ANC Caucus Statement On Provincial Budget

Issued by: African National Congress

2 April 1997

Today`s budget speech by MEC Meiring is a vindication of the stand taken by Minister Manuel in refusing to accede to the NP`s call for additional finances for the province.

There was in fact no reason to delay the tabling of the budget.

The attempt to project the reduction of R780 million to the block grant as recommended by the FFC as punishment of the Western Cape has been exposed as unfounded. The overall allocation to the province increased in nominal terms from R8 378 million 1996/97 to R8 757 for the 1997/98 financial year. In addition the W. Cape allocation per person of R2 197 is much higher than the national average of R1 755 per person.

Minister Manuel`s groundbreaking budget made it clear that all government departments would have to take a cut of 3%. The central government budgets have been cut by a greater degree than those of the provinces who in fact were allocated an additional 9,4% of the budget. This was in line with central governments commitment to cut the deficit before borrowing to 4% and limiting expenditure to 6% growth.

The block allocations to all provinces were thus reduced by the FFC in line with the drive to equity. It was incumbent on all provinces to manage this. The problem with the Western Cape has been the failure to embark on a process to reprioritize expenditure.

The NP cannot support the thrust of the macroeconomic framework yet then refuse to come to terms with the move to equity amongst all provinces. We welcome MEC`s statement that he has "made peace" with the need for equity even though he appears to have done so belatedly and unwillingly.

The challenge now is for our province to manage the projected deficit of R247 million. We are convinced that this can be done. Even Meiring who predicted doom and gloom (and Kriel who said that the FFC cut was unmanageable) admitted in his speech that the problem could be overcome "by taxing our ingenuity to the limit". Why then all the drama of last week?

Meiring`s claim that the failure of central government to provide powers to raise additional income has contributed to our problem does not hold water. All provinces are in the same situation and these provisions only become effective from 1 January 1998. Gauteng, KwaZulu-Natal and all other provinces have managed without these powers.

The ANC will be making concrete proposals as to how the deficit can be managed. We are convinced that R10 million for the provincial constitution is a waste of money. We are further convinced that a review of all leases in the province will result in further savings.

We question the creation of a new vote 18, Provincial Discretionary Fund, to be housed under the Premier`s vote. This R10 million is obviously intended to be an election slush fund for the NP.

MEC Meiring also needs to explain to the public the actual savings which were achieved by the fact that 15 000 public servants took the package in 1996/97. Obviously we will need less funds for 1997/98 if we have 15 000 less public servants on the books?

Now is the time to accept the implications that the national budget holds for equity amongst provinces and embark on a genuine process of reprioritization.

Issued by Tasneem Essop, MPL, Spokesperson on Finance