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Adriaan Basson, Ilham Rawoot, Karabo Keepile29 Mar 2009 06:00
Gauteng’s public hospitals are in crisis after suppliers of food and medical necessities cut off deliveries because of non-payment .
Some are facing water and electricity cuts because municipal bills have not been settled.
For the first time this week the Gauteng government acknowledged “delays in the payment of contractors” by South Africa’s richest province. Earlier officials had denied chronic payment delays and accused opposition parties who raised the issue of “cheap politicking”.
The M&G revealed last week that Gauteng building contractors constructing low-cost houses have not been paid for weeks and some face insolvency.
Contractors working for the province’s public works department also contacted the M&G after the province failed to pay them.
Gauteng’s crisis comes after the Free State heath department ran out of money late last year, leading to thousands of HIV-positive patients being denied antiretroviral treatment.
The letters reveal that:
Hospital chief executive Ernest Kenoshi wrote to the department’s finance chief, Fanuel Meso, on March 12: “The normal functioning of the hospital is seriously threatened.” He supplied a list of outstanding payments totalling almost R7-million.
The hospital has not been receiving bread, radioactive chemicals and maintenance for heart machines and suppliers of water and electricity (the Tshwane municipality), blood, pharmaceuticals, laboratory services and security have threatened to pull the plug.
The hospital is implementing “emergency orders” because companies will not deliver. Leratong’s suppliers of bread, dairy, pharmaceuticals, theatre equipment and blood are awaiting more than R5.5-million.
Baragwanath is experiencing long queues for medicine, especially at its pharmacy for outpatients. On Thursday the M&G spoke to a woman who had waited two days for thyroid medication, only to find the pharmacy had run out. At 8am on Thursday she was 208th in the queue.
A Baragwanath doctor, who requested anonymity, said capacity at Baragwanath was streched, adding: “In other African countries, many of them poorer than South Africa, health departments survive on far lower budgets than Gauteng. The problem is not a shortage of money, but that the money being mismanaged.”
The doctor cited expensive external consultants and squandering of resources on unnecessary equipment.
Gauteng Premier Paul Mashatile announced on Wednesday that payment for “urgent supplies and small, medium and micro-sized enterprises” will be given priority and effected in the next week. The provincial cabinet has resolved to finalise all outstanding payments by the second week of April.
Gauteng spokesperson Simon Zwane said the reasons for non-payment range from late submissions by suppliers to departments’ management of the payment system and the “economic situation in the country”.
“It is common for [suppliers’] invoices to be submitted in the last few months of the financial year and this has been the case this year as well,” Zwane said.
“The sudden increase in the volume of invoices to be processed invariably impacts on the management of supplier payment system, resulting in delays.”
Zwane said departments have received invoices “indicating higher prices than expected as a result of the global economic situation. This has necessitated fresh negotiations with suppliers resulting in delays in processing payments.”
Mashatile and Zwane claimed service delivery has not been affected.
Gauteng was recently in the news for allocating R20-million to political parties represented in the legislature. Six other provinces, including the Free State (R30-million), have also passed laws enabling provincial governments to fund political parties.
‘there’s money, but—’
National treasury is “extremely concerned” about the non-payment of contractors and long delays in paying suppliers, “particularly where it negatively impacts on small businesses”, senior treasury official Kuben Naidoo said this week.
He said that in some cases non-payment reflected unresolved disputes between departments and contractors. But the “underlying problem” was often that departments have contracted for services in excess of the funds appropriated by Parliament.
This was “illegal and reflects deficiencies in financial management that have repeatedly been highlighted in the Auditor General’s reports”.
In addition to Gauteng’s health, public works and housing departments, the national transport department was taken to court by bus operators this year after failing to pay R1.2-billion in subsidies.
Workers’ jobs were threatened and thousands of commuters left stranded. A number of operators are still awaiting payment owed since December.
The Free State treasury “rescued” the provincial health department by stumping up a R110-million advance on its 2009-10 budget after funds dried up at the end of last year.
A moratorium was placed on antiretroviral treatment, providing treatment only for pregnant women and children, which left 115 000 HIV-positive people without ARVs.
Despite the crisis 160 health workers were reportedly granted paid leave to participate in ANC electioneering.
Naidoo was adamant that the government has not run out money, emphasising that public expenditure has grown strongly in the past five years and will continue to grow. “Government spending on transport has increased by 33% a year since 2005-06; housing and community development by over 30%; and justice, health and general public services by about 17%. The 2009 budget provides for public expenditure growth of about 5% a year in real terms over the next three years.”
But departments are legally obliged to limit their expenditure to amounts approved by Parliament. The three-year medium-term expenditure framework provided national departments and provinces with “ample advance notice of the available spending envelope”.
In the bus subsidies case, he said, poor planning, long delays in the conversion of interim agreements to tendered contracts and weak contract management had all played a role.
The agency relationship between provinces and the national department had proved ineffective and the management of these contracts would fall under provincial departments next year.
On the Free State health crisis, Naidoo said there was a breakdown in information flows within the department and the provincial treasury and a failure to revise allocations for ARVs in the light of rising patient numbers.
Steps had been taken to remedy the resulting budgetary defects.
Naidoo also referred to agriculture director general Thozi Gwanya’s recent admission that his department does not have the means to reach government’s target of 30% black land ownership by 2014, saying the target was set without a proper implementation plan or costing.
But Naidoo insisted that by comparison with the over-expenditure and under-expenditure problems of the 1990s “there is now a far better alignment between budgets and service delivery trends”.—Adriaan Basson and Karabo Keepile
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