Fly SAA!
Thirdly, the balance sheets of several entities with extensive infrastructure investment responsibilities are now stretched to their limits. Government has provided support in the form of guarantees, which now total R467 billion or 11,5% of GDP. In other words, ladies and gentlemen, and hon members, if somebody says they want the money back that we borrowed on these guarantees, we'll have to find R467 million, tomorrow. This is a source of pressure on the sovereign rating. Yet, we need to accelerate infrastructure investment in the period ahead.
So, where do we get the money? We must broaden the range and scope of our cofunding partnerships with private-sector and other investors, like trade union investment companies. This requires an appropriate framework to govern concession agreements and associated debt and equity instruments, and appropriate regulation of the market structure. In taking this forward, we are able to draw on our experience in road-funding concessions, in building the renewable energy market, and in promoting broadband telecommunications. Across these and other sectors, we have much to learn from each other, both nationally and through provincial and local initiatives.
In addition, Minister Brown is in discussion with Transnet's leadership on measures to accelerate private-sector participation in the ports and freight rail sector - and we are not talking about privatisation. [Interjections.] [Applause.] I though the only p-word was Pravin, but now we have privatisation! [Laughter.] The intention is to improve efficiencies, reduce the cost of doing business and increase investment in port facilities and inland terminals. This will complement investments that Transnet has already initiated through its Market Demand Strategy.
Our aim is to strengthen our state entities so that they can play a dynamic role in our development. Further financial support to state-owned companies will depend on the clarity of this mandate and firm resolution of governance challenges. Our regulatory agencies have a special responsibility, in this regard. In setting prices for electricity, transport and water utilities, they have to ensure that investment can continue to be financed, that costs are properly managed, and that people can afford the costs.
The strength of our major state-owned companies does not lie in protecting their dominant monopoly positions. It lies in their capacity to partner with business investors and other investors; industry; mining companies; property and logistics developers; and, for example, as I mentioned earlier, union investment companies, both domestically and across global supply chains.
Before I conclude, allow me to return to the main elements of the 2016 Budget, our spending plans and their contribution to growth and broadening development. Our approach is to build on our strengths, directly address weaknesses and be bold where new initiatives are needed. The budget framework brings forward our fiscal consolidation, as I said, and reduces our budget deficit to 2,4% by 2018-19. Taxes are raised moderately, across a broad base, while limiting the impact on lower-income families. Personnel spending has been curtailed and cost-containment measures are reinforced. Expenditure growth is focused on post-school education and training, economic infrastructure, social protection and health services. In respect of economic infrastructure, Budget allocations for water infrastructure this year take into account the specific needs of drought- affected areas and the need to address water losses in critical supply networks. The Regional Bulk Infrastructure Grant programme has been allocated R15 billion over the medium term for the construction of bulk water and sanitation infrastructure.
Public transport improvements in our cities are again prioritised, alongside better road maintenance and rehabilitation plans. Over the MTEF period, R1,6 billion is allocated to the SA Connect broadband programme to support access in remote areas and of schools, health care facilities and government institutions.
Steps to reduce the regulatory burden for business investors are also in progress. These include the establishment of Invest South Africa as a partnership with the private sector, and concerted efforts by our largest cities to reduce the administrative costs of starting businesses. A review of business incentives has been initiated, to strengthen their impact and to focus those initiatives in respect of growth, productivity, competitiveness and trade. An amount of R475 million has been reprioritised to the Department of Small Business Development for assistance to small and medium enterprises and co-operatives. [Applause.]
Programmes aimed at revitalising agriculture include spending on small- scale farming and developing Agri-parks in rural economies. An amount of R2,8 billion is allocated over the medium term to Fetsa Tlala, a food security initiative. The Department of Agriculture, Forestry and Fisheries aims to bring 120 000 ha of land into productive use in the period ahead, benefiting 145 000 subsistence and smallholder producers, each year. [Applause.]
Already this year, the Department of Water and Sanitation has reprioritised R502 million to deliver water, protect springs and refurbish boreholes in response to drought conditions. Funds have also been provided for feed and support for livestock farmers, and disaster relief measures. Additional drought response allocations will be made, as required, in the Adjustments Appropriation, later this year.
