Summary
1. Published by the National Treasury in terms of Section 32 of the Public Finance Management Act (PFMA), the fourth quarter provincial budget statement of receipts and payments is the first estimate of spending outcomes for the 2010/11 financial year (1 April 2010 to 31 March 2011). The statement is available on the treasury website at www.treasury.gov.za. These figures may be revised as provincial departments finalise (and reconcile) their financial statements by 31 May 2011 for submission to the provincial Auditors-General.
2. The information in the statement comes from the Section 40(4) PFMA reports submitted by heads of provincial departments to provincial treasuries, who, in turn, submitted the information to the National Treasury. Queries on spending or budget numbers should therefore, in the first instance, be referred to the head of the relevant provincial department, and in the second instance to the head of the relevant provincial treasury. Queries on conditional grants may be referred to the head of the administering national department.
3. The budgeted figures in the fourth quarter publication take account of revisions effected in the 2010 Adjusted Estimates of Provincial Expenditure, which were presented to the provincial legislatures during November and December 2010. They include R5.3 billion appropriated by national government to provinces (R4.2 billion to the provincial equitable share and R1.1 billion to conditional grants) through the Adjustments Appropriation Act and Division of Revenue Amendment Act. Since the third quarter publication, six provinces tabled a second adjusted estimate, which is now included in the fourth quarter publication.
4. Over and above the additional transfers, provinces increased their main budgets by R5 billion. The increases consist mainly of unspent conditional grants not surrendered to the National Revenue Fund and other funds surrendered to the respective Provincial Revenue Funds during 2009/10.
5.In light of the above, in aggregate, provinces increased their main budgets (on the expenditure side) by R10.2 billion, with the bulk of the increases going to education (R3.1 billion), public works, roads and transport (R2.9 billion) and health (R2.3 billion).
Overall Expenditure Trends – Preliminary Outcomes
6. In aggregate, provinces have spent R330.9 billion, or 97.3 per cent, of their adjusted budgets of R340.1 billion in 2010/11. This represents a spending increase of 8.6 per cent or R26.1 billion compared to the 2009/10 financial year when provinces had spent R304.8 billion.
7. The preliminary outcome for education expenditure is R138.4 billion or 98.5 per cent of the R140.5 billion combined education adjusted budgets, an increase of 9.6 per cent or R12.1 billion on the previous financial year. It remains the largest item on provincial budgets (41.3 per cent).
8. Health expenditure totalled R98.1 billion, or 97.4 per cent, of the R100.7 billion combined health adjusted budgets and is the second largest item on provincial budgets (29.6 per cent). This represents an increase of 10.7 per cent or R9.5 billion on the 2009/10 financial year.
9. Social development expenditure is R9.9 billion or 93.4 per cent of the R10.6 billion social development adjusted budgets.
10. Personnel expenditure (compensation of employees) is in aggregate R193.7 billion or 101.1 per cent of the budgeted R191.7 billion.
11. In aggregate, provinces have spent R21.3 billion or 84 per cent of their R25.4 billion combined capital (payments for capital assets) adjusted budgets. This is a decline of 3.3 per cent when compared to the 2009/10 financial year.
12. Provincial education departments have spent R5.4 billion or 86.6 per cent of the budgeted R6.2 billion for capital expenditure. This is R136.7 million or 2.5 per cent less than what was spent in the previous financial year.
13. Provincial health departments have spent R6.7 billion or 74.1 per cent of the budgeted R9.1 billion for capital expenditure, which is R42 million or 0.6 per cent less than the outcome for 2009/10.
14. After health, the second biggest share of provincial capital adjusted budgets is for public works, roads and transport departments (31 per cent), which have spent R7.5 billion or 95.8 per cent of the total capital budget of R7.9 billion.
15. Provincial own revenue collected is at R10.4 billion or 107.4 per cent of the budgeted own revenue of R9.6 billion. National government has transferred R265.1 billion of the equitable share and R59.8 billion of conditional grants to provinces.
16. A more detailed analysis of the provincial preliminary outcome for the 2010/11 financial year is set out in Annexure A.
Detailed analysis of the 2010/11 financial year (Preliminary outcome)
1. The budgeted figures for provinces are based on the 2010/11 adjusted estimates of provincial revenue and expenditure documents (adjusted budgets) tabled in the provincial legislatures during November and December 2010. The budgeted figures also take account of revisions effected in a second adjusted estimate for six provinces.
Total Expenditure
2. Table 1 indicates that in the 2010/11 financial year provinces spent R330.9 billion (preliminary outcome) or 97.3 per cent of the adjusted budgeted expenditure of R340.1 billion. Spending against adjusted budgets is lower in percentage terms compared to the 2009/10 financial year, when it stood at 100.3 per cent. Spending in nominal terms is 8.6 per cent or R26.1 billion higher than last year, when provinces had spent R304.8 billion.
