The first quarter provincial budget statement of receipts and payments published by the National Treasury on 28 July 2006 covers spending for the first three months of the 2006/07 financial year, which ended 30 June 2006.
This report also includes a comparative spending analysis for the same period over the 2005/06 financial year. It should be noted that the 2005/06 financial year figures have been adjusted to exclude Programme 2: Social assistance grants of provincial social development departments, which was transferred to national government with effect from 01 April 2006. This makes the 2006/07 figures and the 2005/06 figures comparable.
In aggregate, provinces have spent 21,0 per cent or R38,4 billion of their budgets of R183,0 billion for the first quarter ended 30 June 2006. This represents a spending increase year-on-year of 8,6 per cent or R3,0 billion higher than for the same period last year when provinces had spent R35,3 billion.
Education expenditure totalled R17,5 billion or 22,1 per cent of the R79,1 billion total budget for education, and remains the largest item on provincial budgets (43,2 per cent). The spending pattern reflects a R374,0 million or marginal 2,2 per cent increase over the same period last year.
Health expenditure totalled R11,8 billion or 22,9 per cent of the R51,7 billion total budget for health and with the shifting of social security it becomes the second largest item after education on provincial budgets (28,2 per cent). The spending pattern reflects a 15,8 per cent or R1,6 billion increase compared with the same period in 2005/06.
Provincial social welfare services departments have spent 17,7 per cent or R934,4 million of their budgets of R5,3 billion for the first quarter ended 30 June 2006.
Total personnel expenditure in aggregate is at 23,3 per cent or R24,5 billion of the R104,9 billion personnel budget which excludes the recent announced public service increases, which were only effected from 01 July 2006.
In aggregate, provinces spent 16,7 per cent or over R2,4 billion of their R14,7 billion combined capital budgets between the various sectors. This is a significant improvement of 28,9 per cent or R548,8 million more than the R1,9 billion spent over the same period last year.
Education provincial departments spent relatively low on capital at 13,4 per cent or R479,9 million for the first three months of their R3,6 billion education capital budgets. However, this is significantly higher at 25,4 per cent or R97,2 million more than spending over the same period of the previous financial year.
Health provincial departments, year-on-year, significantly improved on spending on capital by spending 19,9 per cent or R858,3 million against their R4,3 billion health capital budgets, which is 64,3 per cent or R335,9 million more than the same period for 2005/06.
The highest share of provincial capital budgets is for public works, roads and transport departments at 35,0 per cent. The sector spent 16,7 per cent or R860,8 million against its combined capital budgets of R5,1 billion.
Provincial own revenue collected thus far is at 25,5 per cent or R1,7 billion of the total own revenue budget of R6,6 billion. National government has transferred R42,2 billion of the equitable share, and R5,1 billion in conditional grants to provinces, during the first three months of 2006/07.
The budgeted figures for provinces are based on the 2006/07 provincial budgets (main budgets) tabled in the various provincial legislatures during February 2006.
This analysis is based on the statement of receipts and payments, published by the National Treasury on 28 July 2006 and is available on the treasury website www.treasury.gov.za. The information is based on the Section 40(4) PFMA reports signed by each head of provincial department to their provincial treasury by 15 July 2006, and submitted to the National Treasury by 22 July 2006. 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 information presented here is mostly restricted to financial information only. Nonfinancial performance information is becoming increasingly necessary to measure outputs and performance and to assess value for money.
Except for housing delivery statistics, where figures are published, no other sector is publishing non-financial data at this stage. However, work is under way to extend reporting on service delivery in other departments. As a result of the shift of social security grants to national government with effect from 01 April 2006, information on social grant beneficiaries is no longer part of this publication.
This first quarter information will provide a valuable basis for determining potential overspending pressures which provinces must take into account when preparing their adjustments budgets. The trends indicated as part of this publication, should be treated with caution given the fact that it is relatively early in the financial year.
