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Budget Speech unpacked

Nmathemba Simelane (36) from Tsakane in Gauteng is an unemployed mother of five who cares for her children with the help of the Child Support Grant she receives from the South African Social Security Agency (SASSA).

Presenting the 2023 Budget Speech, Finance Minister Enoch Godongwana recently announced that social grants will increase by at least five percent.

The increase means that Simelane will, from 1 April 2023, receive R505 per child from R480 in 2022.

“The money I receive from SASSA helps me to buy the necessities such as groceries and school stationery for my children,”she said.

 Simelane adds that life without the Child Support Grant would be difficult for her and her children.

 “It is hard to be unemployed especially when you have children. I have been very unlucky in the job market,” she said.

 Furthermore, Simelane said this year, she plans to use a portion of the grant to start a business so that she can get a better income.

Minister Godongwana said R66 billion has been allocated to the Department of Social Development over the medium term, with R36 billion to fund the extension of the COVID-19 Social Relief of Distress (SRD) grant until 31 March 2024. An amount of R30 billion will be used for inflation-linked increases for other social grants.

The increases in social grants are as follows:

  • The Old Age Grant will go up from R1 985 to R2 085
  • The Old Age Grant for those over the age of 75 will increase from R2 005 to R2 105
  • War Veterans Grant to increase to R2 105 from R2 005
  • Disability Grant to go up from R1 985 to R2 085
  • The Foster Care Grant increases from R1 070 to R1 125
  • Care Dependency Grant  to increase from R1 985 to
    R2 085.
  • Child Support Grant and Grant-in-Aid go from R480 to R505.

“In 2023/24…R400 million is allocated to SASSA to administer it. Government is still considering alternative options to provide appropriate social protection for the working-age population that can replace or complement the current grant,” National Treasury said.

The state was anticipating a growth in grant beneficiaries over the next three years.

“Expenditure on social grants will increase from R233 billion in 2022/23 to R248.4 billion in 2025/26 due to increases in the number of recipients and the value of the grants.

“Excluding the COVID-19 SRD grant, social grant coverage is expected to increase from about 18.6 million beneficiaries in March 2023 to 19.6 million beneficiaries by March 2026,” the department said.

Increase electricity supply

The government has also introduced a R9-billion tax relief programme to support South Africa’s clean energy transition, increase electricity supply and limit the impact of consistently high fuel prices.

Minister Godongwana said the tax incentive available for businesses to promote renewable energy would be temporarily expanded to encourage rapid private investment to alleviate the energy crisis.

The current incentive allows businesses to deduct the costs of qualifying investments over a one-to-three-year period, which creates a cash flow benefit in the early years of a project.

“There will be no thresholds on the size of the projects that qualify, and the incentive will be available for two years to stimulate investment in the short term,” Minister Godongwana said.

To increase electricity generation, government is also proposing a rooftop solar incentive for individuals to invest in solar photovoltaics (PV).

The Minister said individuals will be able to receive a tax rebate to the value of 25% of the cost of any new and unused solar PV panels.

“To qualify, the solar panels must be purchased and installed at a private residence, and a certificate of compliance for the installation must be issued from 1 March 2023 to 29 February 2024."

Minister Godongwana said the rebate is only available for solar PV panels, and not inverters or batteries.

“It [the rebate] can be used to offset the individual’s personal income tax liability for the 2023/24 tax year up to a maximum of R15 000 per individual.”

For example, an individual who purchases 10 solar panels at a cost of R40 000 can reduce their personal income tax liability for the 2023/24 tax year by R10 000.

Support for small businesses

Minister Godongwana said to support businesses in distress due to the COVID-19 pandemic, a new business bounce-back scheme will be launched.

“Firstly, small business loan guarantees of R15 billion will be facilitated through participating banks and development finance institutions.”

According to Minister Godongwana, this is to allow access for qualifying non-bank small and medium loan providers.

“Secondly, by April this year, we intend to introduce a business equity-linked loan guarantee support mechanism. We intend to bring the total support package through the bounce-back scheme to R20 billion.

National Treasury highlighted that economic development programmes and functions are expected to reach at least R774 million over the next three years.

The economic development function “allocates funding to departments and entities focused on promoting sustained and inclusive economic growth to address unemployment, poverty and inequality” with the bulk of the allocation going to goods and services, and capital expenditure.

Economic development programmes earmarked by the government for allocations include:

  • R2.8 billion will be allocated to the Department of Small Business Development as part of the Township and Rural Entrepreneurship Fund to support 120 000 township and rural enterprises
  • The Land Restitution Programme has been allocated R12.5 billion to allow the government to finalise outstanding restitution claims and support resettled farmers to sustain productivity, create jobs and reduce poverty over the next three years
  • Over the medium term, at least R7.8 billion allocated to the Department of Agriculture, Land Reform and Rural Development will continue managing bio-security, increase agricultural production and manage natural resources.

Reaction from government Ministers

Government Ministers welcomed the 2023 Budget Speech, saying Minister Godongwana did his best to extricate the country from an economic conundrum. 

 “He has tried to cover all the corners from the electricity problems to the grants given to the [elderly] and children. He has tried to get a balance; to give everybody something in this budget,” Home Affairs Minister Aaron Motsoaledi said.

Agriculture, Land Reform and Rural Development Minister Thoko Didiza  echoed Minister Motsoaledi’s sentiments, saying while the economic climate was not “an easy situation”, the budget “was balanced.”

Minister Didiza praised Minister Godongwana for being able to prioritise the issue of electricity and revitalise the rural economy.

Small Business Development Minister Stella Ndabeni–Abrahams said the budget was a step in the right direction for the township and rural economy.

“It has looked at all areas that affect small businesses. It is not just only about the allocations that go to small businesses but also issues such as infrastructure,” she said.

Minister Ndabeni-Abrahams also welcomed Minister Godongwana’s pronouncements on the Bounce-Back Loan Guarantee Scheme. - SAnews.gov.za