The KwaZulu-Natal provincial government will not be able to raise the R5,3 billion salary increase recently given to its employees by the national government.
This is according to DA provincial leader Francois Rodgers, who said there were currently no funds to pay the additional R5,3 billion.
“The fact that KZN will now have to find more than R5 billion for compensation of employees (CoE) is set to have a devastating effect on the provincial budget.”
There is already no room to move in KZN’s coffers to fulfil this new national mandate.
“As a result, the province’s ANC-run government may well have to borrow the funds, a detrimental decision for the provincial fiscus,” he said.
In April, the national government and unions reached an agreement for public servants to receive a 7,5% wage increase in the current financial year.
The increase comes as the provincial government’s revenue streams are drying up.
To cope with the province’s deteriorating financial situation, the KZN government has, in in recent years, been implementing cost-cutting measures.
There has been fear that the cost-cutting measures, which saw some provincial departments’ budget being slashed, would compromise the KZN government’s ability to render key services such as the provision of affordable houses to the poor.
“The option of cutting spending within government departments to finance this massive sum is also not an option. KZN has been cutting back on budgets for years, to the point where many important projects have already been stopped to try to ensure financial stability.
“The impact of budget cuts within departments has been dire, with many now projecting massive over-expenditure. This includes Education, with an estimated R3 billion overspend, and Health, with a projected overspend of well over R4 billion,” Rodgers said.
In 2016, the provincial government found itself in a precarious financial situation after the national government resolved that izunduna (headmen) — who in the past rendered their services to community for free — should be paid a R7 500 monthly salary.
For KZN, which has about 2 000 izinduna, it meant that the provincial government had to find about R300 million per year for the headmen’s salaries. When the provincial department delayed the payment of izinduna, it incurred a R300 million backpay bill.
KZN is now headed over the fiscal cliff. The DA has consistently warned this ANC-run government about the looming disaster
The KZN government, which in the past heavily relied on the province’s lucrative tourism industry, suffered a major blow when Covid-19 destabilised the tourism sector.
In 2021, the province suffered another setback following the destruction and looting of businesses by protesters who invaded shops and public facilities following former president Zuma’s arrest.
The province’s economic situation was exacerbated by last year’s floods, which destroyed houses and public infrastructure.