The National Treasury has set aside an additional R23.7bn for health expenditure over the medium term, but the extra funds will do little to alleviate the pressure on provinces as their budgets shrink in real terms.
Treasury instituted unprecedented cuts to the health budget in 2021 as it sought to rein in government spending in the wake of the economic turmoil caused by the coronavirus crisis. Money was shaved from health’s compensation bill as well as conditional grants for HIV/Aids, hospital infrastructure and training.
The extra money announced in Wednesday’s budget is insufficient to counter the effect of these cuts, and as a result the consolidated health budget will fall from a revised estimate of R259.4bn in 2022/2023 to R259.2bn in 2023/2024, and will then increase to R268.9bn in 2024/2025 and R281.3bn in 2025/2026.
This is a nominal increase of just 2.7% over the medium-term expenditure framework, which means budgets will be falling in real terms over the period because inflation is expected to run well above this level. Treasury estimates inflation was at 6.9% in 2022 and forecasts it will be 5.3% this year, 4.9% in 2024 and 4.7% in 2025.
Finance minister Enoch Godongwana said in his speech that the 2023 budget “was not an austerity” budget, but told reporters that the cabinet was “mindful of the challenges health is facing”.
Treasury’s acting director-general, Ismail Momoniat, said the budget was “all about trade-offs between and within departments”, and drew attention to the cost of the corruption plaguing the public health sector.
The extra funding is intended to help tackle the funding crisis for healthcare personnel and the backlogs caused by disruptions to routine health services during the pandemic, Treasury said.
The health budget includes an allocation of R1.35bn to the national health insurance indirect grant over the medium term for the construction of the 488-bed Limpopo Central Hospital in Polokwane that is due to get under way in March. A total of R512m is shifted from health to the department of home affairs’ border management authority, which will take over responsibility for port health services from April 1.
Treasury has offered some relief to the sugar industry, hard hit by public violence, floods and greater regional competition, and kept the health promotion levy constant over the next two years. Treasury estimates it will collect R2.4bn in 2022/2023 for this “sugar tax”, slightly less than the R2.2bn it had anticipated. The levy was introduced to try to curb consumption of sugary drinks, which has been staunchly opposed by the industry.
SA Canegrowers welcomed the Treasury’s decision to maintain the sugar tax at its current level, saying the sugar industry faced revenue losses of more than R700m due to load-shedding, a milling crisis and the effects of the recent floods. An increase would have “decimated the industry” and led to job losses, it said.
“SA Canegrowers is hopeful that this two-year reprieve will also be used to foster further engagement about the effectiveness of the Health Promotion Levy and the possibility of crafting alternative, less destructive and holistic health interventions. At the same time, growers will use the opportunity to revive the industry, and to position it for long-term profitability and sustainability.”
A discussion paper with proposals for taxing the sugar content of fruit juices would be released shortly, the Treasury said.
Medical tax credits will be increased in line with inflation in 2023/2024, to R364 a month for the first two members, and to R246 a month for additional members.
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