Nearly R100 billion has been allocated to cover the costs of the public service wage bill for the next three years, Finance Minister Enoch Godongwana has confirmed.
Tabling the medium-term budget policy statement (MTBPS) on Wednesday, Godongwana, however, emphasised that budget adjustments were targeted to “protect critical front line services”, including basic education, health and the police services.
A strategic decision had been made, the minister said, to allocate funds to sectors that were personnel heavy such as health, education and police services.
“Additional funding of R24 billion this year and R74 billion over the medium term will be used to fund the 2023-24 wage increase and the associated carry-through costs in these sectors.
“Most national and provincial departments will absorb the carry-through costs of the 2023 public service wage agreement and will reprioritise for other priorities.
“Departments would need to reprioritise and repurpose from existing public employment programmes to extend the presidential employment initiative to 2024-25,” said Godongwana.
Director-General Duncan Pieterse said large departments such as health, education, defence and others were being covered in the MTBPS, so that their baselines could accommodate the wage agreement.
However, the policy statement noted that departments would need to manage head counts “proactively” over the medium term.
It (MTBPS) stated that although funding had been provided to Basic and Higher Education departments as well as Sport, Arts and Culture to implement the 2023 public service wage agreement, provincial education departments were constrained in hiring additional teachers.
“This could lead to larger class sizes and higher learner-teacher ratios, possibly resulting in weaker education outcomes. To mitigate this, the sector will improve its approach to allocating teachers to schools, ensure that learner and teacher support materials are used cost-effectively, manage infrastructure projects more tightly and focus on plans to catch up on lost teaching time,” the minister said.
According to the MTBPS, universities and TVET colleges, including the National Student Financial Aid Scheme, would also need to bring their student enrolment and bursary allocations in line with their budgets.
Meanwhile, the Health Department has been allocated funding to cover wage increases, but its baseline reduction would be implemented as part of fiscal consolidation.
The sector would need to improve efficiency in areas such as overtime payments, medical supplies and security services and to delay infrastructure projects.
Allocations will also be shifted from the National Health Insurance (NHI) grant to the national tertiary services grant to address funding fragmentation for oncology services.
The minister is also proposing a single grant to consolidate the existing personal and non-personal services components of the NHI indirect grant.
While further funding will be redirected towards the office of health standards compliance to strengthen the health ombud.
The departments in the peace and security cluster would have to focus on improving efficiency and reprioritising funds towards key programmes.
“As most of the departments within this function are labour-intensive, reduction will primarily affect personnel spending. Organisational structures will need to be rationalised.”
Cape Times