year-to-date Provincial Budget Report
2 February 2007
Summary
1. The third quarter provincial budget statement of receipts and payments,
published by the National Treasury in terms of Section 32 of the Public Finance
Management Act (PFMA) 1999, on Tuesday, 30 January 2007, covers spending for
the first nine months of the 2006/07 financial year, which ended Sunday, 31
December 2006 and is available on the treasury website at http://www.treasury.gov.za.
2. The information is based on the Section 40(4) PFMA reports signed by each
head of provincial department to their provincial treasury and submitted to the
National Treasury by Monday, 22 January 2007. 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. The budgeted expenditure figures take account of revisions effected in
the provincial adjustment budgets, which include R1,6 billion allocated to
provinces for conditional grants in the 2006 Adjusted Estimates of National
Expenditure and additional funding by provinces of almost R3,8 billion, which
includes roll-overs from the previous financial year.
4. This report also includes a comparative spending analysis for the same
period over the 2005/06 financial year. It should be noted that the 2005/06
financial year figures have been adjusted to exclude programme 2: Social
assistance grants of provincial social development departments, which were
transferred to national government with effect from 01 April 2006. This makes
the 2006/07 figures and the 2005/06 figures comparable.
5. In aggregate, provinces have spent 69,9 percent or R131,7 billion of
their combined adjusted budgets of R188,4 billion for the nine months period
ended 31 December 2006. This represents a spending increase year-on-year of
13,9 percent or R16,0 billion, higher than for the same period last year when
provinces had spent R115,6 billion.
6. Education expenditure totalled R58,0 billion or 72,3 percent of the R80,2
billion adjusted budget for education and remains the largest item on
provincial budgets (42,6 percent). The spending pattern reflects a R5,1 billion
or 9,5 percent increase over the same period last year.
7. Health expenditure totalled R38,7 billion or 72,7 percent of the R53,2
billion total adjusted budget for health and with the shifting of social
security it becomes the second largest item after education on provincial
budgets (28,3 percent). The spending pattern reflects a 15,5 percent or R5,2
billion increase compared with the same period in 2005/06.
8. Provincial social welfare services departments have spent 66,5 percent or
R3,5 billion of their adjusted budgets of R5,3 billion for the nine months
ended 31 December 2006.
9. Total personnel expenditure in aggregate is at 73,5 percent or R77,4
billion of the R105,3 billion personnel adjusted budget which includes the
salary increases effected from 1 July 2006.
10. In aggregate, provinces spent 61,4 percent or nearly R10,0 billion of
their R16,3 billion combined capital adjusted budgets between the various
sectors. This is a significant improvement of 34,7 percent or R2,6 billion more
than the R7,4 billion spent over the same period last year.
11. At R2,4 billion (of the R3,8 billion adjusted budget) or 61,4 percent
after nine months of the financial year, provincial education departments'
spending on capital is in line with the total provincial capital spending
average of 61,4 percent.
12. Health provincial departments, year-on-year, significantly improved on
spending on capital by spending 63,2 percent or R3,2 billion against their R5,1
billion health capital adjusted budgets, which is 52,2 percent or R1,1 billion
more than the same period for 2005/06.
13. The highest share of provincial capital budgets is for public works,
roads and transport departments at 34,0 percent. The sector spent 62,7 percent
or R3,5 billion against its combined capital adjusted budgets of R5,5
billion.
14. Provincial own revenue collected thus far is at 79,5 percent or R5,6
billion of the total own revenue adjusted budget of R7,0 billion. National
government has transferred R114,6 billion of the equitable share and R20,2
billion in conditional grants to provinces, during the nine months of the
2006/07 financial year.
Detailed analysis for the first nine months of the 2006/07 financial
year
15. The adjusted budgeted figures for provinces are based on the 2006
Adjusted Estimates of Provincial Expenditure tabled in the various provincial
legislatures during November and early December 2006. The information presented
here is mostly restricted to financial information only. Work is under way to
improve the availability and quality of the data in service delivery sectors of
departments for reporting purposes.
