The National Treasury’s pathway to fiscal consolidation aimed at ensuring sustainable public finances is set to trickle down to the country’s richest province, Gauteng, with finance & economic development MEC Lebogang Maile expected to use the provincial medium-term budget to outline spending pressures.
For this financial year, Gauteng received R155.9bn in transfers from the national government. It includes provincial equitable share and conditional grants.
The provincial medium-term budget policy statement (MTBPS) is expected to reflect the R15bn worth of cuts to the provincial equitable share allocation and the R20bn debt left from the cancellation of e-tolls “reflecting a major setback,” Maile told Business Day.
In October’s MTBPS the Treasury made no allocation for state-owned entities. However, a special appropriation of R5bn was made for the SA National Roads Agency (Sanral) to cover debt repayments linked to e-tolls.
Gauteng is SA’s richest province, contributing nearly 40% to national GDP. However, it is dogged by poor service delivery, high unemployment, mismanagement of funds, fraud and corruption. Revenue collection is expected to marginally increase from R8bn in 2024/25 to R8.3bn in 2025/26 and R8.7bn in 2026/27.
The Treasury provided no relief to provincial health and education budgets in October’s MTBPS raising the ire of unions which have called for more funding for front-line services.
In education, provinces are in a scramble to plug a budget shortfall of R32bn in the fiscal year (projected to rise to R176bn by 2027/28 if no new funds are injected) from their own budget to avoid a teacher shortage.
The budget pressures have already forced the Western Cape to cut 2,400 teachers from its basket of posts for next year, while other provinces are scaling back programmes such as school transport to protect teaching jobs.
Health and education are Gauteng’s biggest pressure points, accounting for 79% of the provincial expenditure, Maile told Business Day. These two line items will unlikely be affected by the expected cuts to expenditure.
He has backed the Treasury’s plans to cull the public service headcount by offering early retirement in 2025/26 and 2026/27. It is expected 30,000 public servants will take up the offer and that it will deliver savings down the line.
Expenditure of R11bn over the next two years has been provided for the voluntary early-retirement package for public servants 55 years and older in a bid to reduce the public sector wage bill (which consumed 32.1% of consolidated expenditure in 2023/24) and to rejuvenate the public service.
“The plan will likely bring in more younger and more dynamic talent ... just because the headcount will be reduced does not mean the posts will be frozen. Even if the posts are frozen, they won’t be frozen forever,” Maile said.
Business Day previously reported that the Treasury has rejected the 7.5% revised wage demand by labour representing 1.3-million public workers.
maekot@businesslive.co.za
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