Womens Budget: Report by CASE

JOINT MONITORING COMMITTEE ON IMPROVEMENT OF QUALITY OF LIFE AND STATUS OF WOMEN
20 June 2001
WOMENS BUDGET REPORT: BRIEFING BY COMMUNITY AGENCY FOR SOCIAL ENQUIRY (CASE)

Chairperson: Ms P Govender

Documents handed out:
South Africa's National Policy Framework for Women's Empowerment and Gender Equality
Briefing on the Medium-Term Budget Policy Statement (see Appendix)
Social Services Allocations Graph

SUMMARY
Ms D Budlender presented CASE's report on the Women's Budget. The Committee considered CASE's report and agreed to hold a workshop in the first week of September with the Ministry of Finance to plan the Women's Budget. The meeting highlighted that government spending on submarines meant less funds were available to address women's needs. Further, the Committee discussed measures to reduce the cost of paraffin and discussed the importance of ensuring that maintenance legislation is implemented effectively.

MINUTES
The Chairperson emphasised the need for a women's budget. Further she indicated three priority policy areas for the Committee- poverty, violence against women and women and HIV.

She explained that the government included women in the budget in 1999, but not in 2000/2001. Ms Debbie Budlender (Community Agency for Social Enquiry or CASE), reported to the Committee on the budget issue.

Presentation
Community Agency for Social Enquiry, Ms Debbie Budlender : The Women's Budget
Ms Budlender indicated that whilst compiling the report, CASE conducted surveys with other organisations that work with government on budget related issues. Some of these groups were government donors. The purpose of these surveys was to establish how much support these organisations could give to government on issues of poverty, HIV and violence against women. CASE also met with the service delivery NGOs to find out how they co-operate with the government in discharging their delivery functions. She explained that issues such as HIV cannot be dealt with solely by the government, nor solely by NGOs. Collaboration between the two will yield better results.

Ms Budlender explained the report and stressed that the report paints a macro picture to give members an idea on how the government operates. She summarised page 5 of the report and added that while government's limitations cannot be ignored, it is important to recognise the extent to which government can address gender issues. One of the focus areas include the employment sector. The government must determine whether women are being given better positions and are being promoted.

Ms Budlender indicated that a women's budget is not just about setting aside money for women, but also working out how a budget is calaculated. The first step is to identify gender gaps in different sectors. The second step is to establish how government's policies and programmes address the gaps. Thirdly, it must be decided whether or not adequate funds have been allocated to address these gaps. Fourthly, the funds must be monitored to ensure that they are used in the targeted areas. Finally, it must be decided whether or not the funds are reducing the gender gap.

Ms Budlender referred to pages 8 and 9 and said that matters such as old age pensions and tax must be looked at. She pointed to the graph dealing with social service allocations and highlighted that the inflation problem must be tackled. She said that viewing the consolidated budget is important, because matters should be perceived from a broader perspective.

Ms Budlender reverted to pages 1 and 2 explaining that these pages consider government's plan for the next three years. The plan indicates a need for investment in human development programmes, an increase in economic activities and the building of infrastructure.

Discussion
The Chairperson asked for the Committee to decide whether it wanted to analyse and adopt the report. Alternatively, she suggested that the Committee hold a workshop aimed at empowering people so that the Minister of Finance can again work on the budget.

Ms Nhlengethwa indicated that she was in accord with the Chairperson on the idea of a workshop as it would facilitate thorough inspection of the report. Ms Sono agreed and indicated that since a similar document was presented the previous year, a workshop would be a step forward. Ms Vilakazi was also in favour of a workshop.

Ms Kgoanali pointed out that the government's budget for the coming year is already in progress and asked how soon the workshop could be held.

It was pointed out that the purpose of the workshop is not only to amend the 2001-2002 budget, but to ensure that all issues are taken into account by the government in relation to future budgets.

Ms Madumise insisted that the Committee meet with the Finance Department prior to the convening of the workshop to straighten issues out.

The Chairperson reminded the Committee that Parliament closes on the 29^th June and only reopens in September.

Government Spending on Submarines
The Chairperson asked for the implications of the government's procurement of submarines.

Ms Budlender replied that this meant there was less money to address gender issues. She explained that this poses a problem since gender issues require immediate attention in order to be solved.

Ms Maloney asked to what extent South Africa needs to increase the size of its army.

Ms Budlender responded that although an army is important, expenditure could be minimised. Instead the government should focus on more pressing issues and not concern itself with future potential conflicts.

