A thorough interrogation of the 2024 Division of Revenue Act (DORA) tells us that the chickens have finally come home to roost. Fiscally, KwaZulu-Natal (KZN) is in a state of disaster with three key departments – Health, Education and Social Development – now in the precarious position of not being able to meet their annual commitment on Compensation of Employees (CoE).
A quick calculation indicates that 77% of the equitable share allocation and own revenue is spent on CoE. The provincial equitable share growth certainly does not meet negotiated wage agreement, so the equitable share is reduced over the Medium-Term Expenditure Framework (MTEF) with reprioritised funding to cover the public service wage agreement.
This means less money spent on service delivery and more spent on government employee salaries. Equally alarming is the revised estimate on 2023/24 salaries of R95.57million, while the current annual budget is R95million.
KZN’s provincial government has become nothing more than an employment agency, with little or no focus on service delivery. What the ANC has managed to achieve is a political patronage system at the expense of service delivery.
This is an ANC created crisis. The writing has been on the wall for some time now with National Treasury sending out a strong message. Edgar Sishi the Head of Treasury’s budget office had the following to say: “An increase in government borrowing and spending hasn’t translated into economic growth, more tax revenue, or a narrower budget gap”. KZN is down by more than R21 billion against the revenue projection “so fiscal measures have to be taken if we are going to maintain our policy targets of reining in the debt and reining in interest costs.”
Despite this, during the past five years, civil servants have earned almost R3 billion in incentives – including performance bonuses and 13th cheques. This was revealed by Public Service and Administration Minister Noxolo Kiviet.
Between 2019 and 2024, national departments spent more than R726 million on staff performance rewards, with R321 million disbursed in 2022 alone. Provincial administrations, accounted for the largest share of bonuses, totalling R2.2 billion over the past five years. In 2021, during the economic recession due to Covid-19, R819 million was released in bonuses by provinces.
Since 2019, almost R129 million has been paid to about 400 government officials suspended on full pay. Additionally, government spent more than R42 million on 56 luxury vehicles for 23 ministers and their deputies to use for official purposes.
The ANC remains the stumbling block to fiscal consolidation. Election day on 29 May will offer KZN’s people a solution to stabilizing the provincial fiscus – that solution is only the DA.