Provincial Budgets and Expenditure Review 2001/02 – 2007/08 15 September 2005

1

Provincial Budgets and Expenditure Review

2001/02 – 2007/08

15 September 2005

2

Prov. Budget and Exp Review (1)

• Unlike previous reviews, focuses only on provincial finances and performance– Scope of LG has grown substantially over

the years and warrants a separate review– Difference in municipal and

provincial/national financial years– LG to be published immediately after the

LG elections• In time for use by new political office bearers

3

Prov. Budget and Exp Review (2)

• Provincial budgets, expenditure and service delivery trends– Builds on the 2004 Trends in Intergov. Finances– Covers past and future budgets (2001/02 to

2007/08)– Provides consolidated information– Allows comparison between provinces – Critical document to inform on service delivery

• Released before 1½ months MTBPS– Assist shaping the 2006 Budget and MinMecs

• Inform policy priorities• Guide provincial EXCOs in budget preparation

4

Prov. Budget and Exp Review (3)• Importance for portfolio and select committees

– Coincides with the tabling of annual reports and thus informs the service delivery debate

• Are targets set in strategic plans achieved?• Are we getting value for money? Broadened access and

quality of services?• What are the service delivery challenges? Remedies?• Do we have data to measure service delivery performance?

– Platform for accounting officers to account– Foster good governance and transparency

• Report to external stakeholders on government performance– Policy analysts, Public, etc

5

Prov. Budget and Exp Review (4)• 9 chapters in the document

– Introduction– Education– Health– Social Development– Housing– Agriculture and Land– Roads and Transport– Personnel– Trends in Provincial Budgets

• Annexure A:– Extensive financial information

6

Intergovernmental Fiscal System (1)

• 3 spheres of government– Independent, interrelated and based on

principles of cooperative governance• All with different functions (exclusive and

concurrent)• Provinces and municipalities have key service

delivery responsibilities• Provinces and municipalities implement pro-poor

programmes• Continued need for provinces and municipalities to

improve their service delivery capacity

7

Intergovernmental Fiscal System (2)

• Key concurrent functions– School education, health, social welfare

and housing• Policy formulation and setting of norms and

standards a national competence• Implementation mainly at provincial level

– Coordination challenges that arise • Is there alignment between provincial budgets

and national policy priorities?

– The Review highlights how each of these concurrent functions are structured

• Which sphere is responsible for what

8

Intergovernmental Fiscal System (3)• Revenue sharing arrangement

– Vertical Division of Revenue • Between the 3 spheres• Informed by assigned service delivery

responsibility and revenue raising capacity of each sphere

• Based on governments policy priorities

– Horizontal Division of Revenue• Among the 9 provinces

– Division of Revenue Bill• Reflects the vertical and horizontal DOR

– Culmination of an extensive intergovernmental consultative process

• Approved by both houses of Parliament/NCOP

9

Intergovernmental Fiscal System (4)Vertical Division of Revenue

Table 1.1 Main budget expenditure, 2001/02 to 2007/082001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Outcome Medium-term estimates

R million

State debt cost 47,581 46,808 46,313 48,901 53,125 56,603 59,381

Non-interest expenditure 215,324 244,721 282,349 321,212 364,694 399,790 435,513

Percentage increase 14.8% 13.7% 15.4% 13.8% 12.9% 9.1% 8.0%

Total expenditure 262,905 291,529 328,662 370,113 417,819 456,393 494,894

Percentage increase 12.4% 10.9% 12.7% 12.6% 12.9% 9.2% 8.4%

Contingency reserve – – – – 2,000 4,000 8,000

Division of available funds

National departments 87,705 99,091 108,459 121,101 136,262 146,800 157,817

Provinces 1 121,099 136,873 161,494 185,354 209,273 229,282 248,236

Local government 1 6,520 8,759 12,396 14,757 17,159 19,708 21,461

Total 215,324 244,722 282,349 321,212 362,694 395,789 427,513

Percentage shares

National departments 40.7% 40.5% 38.4% 37.7% 37.6% 37.1% 36.9%

Provinces 56.2% 55.9% 57.2% 57.7% 57.7% 57.9% 58.1%

Local government 3.0% 3.6% 4.4% 4.6% 4.7% 5.0% 5.0%

1. Includes conditional grants.

Revised estimate

10

Intergovernmental Fiscal System (5)Funding of Provinces

• Provinces determine own budgets guided by national policy priorities– National transfers (97 per cent) the largest share of

provincial revenue• Own revenue (3 per cent)

– Equitable share 65,4 per cent of national transfers• Unconditional transfer• Provinces have discretion on how to allocate based on

government priority• Main source of funding for social services

– Conditional grants 34,6 per cent of national transfers

• Social assistance grant payments reason for large conditional grant share

• Health conditional grants second largest share• Performance and evolution of conditional grants need

thorough review

11

Provincial Budgets and Expenditure Review: 2001/02 – 2007/08

Chapter 9: Trends in Provincial Budgets

12

Chapter Outline

• Introduction

• Provincial Revenue Trends– National transfers to provinces

• Provincial equitable share

• Conditional grants

– Provincial own revenue

• Provincial Expenditure Trends– Social services spending

– Non-social services spending

– Personnel expenditure

– Payments for capital assets

• Conclusion

13

Introduction• SA’s Intergovernmental System places provinces at the epicentre of

government’s delivering programme

• Concurrent functions such as:

– School Education

– Health

– Social Welfare Services

– Housing

• Social Services are approximately 82 per cent of total provincial spending

• Non-social services includes:

– Agricultural support to farmers

– Construction & maintenance of provincial roads

– Provincial administrations & governance functions

• Delivery of social services continues to be a pillar of government’s transformation agenda

• Improved & expanded social service delivery linked to strong economy

• Budget has become key instrument of co-operative governance

14

Provincial Revenue Trends

• National transfers are the largest source of funding for services provided by provinces

– Equitable share & conditional grants

• The change in the financing mechanism for social security grants impacts on the analysis in this Review

• Provincial share of nationally raised revenue above 96 per cent

• Equitable share largest share of national transfers – 64 per cent

– Grows at 4 per cent per year in real terms over the MTEF

– Government continues to prioritize social services funded through ES

• The type and number of Conditional Grants reflect the evolution of the intergovernmental fiscal system

– Three types: Recurrent, capital and transitional and capacity building

– As system matures, transitional and capacity building grants will be phased out

– The increase CG transfers mainly due to social security grants

15


Table 9.1 Provincial revenue and expenditure, 2001/02 to 2007/082001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Outcome

R million

Transfers from national 121 398 136 925 161 532 185 136 209 273 228 782 247 736

of which:

Equitable share 87 628 94 006 108 694 121 157 134 706 146 757 157 678

Conditional grants 33 770 42 919 52 838 63 979 74 567 82 025 90 058

Ow n revenue 4 942 5 984 6 613 6 255 5 905 6 139 6 426

Total revenue 126 340 142 909 168 146 191 391 215 177 234 922 254 162

Total expenditure 122 685 145 808 170 669 188 870 213 769 234 057 253 569

Surplus(+)/deficit(-) 3 655 -2 899 -2 524 2 521 1 409 864 593

Share of total provincial revenue

Transfers from national 96,1% 95,8% 96,1% 96,7% 97,3% 97,4% 97,5%

of which:

Equitable share 72,2% 68,7% 67,3% 65,4% 64,4% 64,1% 63,6%

Conditional grants 27,8% 31,3% 32,7% 34,6% 35,6% 35,9% 36,4%

Ow n revenue 3,9% 4,2% 3,9% 3,3% 2,7% 2,6% 2,5%

Total revenue 100,0% 100,0% 100,0% 100,0% 100,0% 100,0% 100,0%

Source: National Treasury provincial database

Preliminary outcome

Medium-term estimates

16


0%

20%

40%

60%

80%

100%

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Equitable share Conditional grants Ow n revenue

17

Provincial Revenue Trends:Own Revenue

• 2,7 per cent of total revenue in 2005/06 declining marginally to 2,5 per cent in 2007/08

• Budgeted at R5,9 billion in 2005/06, R6,1 billion in 2006/07 and R6,4 billion in 2007/08

• Average annual growth rate of 0,9 per cent between 2004/05 and 2007/08

• Provinces tend to understate their own revenue forecasts - declines from the 2004/05 preliminary outcomes of R6,3 billion to R5,9 billion (5,7 per cent)

