Latest news with #R68-billion
Daily Maverick
23-07-2025
- Business
- Daily Maverick
Gauteng's R68bn education budget is insufficient to address key issues, warn experts
Experts have warned that despite the Gauteng Department of Education budget increasing to R68bn for the 2025/26 financial year, it is not enough to address critical challenges such as the rapid increase in learners, infrastructure backlogs and systemic inequalities. The Gauteng Department of Education (GDE) has announced a R68-billion budget for the 2025/2026 financial year designed to drive improvements across the province's education sector. Key priorities include addressing long-standing infrastructure backlogs, expanding access to Early Childhood Development (ECD) programmes and improving teacher retention and recruitment. Speaking at a post-budget vote media briefing at Jeppe Girls High School on 20 July, Education MEC Matome Chiloane emphasised the transformative intent behind the allocation. Media 'This R68-billion allocation reflects our dedication to building a generation of skilled, confident and capable learners who will drive South Africa's economic growth and social transformation,' he said. Chiloane said the budget supported key initiatives such as the Strategic Framework for Educational Excellence, the expansion of ECD programmes, school nutrition, scholar transport, psychosocial support and upgrading infrastructure. These efforts aim to provide quality, inclusive and future-focused education by universalising Grade R, ensuring school safety and addressing social barriers to learning. It falls short Equal Education Law Centre (EELC) researcher Daniel Peter Al-Naddaf said the budget increase fell short when adjusted for actual spending and inflation. While the GDE's nominal 4.9% increase to R68-billion seems substantial, he explained that this figure was compared to the initial 2024 budget of R65.8-billion, not the actual R66.14-billion spent. As a result, the increase over last year's actual spending is closer to 2.8%. 'The GDE is not planning to increase spending by 4.9%,' said Al-Naddaf, adding that projected increases for the following years fall below inflation. 'This means that in real terms, learners will receive less each year, not more. Gauteng has one of the highest rates of learner population growth in the country, and all provinces have experienced austerity budgeting for more than a decade. Any increase is welcomed, but this is not at all the kind of major increase necessary to rectify years of underspending,' he said. Matshidiso Lencoasa, a budget policy analyst and researcher at SECTION27, underscored the significance of provincial education budgets, which often receive far less public attention than the national budget. 'Most education functions occur at the provincial level. It's crucial for people, especially parents and community members within each province, to actively look at these budgets and monitor what is being allocated. Without this oversight, important needs can easily be overlooked or underfunded,' she said. Lencoasa said that while the increase appeared meaningful, it only roughly aligned with inflation and fell short of what was needed when factoring in population growth and learner migration. 'Gauteng is an urban province that is quite well-resourced, but it has been struggling for years with issues like overcrowded classrooms and vacant teacher posts. Most of this increase will simply cover the rising cost of living and operational expenses, but it doesn't tackle the core issues like overcrowded classrooms, vacant teacher posts and crumbling school infrastructure,' she said. Concerns over deepening inequality and underspending Al-Naddaf warned that the budget risked deepening disparities as a massive 8.3% cut in spending on goods and services over the next three years threatens critical support. Areas affected include learner transport, nutrition, information and communication technology, inclusive education, municipal services, and learning and teaching support materials. 'Some of the most severe inequalities among Gauteng's learners are precisely in their access to food, transport, technology and inclusive services and materials. While there are some promising initiatives, like collaboration with the Department of Social Development to provide uniforms and other materials to indigent learners, the budget generally risks worsening systemic inequalities in a province where many learners already struggle to get to school, eat at least one meal a day, and access learning materials and support,' he said. Lencoasa said provincial education departments faced difficult trade-offs when balancing critical needs with a stretched budget. 'They have to constantly decide between providing scholar transport, textbooks for learners, and stationery, all essential but competing priorities. Even with these increased allocations, the budget remains insufficient. It's still a long way from truly equipping the education system to provide quality basic education to all learners in the province,' she said. Lencoasa expressed concern that underspending and weak consequence management continued to plague education departments despite increased allocations. 'Unfortunately, underspending persists across various departments, including education, which is alarming given the desperate need for funding to improve schools and classrooms,' she said. 