The Chairperson commented that during a 1996/97 budget debate, the Minister of Intelligence said that there was no external threat and that the biggest threat related to existing internal problems.

Impact of Paraffin Vat on Women
Ms Maloney pointed out that VAT charged on paraffin affects poor women and rural women more than any other group of persons.

Ms Budlender agreed that poorer people are the main consumers of paraffin. Hence, removing Vat from paraffin is a well targeted benefit.

The Chairperson suggested that the government set a maximum price that can be charged by vendors, so as to ensure that the poor actually derive the intended benefit.

Budget for Government Departments
Ms Kgoanali insisted that the Committee must consider other Departments budgets when doing its own.

The Chairperson explained that the Women's' Budget Initiative analysed government's single budget in all aspects. Hence the report considered both micro and macro level issues. Overall the report indicates that women are getting poorer.

Ms Sono remarked that the Minister promised more funding for poverty alleviation purposes. She asked where this money is coming from. She said that possibly government will resort to the roll-over funds which could instead be benefiting 51% of South Africa's population - women.

Ms Madumise referred to page 10 and asked if the population is borne in mind when handling budget issues.

The Chairperson explained that Ms Budlender also works for government's statistical services and is therefore in the best position to offer assistance regarding good use of information and statistics.

Social Services
Ms Sue asked whether an analysis had been done regarding increasing old age pensions to cater for the poor.

Ms Budlender responded that they had contacted NGOs delivering services to find out how they access funds. She said that CSIR is also looking at development and social welfare issues and has established that the grants system is the most efficient source of funding. Despite this being the case, the grant system still excludes middle-aged people who are equally disadvantaged.

Maintenance Act
Ms Sono referred to the Maintenance Act and asked what steps are being taken to ensure that the legislation is implemented effectively.

Ms Budlender replied stated that research is being conducted to establish how the R2 million (set aside for implementation of the legislation) is being used. She added that research was done on law enforcement agencies and the issue of maintenance appeared to be the most problematic.

The Chairperson insisted that the Committee ensure that people's needs are being addressed through the legislation.

Suggested Way Forward
The Chairperson suggested that the Committee hold a workshop with the Ministry of Finance because its expertise in statistics and finance issues was crucial.

She requested that each member of the Committee look at the report in detail and debate on it prior to its tabling in Parliament. She emphasised the need to involve all relevant Ministries in these issues, for example, the Minister of Health on HIV issues.

The Committee agreed to the suggestions as tabled.

The Chairperson suggested that the workshop be held during the first week of September when Parliament reopens.

The Committee discussed a need to engage a researcher of its own and a team was accordingly appointed to deal with that issue.

The Committee was reminded of next weeks meeting when the Gender Equality Policy Framework document will be considered.

The meeting was adjourned.

Appendix:
Presentation to the Joint Monitoring Committee on the Quality of Life and Status of Women on 20 June 2001 by Debbie Budlender

Issue brief: The medium-term budget policy statement
In late 2000 the government published its second medium-term budget policy statement (MTBPS). One of the main reasons the government gives for publishing the document is to be more transparent - to give more information to parliament and the public about the planned overall shape of the next year's national, provincial and local budgets. The MTBPS is also important because it shows the plans for the next three years, rather than only one year at a time.

The process…
The government says that the MTBPS is the result of a 'rigorous and consultative process in which the resource needs of various spheres and functions of government are assessed and prioritised' (Treasury, 2000:7). Once the MTBPS is published, there should also be consultation with parliamentarians and the public. In 2000, Parliament had a one-day workshop on the MTBPS and the Treasury briefed the Finance Committee. But consultation means more than handing over information. In 2000, there was no opportunity for proper consultation on the MTBPS, especially as the MTBPS appeared so near the local elections.

Growth depends on human development …
Minister Manuel said there were two key 'policy themes' in the 2000 MTBPS. The first was for government to spend on programmes that promote human development and increase economic opportunities. The second was to spend more on building and maintaining infrastucture. Minister Manuel said that the overall goals of South Africa's economic policy are poverty reduction and human development. And he said that focusing on human development is good for growth (Treasury, 2000:14)

Why then is there not more spending on social services? The MTBPS shows that the share of health, education and welfare is decreasing as a proportion of the total budget. The document says there will be an increase in the share of the provinces, which deliver social services, over the next three years. It says that this will help with the increased demand for child support grants and HIV/AIDS needs. But the numbers show that the share of social services declines from 54,5% in 1999/2000 to 52,1% in 2003/4. And provinces got 58,8% of total in 1999/2000 but will get only 57,3% in 2003/4. None of the new funds are allocated to HIV/AIDS and poverty alleviation. And the share of Welfare stays the same. So where will money come from for more children and higher amounts for the child support grant? And where is the money for a new basic income grant?

