Home News NC govt chops wage bill by 4.7bn

NC govt chops wage bill by 4.7bn

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“It is necessary for all spheres of government to contribute towards reducing the wage bill, more so during these unfavourable economic and fiscal circumstances.”

MEC Abraham Vosloo. File picture

AN AMOUNT of R211.8 million has been allocated for Covid-19 support in the Northern Cape, while the compensation of government employees has been reduced by R4.7 billion.

During his address on the tabling of the 2021 Northern Cape main appropriation bill and the 2021 third adjustment appropriation bill, the MEC for the Department of Finance, Economic Development and Tourism, Abraham Vosloo, stated that spending reviews would take place across all districts to eliminate wasteful expenditure.

“If we are spending on a programme that does not add value and contribute to the social agenda of this Province, we will not hesitate to stop them and immediately direct those resources to our identified priorities.”

Vosloo explained that cost containment of the wage bill included the reversal of the growth in compensation of employees and freezing or zero percent increases for public servants and political office-bearers, including employees of public entities and provincial legislatures.

“Government is obligated to stabilise compensation demands with the broader needs of society. Also, given the effect of the current global pandemic on the economy and already deteriorating state resources, it is necessary for all spheres of government to contribute towards reducing the wage bill, more so during these unfavourable economic and fiscal circumstances.”

He stated that the compensation of employees would decrease by four percent in the 2021/22 financial year and increase to one percent and six percent in the 2022/23 and 2023/24 medium-term expenditure framework (MTEF) year and on average one percent over the MTEF.

“The decrease and slow growth over the 2021 MTEF mainly relates to the reductions on compensation of employees due to fiscal consolidation amounting to R2.1 billion and a wage freeze amounting to R2.5 billion implemented by national. The fiscal consolidation is meant to reduce the growth of the public sector wage bill by progressively reducing headcounts in the country.”

Vosloo said the Province currently employed 28 720 civil servants.

“Projections indicate a decrease of 126 employees by 2024 which represents an average decrease of 0.15 percent.

“The reduction in the compensation of employees provides an opportunity to assess our numbers across departments and start to ask the difficult questions. Measures for containment of the wage bill can be divided between short-term and medium-to-long-term measures. Short-term measures relate largely to those aimed at restraining growth in earnings of public servants across the board and organisational design matters while medium-to-long-term measures relate largely to management of performance and headcount.”

He indicated that they were in discussions with Sol Plaatje Municipality to assist in settling the rates and taxes account owned by the provincial government, where a political steering committee had been established.

“While the technical committee is in the process of verifying some of the amounts to the municipality, we have agreed to advance an amount of R20 million in the current financial year towards reducing the debt owed on rates and taxes. Once the amounts have been agreed to by all parties, provincial government will look at ways of prioritising this account with the intention of settling it.”

He indicated that R11 9 billion would be spent on infrastructure over the next three years.

“Of this amount R8.6 billion will be allocated to provincial infrastructure and provincial departments with municipalities accounting for R3.2 billion over the medium-term expenditure framework.”

Vosloo added that R1.2 billion would be allocated on building new schools in the Province to address the shortage of space, where 2 000 pupils have not been placed yet for the 2021 academic year.

“The education infrastructure allocation will also make provision for the completion of West End Primary, Vooruitsig Primary, Kimberley Boys’ High School as well as the new Redirile School to the amount of R68 million for the 2021/22 financial year, which will seek to alleviate the current constraints in terms of learner space allocation.”

He said the department had also set aside R183 million over the MTEF towards the construction of two new primary and secondary schools in the Kimberley area.

“The need to refocus our planning for the infrastructure portfolio has to be re-emphasised to avoid similar incidences and the shortcomings experienced in the last three years.”

Vosloo added that an agreement was signed between Provincial Treasury and Enterprise Development of Standard Bank to provide small black-owned businesses with bridging/collateral free finance and business support, through a R20 million facility for provincial government suppliers.

“The Enterprise Development Purchase Order Solution will be launched in April. The solution will provide contract financing for these suppliers that would be otherwise unable to fulfil contracts awarded to them or they would be forced to borrow from micro-lenders at exorbitant fees that could cripple their businesses.”

He stated that a large share of independent power producers who would benefit from bids to compensate for Eskom’s capacity shortfall resided in the Province.

“Government is set to initiate the procurement of 11 813 megawatts of new electricity capacity from IPPs in the coming weeks.

“This includes 6 800 megawatts that is to be generated from renewable energy sources. As a province we need to leverage these developments to benefit our people as a large share of the IPPs reside in the province.”

Vosloo said the Department of Economic Development and Tourism was in the process of engaging IPPs to contribute to the implementation of the provincial recovery plan through their socio-economic development contributions.

“The Economic Recovery Plan of the Province is still being finalised and we will share it with the public once completed. We could not have anticipated the tragedy and losses that the Province, this country and the world would suffer with the outbreak of the devastating Covid-19 pandemic. The shortcomings in terms of our maintenance and delivery of infrastructure was further tested by the provisioning of quarantine sites and converting our schools and workplaces into safe hygienic environments.”

Vosloo said provincial own revenue targets have been negatively affected by the Covid-19 pandemic, resulting in a drastic decrease in revenue collection.

He stated that reductions in the equitable share of the Province had left the Province with a net amount of R5.2 billion over the 2021 medium-term expenditure framework.

THE FIGURES

Total provincial budget 2021-2024: R57.4 billion

Total provincial receipts: R41.8 billion

Conditional grants: R14.1 billion

Provincial own revenue: R1.5 billion

Governance and administration: R3.3 billion

Provincial legislature – constituency functions: R10.5 million

Social sector: R43.5 billion including

Covid-19 vaccine roll-out: R211.8 million

Early childhood development: R79.9 million

Education Infrastructure Grant: R1.8 billion

New school infrastructure: R633 million

Economic sector: R11 billion

Upgrading informal settlements: R1.1 billion

Human Settlements Development Grant: R200 million

Provincial Emergency Housing Grant: R70.8 million