The Gauteng Provincial Government will overspend by R954 million in the 2011/12 financial year that ends on 31 March.
This is according to a financial performance report for the third quarter of the 2011/2012 financial year that has been tabled in the Gauteng Legislature.
Although there is a large overall overspend, there has been a large underspend on badly needed capital projects.
According to the report, “[this] means poor performance around infrastructure development and other critical service demanding areas (sic).” The main culprits were the Health department (which underspent by R763m), Education (R151m), Housing (R802m) and Roads and Transportation (R440m).
The Health department has once more demonstrated an inability to collect the cash owed to it. This is not money due from poor and indigent patients but moneys owed by other provinces and medical aids. The department collected 58% of that which is estimated to be due as opposed to the 75% expected. In a more positive vein, the report shows increased collections by Education (111%), Housing (107%) and Roads & Transport (96%). It must yet be determined whether this is a reflection of improved collection processes or an underestimation in the budgeting process. It is probably a combination of both. Moreover, we know that the licensing fees went up dramatically and this would be the source of the increase in Roads and Transport.
In November last year, the MEC for Finance adjusted the budget in order to take into account accrued liabilities from previous years, especially in the Health department. Despite this adjustment, the province will still overrun its budget by about R954m. Most of this is taken up by the Heath department, which needs R945m more than that which has been budgeted. This is mainly due to a R790m overspend on salaries.
It should be noted that the Health department had reported the previous month that it would only marginally exceed its budget. Yet a month later it discovered that it would massively overspend. The Finance department’s report made the following criticism, “This clearly indicates that the department is not in control of the spending and there are no clear interventions being adopted to ensure that the projected overspending is contained to an acceptable limit[.]”
The report was also critical of the shortfall of spending on Health Facilities Management of 53% compared to the expected 75%. The report said that this resulted from the lack of proper planning. The report also indicated that the money that was spent was expended on issues such as rent and not on real hospital and clinic maintenance.
The provincial government appears to have improved the pace at which it spends the Conditional Grants, i.e. the money given by National Treasury for specific forms of capital infrastructure. An example of this is the Health Infrastructure grant. In the first quarter only 9% had been spent. In the second quarter there was 18% expenditure. In this the 3rd quarter, the spending had jumped to 59%.
This is a clear indication that the pressure mounted by the DA to increase the amount spent on Health infrastructure has borne some fruit. However, the provincial government still risks losing about R56m of money available from national treasury purely because of a failure to spend grant money.
Mike Moriarty, DA MPL