KZN in the eye of a fiscal storm with R5.3 billion wage cut

22 November 2020

A National Treasury briefing around the Division of Revenue Second Amendment Bill, has revealed that KwaZulu-Natal (KZN) is in the eye of a fiscal storm, with the biggest blow set to hit the province being a R5.3 billion cut in the provincial compensation budget, translating into a 6.5% reduction on the current wage bill.

The briefing, which took place on Friday last week, also showed that the wage cut is not the end of the woes facing our ANC-led province, with the cuts set to continue into the MTEF over the next three financial years. In layman’s language this relates to no salary increases over the next four years while KZN will have to cut even more posts to meet these budgets.

The DA welcomes this cut. For some time now we have bemoaned the bloated bureaucracy within our province – one which has certainly not morphed into a capable and ethical state with Covid-19 Personal Protective Equipment being just one example of this.

The chickens have come home to roost for the ANC. For too long the ANC have used state employment for patronage and poor cadre deployment. In short, they have created their very own monster.

The big question that remains is whether the ANC’s alliance partners buy into these drastic measures? Currently unions are deadlocked in the courts on this matter. If the alliance partners do not reach consensus, the state will have to borrow more money to fund this compensation.

This means that debt repayments will push South Africa into a debt spiral, leaving very little for service delivery and critically placing further pressure on key departments such as health and education.

Added to this is the fact that KZN does not escape the R10.5 billion SAA bailout, with the province facing reductions in critical provincial conditional grants. The disastrous legacy of SAA and its poor management and endemic corruption is not only reserved for the provincial fiscus.

KZN’s embattled and cash-strapped municipalities will also face reductions to their grants in order to fund the bailout.

The financial stability and security of our province and its municipalities has never been at greater risk than now – a risk created by the ANC through poor policy implementation, placing party before state and by building an incapable state through patronage and the creation of a bloated administration.

The people of KZN and South Africa deserve better. With the 2021 elections on the horizon, they hold the power to send the ANC government into permanent exile.

Issued by Francois Rodgers, DA KZN Spokesperson on Finance, 22 November 2020