Summary
1. The first quarter provincial budget statement of receipts and payments, published by the National Treasury on 30 July 2010, covers spending in provinces for the first quarter of the 2010/11 financial year, which ended 30 June 2010. It is published in terms of Section 32 of the Public Finance Management Act, 1999 (PFMA) and is available on the treasury website at http://www.treasury.gov.za.
2. The information is sourced from the Section 40(4) PFMA reports signed by each head of provincial department to their provincial treasury, and submitted to the National Treasury by 22 July 2010. Queries on spending or budget numbers should therefore, in the first instance, be referred to the relevant head official of the provincial department, and in the second instance to the head official of the provincial treasury. Queries on conditional grants may also be referred to the relevant head official of the administering national department.
3. In aggregate, provinces have spent 22.9 percent or R75.7 billion of their budgets of R329.8 billion for the first quarter. This represents a spending increase year-on-year of 4.8 percent, as spending was R3.5 billion higher than for the same period last year.
4. Education expenditure totalled R33.2 billion or 24.1 percent of the R137.4 billion combined education budgets. It remains the largest item on provincial budgets (41.7 percent). The spending pattern reflects a 10 percent or R3 billion increase over the same period last year.
5. Health expenditure totalled R23.3 billion or 23.7 percent of the R98.4 billion combined health budgets and is the second largest item on provincial budgets (29.8 percent). The spending pattern reflects a 11.5 percent or R2.4 billion increase compared with the same period last year.
6. Social development spending for the first quarter is 20.2 percent, or R2.1 billion of the R10.2 billion social development budgets.
7. Personnel expenditure, in aggregate, is at 24.7 percent or R45.8 billion of the R185.7 billion personnel budgets.
8. In aggregate, provinces spent 16.4 percent or R4.2 billion of their R25.4 billion combined capital budgets. This is a decline of 21.2 percent when compared to the same period in 2009/10.
9. Provincial education departments spent 13.7 percent or R982.9 million of their R7.2 billion education capital budgets. This is 38.4 percent or R613.4 million less than spending over the same period of the previous financial year.
10. Provincial health departments improved on capital spending. They have spent 18.5 percent or R1.6 billion against their R8.8 billion health capital budgets, which is 7.3 percent or R111.3 million more than the same period for 2009/10.
11. The second highest share of provincial capital budgets, after health, is for public works, roads and transport departments at 29.2 percent. The sector spent 18 percent or R1.3 billion against its combined capital budgets of R7.4 billion.
12. Provincial own revenue collected thus far is at 21.9 percent or R2.1 billion of the total own revenue budget of R9.5 billion.National government has transferred R65.2 billion of the equitable share and R15.9 billion in conditional grants to provinces, during the first quarter of the 2010/11 financial year.
13. A more detail analysis of the expenditure outcome as at 30 June 2010 is set out in Annexure A, which also includes a comparative spending analysis for the same period over the 2009/10 financial year.
Detailed analysis for the first quarter of the 2010/11 financial year:
1.The budgeted figures for provinces are based on the 2010/11 estimates of provincial revenue and expenditure documents (main budgets) tabled in the various provincial legislatures during February and March 2010.
Total expenditure
2. Table 1 indicates that provinces have spent 22.9 percent or R75.7 billion of budgeted expenditure of R329.8 billion for the first quarter into the current financial year. Spending against budgets for the first quarter is at a lower level in percentage terms when compared to spending against budgets over the same period for the 2009/10 financial year (24.9 percent).
3. However, in nominal terms, spending is 4.8 percent or R3.5 billion more than for the same period last year when provinces had spent R72.2 billion. Between provinces, spending ranges from the lowest share of 20 percent in North West and 21.2 percent in Free State, to the highest at 25.3 percent in Gauteng and 24.8 percent in Eastern Cape.
Social services
4. Provinces have budgeted R246.1 billion for social services, which includes spending on education, health and social development.
5. Spending on social services is recorded at R58.6 billion or 23.8 percent of the total provincial social services budgets for the first quarter of 2010/11.
