No choice but to do more with less

At a time when residents of the Eastern Cape are worse off than they’ve ever been they will have to make do with less service from the government.

R3.3bn has been shaved from the provincial budget for the 2021-22 financial year.

Eastern Cape finance MEC Mlungisi Mvoko tabled a total budget of R82.6bn in the Bhisho legislature on Wednesday, earmarked mainly for social services, including education and health, along with social development.

These three departments will collectively be allocated a huge 78% chunk of the budget, with education getting the lion’s share of R35.07bn, followed by health with R26.43bn. Social development trails with R3.05bn.

The health department’s allocation includes R1.4bn for infrastructure and R1bn to assist with the response to Covid-19 and the vaccination programme rollout.

Education will get R1.6bn for infrastructure development in the new financial year.

Except for health, which will receive a relatively small bump in its allocation compared to a year ago, all provincial government departments will have to sacrifice on some aspects of their suite of services. But the cuts in the new financial year point clearly to the need to roll back spending for wages and salaries for public servants.

"Ultimately, we must reach levels of comfort where our wage bill is manageable and supports service delivery imperatives," Mvoko said.

He made an impassioned plea to all provincial departments to prioritise reviewing their organograms to weed out non-core jobs.

Mvoko expressed the hope that, overall, the budget would “go a long way” to reviving the provincial economy, if used effectively.

The bulk of the revenue, R68bn, is sourced from national government’s “provincial equitable share”, with R13.2bn coming from conditional grants and the province generating R1.5bn of its own income.

Mvoko said the annual expenditure plan was premised on projects that would grow the economy, protecting and growing “critical socioeconomic infrastructure”, an improved fiscal discipline, and keeping public expenditure at sustainable levels.  

He warned of a runaway deficit which the province could not hope to cover from its own income-generating programmes. Already, own income’s contribution to the 2020 financial year’s budget was reduced to R1.1bn, although in the new year, departments were projecting an increase in own revenue.

“Our spending is already a notch higher than our income. In years to come, own provincial revenue is not going to keep up with this runaway deficit.”

The MEC revealed that a study done on revenue generation indicated that up to R7.6bn could be generated by provincial departments “if we do it right”, to assist to cushion the budget shortfall.

Most of the potential income – over R6m of the projection – would lie with public works, but transport and health, as well as economic development, environmental affairs & tourism, would also contribute revenue.

Outside of the major social services spending items, Mvoko highlighted priorities in economic development, allocating R13.9bn for departmental programmes in the economic sector.

He said the province’s success in agriculture production, alongside “great potential” for job creation, would bolster economic reconstruction and recovery.

Of the R2.3bn allocated to the department of rural development and agrarian reform, R175.9m was set aside for training of emerging farmers, R172.8m for infrastructure for livestock and crop production, and R315.6m for veterinary services.

R123.7m was allocated for an abalone farm in the Coega special economic zone that forms part of the oceans economy sector.

The two SEZs will receive direct funds through a “transfer budget”. The East London SEZ will get R336.5m over the medium term budget to fund operational costs, including investment promotion and attraction.

The Coega Development Corporation will receive R192.1m in the new financial year for zone development and operational costs.

Mvoko underlined premier Oscar Mabuyane’s comments in his state of the province address on expected investment deliverables from the SEZs, saying the ELIDZ would implement 16 investment projects with a rand value of R2.5bn and create 1,400 jobs. At Coega, eight investments worth R420m would be rolled out with a projected job creation tally of 10,382.

On roads infrastructure, Mvoko said the province remained committed to connecting communities to basic service delivery and tourism amenities. Over R800m was allocated for completion of the road from Hluleka to Barnabas Hospital, Dwesa Nature Reserve in Willowvale and the district road from the N2 to Siphethu Hospital, each regarded as strategic linkages. The 12km stretch from Sterkspruit to Mlamli Hospital would also be delivered.

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