In education, the MTBPS says that money will be allocated for 'continued piloting' of early childhood development (ECD) initiatives (Treasury, 2000:68). And the figures show conditional grants for ECD rising from R45 million in 2001/02 to R120 million in 2003/4. ECD is important for the human development of the citizens of the future. It is also important for women as good and accessible ECD freea women to do other things, including earning money. Why, then, is it taking so long to get ECD beyond the pilot stage?

The biggest increases in the MTBPS are for infrastructure spending. This will increase by R8 billion over the next three years. The document talks mainly about roads, which can be good for economic growth. It does not say much about building schools, clinics or water and sanitation services. And it does not say who will be employed in building the new infrastructure. Most poor women, and especially those in rural areas, will be most worried about schools, clinics, water and sanitation because they are concerned about the basic needs of their families. Also, when there are not good water and sanitation services, women and children are the ones who bear the main burden. The cholera epidemic has shown us just how important and urgent spending on water and sanitation is.

Slow spending on poverty alleviation…
The MTBPS says that government will give R1,5 billion for poverty alleviation in 2001/02. It says that the target groups are rural poor, women, youth and disabled. The poverty alleviation money will be used for housing development, social plan activities for people who lose their jobs, and local economic development. Many of these things were agreed over two years ago in the Job Summit of 1998 and the need is now as great or even greater. But the MTBPS admits that there has probably been underspending on the poverty relief programmes in 2000/01.

Minister Manuel said that there would be additional money for poverty alleviation coming from the National Development Agency, national lottery, and Umsobomvu. The worry about all these things is that they have taken a long time to happen. The creation of Umsobomvu from the demutualisation of Sanlam and the Old Mutual was announced in the 1998 budget speech, but the money has still not been spent. Welfare organisations have been suffering - and even closing - because of delays in the distribution of lottery funds.

Submarines or water supply?
The MTBPS says that spending on defence and intelligence will increase by 8,7% a year over the next three years. The main reason for the increase is the arms procurement programme. Defence and intelligence made up 6,4% of the budget in 1999/2000, but will be 7,7% in 2001/02 through 2003/4. But the real expenditure on defence and intelligence is even more than 7,7% as this figure does not include the interest which government must pay on the arms procurement deal. The interest is included instead in state debt costs and repayments. It is part of the 'top slice' which the government puts aside before it divides the available money between national, provincial and local government.

Delivering rights…
South Africa has one of the most progressive constitutions in the world. Unlike many other constitutions, our constitution includes socio-economic as well as political rights. So government has a duty to do all it can to provide things like housing to all citizens. Socio-economic rights are particularly important to poor people and to women because, without them, equality does not mean nearly as much.

The MTBPS acknowledges this duty. It says that in the recent Grootboom case, the Constitutional Court stated clearly that government must use available resources to fulfil this duty. It says that government Departments and the National Treasury will have to 'plan and budget strategy strategically to realise these socio-economic rights' (Treasury, 2000:68). We need to check that this new strategy is part of the 2001/02 budget.

Increasing the wage gap
The new pay policy for government employees service says that the top civil servants must get bigger increases. This moves in the opposite direction to pay changes in the first years after the end of apartheid. The changes in those first years tried to narrow the gap between the bottom and top. If there are fewer women near the top, the new policy means more money for men!


Prepared by Community Agency for Social Enquiry for the parliamentary Joint Committee on Improvement of the Quality of Life of Women, February 2001
With support from the European Union Parliamentary Support Programme

Issue brief: Employment and jobs
In June 1996, the government announced the Growth, Employment and Redistribution (GEAR) strategy. GEAR recognised that unemployment is a big problem in South Africa and promised to create jobs. It forecast a 6,1% growth rate for the economy, and creation of 126 000 new jobs in 1996, 252 000 in 1997, 246 000 in 1998, 320 000 in 1999 and 409 000 in 2000. Have jobs been created? If so, what kind of jobs?

