The second quarter provincial budget statement of receipts and payments, published by the National Treasury in terms of Section 32 of the Public Finance Management Act, 1999 (PFMA) on 30 October 2007, covers spending for the first six months of the 2007/08 financial year, which ended 30 September 2007. It is available on the treasury website at www.treasury.gov.za.
In aggregate, provinces have spent 46.0 per cent or R96.9 billion of their budgets of R210.5 billion for the period ended 30 September 2007. This represents a spending increase year-on-year of 17.1 per cent or R14.2 billion higher than for the same period last year when provinces had spent R82.7 billion.
Education expenditure totalled R42.5 billion or 47.9 per cent of the R88.
(42.2 per cent). The spending pattern reflects a 15.4 per cent or R5.7 billion increase over the same period last year.
Health expenditure totalled R28.4 billion or 47.9 per cent of the R59.
(28.2 per cent). The spending pattern reflects a 13.7 per cent or R3.4 billion increase compared with the same period in 2006/07.
Social welfare services (social development) spending for the first six months of the 2007/08 financial year is recorded at 40.9 per cent or R2.7 billion of the R6.5 billion social welfare services budgets.
Total personnel expenditure, in aggregate, is at 48.2 per cent or R56.9 billion of the R118.1 billion personnel budgets. These figures include the announced improvements in conditions of service (ICS) effected from 01 July 2007.
In aggregate, provinces spent 39.8 per cent or R7.1 billion of their R17.9 billion combined capital budgets. This is a significant improvement of 26.8 per cent over the previous financial year, exceeding the R5.6 billion spent over the same period in 2006/07 by R1.5 billion. This reflects an ongoing improvement in capital spending capacity.
Provincial education departments spent 38.0 per cent or R1.5 billion of their R3.8 billion education capital budgets.
28.7 per cent or R326.1 million when compared to the same period of the previous financial year.
Health provincial departments also significantly improved on capital spending. They have spent 42.1 per cent or R2.3 billion against their R5.5 billion health capital budgets, which is 20.9 per cent or R400.5 million more than the same period for 2006/07.
The greatest share of provincial capital is on the budgets of public works, roads and transport departments at 38.7 per cent. The sector spent 42.5 per cent or R2.9 billion against its combined capital budget of R6.9 billion.
47.1 per cent or R944.4 million compared to the same period last year.
These suggest that the initiatives that have been put in place to enhance infrastructure delivery are paying off.
The government contribution for Gautrain totals R4.5 billion for the 2007/08 financial year. Of the R4.5 billion, R1.5 billion is funded through the provincial equitable share (Gauteng Provincial Government) and R3.0 billion in the form of a conditional grant (funded by National Government). Expenditure incurred for Gautrain recorded against the equitable share portion is at R368.2 million as at 30 September 2007 and R997.5 million against the Gautrain Rapid Rail Link conditional grant.
Provincial own revenue collected thus far is at 57.1 per cent or R4.4 billion of the total own revenue budget of R7.7 billion. National government has transferred R89.1 billion of the equitable share and R14.8 billion in conditional grants to provinces, during the first six months of 2007/08.
A more detail analysis of the expenditure outcome as at 30 September 2007 is set out in Annexure A.
The budgeted figures for provinces are based on the 2007/08 provincial budget statements (main budgets) tabled in the various provincial legislatures during February and March 2007.
Table 1 indicates that provinces have spent 46.0 per cent or R96.9 billion of budgeted expenditure for the first and second quarter into the current financial year. Spending to date is at a slightly higher level in percentage terms compared to spending against budgets over the same period in the 2006/07 financial year (45.2 per cent).
However, in nominal terms, spending is 17.1 per cent or R14.2 billion higher than for the same period last year when provinces had spent R82.7 billion. Between provinces, spending ranges from the lowest share of 43.8 per cent in Gauteng and 43.9 per cent in Eastern Cape, to the highest at 48.3 per cent in KwaZulu-Natal and 47.8 per cent in North West.