'Money being returned to Treasury or spent irregularly highlights inefficiencies. The school nutrition programme frequently faces shutdown threats due to tender and supply issues, underscoring systemic failures.' Lencoasa lamented that while reports flag irregular expenditure and mismanagement, those responsible are rarely named or held to account. Effective consequence management requires naming and shaming, followed by enforcement and remediation. Without this, poor service delivery and corruption will undermine education outcomes. ECD and Grade R funding is inadequate Gauteng's education budget includes a sizeable allocation of R734-million dedicated to universalising Grade R access, expanding ECD programmes, and training practitioners to NQF Level 6. Lencoasa acknowledged the department had made progress in early childhood education, but said it remained inadequate. 'The current allocations are nowhere near enough to support formal registration of ECD centres or effectively expand Grade R,' she said. Al-Naddaf voiced similar sentiments, noting that the funding increase of about 10.1% for Gauteng's ECD budget to R2.6-billion was encouraging, but accounted for less than 4% of the department's total budget. 'This budget will not ensure universal access to Grade R, and this is primarily because National Treasury has refused to provide provincial education departments the necessary funding to do so in 2025. This [R2.6-billion] is nowhere near enough to universalise Grade R, nor to provide quality, holistic ECD services to all young children in Gauteng. The GDE itself has told Parliament's Portfolio Committee on Basic Education that it does not have enough funding to provide universal Grade R, despite it being compulsory nationwide since January this year. 'While Treasury has made a provisional allocation of R10-billion for ECD nationally, this is specifically for subsidies at ECD centres, and not for universalising Grade R,' he said. Alternative funding and fiscal reform Lencoasa highlighted the urgent need for alternative revenue-raising mechanisms to bridge these gaps. She pointed to large sums lost via uncollected taxes, stating that better collection could unlock significant resources without raising the burden on ordinary citizens. She also questioned the effectiveness of corporate tax incentives designed to stimulate employment, suggesting their reform could free funds for education. Moreover, she advocated for redistributive taxes, like luxury and inheritance taxes, to generate equity-enhancing revenues for the sector. 'The Budget Justice Coalition has actively advocated for these alternatives, stressing that political will at national and provincial levels, especially in economically active provinces like Gauteng, is essential to unlocking sufficient and sustainable funding for education,' said Lencoasa. DM
Daily Maverick
21-05-2025
- Business
- Daily Maverick
‘We tread water for another year' — this fiscal offering is a stopgap, not a solution
After months of political brinkmanship, a VAT revolt, and two failed attempts, South Africa's third fiscal offering for 2025 has passed — not with vision, but with just enough duct tape to hold the economy together. Budget 3.0 isn't a blueprint for growth — it's a ceasefire between warring coalition partners, a lifeline for markets and a Band-Aid for a battered economy. Whether it holds, or builds, remains to be seen. Finance Minister Enoch Godongwana opened his address in Parliament on Wednesday. with the now-familiar line: 'We are tabling this Budget against the backdrop of a global slowdown, domestic challenges and coalition government.' It's the kind of framing that's clinical, defensive and quietly damning. He insisted it was 'not an austerity Budget', yet R68-billion in provisional spending has been cut, R1.2-billion will be spent daily on interest, and personal tax brackets have been frozen to harvest R49.4-billion through fiscal drag. To plug the revenue gap left by the abandoned VAT increase — a move widely attributed to pressure from the Democratic Alliance (DA), the Economic Freedom Fighters (EFF) and civil society litigation — the National Treasury has opted for less explosive tools: modest fuel levy increases (16c per litre for petrol, 15c per litre for diesel), sin tax hikes and a medical tax credit freeze that will quietly squeeze middle-income households. The SA Revenue Service, meanwhile, has been allocated an additional R7.5-billion over the medium term and told to deliver up between R35-billion and R50-billion in additional revenue. In his address, Godongwana reiterated the Treasury's intent to 'stabilise debt, fund service delivery and rebuild fiscal credibility'. However, as economists across the board note, the numbers tell a more sobering story — stabilisation is coming at the cost of deferred investment and delayed reform. Debt the devourer In a 21 May research note, Jee-A van der Linde of Oxford Economics stated: 'The Treasury's credibility has been unduly dented as a result of the Budget wrangling.' The firm downgraded South Africa's GDP growth forecast to 1.0% for 2025, calling the Treasury's 1.4% projection 'a bit of a stretch'. Official Treasury estimates now forecast average growth of just 1.6% over the Medium-Term Expenditure Framework (MTEF). Robert Openshaw, an economist at Aluma, put it plainly in his statement issued after the Budget: 'Twenty-two