The third 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 January 2007, covers spending for the first nine months of the 2006/07 financial year, which ended 31 December 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, and submitted to the National Treasury by 22 January 2007. 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 R1,6 billion allocated to provinces for conditional grants in the 2006 Adjusted Estimates of National Expenditure and additional funding by provinces of almost R3,8 billion, which includes roll-overs from the previous financial year.
In aggregate, provinces have spent 69,9 per cent or R131,7 billion of their combined adjusted budgets of R188,4 billion for the nine months period ended 31 December 2006. This represents a spending increase year-on-year of 13,9 per cent or R16,0 billion higher than for the same period last year when provinces had spent R115,6 billion.
Education expenditure totalled R58,0 billion or 72,3 per cent of the R80,2 billion adjusted budget for education, and remains the largest item on provincial budgets (42,6 per cent). The spending pattern reflects a R5,1 billion or 9,5 per cent increase over the same period last year.
Health expenditure totalled R38,7 billion or 72,7 per cent of the R53,2 billion total adjusted budget for health and with the shifting of social security it becomes the second largest item after education on provincial budgets (28,3 per cent). The spending pattern reflects a 15,5 per cent or R5,2 billion increase compared with the same period in 2005/06.
Provincial social welfare services departments have spent 66,5 per cent or R3,5 billion of their adjusted budgets of R5,3 billion for the nine months ended 31 December 2006.
Total personnel expenditure in aggregate is at 73,5 per cent or R77,4 billion of the R105,3 billion personnel adjusted budget which includes the salary increases effected from 01 July 2006.
In aggregate, provinces spent 61,4 per cent or nearly R10,0 billion of their R16,3 billion combined capital adjusted budgets between the various sectors. This is a significant improvement of 34,7 per cent or R2,6 billion more than the R7,4 billion spent over the same period last year.
At R2,4 billion (of the R3,8 billion adjusted budget) or 61,4 per cent after nine months of the financial year, provincial education departments' spending on capital is in line with the total provincial capital spending average of 61,4 per cent.
Health provincial departments, year-on-year, significantly improved on spending on capital by spending 63,2 per cent or R3,2 billion against their R5,1 billion health capital adjusted budgets, which is 52,2 per cent or R1,1 billion more than the same period for 2005/06.
The highest share of provincial capital budgets is for public works, roads and transport departments at 34,0 per cent. The sector spent 62,7 per cent or R3,5 billion against its combined capital adjusted budgets of R5,5 billion.
Provincial own revenue collected thus far is at 79,5 per cent or R5,6 billion of the total own revenue adjusted budget of R7,0 billion. National government has transferred R114,6 billion of the equitable share and R20,2 billion in conditional grants to provinces, during the nine months of the 2006/07 financial year.
The adjusted budgeted figures for provinces are based on the 2006 Adjusted Estimates of Provincial Expenditure tabled in the various provincial legislatures during November and early December 2006. The information presented here is mostly restricted to financial information only. Work is under way to improve the availability and quality of the data in service delivery sectors of departments for reporting purposes.
Table 1 indicates that provinces have spent 69,9 per cent or R131,7 billion of adjusted budgeted expenditure after nine months of the current financial year. Spending to date is at a marginally lower level in percentage terms against spending over the same period in the 2005/06 financial year (70,6 per cent). However, in nominal terms, spending is 13,9 per cent or R16,0 billion higher than for the same period last year when provinces had spent R115,6 billion.
Between provinces, spending ranges from the lowest share of 66,5 per cent in Gauteng and 68,7 per cent in North West, to the highest at 74,2 per cent in Northern Cape and 73,1 per cent in Free State.
Social services adjusted budgets total R138,8 billion and comprise 73,7 per cent of the total R188,4 billion provincial adjusted budgets in 2006/07. The function shift changes the composition of provincial expenditure with the social services share to total provincial budgets now becoming 73,7 per cent in 2006/07, while non-social services rise to 26,3 per cent. Significantly, the proportion that goes to capital is now 8,6 per cent.
Table 2 indicates that provinces spent 72,2 per cent or R100,2 billion of the adjusted budget of R138,8 billion for the three social services (education, health and social welfare services). This is 12,2 per cent or R10,9 billion more than spending over the same period in 2005/06.
Education adjusted budgets of R80,2 billion comprise 42,6 per cent of total provincial adjusted budgets. Table 3 indicates that education expenditure is at 72,3 per cent or R58,0 billion of the total education adjusted budget, an increase of 9,5 per cent or R5,1 billion compared to the R53,0 billion spent over the same period in 2005/06.
