KZN 2010/2011 Budget Debate - Treasury (Vote 6)


By Dr LPHM Mtshali MPL

KwaZulu-Natal Legislature
Pietermaritzburg : 13 April 2010




The most ambitious part of this year’s provincial budget is that it is aiming for a surplus. The provincial Treasury is going to need one if the current budgetary pressures, chief of them the overdraft and unfunded mandates, persist into the future.


Budgeting for an overdraft nevertheless reflects the thinking that governments should build up fiscal space during the good times so that they have a buffer when crisis hits again and government finances deteriorate. Strictly speaking, we have yet to wait for the good times as our economy is only slowly emerging from the meltdown, but the times today are definitely better than they were a year ago when the Hon. MEC for Finance tabled her first post-election budget.


We also appreciate the sentiments voiced by Hon. Cronje last week who is determined to extract a positive lesson from the economic recession. It appears that the provincial government may have been forced into taking a more proactive stance in job creation and look beyond the Expanded Public Works Programme towards the job-creating public sector for assistance.


Sadly, this approach never reached its full potential in the run-up to the recession. The fall in government’s debt ratio over the past decade and the shift to single digit inflation from double digits, lowered the structure of domestic interest rates and boosted private sector investment opening the way for spontaneous job creation in that sector. These positive factors were largely frustrated by the government’s inflexible labour legislation which hindered job creation. In this regard, the past decade was a missed opportunity.


KwaZulu-Natal’s unemployment problem is structural and the education system’s failure to deliver in an economy where economic activity is increasingly skewed towards skill-intensive sectors, must now prompt a more direct, if less managerial intervention in the labour market. The infrastructure spending, including the Expanded Public Works Programme, must now be diversified to co-opt the private sector and let it do what it does best when it is allowed to operate freely - boost employment.


Chairperson, there is a number of developments where the Official Opposition would like to give the Hon. MEC for Finance credit for the progress she has achieved. The extravagance with regard to advertising, venues and facilities, the non-judicious use of consultants and a range of supply chain dilemmas have all been acknowledged and addressed adequately.


The problems of financial mismanagement in various departments, highlighted year after year by the Auditor-General as resulting from the failure on the part of these departments to sign performance contracts with senior management staff have also received the attention they deserve.


But even more than these measures, we welcome the much tougher line taken by the Hon. MEC for Finance and the Hon. Premier against corruption. The IFP would like to pledge its full support to the proposed measures, including “target lifestyle audits”, in order to root out corrupt relationships that continue to mar government.


It is also pleasing to see many government departments turn their attention to their core functions rather than spend wildly on peripheral projects, which became a worrying trend in KwaZulu-Natal between 2004 and 2009. Upon her appointment last year, the Hon. MEC for Finance rightly placed an overdue emphasis on essential services as opposed to nice-to-haves and her efforts have so far yielded results.


There are, however, still some outstanding issues that need to be tackled more holistically and effectively. Excessive bureaucracy coupled with political appointments to management positions is one of them. Sharpening control over departments’ financial systems and associated data integrity by way of targeted assistance to accounting officers and departmental CFOs is another.

 that could form part of Treasury’s cost-cutting measures has been addressed by the finance portfolio committee where it received support from the IFP. The provincial government needs to expedite an audit of its immovable assets to determine which properties could be utilised to meet departmental needs in lieu of costly commercial rentals, which account for a large and ever increasing portion of the budget. We hope that the public debate around this audit will go far enough to uncover not merely uneconomical rental agreements but also those that were motivated by corrupt relationships between politicians and the private sector.


Chairperson, the achievement of the goals spelled out in this budget will require total complicity of the Premier and all the other MECs as well as greater discipline by the members of this House, and even the mayors and councillors of local and district municipalities. Those of us who sit on the opposition benches are prepared to rise to the occasion.


Improved financial governance and service delivery begins with good planning and puts hard milestones in place for each of us to be measured on. This year’s budget is a step toward this, but more has to follow in monitoring, so that we can ensure that we deliver on our undertakings. As far as the Official Opposition is concerned, I can pledge our support.


I thank you.


Lionel Mtshali
078 302 0929