The Western Cape has the fastest-growing population nationally, yet it receives only the fifth-largest allocation of the national budget. Gauteng and KwaZulu-Natal are in a similar predicament.
The overarching message of my opening address at the first sitting of the seventh Western Cape provincial parliament in July 2024 was maintaining financial sustainability across the Western Cape government and fighting for our fair share of the national budget for our residents.
Why? Because if we do not ensure financial sustainability and good governance we cannot deliver the services that our residents rightly expect from us.
As we move into the first phase of our annual budget season with the upcoming Medium-Term Budget Policy Statement and the recent tabling of the Western Cape Provincial Economic Review, which heralds the start of our provincial budget process, it is worthwhile to review some of the key issues confronting us in achieving financial sustainability.
If we are to grow our provincial economy, enable more jobs and make our residents and communities safer, we need:
- Our residents’ fair share of the national government funding that allows us to educate our learners, provide healthcare when our residents need it and build the roads and infrastructure our province needs to thrive;
- Programmes and funding that equip us to respond to the growing complexities of the climate crisis; and
- Data and evidence that helps us make the best possible decisions for our residents’ service delivery needs.
Our residents’ fair share of the money
The Western Cape has the fastest-growing population nationally, yet we receive only the fifth-largest allocation of the national budget.
This does not make sense. And we are not alone.
Gauteng and KwaZulu-Natal – provinces that also have large, growing populations – are in a similar predicament and should also be agitating for their fair share of the national budget for their residents.
This is a massive challenge at the best of times, but amid an increasingly stagnant economic environment, it is especially complex and difficult. Despite this, I am proud of what we have been able to achieve to meet the needs of our residents, particularly the vulnerable.
Financial predictability, fairness and sustainability are essential for good governance and for planning for future crises.
It was for this reason that the Western Cape government took the difficult but necessary decision to declare an intergovernmental dispute with the national government last year upon learning, after the deal was done, that provinces were to be saddled with partially funding the centrally negotiated public wage bill for the 2023/4 financial year. That left us with a R1.1-billion shortfall.
This in-year shortfall and its subsequent knock-on effects were further compounded by the estimated R7-billion cut we are expecting to our overall budget over the next three years from the national government. In the education sector alone, budget cuts are anticipated to amount to nearly R4-billion over the next three years.
Planning and funding for disasters
The Western Cape has been hit by multiple climate disasters this year. Just as the province recovered from one calamity, another hit. This is likely to be the nature of our future as the fuller effects of the climate crisis are felt.
And once again we are not alone: I have just returned from co-chairing, as Africa’s representative, the global sub-national governments’ Under2 Coalition as part of the United Nations’ Climate Week.
Apart from the devastation and tragedy that accompany disasters, there is the growing cost of the ensuing damage. To fully appreciate the true scale of each disaster and its impact on our fiscal situation, you need to look back, beyond 2024 and break down the numbers:
- In May and June 2023, the province was hit by severe weather causing damages of R983.5-million. In response, the Western Cape government reprioritised R147-million and municipalities R124-million. Municipalities received R8.5-million from the national government. That left us R695.5-million out of pocket;
- In September 2023 storm surges along the Garden Route coastline caused extensive damage. Municipalities received R7.8-million from the national government to cover the cost of the disaster response, leaving them with a shortfall of R23.2-million;
- In September 2023, another bout of severe weather swept large parts of the province, leaving destruction in its wake. We responded by reprioritising R102-million, and municipalities R11-million. Five municipalities received R144-million from the national government for damages. The province, however, was left with a shortfall of R1.1-billion;
- In June 2024, severe weather struck again, and damages of R762-million were recorded; and
- In July 2024, severe weather over large parts of the province caused damages preliminarily estimated at R3.4-billion.
Money for responding to disasters is, in terms of national legislation, required to come from the national Treasury via the Department of Cooperative Governance. And while we have had some recent positive engagements, the Western Cape government currently has a R6.1-billion shortfall.
This means that we have had to cover this shortfall from elsewhere in our funds. This damage extends to roads, rivers, bridges, property and agriculture – infrastructure that had to be repaired. Repairs to our provincial roads have cost us R1.8-billion since June last year, but we have only received R350-million – this means that other critical projects and maintenance have had to be reprioritised.
Gift of the Givers is on site to help residents in Dassenberg, Riverlands and Chatsworth near Malmesbury who were affected by flooding caused by the collapse of two dam walls in August, 2024.(Photo: Gift of the Givers)
How is any provincial or local government expected to absorb that financial blow, amid an already heavily constrained financial climate? One of the potential side effects could be that funding that was designated for maintenance has been reprioritised for repair, placing further strain on existing infrastructure that requires important maintenance.
Reliable data and evidence
And finally, if we are to make good service delivery decisions for our residents, it must be based on good information and data. The Western Cape currently gets most of its funding via the Provincial Equitable Share (PES), which is largely allocated to all of South Africa’s provinces according to the 2011 Census results supplemented by other data.
The Western Cape’s PES was last adjusted according to the 2011 census, 11 years ago for the 2013/14 financial year. This increased our PES allocation to 10% of the national allocation. The population of the Western Cape has changed significantly since the 2011 census, yet our allocation is still being made based on outdated data.
While we are deeply concerned about the quality of the Census 2022 data, we cannot further delay updating how the PES is allocated to the provinces. The Western Cape government raised concerns about the quality of the census data in November 2023, particularly when we looked at the population figures in the Cape Winelands.
However, we believe that our focus must now be on using the existing 2022 Census data and supplementing it with other data that is readily available to ensure that the resources that our residents have a right to are correctly allocated.
And while the Western Cape government is committed to doing everything we can to help the Government of National Unity succeed, we will be guided by our commitment to work for the residents of this province.
We must build on the successes that this government has achieved and confront the challenges head on. We will work closely with other spheres of government. We will support them when it is in the interests of our residents and fight for our residents when we do not believe that they are doing so.
We are committed to cooperative governance, but we will also hold the national government to account and ensure that we get our fair share. DM