Spending between provinces for education ranges from the lowest rate in Gauteng at 68,8 per cent, Mpumalanga and North West both at 71,5 per cent to the highest in KwaZulu-Natal at 75,2 per cent and Northern Cape at 75,1 per cent.
The bulk of education expenditure is on personnel (80,4 per cent), amounting to 74,1 per cent or R46,6 billion of the education personnel adjusted budgets of R62,9 billion.
Spending on personnel between provinces ranges from the lowest in Gauteng at 69,1 per cent and Mpumalanga at 72,6 per cent, to the highest in Eastern Cape at 76,9 per cent and Limpopo at 76,2 per cent.
Spending on goods and services (mostly learner support material) in education is recorded at 56,0 per cent or R5,1 billion of the R9,0 billion adjusted budget. It comprises 11,3 per cent of total provincial education adjusted budgets, which is 1,3 per cent more than the share in 2005/06. Spending on learner support material (textbooks, etc.) is expected to increase rapidly during January 2007 due to the commencing of the new school year.
Education capital expenditure is at 61,4 per cent or R2,4 billion of the R3,8 billion adjusted budget. This is significantly higher at 54,9 per cent or R834,7 million more than the R1,5 billion spent for the same period last year.
Spending on capital between provinces ranges from the lowest in Western Cape at 49,5 per cent and KwaZulu-Natal at 50,8 per cent to the highest in Free State at 76,6 per cent and Northern Cape at 73,6 per cent.
Education capital expenditure reflects wide fluctuations compared to the same period last year. Some provinces show very significant improvements while others reflect slow progress.
Health adjusted budgets totalling R53,2 billion comprise 28,3 per cent of total provincial adjusted budgets. Table 6 indicates that health expenditure is at 72,7 per cent or R38,7 billion of the total health adjusted budget, representing an increase of 15,5 per cent or R5,2 billion compared to spending after the first nine months of the 2005/06 financial year.
North West and Eastern Cape health have spent the lowest share of their adjusted budgets at 68,1 per cent and 69,1 per cent respectively. The highest spending rate is recorded in Northern Cape at 77,6 per cent and Gauteng at 76,3 per cent.
Table 7 indicates that health personnel expenditure is R21,2 billion or 73,6 per cent of the health personnel adjusted budget, an increase of R2,4 billion or 12,5 per cent compared to the R18,9 billion spent over the same period in 2005/06.
Spending on non-personnel non-capital items in health, which includes medicines, drugs and other current expenditure is recorded at 73,8 per cent or R14,3 billion of the R19,3 billion adjusted budget, an increase of 13,9 per cent or R1,7 billion compared to the R12,5 billion spent over the same period in 2005/06.
Capital expenditure in the health sector is at 63,2 per cent or R3,2 billion. This is significantly higher at 52,2 per cent or R1,1 billion more than the R2,1 billion 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 54,4 per cent and KwaZulu-Natal at 59,3 per cent with Gauteng and Mpumalanga recording the highest rate of spending at 70,9 per cent and 67,9 per cent respectively.
Social welfare services adjusted budgets at R5,3 billion, comprise 2,8 per cent of total provincial adjusted budgets.
Provinces registered spending of 66,5 per cent or R3,5 billion of their R5,3 billion adjusted budget (Table 9).
R610,3 million above the R2,9 billion spent over the same period last year (excluding social assistance grants).
Between provinces, there are varying degrees of spending with the lowest being in North West at 55,7 per cent and KwaZulu-Natal at 62,2 per cent, while the highest being Eastern Cape at 72,4 per cent and Gauteng at 71,4 per cent.
Housing and local government adjusted budgets at R10,4 billion comprise 5,5 per cent of total provincial adjusted budgets.
Housing and local government spending as at 31 December 2006 is at 59,5 per cent or R6,2 billion of the R10,4 billion adjusted budget (Table 10). This represents an increase of 12,7 per cent or R696,8 million on the R5,5 billion spent over the same period last year.
Spending varies between provinces with the lowest being in Eastern Cape at 49,3 per cent and Free State at 52,3 per cent while the highest being Northern Cape at 74,6 per cent and North West at 68,9 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 61,2 per cent or R4,2 billion of their R6,8 billion housing conditional grant. Spending on housing is higher by 13,4 per cent or R493,8 million over the same period last year.
