Drive to achieve better life for all takes root
Finance MEC says R675m top-up budget will go a long way to re-addressing the imbalances in services delivery in the province
Given the current economic situation of our national economy, tabling the province’s 2018 Medium-Term Budget Policy Statement at the provincial legislature was a challenging and yet hope inspiring task.
This Medium-Term Budget Policy Statement requires the provincial government not to fold its arms and wait for national government to become our Moses.
For the first time in the history of our province we plan to do the unconventional, that is to raise R1.1bn over the 2019 MTEF (Medium-Term Expenditure Framework) to invest massively in the economic cluster.
We would do this through reprioritising within the current baselines in line with the economic stimulus package that was announced by the president, which, among other things, committed government to reprioritise public resources to contribute towards economic growth.
Top slicing public budgets for economic transformation purposes is an unprecedented move and will get us to the summit of the hill of hope much quicker than we would under the current status quo of budgeting for social services.
We would invest these resources to build both the macro and micro economy of our province to create sustainable employment opportunities for our people targeting the agricultural sector, tourism sector, the creative industries, ocean economy sector, manufacturing sector, township and rural economies.
A portion of the stimulus package would go to the services sector where we would support those who want to expand or improve their businesses such as car wash, motor vehicle workshops, carpenters, welders, accommodation establishments and hawkers.
This is key to reviving and encouraging entrepreneurship in rural areas and townships.
The total LED spend incurred by the province amounted to R9.5bn during the year under review. This amounts to 53% of the total goods and services and fixed asset spend of R18bn incurred by the province during the year under review.
All these efforts will go a long way in curbing the out migration which is the single biggest contribution factor to the reduction of our equitable share and thereby our budget baseline.
To sustain the growth of the rural and township economies, we are going to insist that government departments must invest in our townships and rural enterprises through the procurement by setting aside funds for rural and township enterprises.
We cannot expect these enterprises to compete with well-established businesses.
We are also setting aside in the exchequer account an amount of R281m as a buffer to pay service providers that have completed the work they were assigned by the department.
I repeat, payment of service providers that have completed the work they were assigned.
All the pronouncements we made during the tabling are against the backdrop of a worrying outward migration of the population to other provinces, losing the province an estimated R5.9bn in the next three years. In this financial year we have to absorb the cost of living adjustment in relation to Cost of Employees of R160m in the immediate period and R1bn over the MTEF.
At national level we are robustly advocating for the review of the equitable share formula which relies heavily on the outward migration of people to other provinces in the allocation of financial resources.
We are of the view that this formula should be changed as it has a stranglehold on service delivery in rural provinces such as ours.
While we call for the revision of the formula, we must do the right things with what we have by ensuring value for the money allocated for service delivery.
We are also pushing hard for progressive reforms which should see the economic sector allocated resources directly from the DORA (Division of Revenue Act) in the form of conditional grants.
This is long overdue and this is what we need to do, to move away from a consumptive state to a productive state.
Imagine the economic and job creation spinoffs our province could derive if we could be allocated a R2bn economic development conditional grant.
This is not a misplaced desire and we believe that national government can raise this money from within the budgets of national economic cluster departments and direct it to provinces such as the Eastern Cape that suffered the most from apartheid spatial development planning.
Insistence to grow our own revenue base is one of the policy imperatives that we believe our provincial government must pat itself on the back for because had we not taken a decision to enhance our own revenue, we would have been exposed badly by the current economic climate.
We would have been forced to beg for national assistance all the time even for things that we could do on our own.
We are estimating to collect R1.497bn in the 2019-20 financial year and R1.580bn in 202021 and R1.667bn in 2021-22 respectively.
The preliminary provincial fiscal framework for the 2019 MTEF provides for a projected total fiscal envelope of R81.656billion.
As indicated earlier we must absorb a cost of living adjustment of R1.081bn in 2019-20, R1.775bn in 2020-21 and R3.104bn in 202122 due to the outward migration of our people.
This situation will further be compounded by more cuts which are expected on conditional grants.
Because we have to rebalance growth in a constrained fiscal environment, we are proposing an upward adjustment of R675m to the main budget of R78.433bn that we tabled in March to an adjusted budget of R79.109bn to accelerate delivery of socioeconomic services to our people in the remaining few months of this term.
This is where the finances of the province are at and we are mindful of the responsibility to use the limited resources we have to achieve more results to improve the lives of the people of this province.
Lubabalo Oscar Mabuyane is the Eastern Cape finance, economic development, environmental affairs and tourism MEC, ANC provincial chairperson and a member of the provincial legislature.