2021 Budget Speech by the Minister of Finance Mr Tito Mboweni on Wednesday 24 February 2021 at 2pm
What is the Budget?
The budget is a key statement of government policy or financial plan. Financial choices are made about competing priorities to ensure fiscal sustainability, allocative efficiency and value for money through the process.
Main functions of the budget
- Spending, taxation and borrowing must support economic and social objectives.
- Resources must be allocated to where identified priorities are.
- Budget and budget information must be tools to improve the quality and effectiveness of spending.
Where and when is the Budget tabled?
The budget is tabled by the Minister of Finance in the National Assembly in February every year, two weeks after the State of the Nation Address (SONA).
Some of the bills tabled on the day by the Minister are:
- The Division of Revenue Bill, which specifies how the money will be divided among the spheres of government and provinces for the coming year.
- The Appropriations Bill which sets out how the money will be divided among national departments and state institutions, and
- The Income Tax Laws Amendment Bill which indicates the changes to the different tax laws so that the government can raise the required income
What is Parliament’s role in the Budget Process?
Parliament as elected by the people to represent the people authorises the executive to spend taxes and oversee executive action. Through effective oversight of the executive, South Africa can address poverty, inequality and unemployment, which are key objectives of the National Development Plan/Vision 2030.
NB: The Budget is not just about numbers and statistics; the budget is about the people.
Parliament is mandated by:
- Section 77(3) of the Constitution of the Republic of South Africa, 1996 which states that: “All money Bills must be considered in accordance with the procedure established by section 75 of the Constitution”.
- The Money Bills Amendment Procedure and Related Matters Amendment Act of 2018 to amend the budget.
The Budget Process
The national and provincial budget process is a continuous cycle of four stages that runs for a financial year beginning in April of one year and ending in March the following year.
Drafting: Parliament influences this stage indirectly through its oversight work through for example
the budgetary review and recommendations reports (BRRR). These reports require committees of Parliament to annually assess government performance and audit outcomes.
Legislative process: Parliament approves money bills and other budget bills as tabled by the minister of Finance.
Implementation: Parliament will monitor how the departments and government entities throughout the year are using the budget.
Auditing and assessment: at this stage, Parliament monitors spending and performance of departments and entities for the year. Parliament considers:
- Annual reports from the Auditor General,
- In-depth analyses and oversight reports by committees of Parliament e.g. Standing Committee on Public Accounts, Appropriations and Finance Committees.
Budget calendar in Parliament
February: National Budget Speech, Appropriations Bill, Division of Revenue Bill, Estimates of National Expenditure, Budget Review (any other tax amendment laws)
March – April: Deliberations and adoption of the Fiscal Framework and Division of Revenue Bill (Conduct hearings on Division of Revenue Bill)
May: Deliberations and adoption of the Fiscal Framework, Conduct hearings on Division of Revenue Bill
June: Deliberations and adoption of the Appropriations Bill
June – July: National Assembly votes and pass the budget through Appropriations Bill and Division of Revenue Bill
September: Tabling of the budgetary review and recommendation reports as per Section 5 of the Money Bills Act No, 13 of 2018.
October: Tabling of the Medium Term Budget Policy Statement (MTBPS), Fiscal Framework, Adjusted Appropriations Bill, Adjusted Estimates of National Expenditure, Adjusted Division of Revenue Bill
November: Deliberations and adoption of Fiscal Framework, Adjusted Appropriations Bill, Adjusted Estimates of National Expenditure, Adjusted Division of Revenue Bill
Public Participation in the Budget
After the tabling of the Budget, the Committees of Parliament on Appropriations and on Finance must conduct public hearings with relevant stakeholders.
Submissions from stakeholders are received and considered by the committees. After the public hearings, the committees prepare a report and table it in the National Assembly, which further scrutinises expenditure and revenue proposals.
Did you know?
A Bill is a Money Bill if it:
Glossary of terms
Appropriation – is when money is set aside for a specific and particular purpose.
Fiscal sustainability – refers to the ability of a government to sustain its current spending, tax and other policies in the long run without threatening government solvency or defaulting on liabilities or promised expenditures.
Allocative efficiency – ensures that resources are allocated where the need is greatest or where the utility (advantage or fulfilment from using the resources) is maximised.
Surcharges – is an extra fee, charge, or tax that is added on to the cost of a good or service, beyond the initially quoted price.