The third 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 January 2008, covers spending for the first nine months of the 2007/08 financial year, which ended 31 December 2007. It is available on the treasury website at 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, and submitted to the National Treasury on 22 January 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 provincial adjustment budgets, which include R2.8 billion allocated to provinces (R1.6 billion to the provincial equitable share and R1.2 billion to conditional grants) through the 2007 Adjusted Estimates of National Expenditure.
The approved adjustments to provinces were gazetted on 20 December 2007 and these additional transfers were reflected in the adjusted provincial budgets in terms of Section 31(2) of the PFMA and Section 22(2) of the Division of Revenue Act, 2007.
In addition to the national adjustments, provinces increased their main budgets by R1.6 billion. The provincial adjustments consist mainly of unspent conditional grants not surrendered to the National Revenue Fund and other funds surrendered to the Provincial Revenue Funds during 2006/07.
In light of the above, in aggregate, provinces increased their main budgets (expenditure side) by R4.4 billion with the bulk of the additional funds allocated to health (R1.6 billion) and education (R1.2 billion).
In aggregate, provinces have spent 71.6 per cent or R153.9 billion of their adjusted budgets of R214.8 billion for the period ended 31 December 2007. This represents an increase in spending of 16.9 per cent or R22.2 billion higher than for the same period last year when provinces had spent R131.7 billion.
Education expenditure totalled R66.3 billion or 73.7 per cent of the R89.9 billion combined adjusted education budgets and remains the largest item on adjusted provincial budgets (41.9 per cent). The spending pattern reflects a 14.3 per cent or R8.3 billion increase over the same period last year.
Health expenditure totalled R45.3 billion or 74.4 per cent of the R60.8 billion combined adjusted health budgets and is the second largest item (after education) on adjusted provincial budgets (28.3 per cent). The spending pattern reflects a 17.0 per cent or R6.6 billion increase compared with the same period in 2006/07.
Social welfare services (social development) spending for the first nine months of the 2007/08 financial year is recorded at 72.0 per cent or R4.6 billion of the R6.4 billion adjusted social welfare services budgets.
Total personnel expenditure, in aggregate, is at 74.7 per cent or R88.7 billion of the R118.8 billion adjusted personnel budgets. These figures include the announced improvements in conditions of service (ICS) effected from 01 July 2007.
In aggregate, provinces spent 61.4 per cent or R11.7 billion of their R19.1 billion combined adjusted capital budgets. This is an improvement of 17.7 per cent over the previous financial year, exceeding the R10.0 billion spent over the same period in 2006/07 by R1.8 billion. This reflects an ongoing improvement in capital spending capacity.
Provincial education departments spent 58.9 per cent or R2.3 billion of their R3.9 billion adjusted education capital budgets, which is marginally (2.3 per cent) lower than what was spent in the same period last year.
Health provincial departments show improvement on capital spending.
60.6 per cent or R3.7 billion against their R6.0 billion adjusted health capital budgets, which is 14.4 per cent or R460.8 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 37.9 per cent. The sector spent 69.4 per cent or R5.0 billion against its combined adjusted capital budget of R7.3 billion. This represents a massive increase of 45.2 per cent or R1.6 billion compared to the same period last year.
Spending on conditional grants is generally lower at 60.4 per cent against the adjusted conditional grants budget (including provincial roll-overs), excluding Schedule 4 grants, for the first nine months.
Provincial own revenue collected by the end of December 2007 was 81.0 per cent or R6.6 billion of the total adjusted own revenue budget of R8.2 billion. National government has transferred R130.6 billion of the equitable share and R23.8 billion in conditional grants to provinces, during the first nine months of 2007/08.
A more detail analysis of the expenditure outcome as at 31 December 2007 is set out in Annexure A.
The budgeted figures for provinces are based on the 2007/08 provincial adjusted estimates tabled in the various provincial legislatures during November 2007.
Table 1 indicates that provinces have spent 71.6 per cent or R153.9 billion of adjusted budgeted expenditure for the first nine months into the current financial year. Spending to date is at a slightly higher level in percentage terms compared to spending against adjusted budgets over the same period in the 2006/07 financial year (70.0 per cent).
However, in nominal terms, spending is 16.9 per cent or R22.2 billion higher than for the same period last year when provinces had spent R131.7 billion. Among provinces, spending ranges from the lowest share of 68.
69.1 per cent in Gauteng, to the highest at 74.
Eastern Cape 24 544 901 3 687 003 2 376 882 30 608 786 18 084 973 2 097 301 1 652 900 21 835 174 71.
Free State 10 536 699 1 590 598 1 400 212 13 527 509 7 789 218 1 008 861 1 020 780 9 818 859 72.
Northern Cape 4 504 575 643 270 750 855 5 898 700 3 380 282 471 759 401 386 4 253 427 72.
North West 11 770 458 2 402 657 1 385 337 15 558 452 8 498 747 1 651 926 886 223 11 036 896 70.
