Cape Town | Thursday
THE South African government on Wednesday presented a R287,9 billion budget which lowers taxes and raises welfare grants and spending on Aids but failed to satisfy calls for poverty relief.
Finance Minister Trevor Manuel forecast economic growth of 2,1% in 2002 and vowed to increase spending by four percent in the next three years.
He increased grants to pensioners and children by some eight percent and pledged one billion rand ($87,1-million /99,5-million euros) for supplementary HIV programmes, to be increased to R1,8-billion in 2003.
Manuel introduced the R287,9-billion ($25,1-billion dollar/28.67 billion euro) budget by saying the government sought to create a “more compassionate society, intolerant of poverty” and to stimulate growth and development.
But observers said it did not do enough to help 22-million South Africans living in abject poverty, nor was it likely to stimulate growth.
Manuel dashed the hopes of the Congress of South African Trade Unions (Cosatu) and other activists who picketed parliament to demand that the treasury spend R10-billion annually on a blanket welfare grant of R100 per month.
“You cannot spend that amount on an untested set of proposals,” Manuel told reporters.
Cosatu secretary Zwelinzima Vavi said: “You’re talking about a national crisis that we are facing of poverty. We would have preferred some positive statements in relation in this particular regard.”
Manuel said R132,4-billion — about 56% of the budget — would go to the nine provinces for spending on health, welfare, education and social infrastructure.
To fight crime, he pledged R6,6-billion to employ 16 000 more police, and strengthen the court and prison systems.
Manuel said that the health of the economy “is not in question”, but that government had still not managed to reduce rampant unemployment and accelerate investment.
“The budget highlighted the stark contrast between the robust state of government finances against the unhealthy condition of the economy … between substantial reductions in personal tax with the desperate plight of the millions of poor,” said official opposition Democratic Alliance representative Ken Andrew.
The Institute for Democracy in South Africa (Idasa) criticised Manuel for giving low-income earners tax cuts of 25% while pensioners will pocket only R50 more a month.
“They had the possibility to support the poor more — increases in welfare grants were small compared to tax cuts,” said Idasa’s Albert van Zyl.
Van Zyl said the government must put more money into welfare to ensure that the poor were taken care of even if treasury hopes of stimulating spending and ultimately growth through tax cuts failed.
“The idea is that income tax cuts will stimulate spending and economic growth and that will increase employment and reduce poverty. But we have had similar budgets for the last three years and it has not worked,” he said.
Pieter Laubscher of the Bureau for Economic Research said it was encouraging that the treasury increased spending in 2002, resulting in a budget deficit of 2,1% compared with 1,4% last year.
“The government is continuing to close the social deficit, but the emphasis in the budget is firmly in the framework of getting private investors to take the lead rather than the government stimulating growth by increasing social spending,” he said.
Laubscher said the billion rand dedicated to combating Aids was “mildly positive” as it meant government recognised the seriousness of the epidemic in a country where one in nine people are infected with HIV.
He doubted however that the amount was sufficient or would satisfy the demands of Aids lobbyists, who marched on parliament on Wednesday to demand anti-retroviral treatment for all HIV-positive pregnant women.
A budget breakdown shows that only R25-million out of the billion for Aids was earmarked for programmes to prevent mother-to-child transmission of HIV.
While backing calls for greater spending, analysts questioned whether the government would manage to spend allocations for Aids, social projects and infrastructure. It has a track record of failing to spend nearly a quarter of funds.
The South African Chamber of Business said: “We have to look to deepening, let’s call it domestic growth, because foreign capital will only move into South Africa and chase a growth-orientated environment.
“But we in South Africa are not very good at spending. … At the end of the day we’re not even spending what we have.” – AFP