Cash crisis deepens for Health, Education as budget requests denied

Issued by Retief Odendaal, MPL
Shadow MEC for Finance

The future of the two biggest provincial departments in the Eastern Cape is growing increasingly bleak, as their requests for billions of rands of additional funding has been denied.

These cash-strapped departments applied for unprecedented extra funding, as part of the latest adjustments budget, to cover ever-growing costs, but Provincial Treasury simply could not meet their needs with the finances available.

The situation is so dire that, unless immediate action is taken, it is an almost forgone conclusion that these departments will collapse, and service delivery will grind to a halt.

During a Provincial Finance Committee this week, the Provincial Treasury painstakingly explained how dire the situation has become.

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Health and Education, combined, have requested close on R11 billion in additional funding, which excludes additional national adjustments to equitable share, provided by the national government.

The Health Department has requested an additional R5.204 billion for the current financial year, of which R4.4 billion was for accruals and payables.

The Provincial Treasury noted that they could only provide R280,7 million in additional funding for Health, roughly 4.4% of what was asked for. (Table 9 p37)

Suppliers across the province that have already done work for the Department, and have not yet been paid, will have to wait until the new budget allocations in April before receiving any funds. Critical medical supplies for the rest of the financial year could very well be delayed, as the Department does not have the money to pay for them!

The Department of Health is factually insolvent and currently unable to meet its financial commitments for the financial year.

The financial situation in Education is just as bad, with an additional amount of R5.722 billion requested by the Department in the Adjustments Budget, but Provincial Treasury was only able to allocate an additional R307 million (5.4%). (Table 9 p37).

The Education Department is so cash-strapped that it cannot deliver textbooks and stationery to schools, leaving many schools in dire straits.

Both Departments have been berated for their continued disregard of the Provincial Appropriation Act, by overspending the voted budget and resulting in unauthorised expenditure; for continued shifting of funds from non-negotiable items to other areas; negative audit opinions on the predetermined objectives as well as on the regulatory audit; inefficiency on CoE management; committing of expenditure without the necessary allocated budget and over-commitment by the departments despite fiscal consolidation.

Despite this, no action has been taken by Premier Oscar Mabuyane or Provincial Treasury to rectify this. These Departments are spending money they don’t have, resulting in funds being taken from other departments to try and keep the provincial ship afloat.

The Democratic Alliance is demanding that both Departments be forced to implement a strict financial turnaround plan, which Provincial Treasury must oversee.

There can be no further delays. Failure to act can only lead to the collapse of both departments, with disastrous consequences for the people of the Eastern Cape.