KZN has been given a massive R1.1bn cut in its budget from the National Treasury as a result of a decline in its population.
|||Durban - KwaZulu-Natal has had to cope with a R1.1 billion cut in its budget allocation from the National Treasury as a result of a decline in its population, which was outstripped by Gauteng in Census 2011.
Gauteng now has a population of 12 million, with KZN coming second at 10 million.
The size of the population is a key factor in determining the equitable allocations to the provinces by the National Treasury.
For the 2013/14 financial year, the KZN equitable allocation from the National Treasury is R88bn.
However, with R2bn extra, from the province’s own coffers, the money available is R90bn. Of this, the province has allocated R89bn and kept R1bn in reserve for unforeseen circumstances.
The latest allocations tabled by KZN Finance MEC Ina Cronje indicated that the provincial bank account would undergo a massive drop over the next three years.
For the 2013/14 financial year, the KZN budget will decline by R1.1bn, in 2014/15 this will be R2.3bn and in 2015/16 it will be R3.2bn.
Smiso Magagula, head of the provincial Treasury, said that the National Treasury also imposed a 1 percent reduction of allocation to all government agencies. This reduction, brought about by the decline in national revenue collection, would add further pressure to provincial finances.
The impact of the reduction in allocation would be felt most acutely by the critical service departments of education, health and transport.
For the current financial year, the Education Department would undergo a R456m decline, increasing to R946m in 2014/15 and into a whopping R1.1bn in 2015/16.
However, the National Treasury had made provisions to enable KZN to adjust to its smaller budget.
For the 2013/14 financial year, KZN had been allocated an extra R289m, in 2014/15 this would be R656m and in 2015/16 it would be R1.2bn.
This extra allocation would stop after three years and was only to help the province manage the swelling budget cuts.
Cronje put on a brave face yesterday, saying that despite the reduction, the province was not in crisis.
“Times are tough, yes. But we are tough enough to come through. We have managed to put money in areas of service delivery despite these massive reductions,” she said.
The budget was welcomed by political parties and organised business.
The IFP, the official opposition in KZN, said it was “a delicate balancing act”.
“The new and existing cost-saving measures must be implemented consistently, monitored vigorously and communicated adequately so buy-in from every civil servant in KZN is secured,” said IFP spokesman Roman Liptak.
The DA’s Johann Krog said it was a “no-nonsense budget”. The actual implementation would be the acid test, he said.
Krog said that one of the DA’s main concerns - which the MEC had failed to deal with - was fraud, which needed to be addressed at the time of tender.
Durban Chamber of Commerce and Industry chief executive officer Andrew Layman said that some of the cost-cutting measures should have been in force already.
He welcomed the ”rescuing” of the provincial bank account from a deficit in 2010 to a positive balance.
Melanie Veness, head of the Pietermaritzburg Chamber of Business, said: “MEC Cronje has served this province well, taking us out of the red and placing us firmly in the black.
“I think it is a sensible budget against the backdrop of tough economic times.”
The Mercury