• Own revenue is made up of tax receipts (casino taxes, horse racing taxes, liquor licences and motor vehicle licences), non-tax receipts, transfers received, sale of capital assets and other own revenue collected

• Motor vehicle licence fees are the biggest source of revenue - 41,6 per cent 2004/05, and is set to rise further to 48,3 per cent by 2007/08

• The drop in non-tax revenue is due to sharp decline in interest revenue

18

Provincial Revenue Trends:Own Revenue

Table 9.2 Provincial own revenue by category, 2001/02 to 2007/082001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Outcome

R million

Tax receipts 2 447 2 750 3 306 3 441 3 704 3 922 4 115

Casino taxes 410 516 649 729 753 809 848

Horse racing taxes 154 113 112 89 119 121 132

Liquor licences 12 14 16 20 21 27 31

Motor vehicle licences 1 871 2 107 2 530 2 604 2 812 2 965 3 104

Non-tax receipts 1 104 1 258 1 751 1 514 1 354 1 419 1 493

Transfers received 15 15 22 42 67 31 22

Sales of capital assets 77 58 222 60 72 69 55

Other 1 300 1 903 1 312 1 198 709 699 741

Total 4 942 5 984 6 613 6 255 5 905 6 139 6 426

Percentage of total provincial own revenue

Tax receipts 49,5% 46,0% 50,0% 55,0% 62,7% 63,9% 64,0%

Casino taxes 8,3% 8,6% 9,8% 11,6% 12,7% 13,2% 13,2%

Horse racing taxes 3,1% 1,9% 1,7% 1,4% 2,0% 2,0% 2,1%

Liquor licences 0,3% 0,2% 0,2% 0,3% 0,3% 0,4% 0,5%

Motor vehicle licences 37,9% 35,2% 38,3% 41,6% 47,6% 48,3% 48,3%

Non-tax receipts 22,3% 21,0% 26,5% 24,2% 22,9% 23,1% 23,2%

Transfers received 0,3% 0,3% 0,3% 0,7% 1,1% 0,5% 0,3%

Sales of capital assets 1,6% 1,0% 3,4% 1,0% 1,2% 1,1% 0,9%

Other 26,3% 31,8% 19,8% 19,2% 12,0% 11,4% 11,5%

Total 100,0% 100,0% 100,0% 100,0% 100,0% 100,0% 100,0%


Preliminary outcome


19

Provincial Expenditure Trends• Between 2001/02 and 2004/05, expenditure has grown from

R122,7 billion to R188,9 billion: a real growth rate of 8,4 per cent a year

• Budgeted to spend R213,8 billion in 2005/06 (nominal growth of 13,2 per cent, real growth of 8,6 per cent from 2004/05 outcome)

• Over the MTEF, increase to R253,6 billion in 2007/08 at an average annual growth of 10,3 per cent or 5,1 per cent faster than inflation

• Capital spending sustains its upward growth path (9,5 per cent average annual over the MTEF)

• Social development one of the fastest expenditure growing items in provinces

• Provincial spending trends vary between provinces

• Provinces must continue to maintain healthy balances between revenue streams and expenditure

20

Provincial Expenditure TrendsTable 9.3 Provincial expenditure, 2001/02 to 2007/08

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Outcome

R million

Eastern Cape 19 596 24 715 29 672 30 975 33 989 37 499 41 098

Free State 8 227 9 680 11 437 12 876 14 542 15 712 16 920

Gauteng 20 299 24 475 28 339 30 276 33 445 36 865 39 757

Kw aZulu-Natal 25 095 28 871 34 128 38 849 45 573 49 993 54 466

Limpopo 15 656 18 780 21 673 24 995 27 958 30 317 32 730

Mpumalanga 8 426 9 774 11 542 13 140 15 075 16 510 18 023

Northern Cape 2 968 3 469 4 151 4 457 5 048 5 598 6 028

North West 9 901 11 535 13 364 15 052 17 459 19 173 20 769

Western Cape 12 517 14 509 16 365 18 250 20 680 22 391 23 778

Total 122 685 145 808 170 669 188 870 213 769 234 057 253 569

Percentage growth

Eastern Cape 26,1% 20,1% 4,4% 9,7% 10,3% 9,6%

Free State 17,7% 18,1% 12,6% 12,9% 8,0% 7,7%

Gauteng 20,6% 15,8% 6,8% 10,5% 10,2% 7,8%

Kw aZulu-Natal 15,0% 18,2% 13,8% 17,3% 9,7% 8,9%

Limpopo 20,0% 15,4% 15,3% 11,9% 8,4% 8,0%

Mpumalanga 16,0% 18,1% 13,9% 14,7% 9,5% 9,2%

Northern Cape 16,8% 19,7% 7,4% 13,3% 10,9% 7,7%

North West 16,5% 15,9% 12,6% 16,0% 9,8% 8,3%

Western Cape 15,9% 12,8% 11,5% 13,3% 8,3% 6,2%

Total 18,8% 17,1% 10,7% 13,2% 9,5% 8,3%


Preliminary outcome


21

Social Services Spending• Social services spending makes up the bulk of provincial

expenditure – approximately 82 per cent

• This includes Education, Health and Social Development

• Grew by 8,8 per cent in real terms over the period 2001/02 to 2004/05

• Over the MTEF, expected to grow by a further 4,6 per cent in real terms

• Spending doubles over the seven-year period from R100,4 billion in 2001/02 to R206 billion by 2007/08

• Bulk of social services goes to programmes targeted at poor persons and households to improve the quality of life for South Africans

• The more rural, poorer provinces’ share in social services spending is higher than urban provinces

• Significant changes in the composition of social services are evident, e.g. Social security grants

22

Social Services Spending

0%

20%

40%

60%

80%

100%

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Education Health Social Development

23

Social Services SpendingTable 9.5 Consolidated provincial expenditure, 2001/02 to 2007/08

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Outcome

R million

Education 47 274 53 151 60 255 64 656 70 223 76 538 82 202

Health 29 347 32 794 36 916 40 575 45 905 49 969 53 211

Social development 23 768 32 369 42 106 50 796 59 686 65 488 70 614

Total social services 100 389 118 314 139 277 156 027 175 814 191 994 206 028

Contingency reserves – – – 53 953 1 205 1 610

Non-social services 22 297 27 493 31 392 32 790 37 002 40 857 45 931

Total 122 685 145 808 170 669 188 870 213 769 234 057 253 569

Shares of total provincial expenditure

Social services 81,8% 81,1% 81,6% 82,6% 82,2% 82,0% 81,3%

Education 38,5% 36,5% 35,3% 34,2% 32,8% 32,7% 32,4%

Health 23,9% 22,5% 21,6% 21,5% 21,5% 21,3% 21,0%

Social development 19,4% 22,2% 24,7% 26,9% 27,9% 28,0% 27,8%

Non-social services 18,2% 18,9% 18,4% 17,4% 17,8% 18,0% 18,7%

Total 100,0% 100,0% 100,0% 100,0% 100,0% 100,0% 100,0%

Percentage growth

Social services 17,9% 17,7% 12,0% 12,7% 9,2% 7,3%

Education 12,4% 13,4% 7,3% 8,6% 9,0% 7,4%

Health 11,7% 12,6% 9,9% 13,1% 8,9% 6,5%

Social development 36,2% 30,1% 20,6% 17,5% 9,7% 7,8%

Non-social services 23,3% 14,2% 4,6% 15,6% 10,8% 13,0%

Total 18,8% 17,1% 10,7% 13,2% 9,5% 8,3%


Preliminary outcome


24

Non-Social Services Spending• Include, among others, public works, roads and transport, housing and

local government, agriculture, sport and environmental affairs

• Approximately 18 per cent of total provincial expenditure

• Economic functions delivered are very important for economic growth and job creation

• Grew at an average annual rate of 13,8 per cent between 2001/02 and 2004/05

• Slowing down slightly but the strong recovery continues through 2007/08

• The strong growth will strengthen programmes such as:

– The new housing strategy

– The comprehensive agricultural support programme (CASP)

– The expanded public works programme

• Doubles between 2001/02 and 2007/08 from R22,3 billion to R45,9 billion

• Contribution towards stimulating economic growth, creating employment opportunities and reducing poverty

