EASTERN CAPE HEADING FOR FINANCIAL MELTDOWN

The Eastern Cape Province is projected to over-expend by R3.7 billion at the end of the financial year. This comes on the back of over-expenditure in the last financial year (2009/10) of R2.7 billion. This is going to result in a tragic meltdown of funds available for service delivery. The goods and services budget will be particularly hard hit. This impacts on the supply of medicine in clinics, blankets and equipment in hospitals, maintenance of schools and other buildings and road maintenance. It means suppliers stand the strong likelihood of not being paid timeiously. This in turn impacts on the viability of businesses and employment. It is a crisis.

The Democratic Alliance is not surprised. During the budget process we queried the figures as we did not believe them. We took the historic step of opposing the budget.

This means that the Province will have had over-expenditure in two financial years of R6.2 billion. The top-slicing of this amount will have a catastrophic impact on future budgets as there is very little likelihood of a bailout from National Treasury. The cost of salaries is going up and up and the money available for actual service delivery is going down and down.

The provincial budget will increase by a little over R2 billion per annum over the next two financial years. When one considers that 79% of the provincial budget received from national government goes towards the provincial salary bill, one can begin to imagine the magnitude of the crisis facing the Eastern Cape. If one includes the conditional grants of R7 billion, the cost of employment is 63%.

Over expenditure cannot be top sliced from conditional grants; only from the equitable share. If we top-slice the projected over-expenditure total of R6.2 billion over three financial years, it means there will be no increase whatsoever in non-personnel expenditure in the province. When one considers the increases that civil servants receive each year, it will mean we will go backwards as far as funding for actual service delivery is concerned.

Service delivery in this province has not increased with salary increases. This position is completely unaffordable for the Eastern Cape.

Given this crisis there are immediate steps that need to be introduced:

1. Tender reform – next week the Democratic Alliance will be tabling a private members motion in the Legislature which provides for legislation to ban civil servants from trading with the province. It has been estimated in our province that we lose over R2 billion per year in procurement processes as a result of over-pricing, corruption and maladministration.

2. A real belt tightening exercise needs to be introduced so that not one cent is wasted on frivolous expenditure.

3. An action plan needs to be introduced to ensure that the quality of service delivery improves radically. We can no longer afford to employ people in jobs who do not deliver a quality service for this province. How can we justify under-expenditure in this province to date of R1.1.billion on conditional grants and over-expenditure on the cost of employees?

4. The MEC for every department should sign a performance agreement with the Premier.

5. A skills audit must be conducted of senior management in the departments of health and education to determine whether or not people are fit for purpose.

6. Scopa reports for the previous financial year must be finalised before the new budget is introduced.

7. The vacancy of the HoD of the Provincial Treasury needs to be filled as a matter of urgency. This position has been vacant for almost two years.

8. Provincial Treasury needs to provide tough leadership so that sound financial management is restored to the province.

9. The provisions of the Public Finance Management Act need to be rigidly enforced.

What is clearly required to turn the finances of this province and rescue the people from an ongoing poverty trap is strong leadership.

We simply cannot afford to have people in jobs who are unproductive and who are not delivering and get increases year in and year out at the expense of service delivery. What is required is the political will to act and to wield the axe.