The adjustments budget of R1.930 billion is not going to cover the shortfall in projected provincial over expenditure. This is going to leave a huge hole in the Provinceâ€™s finances of potentially R2.1 billion. How this hole is going to be filled is the challenge that the MEC, Departments and this Legislature faces.
An immediate stop needs to be put on non core expenditure and disciplinary action taken against those transgress treasury directives.
The Health Department is projected to overspend by R1.6 billion but only receives R445 million in the adjustments budget. This leaves a hole of R1.155 billion. In a document circulated in the house during the health report it stated that 61% of the budget for goods and services had already been spent. There was a further 15% in committments leaving 24% for the rest of the year. In answer to a question for oral reply in the house, the MEC stated that of the R1.6 billion, R1.2 billion was for compensation of employees and R423 million for goods and services. Even if one simply did not spend anymore on goods and services, which is a step that would be deplorable, the adjustment budget still does not provide enough funding to deal with the projected over expenditure of R1.2 billion for compensation of employees.
The second big hole comes from Education. Education is projected to over expend by R1.4 billion comprising of compensation of employees (R832 million and goods and services R134 million and capital payments R374 million). Education receives R1.081 billion in the adjustment budget. This leaves a shortfall of R320 million. If you add the shortfalls in the two big departments of Education and Health together, and take into account shortfalls in some of the other Departments, there is going to be a projected over expenditure as at the end of the financial year in this Province of R1.5 billion. If one adds the additional potential exposure that this Province has under the backpay issue (HROPT), that could amount to an additional R600 million leaving a projected shortfall of R2.1 billion.
This amount of R2.1 billion is likely to exceed the entire increase that this Province might receive in the new financial year. What the MEC needs to spell out is how this hole is going to covered.
The portfolio committee has requested that the MEC spell out to us in detail how the shortfall between the adjustment budget and the projected over expenditure is going to be covered. We have asked that we be briefed on a monthly basis.
What one does require today is a cast iron guarantee from the MEC that no further funding will be paid out under the HROPT process this financial year. It cannot be done because this Province cannot afford it and the public accounts committee needs to take up the issue of how R388 of unbudgeted expenditure could be paid out by the Health Department under the HROPT process.
We also have to ensure that wage increases next year are kept well within the line of inflation. This year there was a wage increase of 11.3% which was 5% higher than what was budgeted for. This has resulted in the Province having itâ€™s wage bill increased by an additional R713 million rand.
It should also be noted that Municipal Wage increases were also in the region of 13% – a figure which is unafordable for many of our cash strapped Municipalities. Given the fact that whatever budget increase we have next year is likely to be wiped out by over expenditure, every rand more we spend on compensation of employees, is one rand less for service delivery.
Social development is going to receive R20 million more for litigation costs in relation to social grants. One needs a further explanation on this. In the absence of a further explanation, one can only conclude that this exhorbitant amount of funding for litigation costs is there to fight poor people in court who are trying to access their grants. This is despicable and this Province has been severely criticised by the Courts for defending the indefensible.
The youth commission receives an additional R1.1. million of which R687 thousand is for a settlement agreement for the ex youth commissioners and for over expenditure on the youth day celebrations. This would amount to R413 thousand rand.
The Legislature is also to receive an additional R784 000 to cover costs of the state of the province address.
We really need to slash the costs of celebratory events radically. We can have dignified ceremonies without spending exhorbitant amounts of money. In the context of the fiscal space we are now operating in, lavish functions are something of the past.
In the new financial year, there needs to be fresh thinking for a new reality. The days of spending huge sums of money on conferences, workshops, travel and food are over.
Financial management is going to face huge challenges in the new financial year. Budgets are going to have to be tightly managed. There is little room for error.
It is going to take strong leadership, visionary planning and the committment to put the people, all the people of this Province first.
This new culture of greater fiscal accountability needs to permeate right throughout the Province particularly in some of our Municipalities who waste huge sums of money on non core expenditure. A recent example was the Nelson Mandela Metropole who pumped in R250 000 into a failed concert this last Saturday and the O R Tambo Municipality who allegedly spent over R3 million to send a delegation to Zambiaâ€™s independence day celebrations.
These kinds of extravagances are symptomatic of a culture that is removed from the financial reality of our times. It reminds me that prior to the fall of one of the mightiest empires on earth, the Roman Empire, the people were appeased with games and circuses. One cannot but help drawing the same parallels between the decline of the Roman Empire and the current state of this Province today. History often repeats itself.
The red lights are flashing for the ANC in the Eastern Cape today.
I thank you