Formal and informal sectors jobs
The household surveys of Statistics SA show an increase in the number of employed people in every year from 1996 to 1999. Overall, employment increased from 9,29 million to 10,37 million. This is even more than GEAR predicted. But the increase will surprise many people, who hear so often about friends, family and other community members losing jobs.

The increase in the number of employed reported by Stats SA is explained by the fact that the number of people employed in the informal sector doubled in the four years, from 996 in 1996 to 1 907 in 1999. On the other hand, other Stats SA figures show that formal sector employment has decreased, as we expect from reports about retrenchments. Part of the increase in informal employment is due to improvements in the way Statistics SA counts informal sector work. But a large part of the increase is due to an increase in informal sector work as people who cannot find formal sector jobs look for some way to earn money for their households. They do this work even if it brings in only a little money because they are desperate.

Outsourcing, economic empowerment and workers' conditions
Some of the decrease in the formal sector is caused by workplaces closing. One important reason for these closures is competition from producers in other countries as tariffs and other barriers to trade are lifted (see brief on trade). Outsourcing also causes decreases in formal sector employment. In particular, many firms are outsourcing security (which employs mainly men) and cleaning and catering (which employs mainly women). Security, cleaning and catering generally pay very low wages. When the jobs are outsourced, the workers are employed by smaller formal and informal companies. If the smaller companies are owned by black people or women, then people say that it is a good thing, because there is 'economic empowerment'. But the employees in the small companies lose the possibility of being in the same union as the other workers in the workplace and they often have worse wages and working conditions than before.

Unemployment
While the number of people employed increased between 1994 and 1999, so too did the number who were unemployed but looking for employment. There were 2,2 million people in this position in 1996 and 3,2 million - a million more - in 1999. One of the reasons for more people wanting jobs is that informal sector work usually brings relatively low income. So each household needs more people to work if they want to cover their needs. Women, rural people, and African people find more difficulty than men, urban people and non-Africans in finding jobs. For example, in 1999 the official unemployment rate was 19,8% for men and 27,8% for women. For rural women the unemployment rate was 32,3%. For rural African women it was 34,9%.

The official unemployment rate says that a person must have taken active steps to look for work in the past weeks to be counted as unemployed. People who have not taken steps - perhaps because they know that there are no jobs available, and because they know that going to look for work costs money for travel and other expenses - are not counted. The expanded unemployment rate includes these people who say they want work but did not actively look for it. The expanded unemployment rate was 43,2% for women in 1999 and 30,0% for men. For rural women it was 52,7% and for rural African women it was 55,7%.

Government Departments and job creation
Many government Departments have an influence on job creation. These include Department of Finance, which is responsible for overall economic policies such as GEAR. Another important player is the Department of Trade and Industry (DTI). DTI get less than 2% of the national government budget, but is very important because it makes industrial and trade policy. Only 3% of DTI's very small budget goes to programmes to support small business. Yet this is the programme which talks loudest about empowering black people and women.

The Department of Labour also has a smallish budget. The skills development part of it has grown in recent years. Skills development has also attracted large amounts of technical and financial foreign assistance. The skills development act talks about the needs of women and other designated groups, but the work on this has been slow so far. Very little of the Department of Labour's money is spent on inspections and enforcement. Some people complain that laws such as the Labour Relations Act, Basic Conditions of Employment Act and Employment Equity Act, as well as the skills levy, make investment in South Africa expensive. However, the laws are very poorly policed because not enough money and people are allocated to enforcement. The Unemployment Insurance Fund (UIF) also has serious money probleMs And UIF has not been extended to the hundreds of thousands of women domestic workers despite discussions about this which started during the apartheid years.

The Department of Water Affairs and Forestry, Public Works, and Agriculture are among the key players in special employment schemes. There was a lot of talk about these schemes at the Job Summit in October 1998. They benefit society in two ways - firstly, by providing useful assets, and secondly, by providing short-term jobs and training. Water Affairs' work is particularly important because, by providing water schemes, it relieves women and children of collecting it. It is also particularly important now with cholera. Working for Water has also tried very hard to find ways of making its projects gender-sensitive, for example by providing child care and reproductive health education and services, and by setting gender and youth quotas. It has a lot to teach the other Departments who have special employment schemes. But the pay on some of these schemes is very low - sometimes as little as R15 per day. This means about R330 per month, which is less than Welfare's disability grant.

Even though they did not promise to allocate much money, many government Departments made other commitments around job creation at the Job Summit. More than two years later it is time for parliament and the public to ask for a report on what they have done.