25

Personnel Expenditure

• Success of containment of personnel costs to acceptable and sustainable levels - from 55,2 per cent (2001/02) to 46,5 per cent in 2004/05 and to 43,6 per cent by 2007/08

• Provincial education and health departments employ over 658 000 personnel

– Largest contributor is education (R57,5 billion or 59,4 per cent of total provincial personnel spending in 2005/06)

– Education grows by 7,5 per cent from 2004/05 to 2005/06, 7,1 per cent in 2006/07 and 6,8 per cent in 2007/08

– Health is at R25,8 billion or 26,7 per cent in 2005/06

– Slight decline in Health growing by 10,8 per cent in 2005/06, 7,7 per cent in 2006/07 and 5,9 per cent in 2007/08

• Personnel spending growth is still well above inflation

• Over 65 per cent of total provincial personnel spending is concentrated in four provinces (KZN, EC, GT, LIM)

26

Personnel Expenditure

Table 9.6 Provincial expenditure on compensation of employees, 2001/02 to 2007/082001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Outcome

R million

Eastern Cape 11 198 12 210 13 352 14 363 15 123 15 999 16 766

Free State 4 763 5 172 5 714 6 212 7 106 7 589 8 003

Gauteng 10 594 11 452 12 640 13 501 14 672 15 549 16 396

Kw aZulu-Natal 13 621 14 864 16 098 17 909 20 170 22 210 24 207

Limpopo 9 482 10 450 11 488 12 516 13 430 14 266 15 225

Mpumalanga 4 450 4 919 5 395 5 897 6 799 7 216 7 533

Northern Cape 1 410 1 542 1 737 1 946 2 205 2 325 2 456

North West 5 701 6 208 6 851 7 210 7 976 8 630 9 222

Western Cape 6 502 6 987 7 511 8 309 9 322 10 078 10 737

Total 67 722 73 804 80 786 87 861 96 802 103 862 110 545


Preliminary outcome


27

Payments for Capital Assets• Includes spending on construction, rehabilitation of buildings,

roads and other immovable assets

• Excludes spending on housing subsidy (capital transfer) – NERF

• Grew robustly between 2001/02 and 2004/05, at an average annual rate of 18,6 per cent

• Rising at an average annual rate of 15 per cent from R11,9 billion in 2005/06 to R13,9 billion in 2006/07 and R15,3 billion in 2007/08 over the MTEF

• 36 per cent of capital spending is on roads and transport followed by Health (29,4%) & Education (24,1%)

• Preliminary capital spending outcomes (2004/05) show R1,8 billion underspending in provinces – present some challenges

• The infrastructure delivery improvement programme (IDIP) aims to make infrastructure delivery more efficient and effective

28

Payments for Capital Assets

Table 9.7 Provincial payments for capital assets1, 2001/02 to 2007/082001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Outcome

R million

Eastern Cape 359 840 1 699 1 444 1 621 2 303 2 790

Free State 382 422 522 480 544 583 663

Gauteng 1 183 1 640 1 754 1 831 1 455 1 897 1 907

Kw aZulu-Natal 1 937 1 846 2 319 2 318 3 020 3 215 3 515

Limpopo 389 650 875 1 286 1 493 1 361 1 436

Mpumalanga 518 639 695 756 1 075 1 189 1 494

Northern Cape 175 250 200 213 281 455 546

North West 388 587 610 683 968 1 139 1 266

Western Cape 731 823 942 1 093 1 444 1 804 1 729

Total 6 063 7 697 9 617 10 103 11 900 13 947 15 347

Percentage of total expenditure

Eastern Cape 1,8% 3,4% 5,7% 4,7% 4,8% 6,1% 6,8%

Free State 4,6% 4,4% 4,6% 3,7% 3,7% 3,7% 3,9%

Gauteng 5,8% 6,7% 6,2% 6,0% 4,4% 5,1% 4,8%

Kw aZulu-Natal 7,7% 6,4% 6,8% 6,0% 6,6% 6,4% 6,5%

Limpopo 2,5% 3,5% 4,0% 5,1% 5,3% 4,5% 4,4%

Mpumalanga 6,2% 6,5% 6,0% 5,8% 7,1% 7,2% 8,3%

Northern Cape 5,9% 7,2% 4,8% 4,8% 5,6% 8,1% 9,1%

North West 3,9% 5,1% 4,6% 4,5% 5,5% 5,9% 6,1%

Western Cape 5,8% 5,7% 5,8% 6,0% 7,0% 8,1% 7,3%

Total 4,9% 5,3% 5,6% 5,3% 5,6% 6,0% 6,1%

1. Excludes capital transfers.


Preliminary outcome


29

Conclusion• Provincial spending continues to grow in real terms

• Social Development fastest growing item over the last three years and continue to rise rapidly over the MTEF

• Growth (SD) has no impact on other spending – robust growth in education, health and infrastructure

• Strong growth in capital expenditure – nearly triples over seven-year period

– Positive contribution to economic growth and employment creation

– However, underspending in 2004/05 indicates capacity constraints that inhibit certain sectors from delivering infrastructure in line with the resources available

– The infrastructure delivery improvement programme (IDIP) aims to make infrastructure delivery more efficient and effective

• Detail analysis is presented in preceding chapters for school education, health, social development, agriculture, housing and roads and transport and personnel

30


Chapter 2: Education

31

EducationChapter Outline

• Overview of Education Landscape• Review of key provincial expenditure

trends (2001/02 to 2004/05) and budgeted expenditure (2005/06 to 2007/08)

• Brief review of selected public school education outputs and quality

32

Education Landscape

• Three bands:- General education and training (grades R

to 9)- Further education and training (NQF levels 2 to 4 – including grades 10 to 12 and FET Colleges)- Higher education

• Concurrent function:- Provincial: Funding/Provisioning and Delivery

of GET and FET- National: - Policy/Monitor/Support to provinces

- Sole responsibility for Higher Education

33

Education Landscape(Provincial Education)

Biggest component: Public Ordinary Schools

(84,4% of 2004/05 education spending)Number of Learners,Educators and Schools in Public Ordinary Schools

by Province: 2002

Numbers Ratio

Province Learners Educators Schools Learner:

Educator

Leaner:

School

Eastern CapeFree StateGautengKwaZulu-NatalLimpopoMpumalangaNorthern CapeNorth WestWestern Cape

2 064 927 693 2131 482 2532 680 9931 816 200 903 789 194 062 887 649 915 270

64 974 21 947 44 651

71 624 55 155 24 870 6 334 29 451 25 225

6 150 2 281 1 915 5 560 4 561 1 856 459 2 247 1 460

32 32 33 37 33 36 31 30 36

336 304 774 482 398 487 423 395 627

Total 11 638 356 344 231 26 489 34 439

34

Second biggest component: FET CollegesFull-time equivalent (FTE) and head count students and institutions in the

public further education and training sector by province

Pre April 2002 2003

Province Full-time equivalent Head Counts

Former

Technical

Colleges

New

FET Colleges

Eastern CapeFree StateGautengKwaZulu-NatalLimpopoMpumalangaNorthern CapeNorth WestWestern Cape

13 489 9 792 47 161 22 744 13 100 7 655 3 129 9 382 17 461

34 854 24 291 135 227 65 073 37 072 24 067 8 581 31 057 45 922

26 11 33 24 14 10 6 11 17

8 4 8 9 7 3 2 3 6

Total 143 913 406 144 152 50

Education Landscape(Provincial Education)

35

Prov. Expenditure TrendsTable 2.4 Provincial education expenditure1, 2001/02 to 2007/08

