Recovery plan to continue

2010-06-30 00:00

THE provincial recovery plan that saw the KwaZulu-Natal provincial government and public entities implementing a 21-point list of cost-cutting measures will continue after its success in the past financial year.

This was revealed by Finance MEC Ina Cronjé at a media briefing in Pietermaritzburg yesterday to highlight the impact of the programme launched in October last year.

Cronje said the plan, which saw all departments implementing stringent cost-cutting measures, managed to dramatically reduce projec­ted overspending from over R5 billion to R1,7 billion.

“KwaZulu-Natal’s improved position was confirmed after all provincial departments had closed their books for the 2009/2010 financial year,”said Cronje.

“The targeted year-end over-expenditure was calculated not to exceed R1,7 billion at the end of the financial year, after the province introduced stringent cost-cutting measures in September last year. At that time the projected over-expenditure exceeded a whopping five billion rand.

“However, the province’s cost-cutting measures were even more effective than anticipated initially, ending the financial year with a net deficit of R1,692 billion — some eight million rand less than we had hoped for,” Cronjé said.

The 21 cost-cutting measures include the rationalisation of overseas trips; no catering for meetings; lowering of class of vehicles hired; implementation of kilometre control on travelling, with all officials restricted to 1 750 km per month; no furniture or equipment bought without approval from heads of departments; and air travel limited to important meetings with only one official to attend on behalf of a department.

Team-building exercises and year-end and Christmas parties were called off unless staff members paid for them, while performance bonuses and purchase of promotional items like T-shirts, caps and bags were also restricted.

“Cabinet instructed all departments to ensure that no legitimate service delivery should be compromised as a result of the implementation of these cost-cutting measures.

“Further, it was instilled in departments that these cost-cutting measures are really just elements of good governance that should be institutionalised by all government institutions as a way of doing business,” Cronje said.

Although all 14 departments reduced their spending by more than the amounts indicated in the plan, only Health and Education did not fully meet their targeted cutbacks.

“The department of Health had pledged to cut-back their spending by R600 million.

“This, if achieved, could have resulted in a year-end over-expenditure by Health of R1,730 billion. Instead the department ended the year with a net over-expenditure of R2,1 billion, which is R375 million more than the agreed amount,” Cronje said.

From an analysis of the Health Department’s spending, it was discovered that, although it effected savings on items like advertising, catering, travel and subsistence, this was overshadowed by significant over-expenditure on laboratory services and medical suppliesresulitng from the effects that high medical inflation has had on blood products and medicines.

Cronje said that even after the provincial over-expenditure had been achieved, the cost-cutting measures will remain in place “as they are pillars of fiscal prudence and good go­vernance”.

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