The National Education, Health and Allied Workers’ Union [NEHAWU] notes the tabling of the fiscal framework and other related Bills in the form of the 2026/2027 Budget, by Finance Minister Enoch Godongwana today.
The presentation of the budget takes place against the backdrop of the 2026 State of the Nation Address (SONA), in which the President of the Republic, Cyril Ramaphosa, assured the nation that we have turned the tide of low growth and economic uncertainty. The 2026 Budget itself is premised on the theme of “A fiscal turning point in a resilient economy”.
However, the backdrop to the 2026 Budget is a context of unsustainable and crisis levels of unemployment, currently standing at 42.1%. The 2026 Budget Review indicates that the economy is only expected to grow by 1.6% in 2026 with a forecast of 2% real GDP in 2028, yet the fiscal strategy is still narrowly focused on stabilization rather than the transformation of the underlying structure of barriers that reproduce inequality, poverty and unemployment. South Africa continues to face structural unemployment, severe youth joblessness, widening wealth concentration, municipal service collapse and high household indebtedness. In this context, a budget anchored primarily on debt stabilisation at 78.9 percent of GDP and deficit reduction signals that fiscal credibility remains the dominant objective rather than the triple-crises.
Fiscal policy stance
As NEHAWU, we are not convinced that the 2026 Budget can legitimately be regarded as a “turning point”, as claimed by the Treasury. It may be true that in the overall austerity measures have been discontinued in many spending items and in aggregate, but the fact of the matter is that the 2026 Budget does not represent a means for the recovery of the capacity that has been lost through rolling budget-cuts that were imposed over the past decade. The so-called turning point would only be reached when the effects of the previous decade-long austerity measures have been addressed and the weakened state capacity in terms of personnel and expertise have been reversed – given the existing mass vacancies. In other words, NEHAWU rejects the notion that the current allocations for the compensation of public service employees and the overall consolidated government expenditure over the medium-term should be regarded as a baseline, going-forward. That is an absurdity and we demand an explanation as to how the prevailing vacancies that have been under a long-running moratorium and that undermine quality in the delivery of public services such as in healthcare, policing, home affairs, etc. are going to be filled.
We welcome the Minister’s commitment to diversifying South Africa’s trade portfolios, this must be prioritized in the context of US driven tariff wars, new and emerging markets and the establishment and strengthening of various economic and political Global South blocs. NEHAWU urges government, in particular the National Treasury and the Department of Trade, Industry and Competition to ensure that practical steps are taken for the realization of a diversified trading portfolio.
NEHAWU firmly rejects any attempts to introduce fiscal anchors in the upcoming 2026 Medium-Term Budget Policy Statement (MTBPS). The inflation rate projected at 3.4 percent in 2026 may appear moderate in macroeconomic terms, but for low-income households whose consumption basket is concentrated in food, transport and energy, even modest inflation erodes real income. The increases in fuel levies and excise duties in line with inflation compound these pressures indirectly through transport and food price pass through effects. The inflation linked increase of social grants means that the poor are merely being kept at the same real income level and thus being protected from deterioration rather than experiencing a meaningful improvement in living standards.
Notwithstanding its limitation of benefiting only a relatively small group of the formally employed middle income earners rather than the unemployed majority, full inflation adjustment of personal income tax brackets is welcome. The withdrawal of the R20 billion tax increase is said to provide macro stability and avoids dampening fragile growth, yet it also illustrates a reluctance to pursue more progressive taxation instruments in a country with one of the highest levels of wealth inequality globally. In a context where corporate concentration and capital flight remain concerns, the absence of stronger redistributive tax reform suggests that the fiscal burden continues to rely heavily on consumption and labour income rather than wealth and capital.
Public Service
Based on the themes of both the SONA and the Budget Speech, we hoped that the hollowing out of our frontline public services would come to an end. The consistent pursuance of fiscal consolidation has led to government failing to fulfill many constitutional and developmental obligations and mandates, particularly under section 27 of the Constitution. The so-called turning point would only be reached when the effects of the previous decade-long austerity measures have been addressed and the weakened state capacity in terms of personnel has been reversed, especially with regard the prevailing mass vacancies. In other words, NEHAWU rejects the notion that the current allocations for the compensation of public service employees and the overall consolidated government expenditure over the medium-term should be regarded as a baseline, going-forward. That’s an absurdity and we demand an explanation as to how the prevailing vacancies that have been under moratorium and that undermine quality in the delivery of public services such as in healthcare, policing, home affairs, etc. are going to be filled.
Containing the public service wage bill and implementing savings measures reflect fiscal consolidation logic that may limit the expansion of state capacity at a time when communities demand more effective service delivery. Nonetheless, we note certain commitments by the Minister to fill some vacancies and prioritise the proper resourcing of the public service, in particular allocation directed towards the recruitment and hiring of 3000 staff for Home Affairs. But this is minuscule and must only be regarded as a start in the strengthening the state’s capacity.