Table 1 indicates that provinces have spent 21,0 per cent or R38,4 billion of budgeted expenditure after three months into the current financial year. Spending to date is at the same level in percentage terms against spending over the same period in the 2005/06 financial year. However, in nominal terms, spending is 8,6 per cent or R3,0 billion higher than for the same period last year when provinces had spent R35,3 billion. Between provinces, spending ranges from the lowest share of 18,8 per cent in Gauteng and 20,8 per cent in Limpopo and KwaZulu-Natal, to the highest at 23,5 per cent in Northern Cape and 22,7 per cent in Free State.
Eastern Cape 21 110 682 3 688 074 2 028 368 26 827 124 4 715 416 669 174 404 469 5 789 059 21.
Free State 9 681 558 1 362 986 581 638 11 626 182 2 127 789 412 112 97 510 2 637 411 22.
Gauteng 22 348 850 9 562 626 2 548 263 34 459 739 4 955 421 1 099 396 414 214 6 469 031 18.
Kw aZulu-Natal 29 593 311 4 065 809 3 532 490 37 191 610 6 542 383 688 026 501 012 7 731 421 20.
Limpopo 18 584 714 2 577 236 1 736 839 22 898 789 4 087 916 398 611 272 126 4 758 653 20.
Mpumalanga 10 488 185 1 213 193 1 103 602 12 804 980 2 370 871 253 957 201 417 2 826 245 22.
Northern Cape 3 429 415 497 526 468 395 4 395 336 801 294 147 905 83 196 1 032 394 23.
North West 11 539 731 1 780 647 1 079 675 14 400 053 2 520 099 343 229 220 683 3 084 011 21.
Western Cape 14 341 223 2 417 596 1 616 771 18 375 590 3 150 853 652 275 253 458 4 056 585 22.
Total 141 117 669 27 165 693 14 696 041 182 979 403 31 272 041 4 664 685 2 448 084 38 384 811 21.
The 2005/06 financial year excludes Programme 2: Social assistance grants of provincial social development departments which was transferred to the SA Social Security Agency (SASSA) with effect from 01 April 2006.
Social services budgets total R136,0 billion and comprise 74,3 per cent of the total R183,0 billion provincial budgets in 2006/07.
It should be noted that the 2005/06 financial year figures have been adjusted to exclude Programme 2: Social assistance grants of provincial social development departments, which was transferred to national government with effect from 01 April 2006. This makes the 2006/07 figures and the 2005/06 figures comparable.
The function shift further results in a decrease of the social services share to total provincial budgets from 81,8 per cent in 2005/06 to 74,3 per cent in 2006/07.
Table 2 indicates that provinces spent 22,2 per cent or R30,3 billion of the budgeted R136,0 billion for the three social services (education, health and social welfare services). This is 7,3 per cent or R2,1 billion more than spending over the same period in 2005/06.
Education budgets of R79,1 billion comprise 43,2 per cent of total provincial budgets. Table 3 indicates that education expenditure is at 22,1 per cent or R17,5 billion of the total education budget, an increase of 2,2 per cent or R374,0 million compared to the R17,1 billion spent over the same period in 2005/06.
Spending between provinces for education ranges from the lowest rate in Gauteng at 20,5 per cent and Limpopo at 21,7 per cent to the highest in Northern Cape at 25,6 per cent and Free State at 24,3 per cent.
Spending on goods and services (mostly learner support material) in education is recorded at 11,4 per cent or R1,0 billion of its R8,7 billion budget. It comprises approximately 11,0 per cent of total provincial education budgets, which is 1,0 per cent more than the share in 2005/06.
The bulk of education expenditure is on personnel (84,2 per cent), amounting to 23,6 per cent or R14,7 billion of the education personnel budgets of R62,2 billion.
Spending between provinces ranges from the lowest in Gauteng at 22,1 per cent to the highest in Limpopo and North West at 24,9 per cent and 24,6 per cent respectively.
Education capital expenditure is somewhat low at 13,4 per cent or R479,9 million of the R3,6 billion budget. However, this is significantly higher than the R382,7 million spent on capital over the same period last year.
Spending between provinces ranges from the lowest in KwaZulu-Natal at 1,0 per cent and Gauteng at 7,6 per cent to the highest in Northern Cape at 43,9 per cent and North West at 33,3 per cent.