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08


R million

Eastern Cape 7,948 9,268 10,308 10,717 11,251 12,687 13,879

Free State 3,201 3,551 4,087 4,348 4,872 5,202 5,521

Gauteng 7,314 8,129 9,539 9,834 10,360 11,269 11,776

KwaZulu-Natal 9,288 10,432 12,022 13,001 14,506 15,984 17,457

Limpopo 6,740 7,450 8,264 9,611 9,869 10,697 11,430

Mpumalanga 3,363 3,922 4,529 4,869 5,737 6,126 6,616

Northern Cape 1,031 1,181 1,305 1,396 1,534 1,606 1,700

North West 3,996 4,416 4,896 5,179 5,833 6,198 6,580

Western Cape2 4,393 4,802 5,305 5,701 6,260 6,769 7,243

Total 47,274 53,151 60,255 64,656 70,223 76,538 82,202

Percentage of total provincial spending

Eastern Cape 40.6% 37.5% 34.7% 34.6% 33.1% 33.8% 33.8%

Free State 38.9% 36.7% 35.7% 33.8% 33.5% 33.1% 32.6%

Gauteng 36.0% 33.2% 33.7% 32.5% 31.0% 30.6% 29.6%

KwaZulu-Natal 37.0% 36.1% 35.2% 33.5% 31.8% 32.0% 32.1%

Limpopo 43.0% 39.7% 38.1% 38.5% 35.3% 35.3% 34.9%

Mpumalanga 39.9% 40.1% 39.2% 37.1% 38.1% 37.1% 36.7%

Northern Cape 34.7% 34.0% 31.4% 31.3% 30.4% 28.7% 28.2%

North West 40.4% 38.3% 36.6% 34.4% 33.4% 32.3% 31.7%

Western Cape 35.1% 33.1% 32.4% 31.2% 30.3% 30.2% 30.5%

Total 38.5% 36.5% 35.3% 34.2% 32.8% 32.7% 32.4%

Preliminary outcome

36

Provincial Expenditure TrendsTable 2.5 Provincial education expenditure by economic classification,

2001/02 to 2007/082001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08


R million

Current payments 44,946 49,799 55,296 59,065 63,786 69,305 74,402

of which:

Compensation of employees

41,577 45,524 49,591 53,441 57,460 61,536 65,708

Goods and services 3,349 4,271 5,702 5,619 6,319 7,761 8,687

Transfers and subsidies 1,363 1,804 2,694 3,044 3,564 3,750 3,892

Payments for capital assets965 1,548 2,265 2,547 2,873 3,483 3,908

Total 47,274 53,151 60,255 64,656 70,223 76,538 82,202

Percentage change (average annual) 2001/02 – 2004/05 2004/05 – 2007/08

Current payments 9.5% 8.0%

of which:

Compensation of employees 8.7% 7.1%

Goods and services 18.8% 15.6%

Transfers and subsidies 30.7% 8.5%

Payments for capital assets 38.2% 15.3%

Total 11.0% 8.3%


Preliminary outcome

37

Composition: Prov education spending

Composition of Provincial Education Spending (2004/05)

82%

9%

5% 4%


Goods and services

Transfers and subsidies

Payments for capital assets

38

Provincial Expenditure TrendsTable 2.6 Provincial education expenditure by programme, 2001/02 to 2007/08

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08


R million

Administration 3,229 3,846 4,377 4,460 4,841 5,642 5,965

Public ordinary school education 39,987 44,915 50,650 54,540 58,960 63,778 68,694

of which:

Primary schools 22,052 24,217 28,081 29,625 32,109 34,492 37,356

Secondary schools 17,011 19,394 20,922 23,099 24,793 26,997 28,863

Other subprogrammes 924 1,303 1,647 1,816 2,058 2,289 2,474

Independent school subsidies 187 228 266 286 321 347 373

Public special school education

1,356 1,419 1,566 1,831 1,886 2,092 2,220

Further education and training 1,153 1,085 1,171 1,308 1,574 1,640 1,734

Adult basic education and training

379 442 537 530 620 778 814

Early childhood development 263 307 377 409 511 576 639

Auxiliary and associated services 720 909 1,312 1,292 1,510 1,685 1,763

Total expenditure 47,274 53,151 60,255 64,656 70,223 76,538 82,202

Preliminary outcome

39

Provincial Education Programmes

Education Spending by Programme (Excluding Public Schools)

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

1

Programmes

Per

cen

tag

e

Administration

Independent schoolsubsidies

Public special school education

Further education andtraining

Adult basic education andtraining

Early childhooddevelopment

40

Provincial Expenditure Trends(National School Nutrition Programme)

From 1 April 2004, the education sector has been responsible for the implementation of the national school nutrition programme

R’000

NUMBER OF BENEFICIARIES BUDGET ALLOCATED

TARGETED

2004/05

REACHED

2004/05

TARGETED

2005/06

GROWTH

RATE 2004/05 2005/06

GROWTH RATE

Eastern Cape

Free State

Gauteng

KwaZulu-Natal

Limpopo

Mpumalanga

Northern Cape

North West

Western Cape

948 574

164 852

325 036

1 255 950

912 800

491 362

111 284

300 678

149 035

934 912

234 534

356 268

1 187 118

1 157 193

492 687

119 925

338 440

156 509

999 364

246 857

337 859

1 251 140

1 002 609

492 687

122 200

336 464

156 617

5,1%

33,2%

3,8%

-0,4%

9,0%

0,3%

8,9%

10,6%

4,8%

177 259

49 100

75 730

181 420

153 125

64 079

22 469

72 401

36 617

194 288

53 817

83 006

198 849

167 836

70 235

24 628

79 357

40 135

8,8%

8,8%

8,8%

8,8%

8,8%

8,8%

8,8%

8,8%

8,8%

Total 4 659 571 4 977 586 4 945 797 5,8% 832 200 912 151 8,8%

41

Education performance (1)

• Relative to inputs, outputs and quality of education remain a concern

• Trends in matriculation results suggests improved quality and reduced inefficiencies:

– Between 1999 and 2003 numbers writing exam declined from 511 474 to 440 267 - increasing to 467 985 in 2004

• (actual numbers passing the exam increased from 249 831 in 1999 to 330 717 in 2004)

– Matriculation pass rate improved from below 50% in 1997 to 73,2% in 2003. Slight drop to 70,7% in 2004.

– Growing trends in passes in maths and science

42

University Endorsement per Province

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Ea

ste

rn

Ca

pe

Fre

e S

tate

Ga

ute

ng

Kw

aZ

ulu

-

Na

tal

Lim

po

po

Mp

um

ala

nga

No

rthe

rn

Ca

pe

No

rth W

est

We

ste

rn

Ca

pe

To

tal

Province

Perc

en

tag

e

2000

2004

Except for North West, increase in number of endorsements. Sharp increases in LIM, FS and NC


43

Mathematics pass rates (2004)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Easte

rn C

ape

Fre

e S

tate

Gaute

ng

Kw

aZ

ulu

-Nata

l

Lim

popo

Mpum

ala

nga

North

ern

Cape

North

West

Weste

rn C

ape

Tota

l

% Who wrote and failed

Learners passing LG (%)

Learners passing HG (%)

Learners passing SG (%)


44

Physical Science Pass Rates (2004)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

EasternC

ape

Free State

Gauteng

Kw

aZulu-N

atal

Limpopo

Mpum

alanga

NorthernC

ape

North W

est

WesternC

ape

Total

% who wrote and failed

Learners passing LG (%)

Learners passing HG (%)

Learners passing SG (%)


45

Education performance (5)Key issues for discussion

• Are matric results the only yardstick for performance?– Recent standardised international tests show South

Africa as a weak performer– 2001/02 Systemic evaluation (Grade 3) showed poor

numeracy and literacy skills of learners

• Can progress be measured? Data problems?– Quality and availability of data a great concern

• Key challenges remain

- need to improve the quality of education

- need to achieve better outcomes

46


Chapter 3: Health

47

Summary

This Chapter:• Provides an overview of health funding in the

public sector context.• Reviews key policy & sectoral developments.• Examines overall expenditure trends.• Focuses on expenditure & service delivery trends

in key service delivery areas.• Focuses briefly on aspects of personnel in the

sector.

48

Key trends

• Real budget growth exceeds 4% per annum • Improving equity• Primary health care, emergency ambulance and HIV

and AIDS programme funding growing strongly• Capital and NPNC expenditure significant real

growth • Under-spending on capital and conditional grants• Professional personnel increased by 2605 after

scarce skills and rural allowance• Weaknesses in sectoral non-financial information

49

The Public Sector Context: Total Health Funding in South Africa

Table 1: Funding flows for health services, 2004/05

Financing intermediary R million Percentage % GDP

Public 47,500 41.5% 3.4%

Private 66,038 57.7% 4.7%

Donors and NGOs 947 0.8% 0.1%

Total 114,485 100.0% 8.2%

Source: National Treasury provincial database and research

There are large differentials between private and public spending.

Nearly 60% of health funding goes towards funding private health care, while only the wealthiest 15% are insured.

