Government intervention to respond to changing conditions and urgent socio-economic demands

26 November 2024

The 2024 Medium Term Budget Policy Statement was tabled at a period when our economy has relatively recovered from the impact of the COVID-19-induced global recession. The current pattern of the decline of inflation globally and in South Africa presents an opportunity to accelerate the positive outcomes of the implementation of the Economic Reconstruction and Recovery Plan.

Quarterly Labour Force Survey outcomes of a reduction of unemployment by 1.4% is a major indicator of the potential advancements which we can record when we strengthen the capability of the state and have increased investments.

The seventh administration under the ANC-led Government of National Unity is at a critical phase of the last medium-term plan implementation of the National Development Plan. The Government of National Unity has set 3 priorities for the seventh administration, priority one Inclusive economic growth and job creation, priority two Maintaining and optimising the social wage and priority 3 being a capable, ethical and developmental state.

The 2024 Division of Revenue Amendment responds to emerging challenges due to unforeseen and unavoidable expenditures. The reality of climate change disasters is upon us, and as a country, we are experiencing annual disasters, particularly due to floods. Major adjustments of the 2024 division of revenue respond to the effect of flood disasters. In the Western Cape, an additional 948 million was allocated for the province to restore various economic and social infrastructure. R300 million is allocated to support the agriculture sector through the comprehensive Agricultural Support Programme Grant, and 70 million is allocated for the Education Infrastructure

Grant, which will ensure secure teaching and learning in schools impacted by floods.

One of the important lessons from the KwaZulu Natal, Gauteng and North West flood disasters in 2022 is the importance of ensuring local government and provincial departments have the requisite capacity to secure grant funding on time to timely respond to the impact of disasters which disrupt the provision of public and private goods and services.

As a country, we need to continue to develop our disaster risk financing capacity to ensure timely finding and preparedness to effectively respond to climate change disasters.

The ANC welcomes the additional allocation of R685 million allocations for the Municipal Disaster Recovery Grant, which will contribute to supporting recovery interventions from the flood and storm surges in December 2023 and July 2024 for ten municipalities in the Eastern Cape worth R319,3 million and for four municipalities in the Free State by R 48.1 million.

The adjustment further allocates R152.4 million for seven municipalities in KwaZulu Natal, and R 87.6 million for four municipalities in Limpopop, and by R76.6 million for four municipalities in Mpumalanga.

To have a sustainable financing approach for disasters, a comprehensive approach is required to cover public and private assets. Many developed countries are struggling to provide cover for disaster funding. One of the key tasks for the seventh administration is to ensure the state has sufficient disaster risk financing. The Climate Change Act provides a framework for the adaptation and mitigation of climate change disasters, and we need to ensure that all spheres of government have an adequate level of disaster preparedness with the requisite capacity, plans and budget allocations.

The appropriation adjustment responds to the continued need to support public transport, and the taxi industry is a critical component of our public transport system. The taxi industry supports school learners, workers, and job seekers and provides mobility for millions of South Africans. The Taxi Relief Fund will contribute to enhancing the financial sustainability of the taxi industry, and this will further advance the formalisation of the industry.

Infrastructure is a priority expenditure item of the Division of Revenue adjustments as a priority area of government to catalyse social and economic development

Sanitation is an area of weakness in a number of communities in our country and public investment in developing and maintaining sanitation infrastructure is critical. Sanitation is linked to the dignity of humanity. Through the appropriation adjustment, R225 Million is allocated for the Drakenstein Municipality which is funded through the Budget Facility for Infrastructure. The Budget Facility for Infrastructure (BFI) is a reform to the budget process that supports the execution of national priority projects by establishing specialised structures, procedures and criteria for committing fiscal resources to public infrastructure spending.

One of the major advances of the Medium Term Budget Policy Statement prioritises the attraction of private investment in public infrastructure through public-private partnerships. The review of the public-private partnership framework should not only create ease for partnership establishment but enable a cost-neutral approach for the state while preserving ownership and control of public infrastructure. Transparency and ensuring partnerships enable the utmost benefit of ownership and management of the assets.

Capital allocation for infrastructure is critical, and institutional investors, such as pension funds and various asset management companies, need to ensure they allocate assets for infrastructure investment.

The catalytic impact of infrastructure development and its job creation capacity will contribute to the reduction of unemployment.

Maintaining infrastructure is also a critical area requiring a focus to ensure reliable basic service provision and to support economic development. Our democratic government has over the past 30 years, expanded access to basic services and we must maintain reliable service provision.

We call on the National Treasury to continue to strike a balance when implementing cost containment measures. This requires supporting departments to also develop innovative and alternative forms of funding priorities to attain predetermined objectives.

We support the Division of Revenue amendment bill as it respond to the changing conditions in the implementation of the 2024 budget.