We are into a completely new ball game when it comes to budget and expenditure in this Province. The years of generous increases in budgets each year are over. In the new financial year, whatever budget increase we will receive, will no doubt, be wiped out by the over expenditure of the Province.
This means that the resources available for actual service delivery are unlikely to increase. If you factor in inflation, we are going to go backwards.
What we need is a new vision for a new reality and I will say something about that later on.
Earlier on this year in July, in this house, I warned this house that we are sitting on a fiscal time bomb and that it was urgent that we engaged in an austerity campaign. I said and I quote:
â€œTreasury Department needs to do a thorough analysis of each Department to ensure that items like catering, travelling, entertainment, events and seminars are cut back to the minimum and that money is spent on these items, is only done in exceptional circumstances.â€
I further said that the DA is calling on Treasury to adequately prepare the Departments for budget cuts as well as instituting a belt tightening campaign in this Province to ensure that the funding we have is prioritised to the core business of the Province. Treasury must ruthlessly trawl through departmentâ€™s budgets to ensure that this occurs.â€
Yesterday a member said one should not draw comparisons between the Eastern Cape and the Western Cape. Earlier on this year the Western Cape Government re-prioritised the budget and came up with R1 billion in savings. You do not see MECâ€™s in the Western Cape spending money on big advertisements to promote themselves nor did the Western Cape Government spend any money on buying new motor vehicles.
The austerity campaign in our Province should have been implemented then and not now.
It is only in the last meeting that we were advised that Treasury is implementing an austerity campaign.
Can the MEC tell us how much the Province is going to save by cutting back on conferences, travelling, entertainment and telephones?
The high level of Provincial over expenditure is of great concern. This amounts to R3.1 billion although R1.930 billion will be dealt with by the Adjustment Budget.
It is, however, important to note that the Department of Health has a potential over expenditure of R1.6 billion and the Department of Education by R1.4 billion. This over expenditure should have been picked up months ago.
The Health Department had to carry over R700 million worth of accounts from the previous year. There were also the wage settlements that were 5% higher than what was budgeted for. But the real problem lies with the payout of R388 million in relation to the back pay in connection with the amalgamation of the old Ciskei, Transkei and Cape Province (HROPT process) â€“ Human Resources Operation Task Team. This funding was not budgeted for. In fact, when the money was paid out, at that time it was not known how much the department would, in fact, be paying out.
How one can pay out this sum of money without it being budgeted for â€“ knowing the problems that Health has, boggles the mind. It is reckless. Last year the Department of Health ran out of money and could not pay its suppliers. It seems that history is likely to repeat itself once again.
What the house also needs to note is that the Health Department still has a potential exposure of R400 million in relation to the HROPT processes and other Departments brought into account this could be as high as R600 million.
If this money is paid out, it could mean that the Provinceâ€™s over expenditure would be close to R2 billion.
Yesterday, in the Health Debate, somebody asked â€œwhat crisis?â€ The Health Department is creating a threefold crisis:
1. For the people who are experiencing service delivery problems on the ground;
2. For the ruling party because, as the health department faces cost pressures and service delivery declines, the public is going to call for MEC Masualle to be removed. This is going to place the Premier in a corner and raise the whole issue of the two centres of power debate especially in view of the fact that the MEC canâ€™t go down â€“ only up.
3. The financial problem in Health has the potential to derail the Provinceâ€™s finances.
Another Department that has paid out money is Agriculture who has paid out R126 million, the Department of Transport could also be involved and I see that they had asked for a provision of R185 million to deal with this issue (HROPT).
With regard to the HROPT process, the question needs to be posed â€“ what is the total potential bill? Can you pay this entire amount this year? If not, how are you going to deal with the problem?
Although there was an improvement in the audited outcomes of the departments in the Eastern Cape for the 2008/9 financial year, it should be noted that irregular, fruitless and wasteful expenditure amounted to R3.044 billion or 8% of the Provincial Budget.
What we need is a new vision for a new reality:
1. We need radical surgery to get rid of those responsible for the ongoing financial mismanagement;
2. We need strong leadership and the right systems in place;
3. We need to devise reporting lines between the Chief Financial Officers of Departments and Treasury where their advice is not taken.
4. We need to ditch the idea of a developmental state and become a delivery state. A developmental state requires highly skilled civil servants. A delivery state outsources what it cannot do to the private sector.