In respect of higher education, an additional R16,3 billion has been allocated for higher education over the next three years. Of this, R5,7 billion addresses the shortfall caused by keeping fees for the 2016 academic year at 2015 levels - a zero increase - and the carry-through costs over the MTEF period. An amount of R2,5 billion goes to the NSFas to clear outstanding student debt, along with a further R8 billion over the medium term to enable current students to complete their studies. [Applause.]
In respect of basic education and early childhood education, our expenditure on basic education will increase from R204 billion this year to R254 billion in 2018-19. [Applause.] By 2018, 510 inappropriate and unsafe schools will be rebuilt, 1 120 schools will be supplied with water and 916 schools with electricity. An additional allocation of R813 million for early childhood development, ECD, is proposed to increase the number of children in ECD centres by 104 000 over the MTEF period. [Applause.]
In respect of health and welfare services, R4,5 billion is budgeted over the medium term for revitalising health facilities in the 11 NHI pilot districts, and related health system reforms. An additional R740 million has been allocated to strengthen TB programmes to encourage early detection and treatment, and R1 billion for expansion of the antiretroviral treatment programme. [Applause.] Additional funds are allocated for new substance- abuse treatment centres in the Northern Cape, Free State, Western Cape and North West provinces. Now, for the older people who are listening carefully to us and others that depend on social grants, our overall expenditure on social assistance will increase from R129 billion this year to R165 billion in 2018-19. The old age, disability and care dependency grants will rise by R80 to R1 500, in April 2016, and by a further R10 to R1 510, in October. [Applause.] The child support grant will rise by R20 to R350, in April, and the foster care grant by R30 to R890. [Applause.]
In respect of defence, public order and safety, spending will rise from R172 billion, this year, to R204 billion, in 2018-19. Taking into account the recommendations of the Farlam Commission of Inquiry, an amount of R598 million is allocated to enhancing capacity of Public Order Policing units over the MTEF period ahead. [Applause.]
Allocations are also made to strengthen institutions supporting constitutional democracy and to combat corruption, and to enhance the independence of the judiciary. Funds are allocated for the Information Regulator established in terms of the Protection of Personal Information Act of 2013.
In respect of provinces and provincial expenditure management, our Constitution requires an equitable division of nationally collected revenue between national, provincial and local government. Taking into account the current Fiscal Framework, the provincial MECs for finance have agreed to a joint action plan to address expenditure management and service delivery improvements in each of their provinces.
Some of the key measures that they have adopted are the following: firstly, containment of administrative personnel expenditure, while protecting education and health service staff; secondly, improved revenue collection by the provinces themselves; thirdly, rationalisation and closure of redundant and underperforming programmes and entities; and lastly, an intensification of cost-containment measures, in keeping with national guidelines. I think you should congratulate the MECs. [Applause.] They are going to watch you. Those of you in the provinces didn't clap enough for them!
In respect of municipal financial management, we are mindful that municipalities face growing pressures from both the rising cost of bulk services and rapidly growing numbers of households. Municipal capital spending exceeded R53 billion in 2014-15. Yet, we continue to see underspending of infrastructure grants in many local municipalities.
A review of these grants has led to several new proposals for improvement in the delivery of infrastructure. Firstly, grant frameworks will, in future, allow for refurbishing of assets, as I said earlier, recognising the long-term nature of municipal infrastructure. Maintenance is sometimes more important than new infrastructure. [Applause.]
Secondly, water sector grants will be restructured to reduce duplication and the associated administrative burden.
Thirdly, refinements are proposed to take into account the diverse challenges of urban and rural areas, and different-sized towns and cities.
Lastly, public transport transfers to cities will now be allocated through a formula, bringing greater certainty and sustainability to these funding arrangements.
This year brings our fourth fully democratic local government elections to our doorstep. In recognition of this, Treasury will launch a data portal to provide all stakeholders with comparable, verified information on municipal financial and nonfinancial performance. I hope this will further stimulate citizen involvement in local governance. The elections will also see a significant change in municipal demarcations. The number of municipalities will be reduced from 278 to 257, with the objective of improving their viability and sustainability. Local government allocations will be revised to take account of these boundary changes and over R400 million is allocated over the next two years to assist with this transition in the merger process.