Total Expenditure
16. Table 1 indicates that provinces have spent 69,9 percent or R131,7
billion of adjusted budgeted expenditure after nine months of the current
financial year. Spending to date is at a marginally lower level in percentage
terms against spending over the same period in the 2005/06 financial year (70,6
percent). However, in nominal terms, spending is 13,9 percent or R16,0 billion
higher than for the same period last year when provinces had spent R115,6
billion.
See Table 1 on the treasury website: http://www.treasury.gov.za.
17. Between provinces, spending ranges from the lowest share of 66,5 percent
in Gauteng and 68,7 percent in North West, to the highest at 74,2 percent in
Northern Cape and 73,1 percent in Free State.
Social Services
18. Social services adjusted budgets total R138,8 billion and comprise 73,7
percent of the total R188,4 billion provincial adjusted budgets in 2006/07. The
function shift changes the composition of provincial expenditure with the
social services share to total provincial budgets now becoming 73,7 percent in
2006/07, while non-social services rise to 26,3 percent. Significantly, the
proportion that goes to capital is now 8,6 percent.
19. Table 2 indicates that provinces spent 72,2 percent or R100,2 billion of
the adjusted budget of R138,8 billion for the three social services (education,
health and social welfare services). This is 12,2 percent or R10,9 billion more
than spending over the same period in 2005/06.
See Table 2 on the treasury website: http://www.treasury.gov.za.
Education
20. Education adjusted budgets of R80,2 billion comprise 42,6 percent of
total provincial adjusted budgets. Table 3 indicates that education expenditure
is at 72,3 percent or R58,0 billion of the total education adjusted budget, an
increase of 9,5 percent or R5,1 billion compared to the R53,0 billion spent
over the same period in 2005/06.
21. Spending between provinces for education ranges from the lowest rate in
Gauteng at 68,8 percent, Mpumalanga and North West both at 71,5 percent to the
highest in KwaZulu-Natal at 75,2 percent and Northern Cape at 75,1 percent.
See Table 3 on the treasury website: http://www.treasury.gov.za.
22. The bulk of education expenditure is on personnel (80,4 percent),
amounting to 74,1 percent or R46,6 billion of the education personnel adjusted
budgets of R62,9 billion.
23. Spending on personnel between provinces ranges from the lowest in
Gauteng at 69,1 percent and Mpumalanga at 72,6 percent, to the highest in
Eastern Cape at 76,9 percent and Limpopo at 76,2 percent.
See Table 4 on the treasury website: http://www.treasury.gov.za.
24. Spending on goods and services (mostly learner support material) in
education is recorded at 56,0 percent or R5,1 billion of the R9,0 billion
adjusted budget. It comprises 11,3 percent of total provincial education
adjusted budgets, which is 1,3 percent more than the share in 2005/06. Spending
on learner support material (textbooks, etc.) is expected to increase.
25. Education capital expenditure is at 61,4 percent or R2,4 billion of the
R3,8 billion adjusted budget. This is significantly higher at 54,9 percent or
R834,7 million more than the R1,5 billion spent for the same period last
year.
26. Spending on capital between provinces ranges from the lowest in Western
Cape at 49,5 percent and KwaZulu-Natal at 50,8 percent to the highest in Free
State at 76,6 percent and Northern Cape at 73,6 percent.
27. Education capital expenditure reflects wide fluctuations compared to the
same period last year. Some provinces show very significant improvements while
others reflect slow progress.
See Table 5 on the treasury website: http://www.treasury.gov.za.
Health
28. Health adjusted budgets totalling R53,2 billion comprise 28,3 percent of
total provincial adjusted budgets. Table 6 indicates that health expenditure is
at 72,7 percent or R38,7 billion of the total health adjusted budget,
representing an increase of 15,5 percent or R5,2 billion compared to spending
after the first nine months of the 2005/06 financial year.
29. North West and Eastern Cape health have spent the lowest share of their
adjusted budgets at 68,1 percent and 69,1 percent respectively. The highest
spending rate is recorded in Northern Cape at 77,6 percent and Gauteng at 76,3
percent.
See Table 6 on the treasury website: http://www.treasury.gov.za.
30. Table 7 indicates that health personnel expenditure is R21,2 billion or
73,6 percent of the health personnel adjusted budget, an increase of R2,4
billion or 12,5 percent compared to the R18,9 billion spent over the same
period in 2005/06.
