Focus on cost cutting

2015-03-11 00:00

PLANS to build a new legislature and accompanying offices in Pietermaritzburg have been frozen due to a cost-cutting drive by the provincial government.

A new legislative precinct, for which R600 million had been set aside, would have provided a big economic boost to Pietermaritzburg, as there is little new construction work underway in the city at present.

KwaZulu-Natal Treasury head ­Simiso Magagula said in a briefing at the release of the provincial Budget yesterday that planning had progressed far for the establishment of a new legislature building, and for accompanying offices.

“We were hit by two things,” he said.

Firstly, the equitable share of the ­national Budget that the province ­receives from the government has declined by R6 billion over the three financial years to 2013/14.

In addition, all three spheres of government and all departments had entered a period of “fiscal consolidation” announced in the national Budget so that the government could start servicing its debt, which meant “there is no new money for the province this year”, and the province’s equitable share for 2015/16 is down by an additional R1,08 billion.

Pietermaritzburg Chamber of Business CEO Melanie Veness said the postponement of plans for the new legislative precinct was “probably the right thing to do”, given the context of needing to be fiscally responsible in a tight economic environment.

Democratic Alliance KZN finance spokesperson Francois Rogers said while the budget had delivered on cost-cutting proposals, it had not dealt with rampant corruption, effective governance and effective service delivery implementation.

“The national allocation to the province will have very little positive impact on the day-to-day lives of ordinary people, unless there is absolute oversight and political buy-in by all KZN ANC MECs.”

Rogers welcomed the Royal Household Department now falling under the Premier’s Office, but said the effort would be futile without cost saving.

Magagula stressed that the legislative precinct project had not been shelved for good.

“The programme of fiscal consolidation is a two-year [project],” he said.

The province’s departmental budgets were mostly kept at similar levels, with the exception of education and health, where the budgets increased marginally.

Other steps to save money include abolishing the R100 million Strategic Cabinet Initiatives Fund, usually used by the province to host events and other unexpected expenditure.

The Contingency Reserve was also cut over the three-year Medium Term Expenditure Framework (MTEF) from R1 billion to R750 million.

“Having said this, it does not mean the province will not be hosting any strategic events going forward,” said Finance MEC Belinda Scott.

The contingency reserve was being maintained, albeit at a lower level, in case national government did not again provide funds for the 2015 government wage negotiations.

She said events previously funded by the Strategic Cabinet Initiatives Fund deemed to be important should be funded by the relevant departments, either through internal reprioritisation or via partnerships with the private sector.

The province has been at the forefront of cost-cutting compared with other provinces, having started these initiatives in the 2009/2010 financial year.

Tanya Stilhau, from the provincial Treasury, said although the rand value of the cost cuts were difficult to ascertain since 2009, the pattern of big over- and under-expenditure that had characterised the previous provincial budgets had ceased, and such expenditure had been held to within one percent of the Budget every year since then.

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