Eastern Cape 25 016 205 3 455 553 2 537 053 31 008 811 11 332 956 1 387 597 894 046 13 614 599 43.
Free State 10 478 703 1 498 116 1 332 253 13 309 072 5 044 406 592 450 604 612 6 241 468 46.
Northern Cape 4 442 163 653 982 567 148 5 663 293 2 161 753 290 522 215 402 2 667 677 47.
North West 10 981 576 2 185 609 1 245 173 14 412 358 5 388 929 1 031 777 472 349 6 893 055 47.
Western Cape 15 934 599 3 161 589 1 620 366 20 716 554 7 465 425 1 446 238 833 388 9 745 051 47.
Total 160 969 878 31 548 454 17 941 435 210 459 767 75 310 431 14 415 501 7 136 950 96 862 882 46.
Provinces have budgeted R154.5 billion for social services, which includes spending on education, health and social development. Spending on social services is recorded at R73.6 billion or 47.6 per cent of the total provincial social services budget. Social services budgets comprise 73.4 per cent of total provincial budgets in 2007/08.
Education 88 718 713 42 523 461 47.9% 43.
Health 59 251 594 28 401 457 47.9% 29.
Social Development 6 549 607 2 681 684 40.9% 2.
Total 154 519 914 73 606 602 47.6% 76.
Education budgets of R88.7 billion comprise 42.2 per cent of total provincial budgets. Table 3 indicates that education expenditure is at 47.9 per cent or R42.5 billion of the total education budget, an increase of 15.4 per cent or R5.7 billion compared to the R36.8 billion spent over the same period in 2006/07.
44.2 per cent and Western Cape at 46.
56.1 per cent and both KwaZulu-Natal and Limpopo at 49.7 per cent.
Eastern Cape 14 726 061 6 514 999 44.2% 47.
Free State 5 692 455 2 720 656 47.8% 43.
Northern Cape 2 266 871 1 114 009 49.1% 41.
North West 5 323 945 2 984 135 56.1% 43.
Western Cape 7 684 658 3 546 037 46.1% 36.
Total 88 718 713 42 523 461 47.9% 43.
Spending on goods and services (mostly learner support material) in education is recorded at 32.5 per cent or R3.2 billion of its R10.0 billion budget. It comprises approximately 11.
0.3 percentage points more than the share in 2006/07.
The bulk of education expenditure is on personnel (79.8 per cent). Current spending on education personnel amounts to 49.1 per cent or R33.9 billion of the education personnel budgets of R69.2 billion.
Spending by provinces ranges from the lowest in Gauteng at 46.4 per cent and Western Cape at 47.5 per cent, to the highest in North West at 59.7 per cent and Northern Cape at 50.4 per cent.
Eastern Cape 11 836 246 5 695 774 48.1% 64.
Free State 4 411 890 2 197 936 49.8% 56.
Northern Cape 1 688 607 851 686 50.4% 56.
Education capital expenditure is at 38.0 per cent or R1.5 billion of the R3.8 billion budget. This is 28.7 per cent or R326.1 million more than the R1.1 billion spent on capital over the same period last year.
Spending by provinces ranges from the lowest in Eastern Cape at only 18.2 per cent and North West at 22.4 per cent to the highest in Limpopo at 63.6 per cent and Western Cape at 51.9 per cent.
Eastern Cape 764 191 139 412 18.2% 15.
Free State 279 861 97 063 34.7% 16.
Northern Cape 32 246 12 721 39.4% 5.
North West 211 026 47 196 22.4% 10.
Western Cape 167 221 86 751 51.9% 10.
Total 3 845 383 1 460 708 38.0% 20.
Health budgets totalling R59.3 billion comprise 28.2 per cent of total provincial budgets. Table 6 indicates that health expenditure is at 47.9 per cent or R28.4 billion of the total health budget, representing an increase of 13.7 per cent or R3.4 billion compared to spending over the same period in 2006/07.