Personnel expenditure ("compensation of employees") is at 73,5 per cent or R77,4 billion of the R105,3 billion adjusted budget. Spending to date is 8,1 per cent or R5,8 billion higher than the R71,6 billion spent last year.
Mpumalanga at 71,6 per cent and Gauteng at 71,7 per cent recorded the lowest rate of personnel spending while Limpopo and Eastern Cape recorded the highest rates at 75,3 per cent and 74,9 per cent respectively.
By 31 December 2006, provinces have spent 61,4 per cent or nearly R10,0 billion of their R16,3 billion capital adjusted budgets ("payments for capital assets"). This is significantly higher (34,7 per cent or R2,6 billion) than the R7,4 billion spent over the same period last year.
Table 13 also provides capital spending information by province, which indicates low rates of spending in Western Cape at 58,3 per cent and KwaZulu-Natal at 59,1 per cent to the highest in Free State at 80,9 per cent and Northern Cape at 69,8 per cent. However, in absolute terms, KwaZulu-Natal has spent the most at R2,1 billion followed by Gauteng at R1,6 billion and Eastern Cape at R1,2 billion.
The biggest capital budgets in provinces are in public works, roads and transport departments at 34,0 per cent or R5,5 billion of the total provincial capital adjusted budget of R16,3 billion. Spending for these departments is at 62,7 per cent or R3,5 billion which is 11,1 per cent or R345,7 million more than the R3,1 billion spent last year over the same period.
Between provinces, the lowest rate of spending is recorded in Limpopo at 38,2 per cent and Gauteng at 51,4 per cent, whilst Free State and North West recorded the highest rates of spending at 99,3 per cent and 72,9 per cent respectively.
The total adjusted conditional grant allocation for all grants is R28,3 billion (including Schedule 4 grants and provincial roll-overs) with health making up the bulk at R10,6 billion.
Table 15 reflects spending as at 31 December 2006 on conditional grant allocations 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 Provincial Infrastructure grants, 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, 2006 (Act No. 2 of 2006).
National Treasury 4 118 119 865 379 66 951 5 050 449 3 586 501 1.
Against the total adjusted allocation of R16,4 billion, which excludes Schedule 4 grants, the rate of conditional grants spending amounts to 50,5 per cent or R8,3 billion.
Specific grants that show low rates of spending include Agricultural Disaster Management (23,8 per cent), Forensic Pathology Services (27,0 per cent), Land Care Programme (47,5 per cent) and Mass Sport and Recreation Participation Programme (51,3 per cent).
Spending on the Further Education and Training College Sector Recapitalisation grant is at 97,0 per cent or R456,0 million and reflects actual transfers from the provincial education departments to the FET colleges (Table 15).
Table 17 overleaf 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 41,1 per cent or R187,4 million of the R456,0 million transferred from the provincial education departments.
Table 16 indicates selected conditional grant spending rates as at 31 December 2006. It further indicates that five or more provinces have spent less than 60 per cent of their grant budget after nine months for the following grants: Land Care Programme, Forensic Pathology Services and Integrated Housing and Human Settlement grant.
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 conditional grant budgets.
Although the rate of spending is encouraging and reflects an improvement over previous financial years, overall spending still lies below average with the risk of possible underspending.
Percentages represent actual expenditure of adjusted budget as published in the Division or Revenue Act, 2006 (Act No.2 of 2006) and subsequent gazettes.
R thousand Division of Revenue Act, No.
Provincial revenue includes budgeted equitable share allocations of R150,8 billion, adjusted conditional grant allocations of R27,6 billion and adjusted own revenue allocations of R7,0 billion. The total provincial revenue (equitable share, conditional grants and provincial own revenue) to date is recorded at 75,8 per cent or R140,4 billion of total adjusted budgeted total revenue of R185,3 billion.
National government transferred 76,0 per cent or R114,6 billion of the equitable share, and 73,5 per cent or R20,2 billion in conditional grants, to provinces as at 31 December 2006 of the current financial year.
After nine months, provinces have collected 79,5 per cent or nearly R5,6 billion of the adjusted budgeted own revenue of R7,0 billion which is 7,7 per cent or R399,8 million more than what was collected for the nine months of the previous financial year.
The collection rate varies from 64,8 per cent in Northern Cape and 66,1 per cent in Limpopo, to a high of 86,1 per cent in Gauteng and 85,1 per cent in Mpumalanga. It appears at this stage that most provinces will exceed their collection of budgeted own revenue.