Only 40% of health funding goes towards the majority of the population

50

Public sector health funding as a % of GDPCountry Public health

expenditure as percentage of

GDP

Total health expenditure as

percentage of GDP

Cuba 6.1% 6.8%

Argentina 5.1% 9.5%

Namibia 4.6% 6.7%

Poland 4.4% 6.1%

Botswana 4.4% 6.6%

Russia 3.7% 5.4%

South Africa 3.6% 8.6%

Columbia 3.6% 5.5%

Turkey 3.6% 5.0%

Brazil 3.2% 7.6%

Chile 3.1% 7.0%

Algeria 3.1% 4.1%

Iran 2.7% 6.3%Mexico 2.7% 6.1%

Venezuela 2.7% 4.7%

South Korea 2.7% 6.0%

Thailand 2.1% 3.7%

Egypt 1.9% 3.9%

Philippines 1.5% 3.3%

Malaysia 1.5% 2.5%

Source: Adapted from WHO Global Health Report

51

Public Health Sector Funding in Middle Income Countries

• South Africa’s total health expenditure as a proportion of GDP is relatively high

• Public sector funding at 3.4% of GDP compares favourably

• Influenced by large private health sector, escalating wage costs and the growing burden associated with HIV / Aids

52

Health funding flows 2004/05

R million Percentage Provincial departments of Health and Works

40,343 92.8%

Local government health services (including provincial transfers)

2,100 4.8%

National Department of Health 1,047 2.4%

Total public sector 43,490 100.0%

53

Provincial health expenditure, 2001/02 to 2007/08

Table 3.5 Provincial health expenditure, 2001/02 to 2007/0812001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Outcome Preliminary Medium-term estimates

R million outcome

Eastern Cape 3,808 4,374 5,090 5,173 6,088 6,618 7,218

Free State 1,927 2,165 2,503 2,797 3,076 3,315 3,522

Gauteng 6,792 7,625 8,129 8,597 9,258 9,900 10,355

KwaZulu-Natal 6,913 7,392 8,042 8,950 10,379 11,467 12,347

Limpopo 2,596 3,062 3,627 4,196 5,046 5,299 5,552

Mpumalanga 1,425 1,652 1,953 2,263 2,481 2,878 3,055

Northern Cape 509 599 817 832 942 1,161 1,241

North West 1,675 1,973 2,207 2,595 2,894 3,198 3,433

Western Cape 3,703 3,951 4,547 5,172 5,743 6,134 6,488

Total 29,347 32,794 36,916 40,575 45,905 49,969 53,211

Eastern Cape 10.7% 17.7% 11.7% 11.2%

Free State 13.2% 10.0% 8.0% 10.6%

Gauteng 8.2% 7.7% 6.4% 7.3%

KwaZulu-Natal 9.0% 16.0% 11.3% 10.2%

Limpopo 17.3% 20.3% 9.8% 13.5%

Mpumalanga 16.7% 9.6% 10.5% 13.6%

Northern Cape 17.8% 13.2% 14.2% 16.0%

North West 15.7% 11.5% 9.8% 12.7%

Western Cape 11.8% 11.0% 7.8% 9.8%

Total 11.4% 13.1% 9.5% 10.4%

1. Adjusted for the primary school nutrition programme shift to the Department of Education.


2001/02 – 2004/05

2004/05 – 2005/06

2004/05 – 2007/08

2001/02 – 2007/08

Percentage growth(average annual)

54

• Between 2001/02 –2004/05 growth exceeded 15% annually in Northern Cape, Mpumalanga, North West & Limpopo, implying that basic health services were significantly strengthened.

• The medium term sees growth in all provinces, with growth above 11% in KZN, Eastern Cape & Northern Cape.

• KZN now has the largest provincial health budget.• The 20.3% per capita increase in Limpopo’s budgets

in 2005/06 helps to close the spending gap.

Provincial health expenditure, 2001/02 to 2007/08

55

Primary health care per capita spending trends

2003/04 2004/05 2005/06

Projected Budget Increase

Eastern Cape 171 197 217 10.4%Free State 196 218 230 5.7%Gauteng 166 170 182 7.0%Kw aZulu-Natal 150 183 201 9.8%Limpopo 136 170 187 10.1%Mpumalanga 115 118 152 28.8%Northern Cape 200 231 298 28.9%North West 192 196 238 21.5%Western Cape 215 225 274 21.5%

Total 165 184 207 12.8%Source: National Treasury provincial database and demographic projections

Substantive increase in PHC from 2001/02 (R121) to 2005/06 (R207) reflects national policy of improving access and support lower levels of care.

Significant expenditure growth, though large disparities still exist.

Department of Health has set PHC utilisation target at 3.85 visits per year for uninsured persons.

56

Provincial emergency medical services expenditure, 2001/02 to 2007/08

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 Average

Outcome Medium-term estimates annual

R thousand growth 2001/02 - Emergency

transport772,693 898,666 1,186,660 1,194,312 1,491,732 1,556,013 1,639,318 13.4%

Planned patient transport

19,934 8,465 98,808 145,218 187,584 227,715 248,665 52.3%

Total 792,627 907,131 1,285,468 1,339,530 1,679,316 1,783,728 1,887,983 15.6%

1. Ambulances and non-emergency patient transport.


Preliminary outcome

Funding for EMS grows strongly to R1.7billion in 2005/06.

Unit costs vary significantly among provinces due to problems in information systems, population density, distances and variations in staffing models.

57

Provincial HIV and Aids expenditure, 2001/02 to 2007/08

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 Average

Outcome Medium-term estimates annual

R million growth 2000/01 - Conditional grant 37 288 402 770 1,135 1,567 1,646 88.1%

Other 43 -5 216 411 609 650 825 63.8%

Total 80 283 618 1,181 1,744 2,218 2,471 77.2%


Preliminary outcome

Provinces have budgeted R1.7 billion in 2005/06 for specific interventions.

AIDS treatment programmes have been initiated in all 53 health districts, 42 367 people on treatment by December 2004

Widespread rollout of voluntary counseling and testing (427 sites in 2002 to 3369 in 2004) and Mother-child prevention programmes. Male condoms distributed increased from 150 million in 1998 to 360 million in 2004

58

Revitalisation hospitals close to completion

2004/05 2005/06 2006/07

Eastern Cape Mary Theresa

Limpopo Lebow akgomo Jane Furse Dilokong

Mpumalanga Piet Retief

Northern Cape Colesberg Calvinia

North West Sw artruggens

Western Cape George Vredenberg

Worcester (Eben Donges)

Source: National Department of Health

Need higher quality project business & implementation plans.

Strengthening national programme unit & provincial departments through the infrastructure development improvement programme.

59

Trends in scarce health professionals

December 2001

February 2003

April 2004 February 2005

Change February 2003 to

February 2005

Percentage change

Doctors 11,170 11,265 11,595 11,135 -130 -1.2%

Medical practitioners 7,363 7,694 8,146 8,008 314 4.1%

Medical specialists and registrars

3,807 3,571 3,449 3,127 -444 -12.4%

Professional nurse 41,063 40,846 42,263 43,060 2,214 5.4%

Radiographer 2,058 2,078 2,043 2,076 -2 -0.1%

Pharmacists 1,239 1,256 1,336 1,607 351 27.9%

Dental practitioners 625 568 626 585 17 3.0%

Physiotherapists 455 667 725 728 61 9.1%

Occupational therapist 399 574 611 606 32 5.6%

Dieticians 250 378 404 435 57 15.1%

Speech therapist 118 215 240 255 40 18.6%

Dental specialists 44 63 33 28 -35 -55.6%

Total 57,421 57,910 59,876 60,515 2,605 4.5%

Source: Vulindlela

60

Personnel per 100 000 population

EC FS GT KZN LIM MPU NC NW WC

Medical officer 14.6 19.0 24.7 21.8 13.0 18.3 35.7 12.1 31.6

Medical specialist and registrar

2.0 13.5 17.3 5.3 1.4 0.6 2.2 0.9 23.1

Doctor total 16.6 32.5 42.0 27.1 14.4 18.9 37.9 13.0 54.7

Professional nurse 107.5 148.3 105.4 106.6 110.8 93.2 141.3 89.9 105.9

Radiographer 4.1 7.8 7.8 4.4 2.2 2.8 6.5 2.6 10.1

Pharmacist 3.4 4.4 3.7 4.2 2.8 3.9 5.4 3.1 7.3

Dental practitioner 0.9 2.0 2.3 0.6 1.1 1.7 2.2 1.4 2.7

Physiotherapist 0.8 2.4 2.0 2.2 1.3 1.9 2.2 1.3 2.9

Occupational therapist

0.5 2.6 1.8 1.1 1.7 2.2 2.2 1.0 2.4

Dietician 0.6 1.7 1.4 0.6 1.0 1.5 1.9 1.2 1.3

Total 151.3 234.7 209.3 174.6 150.5 146.0 239.2 127.0 242.8

61

Trends in scarce health professionals

• Professional personnel numbers rose (2605 employees), suggesting improving stability

• Increases noted in pharmacists (27.9%), dieticians (15.1%), speech therapists (18.6%) & physiotherapists (9.1%).

