Cost-cutting to save KZN billions

2010-04-16 00:00

WIDESPREAD cost-cutting measures by the KwaZulu-Natal government is envisaged to reduce over-expenditure in the province from a projected R5,6 billion, in September last year, to just under R1,6 billion by the end of the current financial year.

Speaking during a press briefing held in the city yesterday, Finance MEC Ina Cronje said that by December last year the projected figures declined to R2,559 billion, adding that by January of this year the amount further decreased to R2,255 billion.

“It must be emphasised that the main reason for the projec­ted over-expenditure is the funding shortfall in the implementation of the Occupation Specific Dispensation (OSD) and the higher-than-budget wage agreement for the public ser­vants. The shortfall for two expenditure areas in KZN is some R1,1 billion,” said Cronje.

As of the end of February this year, said Cronje, projections indicate that the province will end the 2009/2010 financial year with an over-expenditure that has declined to R1,599 billion.

Contributors to the reduction of the projected over-expenditure figures are the cost-cutting measures implemented in the last quarter of 2009, through the Provincial Recovery Plan programme.

The programme was implemented after an over-expenditure of more than R2 billion, the main culprit being the HealthDepartment.

Cronje said the reasons for this over-expenditure were mainly the implementation of the OSD in the Health and Education departments, the amounts of which were awarded nationally and were significantly higher than had been budgeted for.

Accordingly, Cronje reques­ted each department to cut back on costs that do not impact on service delivery. She said her department pledged to cut back by R10 million, which has since ri­sen to a R27 million.

In the process, the departments were asked to freeze non-essential posts and cut back on frills such as catering for meetings, Christmas parties, business class travel (only for MECs and head of departments), and to hire smaller, cheaper cars.

According to the Provincial Recovery Plan, the cost-cutting measures would have resulted in an over-expenditure of R1,7 billion in 2009/10, said Cronje.

“It is, therefore, pleasing to note that the projections as at February 2010 indicate an over-expenditure of R1,599 billion.

“This means that the provincial expenditure has outperformed the recovery plan by R101 million, according to the February 2010 projections. It must be emphasised that these are projections and might slightly change when the March figures are finalised,” she said.

She said 11 departments are projected to reduce their spending by more than the amounts indicated in the Provincial Recovery Plan.

Even the beleaguered Health Department “is projecting a significant over-expenditure of R1,939 billion — which is an improvement of R207 million when compared to January’s projected over-expenditure of R2,146 billion”.

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