National budget process causing budget cuts to health, education, social services and more

7 February 2024

The impact of the nationally imposed budget cuts on healthcare provision, as outlined in an open letter signed by hundreds of health workers, academics, doctors, professors and clinicians this week, is simply devastating.

The excellent work done day in and day out by the vital people who are integral to the lives of millions of South Africans in the face of significant challenges, does not go unnoticed, nor unappreciated. These dedicated public servants are at the very heart of the frontline services relied upon by our residents, especially the most vulnerable in our society.

The implications of the nationally imposed cuts go beyond health care services and have hit education and social development services - and every other provincial department. This is exactly what the Western Cape Government warned of and which it is now fighting to stop and reverse.

“The mission of the Western Cape Government is to do all we can, using all available levers, to cushion these blows. However, the hard truth is that the quantum of the budget cuts is now so large that it will be almost impossible to fully mitigate the loss of funding from the national purse” said Premier Alan Winde.

“The fact is that these budget cuts are beyond the control of the provinces because we rely almost entirely on funding from the nationally collected tax revenue. This is then allocated to each of the nine provinces by the National Treasury through the Provincial Equitable Share (PES), to fund the core constitutional mandates of providing, amongst others, health care, education and social development services,” added provincial Minister of Finance and Economic Opportunities, Mireille Wenger.

In the Western Cape, the PES accounts for approximately 75% of the budget while Conditional Grants amount to approximately 18% of the total budget. These sources, determined by national government, therefore make up the vast majority (93%) of the budget in the Western Cape.

As things stand, a total of R6.7 billion has been reduced from the Western Cape’s PES over the 2024 Medium-Term Expenditure Framework (MTEF) over the next three financial years as part of nationally imposed fiscal consolidation. This amounts to more than the total combined budgets of the provincial Departments of Police Oversight and Community Safety, Economic Development and Tourism, and Cultural Affairs and Sport.

Currently, the Department of Health and Wellness receives 37% of the total Western Cape Provincial budget.

“Over and above these devastating reductions, provinces have not been fully compensated by national government for the 2023 public sector wage agreement, that was centrally negotiated without consultation, and unilaterally imposed on provinces” added provincial Minister Wenger.

Only Health and Education received partial funding of the wage agreement of which Health received 70% and Education received 64.5% of what is required, while all other departments/services have had to absorb the full cost of the wage agreement. In total the funding shortfall of the wage agreement amounts to R1.1 billion for the 2022/23 financial year and recurs over the MTEF.

“The impact of these budget cuts will have a direct impact on critical service delivery in the Western Cape and we are doing all we can to protect these services” said provincial Minister Wenger.

Premier Winde went on to emphasise that “This is why, in November last year, we formally declared an intergovernmental dispute (IGD) with the national government, to fight for the residents of this province, particularly the most vulnerable who rely heavily on these services. Our residents must get their fair share of funding. As much as we are fighting for our vulnerable residents, we are also fighting for our public servants like our health professionals so that they can focus on their critical work. As we head into the next phase of the IGD with the mediations upcoming, we will not back down.”

Minister Wenger confirmed that “There are also other serious concerns regarding the PES. As it stands, the latest census data has not been incorporated into the PES calculations. The result of which is that while the Western Cape is the third largest province in South Africa by population, we only get the fifth largest budget allocation.”

“This government is fighting for our residents to protect our frontline services, our children, those who depend on the public health system, and the most vulnerable in our society” concluded provincial Minister Wenger.

Issued by Regan Thaw, Media Liaison Officer, Office of the Premier, 7 February 2024