Latest news with #R5.5-billion
eNCA
20-07-2025
- Business
- eNCA
Treasury shoots down SANDF funding criticism
JOHANNESBURG - National Treasury is responding to criticism from Navy Chief Admiral Monde Lobese. He accused Treasury of sabotaging the SANDF during a Joint Standing Committee of Defence meeting. Lobese says Treasury cannot operate like a super department or a government on its own. The SANDF has been allocated 1.7 percent of the country's GDP, just over R57-billion. But, Treasury has hit back, saying it's wrong to suggest the department is responsible for the army's funding crisis. It says Cabinet decides on allocations. In addition to funding distributed for this financial year, the SANDF has also been allocated R4.3-billion in the 2025 Medium Term Expenditure Framework and R5.5-billion for early retirement for the current and next financial years.
eNCA
20-07-2025
- Business
- eNCA
Treasury fires back at SANDF funding criticism
JOHANNESBURG - National Treasury is responding to criticism from Navy Chief Admiral Monde Lobese. He accused Treasury of sabotaging the SANDF during a Joint Standing Committee of Defence meeting. Lobese says Treasury cannot operate like a super department or a government on its own. The SANDF has been allocated 1.7 percent of the country's GDP, just over R57-billion. But, Treasury has hit back, saying it's wrong to suggest the department is responsible for the army's funding crisis. It says Cabinet decides on allocations. In addition to funding distributed for this financial year, the SANDF has also been allocated R4.3-billion in the 2025 Medium Term Expenditure Framework and R5.5-billion for early retirement for the current and next financial years.
Daily Maverick
16-07-2025
- Business
- Daily Maverick
The Road Accident Fund is due for a robust clean-up
The recent suspension of Road Accident Fund (RAF) CEO, Collins Letsoalo, followed by Minister Barbara Creecy's decision to dissolve the RAF board this week, is a welcome move and a long overdue signal that serious intervention is finally under way at this embattled institution. While the RAF's rot certainly worsened under Letsoalo's leadership since 2019, its dysfunction long predates his tenure. The decline began as far back as 2008/09, not coincidentally, the same period when State Capture began to take root under former President Jacob Zuma. The RAF has since become a textbook case of how cadre deployment, poor governance and weak financial oversight give rise to the collapse of a state institution, which in turn leads to widespread failure to deliver on its mandate to the people and massive increases in costs to society. Consider this: in 2005/06, the RAF received just more than R5.5-billion in fuel levy income (then 37 cents a litre), ran a manageable claims book and even produced a surplus of R1.4-billion – thanks in part to a once-off Treasury grant of R2.5-billion. It was, at the time, still largely functional and able to fulfil its mandate, and a 5c increase in the RAF levy would have negated the Treasury bailout. However, within three years, by 2008/09, the RAF's operating expenses had ballooned more than 350% to R24-billion. To cover this growing shortfall, the fuel levy was pushed up to 47c per litre, which was a 27% increase in just three years that significantly outpaced inflation. The rot had taken hold, and opportunistic law firms and other specialist advisory services began feasting on the RAF's inability to manage claims effectively, many settling on courthouse steps at enormous cost to the fund. From 2009 onwards, this chaos spiralled. By 2020, operating expenses had doubled again to nearly R49-billion. However, this figure masked a growing backlog of unpaid claims, with the RAF simply stalling many settlements. Its actuarial liabilities had exploded to an estimated R322-billion, as referenced in its 2020 annual report. Fuel levy hikes In a deeply troubling move, Letsoalo and the RAF Board attempted in 2021 to manipulate the fund's finances by rewriting its accounting policies to reduce liabilities by R306-billion, effectively hiding the problem rather than fixing it. Thankfully, the Auditor-General rejected this cunning plan, and the matter was taken to court. During these loss-of-control years, the public paid a heavy price. Between 2009 and 2022, the RAF levy on the fuel price shot up 360%, from 47c to R2.18 per litre. These hikes inflated the cost of transport, food, and consumer goods for every South African. Instead of fixing the RAF's broken systems, the government simply passed the costs on to the public through excessive, above-inflation levy increases. Had the RAF levy increased only at the rate of inflation, it would have reached just 94c by 2022 – not R2.18. In real terms, the RAF received around R200-billion more than it would have under inflation-linked increases, which is essentially a hidden tax caused by incompetence, maladministration and poor political will. Minister Creecy's intervention must now be the start of a serious turnaround. The next step is critical: appointing a capable, independent and professional board with the skill and courage to fix this institution. That board must recruit qualified executives and people with experience in managing risk, claims, and fraud prevention. South Africa has many capable, retired insurance industry professionals with a deep understanding of complex claims environments and the controls needed to stop internal and external abuse. These are the people the RAF desperately needs. I would also urge the minister to send a strong and unambiguous message to the ANC's cadre deployment machinery – hands off the RAF. It's time to rebuild this institution based on merit, integrity and competence. Not politics. The pain inflicted on accident victims, the public purse, and our economy by a broken RAF is incalculable. Fixing it will take courage and resolve, but it must be done. The window for action is now open. Minister Creecy must not waste it. DM
