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Cape Town - The mini budget might have pictured the new Finance Minister Nhlanhla Nene as a tough and austere guardian of the state purse, but business people and investors will probably be delighted because of his insistence that public spending will now more than ever promote growth and create private sector investment.
Nene said in his speech that over the past decade public sector spending increased from 26% tot 31 % of gross domestic product. Much of this increase has gone to programmes that contribute to the social wage, including schools, roads, hospitals, housing and municipal services. Now there is a shift to target the creation of an environment for greater investment by the private sector.
First there will be support for cities to improve living conditions, modernise transport and communications, expand the urban economy and promote trade and investment. Government will work with development finance institutions to increase investment in the urban landscape and expand the municipal debt market, Nene said.
Secondly, support for export and job creation will be reinforced. This includes over R18bn for manufacturing incentives, the establishment of special economic zones and the employment tax incentive.
Thirdly, the expansion of the skills base will be addressed: R800bn is proposed over the Medium Term Budget Policy Statement (MTBPS) period for education and skills development. Post-school education and training has received the fastest growing share of the budget over the past three years, and will continue to expand.
The MTBPS states initial reports suggest that the employment tax incentive, implemented as the beginning of this year, has begun to improve job prospects for young workers.
As at August 2014, about 23 500 employers had claimed the incentive for at least 209 000 employees. From inception to date, the Jobs Fund has approved 93 projects and allocated R5bn in grant funding.
This has leveraged a further R6.1bn from project partners. Over 185 000 beneficiaries will receive work-related training, according to the MTBPS.
* Visit Fin24's Mini Budget Special for all the news.
- Fin24
