Finance minister Pravin Gordhan made no mention of how government will cut the cost of communication, or how it will use ICT to aid SA's development, during his maiden budget speech this afternoon.
Gordhan's focus on education, employment, health and housing will come as no surprise to analysts who had already predicted that the speech would not centre on ICT.
Gordhan did not provide any clarity as to how government will cut the cost of communication, and improve the speed and accessibility of the Internet, despite President Jacob Zuma's statement in his State of the Nation address last week that this would happen.
Zuma's statement was met with scepticism from various analysts, who said they had heard government's promise to cut the cost of communication for the past five years.
Yesterday, Arthur Goldstuck, MD of World Wide Worx, said: “I don't think we should expect anything in terms of the value of ICTs being acknowledged.”
His view was echoed by Dennis Smith, MD of telecommunications research at BMI-Techknowledge: “ICT is not a priority. We can expect the broadband strategy to move it up a few points, but it's still right at the bottom.”
Spending focus
Gordhan's failure to mention ICT, however, is in contrast to the emphasis he placed on the sector in the mini-budget last year. In the medium-term budget speech, Gordhan said lowering telecommunications costs would be a key driver of economic growth.
During the current financial year, government collected less revenue in taxes due to the economic slowdown that has plagued the world and SA. The minister said “the past year has been one of the most challenging periods for revenue collection since 1994”.
The ministry expects to collect R69 billion less in taxes this year than it had budgeted for, and consolidated revenue would be R568 billion, which is R32 billion less than the previous year.
Despite this, government has budgeted R907 billion over the next financial year, and R2.9 trillion over the next three years. This year's budget is 8.6% more than was budgeted for last year.
More than half of this amount will be spent by provinces and municipalities on education, health, municipal infrastructure and human settlements. Gordhan said this reflects “our commitment to sustaining growth in spending on our key priorities”.
SA is running a budget deficit of 7.3% of gross domestic product, which is a shift from the 1% it held in surplus in the 2007/8 financial year. Public debt is expected to increase from 23% last year to 40% in 2013.
Tackling corruption
Government will clamp down on corruption, however, as waste and inefficiency in the procurement process is a major source of loss of value.
Gordhan said additional funds have been allocated to bolster efforts to strengthen supply chain management, and the relevant government departments have intensified efforts to bring perpetrators of tender fraud to book.
He added that data matching, which is the practise of comparing data such as taxpayer information with social grants registers or housing waiting lists, would become a regular feature of a systematic approach to minimise abuse.
“We are starting to see the early results of these efforts: officials have been disciplined and others fired; five people linked to supply chain fraud were arrested in KwaZulu-Natal last week; and more cases have been handed over to the National Prosecuting Authority,” Gordhan said.
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