Core areas of need to receive additional resources

WHILE THERE IS little room for new spending priorities over the next three years, government has proposed to allocate additional resources to core areas of need.

The 2015 Medium Term Budget Policy Statement (MTBPS) tabled by Finance Minister Nhlanhla Nene stated that provision has been made to increase social grants to accommodate higher than expected growth in grant beneficiary numbers.

In addition, the local equitable share has been bolstered to support the rising cost of free basic services while funds have been set aside to improve the quality of public order policing.

Also resources have been added to social development budgets for substance-abuse centres and early childhood development and financial support for health information systems will alleviate problems in the management of medicine stocks, and help lay a foundation for the national health insurance.

Additional resources have been provided to support treatment of HIV and Aids and Tuberculosis while agencies that support science and innovation have received additional resources to bolster research and development.

In the last two years generally, government has made a large contribution to investment growth while private-sector investment has remained muted.

The document noted that government continues to invest in public infrastructure and housing. Proposed medium-term budget allocations of R542 billion include:
– R130 billion in roads and public transport
– R60 billion in public housing
– R55 billion in water infrastructure
– R50 billion in other municipal infrastructure
– R43 billion in school buildings
– R11 billion in tertiary education capital projects
-R30 billion in health facilities and equipment
-R20 billion to extend the electricity grid to poor households.

In addition, infrastructure plans by large state-owned companies exceed R400 billion over the next three years.

Reforms to capital budgeting framework

According to the MTBPS in recent years, better coordination, the introduction of targeted incentives and efforts to build municipal financial capacity have improved capital project planning and execution.

Local government spent 91% of allocated infrastructure budgets in 2014/15, up from 86 % in 2013/14 and 77% in 2012/13.

”To build on this progress, and improve value for money in infrastructure investment, government will introduce a medium-term capital budgeting framework,” said the document on Wednesday.

The medium-term capital budgeting framework will include new appraisal tools for capital projects, strengthened procurement regulations, measures to lock in resources for operations and maintenance and more transparency on the full life-cycle costs of large capital projects.