NATIONAL ASSEMBLY

QUESTION FOR WRITTEN REPLY

QUESTION NUMBER 2829

DATE OF PUBLICATION: 22 OCTOBER 2010

Mr M Waters (DA) to ask the Minister of Finance:

Whether the National Treasury will bail out the provincial health departments who have (a) overspent and/or (b) over-drafts on their budgets; if not, (i) why not and (ii) what steps will the departments take to eradicate their debts; if so, (aa) what plans, (bb) when will this bail-out happen and (cc) how much will be given to each province?         

NW3618E

REPLY:

No, National Government will not bail out provincial health departments that have overspent their budgets and / or have overdrafts on their budget.  Such a bail-out would not only reward those who do not comply with the PFMA but also undermine section 214 of the Constitution on the equitable division of revenue raised nationally.

(i)  The bailout will create a moral hazard and will compromise the principles of fairness within the intergovernmental system.  Such a bailout will reward provinces that are not prudent and efficient in managing their finances.

(ii)   Provinces are currently busy instituting cost-containment measures and assessing inefficiencies within their entire provincial budgets to redirect savings to health departments.  KwaZulu-Natal has succeeded in turning around the finances of their health department through such cost-containment measures.  This demonstrates that provinces have the ability to manage their finances in an effective manner.

aa. Not applicable.

bb. Not applicable.

cc. Not applicable.

Issued by Parliament, December 13 2010

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