KZN finance MEC Francois Rodgers pleads for no further cuts when new budget is tabled

The DA in KwaZulu-Natal is calling on the National Treasury to ensure no further cuts are imposed on the province when it submits a revised budget.

This comes after the reversal of the planned VAT hike, which would have increased from 15% to 15.5% from May 1.

The cancellation of the increase was announced by finance minister Enoch Godongwana last week, before being reinforced by a Western Cape High Court order which suspended the increase until parliament passes legislation making Godongwana’s decision an act of parliament.

The unchanged VAT will result in a fiscal shortfall of around R75bn and will force the finance ministry to make budget adjustments. This has, in turn, led to a temporary hold of provincial budgets' approvals since they rely on national funding allocations.

The DA's leader in KwaZulu-Natal, Francois Rodgers, acknowledged the temporary impact of the VAT reversal but affirmed that it was “simply a pause in the process” that is no cause for concern.

Rodgers, who is also the province's finance MEC, added: “It is important to note that while KZN’s budget process has been paused, it has not stopped legislation in the province and that up to 45% of the budget may be spent until the revised budget is passed.”

Rodgers emphasised the need to finalise the budget correctly, particularly in identifying new revenue streams and prioritising essential spending, despite the delays. He said the DA had proposed key recommendations for comprehensive fiscal planning.

He urged Godongwana to provide clarity and direction of the third budget, following the proposal that sought a two percentage point VAT hike in March and the recently scrapped 0.5% hike, in the coming days.

However, he requested that the National Treasury shields the province from equitable share or provincial conditional grants reductions.

“Our province has already been hard-hit, with more than R70bn cut from both allocations over the past four years, equating to almost 50% of KZN’s annual budget being cut during this period,” he said.

Rodgers further called on the Treasury to fund the public servants’ salary hikes, for the first time in many years, just as it had committed in the original budget.

KZN's government has always bemoaned the crippling effects of the unilateral decision by the national government to increase public sector wages without releasing funds to provinces to cover that increase. The effect of this has been felt mostly by the provincial education and health departments which are spending significant parts of their budget allocations on staff salaries, which limits their ability to fund other services.

With the national government promising to fund the wage agreement gap in the original budget, Rodgers has predictably prioritised the two departments in his budget allocation.

“All provinces, including KZN, need protection during this revised budget process,” he said.

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