43.7 per cent and 44.0 per cent respectively The highest shares are recorded in KwaZulu-Natal at 51.4 per cent and Northern Cape at 51.0 per cent.
Table 7 indicates that health personnel expenditure is R15.8 billion or 48.1 per cent of the health personnel budget, an increase of R1.8 billion or 13.2 per cent compared to the R14.0 billion spent over the same period in 2006/07.
Eastern Cape 4 404 596 2 096 497 47.6% 23.
Free State 2 239 485 1 114 133 49.7% 28.
Northern Cape 775 800 367 460 47.4% 24.
North West 2 061 230 903 369 43.8% 22.
Western Cape 3 989 531 1 876 736 47.0% 35.
Total 32 876 030 15 826 966 48.1% 27.
Spending on non-personnel non-capital items in health, which includes medicines, drugs and other current expenditure, is recorded at 49.1 per cent or R10.3 billion of the R20.9 billion budget. This is an increase of 12.8 per cent or R1.2 billion compared to the R9.1 billion spent over the same period in 2006/07.
Capital expenditure in the health sector is at 42.1 per cent or R2.3 billion. This is significantly higher at 20.9 per cent or R400.5 million more than the R1.9 billion spent over the same period last year.
The lowest rate of health capital spending is in Mpumalanga at 29.5 per cent and Northern Cape at 34.5 per cent with Free State and KwaZulu-Natal recording the highest rate of spending at 69.0 per cent and 49.9 per cent respectively.
Social welfare services budgets, at R6.5 billion, comprise 3.1 per cent of total provincial budgets.
Provinces registered spending of 40.9 per cent or R2.7 billion of their R6.5 billion budget (table 9). This represents an increase of 23.1 per cent or R502.9 million above the R2.2 billion spent over the same period last year.
Between provinces, there are varying degrees of spending with the lowest being in North West at only 27.9 per cent and Gauteng at 38.1 per cent while the highest are Western Cape and Limpopo at 45.9 per cent and 45.6 per cent respectively.
Housing and local government budgets at R12.0 billion comprise 5.7 per cent of total provincial budgets.
37.1 per cent or R4.4 billion of the R12.0 billion budget (table 10). This represents an increase of 16.3 per cent or R624.3 million more than the R3.8 billion spent over the same period last year.
Eastern Cape 1 574 138 384 708 24.4% 2.
Western Cape 1 198 094 529 085 44.2% 5.
Total 11 983 909 4 446 724 37.1% 4.
24.4 per cent and Limpopo at 27.
48.8 per cent and North West at 46.8 per cent.
Most of the housing and local government expenditure is on the Integrated Housing and Human Settlement Development conditional grant. Table 11 indicates that provinces spent 35.3 per cent or R2.9 billion of their R8.2 billion housing conditional grant. These spending figures are higher by 13.0 per cent or R333.7 million over the same period last year.
Personnel expenditure ("compensation of employees") is at 48.2 per cent or R56.9 billion of the R118.1 billion budget. Spending to date is 12.4 per cent or R6.3 billion higher than the R50.6 billion spent over the same period last year.
46.8 per cent and 47.1 per cent respectively while North West and KwaZulu-Natal recorded the highest rates at 51.3 per cent and 48.9 per cent respectively.
By the end of the second quarter, provinces had spent 39.8 per cent or R7.1 billion of their R17.9 billion capital budgets ("payments for capital assets"). This is significantly higher (26.8 per cent or R1.5 million) than the R5.6 billion spent over the same period last year.
Table 13 provides capital spending information by province, which indicates low rates of spending in Mpumalanga at 32.7 per cent and Eastern Cape at 35.2 per cent and high rates in Western Cape at 51.4 per cent and Free State at 45.4 per cent. However, in absolute terms. KwaZulu-Natal has spent the most at R1.9 billion followed by Gauteng at R1.1 billion and Eastern Cape at R894.0 million.
