Cash-strapped provinces such as Limpopo and Gauteng have complained that pay hikes for government employees are among the reasons for their financial troubles.
In a draft report prepared by the Limpopo finance department, which was leaked to the Mail & Guardian, the hikes in pay granted to public servants, combined with an occupation specific dispensation (OSD), is raised repeatedly as a reason for its soaring bank overdraft.
The overdraft was set to hit R2.37-billion by the end of March next year, according to the confidential report examining the financial woes of the province. But about 76.5% of the bank overdraft was “directly attributable to the overspending on compensation of employees”, the report noted.
“Since 2008-2009 there has been upward pressure on compensation of employees emanating from unfunded OSD in the department of education, resulting in overexpenditure and an increase in the bank overdraft. The department did not implement sound measures to mitigate the OSD, instead opting not to fund the OSD in its budget,” it said.
In the 2011-2012 year the departments of health and social development did not fully fund the compensation of employees, the report said.
Gauteng has complained of similar difficulties. A Gauteng provincial health official said that part of the problem was that the budget allocation from the national government had not kept up with demand and population growth.
“We were faced with higher than budgeted for increases in the past two years when then Public Service and Administration Minister Richard Baloyi approved those high increases for public servants,” the official said.
“The money had to come out of our coffers and we have the largest staff, at 50Â 000. Over and above the increases was the OSD, which also ate a chunk of the budget.”
A research note from Nomura economist Peter Attard Montalto stated that all levels of government had been hamstrung by higher than budgeted for wage increases — at 6.8% for the coming year.
“However, this does not explain the whole picture. Poor management at provincial level has long been blamed for underspending on budgeted items, as the local authorities have not had the efficiency to spend what they have been allocated. Other resources were inefficiently used or wasted,” he said.
“However, that increasingly means an inefficient bureaucracy has been unable to cash manage and, with the national treasury not tolerating such underexpenditure in the past few years because of tighter fiscal pressure at the level of central government, things have unwound for the provinces.”
Treasury spokesperson Bulelwa Boqwana said that the issue was raised with the provinces during the work of the budget council, at which the finance minister met with MECs and provincial heads of treasury. “It’s a reflection of the weaknesses of the provinces budgeting processes,” she said.
“This was identified and communicated to them. They have to be aware of the number of people they employ and how many receive the OSD,” Boqwana said.
Cassel Mathale: Limpopo premier
Most of Limpopo Premier Cassel Mathale’s first term in office has been dominated by allegations of corruption, either by him or his close allies, including ANC Youth League president Julius Malema.
Although Mathale’s supporters dismiss the allegations as a campaign by his detractors — led by trade union federation Cosatu, the South African Communist Party and the Limpopo business forum — to taint his name, political observers believe that the allegations are likely to damage Mathale’s legacy as premier.
Among other things, Mathale has been accused of channelling multimillion-rand tenders to his close allies, including his business partner, Selby Manthata, and Mathale’s wife, Mokgadi Kgohloane.
He has been accused of wearing more than one hat, as a government leader and a businessperson. There is concern about a conflict of interest, especially regarding tenders and patronage.
However, Mathale has said on more than one occasion that there is nothing wrong in him being in business and government at the same time, as long as he declares his business interests.
The premier’s supporters have defended him against accusation that he was presiding over a corrupt administration, pointing out that, for the first time since 1994, as a result of his excellent leadership, three departments in the province have received unqualified audits. — Matuma Letsoalo
Ace Magashule: Free State premier
Ace Magashule’s rise to provincial power was never easy. Even as Free State ANC chairperson he was repeatedly overlooked as Free State premier by former president Thabo Mbeki. But since his appointment as premier two years ago, Magashule’s stated ambition of turning the province into a shining example of good governance has been difficult to accomplish.
The Free State has a 27% unemployment rate among people between the ages of 15 and 64. Cronyism and patronage, according to commentators, have become the order of the day and the departmental finances are in a mess.
This week, the national government placed the departments of finance and roads and transport under administration after the Magashule appealed for help.
The Cabinet’s decision has been welcomed by Cosatu in the province but the ANC Youth League and ANC provincial structures are unhappy and have now placed Magashule on notice.
“We are distressed by this intervention by national government,” said an ANC provincial leader. “We were aware of some of the financial problems — but we did not know the extent of the mess. In fact, the challenges facing the province are more serious. An amount of R263-million for housing has been taken to national government because of underperformance. The municipalities are in total collapse.”
Already, there are attempts to oust Magashule at next year’s provincial conference in June and replace him with provincial secretary Sibongile Besani.
Meanwhile, the Congress of the People and the Democratic Alliance have approached the public protector to probe Magashule’s Operation Hlasela, a voluntary fund meant to create jobs and accelerate service delivery.
It follows allegations that Magashule was using the funds for his own personal and political gain. His spokesperson, Wisani Ngobeni, has repeatedly denied the allegations. — Charles Molele
Nomvula Mokonyane: Gauteng premier
Critics of Gauteng Premier Nomvula Mokonyane were this week rubbing their hands in glee after the national government intervened in the running of the province’s health department.
Mokonyane’s critics are not difficult to find, since the provincial ANC never intended her to be premier in the first place. The province wanted ANC provincial chairperson Paul Mashatile as premier, but were overruled by Luthuli House, which went for Mokonyane. Her supporters called her Mama Action for her swiftness in effecting changes in major provincial initiatives, which included the cancellation of Kyalami motor racing contracts and other projects and were seen as an effort to undo the legacy of Paul Mashatile, who had taken over from Mbhazima Shilowa.
Since her election in 2009 many in the province have hoped that President Jacob Zuma would accommodate her in the Cabinet in one of his reshuffles so that she could make way for Mashatile, but that has not happened.
Some of Mokonyane’s colleagues in the ANC feel that the province has lost its image as the beacon of good governance and that she has failed to articulate any new vision or strategies. On the other hand, the question has been asked whether she has not been prevented from working freely given the hostile Âattitudes of some of her own party members. But she is likely to be held accountable, despite evidence that the problems started well before her tenure. — Rapule Tabane