• While number of doctors did not increase, redistribution noted among provinces, following rural allowance strategy.

• While progress is noted, the lack of skilled personnel in rural areas remains a problem.

• Access to personnel varies considerably across provinces.

62

Conclusion

2005 / 2006 budget showed 8.6% real growth. Key emphasis on strengthening primary health care

and implementing the district health system, expanding programmes to counter HIV / AIDS, and revitalising health infrastructure. Ambulance budget & goods and services (NPNC) continue to improve.

Greater attention to hospital budgets, Modernisation of Tertiary services and improving staffing levels required in future budgets

Publishing and disseminating health information needs to be improved.

63


Chapter 4: Social Development

64

What does Social Development Chapter Address?

• Key developments in social development sector • Provincial social development expenditure• Expenditure by economic classification and by

programme• Preliminary outcome for 2004/05• Conditional grant funding• Personnel expenditure and numbers• Social assistance transfers• Social assistance compensation of employees• Social welfare services, developmental support

services and populations trends• Conclusion

65

Key developments in Social Development Sector

Pages 48 and 49 address:• Social Assistance Function shift from provinces to national

government– Social Assistance Act, 2004

• Establishment of South African Social Security Agency– South African Social Security Agency Act,2004

• Reforming of social welfare services, administration and financing– Child Justice Bill, 2002– Children’s Bill, 2003– Older Person’s Bill, 2003

66

Provincial social development expenditure trends

Table 4.1 shows from page 49– Overall expenditure more than doubled

over 3years from R23,8 billion in 2001/02 to R51 billion in 2004/05

– An annual growth of 28,8 per cent or nearly 21 per cent in real terms

– Growth in expenditure mainly driven by increasing beneficiary numbers in child support and disability grants

– All provinces experience very high growth rates from 21,3 per cent in Western Cape and 33,3 per cent in Free State

67

Provincial social development expenditure trends (cont.)

expenditure in social development is expected to moderate between 2004/05 and 2007/08 due to:– Phasing of extension of child support grants to 14 years to

be completed by end of 2005/06– Disability grants almost at full coverage– Improvements within the administration, especially key

initiatives to address weaknesses in disability grant processes and procedures

– Expenditure is however, expected to exceed R70 billion by 2007/08

– Provides a strong growth of nearly 12 per cent per year or 6.4 per cent in real terms

– Rapid growth in provincial social development expenditure – rose to 26.9 per cent of overall provincial budgets in 2004/05

– Set to increase to nearly 28 per cent in 2007/08

68

Expenditure by economic classification

• Expenditure by economic classification consists of (pages 50-51 and Table 4.2):

– Compensation of employees– Other current payments– Transfers and subsidies (mostly social assistance transfers)– Payment of capital assets

• Highest proportion of social development expenditure on social assistance grants which increases from 86.5 per cent (2001/02) to 88.5 per cent (2004/05) with slight decline to 87.6 per cent (2007/08)

• Compensation of employees is expected to grow at 17.5 per cent a year

– Driven by improved capacity for services and re-grading of social workers salaries

– Also increase in both personnel numbers and average remuneration (also see Table 4.6)

• Other current expenditure grows by 13.2 per cent a year• Non-grant transfers and subsidies (not-for- profit organisations) set to

grow by 14.3 per cent

69

Table 4.2 Provincial social development expenditure by economic classification,

2001/02 to 2007/082001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08


R millionCompensation of employees

991 1 175 1 379 1 541 2 150 2 330 2 500

Other current payments 1 170 1 665 2 295 2 763 3 461 3 795 4 003

Transfers and subsidies 21 521 29 390 38 292 46 284 53 776 59 050 63 848

of which:

Social security 20 567 28 190 37 010 44 931 52 023 57 070 61 830


86 138 141 208 298 314 262

Total 23 768 32 369 42 106 50 796 59 686 65 488 70 614

Percentage share


4,2% 3,6% 3,3% 3,0% 3,6% 3,6% 3,5%

Other current payments 4,9% 5,1% 5,4% 5,4% 5,8% 5,8% 5,7%

Transfers and subsidies 90,5% 90,8% 90,9% 91,1% 90,1% 90,2% 90,4%

of which:

Social security 86,5% 87,1% 87,9% 88,5% 87,2% 87,1% 87,6%


0,4% 0,4% 0,3% 0,4% 0,5% 0,5% 0,4%

Total 100,0% 100,0% 100,0% 100,0% 100,0% 100,0% 100,0%

Percentage growth (average annual) 2001/02 – 2004/05 2004/05 – 2007/08

Compensation of employees 15,9% 17,5%

Other current payments 33,2% 13,2%

Transfers and subsidies 29,1% 11,3%

Payments for capital assets 34,4% 8,0%

Total 28,8% 11,6%


Preliminary outcome

70

Expenditure by Programme• Social development programmes consist of (page 51 to 52 and Table 4.3):

– Administration– Social assistance– Social welfare services– Development and support services– Population development trends

• Greater expenditure on social assistance transfers than any other programme• Generally higher growth in expenditure on administrative capacity than on

welfare services growing from R1,6 billion (2001/02) to R2,1 billion in 2004/05• Much of growth in expenditure on social welfare services is for salaries of social

workers • Average annual growth in administration at nearly 30 per cent• 37 per cent growth in development and support reflects the conditional grant

funding introduced for food relief programme in 2003/04• Social welfare services programme grew at about 2.4 per cent in real terms or 9

per cent in nominal terms (around R2 billion in 2004/05)• Growth further accelerates in social welfare services to nearly 12 per cent per

year and in population development and support services to 28.1 per cent between 2004/05 to 2007/08

71

Preliminary Outcome for 2004/05• Preliminary outcome on page 52 and Table 4.4.• Adjustment of approximately R3,3 billion to provincial

budgets on 2004/05 budgets• Adjustments to address unexpected growth in

disability grants• Resulted in moderate over expenditure of R135

million• Over expenditure in KZN and Eastern Cape• Over expenditure mainly due to:

– Growing numbers in beneficiaries– High average grant payments related to delays in

processing of grants– Costs of back pay to beneficiaries

72

Conditional Grants Funding• Before 2004/05 the bulk of social development expenditure was funded by

the equitable share allocations• Conditional grants in social development are:

– Food Relief– Home and Community Based Care (HIV and Aids)– Extension of the Child Support Grants (until 2004/05)

• From 2005/06 the bulk of social development expenditure funded by conditional grants (see Table 4.5)

– Social assistance Transfers – R52 billion (2005/06); R57billion (2006/07) and R61,8 (2007/08)

– Social Assistance Administration – R3,3 billion (2005/06); R3,5 billion (2006/07) and R3,7 billion (2007/08)

– Integrated social development services grant – R338 million (2005/06); R411million (2006/07) and R432 million (2007/08)

– HIV and Aids - R138 million (2005/06); R139 million (2006/07) and R143 million (2007/08)

• Consolidated in conditional grants expenditure at R55,9 billion (2005/06); R61,2 billion (2006/07) and R66,1 (2007/08)

73

Personnel expenditure and numbers

• Personnel expenditure and numbers are covered on page 53 to 54 and in Table 4.6– Personnel expenditure grew at an annual average

rate of 15.9 per cent– Over the period from 2004/05 to 2007/08 personnel

expenditure is projected to grow by an annual average of 17.5 per cent

– Rapid growth in personnel expenditure driven by:• strong growth in personnel numbers• Increases in average remuneration• Re-grading of social workers

74

Social assistance transfers• Social assistance transfers expenditure – covered in

pages 55 to 62 and in Tables 4.7 to 4.16– Values of grants covered in Table 4.7– Social grants expenditure by grant type and by province in

Table 4.8– Social assistance expenditure as a % of total social

development expenditure – Table 4.9– Social grants as a percentage of GDP in Table 4.10– Social grants beneficiary numbers by grant type and

provinces – Table 4.11– Pensions to older persons (SOAP and WV) – Table 4.12– Disability grant numbers and expenditure – Table 4.13– Care dependency grant numbers and expenditure – Table

4.14– Child support grant numbers and expenditure in Table 4.15– Foster care expenditure and numbers – Table 4.16

75

Social Assistance Transfer (cont.)

