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Western Cape declares intergovernmental dispute with Treasury over rising public sector wage bill

Western Cape declares intergovernmental dispute with Treasury over rising public sector wage bill
Finance Minister Enoch Godongwana. (Photo: Gallo Images / Die Burger / Jaco Marais) I Premier of Western Cape Alan Winde. (Photo: Gallo Images / Brenton Geach)

Western Cape Premier Alan Winde has warned that a shortfall of R1.1bn to pay public servants could hamstring healthcare, schools and infrastructure in the province.

The Western Cape government has declared an intergovernmental dispute with the national government to secure R1.1-billion from the National Treasury for the public sector wage increase. 

Premier Alan Winde and the MEC for finance and economic development, Mireille Wenger, in a joint statement on Tuesday, said the dispute was declared with the national government represented by Finance Minister Enoch Godongwana and Public Service and Administration Minister Noxolo Kiviet in terms of the Intergovernmental Relations Framework Act.

Read more in Daily Maverick: National government inflicting death by a thousand budget cuts on SA and the Western Cape

The Act provides a framework for the creation of intergovernmental forums and mechanisms to facilitate the settlement of intergovernmental disputes. 

“The dispute relates to the centrally negotiated and agreed to public sector wage bill, which was implemented after the Western Cape provincial parliament approved the annual budget, leading to unprecedented in-year budget cuts,” they said.

“Through this action, we are trying to avoid dramatic reductions in service delivery spending in order to cater for the wage liability. We have tried to engage with national government to avoid this situation, to no avail. And for this reason, we have taken the difficult but necessary step of declaring an intergovernmental dispute.” 

In March, the government inked a deal to give 1.2 million public servants a 7.5% pay increase in the current fiscal year (2023/24) that it had not fully budgeted for. 

Public servant remuneration is already the single largest component of government expenditure, gobbling up 30% of 2023’s R2.26-trillion budget, Daily Maverick’s Ray Mahlaka reported. The provinces — who had no role in the wage deal negotiations — have been forced to accommodate pay increases from their existing budgets. 

After the provinces bemoaned that the national government had negotiated unaffordable pay increases centrally and then denied provincial departments the funds to implement them, National Treasury committed to partial funding of R17.6-billion for provinces to be able to implement pay increases.

But DA Western Cape budget spokesperson Deidré Baartman said the increase in public sector wages had had an impact of close to R2.9-billion on the Western Cape’s budget for this financial year. The national government had allocated an additional R1.7-billion to the province, but this would only partially cover the wage increase for education and healthcare. 

“All other departments’ wage increases will have to be self-funded. The approximately R1.1-billion shortfall would have to be found within the existing budget, meaning cuts to vital programmes that impact our residents directly,” Baartman said.

She added that the national government was also slashing R640-million from conditional grants to the province, and there would be no disaster funding from the national government to repair damage from this year’s flooding in the province. The provincial government had requested a State of Disaster declaration from the National Disaster Management Centre to unlock about R700-million in funding to repair flood damage caused by winter storms in May and June. 

Winde and Wenger said the “staggering” R1.1-billion shortfall needed to pay public servants would “have a direct impact on critical service delivery” like schools, clinics, hospitals and road networks.

Read more in Daily Maverick: Public sector wage deal doublethink hides a double whammy for provinces

The CEOs of the Western Cape’s three academic hospitals earlier this month sounded the alarm that, because of severe funding cuts, they could run out of cash by 15 January 2024. The wage shortfall for all the health departments across South Africa’s nine provinces is R8.7-billion, Elsabé Brits reported in Daily Maverick.

“From the start of this process, it was evident we could not afford this wage deal and all warning signs of the irrationality of the agreement were seemingly ignored. This is an issue that affects all provinces and every government department. What is desperately needed is prudent fiscal consolidation, management and discipline. This appears to be lacking in national government,” said Winde.

Read more in Daily Maverick: SA’s delivery of crucial services under threat after Treasury desperately calls for public ‘fiscal consolidation’

Eastern Cape pinching pennies

The MEC for finance in the Eastern Cape, Mlungisi Mvoko, last week said during his adjustment budget speech that the province was running at a deficit of R3-billion.

