The Minister of Finance, Pravin Gordhan delivered the 2016 Budget Speech on Thursday 24 February. The speech focused on decreasing government expenditure, raising tax revenues and preventing a ratings downgrade. The Minister announced a cut in the expenditure ceiling by R10 billion but there is an increase in spending in higher education, economic infrastructure and social protection. Expenditure for this financial year is projected at R1 463 billion and the budget deficit will decrease from 3.2% in 2016/17 to 2.4% in 2018/19. Personal income tax relief of R5.5 billion focused mainly on lower and middle income earners.
Government is allocating R5.7 billion over the Medium Term Expenditure Framework (MTEF) to cover the shortfall created by the 0% fee increase in 2016. This includes allocations of R16.3 billion for short-term funding challenges in higher education over the next three years. The National Student Financial Aid Scheme (NSFAS) is allocated R14.3 billion of which R2.5 billion will be used to clear outstanding student debt. The commission set up by the President in January will focus on long term funding interventions in the higher education sector.
The overall expenditure on social assistance will increase from R129 billion this year to R165 billion in 2018/2019. The following increases will take effect:
Child support grant will increase by R20 to R350
Foster care grant to increase by R30 to R890
Old age, disability and care dependency grants will increase from R1 415 to R1505
Go to vote4thebudget.org and use the online tool to give your opinion on Budget 2016. This initiative gives the public the opportunity to have their input sent to the Standing Committee on Appropriations. This Committee decides whether to accept the government's announced budget or to make changes to it.
See infographic below for a breakdown of Budget 2016: