Debate on the 2011 KZN Adjustments Estimate Bill
By Roman Liptak MPL
Shadow KZN MEC For Finance, KZN Legislature

Pietermaritzburg: 8 December 2011


Honourable Speaker 


When these adjustments are passed in this House, the province will have paid off a multi-billion rand overdraft which began to accumulate four years ago. It is quite an achievement that this exercise has taken a year and a half instead of three years as was the initial plan. This has to be duly acknowledged and I take this opportunity on behalf of the Official Opposition to do so. Well done, MEC!


However, we also need to acknowledge that eliminating the overdraft ahead of schedule has come at a cost. Last year, our province underspent heavily, especially on infrastructure and as a result of failure to fill funded critical posts. Both of these items are key to service delivery, particularly in service delivery departments such as Health or Human Settlements. My emphasis is on funded critical posts because we believe, together with the Hon. MEC for Finance, that while all critical posts should and must be filled, the freeze on the filling of non-critical posts should remain in place. 


When we talk about civil service positions in this House, we only draw the distinction between critical and non-critical posts with regards to vacancies. We are not even asking how many of the existing 180,000 odd civil service positions in our province are truly critical to service delivery and how we can improve on the productivity of these public servants.


I raise this point because their collective payroll is the single largest line item of expenditure in our budget and, more than that, year after year higher than budgeted for wage increases, together with the implementation of various OSDs, represent unfunded mandates. This puts an enormous strain on the provincial budget and it constantly detracts from our service delivery objectives.


By making this point, I am not calling into question the employment status of the existing members of the civil service. I am only making a case for the continued implementation of the moratorium on the filling of non-critical vacancies. And, at the same time, I am calling for measurable tools to improve productivity across the civil service, measures that go beyond the current performance agreements – which, in any case, are at present being ignored by more than half of our civil servants.


Even as our provincial economy continues to shed jobs, the only significant growth in job creation is in the public sector. Our growing public sector wage bill continues to reflect government’s position as the largest job creator in our economy. As this is happening, our national Minister of Finance tells us frankly that our public sector wage bill has already extended beyond what our country can afford.


We in the Official Opposition see no problem in offering appropriate compensation to public servants who add value to service delivery in our hospitals, schools, police stations and elsewhere where frontline services are delivered, but we are totally opposed to the taxpayers’ money being wasted on grossly overpaid deployed cadres in a bloated bureaucracy that adds little value to the upliftment of our people.


The growing public sector wage bill together with the downgraded forecast for growth in the provincial economy means more spending pressures in government against less tax revenue. This is bound to put additional pressure on all government agencies, including our provincial administration, to consolidate their finances.


As a result of financial strain, many requested rollovers have not been approved and such prudence must be welcomed. This leaves departments with an even more urgent need to find efficiency savings in order to fund their equitable share commitments from the previous financial year. Yesterday, I expressed our concern about the inconsistent implementation of cost-cutting measures across government departments and I would like to reiterate this concern today.


Some departments conti........ that are subject to cost-cutting measures, such as communications, venues and facilities, property payments. These departments, and I will specifically refer to Education, are at the same time facing spending pressures against Compensation of Employees which could be at least in part absorbed if the cost-cutting measures were being implemented.


This also means that government, first of all, has to be able to spend what it has. Underspending has to be tackled head-on, with more focus on management of all infrastructure projects funded from the equitable share and all special projects funded by conditional grants, for some of which these adjustments, once again, provide rollovers. Here we urge the relevant MECs to focus more vigorously on future spending of the National Schools Nutrition Programme, and the Comprehensive HIV/Aids Grant. And we urge Provincial Treasury to see to it that they do.


We are happy to see that the province has exceeded its targets for collection of own revenue. However, some areas of concern remain, especially under-collection of patient fees by the Department of Health, which is a going concern and also a warning sign as the government strives to improve management of public healthcare ahead of the implementation of the National Health Insurance in the next financial year and beyond.


We would also like to see a fully operational Liquor Entity able to meet projections for the collection of revenue from liquor licences. We are aware of the delay in the promulgation of this legislation and the delays that ensued in the collection of revenue from liquor licences. We have also received assurances that a new KZN Gaming and Betting Board will be operational within weeks and that it will further improve collection of revenue from this source.


The good news is that we now appear to be compensated in full for all unfunded mandates stemming from higher than anticipated wage agreements and various OSDs as long as we can budget for them appropriately.


We also hope that the province will receive funding on time for the full implementation of the upcoming unfunded mandates in COGTA, namely salaries for izinduna, Traditional Council secretaries and ward committee members as soon as these changes are signed into law.


We appreciate investments by municipal transfers towards the development of Prince Mangosuthu Buthelezi Airport in Ulundi and Richards Bay Airport following a similar investment into Pietermaritzburg airport. We see this as a good example of good intergovernmental relations, but we are wondering why it has taken this government so long to discover the economic potential of the wider regions these airports serve.


We appreciate the additional funding allocated in these adjustments to COGTA towards all traditional council elections. These elections were scheduled to take place in December but have been postponed until next year due to flawed planning. Will this delay have financial implications beyond the current adjustments?


Yesterday I raised some concerns about the contract between Department of Health and the National Health Laboratory Services. This is essentially an underfunded mandate and if the contract cannot be renegotiated, we should be approaching National Treasury directly for the funding of future shortfalls as a result of the uncompetitive prices charged by this agency. 


We welcome continued investment by Provincial Treasury into programmes that promote efficiency within government. The two recent initiatives I would like to single out are: the Infrastructure Crack Team and the hotline where service providers contracted to government can follow up unpaid invoices. We will appreciate regular briefings on these initiatives.


On the related subject of Treasury’s programmes in the fight against fraud and corruption we feel that these efforts are constrained by an absence of specific targets. The Special Investigating Unit estimates that the South African government loses roughly R30-billion a year to financial leakage. This in effect mean.............tate coffers to corrupt government officials every year.


Although efforts on the part of Provincial Treasury and the Office of the Premier with its dedicated Integrity Unit in enforcing regulations and closing down loopholes are impressive, it is disappointing that the provincial government has not set clear targets for reducing the volumes of public money lost through corruption every year.


We propose that such targets be put in place so that the process of combating fraud and corruption can be measured against tangible objectives. It is a fact that objectives that cannot be measured, cannot be managed.


Having said that, I conclude by pledging the IFP’s support for the 2011 Adjustments Estimate Bill.


I thank you.


Roman Liptak
078 302 0929