Eastern Cape Government must rein in spending and table early adjustments budget

Issued by Retief Odendaal, MPL
Shadow MEC for Finance

The dire projections given by the Minister of Finance, Tito Mboweni, during the adjustments budget yesterday, cannot be ignored any longer, and Eastern Cape Government need to start seriously cutting back on expenditure, if the province is to weather the economic storms that lie ahead.

The year ahead will be the litmus test for Premier Oscar Mabuyane, it will make or break his administration.

The last financial year has already been the worst financial performance of the provincial government in the past five years, with four departments receiving qualified opinions and only three received unqualified opinions. This was before the devastating economic impacts of the Covid-19 outbreak and subsequent enforced lockdown.

Several areas of concern need to be addressed, including the province’s ballooning Cost Of Employment (COE), which is currently consuming 67% of the total budget, at R57,4 billion. The provincial target for COE is 60%, which would free up a staggering R6-billion if adhered to.

Departments should freeze all vacant administrative posts and ensure that organograms are updated with the aim of limiting spending on COE to 60%.

Despite the additional resources being allocated to the Department of Health, the department is in financial crisis and teetering on the edge of collapse under the medico-legal claims against it, as well as accruals in excess of R3-billion.

The top 10 Medico Legal Claims cost the province R191 million in 2019/20 financial year, and yet not one disciplinary charge has been brought against those responsible.

My colleague, and DA Shadow MEC for Health, Jane Cowley, MPL, has already written to the Minister of Health to call for the department to be placed under administration.

Government should not be tempted to cut spending on capital infrastructure programmes, which only make up 5,4% of the total budget, as these are now more vital than ever! It is infrastructure that leads to investment and job creation. Departments should focus on how they can free up capital by targeting COE, wasteful and non-core expenditure.

Wasteful Expenditure also needs to be addressed. Overtime increased from a total budget spend of R222.6 million in the 2016/17 financial year to R899.6 million in 2019/20. This is close on a 400% increase in four years! Cell phone expenditure for departments has increased from R60.7 million in 2016/17 to R373.5 million in 2018/19, close on a 615% increase in three years!

The non-payment of suppliers needs to be addressed as a matter of urgency. Not paying suppliers within 30 days, under the current economic conditions, could be the death knell to thousands of small businesses across the province.

I will be submitting these, and other, suggestions to the MEC of Finance, Mlungisi Mvoko, and Premier Mabuyane, and call for an early provincial adjustments budget.

The message is clear. It cannot be business as usual. The province must rein in the spending and get the province back on track!

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