cents of every rand now goes to paying off interest, not development.' That amounts to more than R1.3-trillion across the MTEF. The Treasury's bond-switch scheme may offer temporary relief, but without growth the spiral will resume. Casey Sprake of Anchor Capital called the Budget 'moderately bond-positive', but asked: 'Why couldn't this pragmatic version of the Budget have been presented in February?' Tertia Jacobs, the treasury economist at Investec, echoed the sentiment: 'This is probably as good as we can get in the context of sluggish growth.' Across the board, economists appear aligned: while Budget 3.0 may stabilise the immediate fallout, it's a stopgap, not a solution — and without credible growth, even well-managed debt becomes unsustainable. Tax strategy — shock and squeeze The DA claimed credit for stopping the VAT increase through litigation, but its support for Budget 3.0 is conditional. 'We see this as a pathway to a national Budget we should be able to support,' the party said. While it cautiously backed the new version, the DA maintained that unchecked government spending remained a red line. It welcomed the lack of bailouts for state-owned enterprises, a renewed focus on ghost workers and improved infrastructure allocations. That infrastructure spend — more than R1-trillion over three years — is earmarked for roads, water, rail and Eskom grid upgrades. R219-billion has been committed to renewable energy. But delivery remains the great unknown. Raymond Parsons of NWU Business School warned, 'This is a holding-pattern Budget.' The Treasury's execution record, especially at provincial and municipal levels, invites caution. Analysts have flagged that freezing personal income tax brackets without adjusting for inflation effectively amounts to a stealth tax on the middle class — a move that increases tax burdens even as real incomes decline. The average household, in effect, pays more with less, as purchasing power is quietly squeezed. Markets hold — for now 'Markets thrive on certainty,' said Herschel Jawitz, the CEO of Jawitz Properties. With the VAT reversal locked in and no surprise tax grabs, the rand rallied below R18 and bond yields steadied. But Jawitz cautioned that sentiment, not stimulus, was doing the heavy lifting for now. Any future fiscal missteps could erase those modest gains. Winners, losers and leftovers The sugar industry breathed a sigh of relief. SA Canegrowers called the decision to freeze the Health Promotion Levy a win for rural jobs, saying: 'The sugar tax has been nothing but destructive … Treasury should scrap it to drive jobs and growth.' The Treasury also walked back its earlier proposal to expand the zero-rated VAT basket — a decision that might preserve short-term stability but leaves the poor exposed to food inflation. That retreat preserved calm but erased equity. The Child Support Grant rose by R30 — R1 per day — and is now R560 per month. However, the food poverty line is R796. That gap of nearly R240 renders the increase symbolic at best. The Treasury has reiterated its commitment to frontline services, allocating R845-billion to health and R1.04-trillion to education over the medium term. But with population growth and inflation, these allocations barely maintain real value, let alone expand access or improve service delivery. Savings, reform and the ghost in the machine The Treasury has identified R37.5-billion in potential savings through public finance reform, expenditure audits and what it calls 'baseline reallocations'. A nationwide 'ghost worker' audit has been launched to verify public sector payrolls — part of the Treasury's plan to tighten expenditure and reclaim integrity. Updates are expected in the October Medium-Term Budget Policy Statement. A R21.6-billion contingency reserve has been set aside to manage shocks, and while the Budget deficit is held at 4.8% of GDP, that's significantly worse than the February target. Still, the Treasury remains upbeat. The Budget facility for infrastructure, public-private partnership reforms and Operation Vulindlela are being repackaged as the engines of growth. But the question persists: Can the state implement its plans? Coalition optics, not economic strategy In a post-tabling analysis, Oxford Economics' Van der Linde noted: 'Political parties have been climbing over each other trying to claim credit.' The EFF staged a VAT 'victory march' outside the Treasury. Inside Parliament, the Budget passed not because it solved anything, but because it offended just little enough to be politically survivable. In trying to avoid political collapse, the Government of National Unity may have sacrificed policy ambition — and it's unclear what, if anything, will fill that vacuum before the next crisis. Political analyst Daniel Silke summarised the mood to Daily Maverick: 'We tread water for another year.' So yes, it passed, calmed markets, patched over coalition fissures and avoided another fiscal implosion. But it didn't deliver reform. It didn't spark growth. It didn't shift the centre of gravity. But holding is not the same as building, and South Africa may yet find itself back at the fiscal cliff's edge if growth doesn't follow. For now, the Budget holds. For now, at least, we are not yelling for rescue, nor drowning — but swimming upstream still lies ahead of us. DM
Daily Maverick
21-05-2025
- Business
- Daily Maverick