• Social assistance transfers covered in the pages show:– Social grants represents about 90 per cent of total

social development expenditure– Beneficiary numbers grew from 3,6 million in April

2001 to 9,4 million in April 2005– Growth reflected over this period:

• Old Age at 2.8 per cent• Disability at 20.1 per cent• Foster care at 31.4 per cent• Care dependency at 31.3 per cent• Child support grants at 55,1 per cent

76

Table 4.8 Social grants expenditure by type of grant and province, 2001/02 to 2007/082001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

R million

Old age 12 954 15 285 17 146 18 504 19 996 21 443 23 105 6,4%

War veterans 23 27 34 36 29 25 22 2,9%

Disability 4 585 7 201 10 329 12 570 14 438 15 510 16 932 17,8%

Grant-in-aid 1 1 2 20 – – – –

Foster care 364 787 1 142 1 563 2 044 2 376 2 712 28,0%

Care dependency 226 309 639 760 938 1 040 1 147 22,5%

Child support 2 400 4 558 7 690 11 431 14 483 16 575 17 805 29,3%

Total 20 553 28 168 36 982 44 885 51 927 56 969 61 724 14,2%

Province

Eastern Cape 4 215 5 819 7 553 9 006 9 928 11 030 11 930 13,0%

Free State 1 239 1 788 2 379 3 049 3 719 4 096 4 440 17,0%

Gauteng 2 336 3 206 4 454 5 411 6 442 7 209 7 825 15,6%

Kw aZulu-Natal 4 441 6 082 8 165 10 275 11 964 12 989 13 982 15,2%

Limpopo 2 727 3 933 4 899 5 802 6 807 7 367 7 966 14,0%

Mpumalanga 1 366 1 787 2 421 2 981 3 525 3 827 4 156 14,5%

Northern Cape 572 755 936 1 065 1 227 1 344 1 456 11,5%

North West 1 760 2 258 3 064 3 795 4 320 4 865 5 337 13,7%

Western Cape 1 897 2 540 3 111 3 500 3 995 4 244 4 631 11,2%

Total 20 553 28 168 36 982 44 885 51 927 56 969 61 724 14,2%

Historical numbers adjusted for the phasing out of the state maintenance grant.

Source: Socpen system

% growth (average annual)

77

Compensation of employees in social assistance

programme

• See also page 62 and Table 4.17– Doubling of expenditure on compensation

of employees within this programme– Expenditure on compensation of

employees indicates• Strengthening of provincial capacity• Appointment of permanent staff• Utilization of contract staff

78

Social welfare services and other programmes

• See pages 63 to 65 and Tables 4.18 and 4.19– Social welfare services expenditure– Number and level of social workers

• Social welfare expenditure Table reflects expenditure by subprogramme and by province

• Subprogrammes in this programme are:– Administration– Treatment and Prevention of substance Abuse– Care of the Aged– Crime prevention, rehabilitation and victim empowerment– Services to the Disabled– Child and youth care and protection

• Most other social development services provided by social workers and probation officers

• Growth in social welfare services shows a progressive shift towards welfare and development support expenditure

• Major share of expenditure in development support programmes – HIV and Aids and poverty alleviation programmes

79

Conclusion

• Recent years massive expansion in provincial social development budgets

• Real poverty orientated budget, especially to provide income transfers to poor and vulnerable individuals and households

• However, exponential growth in social development expenditure has put severe pressures on other provincial expenditure responsibilities

• Far reaching initiatives within social development sector:– Centralization of social assistance function– Establishment of social security agency– Designing and finalization of the social welfare service delivery

model

80


Chapter 5: Housing

81

Institutional arrangements

• Housing is a concurrent function– National determines

• Policy and strategy and sets delivery goals• Monitor and evaluate performance

– Provinces • Promote, coordinate and implement housing policy• Approve subsidies and projects• Provide support to municipalities who act as developers

– LG• Are mainly developers• Provide bulk engineering services• Land and town planners, approval of building plans• Community infrastructure• Can execute the housing mandate only if accredited

82

Delivery progress

• Funds for housing has increased – from R3,3 bn in 2001 to R4,4 bn in 2004/05– budgeted to grow to R6,9 bn in 2007/08

• R32,4 billion spent on housing delivery since 1994/5– Construction of 1,79 million new houses

• Transfer of 549 597 government-owned houses to residents

• Property assets worth over R37 billion have been transferred to poor households since 1994

83

Delivery: Type of subsidy by province

Table 5.4 Housing subsidies by province and category of subsidy, 1994 to 2004Project-linked

Individual Consoli-dation

Institu-tional

Informal land

rights (rural)

Hostel rede-velop-ment

Emer-gency

housing

Total

Eastern Cape 208,526 27,653 9,357 5,710 1,050 – – 252,296

Free State 105,770 14,120 8,127 1,300 1,300 516 – 131,133

Gauteng 738,475 52,639 91,911 20,407 563 162,282 – 1,066,277

Kw aZulu-Natal 243,314 17,468 30,077 23,270 12,648 – – 326,777

Limpopo 104,993 4,348 3,252 – 61,606 1,780 – 175,979

Mpumalanga 85,845 16,862 46,546 5,450 1,476 885 – 157,064

Northern Cape 37,657 8,465 384 1,000 – – – 47,506

North West 139,462 8,419 7,326 1,154 18,794 1,273 – 176,428

Western Cape 194,221 11,200 51,539 6,998 44 4,866 283 269,151

Total 1,858,263 161,174 248,519 65,289 97,481 171,602 283 2,602,611

Source: National Department of Housing data to December 2004

84

Delivery: Subsidised housing units

Table 5.3 Houses completed or under construction, 1994 to 20051

Number1994/95 – 1999/00

2000/01 2001/02 2002/03 2003/04 2004/05 Total

Eastern Cape 83 738 34 021 10 816 58 662 27 119 37 524 251 880

Free State 55 611 16 088 7 005 9 155 16 746 16 447 121 052

Gauteng 230 717 38 547 46 723 24 344 49 034 28 002 417 367

Kw aZulu-Natal 178 123 28 547 14 379 24 485 33 668 36 734 315 936

Limpopo 62 151 20 996 16 667 14 953 15 810 16 514 147 091

Mpumalanga 52 403 16 457 14 584 21 649 21 232 18 000 144 325

Northern Cape 16 421 4 148 2 588 6 056 3 787 3 598 36 598

North West 73 575 14 109 13 885 23 784 10 484 10 037 145 874

Western Cape 130 646 17 730 16 634 20 500 15 735 11 756 213 001

Total 883 385 190 643 143 281 203 588 193 615 178 612 1 793 124

1. Historical delivery figures have been adjusted since 2003 as a result of audits carried out in the provinces.

Source: National Department of Housing

85

Challenges

• Housing backlog growing

• Stagnating property values for low cost housing– Non-appreciation of assets

• Sustainable communities and the built environment

• Greater role for municipalities– Capacity and possible accreditation

86

Comprehensive plan for sustainable human settlements

• The Comprehensive plan for sustainable human settlements introduces:– Area-based human settlements development model– Sustainable human setllements

• Include social and economic infrastructure

– More flexible housing subsidy mechanisms to cater for greater range of housing needs

• Sustainable housing market• Improve the value of the house as a capital asset

– Devolution of subsidy administration to municipalities• Focus on metros

87


Chapter 6: Agriculture

88

Agriculture and Land

• Introduction– The importance of agriculture in the economy

• Overview of budget and expenditure: – Provincial expenditure trends

– National Agriculture and land reform trends

• Service delivery trends on selected programmes

• Conclusions: Opportunities & challenges

89

Budget & Expenditure Trends: Overview

• Objectives to broaden access to Agriculture:– increase access to agricultural land

– improve productivity – broadening access to finance and skills (managerial & technical),

– reduce vulnerability to natural disasters, and enhance job creation potential.

