The third quarter provincial budget report covers spending for the first nine months of the 2005/06 financial year, which ended 31 December 2005.
Provinces have spent 70,7 per cent of their adjusted budget, or R154,9 billion of R219,2 billion.
Provinces spent 55 per cent or R7,7 billion of their R13,9 billion combined adjusted capital budgets.
Personnel expenditure by provinces is at 74 per cent or R71,6 billion of the R96,7 billion adjusted personnel budget.
The greatest potential spending pressure is in provincial education departments, where provinces have spent 73,4 per cent or R53 billion of their R72,2 billion adjusted budget, an increase of R5,2 billion or 10,9 per cent over the same period last year. However, capital expenditure in education is relatively low at 45,1 per cent or R1,5 billion after nine months of the 2005/06 financial year.
Health expenditure is at 71 per cent or R33,5 billion, which is R4,8 billion higher compared with the same period last year. Capital expenditure in health is lower at 51,3 per cent or R2,1 billion, however, it is substantially higher compared to the same period last year.
The highest share of provincial adjusted capital budgets is for public works, roads and transport departments at 34 per cent. The sector spent 71,6 per cent or R3,4 billion against its combined capital adjusted budget of R4,7 billion after the third quarter of the financial year.
Provincial own revenue collected thus far is at 82 per cent or almost R5 billion of the total adjusted own revenue budget of R6 billion. National government has transferred R102,4 billion of the equitable share, and R58 billion in conditional grants to provinces after nine months of 2005/06.
The budgeted figures for provinces are based the adjusted estimates of provinces, which were presented to their provincial legislatures during November 2005.
This analysis is based on the statement of receipts and payments, published by the National Treasury on 30 January 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 the 15th January 2006, and submitted to the National Treasury on the 20th January 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 restricted to financial information only, but provincial departments should be in a position to provide complementary non-financial performance information at least up to the second quarter (as such information comes with a longer lag of 2 to 4 months) relative to the targets set in their Strategic and Performance Plans tabled in provincial legislatures. Such information is necessary to measure outputs and performance and to assess value for money. This third quarter assessment will provide a valuable basis for determining any possible overspending pressures after provinces have tabled their adjustment budgets.
Table 1 indicates that provinces have spent 70,7 per cent or R154,9 billion of adjusted budget after nine months of the current financial year. Spending to date is at a similar level in percentage terms against spending over the same nine month period in the 2004/05 financial year. However, in nominal terms, spending is 13,4 per cent or R18,3 billion higher than for the same period last year when provinces had spent R136,7 billion. Among provinces, spending ranges from the lowest share of 68,3 per cent in Free State and 68,4 per cent in North West to the highest at 72,2 per cent in Eastern Cape and 71,8 per cent in Mpumalanga and Northern Cape.
Social services adjusted budgets total R178,9 billion, and comprise 81,6 per cent of the total R219,2 billion combined provincial adjusted budget in 2005/06. Table 2 indicates that provinces spent 71,9 per cent or R128,7 billion of the adjusted R178,9 billion budget for the three social services (education, health and social development). This is 13,3 per cent or R15,1 billion more than spending over the same period in 2004/05.
Social development adjusted budgets of R59,5 billion comprise 27,2 per cent of total provincial adjusted budgets.
The third quarter spending figures indicate that provincial social development departments recorded spending of 70,9 per cent or R42,2 billion of their R59,5 billion adjusted budget (Table 3). This represents an increase of 13,6 per cent or R5 billion above the R37,2 billion spent over the same period last year.
Among provinces, there are varying degrees of year-on-year growth in spending with Eastern Cape spending 19,6 per cent and Limpopo spending 19,1 per cent more while North West and Free State reflecting only modest increases of 3,7 per cent and 9,1 per cent respectively.
Table 4 reflects social grants beneficiary numbers by type of grant and by province over the nine month period ending December 2005. There is a steady average monthly growth in beneficiary numbers of 2,2 per cent over the nine month period rising from 8,8 million in April to 10,5 million in December 2005. The bulk of beneficiaries are for the take-up of Child Support grants (6,7 million beneficiaries) and Old Age (2,1 million beneficiaries which includes Grant-In-Aid take-up) for the month of December.
Support Grant beneficiaries reflect the highest monthly average growth of 3,4 per cent.