Enoch Godongwana's budget: a delicate balance of debt control and social investment unveiled
The bottom line is that a scalpel has been deftly wielded instead of a chainsaw, but economists and the markets will welcome the Treasury's commitment to spending within its limited means. With a scalpel in one hand and undisclosed tax measures for 2026 concealed by a glove in the other, Finance Minister Enoch Godongwana delivered a Budget on Wednesday that aimed to fill the revenue hole dug by the burying of the proposed VAT hikes while keeping mounting state debt levels under control. But the minister insisted that containing debt did not translate into the pain of austerity. 'This is not an austerity Budget,' the minister said in his prepared remarks. 'It is also a redistributive budget. It directs 61 cents of every rand of consolidated, non-interest expenditure towards the social wage… This budget invests over R1-trillion in critical infrastructure to lift economic growth prospects and improve access to basic services.' Pointedly, he noted that '… this is done without compromising the fiscal strategy of sustainable public finances'. The long-stated aim of stabilising debt in 2025/26 at a peak level as measured as a percentage of gross domestic product (GDP) remains firmly in place, with the ratio now seen at 77.4% of GDP this fiscal year compared to 76.2% in March. This will be its highest level since the dawn of democracy in 1994. 'We have achieved this difficult balance by reducing additional spending over the medium term by R68-billion… the size of the proposed increases to allocations is reduced, in line with what we can afford.' These 'downward revisions' to additional spending that were proposed in March over the next three years, an inflation-linked fuel levy adjustment, and undisclosed tax proposals for 2026 to boost state coffers by R20-billion — which are clearly in the drafting phase — were the key measures outlined to bridge the gap created by the scrapping of the VAT boost. The Treasury insists there are no spending cuts, but 'downward revisions' to additional spending amount to the same thing when compared with what was outlined in March. If it walks like a duck and quacks like a duck, it ain't no chicken. Painful Investment The bottom line is that a scalpel has been deftly wielded instead of a chainsaw, but economists and the markets will welcome the Treasury's commitment to spending within its limited means. Godongwana was diplomatic and gracious over the VAT fracas that ultimately produced this third try at a Budget. 'The debate and negotiations have deepened our understanding of policy trade-offs and institutional processes, while giving citizens unprecedented visibility into our democracy's evolution,' he said. 'Negotiation, debate and compromise, as we have seen unfold over the last weeks, has been a necessary, if sometimes painful, investment in the productivity of future government reform in the new political environment.' There will be a slight increase in the gross borrowing requirement to R588.2-billion from the R582-billion foreseen in Budget 2.0. That will include payments to Eskom of R80.2-billion, R30-billion less than the 2024 Budget estimate. The Budget deficit for this fiscal year is now seen amounting to 4.8% of GDP and is projected to narrow to 3.4% by 2027/28. 'Compared to the March estimates, tax revenue projections have been revised down by R61.9-billion over the three years. This reflects the reversal of VAT increase and the much weaker economic outlook,' the minister said. The Treasury has slashed its forecast for South African economic growth in 2025 to 1.4% from 1.9% in March, a reflection of ongoing domestic challenges and a worsening global outlook in the face of US President Donald Trump's chaotic tariff policies and trade wars. The mysterious R20-billion tax measure The tax measures to raise an additional R20-billion next year remain under wraps. Although an additional R20-billion is set down in the Budget documents for collection in 2026, Chris Axelson, acting head of tax at the National Treasury, was somewhat coy when questioned by journalists during the Budget lockdown. 'We aren't going into specifics on that right now. There are a variety of options, including options put forward by the public.' It's clear that the measures will not include any VAT revisions after the recent hullabaloo that almost tore asunder the Government of National Unity (GNU). In his speech, the minister said that in total an additional R7.5-billion that had been allocated to the South African Revenue Service (SARS) over the next three years, and that any resulting windfall from improved revenue collection would mean the mystery tax measures would not need to be implemented. 'As SARS utilises this investment to raise additional revenue, which I believe can be at least R35-billion, the R20-billion to close the current revenue gap will not have to be raised through taxes,' Godongwana said. He said SARS was also aiming to '… target illicit trade in tobacco and other areas, which should boost revenue over the medium term'. All in all, it seems that a viable Budget has been pulled out of Godongwana's fedora against a fraught and fraying political and economic backdrop. In baseball, after three strikes you are out, and the minister's bat on the third try has hit the ball. In cricket terms it may not be a six, but a boundary beckons. DM
