The National Treasury’s plans to increase funding for front-line services are hanging in the balance, after finance minister Enoch Godongwana’s decision earlier this week to scrap a contentious VAT increase.
Officials are now hastily crafting a third iteration of the budget, which has to include savings of R75bn over the next three years to counter the revenue forgone by holding VAT steady at 15%. The new budget will be tabled in parliament on May 21.
Godongwana’s initial plan to raise VAT to 17% was rejected in February, and three weeks later he proposed halving the increase to 16% over two years. But that was rejected by the DA and other parties in the governing coalition and was challenged in court, forcing the minister to draw up a third budget.
Both the initial February budget and the revised and rejected March edition increased allocations to front-line services by R70.7bn over the next three years. The additional money was mainly set aside for health and education, and was intended to employ more doctors, pay for goods and services, and expand access to early childhood education.
Funding pressures are particularly acute in the public health sector, which has taken a huge financial hit with the cessation of US support for HIV/Aids programmes. Even before US President Trump cut aid worldwide, provincial health departments were taking strain and were unable to hire thousands of newly qualified healthcare professionals.
SA’s biggest doctor’s organisation, the SA Medical Association (Sama), estimated in January that more than 1,800 doctors could not find work, but the problem extended to other professions too.
In anticipation of the increased budget allocation, health minister Aaron Motsoaledi announced on April 10 that the National Health Council had approved plans to advertise 1,650 posts for healthcare professionals, including 1,200 doctors and 200 nurses. Those plans were to be finalised after parliament had passed the Appropriation Bill, one of the pieces of legislation required to breathe life into the budget.
The health department’s spokesperson, Foster Mohale, declined to answer Business Day’s questions about the implications of the decision to scrap the VAT hike, saying it would be premature to do so since the Treasury had not yet communicated how it intended to share the cut in projected expenditure.
As things stand, the department will continue with its plans to strengthen the public health system to respond to challenges facing the health sector to deliver quality health services to all South Africans, he said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.