Howard Barrell
OVER A BARREL
There is probably no more decisive issue underlying our politics right now than how much of our money the state should spend on what and how effectively we believe it is capable of spending it. It lurks behind most of our major debates – from public service pay to the size of the civil service and privatisation. The fiscal issue divides our politics.
The provinces have an important place in this debate. Of each rand you and I pay in taxes, we hand over only about 5c to the province in which we live; we give the remaining 95c to the central government. But the picture is radically different when it comes to spending our tax rands. Of each tax rand remaining after the government has paid interest on its debt, the provinces are responsible for spending about 57c. Most of these revenues reach the provinces in the form of transfers from the central government.
The provinces, as we know, have not always spent these revenues well. But provincial accounting has improved greatly over the past year. Much of the credit for this goes to the Department of Finance, particularly to the provincial finances unit headed by Ismail Momoniat, a gifted young mathematician who was a prominent activist in the United Democratic Front in the 1980s. And the department is due as much praise for now trying to improve our knowledge as taxpayers of how the provinces are spending our money. The department has just produced its first Intergovernmental Fiscal Review 1999, in which it manages to present the provinces’ finances and their relations with the central government in simple language and clear tables.
The review shows – yet again – how disparate we are as a country. The differences are both racial and regional. History may have put a lot of distance between white and black, but it is also a long, long way from the Western Cape to the Eastern Cape, or from Gauteng to the Northern Province.
One of the legacies of apartheid is, clearly, that wealth and poverty correlate almost as much on the basis of place as on the basis of race. Those areas of the country where the homelands once stood remain the poorest.
Six out of 10 households in the Eastern Cape and five out of 10 in the Northern Province, North-West and Northern Cape are low income. That is well more than double the incidence of poverty in Gauteng and the Western Cape, where the proportion of high-income families is four and three out of 10, respectively. Moreover, residents of Gauteng and the Western Cape, who together make up slightly more than a quarter of the country’s population, earn more than half the total remuneration paid to employees nationwide. On the other hand, people in the Eastern Cape, KwaZulu-Natal and the Northern Province – half the population – earn only a quarter of total remuneration.
Moreover, the poorest provinces experience the heaviest demands on provincial services. They have the highest numbers of school-age and elderly people – the sections of the population that make the heaviest demands on the provinces’ education, health and welfare systems. The Eastern Cape, KwaZulu-Natal and the Northern Province account for more than half the national totals of elderly and school-age people. On the other hand, pressures on provincial medical services in the Western Cape and Gauteng are substantially reduced because many more of their residents have access to medical aid and, so, to private health care. People in the Western Cape and Gauteng spend more than half the national share of medical aid benefits.
A further drain on the poorer provinces’ resources is that they inherited the bureaucracies of the former homelands and are stuck with large numbers of unneeded civil servants with no jobs to do but whose salaries they must pay. The proportion of people employed by the provincial administrations in the Eastern Cape and Northern Province is twice the national average. This burden also has the effect of squeezing out much-needed capital spending on service provision in these provinces.
In sum, measured on the human development index, the quality of life in the Northern Province and Eastern Cape is, on average, just more than half what it is for those of us living in the Western Cape and Gauteng, according to the Intergovernmental Fiscal Review 1999.
It will take us many years to overcome this legacy – until we can ensure that a young child starting school in a village 60km north of Pietersburg can, if he or she takes the available opportunities, enjoy the same life chances as a child starting out in, say, Benoni or Stellenbosch. It will also take some new ways of marshalling our resources and throwing off unproductive costs.
There is little opposition to the notion that the state in some form – national, provincial or local – should provide educational, health and welfare services. But in the current international economic environment – where fiscal discipline is a virtue we must all (at least pretend to) uphold – the resources the state can afford to make available to these services are more sparse than the task requires in South Africa. We may, therefore, need to look at how the state can more systematically draw private sector resources, methods and economies into the developmental effort than is evident in sporadic acts of benefaction by rich individuals mobilised by former president Nelson Mandela and shown on the television news.