The Department of Public Service & Administration, in its recent negotiations with labour, agreed that jobs need to be created in the country. But it seems that maybe government is thinking of replacing some well-paid, permanent public sector jobs with low-paid, temporary public works jobs. Public sector employment has already decreased significantly since 1994. The main people who are likely to lose their jobs in the coming year are the less skilled supernumeraries, most of whom are in the poorer provinces. These less skilled supernumeraries probably include many women cleaners.

Prepared by Community Agency for Social Enquiry for the parliamentary Joint Committee on Improvement of the Quality of Life of Women, February 2001
With support from the European Union Parliamentary Support Programme

Issue brief: The Women's Budget
In the middle of 1995, women members of the parliamentary Committee on Finance, and two NGOs - Community Agency for Social Enquiry (C A S E) and the Institute for Democracy in South Africa (Idasa) - came together to form the Women's Budget Initiative (WBI). They wanted to find a way of making sure that the new democratic government worked effectively to satisfy the demands in the Charter for Effective Equality. The Charter was drawn up by the Women's National Coalition through a nation-wide consultation process. It said what changes women around the country wanted to see in the 'new South Africa' . The partners decided to focus on the budget because they knew that without money, no policy or programme of government would work.

Gender is everywhere
In the first three years, the WBI produced three books that, between them, covered all the different votes in the national budget. In the fourth year, the book contained five case studies of local government - from wealthy Cape Town to the impoverished Lebowakgomo. It also had a study of donor funding to government, and of how government budgets were affecting job creation. In the fifth year, the Initiative looked at different types of revenue, and at how the national, provincial and local spheres were working together to make policy and budgets for health care delivery. The publications proved that every part of government activity affects women and men in different ways.

Not a separate budget for women…
The WBI does not argue for a separate budget for women. It is not, for example, interested only in how much money is allocated for the Office on the Status of Women or the Commission on Gender Equality, although these are important questions. Instead, the WBI says that we must ensure that the whole budget - all 100% of it - is spent in a way that promotes equity for women and men, girls and boys, and different sub-groups.

The WBI also does not look at budget numbers in isolation. Budgets reflect policy, so to analyse them we must start much earlier than the numbers, just as budget planners now do. The WBI says that good budget analysis must go through five steps:
First, we must look at the situation of women and men, girls and boys in a particular sector, such as health;
Second, we must examine the policy and programmes of government, and see if they address the gender gaps in the situation described in step one.
Third, we must see whether government has allocated sufficient money and people to implement the gender-sensitive policy and programmes. We know that government does not have enough to meet all needs immediately. Is it the gender-sensitive policies and programmes that are being postponed, or falling off the table?
Fourth, we must monitor the outputs and delivery of budgets. Has the money been spent as planned? How many men, women, boys and girls has it reached, and in what areas?
Fifth, we must look at the outcomes. Have the policy, programmes and expenditure helped to address the gender gaps? Have they helped to change the situation described in step one so that it is more equitable?

It's not only about gender
The WBI looks at the different impacts on women and men, girls and boys because it is interested in disadvantage. This disadvantage perspective has two consequences:
Firstly, the WBI's main goal is not to get more women into the top positions, where they can have power and earn big money. It is more interested in what happens to the many women who remain 'at the bottom'. The WBI is mainly interested in getting women into top decision-making positions if, by being there, they influence policies to be more gender-sensitive.
Secondly, the WBI is interested in race, poverty and geography as well as gender. All these things together determine a person's opportunities, roles and needs. Gender is a good way to focus on race, poverty and geography because there are more black women than black men, more poor women than poor men, and more rural women than rural men. These patterns are partly the result of apartheid, but there are also other causes.

Why parliament and government might be interested in gender budgets
Gender analysis of the budget is an important tool for gender-sensitive parliamentarians and civil society organisations because it can help them in their oversight role, in checking what government is doing. Gender analysis can also be a useful tool for a government that wants to promote gender equity. The government can use gender analysis as a management tool, to check on its own progress. It can also use it to report and be accountable to parliament and civil society.

What has happened to gender budget analysis inside government?
The WBI is a partnership of parliamentarians and NGOs. In 1998 and 1999 government had its own gender budget initiative. It received some assistance for the work from the Commonwealth Initiative, because South Africa was the African pilot for the Commonwealth's project on gender and macroeconomics. In the Budget Review of 1998/99 and the National Expenditure Review of 1999/2000, the government included discussion of gender issues and performance in the different sectors. But since that time government seems to have dropped its gender analysis.

