Cape Town - Underspending on infrastructure and an increase in public servants' wages remained key concerns for the government, with R3.8 billion in unspent balances in the last financial year expected to be rolled over and an additional R4.4 billion made available to cover higher-than-expected salary adjustments, the Minister of Finance Pravin Gordhan said today.
Presenting the Medium Term Budget Policy Statement in Parliament, Gordhan said the R3.8 billion to be rolled over includes over R1 billion which had not been spent on infrastructure projects, R200 million which wasn't spent on improving health care facilities and R105 million not spent on next month's COP17 conference.
Gordhan said underspending of capital budgets by departments remained a core concern for the government, with underspending by municipalities having risen from 14% in 2008/9 to 25% in the last financial year, while underspending by provinces increased from 8.3% to 16% over the same period.
He said the government is helping municipalities to beef up their capacity to plan and manage infrastructure better, while a third phase of the infrastructure delivery improvement programme will be rolled out in provinces.
Gordhan said of the R4.4 billion to be made available to cover the costs of higher-than-expected salary adjustments in departments, R3.2 billion would go to provinces, while the remainder would go to national departments.
A further R49.3 million would be allocated to FET colleges to cover the cost of wage agreements.
Gordhan said the public-sector wage bill had been a major driver of spending growth and that ways of managing this needed to be explored.
He said increases in public-service remuneration and increases in employment have raised the wage bill to about 42% of government revenue - up from 31% four years ago.
He cautioned that over the next three years, salary increases for government employees needed to be moderated, while calling for a similar moderation in executive and financial sector remuneration.
Remuneration, he said, should grow at a sustainable pace that supported job creation.
Gordhan said the balance between administration and service delivery staff should be corrected and that the number of supernumeracy staff should be reduced.
He also announced that an additional R266.3 million would be provided as a once-off gratuity for non-returning councillors following this year's municipal elections.
In a media briefing in Parliament before his speech today, he stressed that the five percent year-on-year increase over the next three years was at present only a proposal and hadn't yet been agreed on.
"If all of us want to grow this economy, if all of us understand that in this difficult time this growth has to be through an investment-lead process, then we must find the resources to invest, in infrastructure, in maintenance at a national, at a provincial level and at a local government level," said Gordhan.
Gordhan also said R208 million would be allocated for the management of acid mine drainage in the Witwatersrand area, while R185.8 million would be provided for natural disasters and the outbreak of animal diseases, while R116.8 million would go to cover contractual penalties of the costs incurred by Denel related to the Airbus 400M aircraft contract
Added to this R81.4 million would be set aside to cover joint piracy operations in the Mozambican Channel and R40.6 million to cover a portion of the costs incurred by the Independent Electoral Commission (IEC) to extend the casting of special votes in this year's municipal elections.
A further R21.2 million would go to help the National Nuclear Regulator meet its commitments under the Integrated Resource Plan and to retain experts, while R838.1 million would be refunded to departments for monies paid directly to the National Revenue Fund from department-specific activities.
Provinces would get an extra R752 million as part of various provincial conditional grants including grants for the repair of infrastructure damaged by floods in December last year and in January.
Gordhan said to cover their direct water services operating subsidy grant, local governments would get an additional R28.5 million, while R3.2 million in unused funds would be rolled over.
An additional R11 million declared as savings from the local government financial management grant would also be allocated to municipalities.
