Provincial Budgets: 2014/15 Financial Year: Fourth Quarter year to date Provincial Budgets and Expenditure Report (Preliminary Outcome)
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 2014/15 financial year (1 April 2014 to 31 March 2015). The statement is available on the treasury website (www.treasury.gov.za). These figures may be revised as provincial departments have until 31 May 2015 to finalise (and reconcile) their financial statements before they are submitted 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 publication take account of the 2014 Adjusted Estimates of Provincial Revenue and Expenditure, which were presented to the provincial legislatures during November 2014. The adjustments include R669.4 million in conditional grants allocated in the 2014 Adjusted Estimates of National Expenditure and Division of Revenue Amendment Act, 2014.
4. No additional funding has been allocated to the provincial equitable share. Provinces must ensure that all non-discretionary obligations are adequately provided for in their respective budgets.
5. A summary of the additional transfers to provinces appropriated by National are:
a. A rollover of R9.7 million for KwaZulu-Natal was agreed to under the HIV and Aids (Life Skills Education) Grant.
b. An amount of R397.7 million has been converted from the School Infrastructure Backlogs Grant (indirect grant) to the Education Infrastructure Grant (direct grant) for the Western Cape.
c. Rescheduling of R7 million for the National Health Insurance Grant to the Western Cape was gazetted on 31 December 2014 in terms of Section 21 the Division of Revenue Act, 2014, as amended.
d. Under the National Health Grant (Health Facility Revitalisation Component, an indirect grant) R262 million was converted to the Health Facility Revitalisation Grant (a direct grant) for four provinces (R18 million for the Free State, R200 million for KwaZulu-Natal, R14 million for the North West and R30 million for the Northern Cape).
e. R50.5 million was approved for unforeseen and unavoidable expenditure for the repair and replacement of infrastructure damaged by floods.
6. A second gazette was published on 16 February 2015 in terms of Section 18(4)(a) of the Division of Revenue Act, 2014, as amended, which revised the allocations of the Human Settlements Development grant between provinces.
7. These allocations and others were tabled in second adjusted budgets during February and March 2015. All provinces (except the North West) have tabled second adjusted budgets.
8. In addition to the national adjustments, provinces increased their main budgets by R5.4 billion. The provincial adjustments consist mainly of unspent conditional grants not surrendered to the National Revenue Fund and other funds surrendered to the respective Provincial Revenue Funds in respect of the 2013/14 financial year.
9. In light of the above, in aggregate, provinces increased their main budgets (expenditure side) by R6.2 billion with the bulk to education (R2.5 billion), public works, roads and transport (R1.3 billion) and health (R964.7 million).
10. In aggregate, provinces increased their compensation of employees’ main budget by R15.4 million; goods and services main budget revised upwards by R1.4 billion; and transfers and subsidies main budget increased by R2.8 billion.
11. Payments for capital assets’ main budget have been revised upwards by R1.9 billion. However, under expenditure in respect of capital amounted to R2.5 billion in seven provinces for the 2013/14 financial year. Currently, the preliminary outcome on capital expenditure shows an under expenditure of R2.1 billion in seven provinces.
Overall Expenditure Trends – Preliminary Outcomes
12. In aggregate, provinces spent R454.3 billion, or 98.6 per cent, of their adjusted budgets of R460.7 billion in 2014/15. This represents a spending increase of 7 per cent or R29.6 billion compared to the 2013/14 financial year when provinces spent R424.7 billion.
13. The preliminary outcome for education expenditure is R186.8 billion or 99 per cent of the R188.7 billion combined education adjusted budgets, an increase of 5.9 per cent or R10.3 billion on the previous financial year. It remains the largest item on provincial budgets (41 per cent).
14. Health expenditure totalled R140.9 billion, or 99.5 per cent, of the R141.6 billion combined health adjusted budgets and is the second largest item on provincial budgets (30.7 per cent). This is 7.8 per cent or R10.2 billion more than the 2013/14 financial year.
15. Social development expenditure is R15.3 billion or 99.1 per cent of the R15.4 billion social development adjusted budgets.
16. Personnel expenditure (compensation of employees) is in aggregate R272.6 billion or 99.1 per cent of the budgeted R275.2 billion.
17. In aggregate, provinces spent R31 billion or 94.2 per cent of their R33 billion combined capital (payments for capital assets) adjusted budgets. This is an increase of R855.3 million or 2.8 per cent on the 2013/14 financial year.
18. Provincial education departments spent R8.7 billion or 89.8 per cent of the budgeted R9.4 billion for capital expenditure. This is R369.2 million or 4.1 per cent less than the previous financial year.
19. Provincial health departments spent R7.1 billion or 90.3 per cent of the budgeted R7.9 billion for capital expenditure, which is R442.7 million or 5.9 per cent less than the outcome for 2013/14.
20. The biggest share of provincial capital adjusted budgets was for public works, roads and transport departments (35.6 per cent), which spent R11.8 billion or 100.3 per cent of their combined capital adjusted budgets of R11.7 billion.
21. Provincial own revenue collected was R16.8 billion or 115.1 per cent of the budgeted own revenue of R14.6 billion. National government transferred R362.5 billion of the equitable share and R82.4 billion of conditional grants to provinces.
22. A more detailed analysis of the provincial preliminary outcome for the 2014/15 financial year is set out in Annexure A.
