DA province wants more cash as population rises
The DA-led Western Cape provincial government says it is not being allocated an adequate share of national revenue, and that could prove catastrophic for service delivery with the province’s population expected to surge.
The equitable share formula enables the national government to distribute money, according to developmental priorities, to provinces from revenue collected nationally.
It is also used to allocate funding to municipalities.
But allocations fell in real terms in recent years, with the national government criticised for pumping money into failing state-owned entities instead.
Delivering the Western Cape’s medium-term budget policy statement in the provincial legislature on Thursday, finance and economic opportunities MEC Mireille Wenger said the province’s own modelling, after adjusting for inflation, suggests its equitable share will effectively decline from R54.6bn in 2021/2022 to R49.6bn in 2030/2031.
“Over this same period it is estimated that the City of Cape Town [population about 4.7-million] will grow by 882,607 people, equivalent to the population of Mangaung, while the Western Cape [population about 7-million] will grow by 1.25-million people — or the equivalent of the population of the Nelson Mandela Bay Metro.
“To put it simply, we [are likely to] be receiving less money to respond to what will be significant pressures on frontline services. The consequences of this gap could be catastrophic,” said Wenger. Slow to no growth, high levels of government debt, bailouts for failed state-owned enterprises and state capture have meant that SA has less money to spend on key services at precisely the time when the demand is greatest.
“Over the 2023 mediumterm expenditure framework (MTEF), as a result of changes to how the equitable share formula is calculated, the Western Cape’s percentage of the provincial pie is reduced,” said Wenger.
The hard truth is that the national government is trying to clean up the mess created by years of state capture, corruption and mismanagement by squeezing the provinces on the frontline.
“It is a dangerous exercise. And so it makes me angry to hear in the national government’s medium-term budget policy statement that some R30bn will be provided to ‘stabilise’ state-owned enterprises.
“If that amount had instead been distributed to provinces to deliver frontline services, using the provincial equitable share, the Western Cape would have received R3.12bn more this year
— almost equal to our health department’s infrastructure budget for the next three years. This is, quite frankly, unjustifiable,” the MEC said.
The medium-term budget policy statement (MTBPS) tabled in parliament by finance minister Enoch Godongwana in October acknowledged that “provincial and municipal governments face pressures from rising costs of basic and social services over the medium term as government contains spending growth and weak economic growth affects other sources of funding. While cost pressures are growing, municipalities are in worsening financial distress.”
The national medium-term budget proposed a total provincial allocation of R1.7-trillion over the next three years, representing a nominal growth of 2% over the February budget allocation. The equitable share to provinces is expected to decline 2.5% over this period and conditional grants to grow 4.3%.
Wenger said the Western Cape government will try to do more with less. The provincial medium-term budget policy statement adds a total of R1.28bn to spending over the next three years, bringing the total estimated expenditure for the Western Cape over the period to R230.82bn.
“Firstly, to deliver on our priority of growth for jobs, we will add R466.5m to the new infrastructure and mobility departments over the MTEF, while R257.3m will be added to our education and health departments to expand critical infrastructure,” she said.
Overall, over the 2023 medium-term expenditure framework, the Western Cape is planning to spend R31.17bn on infrastructure as part of efforts to boost service delivery and the economy.
An additional R200m will be allocated to continue the lawenforcement advancement programme, ensuring boots on the ground in crime hotspots. This brings the full allocation for the programme to more than R900m over the medium term.
Overall, health and education will receive the lion’s share of the Western Cape’s budget, with a combined allocation of R168.69bn, or 73% of the total budget over this period.
WE [ARE LIKELY TO] BE RECEIVING LESS MONEY TO RESPOND TO WHAT WILL BE ... PRESSURES ON FRONTLINE SERVICES
IT IS ESTIMATED THAT THE CITY OF CAPE TOWN [POPULATION ABOUT 4.7-MILLION] WILL GROW BY 882,607 PEOPLE