It is time to plug the holes in the Gauteng budget or risk going over the fiscal cliff

19 November 2020

Today’s second adjustment budget tabled by the MEC for Finance and e-Government, Nomantu Nkomo-Ralekho has allocated funding that must prioritize economic recovery and fiscal consolidation. COVID19 has indeed had a significant impact on the functioning and performance of Gauteng Government departments and we expect that to remain the case for as long as we have to deal with the impact of the pandemic on efforts to bolster the Gauteng economy and ensure fiscal prudence.

During her adjustment budget speech today in the Gauteng Provincial Legislature, the MEC highlighted the need for the boosting of the township economy. However, the DA remains concerned that subcontracting remains an issue and that the provincial government does not have a hold on ensuring that main contractors pay subcontractors on time. This is a clear indication that contract management is lacking, which can be used as a tool to ensure that the main contractors pay subcontractors, instead of drafting more legislation to manage timeous payments. In many stakeholder meetings where the DA was present it is evident that SMMEs are worried about late payments, as it is hurts their cash flow and is even destroying the sustainability of their enterprises.

Furthermore, in order to get the private sector involved in assisting government to deal with critical infrastructure projects effectively, there needs to be a trust relationship built on government’s commitment to eradicate corruption, stop the mismanagement of funds and show solid procurement plans to ensure infrastructure projects are completed.

For the 2020/21 financial year an amount of R65.5 million has been approved for rollovers for the following departments:

- Health- R50.9 million

- Human Settlements- R7 million

- Community Safety- R5.5 million

- Sports, Arts, Culture and Recreation- R2 million

These rollovers are due to slower spending as a result of the lockdown, and accruals, mainly because of invoices that have been paid late.

It is also concerning to note that the Community Library Services grant has been reduced by R1.5 million by national government to fund the business rescue plan for SAA, with a total of R94,1m cuts in Conditional Grants to contribute towards rescuing SAA. The DA condemns this as the ANC has chosen to fund public transport for the rich instead of building schools, hospitals and providing water for the millions of poor South Africans.

In addition, the MEC confirmed the focus on Special Economic Zones, Industrial Hubs, and Agri Hubs but it is worrying that these zones are still not all fully operational. Whilst the DA believes that the establishment of these zones, and hubs will indeed create longer term sustainable jobs, more needs to be done to ensure that these zones become fully operational.

The MEC further stressed the need for Public Private Partnerships (PPP) to ensure maintenance of our current infrastructure, however, the Gauteng Province is not known for many successful PPPs. PPPs are often very complex in nature and without a strong relationship with private sector to collaborate government on PPP’s nothing much will happen.

We concur with the statement that the Gauteng government needs to be more transparent in the way it deals with various SIU investigations into alleged corruption and financial mismanagement, as final reports and recommendations are often clouded in secrecy.

In total there were will be a reduction of R5 billion in equitable share, to accommodate consolidation of the public sector wage as Minister Mboweni plans to freeze increases for the next three years. Trade unions will definitely be making their voices heard on this matter and Gauteng can expect protests and disruptions in this regard.

In addition, the DA is calling on the MEC to not only present the Provincial Economic Review and Outlook but also consider presenting a Municipal Economic Review and Outlook as Gauteng municipalities are in serious trouble when it comes to financial sustainability and continuous delivery of services to their residents in the midst of COVID19 and declining revenue collection and increasing debt.

It is important now more than ever that everything possible is done to avoid falling over the fiscal cliff. If anything goes wrong now it will happen easily, and it will be the most vulnerable in our society that will suffer the consequences

Issued by Adriana Randall,DA Gauteng Shadow MEC for Finance and e-Government, 19 November 2020