Education
Having matriculated under difficult circumstances, on an annual basis students find themselves without access to the higher education institutions. Others are left to sleep on the streets as a result of a lack of student accommodation. National Treasury must decisively deal with this annual crisis, which requires the resourcing and construction of new universities, TVET and CET colleges to accommodate our growing youth population and increasing matriculants seeking to enter higher education. Therefore, we welcome the commitment to construct new tertiary institutions, in particular the much anticipated and urgently needed, Ekurhuleni University.
However, it is deplorable that the allocations for University Subsidies are barely above the projected inflation over the medium-term. In fact, as NEHAWU we are very concern that the allocation for the National Student Financial Aid is going to be stagnant in the medium-term – actually it shrinks by 0.1% from 2025/26 to 2028/29. At the same time it is a serious concern that the allocation for infrastructure for Community Education and Training (CET) grows by a modest 5.2% over the medium-term, at the time when it is clear that the 2030 National Development Plan goal on enrolment in the CET sector are not going to be met, given the current downward trend which is in part caused by poor infrastructure. Nonetheless, we welcome the fact that there is a steady increase in allocations for Early Childhood Development (ECD) – growing by about 13.8% over the medium-term – though this is from a very small baseline and the ECD sector is still at a small scale and far from meeting the existing need in the population.
Healthcare
It is deplorable that spending in healthcare barely grows above the projected inflation rate of 4.2% over the medium-term. We condemn this more so because the Treasury has now resumed adjusting the medical tax credits for inflation, at the time when it should be scrapping this unconstitutional and discriminatory subsidy that benefits only 14% of the population who are medical aid scheme members. It is ridiculous that the NHI Act is currently bogged down and facing 14 litigations by reactionary forces that seek to maintain the current ghastly Apartheid-like status quo of a two-tiered health system in which the private sector cannot stand on its own two feet and only survives by leaching on the public sector – being propped up from collapsing through medical tax credits. Government is forfeiting at least about R33 billion annually because of these tax expenditure subsidy for those who have health insurance. In fact, in this 2026 Budget the Treasury has just decided to provide inflation-linked adjustments to the R364 per month subsidy amidst the declining numbers of members of the medical aid schemes in this extortionate private health industry, as highlighted in the Competition Commission’s Report on the Health Market Inquiry. NEHAWU reiterates its call for the scrapping of the medical tax credits – they are based on the provisions of the inherited Apartheid regime’s Income Tax Act of 1962. Instead, this approximately R33 billion in annual tax credits could be used to expedite the roll-out of System-Strengthening measures in public healthcare in the current phase of the implementation of the National Health Insurance Act.
Nonetheless, we welcome the fact that the critical posts, especially those in the division of the health facility inspection at the Office of Health Standards and Compliance (OHSC) are going to be filled. This shall hopefully go a long way in enhancing the monitoring and ratification of bad practices by incompetent managers of healthcare facilities and reinforce our own efforts as NEHAWU in fighting for the implementation of occupational health and safety, improvement in infrastructure and the consistent application of the mandatory clinical protocols. Indeed, we welcome the Minister’s commitment to properly resource a number of dilapidated healthcare facilities such as the Doctor George Mukhari Academic and Inkosi Albert Luthuli hospitals. We also note and welcome the R7.8 billion allocation to NHI Grants (NHI indirect grants), the commitment to establish seven new provincial hospitals as well as the allocations and investment in public healthcare (R24 billion) and to crucial district health programmes (R92 billion).
Social Services
NEHAWU also expected that National Treasury would respond to extremely challenging socio-economic conditions impacting the disabled, the elderly and those most vulnerable in a society suffering from systemic levels of unemployment and income inequality. We therefore take note of the above inflation increases to social grants, this includes an increase to the old age grant, disability and care dependency and war veterans grant. We also note smaller increases to the foster care and child support grants.
However, it is baffling that the Minister continues to refuse to increase the COVID-19 Social Relief of Distress (SRD) grant in line with or above inflation, as has been done with the other grants. Year-on-year, various commitments are made to explore the resourcing and expansion of the SRD grant into a universal basic income guarantee, to no avail. Unfortunately, in the 7th Administration, the commitment to introduce a universal basic income grant is diluted into a regressive policy adjustment, referred to as the ‘job seekers grant’. With the recent release of 2026 Food Poverty Lines by Statistics South Africa indicating increasingly high levels of food insecurity, with significant portions of the population unable to afford a nutritious diet, these adjustments and the noncommittal attitude of National Treasury significantly worsen already unliveable and unsustainable conditions.
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Issued by NEHAWU Secretariat.
Zola Saphetha (General Secretary) at 082 558 5968; December Mavuso (Deputy General Secretary) at 082 558 5969; Lwazi Nkolonzi (NEHAWU National Spokesperson) at 081 558 2335 or email: lwazin@nehawu.org.za