Almost R15-billion of the about R80-billion increase in government spending over the next three years goes to 2010 Soccer World Cup major capital projects, Finance Minister Trevor Manuel said on Wednesday.
This infrastructure will benefit the country long after the final whistle in the tournament has sounded.
In his speech to the National Assembly, Manuel said of the additional R80-billion, the provinces would get R28-billion and local government R19-billion.
The provincial transfers would fund higher spending in education, health and welfare services, and infrastructure.
Transfers to local government went mainly to the 2010 World Cup, but also to speed up free basic services delivery and water and sanitation infrastructure.
According to the Medium-Term Budget Policy Statement (MTBPS), tabled in the National Assembly, sustained economic growth and a sound fiscal position make it possible to budget for strong increases in spending on priority services.
Consolidated spending will increase from about R519-billion in the current financial year to R704-billion in 2009/10, financed largely through the national Budget itself.
Key public spending priorities over the next three years include:
- investment in stadiums and public transport for a successful Soccer World Cup;
- strengthening the criminal justice sector, with particular emphasis on visible policing and improving court case flow;
- increased investment in the built environment in the form of housing, roads, water, sanitation, and community facilities; and
- boosting economic efficiency through investments in roads, rail, electricity generation and supply, dam construction, and skills development.
Manuel said the 2007 MTEF period, ending on March 31 2010, had to carry the full costs of the World Cup investment.
National government would provide a total of R15-billion for infrastructure related to the World Cup.
Of this amount, R8,4-billion was for the stadiums and R6,7-billion for public transport initiatives and supporting infrastructure.
These amounts would be complemented by contributions from local government and other partners, he said.
According to the documents, this infrastructure investment over the next few years will provide a strong platform for accelerated growth in future, the document says.
It forms part of government’s broader capital investment programme, focused on creating economic opportunities for business and individuals, and progressive improvements in household living conditions.
The World Cup also features in the additional R3,5-billion allocated for justice and crime prevention over the next three years.
This money goes for expanding the police by about 8 000 officers and 2 000 civilian employees, modernising and expanding infrastructure, and ensuring ”appropriate security” during the World Cup.
Housing, municipal services and community development get R16,3-billion more, economic infrastructure and state-owned enterprises R10,5-billion, industrial incentives and technology R2,3-billion, higher education and teacher development R3,7-billion, hospitals and social welfare services R3,1-billion, and defence and foreign affairs R5,9-billion.
Growth is forecast to average about five percent a year over the medium term, supported by healthy investment levels and a recovery in exports alongside moderating consumption spending.
GDP is projected to increase from the 2006 estimate of R1,694-billion to R2,277-billion in 2009.
The current account of the balance of payments deficit grew from 4,5% of GDP in the second half of last year to over 6% in the first half of this year.
”While financial inflows more than offset the current account deficit at present, accelerated growth over the longer term will depend on industrial and trade policy reforms that bolster exports and moderate South Africa’s trade deficit,” the document says.
Increased government savings over the medium term will further reduce risks associated with the deficit.
While CPIX inflation has been trending upwards from a low of 3,7% in April, it is expected to average about 4,8% over the next three years.
Tax revenue for 2006/07 is expected to be about R30-billion more than expected.
”Mindful of potential risks, government will review available tax policy choices,” the document says. – Sapa