See Table 7 on the treasury website: http://www.treasury.gov.za.
31. Spending on non-personnel non-capital items in health, which includes
medicines, drugs and other current expenditure is recorded at 73,8 percent or
R14,3 billion of the R19,3 billion adjusted budget, an increase of 13,9 percent
or R1,7 billion compared to the R12,5 billion spent over the same period in
2005/06.
32. Capital expenditure in the health sector is at 63,2 percent or R3,2
billion. This is significantly higher at 52,2 percent or R1,1 billion more than
the R2,1 billion spent for the same period last year (Table 8).
33. Between provinces, with a varying degree of spending, the lowest rate of
spending is in North West at 54,4 percent and KwaZulu-Natal at 59,3 percent
with Gauteng and Mpumalanga recording the highest rate of spending at 70,9
percent and 67,9 percent, respectively.
See Table 8 on the treasury website: http://www.treasury.gov.za.
Social Welfare Services
34. Social welfare services adjusted budgets at R5,3 billion, comprise 2,8
percent of total provincial adjusted budgets.
35. Provinces registered spending of 66,5 per cent or R3,5 billion of their
R5,3 billion adjusted budget (Table 9). This represents an increase of 20,8
percent or R610,3 million above the R2,9 billion spent over the same period
last year (excluding social assistance grants).
36. Between provinces, there are varying degrees of spending with the lowest
being in North West at 55,7 percent and KwaZulu-Natal at 62,2 percent, while
the highest being Eastern Cape at 72,4 percent and Gauteng at 71,4 percent.
See Table 9 on the treasury website: http://www.treasury.gov.za.
Housing and Local Government
37. Housing and local government adjusted budgets at R10,4 billion comprise
5,5 percent of total provincial adjusted budgets.
38. Housing and local government spending as at 31 December 2006 is at 59,5
percent or R6,2 billion of the R10,4 billion adjusted budget (Table 10). This
represents an increase of 12,7 percent or R696,8 million on the R5,5 billion
spent over the same period last year.
See Table 10 on the treasury website: http://www.treasury.gov.za.
39. Spending varies between provinces with the lowest being in Eastern Cape
at 49,3 percent and Free State at 52,3 percent while the highest being Northern
Cape at 74,6 percent and North West at 68,9 percent.
Housing conditional grant
40. Most of the housing and local government expenditure is on the
Integrated Housing and Human Settlement Development conditional grant (formally
the housing subsidy grant). Table 11 indicates that provinces spent 61,2
percent or R4,2 billion of their R6,8 billion housing conditional grant.
Spending on housing is higher by 13,4 percent or R493,8 million over the same
period last year.
See Table 11 on the treasury website: http://www.treasury.gov.za.
Personnel expenditure
41. Personnel expenditure ("compensation of employees") is at 73,5 percent
or R77,4 billion of the R105,3 billion adjusted budget. Spending to date is 8,1
percent or R5,8 billion higher than the R71,6 billion spent last year.
42. Mpumalanga at 71,6 percent and Gauteng at 71,7 percent recorded the
lowest rate of personnel spending while Limpopo and Eastern Cape recorded the
highest rates at 75,3 percent and 74,9 percent, respectively.
See Table 12 on the treasury website: http://www.treasury.gov.za.
Overall capital budgets and expenditure
43. By 31 December 2006, provinces have spent 61,4 percent or nearly R10,0
billion of their R16,3 billion capital adjusted budgets ("payments for capital
assets"). This is significantly higher (34,7 percent or R2,6 billion) than the
R7,4 billion spent over the same period last year.
44. Table 13 also provides capital spending information by province, which
indicates low rates of spending in Western Cape at 58,3 percent and
KwaZulu-Natal at 59,1 percent to the highest in Free State at 80,9 percent and
Northern Cape at 69,8 percent. However, in absolute terms, KwaZulu-Natal has
spent the most at R2,1 billion followed by Gauteng at R1,6 billion and Eastern
Cape at R1,2 billion.
See Table 13 on the treasury website: http://www.treasury.gov.za.
