KZN General Budget Debate
by Dr LPHM Mtshali MPL
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KwaZulu-Natal Legislature
Madam Speaker
While we in the Official Opposition applaud the decision to cut the provincial budget by 7.5 percent over the next three years in anticipation of falling tax revenue due to the global economic downturn and the domestic recession, we remain unconvinced by the Hon. Finance MEC's maiden budget speech which proposed that KwaZulu Natal should spend its way out of the current recession. Spending without acceptable safeguards against government waste runs the risk of incurring an even bigger than the current overdraft.
Even more significant is the risk that this government's ambitious new expenditure plans will pass unreasonable economic costs onto future generations, making economic development at current levels unsustainable in the future. Every day new indicators emerge to reveal the depth of the economic crisis we find ourselves in. In the first quarter of 2009 our economy shrunk by 6.4 percent, manufacturing production has declined by 21.6 percent and exports have plunged by 55 percent in value terms.
The most immediate consequence of this decline in economic activity is its effect on tax revenue. Treasury has already fallen R10-billion short in the first two-and-a-half months of this financial year and tax revenue is down 11.3 percent year-on-year. If tax collection continues at these lower rates - and there is reason to believe the rate could worsen since corporate taxes have not been assessed yet - then the tax revenue for this financial year could fall short of estimates between R40-billion and R100-billion. The 7.5 percent cut across the departmental budgets may yet prove insufficient.
The background of this economic crisis, however, does not paint a full picture. We in the Official Opposition did not feel that the chronology of the sub-prime mortgage crisis in the USA was an appropriate introduction to a budget speech for a province that is currently sitting with a R3-billion overdraft of its own making. The massive overdraft was acknowledged only marginally. We have yet to hear in detail how this overdraft was accumulated. What is clear today is that its main culprit was the Department of Health and that it is the consequence of reckless spending as well as misplaced priorities.
We were rather surprised that Health, which had previously overspent most, was given scant attention - mention of mere five sentences in the budget speech. The Health Department's woes have worsened ever since the budget speech with national Parliament now squeezing it for R169-million it owes the National Health Laboratory Service. The laboratory service provides essential services to 80 percent of our population in testing for HIV and Aids, malaria, TB, cancer, occupational health and malnutrition, among other diseases.
The department is facing ongoing challenges in the day-to-day management of state hospitals and other medical facilities. The crisis has manifested itself in two new developments since the budget speech. We went through a medical doctors' strike which has highlighted the most pertinent challenges faced by that profession. And we witnessed a crisis - first denied by the government - at Edendale hospital which is KwaZulu Natal's flagship medical facility for the provision of antiretroviral therapy, currently serving 11 000 HIV patients.
With our tax revenue plummeting and the government's proven inability to manage the existing healthcare system, we can only urge caution against hasty implementation of the National Health Insurance scheme. While we support such a scheme in principle given the obvious benefit of extending health services to all sections of our population, we must not ignore the warnings that NHI, if managed along the same lines as the current system, will prove an unworkable and unaffordable solution that will not improve health services despite massive increases in expenditure.
Education, which is the second biggest offender in terms of fiscal overspending and for which the current MEC for Finance was directly responsible as MEC, did receive marginally more attention in the budget speech. Here too the challenges are overwhelming. Apart from partial success such as the Masifundisane adult literacy programme, for which the government must be given credit, the fact remains that KwaZulu Natal's matric pass rate is on the skids and the infrastructure backlog in education stubbornly persists.
The IFP agrees wholeheartedly with the Hon.
MEC's declared urgency in dealing with the challenges of food
security and skills development despite the recession. The question
is how the new ANC government can advance food security and skills
development in the middle of a recession and amid a budget overdraft
when its predecessor was not able to deliver either during an
economic boom. We will watch this part of the government's programme
closely as we pledge our support in advancing the food security and
skills development agenda. The optimal management of the Department of Agriculture and Environmental Affairs is key to these twin objectives in KwaZulu Natal. During the previous parliament, this was one of the worst run government departments and we have yet to appraise the full extent of the mismanagement, fraud and corruption that took place under its auspices. We urge the government to live up to its declared spirit of openness and table in this House the long overdue forensic audit report into mismanagement at agriculture.
The Department of Agriculture needs a new ethos and this new government must seize the opportunity afforded to it by its fresh mandate to start anew. The grim reality of the past fifteen years is that many landless and previously dispossessed people feel overlooked in the new democratic dispensation. We need to speed up land reform but to do so with legally justifiable laws, not ones like the Expropriation Bill, whose primary goal was to undermine the confidence of local and foreign investors.
We also need to provide new land owners and emerging farmers with adequate financial and material support. Yes, credit is in short supply due to the recession but what we have available we have to use all the more wisely.
Surveys show that more than a half of land reform projects are doomed to failure because the state does not provide adequate support to their beneficiaries. Adequate support for our farming communities - the emerging as well as the established ones - is also essential for employment and food security.
In order to address the challenges of these and other departments, this government must ensure that vacant posts are filled with honest, efficient and properly qualified people. Again, the recent election has given the government a renewed mandate which it must seize to act decisively. We must put an end to the policy of 'cadre deployment' when our people struggle to find work, go hungry, continue to die of preventable diseases and remain homeless, landless and illiterate.
As far as the existing civil service is concerned, the problems of financial mismanagement in various departments, highlighted year after year by the Auditor-General, often result from the failure on the part of these departments to sign performance contracts with senior management staff. A public service that cannot measure the performance of its own officials, cannot hold them accountable for failures. At the same time, such a public service cannot acknowledge the hard work done by the many dedicated public servants. This has to change.
On the whole, we in the Official Opposition applaud the Hon. MEC's call for spending wisely but, at the same time, we continue to warn that the record of the ANC government points to the contrary. What we saw in KwaZulu Natal between 2004 and 2009 could hardly be termed as fiscal prudence as many government departments had abandoned their core functions and spent wildly on peripheral projects. The Hon. MEC is now placing an overdue emphasis on essential services as opposed to nice-to-haves and in doing so she has our full support.
I thank you.
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