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Trends in Intergovernmental Finances: 2000/01 – 2006/07 01 September 2004

Trends in Intergovernmental Finances: 2000/01 – 2006/07 01 September 2004. Trends in Intergovt Finances. Trends in Intergovt Finances is an update on 2003 Intergovt Fiscal Review Mini-IGFR Prov revenue and spending trends from 2000/01 to 2006/07 and municipal budgets in 2003-04

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Trends in Intergovernmental Finances: 2000/01 – 2006/07 01 September 2004

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  1. Trends in Intergovernmental Finances: 2000/01 – 2006/0701 September 2004

  2. Trends in Intergovt Finances • Trends in Intergovt Finances is an update on 2003 Intergovt Fiscal Review • Mini-IGFR • Prov revenue and spending trends from 2000/01 to 2006/07 and municipal budgets in 2003-04 • Past and future budgets (7 years) • Provides consolidated info of municipalities and provinces • Allows comparison between provinces and municipalities • Covers 8 sectors

  3. Document covers • 11 Chapter in the document: • Chapter 1: Introduction • Chapter 2: Trends in provincial budgets • Chapter 3: Local government finances • Chapter 4: Education • Chapter 5: Health • Chapter 6: Social development • Chapter 7: Agriculture and land • Chapter 8: Roads and Transport • Chapter 9: Housing • Chapter 10: Water and Sanitation • Chapter 11: Electricity

  4. Intergovernmental Fiscal System • 3 spheres of govt, all with different functions • Biggest budgets at provincial level • 2004 budgeted non-interest revenue R318,5bn in 2004/05 • National – R120,6 bn or 38,2 % • Provinces – R181,1bn or 57,3 % • Local government – R14,3 bn or 4,5% • provincial share grows to 58,0 per cent in 2006/07 • Provinces draw up their own budgets after national budget • allocate national transfers (97,1%) plus own revenue (2,9%) • national transfers grows to 97,3% in 2006/07

  5. Provincial budgets • 2004 Budget consolidated and made comparable by function • 2004/05 budget R186,7 bn • outer years R204,9 bn and R221,4 bn • biggest budget KZN R37,8 bn, smallest NC (R4,4 bn) • social services 81,9% • Compensation of employees 47,3% • Capital 6,1% at R11,3bn, to R13,7 bn in 2006/07 • Non-compensation non-capex R87,1 bn or 46,6%

  6. Non-Social Services Spending • Housing, provincial roads, agriculture, economic affairs, tourism and other admin functions) • R107,8 billion over next three years • positive economic spin offs for provinces • improve the quality of provincial infrastructure and contribution to EPWP • efficient delivery of other services • contribute to economic growth and job creation

  7. Key trends • Provinces are budgeting for a deficits of R215m in 2004/05 and surplus budgets in the outer years (R499m and R914m) • Capital spending growing strongly between 2000/01 and 2006/07 • Total prov capital spending (R4,1 bn to R13,7 bn) • Share in total spending also increase from 3,7% to 6,2% • Education from R553m to R3,5 bn • Health from R1,0 bn to R3,8 bn

  8. Provincial Spending

  9. Social services share

  10. Provincial spending

  11. Provincial capital spending

  12. Provincial revenue

  13. Chapter 3:Local government finances

  14. Overview • Covers 2003-04 Budgets & growth since 2002-03: • Total municipal budgets - R86bn, up by 15,3% • R16,7bn budgeted for capital expenditure, up by 27,5% • 3 largest municipalities – Joburg (R12,2bn), Cape Town (R10,3bn) & eThekwini [Durban] (R9,8bn) • Continued real increase in national transfers, up by 39% • Municipalities displaying varying dependence on transfers from 3% to 92% of budgets

  15. Key Challenges faced • Personnel costs • Up by 15,2% since 02-03 • Revenue Collection • Outstanding consumer debtors up to R28bn • Pro-poor policies: • Adequate infrastructure • Appropriate targeting mechanisms • Affordability

  16. Reforms within LG sphere • Municipal Property Rating Act • Broaden rates base • Harmonise valuation methods to land + improvements • Municipalities to monitor impact of new system • Municipal Finance Management Act • Primary legislation governing municipal finances • Review of LG fiscal framework • inc. equitable share formula & RSC levies

  17. EDUCATION SPENDING

  18. Education spending trends • Largest share at 34,7% of total budget • Highest share in Mpumalanga (38,9%) and Limpopo (38,2%) • 11,9 million learners and 364 000 teachers (86% of staff) • 27 000 schools • Total budget - R64,8 bn (2004/05) R73,7 bn (2006/07) • R53,2 billion personnel or 81,6% • Highest in North West at 86,3%, lowest on Gauteng at 77,2% • Capital rises to R3,0 bn in 2004/0 to R3,5 bn in 2006/07 • Public ordinary schools R53,9 billion (83,3%) • Non-compensation recurrent spending (eg textbooks, LSM) • Rises from R3,8 bn in 2000/01 to R11,3 bn in 2006/07 • Per capita spending averaged R5 011 per learner in 2003/04 • highest in NC at R6 455, lowest KZN R4 359

