The fact that KwaZulu-Natal (KZN) has to self-fund R6.3bn from internal sources, in order to provide for the Covid-19 relief programme, has left our province in an extremely vulnerable financial position. It is also evident that with the adoption of the 2020/21 Special Adjustments Budget, KZN is entering into an unchartered fiscal space – one which will test the limits of the effective functioning of the provincial state.
The reality is that there is little or no fall back mechanism, nor is there any chance of a bail out by national government. there is no chance of a bail out. If ANC-led provincial government gets it wrong, it will only have itself to blame. Finance Minister, Tito Mboweni, recently highlighted the fault lines when he stated, “Our public finances which reached an unsustainable position before the pandemic, are now overstretched. We will face tough choices in the coming month. We will have to make painful sacrifices and must be resolute in implementing desperately needed reforms.”
No matter how KZN slices up the fiscal pie, it will all come to nothing without the necessary vehicle to effectively utilize the allocations – everything else is moot and frankly irrelevant.
For some time now, the Democratic Alliance in KZN has been a proponent of developing an ethical capable state, or indicating the lack thereof. During the previous parliamentary term, this was in fact my mantra. Naturally, its merits were shrugged off by the ANC in this province even denying this challenge. They also went so far as to accuse me of being a prophet of doom, trying to score cheap political points and of course – the ANC’s fall back stance – nothing but a racist.
It is therefore interesting to note that his Excellency President Cyril Ramaphosa, also President of the ANC, in January of this year admitted that in all spheres of government the state lacks the capacity to meet people’s needs. He was quoted as saying, “A capable state starts with people who work in it. Officials and managers must possess the right financial and technical skills and other expertise. We are committed to end the practice of poorly qualified individuals being parachuted into positions of authority through political patronage. There should be consequences for all those in public service who do not do their work.”
I have to say that I feel vindicated. When it comes from the President, it cannot be labelled as the utterings of a naysayer, a political opportunist or a racist!
The question is – now that KZN has an adjusted budget, can our state implement it efficiently and effectively? And – is our provincial government listening to the President and building a capable state? Pre-Covid-19 and it was already clear that not all was good in the state of KZN, with a disturbing phenomenon – serious contravention of the Public Finance Management Act (PFMA)- having crept back into at least four Departments during the 2019/20 financial year. A sad regression indeed.
This applies specifically to the contravention of S43(4)(a) which has seen Departments utilize specifically and exclusively appropriated funds to accommodate spending pressures in other areas. In simple terms, this is a direct result of negative cash flow and spending pressure. Further simplification is that these specifically and exclusively appropriated funds are used to fund operations. In the past, the provincial government put a stop to this through the cash blocking system. However, it seems that some Departments may have found a loophole to this system – by just paying salaries.
Departments found guilty of contravening this section of the PFMA will face “first charges” in the outer year’s budget. So, even though KZN’s Education Department receives additional funds in the adjusted budget, it will have to repay any contravention of S43(4)(a). Then there are the province’s Departments of Public Works and Social Development – both of which had their budgets reduced in the adjustment – which could now face additional first charges, compounding the situation in an already fiscally challenging climate.
To date, KZN has shown little indication of trying to transverse the fiscal quagmire by building the capable and ethical state needed to implement the adjusted budget. The DA is also not convinced that moving Forensic Investigations from Treasury to the Office of the Premier is in the best interests of transparency and effective governance, a move which took place very quietly and under the radar even though Treasury appeared to be doing a fine job.
One of the reasons I raise this is due to what appears to be an unresolved matter relating to the Director-General within the Office of the Premier, Dr Mkhize. The Public Protector (PP), Busisiwe Mkhwebane implicated Dr Mkhize in a R70million tender scandal relating to a Nelson Mandela memorial service while she was D-G in Mumalanga. The PP went a step further and recommended that Premier Sihle Zikalala “take appropriate action” against Mkhize.
The DA is not sure whether this was ever complied with? I could be wrong but today would be a good time to set the record straight. Then of course, there is the corridor talk that the Premier is not in control of his own Department and that little or no vetting of appointed officials is taking place. Perhaps the Premier can elaborate on this claim?
Today, the DA’s challenge to the ANC is this – if the ANC is truly committed to cleaning up our province and creating an ethical capable state, then it must allow a member of the opposition to chair KZN’s new ad hoc committee which is to be tasked with forensic investigations. This is already being done in the Western Cape, where the ANC, as opposition in that province, chairs SCOPA. If the ANC in KZN has nothing to hide, then it should have nothing to fear.