On the right track
The personal tax relief to the tune of R13.4 billion is a welcome measure and it will go a long way to increasing people’s disposable income and contribute to an increase in aggregate demand. Such fiscal measures are not uncommon in times of serious economic slump like the one we find ourselves in courtesy of the global financial crisis. It is equally good that the minister saw it fit to adjust upwards social grants and other welfare transfers. This will give a little relief to the most vulnerable groups in our society who are currently reeling under the pressure of high food prices and rising costs of living. It is, however, likely that some of the envisaged gains for the poor will be eroded in the not too distant future owing to the intended increases in the fuel levies to the tune of 40.5c and 41.5c a litre for petrol and diesel respectively.
Equally welcome is the increased expenditure in education, although questions of quality offered to learners from poor backgrounds still need to be resolved. Hopefully, part of the budgeted money will address these concerns. The health sector has also received a good shot in the arm and this should to a large extent help address the problems of staffing and medical stocks. The intended establishment of the National Office for Standards Compliance will hopefully help address the shameful mess in this sector.
The increase in expenditure for infrastructure development and public works should also provide much needed jobs at the local level and further boost consumption and economic growth. Umsobomvu received a further R1 billion which should also help create more jobs for the youth.
In a nutshell, the budget is quite balanced - trying to shore-up the social sector and spur growth at the same time. However, it will take a lot more than the mere disbursement of funds for the desired outcomes to be achieved. The good intentions exemplified by the increased social and infrastructure spending will need to be followed up with ethical governance devoid of corruption and cronyism. Besides serious capacity gaps in the civil service, especially in local bureaucracies, these are the key threats to the attainment of our developmental objectives. Therefore, Minister Trevor Manuel has done his job almost adequately, but will other people in the chain responsible for the implementation carry this through?