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2017 Budget focuses on the poor

Written by Ongezwa Mogotsi and Amukelani Chauke
Finance Minister Pravin Gordhan recently tabled a budget that emphasises the need for transformation for all.

In his Budget Speech he outlined government’s plans to make the economy stronger and service delivery to citizens efficient.

To achieve these objectives South Africa has to go through radical transformation.

“To achieve sustained higher growth there are also more fundamental, radical transformation measures that are needed. These relate, in particular, to economic power,” said Minister Gordhan. 

He said the relationships between labour and capital, rich and poor, black and white, men and women, town and townships, among others, still reflect the entrenched legacy of colonialism and apartheid.

“Wealth is produced and allocated along lines that remain fundamentally unjust. The ownership of assets and the distribution of income is captured by a minority of the population – a situation that is morally wrong and economically unsustainable.

“We agree with President Zuma that a new perspective on economic transformation is required,” said Minister Gordhan.

Transformation for growth

For the country to achieve sustained higher growth, there are fundamental, more radical transformation measures that are needed said Minister Gordhan.

“The relationships between labour and capital, rich and poor, black and white, men and women, town and township, urban and rural, still reflect the entrenched legacy of colonialism and apartheid.”

He said the principles that should guide transformation include:

  •  Transformation must  be  mass-based, benefiting  the  most  disadvantaged South Africans through the creation of new assets, capabilities and opportunities to build livelihoods.
  • Mobilise both private and public investment in social and economic infrastructure, new technologies and new activities that help build a modern and diversified economy.
  • Continue  to  confront  cartels  and  collusion  robustly  and  provide  new opportunities for access to markets.
  • Transformation must re-shape our cities and build linkages across the rural and urban landscapes, where fragmentation and separation characterised past patterns.
  • Transformation must achieve a more balanced structure of ownership and control in our economy.
  • Transformation should build on and strengthen democracy, and entrench open, transparent governance and the rule of law.
  • Transformation must build self-reliance of South Africans, reject the dependence on debt and protect our fiscal sovereignty.
  • Transformation must result in an economy that belongs to all, black and white, where the legacy of race domination is no longer visible.

Transformation must unleash growth, establish a new economic direction, mobilise investment, empower the masses and create new resources for social change.î Minister Pravin Gordhan.

Transforming higher education

Minister Gordhan said transformation is not only about overcoming the legacy of exclusion and inequality of the past, but it is also about restructuring the economy to take advantage of new technology, market access and investment opportunities.

It is about investing in social capabilities, through better outcomes in health and education and skills development, and through inclusive and responsive institutions.”

The minister also announced the following:

  • R5 billion would be allocated to higher education and training in 2019/20.
  • Funds have been provided to ensure that students from households that earn up to R600 000 do not pay university fee increases for 2017.
  • All poor students who applied and qualified for National Student Financial Aid Scheme (NSFAS) awards, and who have been accepted by a university or a TVET college, will be supported.

The Budget and transformation

The budget gives effect to our transformation action agenda by financing government programmes which:

  • Ensure that many more people live in dignity every year
  • Radically improve access to services and economic participation across all racial lines
  • Energise growth and create jobs
  • Increase investment and development – at national, provincial and local level –mobilising resources across government, business and other sectors.

Minister Gordhan said the South African budget finances, among others, the construction of houses and schools, the education of young people, care for the elderly and incomes of the most vulnerable.

But budgets alone cannot achieve our transformation goals.”

He said the country needs a powerful combination of:

  • Effective and targeted government delivery of economic programmes,
  • An energetic coalition with labour, business and civil society,
  • A consensus on a transformation programme – with each of us clear about the contribution and sacrifices we have to make to ensure optimal inclusivity,
  • A commitment to eradicate gross inequality and share the benefits of growth and restructuring of the economy.

Providing social support to the poor

A social grant is the most direct way to alleviate poverty. By 2020, social grants will reach 18.1 million South Africans, mainly children (12.8 million) and the elderly (3.6 million).

The child support grant is expected to increase by R25 in 2017/18 while the foster care grant will go up by R30. The old age pension grant will increase by R95 a month in 2017/18.

Radical socio-economic transformation

Radical socio-economic transformation will help to grow the economy in a way that will include all South Africans and will ensure true reconciliation and prosperity.

Through transformation the country can achieve a more balanced structure of ownership and control of the economy.