Johannesburg - Gauteng’s government faces tough times in an election year, with instructions to implement national budget cuts and spend carefully in a sluggish economy that's unlikely to grow much.
The Gauteng budget totals R103.365 billion for 2016/17, with 95 percent of this coming from the national government - mostly as the equitable share but also as ring-fenced conditional grants. The rest comes from the province’s own revenue, mainly from vehicle licences.
The national government is cutting the equitable share to all provinces and Gauteng - as the province with a quarter of the country’s population and thus 19 percent of the equitable share - loses proportionately more than other provinces.
“Our equitable share will be cut by R2.9bn, our contribution to Minister [Pravin] Gordhan’s R25bn budget cut,” said Finance MEC Barbara Creecy. This is the total cut over three years.
Gauteng’s economic growth was predicted to be 1.2 percent for 2016/17 and 2.8 percent over the medium term of three years.
Spending cuts will focus on travel, entertainment, catering and advertising, where the province plans to reduce spending this year by R100m and over three years by R400m. Yesterday, Creecy couldn’t give a total for the province’s current spend on this.
In line with the national instructions, the wage bill must be watched, and crucial posts like teachers, doctors, nurses and social workers prioritised.
Read also: Gauteng gets a carrot and stick budget
Creecy emphasised that the education and health budgets - together about three-quarters of Gauteng’s spending - would not be jeopardised, but increased annually to deal with population increases.
Human Settlements was the big loser in this year’s budget. This is a blow to Gauteng, as service delivery protests often revolve around housing and are likely to be problematic in the run-up to this year’s local government elections.
It was the only department to get less funding than a year ago, dropping from R5.939bn to R5.871bn.
The department’s new MEC, Paul Mashatile, will have his work cut out for him sorting out the spending problems and is expected to announce details in his upcoming budget vote.
Failing to spend
On Monday, The Star reported that Gauteng lost R908 million or about 18 percent of its Human Settlements Development Grant, which was returned to the national government for reallocation to other provinces after Gauteng failed to spend it by the end of the financial year in February.
Gauteng’s Department of Human Settlements said the grant was stopped by Minister Lindiwe Sisulu due to the province’s failure to spend.
However, Ministry of Human Settlements spokesman Ndivhuwo Mabaya said the reallocation was a collective decision by the ministry and provincial MECs, after they assessed Gauteng’s ability to spend and decided to ask the National Treasury to reallocate the money to provinces which could absorb it, so that the funds could remain in the sector.
Yesterday, Creecy confirmed the province was concerned about the department’s difficulties with spending, and said Premier David Makhura was addressing it.
“I’m concerned about the money we had to return to the National Treasury from the Department of Human Settlements,” she said.
While the department overall lost funds, that grant has a little more year-on-year. The department’s overall housing development programme was trimmed, along with its administration.
The budget notes that the department is reviewing its operations to save, eliminate inefficiency and reprioritise. It’s looking at less expensive building technologies and cutting non-core spending.
Despite the gloom of cuts, the budget hopes to encourage more private investment and public-private partnerships to drive growth.
The Gautrain is due to get 48 more train cars (paid for by the Gautrain Management Agency, not off the provincial budget), and Gauteng has got National Treasury permission to issue requests for qualifications for the Tshwane Innovation Hub, the Kopanong Precinct, the rooftop solar panel project and the tri-generation plant project. These and other projects ideally won’t cost the province.
“In total, we estimate all these projects will bring in an additional R10bn in infrastructure investment into the city region,” said Creecy.
Gauteng’s own spending over the next year includes R1.9bn for hospitals and R3bn for finishing 12 new schools, upgrading 26 existing schools and rehabilitation of 123 existing schools.