February 16, 2006
By Anish Abraham
THERE are tax cuts for individuals and better revenues and, importantly, there is massive spending on capital infrastructure by all spheres of government. This is the message in Finance Minister Trevor Manuel's record-breaking tenth budget, given on 15 February.
Speaking to parliament in the legislative capital of Cape Town, Manuel announced a budget for the 2005-06 financial year of R419-billion, while estimated revenues for the same period was raised to R411,1-billion, up by R41,2-billion from the previous estimate.
Revised figures estimated growth in 2005 to have been 5 percent, though when full accounting is done at the end of the financial year, it may well be that South Africa achieved the desired economic growth of between 5,5 percent and 6 percent.
Survey data also revealed that the economy was creating about 350 000 jobs a year, averaging 1 500 new jobs every working day.
Local governments would receive a combined R26,5-billion over the financial year, while the national departments and provinces would receive R215-billion and R176,7-billion, respectively.
"A core priority is to strengthen education, public health services and social welfare services," Manuel said.
Turning to housing, Manuel commended the Brickfields and Legae housing projects in Newtown, saying they gave affordable homes to 537 families and were an excellent example of the government and private citizens working in partnership.
Joburg benefits
In what he termed a "significant change in the division of revenue", Manuel allocated R24-billion to local municipalities to compensate for revenue lost after the scrapping of Regional Services Council (RSC) levies.
Of that amount, R7-billion will be distributed in the 2006-07 financial year, R8-billion in 2007-08 and finally R9-billion in 2008-09.
This payment to local municipalities was just an interim measure and the national Treasury was still investigating possible alternatives that could replace the revenue lost when the RSC levies were cancelled.
According to the national Treasury, it is engaged with all stakeholders including business, the Department of Provincial and Local Government and the South African Local Government Association.
The amount received by each municipality would be similar to what they were receiving through the collection of RSC levies.
Taking another decision that would add a bit more to municipal coffers, Manuel declared that municipal property rates revenue would be zero-rated for VAT purposes, which would result in a benefit of about R1-billion for local governments.
According to the national Treasury, most municipalities used money collected from property rates to fund delivery of services, and enabling them to claim VAT rebates would give them more money to do so.
To assist with the provision of basic services infrastructure in traditionally poor and neglected areas, the amount budgeted for the Municipal Infrastructure Grant was increased by R800-million to R21,5-billion over a three-year period.
The grant supports basic water infrastructure, sanitation (which includes eradication of the bucket system), roads and other infrastructure.
Manuel also allocated an additional R1,7-billion for upgrading informal settlements, with national and provincial housing departments being allocated a total of R23-billon over a three-year period.
The national Treasury would also make a contribution of R7,1-billion towards the Gautrain Rapid Rail Link project, with the Gauteng provincial government contributing a similar amount.
In a statement issued by the Office of the Premier on 16 February, Gauteng Premier Mbhazima Shilowa announced that the provincial government had concluded a deal with the Bombela International Consortium on the costs of the high-speed train.
It would now be forwarded to the national Treasury and the minister of finance for final approval and to work out terms of the concession agreement.
In preparation for the 2010 Soccer World Cup, now only four years away, Manuel allocated R5-billion towards dedicated infrastructure for the soccer spectacular. Of that, R3-billion would be set aside for use over the next three financial years.
In playing its own part, the City of Johannesburg will also invest heavily in areas around the two chosen stadiums, namely the FNB Stadium in Nasrec and the Ellis Park precinct in Doornfontein.
The capacity at Ellis Park, where the Springboks won the Rugby World Cup in 1995, is to be increased by 20 000 seats, while the general area around the precinct will benefit from a R2-billion upgrade.
The FNB Stadium, which regularly hosts titanic battles between soccer giants Kaizer Chiefs and Orlando Pirates, will receive R350-million to have its capacity increased from 80 000 seats to about 100 000 and an encircling roof added, giving the stadium a brand-new look.
As part of its Nasrec precinct, the City will also upgrade infrastructure surrounding the FNB Stadium.
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