Eastern Cape Govt dealt a R3,476 billion blow to budget

Issued by Retief Odendaal, MPL
Shadow MEC for Finance

The Eastern Cape Provincial Government was dealt a R3,476 billion blow during the Provincial Adjustments Budget tabled in the Eastern Cape Legislature today, which was cut from the province’s equitable share for compensation of employees from national government.

MEC of Finance, Mulungisi Mvoko announced that the huge cut in employee funding had been offset, in part, by dipping into the Province’s financial reserves to the tune of R2 billion.

This is a case of the province once again kicking the can down the road and not dealing with the issue at hand, which is the runaway cost of employment. We cannot keep putting it off. We need to make difficult decisions and implement them now, because the problem is not going to go away.

Although the MEC announced some measures to deal with the rising cost of employment (COE), it is clear that it remains an albatross around the neck of the province, with 67% of the entire budget being spent thereon. Instead of cutting COE, the MEC is spending an additional R2-billion of emergency reserves to pay bloated salaries, while businesses suffer.

The MEC missed an opportunity by failing to announce a much-needed stimulus package for economic development in the province. In sharp contrast, the Western Cape have just launched a provincially funded support package for businesses of R1,4 billion.

It is also shameful, in the extreme, that grant funding to the Eastern Cape is being cut, to be used as part of the R10,5 billion bailout of the ANC’s bankrupt vanity project, South African Airways. Even more so on the back of the recent announcement by Minister Pravin Gordhan that this will most likely not be enough to get it off the ground.

This is money that was meant to assist in building schools and hospitals, tertiary institutions, community libraries, and homes for our people.

What is needed now is strong leadership to change the fiscal policy of the province to get the Eastern Cape back on track towards being a capable state. That will also entail a firm hand to implement the necessary cost cutting measures that will realign our Departments to the realities of much diminished budgets.