Page 13 - Parliament Budget Office Annual Report 2022-2023

kWh of electricity, where the free quota is 50 kWh. Hence, the 10 Kl of free water is only around two-thirds of what is required.
Poor service delivery then has a disproportional impact on different households (along racial, gendered and geographic lines) because it is predicated upon a set of distributive relations across different social groups. COVID-19 has then highlighted the centrality of (social) reproduction and the gendered nature of household duties such as cooking, cleaning, water and fuel collection, child-care and care of the elderly. In undertaking vital household duties, so many women and girls are doing unpaid work but this is not recognised in Gross Domestic Product (GDP) calculations. The reality is that insufficient and poor-quality basic services leave women and girls from poorer backgrounds spending more and more time on these duties.
The social wage and actual access to services
The National Development Plan 2030 aims to eliminate poverty and reduce inequality by 2030. According to the NDP:
u “Part of our approach to social protection is through a social wage, which includes no-fee schools, free basic services and subsidised public transport” (p. 43)
u “To promote sustainable livelihoods, it is important that individuals or families, irrespective of income, can access services” (p. 31)
u One of SA’s nine primary challenges is “public services are uneven and often of poor quality” and adds that “Citizens have the right to expect government to deliver certain basic services” (p. 15, Exec. Summary)
The 2023 Budget claims that even though it follows a fiscal consolidation framework, the social wage continues to be protected. In fact, it reports that 51 per cent of the Budget over the MTEF will be on the social wage. However, for some years in South Africa the level of spending on the social wage seems to have been quite inadequate across the entire country, including in the 2023 Budget, because unemployment poverty and inequality have increased since the NDP
was published. Here, continued backlogs and “uneven and poor quality” of services remain primary challenges. The problem has not been “incrementalism” in budgets as claimed by the National Treasury, but that over many years’ budget provisions have been insufficient for local governments to operate properly.
Government’s efforts to improve access to services fail because they do not provide ample free services and most households cannot afford them. Even with increased electrification, the majority of households have had much more to
worry about than just load shedding. Households have been forced to choose between buying food and paying for water and electricity. For a significant number of households, service non-payment is due to poverty and not an unwillingness to pay. Local governments are forced to increase utility costs, even though they are aware that households cannot afford services because their business model depends on raising tariffs and not increasing levels of free services. The principal sources of local government revenue are property rates, taxes and services, such as electricity and water. These revenues are meant to fund nearly three-quarters of all operating expenditure requirements, which means that tariffs have to be increased in line with them.
Global Economic Outlook
The global economy is experiencing many difficulties as countries attempt to rebuild and recover from the Covid-19 pandemic. Geopolitical conflicts, including the conflict in Sudan and the ongoing war in Ukraine, have further increased the economic impact of global climate change and continued to raise interest rates, reflecting the slow recovery over the rest of 2023 and promised to continue for 2024. The financial sector seems to have returned to business as usual after the collapse of a few US banks and the need for the Swiss Government to broker a takeover of Credit Suisse Bank earlier this year. Nonetheless, there has been much unease over the major negative consequences traditionally associated with interest rate hikes.
In developed countries, many financial, real estate and industrial businesses borrowed heavily during the period of quantitative easing (QE) when interest rates were very low. Concerns exist that the fallout of higher interest rates across businesses has yet to occur. The global business media has thus been speculating about the next ‘shoe to drop’ in terms of strained economic sectors and the potential dangers to banks. In turn, they have been pointing to risks of higher interest rates in the US$5.6 trillion commercial real estate markets in the USA (Financial Times, 23 March 2023). Meanwhile, there is a
PARLIAMENTARY BUDEGT OFFICE ANNUAL REPORT FOR THE 2022/2023 FINANCIAL YEAR
99