Western Cape 16 271 594 3 585 620 1 825 223 21 682 437 11 838 341 2 385 870 1 239 583 15 463 794 71.
Total 162 619 896 33 049 987 19 145 407 214 815 290 118 805 135 23 327 723 11 749 953 153 882 811 71.
Provinces' adjusted social services budgets are at R157.2 billion, which includes spending on education, health and social development. Spending on social services is recorded at R116.2 billion or 73.9 per cent of the total adjusted provincial social services budget. Adjusted social services budgets comprise 73.2 per cent of total adjusted provincial budgets in 2007/08.
Total Social Services 157 159 204 116 208 905 73.9% 75.
The original education budget, in aggregate, has been increased by R1.2 billion during the provincial adjusted estimates process. Adjusted education budgets of R89.9 billion comprise 41.9 per cent of total adjusted provincial budgets.
Table 3 indicates that education expenditure is at 73.7 per cent or R66.3 billion of the total adjusted education budget, an increase of 14.3 per cent or R8.3 billion compared to the R58.0 billion spent over the same period in 2006/07.
Spending by provinces on education ranges from 70.
71.0 per cent in Mpumalanga to 78.3 per cent in North West and 75.7 per cent in Northern Cape.
Total 89 948 768 66 331 776 73.7% 43.
Spending on goods and services (mostly learner support material) in education is recorded at 60.8 per cent or R6.0 billion of its R9.8 billion adjusted budget. It comprises approximately 11 per cent of total adjusted provincial education budgets.
The bulk of education expenditure is on personnel (79.1 per cent). Current spending on education personnel amounts to 74.9 per cent or R52.5 billion of the adjusted education personnel budgets of R70.1 billion.
Personnel spending by provinces ranges from the lowest in Gauteng at 72.9 per cent and Western Cape at 73.6 per cent, to the highest in Northern Cape at 78.7 per cent and North West at 78.2 per cent.
Education capital expenditure is at 58.9 per cent or R2.3 billion of the R3.9 billion adjusted capital budget. This is R55.0 million less than the R2.4 billion spent on capital over the same period last year.
38.9 per cent and Gauteng at 52.0 per cent to the highest in Limpopo at 82.5 per cent and Northern Cape at 72.6 per cent.
The original health budget, in aggregate, has been increased by R1.6 billion during the provincial adjusted estimates process.
Adjusted health budgets totalling R60.8 billion, comprise 28.3 per cent of total adjusted provincial budgets. Table 6 indicates that health expenditure is at 74.4 per cent or R45.
17.0 per cent or R6.6 billion compared to spending over the same period in 2006/07.
North West and Mpumalanga health have spent the lowest share of their adjusted budgets at 66.8 per cent and 68.0 per cent respectively. The highest shares are recorded in KwaZulu-Natal at 79.7 per cent and Limpopo at 78.2 per cent.
Table 7 indicates that health personnel expenditure is R25.2 billion or 76.1 per cent of the adjusted health personnel budget, an increase of R4.0 billion or 18.9 per cent compared to the R21.2 billion spent over the same period in 2006/07.
Eastern Cape R thousand 4 171 711 3 300 143 Adjusted budget payments as at 31 December 2007 79.1% payments as % of adjusted budget 23.
Free State 2 251 816 1 706 420 75.8% 28.
Northern Cape 794 513 583 211 73.4% 24.
Spending on non-personnel non-capital items in health, which includes medicines, drugs and other current expenditure, is recorded at 75.8 per cent or R16.4 billion of the R21.6 billion adjusted budget. This is an increase of 14.9 per cent or R2.1 billion compared to the R14.3 billion spent over the same period in 2006/07.
Capital expenditure in the health sector is at 60.6 per cent or R3.7 billion. This represents an increase of 14.4 per cent or R460.8 million more than the R3.2 billion spent over the same period last year.
The lowest rate of health capital spending is in Mpumalanga at 37.1 per cent and Northern Cape at 45.0 per cent with Eastern Cape and Free State recording the highest rate of spending at 75.0 per cent and 69.6 per cent respectively.
Adjusted social welfare services budgets, at R6.4 billion, comprise 3.0 per cent of total adjusted provincial budgets.
Provinces registered spending of 72.0 per cent or R4.6 billion of their R6.4 billion adjusted budget (table 9). This represents an increase of 30.1 per cent or R1.1 billion above the R3.5 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 56.0 per cent and Mpumalanga at 63.1 per cent while the highest are Gauteng and Eastern Cape at 83.4 per cent and 73.1 per cent respectively.
Adjusted housing and local government budgets at R12.3 billion comprise 5.7 per cent of total adjusted provincial budgets.
61.8 per cent or R7.6 billion of the R12.3 billion adjusted budget (table 10). This represents an increase of 22.2 per cent or R1.4 billion more than the R6.2 billion spent over the same period last year.
Eastern Cape R thousand 1 234 055 572 130 Adjusted budget payments as at 31 December 2007 46.4% payments as % of adjusted budget 2.