Education capital expenditure reflects wide fluctuations compared to last year. Some provinces show very significant improvements while others are moving slowly to implement projects.
Health budgets totalling R51,7 billion comprise 28,2 per cent of total provincial budgets. Table 6 indicates that health expenditure is at 22,9 per cent or R11,8 billion of the total health budget, representing an increase of 15,8 per cent or R1,6 billion compared to spending after the first quarter of the 2005/06 financial year.
Limpopo and North West health have spent the lowest share of their budgets after the first three months at 20,8 per cent and 20,9 per cent respectively The highest shares are recorded in Eastern Cape and Mpumalanga both at 24,8 per cent.
Table 7 indicates that health personnel expenditure is R6,7 billion or 23,5 per cent of the health personnel budget, an increase of R748,7 million or 12,5 per cent compared to the first quarter R6,0 billion spent in 2005/06.
Spending on non-personnel non-capital items in health, which includes medicines, drugs and other current expenditure is recorded at 22,7 per cent or R4,3 billion of the R18,7 billion budget, an increase of 14,3 per cent or R531,4 million compared to the first quarter R3,7 billion spent in 2005/06. This appears to be an area of spending pressure on health budgets in a number of provinces.
Capital expenditure in the health sector is at 19,9 per cent or R858,3 million. This is significantly higher at 64,3 per cent or R335,9 million more than the R522,3 million spent for the same period last year (Table 8).
Between provinces, with a varying degree of spending, the lowest rate of spending is in North West at 13,0 per cent and Northern Cape at 13,3 per cent with Gauteng and Eastern Cape recording the highest rate of spending at 26,5 per cent and 25,8 per cent respectively.
Social welfare services budgets at R5,2 billion comprise 2,9 per cent of total provincial budgets.
With the shifting of the social security function to national government, provinces are only left with social welfare services.
The function shift further results in a decrease of the social welfare services share to total provincial budgets from 27,4 per cent in 2005/06 to only 2,9 per cent in 2006/07.
Provinces registered spending of 17,7 per cent or R934,4 million of their R5,3 billion budget (Table 9). This represents an increase of 8,7 per cent or R74,8 million above the R859,5 million spent over the same period last year (excluding social assistance grants).
Between provinces, there are varying degrees of spending with the lowest being in Mpumalanga at only 9,9 per cent and North West at 15,7 per cent while the highest being Eastern Cape and Western Cape at 21,6 per cent and 19,9 per cent respectively.
Housing and local government budgets at R9,3 billion comprise 5,1 per cent of total provincial budgets.
Housing and local government spending at the end of the first quarter is at 17,0 per cent or R1,6 billion of the R9,3 billion budget (Table 10). This represents an increase of 1,8 per cent or R28,3 million of the R1,6 million spent over the same period last year.
Spending varies between provinces with the lowest being in Eastern Cape at 11,3 per cent and KwaZulu-Natal at 12,2 per cent while the highest being Western Cape at 27,9 per cent and North West at 24,4 per cent.
Most of the housing and local government expenditure is on the Integrated Housing and Human Settlement Development conditional grant (formally the housing subsidy grant). Table 11 indicates that provinces spent 16,6 per cent or just over R1,0 billion of their R6,3 billion housing conditional grant. These spending figures are marginally lower compared to last year with spending decreasing by 0,5 per cent or R5,5 million over the same period last year.
Division of Revenue Act, 2006 (Act No.
For the first time in the 2006/07 financial year this report includes data on housing delivery (non-financial data).
Table 12 indicates for the first quarter that there were 43 approved projects, 33 219 approved subsidies (planned units) as well as 40 904 beneficiaries approved. The number of sites and units completed as at 30 June 2006 are 34 986 and 28 978 respectively.
Personnel expenditure ("compensation of employees") is at 23,3 per cent or R24,5 billion of the R104,9 billion budget. Spending to date is 4,9 per cent or R1,1 billion higher than the R23,3 billion spent last year.