Provincial receipts of just over R1-billion, mostly the rollover of conditional grants, had reduced the deficit.

The total transfers received from the national government amounted to R89.4-billion and the total expenditure to R92.3-billion.

He said the province had received an equitable share of R72.3-billion in February and this was boosted by an adjustment of R2.3-billion specifically for the implementation of the health and education public wage bill. This wage bill was, however, R3.6-billion.

“What we got doesn’t even come close [to covering the wage bill],” he said. DM

Additional reporting by Estelle Ellis

Gallery

Comments - Please in order to comment.

  • Beezy Bailey says:

    Anything to hobble the DA led Western Cape by the ANC in its dieing days . SA has a massively disproportionate civil service [ mostly ineffective often corrupt] government employees sector . That goes hand in hand with the ANC policies of absorbing more tax payers money than they reap . And considering what the Western Cape brings into the national budget from taxes, well done Premier Winde for tackling it . The money should be going to hospitals schools and infrastructure instead of making ANC cadres fatter .

    • Bernhard Scheffler says:

      Indeed!

    • jason du toit says:

      this is affecting all provinces. in fact, the final few paragraphs outline the situation in EC being similar to WC

      • Cape Doctor says:

        Quite true. But the (ANC) Eastern Cape Provincial Government, which has radically overspent for at least the past 15 years knows that National Government will always bail it out, or simply write off the debt. The (DA) W. Cape enjoys no such guarantees.

      • Fanie Rajesh Ngabiso says:

        This is not a Lowest Common Denominator scenario. Every single Province being underpaid should be taking the government on. The fact that they are not simply highlights – as usual – how much better the DA are.

  • Richard Bryant says:

    It is clear that nobody in the ANC has a cooking clue about the value of money. They operate on a type of bravado where they commit to buying things at way over their commercial value (usually so there is enough to split a share among a whole lot of friends). And have no idea of how to pay for it.

    This is called reckless trading.

    The R150m the ANC owes for election posters clearly demonstrates the problem. Their useless SG Mbalula accepted a quote for nearly R3000 a poster but didn’t sit down with a calculator to work out that R3000 times 30000 posters is R90m. Obviously didn’t know here the money would come from, and now that he can’t pay, he tries to lie about it.

    Same as government salaries. Same as the NHI. Same as Eskom. Even the Post Office has been bailed out by the tune of tens of billions and we have absolutely zilch to show for it. Same as SAA.

    It’s time they move along.

  • coach.dion says:

    They say the Public Servant’s wage bill is about 30% of the budget, it’s not the wage bill that’s too big, it’s the budget that is to small!
    That’s said: I work for a government department, and there are to many bosses doing nothing but asking us for reports! One will ask for a report alphabetical, then next will ask for a similar report numerically!
    Oh wait, it’s all information they could download from the system if they knew how!

    • J vN says:

      Let’s hope you have taken a day’s leave, because 08:38am on a Thursday is certainly within the working hours of a public servant and no time to be hanging around on any news sites.

      • Bernhard Scheffler says:

        Wednesday

        • J vN says:

          Oops – it’s been a long week, feels like it should be Friday already, never mind Thursday.

          • L Rey says:

            Remember to have perspective, some people work night shift, there can be reasons. As adults, work is not tied to only working hours, and visa vera. is the work being done to a satisfactory degree? If so then what is there to moan about, quota? Not browsing the web between 8 and 5 does not make you productive.

  • Vincent Britz says:

    The corrupt ANC government doing it’s best to stop the best run province & cripple the rest of SA just so they The ANC gangsters of SA can fill their own pockets!!!

    We as South African citizens need to vote the corrupt ANC government out of power to safe our beloved country..

  • William Dryden says:

    Too many government and public services employees that are costing a fortune from the fiscal, and now the government negotiates a 7.5% salary increase? Why not used the lottery revenue to fund services first and then NGO’s after.

  • Patrick Veermeer says:

    What have we done to deserve this ANC government? What have we done to have our noble expectations of 1994 so thoroughly debased?

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