General 2010-2011 KZN Budget Debate


By Dr LPHM Mtshali MPL

KwaZulu-Natal Legislature Pietermaritzburg: 8 April 2010


Honourable Speaker


The thrust of the 2010/2011 provincial budget shows renewed fiscal discipline, while it includes a number of stimulative elements and presents a longer term economic vision for KwaZulu-Natal than we have seen at any time during the past five years of ANC government.


The most ambitious part of the budget is without doubt that it aims for a surplus - something we have not seen for a long time as we in this House continue to take stock of cumulative over-expenditure across most government departments. Given the toxic mix of unfunded mandates - such as occupation specific dispensation payments and higher than expected wage agreements along with the responsibilities linked to past over-expenditure and ingrained profligacy and financial mismanagement in many government departments - we are unlikely to see a real surplus at the conclusion of the current financial year.


Even so, the provision in this year's budget for a surplus should provide a reserve of sorts for unforeseen and unavoidable expenditure. This - along with the provisions of the Provincial Recovery Plan and the emphasis the Hon. MEC for Finance has repeatedly placed on improving internal efficiencies and the reduction in wastage in service delivery, through elaborate cost-cutting measures which are designed to last beyond the current fiscal crisis - heralds a fresh new start.


There are distinct echoes in our provincial budget of an appreciation that while South Africa was not as severely affected by the global downturn as some other countries, our current recovery is not robust. The provincial budget mirrors the recognition that the national Minister of Finance has given to the plight of the distressed sectors of the economy through government's new Industrial Policy Action Plan.


Most notable of these are initiatives aimed at encouraging the employment of young and inexperienced persons who may be classified as new entrants into KwaZulu-Natal's depressed labour market. While there may be an initial cost to government, we believe that increased employment will lead to later gains from income tax and will make a contribution to poverty alleviation. This, in turn, will help relieve the burden the ever expanding safety net is placing on the state.


We agree that improvements in education and skills development cannot be achieved without additional allocations for these entities. However, in addition to the provision of learner materials and school infrastructure, we in the IFP encourage the use of some of the additional funds for the improvement of teaching skills and for the reopening of teacher training colleges.


We also contend that contrary to its belief government is essentially unable to respond with sufficient flexibility to the needs of the labour market and to determine the skills needed by beneficiaries of its educational and skills development programmes in order to facilitate gainful employment, particularly for entrants into the labour market. In order to overcome this disadvantage, the government needs to consult the private sector rather than rely blindly on its own bureaucracy in this regard which presumes to act as a go-between.


We are excited about the plans to extend and improve management of HIV and TB. We are equally thrilled by the prospect of introducing public-private-partnerships in the health sector. However, we are disappointed that the budget did not place greater and more innovative emphasis on improving management and conditions in hospitals and the skills levels of care givers than the passing mention of both items familiar from previous budgets.


While we welcome continued and in some cases substantially increasing infrastructure spending, we are disappointed that the majority of jobs created by the public infrastructure projects - and I am specifically referring to Expanded Public Works Programmes - will be of a temporary nature where little or no transfer of skills can possibly take place.


We maintain that most of this spending should at least gradually be allocated to the establishment of small businesses that can undertake maintenance of the new infrastructure. This will increase the potential for more permanent employment of a decent nature and, at the same time, shift the responsibility for job creation from government to the private sector where it truly belongs. In the same breath, I wish to add that we would have liked to see more detail in the budget regarding government support for the business environment, particularly the cutting of red tape for SMEs.


Honourable Speaker, the IFP's record in government in the realm of rural development speaks for itself and we continue to support sustainable and equitable land reform to address the imbalances of the past. We were encouraged by the joint pledge by the Hon. President and Premier in their respective State of the Nation and Province Address to identify rural development and land reform as one of the government's top five priorities.


We are pleased that, at least on paper, rural development is receiving the attention it deserves from the ANC government. This is further evidenced by the renaming of the respective government department to include rural development.


On the whole, we welcome the provision of income earning opportunities to rural areas which, we believe, has the potential to stem the migration of work seekers towards urban areas, thus reducing the need for local authorities to provide housing and services and thereby alleviating pressure on urban infrastructure.


But we are concerned about the inadequate budget allocated to the department in charge of implementing this priority. Our constituency work has shown that poor land claimants pinned their hopes on the budget for the 2010/11 financial year to address outstanding claims. This financial year was supposed to address these backlogs and allow the department to move forward on a clean sheet. Farmers who signed contracts with the department also hoped that they would this year finally receive payments.


I would like to mention that the National African Federated Chamber of Commerce and Industry (NAFCOC) and the Industrial Development Corporation


(IDC) have initiated a programme creating 54 business centres in the rural areas across the country. The initiative will boost economy in the rural areas and thereby create hope for many people in the rural areas.


We in the IFP commend their bold move as business in the rural areas has declined due to lack of financial support and we encourage the government to lend its support to similar ventures in KwaZulu-Natal in the future.


Past experience in the Department of Agriculture and Environmental Affairs has demonstrated that merit and quality should be the sole prerequisites for appointing staff to manage the rural development and land reform processes. The hiring of inexperienced and unqualified staff has proved to be the cause for the failure of too many otherwise deserving rural development projects to mention here.


My last comment in connection with rural development has to do with the issue of nationalisation of farm land which has resurfaced recently causing investors' confidence in our agricultural sector to plummet once again. South Africa cannot succeed where communist countries so obviously failed. We disagree with the view expressed recently by the national minister in charge of this portfolio that nationalisation of farm land would speed up land reform.


Turning a commercial productive farm land into a national asset, as noble as it may sound, will not work. It will scare away hard-working experienced farmers and investors whose commercial interests ensure our food security. South Africa is where it is today because of experienced commercial farmers and not the subsistence garden farming.


Honourable Speaker, as far as corruption is concerned, the budget does not imply any new measures and the plans put forward both by the Hon. Premier and the MEC for Finance seem too narrow with their focus on public sector tendering processes. There is clearly a need to address the broader facets including the rooting out of bribery and corruption not related to tendering and improved efficiencies in government's interaction with law enforcement agencies.


We welcome the vigorous implementation of the Local Government Turnaround Strategy implied in the provincial budget and as a political party that is in control in more than half of KwaZulu-Natal's municipalities, we pledge to co-operate fully in this regard with other spheres of government in a spirit of co-operative governance.


But given the sorry state of local government across the country, we continue to advocate a comprehensive review of all grants to municipalities to ensure co-ordination of the grants and their more effective use. By the same token, I wish to say that we welcome the new process designed to ensure that previously unspent conditional grants not repaid by municipalities are deducted from their future allocations.


As an off-side remark on the implications of the national budget on the provincial one, I wish to voice the IFP's concern about the increase in the fuel tax of 25,5 cents per litre and the implementation of a flat emissions tax, both of which are bound to have a negative impact on the cost of transport in KwaZulu-Natal and consequently on inflation countrywide.


Honourable Speaker, with these words, I welcome further debate on this year's provincial budget and I thank you.


Contact: Dr Lionel Mtshali, 078 302 0929