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Intergovernmental Fiscal Review and 2003 Budget Analysis

This briefing on the Intergovernmental Fiscal System highlights the distinct functions across three spheres of government in South Africa and the significant budget allocations at the provincial level—R165.2 billion for provinces, R108.9 billion for national, and R72 billion for local government. It examines trends from the 2003 provincial budgets, revealing insights into critical sectors like education and health, and emphasizes the importance of these budgets for parliamentary hearings and policy analysis. The document serves as a crucial resource for at least the next seven years of budget planning.

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Intergovernmental Fiscal Review and 2003 Budget Analysis

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  1. Briefing on IGFR Thursday 10 April 2003 Parktonian Presentation Ismail Momoniat

  2. Intergovt Fiscal System • 3 spheres of govt, all with different fncs • Biggest budgets at provincial level • Prov (R165,2 bn), nat(108,9 bn), LG (R72 bn) • 2003 budget non-int allocation of R280 bn • R171 bn to prov (R159 bn) and LG (R12 bn) • Provinces and munis have own budgets • Allocate national transfers plus own revenue • Prov table budgets after national budget

  3. Intergovt Fiscal Review (IGFR) • Covers 2003 prov budgets, 2002 LG budgets and trends • Also cover past and future budgets (7 years) • Provides consolidated info • Allows comparison between provinces and municipalities • Covers 8 sectors and personnel • Critical document to inform on service delivery

  4. 2003 IGFR • IGFR published earlier • Main reason is to enable Parliament and provincial legislatures to take into account for their budget hearings • Challenge is that info provided will be used by portfolio and select committees • Also for policy-analysts, public etc • Assists shaping 2004 budget and Minmecs • Info to be used in next few months

  5. Provincial Budgets • 2003 Budget consolidated and made comparable by function • 2003 budget R165,2 bn (nat rev R160 bn) • outer years R181,0 bn and R198,4 bn • biggest budget KZN R32,0 bn, smallest NC (R3,9 bn) • social services 80,9% • personnel 49,1% • Capital 11,3% at R18,6 bn, to R22,1 bn in 2005/06 • Non-personnel non-capex R65,2 bn or 39,5%

  6. Local Govt Budgets • Covers 2002-03 municipal budgets • different financial year for munis, starts 1 July • Totals R74,5 bn, with about R13,1 bn capex • Three big budgets: Jhb (R10,9 bn), CT (R9,8 bn), eThekwini (Durban)(R9,3 bn) • Variance in per capita budgets (R4161 Jhb) • Disturbing rise in share of personnel to 32% of operating expenditure (or 45% w/0 bulk) • Problem:non-collection & non-billed losses

  7. Education (2003/04) • Largest single component of provincial budgets 35,6% • R58,9 billion combined budget • R49 billion personnel or 83,7% • Public ordinary schools R48,8 billion (83%) • 11,9 million learners • 364 000 teachers (86% • 27 000 schools • Non-personnel expenditure (capital and NPNC) • NPNC per child, LSM (textbooks) per child

  8. Health • Health 22,3% of total budget • Two types of provinces • those with central hospitals have v high share • those without central hospitals • Personnel share 57,6% (216 092 staff) • Capital share 8,2% • Non-personnel non-capex share rising • Primary health care (R6bn) • Local govt R1,1 bn in metros (3500 staff) • Distribution of doctors between provinces

  9. Social Development • One of great achievements of govt • 2,5 mil beneficiaries in April 1997 • 5,6 million in March 2003 • Rapidly rising share of budget • from 18,9% in 2000/01 to 21,6% in 2002/02 • Rises to 22,9 % in 2003/04, and 25,8% in 2005/06 • EC highest share 26,7%, lowest Gauteng 17,0 % • Less info on social welfare services

  10. Agriculture and Land • Agriculture accounts for 1,9 percent of provincial budgets • Provinces that incorporated former homelands spend between 2,4% and 3,8% • Personnel take up 75% of agriculture budgets • Total land transferred through restitution and redistribution approx 2 m hectares

  11. Roads and Transport • All spheres have some responsibility for: • Roads (Munis R1,8 bn) • Public transport • Traffic Management and safety • Proclaimed road network =532 000km • 63 631km or 16,2 % paved • Provincial roads – 348,527km (>80% not paved) • Roads account for 3,1% of prov budgets • National Transport provides for transport Subsidies – take 60% of its budget • Provinces project to spent R851m on traffic management – rises to about R1 bn 05/06

  12. Housing • 1,5 mil housing opportunities since 1994 • Budget rises to R4,2 bn in 2003/04 • No of subsidies per year over 220 000 • Is this rate slowing down in 2002/03? • Types of subsidies • No of houses transferred over 1 million • Poor collection of rental from housing stock • Local Govt and Housing

  13. Personnel • 1,6 million personnel in public sector • Provinces have over 700 000 • Education 426 913 and Health (216 092) • LG around 210 000 • N govt safety and security (131 560), defence (75 290), justice (15 562), water (9843) • Approx 150 000 in public entities • Problem of superneumeries • LG personnel expenditure rising, non-wage

  14. Water • Role of DWAF, water boards, municipalities • Budgets: Dwaf (R3,1 bn), water boards (R4 bn) and municipalities (R11 bn) • Personnel: DWAF (9900), water boards (6800) and municipalities (12 000) • Free basic services • Price setting process • Water losses

  15. Electricity • Role of 3 spheres of govt (generation, transmission, distribution) • Distribution (Eskom and municipalities) • 22,8% of urban homes not electrified, 50,9% of rural households • Great success of electrification prog • Impact of restructuring on local govt

  16. Annexures • Annexure D: Governance Budgets (Parliament and Provincial legislatures) • Annexure E: Provincial Public Entities • Annexure F: Audit Outcomes

  17. Conclusion • IGFR provides valuable info on provincial and local govt budget trends • Covers 8 key sectors and personnel • Need for deeper coverage over next two months

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