Finance Minister Pravin Gordhan's proposed 2012/13 Budget exceeds R1 trillion -- R1.06 trillion -- for the first time ever, with the bulk of spending, R615.7 billion, earmarked for social services.

Tabling the budget in the National Assembly, he said it had been crafted at a "challenging but hopeful time".

"We have to say to our people that economic uncertainty will be with us for some time, yet we have a programme of economic change that can steadily roll back unemployment, poverty, and inequality.

"We have demonstrated excellent resilience during the post-2008 crisis. We now need to introduce a new dynamism among all South Africans," Gordhan said.

Reducing unemployment was the centrepiece of government's approach to reducing poverty, but it was not the only measure.

Social spending comprised 58 percent of government spending next year -- up from 49 percent a decade ago.

The budget provided social grants to almost a third of the population; and paid for largely free services at public health facilities and no-fee schools for 60 percent of pupils, and for housing, water, and electricity in poor communities.

The average value of the "social wage" for a family of four in 2012/13 was about R3,940 a month.

"This represents a substantial investment in household living conditions, financed through a broadly progressive tax structure," Gordhan said.

Social security reform and phasing-in the national health insurance would improve the effectiveness and coherence of redistribution through the fiscus.

"But, of course, redistribution is not a substitute for economic growth and job creation.

"And so the quality of the poverty reduction we achieve over the decades ahead will depend on our success in broadening development to include historically disadvantaged sectors and communities, as envisaged in our New Growth Path and draft Development Plan."

The budget was intended to accelerate growth, expand investment, support economic development, and confront poverty and inequality.

Gordhan said South Africa's finances were in good health. A budget deficit of 4.6 percent of GDP was projected in 2012/13.

It was planned to reduce the deficit to three percent of GDP in 2014/15, and public debt would stabilise at about 38 percent of GDP, he said.

An expansion in infrastructure investment was one of the central priorities of the 2012 budget.

Special emphasis was given to improving competitiveness in industry, investment in technology, encouragement of enterprise development, and support for agriculture.

Total spending would reach R1.1 trillion next year, representing some 32 percent of GDP.

Education, health, and social assistance would remain the largest categories of spending, sustaining and expanding the social wage over the MTEF period ahead.

"Investment in people is at the centre of our growth and development strategy," Gordhan said.

The budget continued to support job creation, with a particular focus on unemployed youth.

It also provided for personal income tax relief of R9.5 billion, with further measures to increase tax compliance.

Measures were also proposed to invigorate household savings.

"We will strengthen financial management in the public sector, pursue value for money with the greatest possible vigour and ensure that taxpayers' money is well used," he said.

Fraud and corruption would be combated through changes to procurement policies and practices, and tough enforcement of the law.

In 2012/13, the biggest slice of the social services cake goes to:

* education (R207.3 billion),

* social protection (R157.9 billion),

* health (R121.9 billion), and

* housing and community amenities (R120.1 billion).

For the rest, economic affairs is allocated R145 billion; general public services R141.4 billion, which includes state debt costs of R89.4 billion; defence gets R41.6 billion; and, public order and safety R98 billion.

Revenue is expected to be about R905 billion.

Gordhan forecast economic growth will slow to 2.7 percent in the new financial year -- from 3.1 percent in 2011 -- but increase to 4.2 percent in 2014.

National government's net loan debt was set to reach R1.5 trillion in 2014/15.

Gordhan's other tax proposals for 2012/13 include a tax incentive to encourage savings, tax relief for micro and small businesses, a 28 cents a litre increase in fuel levies, and the usual "sin tax" increases on cigarettes and alcohol.

A packet of 20 cigarettes will cost 58 cents more, a litre of wine 18 cents, a can of beer 9 cents, and a bottle of spirits R6 more.

The electricity levy increases by one cent a kWh.

The monthly state old age pension and the disability and care dependency grants will rise by R60 a month, to R1,200, and R1,220 for pensioners over 70.

Foster care grants will go up by R30, to R770, and the child support grant will increase to R280.

These would be reassessed if inflation continued to rise.

Consumer price inflation is expected to average 6.2 percent in 2012/13, dropping to 5.1 in 2014.

Additional spending plans over the next three years include R9.5 billion for the economic competitiveness and support package, including R2.3 billion for dedicated special economic zones, and R6.2 billion more for job creation.

Around R4 billion more goes for passenger rail coaches, R1 billion for rail signalling and depot infrastructure, R4.7 billion for solar water geysers, R1.8 billion for municipal water infrastructure, and R3.9 billion more for upgrading informal settlements.