Education
6. Education budgets of R137.4 billion comprise 41.7 percent of total provincial budgets. Table 3 indicates that education expenditure is at 24.1 percent or R33.2 billion of the total education budget, an increase of 10 percent or R3 billion compared to the R30.2 billion spent over the same period in 2009/10.
7. Spending by provinces on education ranges from the lowest rate in North West at 21.8 percent and Free State at 23.2 percent to the highest in Gauteng at 25.1 percent and KwaZulu-Natal at 25 percent.
8. Spending on goods and services (which includes learner and teacher support material) in education is recorded at 14 percent or R2.1 billion of its R14.7 billion budget. It comprises approximately 10.7 percent of total provincial education budgets.
9. The bulk of education expenditure is on personnel (79.3 percent). Current spending on education personnel amounts to 25.2 percent or R26.3 billion of the education personnel budgets of R104.6 billion.
10. Spending by provinces ranges from the lowest in three provinces, Mpumalanga, Western Cape and Northern Cape all at 23.9 percent, to the highest in Eastern Cape at 26.2 percent and both Gauteng and Limpopo at 25.5 percent.
11. Education capital expenditure is at 13.7 percent or R982.9 million of the R7.2 billion budget. This is significantly lower by 38.4 percent or R613.4 million less than spending over the same period of the previous financial year.
12. Spending by provinces ranges from the lowest in Gauteng at only 3.3 percent and Limpopo at 5.1 percent to the highest in KwaZulu-Natal at 27.4 percent and Northern Cape at 18.4 percent.
Health
13. Health budgets totalling R98.4 billion comprise 29.8 percent of total provincial budgets.
14. Health expenditure is at 23.7 percent or R23.3 billion of the total health budget, representing an increase of 11.5 percent or R2.4 billion compared to spending over the same period in 2009/10.
15. Free State and Limpopo health have spent the lowest share of their budgets at 20.2 percent and 20.6 percent respectively. The highest shares are recorded in Eastern Cape at 27.9 percent and Gauteng at 26.1 percent.
16. Table 7 indicates that health personnel expenditure is R13.7 billion or 24.6 percent of the health personnel budget, an increase of R2.3 billion or 20.2 percent compared to the R11.4 billion spent over the same period in 2009/10.
17. Spending on non-personnel non-capital items in health, which includes medicines, drugs and other current expenditure, is recorded at 23.6 percent or R8 billion of the R33.9 billion budget.
18. Capital expenditure in the health sector is at 18.5 percent or R1.6 billion. This represents an increase of 7.3 percent or R111.3 million more than the R1.5 billion spent over the same period last year.
19. Between provinces, with a varying degree of spending, the lowest rate of health capital spending is in Free State at 7 percent and Limpopo at 11.6 percent with the highest in North West and Eastern Cape at 50.9 percent and 23.5 percent respectively.
Social Development
20. Social development budgets, at R10.2 billion, comprise 3.1 percent of total provincial budgets.
21. Provinces registered spending of 20.2 percent or R2.1 billion of their R10.2 billion budget. This represents an increase of 4.9 percent or R96.3 million above the R2 billion spent over the same period last year.
22. Between provinces, there are varying degrees of spending, with the lowest being in North West at only 16.6 percent and KwaZulu-Natal at 17.2 percent while the highest are Limpopo at 26.9 percent and Free State at 25.1 percent.
Housing and Local Government
23. Housing and local government budgets at R20.8 billion comprise 6.3 percent of total provincial budgets.
24. Housing and local government spending at the end of the first quarter is at 17.4 percent or R3.6 billion of the R20.8 billion budget (table 10). This represents a significant decrease of 20.7 percent or R941 million less than the R4.5 billion spent over the same period last year.
25. Spending varies between provinces with the lowest being in North West at 12 percent and Free State at 13.5 percent while the highest are Northern Cape at 23.7 percent and Western Cape at 20.9 percent.
Housing Conditional Grant
26. Most of the housing and local government expenditure is on the Human Settlements Development conditional grant. Provinces spent 15.7 percent or R2.4 billion of their R15 billion housing conditional grant. These spending figures are less by 28 percent or R916.9 million over the same period last year.