A few years ago, when Minister Manuel announced the budget, he said that government had cut the amount going to defence. He said they would instead spend the money saved on women and children. In the last few years, the amount going to defence has increased again. We need to ask Minister Manuel whether he is now taking money back from women and children to spend on submarines and weapons instead.

South Africa has led the way
The Australian government produced the first women's budget reports in the world in the mid-1980s. South Africa and the Philippines were the next countries to do so, in 1995. In the Philippines the work was coordinated by the government's National Commission on the Role of Filipino Women. In South Africa it was done from outside government.

Since 1995, governments, parliamentarians or NGOs in more than 40 other countries have been inspired to start looking at their government budgets from a gender perspective. People are particularly interested in what we are doing in South Africa. They know that we have had a big change in government. They know that we have one of the most progressive and gender-sensitive constitutions in the world. They are watching to see how we are going to implement all our progressive policies, and how the women's budget helps us in this task.

Prepared by Community Agency for Social Enquiry for the parliamentary Joint Committee on Improvement of the Quality of Life of Women, February 2001
With support from the European Union Parliamentary Support Programme

Issue brief: Revenue, trade and gender
The government works out how much money it thinks it will collect as revenue before it decides what to spend it on. Deciding how to collect revenue is a political decision. And it affects women's and men's lives differently.

When the budget is announced, the media use up a lot of space reporting on how individual and company taxes have been changed. They do not usually give much space to other types of revenue - and in particular the revenue that comes from trade. Yet government is promoting trade because the Growth, Employment and Redistribution (GEAR) strategy says that increasing exports is an important way to make the economy grow.

Revenue from trade
Customs are the import taxes which government imposes on different products. Excise is the taxes it imposes on certain goods traded both locally and internationally. Together, customs and excise make up about a quarter of government's revenue.

Women are affected by customs and excise in three main ways:
Women are workers in sectors of the economy where goods are imported and exported.
Women buy imported goods .
Women are traders.

The WTO and tariffs
World Trade Organisation (WTO) rules say that all countries must reduce their tariffs so that producers can sell goods easily all over the world. Because of its transition from apartheid to democracy, the WTO allowed South Africa some special arrangements. South Africa was allowed to have higher tariffs. It was also given a longer period of time to lower tariffs for sectors such as clothing and textiles (which employs mainly women) and the motor industry (which employs mainly men).

But the South African government decided to lower tariffs at a faster rate, and to drop them to lower levels than we had to. The government said that increased international competition would make South African companies more productive. Other people say that if competition happens too quickly, and without enough support, it forces companies to retrench workers, or to close.

The number of workers employed in South Africa's clothing and textiles factories has dropped a lot since tariffs were lowered in September 1995. Between June 1996 and June 1999, almost a quarter of all manufacturing job losses happened in the clothing industry. The Southern African Clothing and Textile Workers' Union (Sactwu) counted 14 000 job losses through retrenchment, factory closures and bankruptcies in 1999 alone. In 1998, 22 000 workers in the industry lost their jobs. This pattern is likely to continue.

Some people say these losses are not as bad as they sound. They say many workers who lost formal jobs are now working in the informal economy. But it is very unlikely that tens of thousands of new jobs in the informal sector have been created. Anyway, informal sector workers usually earn much less than in the formal sector, and they also don't usually get benefits, like pensions and maternity leave.

Who gains from free trade agreements?
Free trade agreements allow for trade to happen between countries without any tariffs. Governments enter into these agreements because they think that the benefits of increased trade and growth will compensate for the loss of money from customs and excise. The free trade agreement with the European Union (EU) aims to give South African producers more opportunities to sell goods and services on the EU countries' markets. It also gives producers in the EU greater South African market opportunities. But the agreement means that South African producers face more competition from foreign producers. The DTI did not investigate how these agreements would affect economic growth and employment in South Africa before signing them.

The agreement between South Africa and the EU took a long time to reach. Many of the battles along the way were because EU producers - and particularly agricultural producers - did not want competition from South Africa. Only a small proportion of South Africa's producers is likely to benefit from increased access to the EU market. So we won't have a large number of jobs created. In fact, jobs are already being lost in the food industry as a result of non-tariff barriers to trade with the EU. In January in Davos, Minister Erwin spoke out strongly about how developed countries seem to be interested only in promoting their own interests.