Western Cape and KwaZulu-Natal recorded the lowest rates of personnel spending at 22,6 per cent and 22,9 per cent respectively while Limpopo and Mpumalanga recorded the highest rates at 24,2 per cent and 24,1 per cent respectively.
Provinces have spent 16,7 per cent or over R2,4 billion of their R14,7 billion capital budgets ("payment for capital assets"). This is significantly higher (28,9 per cent or R548,8 million) than the R1,9 billion spent over the same period last year.
Table 14 also provides capital spending information by province, which indicates low rates of spending in KwaZulu-Natal at 14,2 per cent and Limpopo at 15,7 per cent to the highest in North West at 20,4 per cent and Eastern Cape at 19,9 per cent. However, in absolute terms, KwaZulu-Natal has spent the most at R501,0 million followed by Gauteng at R414,2 million and Eastern Cape at R404,5 million.
The biggest capital budgets in provinces are in public works, roads and transport departments at 35,0 per cent or R5,1 billion of the total provincial capital budget of R14,7 billion. Spending for these departments is at 16,7 per cent or R860,8 million which is 7,7 per cent or R61,5 million more than the R799,3 million spent last year over the same period.
Between provinces, the lowest rate of spending is recorded in Limpopo at 12,2 per cent and Gauteng at 13,9 per cent, whilst North West and KwaZulu-Natal recorded the highest rates of spending at 21,5 per cent and 19,3 per cent respectively.
Table 16 (overleaf) reflects spending on 2006/07 conditional grant allocations as at 30 June 2006 for all provinces. It excludes expected conditional grants roll-overs from the 2005/06 financial year and spending on general purpose conditional grants (Schedule 4 grants) like National Tertiary Services, Hospital Professions Training and Development, and the Provincial Infrastructure grants, as reporting against these grants cannot be separated from the province's health and capital budgets.
Spending on the Comprehensive Agricultural Support Programme Grant (also Schedule 4) is subsumed in a range of programmes across provincial departments and therefore no separate reporting is required in terms of the Division of Revenue Act, 2006 (Act No. 2 of 2006).
The total conditional grant allocation for all grants is R25,9 billion with health making up the bulk with R10,0 billion.
Against the total allocation of R15,0 billion, which excludes Schedule 4 grants, the rate of conditional grants spending amounts to 13,9 per cent or R2,1 billion.
Specific grants that show low rates of spending include Forensic Pathology Services (3,9 per cent) and Mass Sport and Recreation Participation Programme (7,4 per cent).
Revenue Act, 2006 (Act No.
National Treasury 4 118 119 658 180 1.
Table 17 indicates that provinces are spending slowly on conditional grants (Table 17 excludes schedule 4 conditional grants). The figures indicate that five or more provinces have spent less than 10 per cent of their grant budget after three months for the following grants: Land Care Programme, Forensic Pathology Services and Mass Sport and Recreation Participation Programme.
The table also indicates the number of provinces spending at slightly higher levels between 10 and 20 per cent and greater than 20 per cent of their conditional grant budgets. Although the rate of spending is encouraging and reflects an improvement over previous financial years, overall spending still lies below average.
Percentages represent actual expenditure of main budget as published in the Division or Revenue Act, 2006 (Act No.2 of 2006).
Provincial revenue includes budgeted equitable share allocations of R150,8 billion, conditional grants of R25,9 billion and own revenue of R6,6 billion. The total provincial revenue received and collected to date is recorded at 26,8 per cent or R49,0 billion of total budgeted total revenue of R183,2 billion.
National government transferred 28,0 per cent or R42,2 billion of the equitable share, and 19,8 per cent or R5,1 billion in conditional grants, to provinces after the first three months of the current financial year.
After three months, provinces have collected 25,5 per cent or R1,7 billion of the budgeted own revenue of R6,6 billion which is 11,2 per cent or R168,7 million more than what was collected by the end of June for the previous financial year.
The collection rate varies from 15,7 per cent in Limpopo and 19,0 per cent in Northern Cape, to a high of 35,5 per cent in Eastern Cape and 26,9 per cent in Mpumalanga. 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.