Equitable share allocations to provinces are down R14.9 billion from what was forecast in the 2015 Medium Term Budget Policy Statement (MTBPS), according to the 2016 budget review, released on Wednesday.
The reduced allocations was as a result of government being compelled to shift around money to “fund emerging priorities” and a R11.6 billion trim in support of fiscal consolidation.
The R14.9 billion brought the total medium-term allocation – over three years – to the provincial equitable share to R1.327 trillion.
Equitable shares are determined by formulas that take into account demographics and developmental factors. Often complementing shares are conditional grants which are designed to encourage provinces and municipalities to achieve goals, meet specific criteria, and fulfill certain conditions.
Over the medium-term, KwaZulu-Natal would received the highest provincial equitable share, followed by Gauteng, and the Eastern Cape.
The top three priorities in regards to direct conditional grants over the same three-year period – in order – were human settlements development, comprehensive HIV and AIDS and tuberculosis treatment, and spending on education infrastructure.
Despite the shortfall in share, the budget documents stated that allocations would still be high because substantial amounts were added to the provincial equitable share in the 2015 Medium Term Budget Policy Statement (MTBPS) in order to assist provinces to fund higher than expected salaries following the public-sector wage settlement.
To manage the shortfall in provincial equitable share, a joint action plan, agreed to by provincial MECs for Finance would be put in place. This would aim to “address expenditure management and service delivery challenges”.
Key measures to be pursued in line with the joint action plan included containment of administrative personnel expenditure, improved revenue collection, closure of redundant programmes, and intensification of cost-containment measures.
A reduction in the number of non-critical provincial employees had already assisted in offsetting growth in wage costs. In 2012, there were 920,826 people employed in provincial government positions. In 2015, this number was down to just under 900,000.
Provinces would also be required to look at ways in which they could raise their own, additional budget in an environment where wages and basic service provision costs were increasing. Extra cash could come from increasing vehicle licence and gambling licence fees, as well as service fees, the budget review said.
– African News Agency (ANA)