Limpopo at 1,5 million. Mpumalanga has the most volatile fluctuation in beneficiary numbers rising sharply in May and then steadying over June through to December. As a result, Mpumalanga reflects the highest average monthly growth of 15 per cent over the nine month period, however it is hugely influenced by the large increase in May.
1 Excludes "Social Relief of Distress" which is included in the overall Social Assistance Transfers Grant.
2 The Old Age Grant includes "Grant-in-aid".
Table 5 reflects social grant payments by type of grant and by province over the nine month period ending December 2005. Like the beneficiary numbers, there has been a low but steady average monthly growth in grant payments of 1,9 per cent over the nine month period rising from under R4 billion in April to R4,6 billion in December 2005. The majority of payments are for Old Age (R1,8 billion) which include Grant-In-Aid payments, Child Support grant payments (R1,4 billion) and Disability grant payments (R1,2 billion). Foster Care (4,9 per cent), Child Support (3 per cent) and Disability (1,6 per cent) grant payments have the highest average monthly growth over the nine month period. Among provinces, KwaZulu-Natal and Eastern Cape records the highest payments of social grants of R1,2 billion and R823,4 million followed by Gauteng at R634,8 million. Gauteng and KwaZulu-Natal have the highest average monthly growth in social grant payments of 5,6 per cent and 3,1 per cent respectively.
Education adjusted budgets of R72,2 billion comprise 33 per cent of total provincial adjusted budgets. Table 6 indicates that education expenditure is at 73,4 per cent or R53 billion of the total adjusted education budget, an increase of 10,9 per cent or R5,2 billion compared to the R47,8 billion spent over the same period in 2004/05. Spending between provinces for education ranges from the lowest rate in Free State at 71,3 per cent and Gauteng at 71,9 per cent to the highest in Northern Cape at 75,9 per cent and Limpopo at 75,1 per cent.
The bulk of education expenditure is on personnel (82,7 per cent), amounting to 75,2 per cent or R43,8 billion of the adjusted education personnel budget of R58,2 billion. Spending on goods and services (mostly learner support material) in education is recorded at 63,7 per cent or R4,6 billion of its R7,2 billion adjusted budget.
Education capital expenditure is low at 45,1 per cent or R1,5 billion of the R3,4 billion adjusted budget. However, this is marginally higher (1,9 per cent or R27,7 million) than what was spent on capital over the same period last year. Capital spending for education between provinces ranges from the lowest in KwaZulu-Natal at 21,7 per cent and Mpumalanga at 33,8 per cent to the highest in Western Cape at 70,8 per cent and North West at 68,5 per cent.
Health adjusted budgets totalling R47,1 billion comprise 21,5 per cent of the total provincial adjusted budget. Table 8 indicates that health expenditure is at 71 per cent or R33,5 billion of the total health adjusted budget, representing an increase of 16,7 per cent or R4,8 billion compared to spending after the third quarter of the 2004/05 financial year.
Limpopo and Gauteng have spent the lowest share of their adjusted health budgets after nine months at 63,4 per cent and 70,1 per cent respectively. The highest shares are recorded in Northern Cape and Mpumalanga at 75,9 per cent and 75,4 per cent respectively.
Capital expenditure in the health sector is somewhat low at 51,3 per cent or R2,1 billion. However, this is significantly higher at 62 per cent or R806 million more than the R1,3 billion spent for the same period last year (Table 9). Between provinces, the lowest rate of spending is in Limpopo at 35 per cent and Free State at 44,1 per cent with Mpumalanga and KwaZulu-Natal recording the highest rate of spending at 69,4 per cent and 57,8 per cent respectively.
Provinces have spent 55 per cent or R7,7 billion of their R13,9 billion adjusted capital budgets ("payment for capital assets"). This is significantly higher (28,7 per cent or R1,7 billion) than the R6 billion spent over the same period last year. However provinces will most likely underspend by the same proportion as in the previous financial year.
Table 10 also provides capital spending information by province, which indicates significantly low rates of spending in Limpopo at 42,7 per cent and Free State at 45,9 per cent to the highest in Eastern Cape at 65,6 per cent and Mpumalanga at 63,7 per cent. In absolute terms, KwaZulu-Natal has spent the most at R2,0 billion followed by Eastern Cape and Gauteng at R1,1 billion.
