Baragwanath Chris Hani Hospital. Picture: BUSINESS DAY
BUSINESS AS USUAL: People queue at Baragwanath Chris Hani Hospital. Picture: CLEMENT LEKANYANE

SPENDING on welfare grants, education and health was unscathed in a budget that slashed expenditure by R25bn over the next three years.

Overall, this spending is expected to grow by 7.1%, only just outpacing inflation.

However, spending on social services will grow by 8.1% — maintaining the value of social grants and allowing the education and health budgets to keep pace with the demands of a rising salary bill.

An additional R11,5bn was allocated to social grants over the next three years to keep pace with inflation.

Briefing journalists before his speech Finance Minister Pravin Gordhan said: "We are not imposing austerity on our people. The cuts we are making do not reduce social grants or spending on education and health services."

The old-age pension, disability grant and care dependency grant will all rise to R1,505. Pensions for war veterans and people over the age of 75 will increase to R1,525. The child support grant rises to R350 a month and the foster care grant to R860.

While the increases are about 0.3% short of projected inflation for 2016, treasury officials said the grants would keep pace with inflation over the medium term. Should economic conditions improve by October, additional adjustments to welfare grants would be considered.

The government hopes much of the R25bn in spending cuts will be achieved through reducing the size of the public service. It is envisaged that front-line service jobs – such as health workers and teachers – will be protected from job cuts.

Among the few new additions to the budget is a small early childhood development grant – R 813m over three years — which will provide subsidies for poor children to attend early childhood development centres and will fund infrastructure for educate centres.

Head of the budget office Michael Sachs said while spending had been cut overall "this is not an austerity budget". A commitment to reducing inequality remained an important consideration in putting the budget together, alongside concerns over growth and fiscal stabilisation, he said. "The cuts we have made are not comparable to the reductions in public spending that we have seen in European countries in response to the global financial crisis," he said.