  19. Education spending

  20. Education spending by economic classification

  21. Provincial Education spending by programme

  22. Provincial Education spending by programme (percentages)

  23. Matric learners and pass rates in Mathematics

  24. Matric learners and pass rates in Physical Science

  25. Chapter 5:HEALTH SPENDING

  26. Health services • Strong spending in 2003/04 outcome • Stabilisation of health budgets – real annualised growth 4.9% over 7 year period • Stabilisation and improvement in health personnel numbers • Substantial recovery in NPNC expenditure, including medicines • Strengthening of capital spending and hospital revitilisation (27 projects)

  27. Health services • Inter-provincial equity improving • Significant increases in spending on primary health care, emergency medical services • Scarce skills and rural allowances implemented and backdated to July 2003 • HIV/AIDS spending significantly increasing with implementation of comprehensive programme • Other pressures: Health inflation; hospitals; PHC function shift

  28. Health spending trends • Health 21,7% of total budget declining to 21,4% in 2006/07 • Two types of provinces • those with central hospitals have v high share • those without central hospitals • Capital R1,0 bn in 2000/01 to R3,8bn in 2006/07 • Primary health care (R7,1 bn) • HIV and Aids spending – R60 m in 2000/01 to R2,2 bn 2006/07 • EMS spending – R719 m in 2000/01 to R1,6 bn in 06/07

  29. Health spending by programme

  30. Health spending by economic classification

  31. Health spending per capita

  32. Public health expenditure trends in 2004 prices,

  33. Health personnel numbers by category

  34. Chapter 6:Social Development

  35. Overall Expenditure and Budget Trends • Provincial spending growing strongly from R21 billion in 2000/01 to R42,4 billion in 2003/04 • An annual average growth of 26,6 per cent • Further accelerated growth over the period from R42,4 billion in 2003/04 to R61,2 billion in 2006/07 • An annual average growth rate of 13,4 per cent • Overtaken health as second biggest expenditure item after education

  36. Dominance of Social Grants in Budgets

  37. Social Grants Spending • Continued dominance of social grants within social development budgets as a result of the continuing expansion of the social grants and welfare services for the poor • Social grants spending is at an annual average of around 87 per cent within all provinces • Proportions are particularly high in a poor provinces such as EC and MP at around 90 per cent over MTEF • Especially extension of the child support grant to children up to their 14th birthday, an average annual growth of 87 per cent • Strong overall growth in grants spending from more than R18 billion to R37,1 billion expenditure between 2000/01 to 2003/04 • This spending grows to R54,4 billion in 2006/07

  38. Social Grants Spending by Province

  39. Social Grants Beneficiaries • Rapid growth in beneficiary numbers • 2000 beneficiary numbers were more than 2.9 million • By April 2004 beneficiary number more than 7.9 million • An increase of more than 5 million over 5 years • Highest growth in child support and disability grant beneficiary numbers – more than 4.3 million children by end of April 2004

  40. Social Grants Beneficiaries

  41. Prov Social grants spending

  42. Percentage of total social development spending

  43. Social grants beneficiary numbers by grant type

  44. Chapter 7:AGRICULTURE AND LAND

  45. Agriculture • Spending on Agriculture rises from R3 billion in 00/01 to R5,5 b in 06/07 – growth of 10,6% • Provinces account for just under 80% of total sector spending • Provincial budget grows by 16,9% from R3,2b in 03/04 to R3,8b in 04/05, rising to R4,2 b in 06/07 • spending on personnel account for largest share but declined from 71,9% in 00/01to 60,4% in 02/03, will further fall to 56,7% in 06/07 • Non personnel spending increases to enhance farmer support programmes including infrastructure • Additional funds through conditional grant (R750m over 2004 MTEF) to implement a new framework for farmer support – Comprehensive Agricultural Support Programme

  46. Land • Spending on land reform programme increase from R518 m in 00/01 to R1,3 b in 2003/04 , further rising to R2,2 b in 06/07 • Restitution programme account for the largest increase in spending from R265m in 00/01 to R839m in 03/04, budget to rise to R1,4 b in 06/07 • 60,8% (48,463) claims settled at cost of R3,7 b benefiting 616,429 beneficiaries • 64% of unsettled claims are urban, mostly in metros • By 06/07 settlement of restitution claims will be completed

  47. Key Challenges & Initiatives • Increasing access to farmer support services to enable effective land use • Linking land reform programme with post transfer farmer support • High spending on personnel but shortage of appropriate skills mix • Newly settled farmers need access to capital but difficult to access financial markets • Need to support research on appropriate technology for small scale farmers • Comprehensive Agriculture Support Programme provides a new framework to increase farmer support services targeting small scale farmers and land reform beneficiaries

  48. Chapter 8:TRANSPORT AND ROADS

  49. Overview • All spheres have some responsibility for • Roads • Public Transport and • Traffic management and safety • Government spending on roads amount to R9,8 bn in 03/04 • municipalities account for 34,1% (R3 bn) of which 51% is spent by metros • National (SANRAL) 13,1% or R1,3 bn rising to R1,7 bn in 06/07 • Provinces account for 65,5% or R5,6 bn • Provincial spending rises to R7,6 bn in 06/07 • Maintenance account for 52,3% of prov road spending

  50. Public Transport & Traffic • National government spending on transport subsidies increase from R3,2 bn in 00/01 to R5,3b in 06/7 • Bus subsidies account for about 45%, and rail 53% • Provincial spending on public transport rises from R308 m in 00/01 to R771 m in 03/04, budget to increase to R1,4 bn in 06/07 • National and provinces spent R1,1bn on traffic & safety, with province accounting for 84% or R960m

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