Business Day

DA province wants more cash as population rises

- Bekezela Phakathi phakathib@businessli­ve.co.za

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

 ?? ?? Warning: The Western Cape government has warned of the consequenc­es of not giving the province an adequate share of national revenue while its population is expected to surge. /123RF/95081215
Warning: The Western Cape government has warned of the consequenc­es of not giving the province an adequate share of national revenue while its population is expected to surge. /123RF/95081215

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