East Cape budget must stretch
Given the current situation of our national economy, tabling the Eastern Cape’s 2018 medium-term budget policy statement at the provincial legislature was a challenging and yet hope-inspiring task.
This policy statement requires the provincial government not to fold its arms and wait for the national government to become our Moses.
For the first time in the history of our province we plan to do the unconventional, that is to raise R1.1bn over the 2019 MTEF (medium-term expenditure framework) to invest massively in the economic cluster.
We would do this through reprioritising within the current baselines in line with the economic stimulus package announced by the president, which, inter alia, committed the government to reprioritise public resources to contribute towards economic growth.
Top-slicing public budgets for economic transformation purposes is an unprecedented move and will get us to the summit of the hill of hope much quicker than we would under the current status quo of budgeting for social services.
We would invest these resources to build both the macro and micro economies of our province to create sustainable employment opportunities, targeting the agricultural sector, tourism sector, the creative industries, oceans economy, manufacturing sector, township and rural economies.
A portion of the stimulus package would go to the services sector, where we would support those who want to expand or improve their businesses such as car washes, motor vehicle workshops, carpenters, welders, accommodation establishments and hawkers.
This is key to reviving and encouraging entrepreneurship in rural areas and townships.
The total LED spend by the province amounted to R9.5bn during the year under review.
This amounts to 53% of the total goods and services and fixed asset spend of R18bn incurred during the year under review.
All these efforts will go a long way in curbing the outmigration which is the single biggest contributing factor to the reduction of our equitable share and thereby our budget baseline.
To sustain the growth of the rural and township economies, we are going to insist that government departments must invest in our townships and rural enterprises through procurement by setting aside funds for rural and township enterprises.
We cannot expect these enterprises to compete with well-established businesses.
We are also setting aside in the Exchequer Account an amount of R281m as a buffer to pay service providers that have completed the work they were assigned by the department.
I repeat, payment of service providers that have completed their assigned work.
All the pronouncements we made during the tabling are against the backdrop of a worrying outward migration of the population to other provinces, losing the province an estimated R5.9bn in the next three years.
In this financial year we have to absorb the cost of living adjustment in relation to cost of employees of R160m in the immediate period and R1bn over the MTEF.
At national level we are robustly advocating for the review of the equitable share formula, which relies heavily on the outward migration of people to other provinces in the allocation of financial resources. We are of the view that this formula should be changed as it has a stranglehold on service delivery in rural provinces such as ours.
While we call for the revision of the formula, we must do the right things with what we have by ensuring value for the money allocated for service delivery.
We are also pushing hard for progressive reforms which should see the economic sector allocated resources directly from the DORA in the form of conditional grants. This is long overdue and this is what we need to do, to move away from a consumptive state to a productive state.
Imagine the economic and job creation spin-offs our province could derive if we could be allocated a R2bn economic development conditional grant.
We believe that the national government can raise this money from within the budgets of national economic cluster departments and direct it to provinces such as the Eastern Cape that suffered the most from apartheid spatial development planning.
Insistence to grow our own revenue base is one of the policy imperatives that we believe our provincial government must pat itself on the back for, because had we not taken a decision to enhance our own revenue, we would have been exposed badly by the current economic climate.
We are estimating to collect R1.497bn in the 2019/2020 financial year, R1.580bn in 2020/2021 and R1.667bn in 2021/2022 respectively.
The preliminary provincial fiscal framework for the 2019 MTEF provides for a projected total fiscal envelope of R81.656bn.
We must absorb a cost of living adjustment of R1.081bn in 2019/2020, R1.775bn in 2020/2021 and R3.104bn in 2021/2022 due to the outward migration.
This situation will further be compounded by more cuts expected on conditional grants.
Because we have to re-balance growth in a constrained fiscal environment, we are proposing an upward adjustment of R675m to the main budget of R78.433bn that we tabled in March to an adjusted budget of R79.109bn to accelerate delivery of socioeconomic services in the remaining few months of this term.
● Lubabalo Oscar Mabuyane is the finance, economic development, environmental affairs and tourism MEC and ANC provincial chair...