E-mail: Lungisa. Fuzile@treasury.gov.
The fourth quarter year to date 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 April 2008, is the first estimate of spending outcomes for the 2007/08 financial year which commenced on 1 April 2007 and ended on 31 March 2008. It is available on the treasury website at www.treasury.gov.za. These figures may be revised as provincial departments finalise (and reconcile) their financial statements by 31 May 2008 for submission to the provincial Auditors-General.
The information is based on the Section 40(4) PFMA reports signed by each head of provincial department to their provincial treasury, and submitted to the National Treasury by 22 April 2008. Queries on spending or budget numbers should therefore, in the first instance, be referred to the relevant head official of the provincial department, and in the second instance to the head official of the provincial treasury. Queries on conditional grants may also be referred to the relevant head official of the administering national department.
The budgeted expenditure figures take account of revisions effected in the 2007 Adjusted Estimates of National Expenditure. A total adjustment of R2.8 billion was allocated to provinces consisting of a R1.6 billion adjustment to the provincial equitable share and a R1.2 billion adjustment to conditional grant expenditure.
The approved additional adjustments to provinces were gazetted on 20 December 2007 and these additional transfers were taken up in the provincial adjusted budgets in terms of Section 31(2) of the PFMA and Section 22(2) of the Division of Revenue Act, 2007.
a. In compliance with Section 26 of the 2007 Division of Revenue Act (Act No. 1 of 2007), the national Department of Housing stopped the transfer of funds following slow spending on the part of the Eastern Cape (R500 million) and the Free State (R100 million).
b. In compliance with Section 27 of the 2007 Division of Revenue Act (Act No. 1 of 2007), the national Department of Housing re-allocated funds between provinces in Gauteng (R350 million) and Northern Cape (R100 million).
In addition to the national adjustments, provinces increased their budgets by R2.7 billion (including second adjusted estimates by Gauteng (R950 million) and Limpopo (R163.9 million)). The provincial adjustments consist mainly of unspent conditional grants not surrendered to the National Revenue Fund and other funds surrendered to the provincial exchequer during the 2006/07 financial year.
In light of the above, provinces, in aggregate, increased their main budgets (expenditure side) by R5.5 billion with the bulk to health (R1.7 billion) and education (R1.2 billion).
In aggregate, provinces have spent R213.5 billion or 98.9 per cent of their adjusted budgets of R215.9 billion in 2007/08 (preliminary outcome). This represents a spending increase year-on-year of 14.9 per cent or R27.7 billion over the audited R185.8 billion spent in 2006/07.
96.5 per cent in Mpumalanga and 97.
100.5 per cent in KwaZulu-Natal and 99.2 per cent in Western Cape.
The preliminary under expenditure outcome of R2.6 billion or 1.2 per cent of provincial adjusted budgets in eight provinces for the 2007/08 financial year is largely due to under expenditure in seven provincial education departments, all social welfare services' departments, capital and conditional grants. KwaZulu-Natal is the only province to overspend its adjusted budgets by R226.4 million.
Eastern Cape 30 608 786 30 269 445 98.9% 14.
Free State 13 427 509 13 269 666 98.8% 6.
Gauteng 42 143 686 41 611 990 98.7% 19.
KwaZulu-Natal 44 537 996 44 764 412 100.5% 21.
Limpopo 25 125 210 24 677 410 98.2% 11.
Mpumalanga 16 846 448 16 264 748 96.5% 7.
Total 215 929 224 213 522 393 98.9% 100.0% 185 812 083 10.
Education expenditure totalled R88.7 billion or 98.6 per cent of the R90 billion combined education adjusted budgets and remains the largest item on provincial adjusted budgets (41.7 per cent). The spending pattern reflects a 12.3 per cent or R9.7 billion increase compared with the audited spending in the 2006/07 financial year.