45. The biggest capital budgets in provinces are in public works, roads and
transport departments at 34,0 percent or R5,5 billion of the total provincial
capital adjusted budget of R16,3 billion. Spending for these departments is at
62,7 percent or R3,5 billion which is 11,1 percent or R345,7 million more than
the R3,1 billion spent last year over the same period.
46. Between provinces, the lowest rate of spending is recorded in Limpopo at
38,2 percent and Gauteng at 51,4 percent, whilst Free State and North West
recorded the highest rates of spending at 99,3 percent and 72,9 percent,
respectively.
See Table 14 on the treasury website: http://www.treasury.gov.za.
Conditional grants
47. The total adjusted conditional grant allocation for all grants is R28,3
billion (including Schedule 4 grants and provincial roll-overs) with health
making up the bulk at R10,6 billion.
48. Table 15 reflects spending as at 31 December 2006 on conditional grant
allocations for all provinces. It excludes spending on general purpose
conditional grants (Schedule 4 grants) like National Tertiary Services, Health
Professions Training and Development and the Provincial Infrastructure grants,
as reporting against these grants cannot be separated from the provinces'
health and capital budgets.
See Table 15 on the treasury website: http://www.treasury.gov.za.
49. Spending on the Comprehensive Agricultural Support Programme grant (also
Schedule 4) is subsumed in a range of programmes and therefore no separate
reporting is required in terms of the Division of Revenue Act, 2006 (Act No 2
of 2006).
See Table 16 on the treasury website: http://www.treasury.gov.za.
50. Against the total adjusted allocation of R16,4 billion, which excludes
Schedule 4 grants, the rate of conditional grants spending amounts to 50,5
percent or R8,3 billion.
51. Specific grants that show low rates of spending include Agricultural
Disaster Management (23,8 percent), Forensic Pathology Services (27,0 percent),
Land Care Programme (47,5 percent) and Mass Sport and Recreation Participation
Programme (51,3 percent).
52. Spending on the Further Education and Training (FET) College Sector
Recapitalisation grant is at 97,0 percent or R456,0 million and reflects
actual transfers from the provincial education departments to the FET colleges
(Table 15).
53. Table 16 overleaf indicates the actual amounts transferred by provincial
education departments to colleges and amounts spent by colleges, as provided by
the national Department of Education. FET colleges expenditure is at 41,1
percent or R187,4 million of the R456,0 million transferred from the provincial
education departments.
54. Table 17 indicates selected conditional grant spending rates as at 31
December 2006. It further indicates that five or more provinces have spent less
than 60 percent of their grant budget after nine months for the following
grants: Land Care programme, Forensic Pathology Services and Integrated Housing
and Human Settlement grant.
55. The table also indicates the number of provinces spending at slightly
higher levels between 60 and 70 percent and greater than 70 percent of their
conditional grant budgets.
56. Although the rate of spending is encouraging and reflects an improvement
over previous financial years, overall spending still lies below average with
the risk of possible under spending.
See Table 17 on the treasury website: http://www.treasury.gov.za.
Provincial revenue
57. Provincial revenue includes budgeted equitable share allocations of
R150,8 billion, adjusted conditional grant allocations of R27,6 billion and
adjusted own revenue allocations of R7,0 billion. The total provincial revenue
(equitable share, conditional grants and provincial own revenue) to date is
recorded at 75,8 percent or R140,4 billion of total adjusted budgeted total
revenue of R185,3 billion.
58. National government transferred 76,0 percent or R114,6 billion of the
equitable share and 73,5 percent or R20,2 billion in conditional grants, to
provinces as at 31 December 2006 of the current financial year.
See Table 18 on the treasury website: http://www.treasury.gov.za.
59. After nine months, provinces have collected 79,5 percent or nearly R5,6
billion of the adjusted budgeted own revenue of R7,0 billion which is 7,7
percent or R399,8 million more than what was collected for the nine months of
the previous financial year.
60. The collection rate varies from 64,8 percent in Northern Cape and 66,1
percent in Limpopo, to a high of 86,1 percent in Gauteng and 85,1 percent in
Mpumalanga. It appears at this stage that most provinces will exceed their
collection of budgeted own revenue.
Issued by: National Treasury
2 February 2007