The biggest adjusted capital budgets in provinces are in public works, roads and transport departments at 34 per cent or R4,7 billion of the total provincial capital adjusted budget of R13,9 billion. Spending for these departments is relatively higher than in other sectors at 71,6 per cent or R3,4 billion which is appreciably higher by 25,1 per cent or R682,1 million more than the R2,7 billion spent last year over the same period. Between provinces, the lowest rate of spending is recorded in Limpopo at 50,1 per cent and North West at 51,2 per cent, whilst Eastern Cape and Mpumalanga recorded the highest rates of spending at 86,9 per cent and 86,5 per cent respectively.
Table 12 indicates that provinces spent 75,9 per cent or R3,7 billion of their R4,8 billion housing conditional grant. These spending figures are a significant improvement compared to last year with spending increasing by 11,5 per cent or R378 million from R3,3 billion spent over the same period last year.
Table 13 (overleaf) reflects spending on all 2005/06 conditional grant allocations as at 31 December 2005 for all provinces. It excludes conditional grants rollovers from the 2004/05 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, Integrated Social Development Services and Land Distribution (Alexandra Urban Renewal Project) (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, 2005 (Act No. 1 of 2005).
The total conditional grant allocation for all grants (including additional allocations published in the Government Gazette of 7 December 2005) is at R75,1 billion (excluding provincial rollovers) with social development making up the bulk with R55,9 billion. Against the total allocation (excluding provincial rollovers), the rate of conditional grants spending (excluding schedule 4 grants) amounts to 71,7 per cent or R46,3 billion.
Specific grants that show low spending trends include Disaster Relief (zero per cent), Forensic Pathology Services (2,3 per cent) and Agricultural Disaster Management (29,5 per cent).
Provincial roll-overs, as submitted by provinces in their In-Year Management, Monitoring and Reporting model, amount to R1,3 billion which includes rollovers for Integrated Housing and Human Settlement Development of R384,1 million, Provincial Infrastructure of R188 million, Hospital Revitalisation of R126,9 million, Integrated Social Development Services of R78,8 million and National School Nutrition Programme of R75,9 million amongst others which are excluded from the table, but are available for spending during the 2005/06 financial year.
R thousand Division of Revenue Act, 2005 (Act No.
National Treasury 3 730 773 - 3 730 773 2 132 176 1.
Table 14 below indicates that some provinces are spending slowly on conditional grants excluding the schedule 4 conditional grants. It indicates that five or more provinces have spent less than 50 per cent of their grant budget after nine months for Hospital Management and Quality Improvement with many grants falling within the 50% to 70% spending range. However these spending trends exhibit a marked improvement in conditional grant spending as compared to previous financial years.
Table 14: Selected Conditional Grants Spending Rate as at December 2005 1) Percentages represent actual expenditure of main budget as published in the Division or Revenue Act, 2005 (Act No.
Personnel expenditure ("compensation of employees") is at 74 per cent or R71,6 billion of the R96,7 billion adjusted budget. Spending to date is 8,9 per cent or R5,8 billion higher than the R65,7 billion spent last year. Gauteng and Western Cape recorded the lowest rates of personnel spending at 71,8 per cent and 71,9 per cent respectively while Limpopo and North West recorded the highest rates at 77,5 per cent and 74,6 per cent respectively.
Provincial Revenue includes budgeted equitable share allocations of R134,7 billion, conditional grants of R75,1 billion and own revenue of R6 billion (post adjustments).
National government transferred 76 per cent or R102,4 billion of the equitable share, and 77,3 per cent or R58 billion in conditional grants, to provinces after nine months of the current financial year.
After nine months, provinces have collected 82 per cent or almost R5 billion of their adjusted own revenue budget of R6 billion.
The total provincial revenue received and collected to date is recorded at 76,6 per cent or R165,4 billion of total adjusted revenue budget of R215,9 billion.
The R6 billion adjusted budget amount is almost identical to the own revenue collection for the entire 2004/05 financial year. The R5 billion collected thus far is however 17,2 per cent or R725,4 million more than what was collected by the end of December for the previous financial year. The collection rate varies from 66,9 per cent in North West and 74,6 per cent in Northern Cape, to a high of 96,9 per cent in Mpumalanga and 92,5 per cent in Gauteng.