The Back to Basics programme, launched in 2014, aimed at improving service delivery performance of municipalities, is entering its second phase of implementation, under Minister Van Rooyen. [Interjections.] [Applause.] It involves active monitoring of performance in governance and service delivery, support to struggling municipalities and stronger accountability measures.
Our investment in cities and urban networks is as follows. Cities are already taking steps to encourage higher land-use density and inner-city development under the authority of the new Spatial Planning and Land Use Management Act. This will unlock significant further private sector development potential across our cities, focused on strategic corridors.
Bus rapid transit systems are operational and expanding in Johannesburg, Tshwane, Cape Town and George. They will be extended to Ekurhuleni and eThekwini this year, although we've got to watch the sustainability of these programmes, as well. About R6 billion is allocated to this programme in 2016-17. Improvements to rail rolling stock and infrastructure will begin to improve the daily travel experience for commuters. We owe that to the workers of South Africa. [Applause.]
Associated with these transport investments, over 90 integrated land development projects valued at more than R130 billion are in progress to reshape our cities, in partnership with the private sector. Let me give you some examples.
In eThekwini, the Cornubia node comprises 25 000 housing units. An inner- city regeneration programme is also under way, including projects at Bridge City, Centrum, the Point and the interconnecting corridor. In the Tembisa Corridor in Ekurhuleni, R6,5 billion in public investment will leverage R8 billion in private-sector investment to deliver housing, commercial and office facilities.
In Cape Town, the N2 Gateway housing programme is continuing, together with the redevelopment of the Voortrekker Road Corridor, Conradie Hospital, the Athlone Power Station, and other sites. In Tshwane, investments are focused on the Mabopane Station hub, which is the gateway to the north for more than 150 000 passengers a day and has an informal market accommodating approximately 2 500 traders.
In Manguang, the R2,6 billion mixed-use Airport Development Node is under construction. An inner-city residential development is planned and the Vista Park and Brandkop projects will yield over 8 500 housing units at a total development cost of over R1,9 billion. In Johannesburg, the Corridors of Freedom connecting Soweto, Alexandra, Sandton and the Johannesburg CDB bring together public transport improvements, social amenities and partnerships with property developers to increase settlement densities and improve social mobility.
Our economic imperative is to ignite inclusive growth. This is central for jobs, for lowering debt, for delivering services and building infrastructure for a 21st century economy. Let us chart a new course for the economy and the wellbeing of all South Africans, particularly for those hardest hit by unemployment - the low-skilled and the youth. This is not only crucial to address social imbalances and inequality, it is also fundamental to encouraging investment. The recent tremors felt by the emerging markets are a warning that we need to take corrective steps urgently or we will all be worse off. At the same time, we need to move forward to mobilise the resources and capacity of all our people, large and small enterprises, civil society organisations and, importantly, the public, more generally.
The joint actions we need will not always be easy. All too often, bureaucrats and businesspeople speak past each other. The needs of the young are not the same as those of the elderly, like yourselves. The rhythms of the township differ from those of the suburb. Race, class and language differences hold back progress, even when we have shared aspirations and shared goals. We need to bridge these divides. [Applause.]
I believe that we are resilient enough, committed enough, and, hopefully, resourceful enough to overcome these challenges and seize these opportunities. We can turn today's adversity into opportunities. We can address the weaknesses that create policy uncertainty. We can build on the strengths that our resource base, our institutions and our workforce offer us. We can do things differently and, indeed, be innovative.
We have avoided reckless policies which might have dragged us into recession or reversed the capital flows we need. We have a sound macroeconomic and fiscal framework, and the will to work together for faster and inclusive growth.
Allow me, in conclusion, to thank you, Mister President and Minister Deputy President, for your leadership and support. [Interjections.] [Applause.] I also want to thank Cabinet colleagues for their contributions to addressing the challenges before us and for working as a team.
Members of the Ministers' Committee on the Budget, including Deputy Minister Jonas, who has been a pillar of strength, have provided sterling support. [Applause.] I want to thank our provincial Premiers, finance MECs and municipal mayors, who share our fiscal and financial responsibilities.
Please join me in also expressing appreciation to Minister Nene for his valuable contribution to our government and Treasury. [Applause.] Thank you! Thank you! Thank you. [Interjections.] I want to finish the speech now!