There can be no doubt that South Africa and KwaZulu-Natal (KZN) find themselves in a vicious cycle created by sluggish or stagnant economic growth. The result is a reduction in collectible revenue by the state which has led government to raise taxes to balance the books, leading to snail like economic growth. Unable to cope, the South African government has taken on debt to cope. This added burden robs South Africans of R1 in every R5.
Sob story bailouts, such as SAA and Eskom, have not helped the situation. With a lot less cash to go around, National Treasury have been forced to slash KZN’s equitable share – money needed to achieve its service delivery goals. The collective shock to most provincial departments and entities has been palpable. While this places many of them in a tough position, they simply have to make do with less. But it can be done.
Financial management, in its essence, is remarkably simple;
• Step 1: The department receives revenue
• Step 2: It sits down with a lot of really clever people and work out the most effective way to get the most bang for its buck for KZN’s people
• Step 3: Then ruthless and merciless managers step in and ensure that Step 2 is followed down to the last detail – which includes spending every cent.
Legislature Members will note that the historically popular steps of theft, corruption and waste are missing from this plan. Simply put, when you remove the hyenas of corruption and replace them with honest officials, bound by a sense of professional pride, the results are almost immediate.
It is clear from the MECs budget and the DA’s expectations, that there is a need to change methodology and that tough decisions have to be made going forward. The DA welcomes the focus on the trifecta of irregular, fruitless and wasteful expenditure by KZN government departments – which has been outlawed by Finance MEC, Francois Rodgers – along with a stern warning to avoid going into debt at all costs. The MEC has backed his words with actions by closing a defunct office in Durban and by not insisting on the fanciest car in the car park. He also has plans to reduce S&T claims by a dramatic 25%.
The MEC for Public Works has also saved money by trimming the frills. His budget presentation this week is costing approximately R300, as opposed to R228 000 spent last year by his predecessor. Radio advertising, banners, glossy folders and the like were replaced by a simple report printed on simple paper.
In short, these MECs are giving life to one simple truth: When you are in a hole, stop digging. These amounts may seem small but when you add all the savings over a period of time, they will amount to large sums of money that can be spent on the core business of the department.
The DA welcomes the prioritisation of decent funding for critical areas including Health, Education and Social Development. This spells good news for KZN’s people as does Treasury’s offer to assist with the burdensome wage bill. We are also pleased to note that grants focused on job stimulation, health and nutrition and roads have not been cut too significantly. Regrettably, the wage agreement continues to affect both grants for housing and informal settlement upgrades. The decent budget allocation to fix KZN’s often ailing infrastructure is also encouraging. It is now critical that this funding be carefully monitored in order to stamp out any corruption.
The other side of getting out of fiscal hole lies in making more money. This is an unavoidable requirement that requires imagination and innovation. The DA reiterates its call to MEC Rodgers and his team to focus on stimulating income generation in KZN by incorporating entities such as Ezemvelo KZN Wildlife (EKZNW), the KZN Gaming and Betting Board and the KZN Liquor Board under the Treasury umbrella.
These entities require efficient management. A simple example is that it currently takes more than a year to get a liquor licence – a licence that will allow a business to flourish, employ people and pay more taxes. This is the start of a virtuous cycle as opposed to a vicious cycle.
The DA also welcomes the move by the MEC to regulate licensing fees by volume solely, not at a flat rate that does not reflect the reality of the market. This will ease the burden on the small business owner. In terms of Ezemvelo KZN Wildlife – a public private partnership in regards to this entity could be a game changer in the tourism sector. All income generators.
The task ahead of MEC Rodgers will not be an easy one. He faces momentous decisions in order to get KZN’s finances back on track. The DA will continue to monitor progress in this regard and offer solutions as we begin the hard work of making our province financially viable.