3. Among provinces, spending is the lowest in KwaZulu-Natal (95.2 per cent of the adjusted budget) and the Northern Cape (95.9 per cent) and highest in Limpopo at 100 per cent and the Western Cape at 98.6 per cent.
Social Services
4. Provinces have budgeted R251.8 billion for social services, including education, health and social development.
5. The preliminary outcome on social services is recorded at R246.3 billion, or 97.8 per cent of the total provincial social services adjusted budgets for 2010/11.
Education
6. Education adjusted budgets of R140.5 billion comprise 41.3 per cent of total provincial adjusted budgets. Table 3 indicates that the preliminary outcome for expenditure is R138.4 billion or 98.5 per cent of the total education adjusted budget. This is an increase of 9.6 per cent, or R12.1 billion, on the R126.3 billion spent in 2009/10.
7. Spending by provinces on education ranges from 97 per cent in Mpumalanga and 97.4 per cent in the Eastern Cape, KwaZulu-Natal and Gauteng, to the highest in Limpopo at 102.6 per cent, followed by the North West at 99.4 per cent.
8. The preliminary outcome on goods and services (including learner and teacher support materials) in education is recorded at R12 billion, or 80.1 per cent of the budgeted amount of R15 billion.
9. The bulk of education expenditure is on personnel (79.5 per cent). The preliminary outcome on education personnel amounts to R109.9 billion, or 101.5 per cent, of the R108.3 billion budgeted for personnel (table 4). Spending by provinces on personnel expenditure in education ranges from 98.5 per cent in the Western Cape, to 103.8 per cent in Limpopo.
10. Education capital preliminary outcome is at R5.4 billion, or 86.6 per cent, of the R6.2 billion adjusted budget. This is lower than the spending in the previous financial year by 2.5 per cent. Education capital expenditure is lowest in the Eastern Cape at 43.9 per cent and highest in Gauteng at 163 per cent.
Health
11. Health adjusted budgets, totalling R100.7 billion, comprise 29.6 per cent of total provincial adjusted budgets.
12. Table 6 indicates that, at R98.1 billion or 97.4 per cent of the total health adjusted budget, health expenditure increased by 10.7 per cent, or R9.5 billion, on the 2009/10 financial year.
13. The KwaZulu-Natal and Free State provinces spent the lowest share of their health adjusted budgets at 93.4 per cent and 95.3 per cent respectively. The highest shares are recorded by Gauteng at 100.5 per cent and the North West at 100.2 per cent.
14. Table 7 indicates that health personnel preliminary outcome is R58.9 billion, or 102.5 per cent, of the health personnel adjusted budget, an increase of R8 billion, or 15.7 per cent, on the R50.9 billion spent in 2009/10.
15. Non-personnel non-capital items, including medicines, drugs and other current expenditure, is at R32.4 billion, or 94.9 per cent, of the R34.1 billion adjusted budget.
16. The capital preliminary outcome in the health sector is at R6.7 billion, or 74.1 per cent, a decrease of R42 million or 0.6 per cent on the R6.8 billion spent last year.
17. Spending by provinces varied, with the lowest rate of health capital expenditure being in the Eastern Cape at 55.1 per cent, Gauteng at 58.3 per cent, and the highest being the North West and the Western Cape at 105.3 per cent and 99.3 per cent respectively.
Social Development
18. At R10.6 billion, the social development adjusted budget comprises 3.1 per cent of total provincial adjusted budgets.
19. Provinces registered a preliminary expenditure outcome of R9.9 billion, or 93.4 per cent, of the total R10.6 billion adjusted budget. This represents an increase of R856.8 million, or 9.5 per cent, on the R9.1 billion spent last year.
20. There were varying degrees of spending among provinces, the lowest being KwaZulu-Natal at 86.1 per cent and Gauteng at 87.2 per cent while the highest are the North Westat 100.4 per cent and the Eastern Cape at 99.9 per cent.
Human Settlements and Local Government
21. The human settlements and local government adjusted budgets, at R21.4 billion, comprise 6.3 per cent of total provincial adjusted budgets.
22. Spending by human settlements and local government was R20.7 billion, or 96.6 per cent, of the R21.4 billion adjusted budget. This represents an increase of R3 billion, or 16.9 per cent, on the R17.7 billion spent in 2009/10.
23. Spending levels by provinces varied, with the lowest being the North West at 88.2 per cent and the Eastern Cape at 93 per cent, while the highest spenders were the Northern Cape at 100 per cent and the Western Cape at 99.4 per cent.
