Report to assess sustainability of state’s spending options

The National Treasury is expected to next month release the preliminary findings of a long-term fiscal report that will assess the sustainability of spending options in light of demographic and economic projections.

The report, says the Medium Term Budget Policy Statement which was released yesterday by the Minister of Finance Pravin Gordhan, will look at growth projections for different age groups and how this will affect public spending over time and will also consider the limits to expenditure in low, medium and high-economic growth scenarios.

The National Treasury says that unlike many developed economies, the effects of population ageing will not begin to fully exert pressure on the South African fiscus for several decades.

The report is expected to look at how, for example, the slowdown in population growth and in the number of those eligible for child support grants is likely to effect budgets, particularly as such a slowdown will mean reduced pressure on the fiscus from social grants over the next two decades.

Added to this, the school-age population is beginning to fall, underscoring the need to improve the quality of education rather than increasing the quantity of resources available.

The long-term fiscal report will model the impact of a variety of policy changes, including the introduction of national health insurance and proposals contained in the National Development Plan, said Gordhan.

The National Treasury is to publish the full report early next year, when data from the 2011 census will also be included. –