• Aggregate budget grows by 11,7% over the 2005 MTEF from R4,6bn in 2004/05 to R6,4 bn in 2007/08.

• It increased from R3,1bn in 2001/02

90

Provincial Expenditure Trends

• Spending increased by about 50% from R2,3 bn in 2001/02 to R3,4bn in 04/05, will rise by annual average 11% to R4,7bn in 2007/08 – Table 6.1

• Strong growth in personnel, rising by average 8,9% over the 2005 MTEF, but declining as a proportion of total expenditure – from 69,4% in 2001/02 to 51,9% in 2007/08 - Table 6.2

• Proportion of non-personnel spending grows from 30,6% in 2001/02 to 48,1% in 2007/08

91

Provincial Expenditure By ProgrammeTable 6.4 Provincial agriculture expenditure by programme, 2001/02 to 2007/08

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08


R million outcome

Administration 539 610 671 833 798 865 937

Sustainable resource management

226 246 272 263 468 537 577

Farmer support and development

991 1,170 1,400 1,588 1,745 1,990 2,215

Veterinary services 255 280 308 340 370 400 423

Technology research and development services

181 220 244 224 281 290 309

Agricultural economics 20 23 33 46 59 65 70

Structured agricultural training

88 93 123 152 155 171 183

Total 2,299 2,641 3,052 3,447 3,876 4,318 4,714

Percentage of provincial agriculture expenditure

Administration 23.4% 23.1% 22.0% 24.2% 20.6% 20.0% 19.9%

Sustainable resource management

9.8% 9.3% 8.9% 7.6% 12.1% 12.4% 12.2%


43.1% 44.3% 45.9% 46.1% 45.0% 46.1% 47.0%

Veterinary services 11.1% 10.6% 10.1% 9.9% 9.5% 9.3% 9.0%

Technology research and development services

7.9% 8.3% 8.0% 6.5% 7.2% 6.7% 6.6%

Agricultural economics 0.9% 0.9% 1.1% 1.3% 1.5% 1.5% 1.5%

Structured agricultural training

3.8% 3.5% 4.0% 4.4% 4.0% 4.0% 3.9%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%


92

National Expenditure Trends

Table 6.6 National agriculture and land reform expenditure by programme,

2001/02 to 2007/082001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08


R million outcome

Agriculture

Administration 115 137 157 170 170 181 190


101 123 282 330 477 581 750

Agricultural production 278 285 320 368 408 451 473

Sustainable resources management and use

123 121 121 143 177 193 202

National regulatory services

150 147 177 247 231 245 258

Communication and information management

60 76 82 83 93 97 102

Other programmes 44 29 37 45 129 183 187

Subtotal 871 917 1,177 1,387 1,685 1,932 2,163

Land Affairs 976 1,077 1,608 1,991 3,882 4,815 5,637

of which

Restitution 291 394 839 1,183 2,706 3,369 3,838

Redistribution and tenure reform

444 416 454 454 770 1,016 1,349

Subtotal 735 810 1,293 1,636 3,476 4,385 5,187

Total 1,606 1,728 2,470 3,023 5,161 6,317 7,350

Source: 2005 Estimates of National Expenditure; 2004/05 Vulindlela

93

Land Reform

• Spending on land reform increases from R735m in 2001/02 to R1,6bn in 2004/05, rising to R5,2bn in 2007/08

• Restitution increases at an annual average of 48% from R1,2bn in 2004/05 to R3,8bn 2007/08

• By Dec. 2004, 57 257 claims were settled out of a total of 79 694, and 164 000 HH benefited – Table 6.7

94

Land Reform

• Total land transferred up to Dec 2004 is about 2.8m ha,

• Redistribution Land transferred (2m ha) to about 200,000 HH

• Largest land trasfered in NC (28%), followed by EC (16%), KZN(15%) and FS(12%)

• EC (29%) accounts for largest number of HHs followed by NW (23%), and NC is the lowest (4%)

95

Opportunities And Challenges

• Strong growth in agriculture and land reform expenditure

• Increasing pace of land reform increases the need for farmer support programmes

• CASP was introduced in 2004/05 to complement LRAD

• It has six main priority areas:– Information and knowledge management– Technical and advisory assistance– Training and capacity building– Marketing and business development– 0n-and off farm infrastructure– Financial support

96


Chapter 7: Roads and Transport

97

Outline

• Introduction• Institutional arrangements• Roads infrastructure• Traffic management & safety• Public transport• Conclusion

98

Part 1: Roads Infrastructure

• Extent of Provincial Road network – 344 000• Number of registered vehicles – 6.8million• Consolidated Roads Budgets – R10.6 billion• Provincial roads expenditure patterns• Expenditure on roads maintenance• Service delivery outputs both capital and

maintenance

99

Part 2: Revenue Collection

• Trends on revenue collected from motor vehicle licences

• Revenue collected from RTA fees

• Administering agents

• Motor vehicle licence fees per province

100

Part 3: Traffic Management & Safety

• Initiatives geared towards improved traffic management and safety

• Expenditure in traffic management• Overload control measures• Effectiveness of overload control per

province• Traffic personnel per province

101

Part 4: Public Transport

• Bus subsidies

• Spending on national bus subsidies

• Public transport expenditure

102


Chapter 8: Personnel

103

Introduction

• This Chapter highlights the following:– Institutional arrangements in the public

service– Policy developments in personnel– Personnel spending and employment

trends– 2004 Wage agreement

104

Legal framework and institutional arrangements

• Legislation that govern the public service:– Public Service Act– Employment of Educators Act– South African Police Services Act– National Prosecuting Authority Act– South African Defence Force Act

• PSCBC is the major negotiating chamber for national and provincial governments

• SALGA caters for local government• Personnel policy development has undergone these phases:

– 1st phase (1994-1997): Unification of the highly fragmented dispensations

– 2nd phase (1997-2000): Alignment of personnel costs with public priorities

– 3rd phase (2001-current): Ability to deliver quality services

105

Policy developments • To improve service delivery and align personnel

spending with the service delivery objective, the following are put in place:– 2004 Wage agreement – first multi-year wage

agreement based on inflation projections– Macro benefits – housing and medical aid (GEMS)

allowances– Introduction of pay progression, career pathing and

retention of scarce skills– Introduction of Incapacity Leave and Ill-health

Retirement policy– Enable restructuring in government to allow for excess

employees to leave the public service

106

Personnel spending trends (table 8.1)

• Slower growth in personnel expenditure has been a success (55,5% in 1997/98 of total expenditure to 46,5% in 2004/05)

• In 2004/05, provinces spent R87,9 billion, a 4,4% real increase from 2003/04 due to:– 2004 Wage Agreement– Employment increase in 2004

• Expectations: – Slower growth rate for personnel expenditure (low inflation

environment)

• Provincial share of personnel expenditure:– KZN 20,4%, EC 16,3%, GP 15,4%, LP 14,2%, WC 9,5%,

NW 8,2%, FS 7,1%, MP 6,7% and NC 2,2%

107

Provincial employment trends

• 2004/05: employment increased by 2,2% (table 8.3)– Significant increases experienced in GP 6,7%, LP 4%

and MP 4,2%– Employment contraction in EC 1,9%

• Technical skills people (levels 6-9) comprises of 62% of provincial employment

• Shift towards employing more SMS in provinces (table 8.4):– Ratio decreased from 1:436 (in 2001) to 1:263 (in

2004)– Significant increases in EC, LP and NW

108

2004 Wage Agreement• First multi-year agreements (3 years) based

on inflation projections (forward-looking) • Introduced pay progression system and

addressed backlogs in educator remuneration

• Provided macro benefits – housing and medical aid allowances (GEMS)

• Addressed the need for the development of policies around the attraction and retention of scarce skills in the public service

109

Conclusion

• To achieve good personnel management, the following needs to be in place:– Restoration of balance in the use of resources –

personnel vs. non-personnel expenditure– Performance based remuneration dispensation– Flexible remuneration dispensation for

professionals– An empowered public service to drive the

development and implementation of policy

Provincial Budgets and Expenditure Review 2001/02 – 2007/08 15 September 2005

Documents

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