A big chunk of the R10.5bn to save SAA will come from police, university budgets

Business Insider SA
  • Treasury finally agreed to give SAA R10.5 billion.
  • It "found" the money by reallocating budgets from a long list of departments.
  • More than a fifth of the money came from the budgets for the police and from higher education.
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Following a protracted period of will-he-or-won’t-he, finance minister Tito Mboweni finally committed to giving South African Airways the money it needs to restart its operations.

In the medium-term budget, announced on Wednesday, Mboweni finally confirmed that SAA will get the R10.5 billion as outlined in its business rescue programme, which was accepted by creditors earlier this year. This means it can extend retrenchment packages and do the necessary restructuring before it adopts a new business model, and takes to the skies.

In an extremely tight budget, where did the money come from?

“(The SAA) allocation was mainly funded through reductions to the baselines of national departments and their public entities, and provincial and local government conditional grants,” says Treasury in the medium-term budget documents.

In a table in the budget documents, Treasury outlines exactly which departments saw their funds “reprioritised” to assist SAA

Almost R1.2 billion in the allocation to the police, as well as R1.1 billion from the higher education and training budget were shifted towards SAA. Other big contributions came from transport (more than R680 million) and health (almost R695 million).

Overall, though, these departments will still see their budgets grow over the next couple of years – which is more than others can say.

The new medium-term budget shows that the defence and state security budget will be cut by a massive R5 billion. Next year, it will receive only R47.2 billion – from R52 billion this year.

“The security cluster’s medium-term priorities are to fight crime and ensure territorial integrity. Because most departments in this function are labour intensive, spending reductions will mainly affect staff,” Treasury said.

Home affairs will also be affected. The medium-term budget confirms that the allocation to home affairs will fall from R10.5 billion currently to R9.1 billion next year.

Other departments that will see budget cuts include agriculture and rural development, with its allocation falling by almost R1bn to R28.2bn, as well as government’s “executive and legislative organs” – mostly parliament. Its allocation fell from R15.2 billion to R14.6 billion.

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