Provinces have increased concerns about budgets

Provincial lawmakers, in passing on their mandate on this year’s Revenue Distribution Bill, have expressed deep concern about the reduced allocations to provinces due to the Covid-19-driven economic contraction, as well as potential mismanagement and corruption.

Nevertheless, seven provinces (Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga and North West) have pledged their full support to the bill, which determines how much of the tax revenue is allocated to the national, provincial and municipal spheres respectively.

The Northern Cape conditionally agreed to the framework, while the Western Cape voted against the law.

Several provinces nonetheless expressed their reservations about the budget.

The Eastern Cape is R1.03 billion worse off than before the adjusted budget and is worried that various development projects will therefore stand still, as well as that it will take longer for the province to recover from the contraction due to Covid-19.

Furthermore, the Eastern Cape is concerned about mismanagement and corruption regarding the acquisition of protective medical clothing and the provision of food parcels to the poor.

Gauteng is concerned about the socio-economic impact of the financial cuts and calls on the national treasury to ensure accountability.

The economic heartland province further warns that too much emphasis on the social safety net can harm the economy and that future South African generations should not be saddled with the debt burden that stems from current decisions.

Limpopo’s legislature is upset that the province is receiving R4 billion less than before from the national budget and this against the background that there is already a sharp reduction in municipal revenue. The province would prefer a larger municipal allocation and is concerned about corruption and mismanagement.

Northwest is also concerned about mismanagement of Covid-19-related allocations. The province is requesting that municipal allocations for specific projects be set aside, that the allocation for agriculture be increased to ensure food security and that specific attention be given to unfinished housing projects.

The Free State requests that municipal allocations should only reach those municipalities that have a proven management record. The province is also asking for more money for drought relief.

The Northern Cape’s support for the budget is conditional and is based on making four changes. First, drought relief is insufficient. Secondly, the decline in budgets for roads and for education infrastructure is too great. Thirdly, rural municipalities must be helped to compensate for loss of revenue and lastly, the maintenance and expansion of infrastructure must be prioritized.

The representatives of KwaZulu-Natal, Mpumalanga and the Western Cape did not elaborate on the reasons for their provinces’ choice for or against the bill, but it was submitted in writing.

The national treasury will answer all reservations in writing on Monday and the National Council of Provinces will put the bill to the vote next week.