Personnel expenditure
27. Personnel expenditure (“compensation of employees”) is at 24.7 percent or R45.8 billion of the R185.7 billion budget.
28. Spending to date is 20.1 percent or R7.7 billion higher than the R38.2 billion spent over the same period last year.
29. Western Cape and both Northern Cape and Mpumalanga recorded the lowest rate of personnel spending at 23.5 percent and 23.7 percent respectively while Eastern Cape and Gauteng recorded the highest rates at 25.8 percent and 25.5 percent respectively.
Overall Capital Budgets and Expenditure
30. By the end of the first quarter, provinces have spent 16.4 percent or R4.2 billion of their R25.4 billion capital budgets (“payments for capital assets”). This is a decline of 21.2 percent when compared to the same period in 2009/10.
31. Capital spending information by province, which indicates low rates of spending in Limpopo at 8.6 percent and Free State at 9.9 percent and high rates in North West at 21.5 percent and Mpumalanga at 20.5 percent. However, in absolute terms, KwaZulu-Natal has spent the most at R1.3 billion followed by Eastern Cape at R719.6 million and Western Cape at R472.7 million.
32. Provincial education departments spent 13.7 percent or R982.9 million of their R7.2 billion education capital budgets. This is 38.4 percent or R613.4 million less than spending over the same period of the previous financial year.
33. Provincial health departments improved on capital spending. They have spent 18.5 percent or R1.6 billion against their R8.8 billion health capital budgets, which is 7.3 percent or R111.3 million more than the same period for 2009/10.
34. The second highest share of provincial capital budgets, after health, is for public works, roads and transport departments at 29.2 percent. The sector spent 18 percent or R1.3 billion against its combined capital budgets of R7.4 billion.
Conditional grants
35. The total conditional grant allocation is R61.9 billion (including Schedule 4 and 8 grants) with health making up the bulk at R19.9 billion.
36. Spending on conditional grant allocations as at 30 June 2010 for all provinces. It excludes expected conditional grant roll-overs from the 2009/10 financial year and spending on Schedule 4 grants. Schedule 4 grants specify allocations to provinces to supplement the funding of programmes or functions funded from provincial budgets. The Expanded Public Works Programme Incentive grant for the Infrastructure Sector (Schedule 8 grant) specifies incentives to provinces to meet targets with regards to priority government programmes.
37. Against the total allocation of R32.5 billion, this excludes schedules four and eight grants, the rate of conditional grants spending amounts to 18 percent or R5.8 billion. However, when excluding the Gautrain Rapid Rail Link grant, the conditional grant expenditure amounts to R5.4 billion or 16.9 percent against a total allocation of R32 billion.
38. Specific grants that show low rates of spending include: Ilima/Letsema Projects (5.6 percent), HIV and Aids (Life Skills Education) (7.2 percent), Housing Disaster Relief (7.7 percent), Land Care Programme (8.4 percent) and Community Library Services (10.5 percent).
39. Selected conditional grant spending rates as at 30 June 2010. It further indicates that five or more provinces have spent less than 15 percent of their grants budgets after the first quarter for the following grants: Land Care Programme, Community Library Services, HIV and AIDS (Life Skills Education), Hospital Revitalisation and Devolution of Property Rate Funds.
40. The number of provinces spending at slightly higher levels between 15 and 25 percent and greater than 25 percent of their conditional grant budgets.
Provincial Revenue
41. Provincial revenue includes budgeted equitable share allocations of R261 billion, conditional grants of R61.9 billion and own revenue of R9.5 billion. The total provincial revenue received and collected to date is recorded at 25 percent or R83.2 billion of total budgeted revenue of R332.3 billion.
42. National government transferred 25 percent or R65.2 billion of the equitable share and 25.7 percent or R15.9 billion in conditional grants, to provinces after the first quarter of the current financial year.
43. After the first quarter, provinces have collected 21.9 percent or R2.1 billion of the budgeted own revenue of R9.5 billion which is 1.5 percent or R30 million more than what was collected by the end of June for the previous financial year.
44. The collection rate varies from 11.1 percent in North West and 18 percent in Mpumalanga, to a high of 30 percent in Eastern Cape and 26.3 percent in Northern Cape.
