ANC can’t walk the talk when it comes to KZN finances

By: Francois Rodgers, MPL DA KZN Spokesperson on Finance THE economic landscape that faces our country and KwaZulu-Natal is far from serene and picturesque. We are by no means out of the woods and have yet to face the full might of the ultimate challenge during the 2016/17 financial year as buffer funding to ease the reduction in the equitable share dries up. The words of the Financial and Fiscal Commission ring true, “Government should not simply resort to simple cost cutting to reduce public debt. The need to restrain spending should be an opportunity to reform programmes and service delivery. Simple cost cutting may be effective in achieving deficit reduction targets but does not encourage longer-run fiscal stability or allow for reforms that will generate more value for money spent.” KZN Finance MEC, Belinda Scott covered this challenge extensively in her budget presentation on the 10 March 2015, where she outlined KZN’s approach to dealing with fiscal consolidation cuts. The DA commends the MEC for certain of these initiatives, many of which we as the official opposition have been calling for namely: * R100 million of Strategic Cabinet Initiative funds put on ice. This fund has come under enormous criticism in the past over many of the projects rolled out and whether they are provincial or political initiatives * R600 million to relocate the legislature precinct. As commented in past debates this is not a necessity or a priority * The continued inclusion of the budget contingency reserve, reduced from R1 billion to R750 million. Had this not been included in the last budget, KZN would not have been in a position to assist with the shortfall of compensation of employees increases within the department of Education and still allow R240 million to be carried through into 2015/16 to assist with equitable share reductions. This progressive form of budgeting is to be commended. * The MEC’s instruction that Provincial Treasury carry out an in-depth analysis of all public entities operation with various provincial departments. This is long overdue and the DA welcomes the initiative since it is abundantly clear that many of these entities are a duplication of responsibility. The DA is aware that KZN leads the way in South Africa in the number of operational entities in the province and also records the highest cost on maintaining these entities. This is an embarrassment to KZN and urgently needs to be addressed. The DA looks forward to these treasury reports being made available so that an informed strategic decision can be taken about the future of some of these entities. One of the greatest challenges the province faced in 2014 was the non-funding by National Treasury of the above wage agreement in 2014/15, the 1% ultimately costing KZN a shortfall of R580 million. It is incomprehensible that as a province, with a budget already cut to the bone, the shortfall of a national wage negotiation should be borne by KZN. Departments other than Education and Health had to cut their own base line to fund the shortfall. Our existing contingency reserve has been diminished to assist Education and our budget contingency reserve will further be reduced to address the carry through costs. The question on everybody’s lips is what will happen to compensation of employees this year? Provinces will in all likelihood have to fund any shortfall, as government could be in the red to the tune of R157 billion if it accedes to all union wage demands. Current budgets reflect a 5.8% proposed increase, with unions now having reduced their demand to 10% with a housing allowance adjustment of R1500. Governments wage bill is R400 billion and is expected to grow to R430 billion in this year. This is over 35% of the total budget, clear evidence that SA suffers with a bloated bureaucracy that has become a mill-stone around our neck with unrealistic and above inflationary demands being driven by the alliance partners of the ANC. This is evidently a case of the tail wagging the dog and cannot be allowed to continue. Our country cannot, during these unstable economic times, endure endless and crippling labour action which is looking all the more likely with wage talks having deadlocked, resulting in a conciliation process. The DA calls upon the ANC leadership to make the right decision not to further increase government deficit. This is merely pandering to the voter base. It is immoral, affects service delivery and ultimately the poorest of the poor. A budget can only be as good as those who implement and monitor the process in accordance with the relevant legislation. A quick glance at the Auditor-General’s report for 2013/14 is an indication that we still have some way to go. Unauthorised expenditure has increased this year by 52% from R452 million to R685 million. Education and Health were the highest contributors to this unauthorised expenditure. To blame OSD and wage agreements is to admit failure and either way it places pressure on the cash flow of the province and ultimately the money must be found elsewhere. Unauthorised expenditure in KZN totalled R460 524 000. Irregular expenditure has increased by over 20% from R3 587million to R4 333million in 2013/14. To quote from the A-G’s report “The increasing trend in irregular expenditure over the three year period is unsatisfactory …the leadership should set the tone by demonstrating aggressions.” Since last year’s budget we have been hearing about how non-compliant officials will face the full might of the law. This is certainly not evident in the AG’s findings where the guilty departments are Education, Health and Arts and Culture. Fruitless and wasteful expenditure has also increased by 18% in 2013/14 from the previous year. This is again an indication that we have yet to achieve political will and buy in when it comes to the budget and its implementation. The guilty departments here are Education, Public Works, CoGTA and Human Settlements. During the MEC’s budget presentation she spent a substantial amount of time and energy detailing a cost cutting programme. The DA welcomes this move which is really a carbon copy of standard financial policies and guidelines on expenditure in the Western Cape. Our only reservation was whether there will be political buy in here in KZN. The words were hardly out of our mouths when we saw bullet number 5 which read: “No musicians or other performing artists to be used at these events, as these events come at exorbitant fees”. This is now being challenged by members in the ANC, as is the proposal to cut costs on taking parliament to the people, an example of just another selective cut to cost cutting by the ruling party when it suits their agenda. Continuing along the road of fiscal consolidation, also a part of the 2014/15 provincial budget, it is alarming to analyze some of the written parliamentary responses received by the DA. The questions, which were submitted to all departments, revolved around aspects where a financial difference through effective leadership could be made. * The first question related to expenditure incurred during the 2014/15 budget debates which included catering, advertising and any other costs relating to the debates. Of the 16 provincial government departments only six bothered to respond but if one takes an average it appears that well over R6 million was spent on budget hearings. This is not money well spent * The second question submitted to all departments related to overseas travel. Here the response was marginally better, seven departments responded. Again, using an average to determine the outcome, in less than a year departments have spent almost R8 million on overseas travels. CoGTA holds the travel record with 20 overseas trips in less than 10 months. There are even deputy managers in some departments flying business class. Is this money well spent? * The third question relates to the number and costs of forensic investigations. A grand total of three departments responded. Agriculture has spent over R11 million on forensic audits, Health R38 million and Education R44 million. So, just these three departments have spent almost R95 million rand on forensic investigations. What the final total will be is anyone’s guess. * I have left the best for last, the final question relates to consultants costs for the current financial year. Here, three departments made the effort to respond. Their combined total spent on consultants is the obscene amount of R168 million. Once we have figures from all the departments KZN could well be spending in the region of R300 million on consultants – a task that our existing staff appear not to be able to perform. The question has to be why. This expense could go a long way to assisting with wage differentials. The question must be asked – if we are all serious about our province and about governance why have five departments not responded to one of these important questions? These departments are Community Safety, Transport, Arts and Culture and Sport and Recreation. Do they believe that they are above the standing rules and orders of this legislation? Or do they believe that they are not answerable to any oversight by opposition in this assembly? The time has come for the ruling party and its leading members to walk the talk when it comes to budget implementation and oversight. We owe it to the citizens of this province. [END] ##################################################################################### Scanned by MailMarshal – M86 Security’s comprehensive email content security solution. Download a free evaluation of MailMarshal at www.m86security.com #####################################################################################