Health expenditure totalled R62.4 billion or 102.3 per cent of the R61 billion combined health adjusted budgets and is the second largest item (after education) on provincial adjusted budgets (28.2 per cent). The spending pattern reflects a 16.3 per cent or R8.8 billion increase compared with the audited spending in the 2006/07 financial year.
Social welfare services (social development) preliminary outcome for the 2007/08 financial year is recorded at R6.2 billion or 97.3 per cent of the R6.4 billion social welfare services adjusted budgets.
Total personnel expenditure, in aggregate, is at R120.1 billion or 100.9 per cent of the R119 billion personnel adjusted budgets.
In aggregate, provinces spent R16.9 billion or 88.5 per cent of their R19.1 billion combined capital adjusted budgets. This is an improvement of 8.2 per cent over the previous financial year, exceeding the audited R15.6 billion spent in 2006/07 by R1.3 billion.
Provincial education departments spent R3.3 billion or 83.3 per cent of their R3.9 billion education capital adjusted budgets.
Provincial health departments show improvement on capital spending when compared to the previous financial year. They have spent R5 billion or 84.3 per cent against their R6 billion health capital adjusted budgets, which is 7.2 per cent or R338.9 million more than the audited spending over the previous financial year.
The greatest share of provincial capital is on the budgets of public works, roads and transport departments at 38 per cent. The sector spent R7.1 billion or 97.8 per cent against its combined capital adjusted budget of R7.3 billion. This represents a massive increase of 23.7 per cent or R1.4 billion compared to the audited outcome of last year.
Provincial own revenue collected is 13.6 per cent or R1.1 billion more than the adjusted forecast of R8.2 billion. National government has transferred R172.9 billion of the equitable share and R32.1 billion in conditional grants to provinces, for the 2007/08 financial year.
A more detail analysis of the provincial preliminary outcome is set out in Annexure A.
The budgeted figures take account of revisions effected in the adjusted estimates of provinces, which were tabled in their provincial legislatures during November 2007 and also cater for amendments made to the adjusted estimates in the case of the Limpopo and Gauteng provinces (approved by their legislatures on 11 March and 29 March 2008 respectively).
Table 1 indicates that provinces have spent R213.5 billion or 98.9 per cent of adjusted budgeted expenditure for the 2007/08 financial year. The preliminary outcome is at a similar level in percentage terms compared to the audited outcome for the 2006/07 financial year (98.8 per cent).
However, in nominal terms, spending is 14.9 per cent or R27.7 billion higher than last year when provinces had spent R185.8 billion (audited outcome). Between provinces, spending ranges from the lowest share of 96.
97.9 per cent in North West to the highest at 100.
99.2 per cent in Western Cape.
Eastern Cape 24 544 901 3 687 003 2 376 882 30 608 786 24 787 178 3 252 297 2 229 971 30 269 445 98.
Free State 10 536 699 1 490 598 1 400 212 13 427 509 10 536 045 1 431 035 1 302 586 13 269 666 98.
Gauteng 27 575 998 11 428 360 3 139 328 42 143 686 27 456 340 11 441 195 2 714 454 41 611 989 98.
KwaZulu-Natal 34 235 421 5 378 832 4 923 743 44 537 996 35 114 946 5 392 068 4 257 398 44 764 412 100.
Limpopo 20 134 684 3 485 954 1 504 572 25 125 210 19 858 961 3 421 839 1 396 610 24 677 410 98.
Mpumalanga 13 219 711 1 866 907 1 759 830 16 846 448 13 103 488 1 805 803 1 355 457 16 264 748 96.
Northern Cape 4 504 575 743 270 750 855 5 998 700 4 589 596 709 602 629 518 5 928 716 98.
North West 11 770 458 2 402 657 1 385 337 15 558 452 11 743 087 2 220 160 1 271 167 15 234 414 97.
Western Cape 16 271 594 3 585 620 1 825 223 21 682 437 16 307 137 3 484 707 1 709 747 21 501 591 99.
