SPEECH NOTES BY BOBBY STEVENSON, DA MPL AND SPOKESPERSON ON FINANCE SPEAKING ON THE ANNUAL AND OVERSIGHT REPORT OF THE DEPARTMENT OF FINANCE IN THE PROVINCIAL LEGISLATURE 30 November 2010

Let me welcome MEC Masualle for Finance back to this Portfolio – this is the fifth MEC in seven years. This instability must come to a halt. It is clearly manifesting itself in the state of the Province’s finances. The Department also has had no permanent HOD for almost two years. When one looks at the state of Health Care and Finance in this Province, it’s a case of the MEC moving from the fire into the volcano.

The MEC is now firmly in the hot seat. We are a Province with our backs to the wall financially where there needs to be strong leadership and a political will to turn the financial situation around.

The Province is projected to over spend by R3.7 billion if the measures proposed by Health and Education do not bear fruit. Health is expected to cut back by R461 million and education by R1.833 billion. These cutbacks are largely on the cost of employees, goods and services and infrastructure. If these savings and others from elsewhere can be realised, then the projected overdraft is expected to be in the region of R1.2 billion.

If one considers that the cost of employment is 79% of the equitable share, then one can understand the magnitude of the crisis when it comes to service delivery. There is no way one can continue to justify over expenditure on the cost of employees and under expenditure in this Province of R1.1 billion on conditional grants.

Can the MEC tell us whether any money from the conditional grants of human settlements and hospital revitalisation were unspent at the end of the financial year and returned to the National Treasury?

An issue where there really needs to be tightening up is on the whole matter of tenders. This index also needs to deal with major items. For example, in the finance meeting held last week, the superintendant general of health mentioned that he intervened to prevent a contract that would cost R59 million for building 100 units where each unit was basically a room, a shower and a toilet with a common kitchen at a certain point. One only has to do the maths to work out that each unit would have cost R590 000 each. The rip off of the Province needs to come to a halt. The goods and services budget and that of capital expenditure is in the region of R13 billion and if 20% of this is lost to over pricing, corruption and fraud, this Province is losing R2.6 million a year.

Another area where firm action needs to be taken is with regards to the recovery of monies incorrectly paid out for the HROPT (Human Resources Operational Task team) process. This money must be recovered as well as the money owed for strike pay.

This brings me on to the issue of the Nelson Mandela Metropole. This Municipality is facing a cash crisis with only 15 days of cash reserves at hand. They are borrowed to the hilt and cannot afford to borrow another cent. This means that there is a huge responsibility on the Province to ensure that every cent due to this Municipality is paid timeously.

The bureaucratic snarl-ups that are bedevilling the Nelson Mandela Metropole’s cash flow need to be unshackled. Officialdom on the side of the province and the Metro must pull out all stops to ensure money

flows into the municipal coffers as quickly as possible.

R214 million is due to the Nelson Mandela Metropole from the provincial government. However, part of the total of R214 million is an amount of R101 million owed for bridging finance in regard to housing. The figure seems to vary between R101 and R140 million. This has not been paid due to the Metro not meeting certain requirements.

Similarly R43 million is outstanding for the primary healthcare subsidy due to a service level agreement for the municipal financial year only being finalised last week.

As a result thereof the municipality has not received its primary healthcare subsidy for two quarters. This is bureaucratic bungling at its worse.

The Department of Roads and Public works owes the Metro a total of R50 million for maintenance on provincial classified roads over the last three years. In the legislature next week the MEC for Roads and Public Works will have to provide an answer to this by means of a question I have tabled for oral reply.

The Department of Education also owes the Metro an amount of R23.2 million as at the end of October. The Department of Education only paid the Metro an amount of R2.2 million in October, which is a fraction of the amount owing.

What must the Metro do to get this money? The only drastic measure it can take is to cut off service to schools, with the learners being the victims. On the other hand if they don’t pull out all stops to get in their cash, service providers to the municipality will remain unpaid with the huge damage that this inflicts on their businesses and employees. The Department of Education needs to meet its commitments so innocent learners don’t end up becoming a political football.

On the one hand the Metro needs to get its act together and ensure that all the necessary agreements and conditions for funding are put promptly in place. On the other hand the province needs to live up to its own norms by paying the Metro what is owed to it within 30 days.

The Democratic Alliance will continue to raise these issues to ensure action.

For the Province to overcome the current financial crisis, a real belt tightening exercise needs to be undertaken. Tough leadership needs to be exercised to ensure that the Province’s finances are put back on track. Whether the volcano will erupt or whether it will be contained, lies in the hands of the new MEC. I wish you well with this challenge.