Local government failed to spend 17c of every budgeted rand it was allocated for infrastructure projects in 2009-2010, according to the national treasury. Provincial and national government are also failing South African citizens by failing to spend budgeted infrastructure funds — provincial government failed to spend 14c of every budgeted rand between 2006 and 2011.
The treasury has flagged the government’s inability to spend budgets as a major headache and is aiming to rectify it. A treasury document handed to journalists on Wednesday says that the public sector’s record on infrastructure expenditure is not great.
The public sector failed to spend R12,4-billion in the 2009-10 financial year that was budgeted for infrastructure spending, it states. “This trend is most pronounced at municipal level, where there is an even greater need to build new and maintain existing infrastructure.”
The Budget Review 2011 says that the key reasons for underspending at local government level are unrealistic financial targets, inefficient supply-chain management, subdued revenue levels and a lack of capacity to plan.
At a provincial level the treasury has highlighted key problem areas as a lack of integrated planning, poor supply-chain management, inadequate risk management and a lack of skills.
It says it plans to address this by adopting a new approach to planning and budgeting for major new infrastructure projects. To do this:
- The treasury is developing a framework for appraising public sector infrastructure projects to reduce bottlenecks;
- The national government has realigned infrastructure grants to provinces and is building capacity in provincial treasuries and the departments of health, education and transport; and
- The department of cooperative government is establishing a support unit to help municipalities plan and contract infrastructure projects.
The Budget Review says that public sector spending on infrastructure has increased from 4,6% of GDP in the 2006-2007 financial year to 9,8% of GDP in the 2010-2011 financial year.
The treasury forecasts that it is expected to average 8,4% over the medium term. It also forecasts that the public sector will spend R291-billion on energy infrastructure, R212-billion on transport infrastructure and R80-billion on water and sanitation infrastructure.
Infrastructure projects get a boost
The government’s major energy infrastructure projects include the R142-billion Kusile power station, the R125-billion Medupi power station, the R15,6-billion Ingula pumped-storage scheme and recommissioning three mothballed coal-fired power stations in Camden, Grootvlei and Komati at a cost of R27-billion.
Major transport infrastructure projects include the Gauteng freeway improvement scheme (R20,7-billion), Transnet’s multiproduct pipeline (R23,4-billion), an upgrade to Transnet’s iron-ore pipeline (R11,6-billion) and the Ngqura container terminal (R10-billion).
On the health front the Nelson Mandela Hospital in the Eastern Cape, the Chris Hani Baragwanath Hospital in Gauteng, the George Mukhari Hospital in Gauteng and the King Edward VIII Hospital in KwaZulu-Natal have been allocated R4-billion each for upgrade and rehabilitation, and R4-billion has been allocated for the development of an academic hospital in Limpopo.
There are two major water infrastructure projects — the Mokolo-Crocodile water augmentation project amounting to R15-billion and R16,1-billion for the Olifant’s River water resource development project.
On the housing front, the N2 Gateway housing project has been allocated R2,3-billion and the Cornubia housing development R5,1-billion.
The government is also investing a lot in the department of public works. Overall expenditure for the expanded public works programme is R73-billion in the next three years.
The Budget Review says that the programme created one million short-term jobs (of 104 days on average) between April 2009 and February 2011 and the treasury is forecasting that another 800%nbsp;000 jobs will be created by March 2012. Of these more than half will be in infrastructure projects such as provincial road maintenance.
But when phase two of the expanded public works programme was launched in 2009, it was committed to delivering 4,5-million work opportunities over five years.