Total 162 794 041 34 069 201 19 065 982 215 929 224 163 496 778 33 158 707 16 866 907 213 522 392 98.
Provinces have budgeted R157.3 billion for social services, which include spending on education, health and social development.
Total 157 336 868 157 281 948 100.0% 73.7% 137 749 980 5.
Preliminary outcome on social services is recorded at R157.3 billion or 100 per cent of total provincial social services adjusted budget. This is 14.2 per cent or R19.5 billion more than the audited spending in 2006/07.
Social services adjusted budgets comprise 72.9 per cent of total provincial adjusted budgets in 2007/08. The original social services budget, in aggregate, has been increased by R2.8 billion during the provincial adjusted estimates process.
Education preliminary outcome is at R88.7 billion or 98.6 per cent of the total provincial education adjusted budget of almost R90 billion, an increase of 12.3 per cent or R9.7 billion compared to the R78.9 billion spent in 2006/07. The original education budget, in aggregate, has been increased by R1.2 billion during the provincial adjusted estimates process.
94.4 per cent and Mpumalanga at 96.3 per cent to the highest in North West and Free State at 101.8 per cent and 101.4 per cent respectively. The preliminary outcome for education personnel is at R70 billion or 99.9 per cent of the education personnel adjusted budgets of R70.1 billion.
Page 2 of 11 provinces ranges from the lowest in Gauteng and Eastern Cape at 97.
98.7 per cent to the highest in Northern Cape and North West at 105.
103.8 per cent respectively.
The preliminary outcome on goods and services (mostly learner support material) in education, is recorded at R9 billion or 92.1 per cent of the R9.8 billion adjusted budget.
The preliminary outcome for education capital is at R3.3 billion or 83.3 per cent of the R3.9 billion education capital adjusted budget. Capital spending for education between provinces ranges from the lowest in Mpumalanga at 60.
71.4 per cent to the highest in Northern Cape at 120.7 per cent and Limpopo at 104 per cent.
Eastern Cape 590 423 429 336 72.7% 19.
Free State 252 609 233 898 92.6% 18.
Gauteng 760 520 542 765 71.4% 20.
KwaZulu-Natal 1 034 377 996 879 96.4% 23.
Limpopo 403 962 420 208 104.0% 30.
Mpumalanga 429 201 261 514 60.9% 19.
Health expenditure is at R62.4 billion or 102.3 per cent against the total provincial health adjusted budget of R61 billion, representing an increase of 16.3 per cent or R8.8 billion compared to the spending of the previous financial year. The original health budget, in aggregate, has been increased by R1.7 billion during the provincial adjusted estimates process.
North West and both Northern Cape and Mpumalanga have spent the lowest share of their health adjusted budgets at 98.3 per cent and 98.6 per cent respectively.
Health personnel expenditure is at R35.1 billion or 105 per cent of the health personnel adjusted budget of R33.4 billion, an increase of 22 per cent or R6.3 billion more compared to the R28.7 billion spent in 2006/07.
This could be attributed to the 'Occupation-specific dispensations' (OSD) agreement that has been concluded for nurses. This agreement covers two phases: Phase One provides for a general increase for nursing staff and Phase Two provides for the identification and increased remuneration of nurses in specialist positions. Spending on non-personnel non-capital items (NPNC) in health, which includes medicines, drugs and other current expenditure is recorded at R22.
103.1 per cent of the R21.6 billion adjusted budget, an increase of 10.3 per cent or R2.1 billion compared to the R20.2 billion spent in 2006/07.
Eastern Cape 838 528 824 836 98.4% 37.
Free State 292 470 302 722 103.5% 23.
Gauteng 1 196 713 1 011 011 84.5% 37.
KwaZulu-Natal 1 388 863 1 012 039 72.9% 23.