The biggest capital budgets in provinces are in public works, roads and transport departments at 38.7 per cent or R6.9 billion of the total provincial capital budget of R17.9 billion. Spending by these departments is at 42.5 per cent or R2.
Eastern Cape 2 537 053 894 046 35.2% 6.
Free State 1 332 253 604 612 45.4% 9.
Northern Cape 567 148 215 402 38.0% 8.
North West 1 245 173 472 349 37.9% 6.
Western Cape 1 620 366 833 388 51.4% 8.
Total 17 941 435 7 136 950 39.8% 7.
47.1 per cent or R944.4 million more than the R2.0 billion spent last year over the same period.
Between provinces, the lowest rate of spending is recorded in Limpopo at 32.0 per cent and Northern Cape at 33.6 per cent, while Western Cape and Eastern Cape recorded the highest rates of spending at 55.4 per cent and 49.5 per cent respectively.
The total conditional grant allocation is R31.5 billion (including Schedule 4 grants) with health making up the bulk at R11.3 billion.
Sport and Recreation South Africa 194 000 122 321 71 192 36.
Mass sport and recreation participation programme gr 194 000 122 321 71 192 36.
Transport 3 029 411 1 002 608 997 469 32.
Gautrain rapid rail link grant 3 029 411 1 002 608 997 469 32.
Total excluding Schedule 4 grants expenditure 31 493 722 14 789 397 6 764 674 37.
Table 15 reflects spending on conditional grant allocations as at 30 September 2007 for all provinces.
National Tertiary Services, Hospital Professions Training and Development and the Infrastructure grant to provinces, as reporting against these grants cannot be separated from the provinces' health and capital budgets.
Spending on the Comprehensive Agricultural Support Programme grant (also Schedule 4) is subsumed in a range of programmes and therefore no separate reporting is required in terms of the Division of Revenue Act, 2007 (Act No. 1 of 2007).
Against the total allocation of R18.0 billion, this excludes Schedule 4 grants, the rate of conditional grants spending amounts to 37.6 per cent or R6.8 billion.
(11.8 per cent), HIV and Aids (Life Skills Education) (25.9 per cent) and Land Care Programme (34.8 per cent).
Percentages represent actual expenditure of main budget as published in the Division or Revenue Act, 2007 (Act No.1 of 2007) and subsequent gazettes.
Table 16 indicates selected conditional grant spending rates as at 30 September 2007. It further indicates that five or more provinces have spent less than 35 per cent of their grants budgets after the second quarter for the following grants: Land Care Programme, Community Library Services and HIV and Aids (Life Skills Education).
The table also indicates the number of provinces spending at slightly higher levels between 35 and 45 per cent and greater than 45 per cent of their conditional grant budgets.
Although the conditional grant rate of spending is encouraging and reflects an improvement over previous financial years, overall conditional grants spending still lies below the total provincial spending average of 46.0 per cent.
Spending on the Further Education and Training College Sector Recapitalisation grant is at 44.0 per cent or R262.1 million and reflects actual transfers from the provincial education departments to the FET colleges.
Provincial revenue includes budgeted equitable share allocations of R171.3 billion, conditional grants of R31.5 billion and own revenue of R7.7 billion. The total provincial revenue received and collected to date is recorded at 51.4 per cent or R108.2 billion of total budgeted total revenue of R210.4 billion.
National government transferred 52.0 per cent or R89.
47.0 per cent or R14.8 billion in conditional grants, to provinces after the second quarter of the current financial year.
After the second quarter, provinces have collected 57.1 per cent or R4.4 billion of the budgeted own revenue of R7.7 billion which is 19.2 per cent or R705.8 million more than what was collected by the end of September for the previous financial year.
The collection rate varies from 41.9 per cent in Northern Cape and 48.7 per cent in Limpopo, to a high of 80.3 per cent in North West and 70.6 per cent in Eastern Cape. It appears at this stage that most provinces will exceed their collection of budgeted own revenue. Often, the over collection reflects understatement of targets rather than improved fiscal effort.