Saving pays off for KZN - Various departments add R729?mln to public purse

2014-03-12 00:00

IN five years the provincial government’s austerity measures are paying off with hundreds of millions of rands freed up for future development in KwaZulu-Natal.

The result of the belt-tightening measures announced by Finance MEC Finance Ina Cronjé yesterday means that various departments have added R729 million to the public purse.

In 2009 the province was in the red, but the current surplus means the province does not have to rely on a bail-out from national government and now has a contingency reserve for emergencies. This, coupled with re-prioritisation of development projects, will feature high in the management of the province’s finances over the next three financial years.

This emerged yesterday when Cronjé tabled her R96,864 billion Budget for 2014/15 financial year.

“In the 2014/15 medium-term expenditure framework, nearly all new spending is funded through re-prioritisation of funds by departments and the identification of savings,” Cronjé told the KZN Legislature.

The overall Budget showed that R729 million will be used as additional funding to the departments and parastatals.

“That is the amount we found within our resources. It is not from heaven. It comes from our own provincial coffers,” head of department Simiso Magagula told the media yesterday.

KZN has had to embark on a similar exercise of cushioning national allocations due to changing population dynamics and other budget cuts relating to the “equitable share” formula in the financial year ending in March.

Amid a culture of saving and austerity measures, KZN is also boasting a positive bank balance instead of repaying debt. “This has enabled provincial government to extend service delivery in our province as the money earned on interest is allocated for additional projects,” Cronjé said.

Magagula said “new money” was hard to come by and that Finance Minister Pravin Gordhan had stressed fiscal prudence when he tabled the national Budget a few weeks ago.

“We started with implementing fiscal discipline long ago, 2009 to be exact,” he said, referring to when the province started to implement belt-tightening measures.

“All allocations we made to provincial departments are purely from our provincial savings. It is not money from national. It is money the province has been able to squeeze out via efficiency gains and was implemented as a result of austerity measures.”

The many belt-tightening measures introduced by Gordhan a year ago were more or less similar to those KZN introduced five years ago.

Cronjé said when the contingency reserve was not used, it would be re-allocated to departments for projects.

But she said the KZN government would increase its revenue base, which is mainly derived from hospital patient fees, traffic fines, gambling and liquor licensing, among others.

“We have a small window to generate our own revenue,” Cronjé added.

She ascribed the fortunes in KZN finances to both administrative and political leaders who committed to turn the situation around when the province paid an overdraft with interest.

“We thought it would take us two to three years. We were so successful we paid within 18 months,” she said, adding that KZN was determined to remain out of the red.

Recalling the introduction of belt-tightening measures, Cronjé said she had a reputation that she did not want people to eat at government functions.

“We said we were all going to do it with political and administrative buy-in,” Cronjé added.

Magagula and a senior official in the Provincial Treasury told of how some departments tried to get around the belt-tightening measures. In cases where Treasury was alerted through tip-offs, it reported them to the provincial executive council for MECs to take action against responsible officials.

“In the current financial year I can barely recall a tip-off. It used to be a slight problem when cost-cutting measures were new, but compliance has substantially improved,” Magagula said. “The way they used to do it related to getting approval from Treasury. It was not a systematic breach.”

Some of the additional funds from KZN’s own coffers will go towards the following:

• R38,869 million towards the integrity management unit that fights corruption;

• R39,512 million for a road maintenance programme for Ezemvelo KZN Wildlife;

• R10,2 million for tagging of livestock to fight stocktheft;

• R50 million to the Education Department to pay its personnel costs;

• R50 million for rural development projects; and

• R19 million to Co-operative Governance and Traditional Affairs for the construction of community service centres in Bulwer and the revamping of three others in Jozini, Abaqulusi and Umlalazi.

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