The Western Cape Government (WCG) calls on National Minister of Finance, Enoch Godongwana, to provide a clear and credible path for provinces to navigate South Africa’s current fiscal pressures in his upcoming 2025 Budget Speech.
“Provinces are facing growing service delivery demands in the face of cuts to donor funding, a national revenue shortfall, and rising government debt. We can, and must, maintain fiscal consolidation while supporting the increasing demand for social services. Now is not the time to desert our core services of education, health, and social development,” said Western Cape Minister of Finance, Deidré Baartman.
Premier Alan Winde stated, “While the Western Cape Government recognises that there is very little room for Minister Godongwana to maneuver, he still needs to assure the residents of our province and country that repeated commitments to fast-tracking economic reforms are being implemented. A key priority remains further enabling infrastructure development and structural reforms to the country’s logistics sector, desperately needed to fuel economic growth and job creation.”
Minister Godongwana needs to provide clarity on the following matters:
- The USAID/PEPFAR funding freeze will place added pressure on programmes in health, social development, education, and economic development. Failure to address the vacuum left by the funding freeze will hit countless vulnerable South Africans hard. While the WCG welcomes the measures announced by the National Department of Health to mitigate the impact of the funding freeze, clarity is still needed around the uncertainties regarding the long-term financial sustainability of these initiatives.
- While the Provincial Equitable Share increased in nominal terms in last year’s Adjustments Budget, the current formula does not adequately account for population growth and economic performance indicators. These indicators require heavier weightings to accurately reflect rapidly growing provinces like the Western Cape, Gauteng, and KwaZulu-Natal; and fail to sufficiently reward good governance and innovation. The majority of provincial budget funding comes from national government – thus, not increasing provincial envelopes in real terms has a direct impact on service delivery – such as health, education, and social development.
- We support the expansion of Grade R provision, but concerns remain over how provinces will foot the bill for the unfunded mandate for universal Grade R access. Provinces simply do not have the means to carry this financial burden alone without the risk of compromising other critical social services.
Minister Baartman added, “There is speculation that tax hikes are being considered to finance the national budget deficit. Any above inflationary increases, which specifically do not deal with preventing low- and middle-income families from being pushed into higher income tax brackets (‘bracket creep’), would disproportionately impact our poorest and most vulnerable families. Minister Godongwana’s budget should focus on trimming fiscal fat and boosting economic growth that drives job creation and investment.”
Premier Winde concluded, “The cost-of-living crisis is already placing immense pressure on vulnerable residents. Hiking taxes would be unconscionable and disastrous.”
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