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Government pulls up the handbrake in 2013 Budget

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Smarter spending and a brutal crack-down on corruption and wasteful expenditure form the heart of this year’s Budget, presented in Parliament today by Finance Minister Pravin Gordhan. Government spending plans have been reduced by R10.4 billion. In addition, money is being taken from non-performing portfolios to those that are doing well. The Department of Public Works has re-prioritised R464 million over the medium-term to fund its turnaround strategy, which focuses on lease and property management portfolios. According to Gordhan, “a new local government equitable share formula is proposed, providing for free basic services designed to reach 59 percent of households.” This formula will differentiate assistance to different municipalities, including those in rural areas. Municipal infrastructure grants will also be re-aligned. Components of the so-called social wage add up to 60% of public expenditure. From the R1.15 trillion budget: • Education and related services receives R232.5 billion According to the minister, “education and training is an essential foundation of a more productive and inclusive growth path.” • Health is allocated R133.6 billion. • R827 billion is allocated over the next three years for state-owned enterprises to build infrastructure. According to Gordhan, “the financing of these projects is in place, and is not affected by the spending cuts in the budget.” • The majority of R430 billion for schools, hospitals, clinics, dams, water4 and electricity, sanitation, building of classrooms and prisons, and new homes is allocated to provinces and municipalities. • Public order and safety received R108.9 billion. The budget proposes an employment incentive and a youth employment incentive which are yet to be tabled in Parliament. Grants are to go up marginally: • Old age and disability grant goes from R1200 to R1260. • Foster care grants increases from R770 to R800. • Child support grants rises from R290 to R300. Corruption and Procurement Drawing from the National Development Plan (NDP), Gordhan points out one of government’s priorities is “improved management and enforcement systems to fight corruption”. He says Corruption was a “recurring theme” in comments from the public on the Budget. Magezi Mkhacani provided a Pointer for Pravin in this regard: “Corruption is the disease that we are facing in our country if there is a way that this disease can be killed first from the government we will leave in a healthy state. Mr Minister you must come with a plan to fight corruption in our society.” Bongani Radebe from Devon, echoed this sentiment: “Deal more with corruption, particularly in the public sector. These people have become too powerful, too presumptuous in themselves. They are untouchable, selfishly & greedily embezzling what belongs to the poor. The corrupt officials in senior positions within the public sector are destroying our Nation. Please act urgently in this regard.” Minister Gordhan said in his speech today: “Last year I said to this House (Parliament) that we will continually endeavour to increase the value which government received for the money it spends. “Let me be frank. This is a difficult task with too many points of resistance.“ The minister says: “I cannot simply wave a magic wand to make these problems disappear,” says the Minister. “This is going to take an epical effort from all of us in Government, assisted by people in business and broader society.” According to the minister, the process of setting up a Chief Procurement Office in Treasury is well underway with a Chief Procurement Officer to be appointed soon. This office will introduce immediate remedies; improve the current system; standardise the procurement of critical items across all government spheres; and modernise the system in the long-term. “National Treasury is currently scrutinising 76 business entities with contracts worth R8.4 billion, which we believe have infringes the procurement rules,” says Gordhan. He adds: “SARS is currently auditing more than 300 business entities and scrutinising another 700 entities. The value of these contracts is estimated at over R10 billion.” Gordhan supports the call for government officials to be barred from doing business with the State. To this end the Public Finance Management Act (PFMA) is to be amended by him.

– By Christelle du Toit

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