2021 budget not so hopeful for basic education or healthcare – SECTION27

25 February 2021, Johannesburg — Despite bold claims that this year’s budget is one of hope, the National Budget tabled by Finance Minister Tito Mboweni on 24 February 2021 cuts funding for socio-economic rights, which will have lasting effects on our society for years to come. SECTION27 is deeply worried that this budget allocates less funding in real terms to the basic education and healthcare sectors, to the detriment of the 13.2 million learners in South African schools and 49.8 million people in this country who rely on public healthcare services. 

We see this as the continuation of a  trend  of prioritising the reduction of public debt and tax breaks for corporates and high income earners,  while the fulfilment of  socio-economic rights is sidelined. Treasury and the Ministry of Finance have obligations to promote and protect the human rights enshrined in our Constitution through budgeting which is sufficient, equitable, efficient and effective. But government’s obsession with debt stabilisation, and keeping business and the wealthy happy, has caused it to neglect its duties to the majority of people.  

Some promises made in Mboweni’s budget were hopeful, with some of the funds for education infrastructure that had been slashed last year recovered, and a strengthening of the National Health Insurance (NHI) office. But despite these promising developments, real term funding to basic education and healthcare sectors will diminish in the medium term.

Basic education

While there is some good news in the education budget in the form of an increase to the conditional grant for the National School Nutrition Programme which is set to increase at 5% annually over the next three years, this year’s budget deprioritises basic education. Analysis of estimates of national expenditure for basic education show that per learner funding will decrease in real terms over the next three years because of rising inflation and increased enrolments in schools. Treasury admits that this, combined with compensation funding freezes and early retirement of older teachers, will adversely affect learning outcomes:

Low compensation growth of 0.8 per cent over the MTEF period, combined with early retirements, will reduce the number of available teachers. This, coupled with a rising number of learners, implies larger class sizes, especially in no-fee schools, which is expected to negatively affect learning outcomes.

(2021 Budget Review, p.59).

Such a brazen admission of the failure to promote the fulfilment of the right to basic education is unheard of. And instead of mitigating the loss of teachers, the 2021 budget goes even further and announces cuts of R250 million to the Funza Lushaka bursary for new teachers. And the cuts don’t stop there. In total, cabinet has approved R1.6 billion worth of reductions to previously planned expenditure and conditional grants in the education sector over the next three years.

SECTION27 welcomes the partial recovery of funds directed towards fixing school infrastructure including unsafe sanitation in this budget particularly because Covid-19 has put these issues under the spotlight. R36.7 billion is allocated towards the Education Infrastructure Grant (EIG) over the medium term, with the sector receiving R11.6 billion for this financial year. After R2.2 billion was slashed from the EIG in June last year to act as a “donor” for the Covid-19 relief effort, and a further R4.4 billion re-prioritised within the grant to cover Covid-related expenses in schools, we welcome the recovery of money to the EIG for this year.

The recovery of these funds, however, may not be enough to catch-up on last year’s suspended and cancelled crucial infrastructure projects at schools. Whether the DBE is capable of not only catching up but meeting new ambitious targets for school infrastructure is unclear, particularly given reductions of R413.3million to the school infrastructure backlogs grant (SIBG) in this budget.

Health

SECTION27 welcomes the substantial expenditure on Covid-19 vaccines. However, we are disappointed that this seems to have come at the cost of reducing critical investments in other areas of the health budget. The health budget as a whole will be cut by -R15 billion over the next three years: -R4.1 billion in 2021/22, -R4.9 billion in 2022/23 and -R5.1 billion in 2023/24. Rather than raise taxes, which Treasury had considered in January, Treasury is forcing the Department of Health to use already stretched budgets to fund the vaccination rollout – at the expense of other key programmatic areas like HIV, TB and mental health to name a few.

While the health sector’s budget grew in nominal and real terms last year, this was a result of substantial spending on Covid-19, estimated at R22.9 billion. In the current year, a substantial amount of R13.2bn has been allocated for vaccine rollout and infection control, while in total, real spending on health is cut by -2.2%.

Like basic education, the healthcare sector will see reductions in real spending per user over the next few years thanks to cuts proposed in this budget. Between this year and 2023, Treasury’s austerity programme will have shrunk the total value of the health budget by -R3.2billion in real terms, meaning that government will spend R332.80 less per health user than it did in 2019 by 2023. 

These reductions threaten the sustainability of our health system and potentially delay the realisation of National Health Insurance by a further three years at least. 

The baseline of the HIV, TB, Malaria and community outreach grant to provinces – the largest conditional grant in the healthcare sector – has been reduced by a total of R5.8 billion over the MTEF -4.5% in 2021/22, -5.9% in 2022/23 and -10.4% in 2023/24). These reductions reduce the real value of the grant considerably this year and for the next three years. Moreover, the grant has become an umbrella for funding a variety of projects: HIV and TB, malaria, community outreach, HPV vaccines, mental health, oncology and now COVID-19. Despite including yet another component to this grant, Treasury admits that “no additional funding” will be allocated to it over the next three years.

We cannot accept a vaccine versus health system trade-off. The sustainability of our public healthcare system must be ensured and indeed strengthened for the transition to NHI. Government must expedite the procurement of vaccines without cutting costs to other crucial programmes, and make sure that provinces have the staff and other capabilities to rapidly roll them out and improve the quality services. 

Government is under an obligation to do everything in its power to mitigate and avoid regression on fundamental rights, but has failed to demonstrate this. Rather than respecting people’s rights, and the urgent need to tackle rising poverty and inequality, the cuts to public services announced in the 2021 budget delivered by Finance Minister Tito Mboweni will deepen socio-economic faultlines.

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