Western Cape declares intergovernmental dispute with Treasury over rising public sector wage bill

The Western Cape government has declared an intergovernmental dispute with the national government to secure R1.1-billion from the National Treasury for the public sector wage increase. 

Premier Alan Winde and the MEC for finance and economic development, Mireille Wenger, in a joint statement on Tuesday, said the dispute was declared with the national government represented by Finance Minister Enoch Godongwana and Public Service and Administration Minister Noxolo Kiviet in terms of the Intergovernmental Relations Framework Act.

Read more in Daily Maverick: National government inflicting death by a thousand budget cuts on SA and the Western Cape

The Act provides a framework for the creation of intergovernmental forums and mechanisms to facilitate the settlement of intergovernmental disputes. 

“The dispute relates to the centrally negotiated and agreed to public sector wage bill, which was implemented after the Western Cape provincial parliament approved the annual budget, leading to unprecedented in-year budget cuts,” they said.

“Through this action, we are trying to avoid dramatic reductions in service delivery spending in order to cater for the wage liability. We have tried to engage with national government to avoid this situation, to no avail. And for this reason, we have taken the difficult but necessary step of declaring an intergovernmental dispute.” 

In March, the government inked a deal to give 1.2 million public servants a 7.5% pay increase in the current fiscal year (2023/24) that it had not fully budgeted for. 

Public servant remuneration is already the single largest component of government expenditure, gobbling up 30% of 2023’s R2.26-trillion budget, Daily Maverick’s Ray Mahlaka reported. The provinces — who had no role in the wage deal negotiations — have been forced to accommodate pay increases from their existing budgets. 

After the provinces bemoaned that the national government had negotiated unaffordable pay increases centrally and then denied provincial departments the funds to implement them, National Treasury committed to partial funding of R17.6-billion for provinces to be able to implement pay increases.

But DA Western Cape budget spokesperson Deidré Baartman said the increase in public sector wages had had an impact of close to R2.9-billion on the Western Cape’s budget for this financial year. The national government had allocated an additional R1.7-billion to the province, but this would only partially cover the wage increase for education and healthcare. 

“All other departments’ wage increases will have to be self-funded. The approximately R1.1-billion shortfall would have to be found within the existing budget, meaning cuts to vital programmes that impact our residents directly,” Baartman said.

She added that the national government was also slashing R640-million from conditional grants to the province, and there would be no disaster funding from the national government to repair damage from this year’s flooding in the province. The provincial government had requested a State of Disaster declaration from the National Disaster Management Centre to unlock about R700-million in funding to repair flood damage caused by winter storms in May and June. 

Winde and Wenger said the “staggering” R1.1-billion shortfall needed to pay public servants would “have a direct impact on critical service delivery” like schools, clinics, hospitals and road networks.

Read more in Daily Maverick: Public sector wage deal doublethink hides a double whammy for provinces

Our message to the national government is clear:

Give us our R1.1 billion or we will see you in court.

— Premier Alan Winde ?? (@alanwinde) November 28, 2023

Eastern Cape pinching pennies