children, the supplementary budget is completely gender blind, and fails to mention any of the funding promised by the President for the struggle against violence directed at womxn and children. With provinces required to find R20 billion within their existing budgets for reprioritisation towards health, education catch-up, social welfare (humanitarian relief) and public works (quarantine sites), deep cuts to all provincial department budgets can be anticipated. There is no guidance in the supplementary budget requiring provinces to protect programmes aimed at preventing violence against womxn and children.
BJC is concerned about the increasing dishonesty from government in how the budget is presented. By seeking to disguise glaring fault lines in the budget proposals, government is undermining the moral high ground that was available to claim at the outset of the pandemic. BJC demands that government be much more transparent about its plans and involve all sectors of society in the “Zero based budgeting” decisions that aim to slash a further R231 billion from spending in the 2021 Medium Term Expenditure Framework.
For detailed BJC analysis on the supplementary budget, see our in-depth analysis at this link.
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