Daily Maverick
21-05-2025
- Business
- Daily Maverick
Education and health funding slashed while fuel levy increased
From grant recipients and healthcare, to education and Home Affairs, this is an overview of the May 2025 Budget allocations. A rocky road lies ahead for social grant recipients who will see no increase in the amounts they receive over the next two years. This is just one of several changes revealed by Treasury this week in the third iteration of the National Budget for 2025. Those in the public sector who were hoping to take advantage of the early retirement programme will have to hop to it. The R11-billion allocation over the medium term has been slashed to R5.5-billion, which means the potential 11,000 employees who could have benefited has been halved to 5,500. Treasury director-general Duncan Pieterse said part of the reason for halving the allocation is that there is a process under way with the bargaining council for the current financial year. The previously projected savings of about R7-billion would also be reduced to about R3.5-billion. Slight acceleration for the fuel levy Consumers will also take a hit with a 4% (inflationary) increase to the fuel levy that will see petrol go up by 16 cents a litre, while diesel increases by 15c a litre – effective from 4 June this year. In other words, Treasury is clawing back the R4-billion relief that would have been seen had the fuel levy not increased. However, this is the first fuel levy increase since 2021. The zero-rated foods increase (on canned vegetables such as chickpeas and baked beans, edible offal of sheep, poultry and other animals, and dairy liquid blends) is now out the window. Importantly, additions to front-line services such as education, health and Home Affairs remain in place, although they have been revised downward. Healthcare The three-year allocation for health (provincial health compensation costs, unemployed doctors and goods and services) shifts down from R28.9-billion in the March Budget presentation to R20.7-billion in the Budget tabled this week. This funding will cover the employment of 800 doctors who have completed their community service, safeguard about 4,700 health posts and address shortages in medical goods, services and accruals. The May 2025 Budget overview document states that an additional R1.4-billion is earmarked for the construction of Siloam Hospital and the implementation of public-private partnership health technology at Tygerberg Hospital. Home Affairs Lines at Home affairs (Hell Affairs) are destined to remain long for the foreseeable future. While the March Budget allocated an additional R3.3-billion over three years for digitisation and 'human resource capacitation', it has been reduced to R965-million. Importantly, the line item in the 'spending additions funded over the MTEF period' now only reads 'digitisation', which means the 'human resource capacitation' or jobs or training element has been dropped. Education The additional spending for education shifts from R29.5-billion in March 2025 to R19.5-billion. This will go towards safeguarding about 5,500 teacher posts and increasing the early childhood development (ECD) subsidy from R17 per child per day to R24. The May 2025 Budget overview document then says that 'additional funding of R10-billion over the medium term will expand ECD access to an additional 700,000 children up to the age of five years old'. Defence 'The R5-billion we had proposed to allocate to the Department of Defence for its participation in the SADC mission in the DRC is reduced,' said Finance Minister Enoch Godongwana. However, the SANDF allocation for 2025/26 has been increased from R1.8-billion to R3-billion. 'This will cover the immediate costs of an orderly and safe withdrawal of our troops and mission equipment,' Godongwana said. Anticipated spending pressures Initiatives that may require funding later this year include: The withdrawal of the US President's Emergency Plan for Aids Relief (Pepfar) funding, particularly through USAID; Infrastructure projects in the Budget Facility for Infrastructure and the Passenger Rail Agency of South Africa rolling stock fleet renewal programme; Accommodating population changes that impact on the provincial equitable share allocations; Strengthening capabilities in the Office of the Chief Justice and Statistics South Africa; Political party funding and infrastructure provision for royal houses; and The National Social Dialogue. DM