Free State 906 074 458 604 50.6% 4.
46.4 per cent and Free State at 50.
81.3 per cent and Gauteng at 74.4 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 58.8 per cent or R5.1 billion of their R8.7 billion adjusted housing conditional grant budget.
Personnel expenditure ("compensation of employees") is at 74.7 per cent or R88.7 billion of the R118.8 billion adjusted personnel budget. Spending to date is 14.7 per cent or R11.3 billion higher than the R77.4 billion spent over the same period last year.
73.1 per cent and 73.2 per cent respectively while KwaZulu-Natal and Northern Cape recorded the highest rates at 76.1 per cent and 75.5 per cent respectively.
By the end of the third quarter (year to date), provinces had spent 61.4 per cent or R11.8 billion of their R19.1 billion adjusted capital budgets ("payments for capital assets"). This represents an increase of 17.7 per cent or R1.8 billion than the R10.0 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 48.1 per cent and Gauteng at 52.1 per cent and high rates in Free State at 72.9 per cent and Eastern Cape at 69.5 per cent. However, in absolute terms, KwaZulu-Natal has spent the most at R3.1 billion followed by Eastern Cape at R1.7 billion and Gauteng at R1.6 billion.
The biggest adjusted capital budgets in provinces are in public works, roads and transport departments at 37.9 per cent or R7.3 billion of the total adjusted provincial capital budget of R19.1 billion. Spending for these departments is at 69.4 per cent or R5.0 billion which is 45.2 per cent or R1.6 billion more than the R3.5 billion spent last year over the same period.
56.4 per cent and Gauteng at 58.0 per cent, while North West and Free State recorded the highest rates of spending at 80.0 per cent and 76.7 per cent respectively.
The total adjusted conditional grant allocation for all grants is R33.5 billion (including Schedule 4 grants and provincial roll-overs) with health making up the bulk at R11.9 billion.
Gautrain rapid rail link grant - 300 000 16 034 316 034 - 15 684 5.
Division of Revenue Act, 2007 (Act No.
Total excluding Schedule 4 grants expenditure 31 493 722 1 181 836 800 473 33 476 031 23 831 730 11 839 388 60.
Table 15 reflects spending on conditional grant allocations as at 31 December 2007 for all provinces. It excludes spending on general purpose conditional grants (Schedule 4 grants) like 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.
Further Education and Training Colleges Division of Revenue Act, No.
Against the total adjusted allocation of R19.
60.4 per cent or R11.8 billion.
Specific grants that show low rates of spending include Agricultural Disaster Management (5.0 per cent), Community Library Services (38.3 per cent), Forensic Pathology Services (45.9 per cent) and Land Care Programme (46.3 per cent).
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 against the conditional grant portion is recorded at R1.6 billion against the Gautrain Rapid Rail Link conditional grant allocation of R3.0 billion.
Spending on the Further Education and Training College Sector Recapitalisation grant is at 91.9 per cent or R587.5 million and reflects actual transfers from the provincial education departments to the FET colleges.
Table 16 (page 9) indicates the actual amounts transferred by provincial education departments to colleges and amounts spent by colleges, as provided by the national Department of Education. FET colleges' expenditure is at 61.7 per cent or R389.1 million of the R631.1 million transferred from the provincial education departments.
Table 17 (page 10) indicates selected conditional grant spending rates as at 31 December 2007. It further indicates that five or more provinces have spent less than 60 per cent of their adjusted grant budget after the first nine months for the following grants: Land Care Programme, Community Library Services, HIV and Aids (Life Skills Education), Forensic Pathology Services and Integrated Housing and Human Settlement Development.
The table also indicates the number of provinces spending at slightly higher levels between 60 and 70 per cent and greater than 70 per cent of their adjusted 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 71.6 per cent.
Percentages represent actual expenditure of adjusted budget as published in the Division or Revenue Act, 2007 (Act No.1 of 2007) and subsequent gazettes.
Provincial revenue includes adjusted budgeted equitable share allocations of R172.9 billion, adjusted conditional grants of R32.7 billion and adjusted own revenue of R8.2 billion.
75.3 per cent or R161.0 billion of total adjusted budgeted total revenue of R213.7 billion.
National government transferred 75.5 per cent or R130.6 billion of the equitable share and 72.9 per cent or R23.8 billion in conditional grants, to provinces after the first nine months of the current financial year.
After the third quarter (year to date), provinces had collected 81.0 per cent or R6.6 billion of the adjusted budgeted own revenue of R8.2 billion which is 18.0 per cent or R1.0 billion more than what was collected by the end of December for the previous financial year.
Western Cape 1 707 335 1 399 865 82.0% 8.
Total 8 151 180 6 599 585 81.0% 4.
The collection rate varies from 67.3 per cent in Limpopo and 69.8 per cent in Northern Cape, to a high of 107.1 per cent in North West and 98.7 per cent in Mpumalanga. It appears at this stage that most provinces will exceed their collection of budgeted own revenue.