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Education and health funding slashed while fuel levy increased

Education and health funding slashed while fuel levy increased
Neesa Moodley
By Neesa Moodley
21 May 2025
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From grant recipients and healthcare, to education and Home Affairs, this is an overview of the May 2025 Budget allocations.

A rocky road lies ahead for social grant recipients who will see no increase in the amounts they receive over the next two years. This is just one of several changes revealed by Treasury this week in the third iteration of the National Budget for 2025.

Those in the public sector who were hoping to take advantage of the early retirement programme will have to hop to it. The R11-billion allocation over the medium term has been slashed to R5.5-billion, which means the potential 11,000 employees who could have benefited has been halved to 5,500.

Treasury director-general Duncan Pieterse said part of the reason for halving the allocation is that there is a process under way with the bargaining council for the current financial year. The previously projected savings of about R7-billion would also be reduced to about R3.5-billion.

Slight acceleration for the fuel levy


Consumers will also take a hit with a 4% (inflationary) increase to the fuel levy that will see petrol go up by 16 cents a litre, while diesel increases by 15c a litre – effective from 4 June this year. In other words, Treasury is clawing back the R4-billion relief that would have been seen had the fuel levy not increased. However, this is the first fuel levy increase since 2021.

The zero-rated foods increase (on canned vegetables such as chickpeas and baked beans, edible offal of sheep, poultry and other animals, and dairy liquid blends) is now out the window.

Importantly, additions to front-line services such as education, health and Home Affairs remain in place, although they have been revised downward.


Healthcare


The three-year allocation for health (provincial health compensation costs, unemployed doctors and goods and services) shifts down from R28.9-billion in the March Budget presentation to R20.7-billion in the Budget tabled this week. This funding will cover the employment of 800 doctors who have completed their community service, safeguard about 4,700 health posts and address shortages in medical goods, services and accruals. The May 2025 Budget overview document states that an additional R1.4-billion is earmarked for the construction of Siloam Hospital and the implementation of public-private partnership health technology at Tygerberg Hospital.

Home Affairs


Lines at Home affairs (Hell Affairs) are destined to remain long for the foreseeable future. While the March Budget allocated an additional R3.3-billion over three years for digitisation and “human resource capacitation”, it has been reduced to R965-million. Importantly, the line item in the “spending additions funded over the MTEF period” now only reads “digitisation”, which means the “human resource capacitation” or jobs or training element has been dropped.



Education


The additional spending for education shifts from R29.5-billion in March 2025 to R19.5-billion. This will go towards safeguarding about 5,500 teacher posts and increasing the early childhood development (ECD) subsidy from R17 per child per day to R24. The May 2025 Budget overview document then says that “additional funding of R10-billion over the medium term will expand ECD access to an additional 700,000 children up to the age of five years old”.

Defence


“The R5-billion we had proposed to allocate to the Department of Defence for its participation in the SADC mission in the DRC is reduced,” said Finance Minister Enoch Godongwana.

However, the SANDF allocation for 2025/26 has been increased from R1.8-billion to R3-billion. “This will cover the immediate costs of an orderly and safe withdrawal of our troops and mission equipment,” Godongwana said.

Anticipated spending pressures


Initiatives that may require funding later this year include:

  • The withdrawal of the US President’s Emergency Plan for Aids Relief (Pepfar) funding, particularly through USAID;

  • Infrastructure projects in the Budget Facility for Infrastructure and the Passenger Rail Agency of South Africa rolling stock fleet renewal programme;

  • Accommodating population changes that impact on the provincial equitable share allocations;

  • Strengthening capabilities in the Office of the Chief Justice and Statistics South Africa;

  • Political party funding and infrastructure provision for royal houses; and

  • The National Social Dialogue. DM

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