Eastern Cape budget: Core business must be prioritised over consumption expenditure

Bobby Stevenson MPL

Shadow MEC for Finance

The Democratic Alliance believes that the function of the annual budget is to lay the foundation of economic growth and job creation in the Eastern Cape.  Core business must be prioritised over consumption expenditure.

The provincial budget for 2014/2015 will be tabled by Finance and Provincial Planning MEC Phumulo Masualle in the Bhisho Legislature on Thursday, 6 March 2014.

The MEC needs to spell out in no uncertain terms how a shift will take place away from consumption expenditure – mainly cost of employees – towards actual service delivery, infrastructure and other capital expenditure. Unless he does this the Eastern Cape provincial government is being reduced to little more than an employment agency which will fail to create the right climate for economic growth.

Last year the cost of employees as a percentage of the equitable share amounted to 77%.  This year our equitable share component will increase by only 3,9% while the cost of employees will rise in excess of 6%.  This means there will be even less funding for actual service delivery in the new budget.  When it comes to conditional grants — the other component of the provincial budget — we received R9,466 billion last year and this year we should receive R9,846 billion.  It is expected that the total budget will be in the region of R62 billion.

The bad news for the Eastern Cape is that the implications of the R5,1 billion cut in equitable share for the province due to a drop in our population is now coming home to bite.  The provincial budget is made of an equitable share component as well as conditional grants.

This year the equitable share component is R52, 145 billion as tabled in the national parliament last week.  Last year the equitable share component amounted to R50, 64 billion.  Last year the cost of employees amounted to R38, 478 billion or 77% of the equitable share component of the budget.

Too much is being spent in the Eastern Cape on a budget that caters for consumption expenditure instead of core service delivery.

Coupled with excessive spending on travel, food and hotels this province is catering for consumption instead of service delivery to the citizens of the Eastern Cape.  Issues such as fully functional hospitals, decent roads and computer laboratories together with toilets electricity and running water in our schools need to be prioritised.

MEC Masualle needs to come up with plans to deal with the bloated and inefficient civil service which will promote a growth-friendly environment.