*This article has been updated to reflect National Treasury’s response.
In a bid to force the hand of Finance Minister Enoch Godongwana over a R1.1 billion budget shortfall to cover the public sector wage bill, Western Cape Premier Alan Winde and Finance MEC Mireille Wenger have declared an intergovernmental dispute with the national government.
Winde said: “From the start of this process it was evident we could not afford this wage deal and all warning signs of the irrationality of the agreement were seemingly ignored.
What is desperately needed is prudent fiscal consolidation, management and discipline.”
This comes as Wenger tabled the 2023/24 Western Cape medium-term budget policy statement and the 2023/24 adjustments budget on Tuesday, where she said she could only give “broad estimates for allocations, by cluster” as a result of uncertainties.
She said the centrally negotiated and agreed-to public sector wage bill had been implemented after the Western Cape Provincial Parliament approved its annual budget, which meant in-year budget cuts for them.
This shortfall, she said, amounts to R1.1 billion in addition to a R642 284 million in cuts to Conditional Grants.
“The provincial baseline is thus reduced by R2.219 billion (3.64%) in 2024/25, R2.211 billion (3.48%) in 2025/26 and R2.307 billion (3.48%) in 2026/27. In terms of the public sector wage bill, National Treasury has committed only 78% of the cost for Education and Health, leaving a shortfall of 22% for these, our largest departments, while no allocation has been made to any other votes to cushion the blow of these increases.
“We are able to cushion this slashing of our budgets from the fiscal stabilisation reserve and from the provincial revenue fund across the medium-term expenditure framework (MTEF). But we are still confronted with a shortfall of R2.646 billion over the MTEF that needs to be funded from our departments, amounting to: R855.789 million in 2024/25, R846.740 million in 2025/26, and R943.515 million in 2026/27,” said Wenger.
She said the preliminary 2024 MTEF allocations for the Social Cluster, encompassing Police Oversight and Community Safety; Education; Health and Wellness; Social Development; Cultural Affairs and Sport was R198 billion.
The 2024 MTEF allocations for the Economic Cluster encompassing Mobility; Environmental Affairs and Development Planning; Infrastructure; Agriculture; Economic Development and Tourism was R44.8 billion. For the Governance Cluster of the Department of the Premier; Provincial Treasury; Local Government, the 2024 MTEF allocation amounts to R8.1 billion.
The ANC in the Western Cape criticised the budget policy and adjustment statement.
“It does not address the need to empower communities to be part and parcel of fighting crime. It does not address the rise in crime. It does not address the unplaced learner crisis we are facing, the need to improve basic healthcare facilities. It does not address the department of infrastructure’s failure to spend the existing budget that it has to roll out for dignified housing in our province.
“We are extremely concerned that the (provincial) government has now declared an intergovernmental dispute around the issue of salary increases for public servants. Public servants are ... each and every civil servant from the municipal worker to the director-general in the provincial government,” said ANC Western Cape spokesperson Khalid Sayed.
The National Treasury confirmed receipt of the dispute. "National Treasury confirms that it has received a declaration of the intergovernmental dispute from the Western Cape provincial government regarding the funding of the 2023 wage agreement. Intergovernmental disputes are managed in terms of the provisions made in Chapter 4 of the Intergovernmental Relations Framework Act of 2005. Therefore, National Treasury and other relevant stakeholders will follow the processes as outlined in the legislation to find an amicable solution with the Western Cape provincial government."
Cape Times