Excise taxes
Overall, excise tax is very regressive. Research done for the Treasury found that the poorest households spend 0,8% of their income on excise taxes while the richest spend 0,2%.

One type of excise tax that gets a lot of publicity is sin taxes on products like alcohol and tobacco. Every year people (mainly men) complain about increases in these taxes. But the percentage sin tax revenue brings into total government revenue has not increased. The percentage contribution of revenue from taxes on luxury goods that wealthier people buy has also not increased.

Men consume more alcohol and tobacco products than woman. Statistics show when there is a greater number of women than men in a household, less alcohol is drunk. Women take more responsibility than men do for family health care, including care for illnesses caused by drinking alcohol and smoking. When men drink alcohol, they sometimes become aggressive, making domestic and other violence more likely. Some people say that higher taxes on things like alcohol and tobacco help women because men will buy less when these goods are taxed more. Other people say that an increase in the price will mean that there is less money in the household budget for other things if men continue to buy their luxuries.

If the tax on cigarettes were increased from 41,6% to 50%, government would get an extra R300 million in revenue. The extra revenue could be used to pay for improvements in the public health system. This would benefit women, in particular.

Protecting jobs
There are ways the government service can improve its job of protecting the economy. It can:
Develop information systems in customs and excise that will show how employment is affected by trade agreements.
Make sure the DTI looks at the impact trade agreements are having on jobs.
Include trade union representatives in trade agreement negotiating teaMs

Prepared by Community Agency for Social Enquiry for the parliamentary Joint Committee on Improvement of the Quality of Life of Women, February 2001
With support from the European Union Parliamentary Support Programme

Issue brief: The 2001/2 budget - making sense of the numbers

Is this good or bad news?
Old age pensions and child support grants (CSGs) are very important for women. More women than men get old age pensions because (a) women get them at 60 rather than 65 years; (b) women usually live longer than men; and (c) women are generally poorer than men. More women than men receive the CSG because the money is paid to the primary caregiver of the child, and women are almost always the main caregivers of young children.

In his budget speech, Minister Manuel announced that pensions would increase from R540 to R570 from July 2001, and that the CSG would increase from R100 to R110. The Minister also said that all grants will increase to keep up with inflation over the next few years. However, the increases that he announced did not keep up well with inflation this year. The increase in the pension is only 5,5%, while the official inflation rate is more than 7%. The increase in the CSG is 10%. This is higher than inflation for one year, but it is the first increase since the CSG was introduced in April 1998, three years ago. Inflation from April 1998 to April 1999 was 7,7%, so the CSG should have been increased to at least R107,70 (R100 x 107,7/100) in April 1999 to keep up. Inflation from April 1999 to April 2000 was 4,5%, so the CSG should have been R112,54 (R107,70 x 104,5/100) to keep up. If inflation from April 2000 to April 2001 is about 7%, then Minister Manuel should be increasing the CSG to R120,42 (R112,54 x 107/100) to give it even the low value at which it was first introduced.

Tax
A piece of good news for poor people is that VAT will no longer be charged on paraffin. Many poor households rely on paraffin for energy. The VAT exemption will help these households, but they will still struggle. The Minister noted that the price of paraffin had increased 'dramatically' over the past few years, so even without VAT people will be paying more than before. The Minister also said he was worried that those who sell the paraffin might not pass the benefit of the VAT exemption on to consumers. A way to solve this second problem is to introduce resale price maintenance, where government sets the maximum price at which paraffin can be sold.

The Minister also announced changes in personal tax that he said would help poor people. In particular, he said that workers who earn less than R23 000 a year will pay no personal tax and those who earn less than R70 000 will pay about 12% less tax than before. The Minister recognised that it is mainly women who earn low wages when he said that these tax changes will increase 'her take-home pay by … an extra R140 a month'. This was the only time that he mentioned women, either explicitly or implicitly.

The tax change is good news for people who earn low wages. But it does not help people who are unemployed, and don't earn at all. They will continue to pay VAT at the same 14% rate on all the same goods as before except paraffin. And VAT will continue to eat up a larger proportion of the income of poor households than it eats up of the income of wealthier households.

Social services and defence
Minister Manuel noted that social services take up about 58% of consolidated national and provincial allocations after interest. Table 6 of the Budget Review shows how the consolidated allocations have changed between 1997/8 and now, and what further changes are planned up to 2003/4. The table shows that the allocation for Social Services has fallen from 48,5% of consolidated expenditure in 1997/8 to 46,7% in 2001/2. Meanwhile Defence increased from 5,9% in 1997/8 to 6,4% in 2001/2. Protection services as a whole - Defence, Police, Prisons and Justice - increased from 15,3% to 16,9%.

