Finance Minister Pravin Gordhan delivering his budget speech. Photo: Business Day

• VIDEO - Consolidated government expenditure - Economic Dev
• VIDEO - What does this Budget offer
• BLOG UPDATE- Stock Blog takes a look at oil and the state job bill

Go to Business Day’s special budget page for more

Gordhan adds budget muscle to growth plan

Minister allocates R150bn over three years to jobs, training and skills development.

EDWARD WEST and LINDA ENSOR

Published: 2011/02/24 05:59:22 AM

CAPE TOWN — Finance Minister Pravin Gordhan yesterday unveiled a budget to give financial muscle to the government’s new growth plan, allocating R150bn over three years for job creation, training and skills development.


These are the key objectives of the government’s New Growth Path policy. When it was released last year, there was some scepticism about whether the country could afford the investment required to generate 5-million jobs in 10 years.




But Mr Gordhan neatly aligned his spending plans with policy — without punishing taxpayers.




He reminded the National Assembly that he had to find almost R40bn to fund last year’s public sector wage deals, which hobbled his ability to spend this year.


Mr Gordhan said non-interest spending on public services would grow by an average of 8% a year, well above the projected inflation rate, rising from R897bn in 2010- 11 to R1,2-trillion in 2013-14.


The hallmark of this year’s R979,3bn consolidated budget is that it is slightly expansionary, with a slower than projected reduction in the budget deficit over the next few years — the only way Mr Gordhan can match funds to the African National Congress’s intention to address SA’s chronic unemployment.


The budget makes provision for a substantial unallocated contingency reserve of R4bn in 2011-12, R11bn the following year and R23bn in 2013-14.


Mr Gordhan said that this allowed for unforeseeable and unavoidable spending requirements next year and policy priorities over the medium term, which could include financing the National Health Insurance scheme. The proposed R5bn youth employment subsidy will contribute significantly to the suite of policies directed at achieving the growth path’s ambitions.


Infrastructure spending of more than R800bn by the government and state-owned enterprises over the medium term, R20bn in tax incentives for manufacturing investment, R73bn for the expanded public works programme and the R9bn jobs fund , all coalesce into a focused drive to boost economic growth.




In addition, a three-year allocation of R10bn for investment promotion will underpin the Industrial Policy Action Plan.


At a media briefing, Mr Gordhan said the focus on job creation was vital to address SA’s "chronic employment crisis".




To make a significant dent in unemployment, growth of 7% per year was required, which Mr Gordhan said remained a big challenge, but he added that there was "no silver bullet" for growth.


The government predicts real growth in gross domestic product of 3,4% this year, 4,1% next year and 4,4% in 2013. This compares with last year’s 2,8%.


Mr Gordhan allocated substantial amounts of the budget for education and skills training.


Further education and training colleges will get R14bn over the next three years, while m ore than R20bn will go to the sector education and training authorities and R5bn to the national skills fund. The National Student Financial Aid Scheme will get R6bn.


"Including adjustments for the remuneration of teachers, a total of R24,3bn will be added to education and skills spending over the next three years, which rises from R190bn next year to R215bn in 2013-14," Mr Gordhan said.