Total 5 963 209 5 024 295 84.3% 29.8% 4 685 431 17. Capital expenditure in the health sector at R5 billion or 84.3 per cent of the almost R6 billion health capital adjusted budget, is lower than the overall capital expenditure share of 88.5 per cent. However, this is higher by 7.2 per cent or R338.9 million more than the R4.7 billion spent for the same period last year. Between provinces, the lowest rate of spending is in Mpumalanga at 57.5 per cent and Northern Cape at 59.
Page 4 of 11 with Free State and Limpopo recording the highest rate of spending at 103.5 per cent and 98.8 per cent respectively.
Provinces have spent R6.2 billion or 97.3 per cent of the total provincial social development adjusted budget of R6.4 billion.
20.7 per cent or R1.1 billion above the R5.2 billion spent last year. Between provinces, there are varying degrees of spending with the lowest being in North West at 88.7 per cent and Mpumalanga at 92.3 per cent while the highest being Western Cape at 100 per cent and both Eastern Cape and Limpopo at 99.8 per cent.
Housing and local government adjusted budgets at R12.6 billion comprise 5.8 per cent of total provincial adjusted budgets.
The preliminary outcome for the housing and local government sector is recorded at R12 billion or 95.2 per cent of the housing and local government adjusted budgets. This represents an increase of 22.3 per cent or R2.2 billion more than the R9.8 billion audited outcome in 2006/07.
Eastern Cape 1 234 055 1 059 417 85.8% 3.5% 36.
Free State 806 074 703 064 87.2% 5.3% 67.
Gauteng 3 258 374 3 286 787 100.9% 7.9% 79.
KwaZulu-Natal 2 305 155 2 266 692 98.3% 5.1% 57.
Limpopo 1 049 562 1 004 325 95.7% 4.1% 63.
Mpumalanga 1 006 023 920 474 91.5% 5.7% 70.
Northern Cape 397 500 393 507 99.0% 6.6% 58.
North West 1 113 079 1 008 983 90.6% 6.6% 77.
Western Cape 1 431 861 1 350 625 94.3% 6.3% 81.
Total 12 601 683 11 993 874 95.2% 5.6% 68.3% 9 808 369 85.8 per cent and Free State at 87.
100.9 per cent and Northern Cape at 99 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 R8.2 billion or 95.6 per cent of their R8.6 billion housing conditional grant adjusted budget. These spending figures are higher by 26 per cent or R1.7 billion more than the audited outcome in 2006/07.
However, a total of R600 million of the Integrated Housing and Human Settlement Development grant has been stopped by the national Department of Housing due to a lack of spending capacity, with Eastern Cape (R500 million) and Free State (R100 million) being the affected provinces.
The national department of Housing, after the stopping of transfers, has re-allocated funds to the value of R450 million in terms of the Integrated Housing and Human Settlement Development grant towards Gauteng and Northern Cape. These provinces' allocations have been revised upwards by R350 million and R100 million respectively.
The preliminary outcome for personnel (compensation of employees) is at R120.1 billion or 100.9 per cent of the R119.1 billion provincial personnel adjusted budget.
The preliminary outcome is 15.2 per cent or R15.8 billion higher than the R104.3 billion spent last year mainly due to the 'Occupation-specific dispensations' (OSD) agreement that has been concluded for nurses. R1.2 billion was added to the provincial equitable share through the national adjusted estimates process to cover the shortfall of the wage agreement which is 1.5 percentage points higher than what provinces planned for when they tabled their 2007 Budgets.
Both Mpumalanga and Western Cape and Gauteng recorded the lowest rates of personnel spending at 99.9 per cent and 100.1 per cent respectively while KwaZulu-Natal and Northern Cape recorded the highest rates at 102.
101.7 per cent, respectively.
The preliminary outcome for the "payments for capital assets" category (capital) is at R16.9 billion or 88.5 per cent of the R19.1 billion provincial payments for capital assets adjusted budget. It is higher by 8.2 per cent or R1.3 billion more than the R15.6 billion spent in 2006/07.