We can also look at the absolute numbers. The amount allocated for Social Services increases from R99,2m in 1997/8 to 126,2m in 2001/2. The amount for Defence increases from R12,0m to R17,3m. (This excludes any amounts that must be paid for interest on loans connected with the arms package.)

We must make several adjustments to these figures. First, we must adjust for inflation. We would need R1,28 in 2001 to buy what we bought for R1,00 in 1997. So, to stay the same, Social Services should have been R127,0m in 2001/2 and Defence should have been R15,4m. These inflation-adjusted figures say that spending on Social Services has fallen, while spending on Defence has increased.

Because Social Services are delivered to individuals, we must also adjust the amount for population growth to see what is happening to expenditure per person. South Africa's population is growing at about 2,2% per year. So it would have increased by 6,7% between 1997/8 and 2001/2. This means that, to get the same Social Services allocation per person in 2001/2 as in 1997/8, the allocation should have been R135,5m. It is difficult to see how the actual amount allocated - R126,2m - will be enough, specially when there are the added demands now of HIV/AIDS, the planned increased uptake of the CSG and maybe also a basic income grant.

The arms package makes up almost half of the defence budget. The price of the arms package has increased from the R30,3bn which was originally announced to R43,7bn because of inflation and changes in exchange rates. Spending on the arms package increased from R2,8bn last year to R4,2bn this year.

The big picture
Minister Manuel announced that the 'main' budget for 2001/2 was R258,3 million. If we take away from this the amounts for standing appropriations that do not get voted (R0,3m), unallocated expenditure (R1,8m) and the contingency reserve (R2,0), we get left with R254,2 million which is allocated to the different national Departments and agencies. The table on the next page shows the amount of each allocation, and the percentage this makes up of the R254,2m.

The problem with the table is that some of the Departments do not use the money themselves. Instead they pass some of it on - in particular, to provinces and local government. For example, the table shows that the Treasury gets 63,5% of the total. But R104,1m - about 65% of the Treasury total - gets passed straight on to provinces and R48,1m is used to pay interest on debt.

Another way of calculating percentages is to look what portion of national expenditure each Department gets. This is a complicated question for Departments like education, health and welfare, where a lot of additional spending gets down by provinces and is not clear from the table. It is also complicated for Departments like Treasury and Provincial & Local Government that pass on money. But the calculation makes sense for Departments like Defence, Safety & Security, Justice, Labour and Land Affairs where the rands shown in the table are spent by national and represent most of the money going to these functions.

If we exclude Treasury's transfers, the total for the national votes is R102,5m in 2001/2. If we use this figure, we calculate that Defence gets 15,4% of the national pie, Safety & Security get 16,7%, Justice gets 3,6%, Labour 3,5% and Land Affairs 0,8%.


Budget allocations for 2000/1 (R'000)

Comparing apples and pears
Discussing budget figures can be very confusing because often people are talking about different 'total' budgets when they talk about shares and percentages. The tables below show what the different national 'budgets' include, from the smallest adding up to the largest total.

CENTRAL GOVERNMENT
+ provincial conditional grants
+ provincial equitable shares
+ local government equitable share
= NATIONAL BUDGET
+ provincial own revenue
= CONSOLIDATED NATIONAL AND PROVINCIAL BUDGET
+ Extra budgetary institutions
+ Social security funds - unemployment insurance and road accident
=CONSOLIDATED CENTRAL GOVERNMENT + PROVINCES
+ Local government (excluding business enterprises)
=GENERAL GOVERNMENT
+ National parastatals
+ Provincial parastatals
+ Local business enterprises
=PUBLIC SECTOR

Another way of adding is:

CENTRAL GOVERNMENT
+ extra budgetary institutions
+ social security funds - unemployment insurance and road accident
= CONSOLIDATED CENTRAL GOVERNMENT

A further complication is that the tables in the first part of the Budget Review often include RDP funds and money of the unemployment road accident funds. So those figures do not match the figures in the back of the Budget Review or in the medium term budget policy statement.

Prepared by Community Agency for Social Enquiry for the parliamentary Joint Committee on Improvement of the Quality of Life of Women, February 2001
With support from the European Union Parliamentary Support Programme