The Western Cape is in deep trouble
The Western Cape has one of the fastest-growing populations in the country, but its budget has been cut consecutively over recent years, threatening the province’s financial stability and the quality of life for residents.
Delivering his State of the Province Address at the Western Cape Provincial Legislature on Wednesday (31 July), Western Cape Premier Alan Winde said that over the next five years, the government will focus on financial sustainability to ensure the ability to build infrastructure, employ essential workers, and serve the community effectively.
However, he said that the National Treasury’s budget allocations must be revised, given the current migration trends and disappointing budget cuts.
For example, Winde explained the 2023 Medium Term Expenditure Framework (MTEF) imposed a centrally agreed public sector wage bill, resulting in severe budget cuts that affected residents.
Consequently, the Western Cape declared an intergovernmental dispute (IGD) with the national government to address these issues.
Discussing the issue with eNCA, Winde noted one can’t just cut budgets mid-year when the province has already entered into contracts with service providers and essential workers such as doctors, nurses, and teachers.
Concerningly, he added that over the past three years, the Western Cape has seen a R7 billion cut to its provincial budget.
“However, this is coupled with the fact that the population in the Western Cape is one of the fastest growing out of all nine provinces, yet it receives only the fifth largest budget despite having the third highest population,” he said.
A shrinking budget combined with a growing population presents significant challenges for the Western Cape.
As the population increases, so does the demand for public services, including healthcare, education, and infrastructure.
However, with a reduced budget, the government struggles to meet these demands, leading to potential service shortfalls, overburdened facilities, and inadequate staffing.
This situation can hinder economic growth, reduce the quality of life for residents, and create social unrest.
Ensuring fair funding and exploring alternative revenue sources are crucial to addressing these challenges and maintaining the province’s development and prosperity.
This disparity will be challenged to ensure residents receive the funding they deserve.
Additionally, the government will explore alternative funding opportunities to diversify revenue streams.
By the end of the term, the goal is to secure deals for future investments, ensuring financial sustainability through borrowing for critical mega-investments.
Winde’s concerns align with national data.
StatsSA’s Migration Profile Report for South Africa shows that the Western Cape has seen the highest net increase in the number of people coming in from other provinces.
According to the data, the province has experienced a net inflow of over 294,000 people within the last decade.
Additionally, according to data from Lightstone, the Western Cape’s population grew well above the average over the last decade.
Since 2021, the Western Cape has grown by 24%, which is comfortably above the average of 17%.
Winde noted that the Western Cape is expected to grow by an estimated 150,000 people annually while the budget is receding.
This is a big problem for the sustainability and financial viability of the province, he said.
“Our MEC of Finance is already engaging with the Nationa Treasury to say that they have to correct the formula for the division of revenue because the funds don’t follow the citizens that come,” said Winde.
The Premier also said this issue has been exacerbated by the R3.1 billion the province spent on fixing the damage inflicted by the recent floods experienced by the province recently—money that was diverted from other budgets.
At this moment, Winde highlighted that the province’s only solution is to borrow the money needed, which, again, is not sustainable.
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