Provincial Infrastructure Spending: Western Cape only province to receive 100% infrastructure grant from Treasury

Note to editors: The following statement was distributed at a press conference held in Parliament today by James Selfe MP, Chairperson of the DA Federal Executive.

It is deeply significant that Finance Minister Pravin Gordhan has allocated the Western Cape its full Provincial Infrastructure Grant allotment for 2010/2011 under the Division of Revenue Act (DORA), while terminating allocations to all eight other ANC-run provinces. The decision was gazetted earlier this week.

The move constitutes yet further evidence that, where the DA governs, it delivers for all and to a better standard than the ANC. In particular, it shows that the DA delivers to the poor, because the infrastructure grants in question are dedicated for education, health, roads and agriculture. A full breakdown of the Treasury's decision follows below:

Infrastructure Grant to Provinces - National Treasury allocations 2010/2011:
 

• Eastern Cape: Stopped R502.7 million of R2.011 billion allocation (25%)
• Free State: Stopped R391.2 million of R869.3 million allocation (45%)
• Gauteng: Stopped R285.7 million of R952.5 million allocation (30%)
• KwaZulu-Natal: Stopped R119.8 million of R2.396 billion allocation (5%)
• Limpopo: Stopped R261.5 million of R1.743 billion allocation (15%)
• Mpumalanga: Stopped R439.3 million of R976.3 million allocation (45%)
• Northern Cape: Stopped R275.4 million of R598.8 million allocation (46%)
• North West: Stopped R194.6 million of R937.1 million allocation (20%)
• Western Cape: No funds stopped out of R794.8 million allocation

The DA-run Western Cape is the only province to receive its full allocation, as the Treasury has stopped allocations to every other province, penalising them for their failure to plan for and spend their infrastructure grants properly.

While this bears testimony to the DA's good stewardship of public funds and its ability to deliver infrastructure-led economic growth, it is a tragedy for residents of other provinces who are desperate for infrastructure development, maintenance and service delivery. Their governments have let them down, and there is no excuse for it.

While the Western Cape will receive 100% of its R795 million allocation for infrastructure spending, provinces like the Free State and Mpumalanga will only receive 55%, the Northern Cape 54% and Gauteng 70%. The Eastern Cape, which was supposed to receive a much needed R2 billion, was denied a massive R500 million.

In total, ANC-run provinces will be denied R2.47 billion in infrastructure grants during this financial year because of maladministration, financial mismanagement and poor planning. This is 22% of the R11.3 billion overall allocation from the Treasury, and is the equivalent of the funds needed to build about 30,000 RDP houses.

What is the Provincial Infrastructure Grant?

National Treasury allocates Provincial Infrastructure Grants to finance the construction, maintenance, upgrading and rehabilitation of new and existing infrastructure in education, health, roads and agriculture. At R11.3 billion in 2010/11, it is by far the largest of the six types of Treasury grants allocated to supplement programmes funded from provincial budgets. It is similar to the Municipal Infrastructure Grant, although the Provincial Infrastructure Grant provides funding for provincial, not municipal, infrastructure, and is a larger total allocation.

How did funds get blocked to the eight provinces?

Finance Minister Pravin Gordhan blocked funding to the eight ANC-run provinces in this week's Government Gazette, in terms of section 17 of the Division of Revenue Act. This provision of the Act can only be invoked in two conditions: either on the grounds of "persistent and material non-compliance" with national legislation and the conditions under which allocations are made, or on the basis that the Treasury anticipates that an administration will "substantially under-spend on that programme or allocation in the financial year."

Why is the Provincial Infrastructure Grant important?

The proper expenditure of infrastructure funds is crucial because infrastructure development and maintenance creates jobs, provides the platform for people to start businesses and creates the confidence that companies need to invest here. The roll-out and maintenance of infrastructure provides the foundation upon which provincial and local government service delivery can take place.

It also provides the means by which young people can travel to school, entrepreneurs can start businesses, companies can transport goods and residents can enjoy high standards of living. Without good infrastructure, services languish and people remain unable to live up to their potential. Essentially, adequate infrastructure is the bedrock on which good governance can thrive and productive communities can empower themselves.

What is the DA's record on efficient spending?

The DA believes in infrastructure-led growth not just at the provincial level, but the municipal level as well. Last year, DA-run municipalities far outperformed non-DA run municipalities in spending their Municipal Infrastructure Grants (MIGs). During the 2009/10 financial year, 272 municipalities were given MIGs totalling R8.739 billion. Of this, only R6.575 billion, or 75%, was spent, leaving a massive R2.164 billion unspent. To put this into perspective, these leftover billions could have provided more than 25,000 RDP houses to shelter more than 125,000 people.

The 13 DA-run municipalities, along with the Cape Town metro, were allocated a total of R452 million, of which we spent R446 million, a 99% rate of expenditure. Indeed, 12 of our 13 municipalities (93%) spent 100% of their MIGs, while only 34% of non-DA municipalities spent their full allotment.

This trend is likely to continue, for while the Treasury stopped the allocation of infrastructure grants to all ANC-run provinces, it also stopped allocations to several provinces regarding the Community Library Services Grant and the Hospital Revitalisation Grant. But the DA-run Western Cape was given its full allocation.

The only way in which this trend changes is if the people of South Africa, not just the Treasury, hold their government leaders to account. They can do this by voting for the DA, which has a proven track record of responsible financial management, robust infrastructure development and outstanding service delivery. That's what this upcoming local election is all about

Statement issued by James Selfe MP, DA Chairperson of the DA Federal Executive, April 7 2011

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