KwaZulu-Natal Finance MEC Francois Rodgers says provincial departments will have to take cost cutting seriously as the province has to manage a R9 billion budget deficit.
Rodgers, who is also the provincial chairperson of the DA, spoke to “The Mercury” about his first 100 days in office and said the province’s finances were not “too healthy”.
“We have inherited a province where expenditure was not managed and we have inherited a province that is now projecting a R9bn deficit.
“It is not a good position and it is going to take an enormous amount of effort and fiscal discipline to be able to turn it around,” Rodgers said.
He said that each member of the provincial executive would have to take an interest in the financial health of their particular department.
“There’s a Treasury note going through, and it’s on cost cutting measures...but it’s serious cost cutting; we have to be serious, because I’ve got to try and find R9 billion, otherwise we’re going to have to go into an overdraft.”
Rodgers said in terms of the Constitution and the PFMA (Public Finance Management Act), provinces are not authorised to go into an overdraft.
“This means you would be under national administration and we need to avoid that at all costs.
“The other option for me would be just to take the R9 billion and split it across all the province’s departments and cut their budgets pro rata, but that’s not the way that I want to do it.
“We are busy crunching the numbers at the moment and it looks like we’re going to be able to save at least 60 to 70% of that particular deficit.”
He said one of the revenue streams that they are looking at is liquor licences.
“At the moment, there is a fixed annual fee for liquor licences and we are exploring the possibility of charging an annual fee based on volume, which we think is more equitable, particularly for the smaller emerging liquor outlets.”
He said another focus area would be the Department of Transport and its fine collection revenue.
“We are not collecting fines effectively. Half of the cameras are not working which affects a huge revenue stream.”
Rodgers said the Gaming and Betting bill is currently being reviewed, and there is a possibility of looking at new streams of revenue.
The amendments include an increase in tax rates across the board, including items such as casino gaming tax, limited payout machine gaming tax, bingo gaming tax, and the betting tax on fixed odds bets on sporting events. He said that he had engaged with the national Minister of Finance, Enoch Godongwana, on the taxation of online gambling.
“Currently, there is absolutely no form of taxation on online gambling which we believe could be another fairly short-term revenue stream.
Rodgers said he had also spoken to Godongwana and the Budget Council and requested that the province should not be left with an unfunded wage increase when salaries are negotiated in the upcoming financial year.
“In the past, we were told to budget four and a half percent, and then 4.9% was the final agreement, and we had to then reprioritise our budgets and fund that shortfall.
“We have been given the assurance that this is not going to happen this year,” Rodgers said.
The Mercury