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Budget 2021: Health and Education Cuts In The Midst Of A Pandemic. The Fiscal Fiasco Continues…

budget 21

With so much of the world’s media attention focused on the recent – and now infamous – interview between Oprah, Prince Harry and Megan Markle, it’s easy to forget that the United Kingdom is not the only country in the world with a Monarchy.

South Africa’s own King Goodwill Zwelithini, king of the Zulu nation and probably one of the most well-known monarchs on the African continent, sadly passed away last week from COVID-19 complications linked to his diabetes.

His tragic passing is a stark reminder that, although South Africa is now at Alert Level 1, and our lives – outwardly at least – appear to be getting back to some kind of normality, the pandemic continues to claim the lives of our people, and will no doubt continue to do so for many months to come.

Yet we seem to have forgotten that it is just one of the many – and significant – health concerns facing our country. Malaria, TB and HIV/AIDS continue to claim more lives every year than COVID-19 ever will.

Which is just one of the reasons that I cannot understand why, in our government’s 2021 Budget Speech, healthcare was one of two key areas designated for massive cuts in funding.

Granted, there was a significant – and desperately needed – allocation for investment in the purchase and rollout of Covid-19 vaccines, but this has come at the expense of other essential health services. All of which translates to an overall reduction in planned spending on public health of an eye watering R50.3 billion over the next three years.

In their article in The Daily Maverick, Daniel McLaren, Mbali Baduza, Sasha Stevenson and Julia Chaskalson write: “We cannot accept a vaccine versus health system trade-off.”

Pro government advocates will no doubt counter that the health budget grew overall in both nominal and real terms in 2020/21. But this can almost entirely be attributed to the R23 billion in estimated spending earmarked for Covid-19 pandemic relief efforts. The reality is, in real terms, the overall budget for health care has been reduced by -2.2%.

To make this a more relatable statistic, The Daily Maverick explains it thus: “Given the additional 700,000 users of the public health care system, this results in a reduction in spending per user of -3.5%, or R171 less per user.”

One of the most significant reductions in spending affects the HIV, TB, Malaria and community outreach grant to provinces. In addition to the “Big 3” diseases, the grant also provides funding for mental health, oncology, COVID-19 and human papillomavirus vaccines. Thanks to budget cuts, its funding has been reduced by a total of R5.8 billion over the next three years.

Education – which, in addition to healthcare, is probably the area most affected by the pandemic – will also see massive reductions in funding.

Over the next three years, we can expect to see around R9 billion less invested into our children’s education. The fact that this amount is less than the R14 billion reduction initially proposed is scant comfort.

All of which means there will be less money to pay teachers and other education staff. This is likely to result in bigger classes and a consequential negative impact on learning outcomes.

Although the amount allocated to the National School Nutrition Programme for the provision of school meals is the same as last year, the number of learners needing help in this area has increased. The obvious outcome is that some children are going to go hungry because of underfunding.

So, with the total government budget sitting at around R2 trillion, where then is the money actually going?

Servicing debt is the biggest culprit. Combined debt is predicted to soar to over R5 trillion in the 2023/24 financial year, meaning we will pay R269 billion in interest to bondholders and other lenders in 2021.

The not insignificant sum of R7 billion has been set aside to bail out the state-owned Land Bank, which is said to be “in financial distress.”

And of course, while our old friend Eskom continues to plunge us into scheduled darkness several times a week, the government has seen fit to grace it with yet more billions in 2021/22 – R31.7 billion, to be precise.

And then there are our public servants. Much like the aforementioned Harry and Megan, who claim to be dedicated to public service, many of our own government-paid workers appear to only be interested in servicing themselves.

Of course, we are immensely grateful to the many government officials who, despite the challenges, are working tirelessly for change – and their efforts are, without doubt, making a difference.

Unfortunately, there are still those government employees who, as Busisiwe Mavuso, CEO, Business Leadership SA, says, “Get paid too much for what they do. That is a fact.”

And, in a recent webinar hosted by cement producer AfriSam on the outlook for South Africa’s economy in the context of the 2021 budget, Econometrix chief economist and director Azar Jammine said, “The cost of financing the public sector wage bill in South Africa is among the highest of any countries in the world. Only Denmark and Norway spend more in terms of their public service and I can guarantee you that the Danes and Norwegians get a lot more bang for their buck out of spending that money on their public servants than we do.”

Even our National Treasury doesn’t try to ignore the facts.

In a parliamentary briefing at the end of last year, National Treasury chief director Edgar Sishi said, “Since 2006/07, average public-service remuneration has increased at a faster pace than per capita GDP, and is now 4.7 times larger.”

This means the average government employee earns far more than the average worker outside of government. They also get salary increases above inflation, and all the additional perks that come with working for the state.

In fact, as Azar Jammine says, “More than 95% of public servants earn more than the bottom 50% of registered taxpayers.”

And yet, when Finance Minister Tito Mboweni dared to suggest a continuation of the public servant wage freeze policy introduced last year (and which is proving to have a very positive effect) the unions were noticeably very un-public-service-minded in their response:

They asked for a 4% wage increase. And the National Education, Health and Allied Workers’ Union (Nehawu) said it is planning a major strike action in response to the government’s decision to freeze public-sector wages.

According to a report in the Daily Maverick:

“Unions will not take [this] lying down.

“Federations organised mass protests ahead of the budget – making demands for R12,500 minimum wages, a moratorium on retrenchments, and a plethora of other costly benefits – with indications that there will be more to come, should government proceed with its plans to freeze or cut wages.

“Unions have said they will accept nothing less than an above-inflation pay increase in this year’s negotiations and have threatened further strike action across the country should things not go their way.”

And this at a time when wages in the private sector fell by 8% between the first and second quarter of 2020 and the total wage bill of the private sector, when accounting for those who lost their jobs as result of the pandemic, fell by 15%.

Less than 6% of our population foots over 90% of all personal tax.

In October last year, South Africa’s debt, including guarantees, was forecast to reach 100.5% of GDP in the next four years. Predictions are that soon, R1 in every R5 spent by the Government will be used to make interest payments.

South Africa is essentially bankrupt. These costs are unsustainable.

We cannot keep haemorrhaging money. We cannot allow the Unions to hold us hostage. And the Government has to hold the line on expenditure.

“We need to be investing in a state that can manage a growing economy and efficiently deliver public services to all South Africans.”

Busi Mavuso

Amen to that.