The Eastern Cape is facing a dire cash shortage, driven by the unchecked spending of the departments of Health and Education, which is threatening provincial government’s ability to provide the most basic services to the people of this province.
These departments, which account for 75% of the total provincial budget, have become a law unto themselves and need to be placed under administration as a matter of urgency, if we are to prevent the province from heading over the financial cliff.
Funding provided by national government is shrinking, as are our financial reserves and self-generated revenue, and what is available, is going to an ever-increasing wage bill. Currently, the province is spending 66 cents of every rand received on salaries.
The effects of this cash crisis are already being felt across the province. Children have not received their textbooks, because there is no money to pay for them. Hospitals can’t pay service providers that provide food, clean linen, and security for patients in their care.
Cash reserves of the province have shrunk to just R3,5 billion, which is less than the R11 billion requested by Health and Education to balance their books for this financial year!
The ballooning medico-legal claims are not only adding to Health’s financial woes but are also a symptom of a collapsing healthcare system. The department is simply unable to provide our people with even the most basic care they are entitled to, which is why they are being sued.
Both Health and Education have asked for extensions to their overdraft facilities, which are currently standing at R979 million and R1,4 billion respectively. to see them to the end of the financial year!
Provincial government is not an employment agency. You do not create sustainable jobs by employing more people in government. By spending all our money on salaries, service delivery suffers. When service delivery collapses, businesses close and people lose their jobs. Less jobs and fewer businesses, translates into less revenue for government.
However, our provincial departments continue to create bloated administrative posts for cadres who are not capable of doing the work, while leaving critical posts at the front lines, such as nurses, doctors and specialists, vacant. The province’s staff count has grown from 135 663 in the 2017/18 financial year, to 139 390 provincial employees this financial year, at a staggering cost of R57-billion.
Provincial Treasury’s targeted cost of employment (COE) is 60%. If this goal was achieved, the COE would have been around R52-billion which would have meant that R5-billion could have been freed up to assist with our current financial crisis.
Together, the departments of Health and Education are allocated some 75% of the total provincial budget. The financial sustainability of provincial government can be compromised if the financial situation in these two departments deteriorate any further.
The Democratic Alliance will be tabling a motion in the house tomorrow calling for immediate action to be taken. This includes:
1. That both the Departments of Health and Education immediately be placed under administration in terms of section 100 of the Constitution.
2. Alternatively, strict financial turnaround plans be implemented and be overseen by Provincial Treasury and National Treasury.
3. A further, immediate overdraft facility be made available to allow Education to distribute all outstanding textbooks and stationery to schools before the end of February.
4. That the 2022/23 budget avail sufficient budget for the Department of Health to roll out and implement its Electronic Recordkeeping Database, thereby replacing the outdated and dysfunctional manual method of recordkeeping.
5. To Immediately adopt the revised organograms for both departments and thereafter implement a Cost Containment Plan insofar the COE is concerned. The aim must be to contain COE at no more than 60% of total budget. The aforesaid plan can facilitate immediate options for early retirement and/or voluntary retrenchment.
Failure to take action now will mean even more suffering for the people of the Eastern Cape going forward.