2008 Appropriation Bill Presentation to the Standing Committee

2008 Appropriation Bill Presentation to the Standing Committee on Finance

Overview • • What is in the Appropriation bill What’s new in the Bill Structure of the bill Key spending allocations

What’s in the Bill • Bill provides for the appropriation of money from the National Revenue Fund in terms of section 213 of the Constitution and section 15 of the PFMA • Bill sets out allocations by Vote and main divisions within votes • Spending is subject to the PFMA • Bill provides for specifically and exclusively appropriated – Minister may impose conditions – Minister may stop allocations if conditions not met • Bill provides for Treasury to approve use of savings under a transfer within vote to other purposes • What’s new in the Bill? – Specifically and exclusively appropriated items dealt with differently – New layout and headings for transfers

Structure of the Bill • Bill is divided by Vote and by main division within a vote (programmes) • An aim is set out for each vote and a purpose is set out for each programme • Allocations are divided into: – Current payments – Transfers and subsidies – Payments for capital assets • Allocations marked with an * refers to specifically and exclusively appropriated • Conditional grants are specifically and exclusively appropriated and are also listed in the Division of Revenue Bill

Additional allocations per cluster

Social security reforms • Child Support Grant extended from 14 up to 15 years; conditionalities being considered • Qualifying age for old age grant - phasing down of the qualifying age for men to 60 over the MTEF period: – Age 63 -64 – Age 61 -62 – Age 60 April 2008 April 2009 April 2010 • Raising of means tests (disability, old age grants) under consideration • Above inflation grant increases – R 70 to R 940 a month for OAG and disability (8%) – R 10 in April and R 10 in October to R 220 a month for CSG (7. 5%) • These changes budget to cost an additional R 12 billion over 3 years • SASSA administrative reforms under way • Broader social security reforms entering design phase

Infrastructure, economic and admin services • Infrastructure and economic services – – – – – Municipal infrastructure - R 3. 8 billion, provincial infrastructure - R 2. 7 billion Investments in buses, taxi recapitalisation, roads and rail - R 3. 9 billion Public transport infrastructure and systems - R 2 billion Digital television & internet infrastructure - R 984 million Industrial development – R 2. 3 billion Expanded Public Works – R 1 billion Land restitution and distribution R 1. 9 billion and agric support R 500 m Human capital development and R&D – R 760 million PBMR – R 3. 5 billion R 60 billion provision to support Eskom over five years • Admin services – Home Affairs turn around strategy – R 1. 5 billion – R 1. 2 billion for SARS - customs and systems improvements – R 717 million for the construction of Pan African Parliament building

Social services and justice and crime prevention • Social services – Increased social grant amounts and number of beneficiaries – R 12 billion Higher education – R 1. 4 billion School Nutrition Programme – R 1. 8 billion Hospital revitalisation and tertiary services - R 3. 1 billion HIV/Aids prevention and treatment – R 2. 1 billion • – – Justice and protection services – Forensic laboratories, policing and IT equipment – R 1. 4 billion – SAPS ICT for resource & evidence management - R 1. 3 billion – R 300 million - judges, magistrates and public defenders – Correctional facilities and personnel – R 1. 9 billion – Military skills development and defence infrastructure – R 1. 4 billion

Provincial priorities • R 45. 7 billion added to provincial share – • Personnel adjustments – – • General baseline adjustment to stabilise the public health system TB (MDR and XDR) Comprehensive HIV and Aids strategy (preventative, HBC and ARVs) Hospital revitalisation In social development – – – • • Grade R and ECD Learners with special needs (inclusive education) Learner support materials for grades 10 to 12 (NSM) Education infrastructure needs In health – – • Interventions to recruit and retain social services personnel 2007 wage agreement, including OSD for educators, health professionals, social workers In education – – • R 33. 2 billion to the equitable share and R 12. 5 billion to conditional grants ECD (in collaboration with education) Secure care services for children in conflict with the law Access home and community based care Roads, agriculture and SMME development Housing and human settlements

Local government priorities • Increasing the equitable share envelope (R 6. 5 billion) for : – Increased service delivery costs due to tariff increases – Increased demand following the rollout of basic infrastructure to the poor • Support for poorer municipalities • Step up of MIG to the tune of R 7 billion – to allow further rollout of basic municipal infrastructure in poor communities – to provide each municipality with a reasonable minimum MIG allocation • Enhanced funding of capacity-building initiatives in the area of financial management • Further ensuring the readiness of the host cities for the 2010 FIFA World Cup

Conclusion • Budget focuses on investing to raise long term growth • We’re protected from the storm, growth will slow but no chance of recession • Economic foundation strong • Spending growth slows but still healthy, mainly on infrastructure and social services • Fiscal balance in surplus, providing cushioning effect against inflation and current account deficit • Tax measures support investment, growth and jobs