Human Settlements Development Conditional Grant
24. Most of the human settlements and local government expenditure comes from the Human Settlements Development conditional grant. Table 11 indicates that provinces have spent R14.8 billion, or 97.3 per cent, of the R15.2 billion Human Settlements Development grant adjusted budget. These spending figures are R2.6 billion or 21.2 per cent higher than the outcome for last year.
Personnel expenditure
25. Personnel expenditure (compensation of employees) for the 2010/11 financial year is at R193.7 billion, or 101.1 per cent, of the R191.7 billion adjusted budget.
26. The preliminary outcome is R21.5 billion, or 12.5 per cent, higher than the R172.2 billion spent in the 2009/10 financial year.
27. Spending ranged from 98 per cent and 98.5 per cent in the Western Cape and KwaZulu-Natal respectively, to 105.1 per cent and 102.2 per cent in Gauteng and Limpopo respectively.
Overall Capital Budgets and Expenditure
28. Provinces have spent R21.3 billion or 84 per cent of the R25.4 billion capital adjusted budget (payments for capital assets). This is a decline of 3.3 per cent compared to the 2009/10 financial year.
29. Table 13 provides capital spending information by province and shows low rates of spending in the Eastern Cape at 65.3 per cent and Gauteng at 72 per cent, and high rates in the Western Cape at 97.9 per cent and Limpopo at 95.1 per cent. However, in absolute terms, KwaZulu-Natal has spent the most, with total spending of R5.7 billion followed by the Western Cape at R2.9 billion and Limpopo at R2.7 billion.
30. Provincial education departments have spent R5.4 billion, or 86.6 per cent, of their R6.2 billion education capital adjusted budgets. This is R136.7 million, or 2.5 per cent, less than spending in the previous financial year.
31. Provincial health departments have spent R6.7 billion, or 74.1 per cent, of their R9.1 billion health capital adjusted budgets, which is R42 million or 0.6 per cent less than the 2009/10 financial year.
32. At 31 per cent, public works, roads and transport departments has the second highest share of provincial capital adjusted budgets (after health). The sector has spent R7.5 billion or 95.8 per cent against its combined capital adjusted budgets of R7.9 billion.
Conditional Grants
33. The total conditional grant adjusted allocation is R64.6 billion (including conditional grant roll-overs from the 2009/10 financial year and other provincial adjustments), with health making up the bulk at R20.4 billion.
34. Table 14 reflects spending by all provinces on conditional grant adjusted allocations as at 31 March 2011 (preliminary outcome). It includes conditional grant roll-overs from the 2009/10 financial year and other provincial adjustments, but excludes spending on Schedule 4 and Schedule 8 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 (EPWP) Incentive grant for the infrastructure sector (Schedule 8 grant) specifies incentives to provinces to meet targets for priority government programmes.
35. Against the total adjusted allocation of R34.6 billion (which excludes Schedules 4 and 8 grants), the preliminary outcome for conditional grants amounts to R32.1 billion, or 92.6 per cent. Excluding the Gautrain Rapid Rail Link grant, the conditional grant outcome amounts to R31.6 billion, or 92.5 per cent, of the total adjusted allocation of R34.2 billion.
36. Specific grants that show low rates of spending for the 2010/11 financial year include:
a. Transport Disaster Management (63.9 per cent)
b. Expanded Public Works Programme for the Social Sector (72.4 per cent)
c. Hospital Revitalisation (75.2 per cent)
d. Technical Secondary Schools Recapitalisation (75.8 per cent)
e. Devolution of Property Rate Funds (81.5 per cent)
f. HIV and Aids (Life Skills Education) (87.4 per cent)
g. Community Library Services (87.9 per cent)
h. Forensic Pathology Services (88.1 per cent)
37. Table 15 indicates selected conditional grant spending rates as at 31 March 2011.
38. The table further indicates that four provinces have spent less than 90 per cent on the Forensic Pathology Services grant, and six provinces have spent less than 90 per cent on the Hospital Revitalisation grant.
Provincial Revenue
39. Provincial revenue includes adjusted equitable share allocations of R265.1 billion, conditional grants of R63 billion and own revenue of R9.6 billion. The total provincial revenue received and collected for 2010/11 is R335.3 billion, or 99.3 per cent, of total adjusted revenue of R337.8 billion.
40. National government has transferred R265.1 billion or 100 per cent of the equitable share to provinces, and R59.8 billion or 95 per cent in conditional grants to provinces.
41. Provinces have collected R10.4 billion or 107.4 per cent of the budgeted own revenue of R9.6 billion, which is R679.5 million, or 7 per cent, more than what was collected for the previous financial year.
42. The collection rate varies from 93.5 per cent in Mpumalanga and 101 per cent in the Eastern Cape, to a high of 128.7 per cent in the Northern Cape and 114.8 per cent in the North West.
Annexure A - Tables [PDF]
