There’s good and bad news from the social delivery interface — the nine provinces — but mostly it is good.
Personnel costs are down, capital expenditure is up, the provinces are growing their implementation capacity, social development expenditure has more than doubled since 2001/02 and nearly 5,6-million children are getting child support grants, up from 970 000 in 2001/02.
The bad news is that the provinces collectively underspent by R1,8-billion last year on their capital budgets, a low 0,9% of total budget, but a relatively high 15% of total capital expenditure of R11,9-billion.
This problem is exacerbated at local government level where many councils are battling to meet their capital expenditure budgets.
Cape Town has spent just 60,9% of its budget, Ekurhuleni 70,4% and eThekwini 90%. At Gert Sibande council in Mpumalanga, only 22% of the budget allocated to water, lights, housing and roads was spent.
And at Matjhabeng, where protests have wracked the town repeatedly, there are simply no available figures on capital spending.
Under-spending points to continuing capacity issues in regional government. ”Provincial budgets often show clear intent to address backlogs and poverty alleviation, but poor budget planning and spending capacity often means that these intentions are not realised. This is particularly true of poorer provinces,” says the National Treasury in its Provincial Budgets and Expenditure Review released this week.
The review says there is a need to improve infrastructure delivery in provinces, building sustainable communities remains a major issue, poor budget planning and spending capacity continue to slow service delivery and the re-emergence of sizeable unallocated funding is a concern.
”These funds have been given various names in different provinces, such as poverty relief or economic development funds. In many instances they lead to under-spending,” the review says.
Unattached allocations ”weaken the link” in the budgeting process of identifying development needs and money allocations, says Lungisa Fuzile, acting head of Intergovernmental Relations at the Treasury.
According to the Treasury the unallocated funds are a worry not because of the amounts — less than R5-billion over the three-year medium-term expenditure framework period, compared to the R193-billion provincial budget for 2005/06 alone — but because they create budgets within budgets, potentially thwarting government’s overall development goals.
”Unallocated funds throw out all budgeting priorities and weaken the link between priorities and allocations,” says Fuzile. ”We ought to be worried.”
”[Provinces] see poverty and want to do something. The intentions are good in many instances. All we are saying: do the planning and take the decisions ahead of time,” Fuzile says.
The Provincial Budgets and Expenditure Review shows that personnel costs have been brought down from a high of 55,2% in 2001/02 to 46,5% last year and are projected to drop to 43,6% by 2007/08.
North West has achieved the lowest overall spending rate at 94,8% of total budget, KwaZulu-Natal scored the highest with 99,6%. About 26 provincial departments have underspent by more than 10%.
Mpumalanga spent just 66,1% of its capital budget, followed by North West (70,6%), Free State (75,9%) and Gauteng (84,5%). The Eastern Cape was the biggest spender on capital infrastructure with 94,6%.
These spending levels are a 13% (or R1,2-billion) improvement on the previous financial year. As provinces are getting a better handle on their budgets, incidences of fiscal dumping, or huge increases in spending in the last quarter of the financial year, have dropped but still remain a concern.
At local government level councils raise 98% of their own revenue from rates and levies, but the national government funds 44% of the municipal capital expenditure — R17-billion — through transfers.
In contrast, provinces receive 96% of their funding — for education, health and social services, for example — from national coffers, the remainder being raised by the provinces from car licences, casino and horse racing taxes.
The government has now paved the way to re-recruit skilled workers who left local government, partly because of the implementation of employment equity targets, according to a damning presentation to Parliament last week.
Only 70 of 284 councils have at least one civil engineer; skills gaps range from IT to librarians and labourers in areas like water and sanitation, according to that report.
While the Department of Provincial and Local Government has identified 136 of the country’s 284 municipalities for special attention to boost skills and capacity, it is clear from Treasury statistics that even the larger, metropolitan councils face difficulties.
In the Eastern Cape, of the more than 40 councils, only Amatole and Buffalo City received unqualified audit reports. Although R15-million had been spent in 2001/02 to clear years of backlog of annual financial statements, 22 councils have still not bothered to submit annual financial statements for the past financial year.
In Mnquma council ”an in-fight between councillors is retarding the process” of submitting annual financial statements, says the document.
Although the government has for the past five years, described local government as the coalface for service delivery, more must be done to resolve financial and political inertia.
In recent months, communities from the Cape through to Mpumalanga have taken to the streets in protest against slack delivery, a series of broken promises from councillors and the playing out of, what one local government observer labelled ”vested parochial interests and patronage”.
While the provincial and local government department has put various initiatives in place to redress skills shortages at local government level, the drive is on now to improve capacity and the quality of leadership at both administrative and political level.
Meanwhile, municipal debt, which stands at R40-billion, is increasing more slowly. In the past financial years it has grown by 4%, compared to the 9% hike in 2000/01.
An eye on the provinces
The Provincial Budgets and Expenditure Review for 2004/5 contains some startling statistics:
- A total of 5,6-million children under 14 received the R180 child support grant as of April 2005, up by 1,3-million from April 2004.
- A total of 9,4-million people received social grants, including 2-million pensions and 1 307 459 disability grants.
- South Africa has only 2 642 social workers.
- A total of 42 367 patients were on the government’s anti-retroviral programme by March 2005, with at least one treatment site accredited in each of the 53 health districts.
- Provinces have overspent on the comprehensive HIV/Aids programme by 3,3%. The pandemic affects primary health care, where expenditure rises to R254 instead of R207 per head if HIV/Aids and nutrition programmes are included.
- The Western Cape leads health spending with R1 433 per uninsured patient, while Mpumalanga spends the least, at R774.
- The Western Cape has 55 doctors per 100 000 uninsured residents, followed by Gauteng (42), while the North West has just 13.
- A total of 178 612 houses were built, down from 193 615 in 2004/05. The Eastern Cape led, with 37 524. House spending in Limpopo (16 514 built) dropped to R313-million from R387-million in 2001/02.
- 1,8-million houses have been built since 1994, more than 1,8-million households have inadequate shelter.
- The Northern Cape spends the most per learner, with R500, and KwaZulu-Natal the least (R300).
- About 4,9-million learners were on the school nutrition programme.
- The Western Cape received the most university passes (27,1%) and was second in the number of successful maths passes. Only 51% of Mpumalanga learners who wrote maths exams passed.
- The average teacher-learner ratio is 1:34 ,with the highest being in Kwazulu-Natal (37) and the lowest in the North-West (1:30).
- Personnel spending continues to decline from 55,5% of budget in 1997/98 to 46,5% in 2004/05.