No free lunch

2009-06-23 00:00

THERE will be no more free lunches for politicians and civil servants, Finance MEC Ina Cronje said yesterday.

Civil servants in particular will probably have to get used to doing without five-star accommodation, fancy and expensive catering and subsistence and travel benefits as the KwaZulu-Natal government begins seriously to trim spending across all provincial departments.

Addressing the KZN Legislature during the provincial budget speech yesterday, Cronje said the goods and services budgets of all departments will be cut by as much as 7,5% over the next three years.

The move will enable the government to finance its cumulative budget deficit and pay off its hefty overdraft bill — a result of significant overexpenditure over two financial years.

It will also ensure that government departments spend wisely during a tough and turbulent economic period characterised by lower tax revenues.

According to Acting Head of Treasury Leslie Magagula, unaudited figures reveal that the cumulative overexpenditure in KZN now amounts to over R2 billion.

The move comes hot on the heels of news that KZN almost certainly entered a deep recession in April this year. The estimated provincial economic growth figure plummeted -9,37% (quarter on quarter) during the first quarter of 2009.

Cronje and Magagula said the cutbacks will not affect essential ser­vice delivery efforts.

“What we are focusing on is core service delivery. That R1 that you have [to spend] can be stretched. We are stressing that they do not jeopardise [for example] the health programmes that they have,” said Magagula.

“Departments were asked to look at efficiency savings first, before cutting service delivery spending,” he added.

Cronje noted that, for the most part, the cut-backs will not have a major impact on the province’s multi-billion rand infrastructure spen­ding plan, which is aimed at creating jobs and turning KZN into an internationally competitive investment destination.

As expected, a sizeable chunk of the R60,4 billion KZN budget will be spent on Education (R24,6 billion) and Health (R17,4 billion).

It is understood that about R876 million during 2009/10 alone will be spent on finan­cing the cumulative budget deficit.

The Treasury hopes to save a further R1,02 billion and R1,12 billion during 2010/11 and 2011/12 respectively.

The recent overspending means that the government lost out on positive cash balances.

Cronje told the legislature,“The province cannot spend money it does not have — full stop. As a result of the persis­tent overexpenditure, the province has had to forgo budgeted interest earnings and is currently servicing a huge overdraft at a cost of about R130 million per annum, at prevailing interest rates.”

The “revised” budget also accommodates small budget shifts brought about as a result of the reconfiguration of certain provincial departments.

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