BACKPAY DEBACLE ESCALATING OUT OF CONTROL

The Eastern Cape Department of Health could once again run short of money and not be able to pay suppliers in the last quarter of the financial year. Other departments will also have to cut back on services, unless money is found in the adjustment budget for them to deal with the historic backlogs in back-pay.

At a finance portfolio meeting held last week in the Legislature, I again raised the issue of the back-pay to thousands of provincial employees, because of a totally unsatisfactory response I got in relation to an oral question posed by me to the MEC for Finance at the Mthatha sitting of the Legislature in October.

The provincial Treasury admitted last week that Health had paid out in the region of R400 million and that Agriculture had paid out R126 million. The total exposure of the Health Department could be R800 million and the total exposure of the Province could exceed a billion rand.

As a result of these payouts, administrative personnel are receiving payments between R300 000 and R900 000 according to information that people are feeding me.

According to the annual report of the Department of Health, a provision of R361 million was made in the financial statements for payments in relation to the backpay issue which is commonly known as the Human Resource Operating Team (HROPT). The issue relates to back-pay to provincial employees during the amalgamation of the former Ciskei, Transkei and Cape Provincial Administration. It has now emerged that Health has paid out over R400 million in this financial year. The fact that departments are unable to quantify their liabilities in relation to the back-pay owed to employees dating back to 1994, is symptomatic of the ongoing problem of the lack of effective financial management systems in this province.

Another Department implicated is Agriculture, who is to pay out an estimated R126 million. It must be noted that the total provincial budget allocation for this department for 2009/10 was a mere R1,4 billion.

According to the Annual Report of the Department of Health, the provincial executive council in August 2006 decided that debts of employees that were overpaid in terms of this process, be written off. In April 2009, the ex Premier Mbulelo Sogoni, directed that the Department of Health process claims. These processes resulted in mass promotions, effectively promoting every employee who was employed prior to 30 April 1994.

What is also significant is that the paragraph dealing with this issue in the Department of Agriculture clearly indicates that the Executive came under pressure from the Unions in the election period and I quote “however, on the 1st April 2009, the Department (Agriculture) was instructed in the meeting held at the office of the Premier between the Premier, MEC’s and HOD’s, Agriculture and Health and NEHAWU Provincial Leadership, to pay the HROPT as per the agreement with the unions. The payments started in April 2009.”

What this means, at the very beginning of the financial year, Unions and the Executive Council, decided to go ahead and pay these amounts but nothing whatsoever was said in the budget process nor to date, have any of my questions — which I have tabled in the Legislature — resulted in me being given any significant information on this issue. Clearly, something is not right and I will be probing as to whether or not this money has been paid out in terms of the correct procedures. Clearly something stinks.

Last year the Health Department ran out of money and could not pay its suppliers for the last three months of the financial year, resulting in over R700 million in unpaid accounts being carried over from 2008/09 to 2009/10. If a further R1 billion was to the paid out in back-pay from the health budget of R11,3 billion, this will simply cripple health services in the province.

The fact that this issue has dragged on for so many years points to gross and ongoing financial mismanagement. By simply putting one’s head in the sand and not dealing timeously with the matter, the department has compounded a financial crisis.

The DA believes the Portfolio Committee on Finance should be given a full explanation as to the process and the amounts involved and from where the money will be paid. Clearly the province cannot pay this money out in one go and a settlement agreement and national assistance is required.

The Democratic Alliance will continue to question members of the Executive Council on this matter.

For further information, please contact Bobby Stevenson, MPL on 082 775 3444