Table 13 provides total capital spending information by province, which indicates low rates of spending in Mpumalanga at 77 per cent and Northern Cape at 83.8 per cent to the highest in Eastern Cape at 93.8 per cent and Western Cape at 93.7 per cent. In absolute terms, KwaZulu-Natal has spent the most at R4.3 billion followed by Gauteng and Eastern Cape at R2.7 billion and R2.2 billion respectively.
The biggest capital adjusted budgets in provinces are in public works, roads and transport departments at 38 per cent or R7.3 billion of the total provincial capital adjusted budget of R19.1 billion. Spending for these departments is at R7.
97.8 per cent which is 23.7 per cent or R1.4 billion more than the R5.7 billion spent last year.
Total 7 251 869 7 094 116 97.8% 42.1% 5 736 882 85.5 per cent and Limpopo at 85.6 per cent, while Eastern Cape and Gauteng recorded the highest rates of spending at 105.4 per cent and 103.2 per cent respectively.
The total conditional grant adjusted allocation for all grants is R33.3 billion (including Schedule 4 grants and provincial roll-overs) with health making up the bulk at R11.9 billion.
Table 15 reflects the preliminary outcome on conditional grants for all provinces. It excludes spending on general purpose conditional grants (Schedule 4 grants) like the National Tertiary Services, Health 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.
Against the total adjusted allocation of R19.5 billion (including provincial roll-overs), this excludes Schedule 4 grants, the rate of conditional grants spending amounts to R19.2 billion or 98.7 per cent.
However, when excluding the Gautrain Rapid Rail Link grant, the preliminary outcome amounts to R15.1 billion or 92.2 per cent. The reported higher expenditure amount for the Gautrain Rapid Rail Link grant is inclusive of expenditure in respect of the Gautrain provincial allocation. The expenditure level being higher than the national conditional grant allocation implies that all the national funding has been fully spent.
Specific grants that show low rates of spending include Agricultural Disaster Management (34 per cent), Forensic Pathology Services (77.6 per cent), Land Care Programme (83.2 per cent), HIV and Aids (Life Skills Education) (83.3 per cent) and Community Library Services (83.8 per cent).
Gautrain rapid rail link grant - 300 000 16 034 316 034 300 000 107 493 34.
Total excluding Schedule 4 grants and Gautrain 31 493 722 1 031 836 800 473 33 326 031 32 134 605 15 144 565 92.
Total excluding Schedule 4 grants expenditure 31 493 722 1 031 836 800 473 33 326 031 32 134 605 19 198 073 98.
Table 16 indicates selected conditional grant spending rates as at 31 March 2008 (preliminary outcome). It further indicates that four or more provinces have spent less than 90 per cent of their grant adjusted budget at the end of the financial year for the following grants: Forensic Pathology Services and Hospital Revitalisation.
The table also indicates the number of provinces spending at slightly higher levels between 90 and 100 per cent and greater than 100 per cent of their conditional grant adjusted budgets.
Provincial revenue includes budgeted equitable share adjusted allocations of R172.9 billion, adjusted conditional grants of R32.5 billion and adjusted own revenue of R8.2 billion. The total provincial revenue received and collected for the 2007/08 financial year is recorded at R214.3 billion or 100.3 per cent of total revenue adjusted budgets of R213.5 billion.
National government transferred the entire equitable share (R172.9 billion) and R32.1 billion or 98.8 per cent in conditional grants to provinces for the 2007/08 financial year.
The preliminary outcome on provincial own revenue suggests that provinces have collected R9.3 billion or 113.6 per cent of their own revenue adjusted budgets of R8.2 billion, which is 16 per cent or R1.3 billion more than what was collected for the previous financial year.
The collection rate varies from 98.4 per cent in Northern Cape and 98.8 per cent in Limpopo, to a high of 133.8 per cent in North West and 123 per cent in Eastern Cape.
Eastern Cape 829 825 1 020 496 123.0% 3.