SECTION27 2011 BUDGET ANALYSIS

SECTION27 and the Treatment Action Campaign welcome the increased budget for health, but express concerns about:

  • Capacity of national and provincial departments for health budget planning
  • Provinces’ commitment to using equitable shares in accordance with national priorities
  • Limited monitoring of expenditure – in particular of conditional grants
  • Limited parliamentary oversight and delays in implementing the Money Bills Amendment Procedure and Related Matters Act 9 of 2009

SECTION27 and the TAC welcome the proposed increases in health expenditure outlined in the budget tabled by Minister of Finance Pravin Gordhan on 23 February 2011.  In particular, we welcome the Minister’s commitment to significant investment in strengthening the public health sector.

However, we are concerned that the additional R11 billion available for 2011/12 will not necessarily translate into improvements in the delivery of health care services in the absence of a reasonable plan to address endemic and systemic problems with budgeting and expenditure within health departments at all spheres of government.

Such problems make it difficult to determine precisely what health service is being delivered, what needs to be delivered, and how much it will all cost.  The constitutional right to have access to health care services can only be realised if budgets are aligned to objectively identified health needs and priorities, and if sufficient information is available to departments to formulate and implement appropriate budgets.

National Health Insurance (NHI)

Importantly, Minister Gordhan acknowledged that the phasing in of NHI requires “substantial reforms to address imbalances across the public and private sectors”.  However, he did not clearly articulate what these reforms will entail.  In our view, the Health Minister’s comments earlier this week about the unsustainability of private health service pricing provide an important indication of where to start.

In this regard, we note the Finance Minister’s commitment to addressing the findings of the Panel of the Banking Enquiry established by the Competition Commission in 2006 and headed by former Judge Thabani Jali.  In our view, there is an urgent need for a similar investigation into the private health sector to ensure that prices are “fairly set, are transparent and do not create undue hardship”.  This, we believe, would be integral to addressing the imbalances between the public and private health sectors and guiding the government on how to regulate prices.

Implement the Money Bills Amendment Act to strengthen Parliament’s capacity in the budget process

Once again we must raise concerns about delays in proper implementation of the Money Bills Amendment Procedure and Related Matters Act 9 of 2009 (“the Money Bills Act”).  This is a concern we raised in 2010 in our submission – as the AIDS Law Project – to the Select Committee on Appropriations on the Division of Revenue Bill, where we pointed out as follows:

The Constitution vests Parliament with the responsibility for establishing budgeting procedures and passing the annual national budget. More fundamentally, Parliament has the responsibility to ensure that the manner in which resources are raised, appropriated and ultimately spent advances the constitutional project, the cornerstone of which is the Bill of Rights and the obligation it imposes on the state to respect, protect, promote and fulfill those rights, including the progressive realisation of the right to have access to health care services.

The Money Bills Act, as required by section 77(3) of the Constitution, provides Parliament for the first time with the statutory powers necessary to fulfill its constitutional mandate in respect of the budget. However, implementation of the Money Bills Act must be prioritised urgently by Parliament. Given the limited timeframes in the Money Bills Act and the complexity of the budget, there is insufficient time to engage substantively with the [Division of Revenue Bill] as tabled. However, for Parliament to implement fully this constitutional mandate for the 2011/12 financial year it is essential that the [Parliamentary Budget Office] be established urgently.[1]

Two years after the Act was passed the Parliamentary Budget Office (PBO) has still not been established, severely handicapping the ability of MPs to fulfill their constitutional duty in the budgetary process.  There is some indication in the Estimates of National expenditure 2011documentation over next two years the formation of the PBO will be resourced using unspent funds from Parliament’s surplus account.

This is inadequate. There is the danger that Parliament may not generate surplus funds.

In our view, Parliament has the constitutional duty and power to ensure that dedicated funds are allocated from its equitable share for this process. We call on Parliament to ensure that the PBO is established and fully functional by the time of the 2012-13 budget.

Finally, we consider a few aspects of the health budget in some detail – HIV/AIDS, provincial health spending and the revitalisation of the public health system.

HIV/AIDS, STIs and TB: ensure better accountability for expenditure in provinces

The need for better monitoring and evaluation of health spending is particularly true for the HIV/AIDS programme.  This programme will receive increases to its allocation totaling R27 billion over the next three years.  It is planned that these increases will be used for the expansion of antiretroviral (ARV) treatment to 2.6 million people by 2013/14.  For this to happen, the state needs accurate data on how many people are on or need ARV treatment, and must put in place adequate controls over financial and other resources that have been made available.

SECTION27 and TAC are concerned that over the last few financial years some provincial health departments have continued to reduce contributions from their own coffers to the funding of the HIV/AIDS, sexually transmitted infections (STIs) and TB programme.  Thus at the same time that the national Department of Health (DoH) has increased its funding of this provincially-implemented programme through the conditional grant, these provinces have cut back on supplementing this funding from their equitable share.  This means that those activities not funded through the conditional grant, such as those related to the integration of HIV/AIDS and TB services and the treatment of STIs, continue to receive less money.

This could be addressed in one of two ways:

  • By expanding the conditional grant to include such essential activities and services; or
  • By adding a further condition in that grant that effectively compels provinces to cover the costs of such activities and services from their equitable share.

Once again, Parliament has the duty and power to ensure that this happens.

Provincial health spending: resolve the problem of accrued debts and fully implement the IST recommendations

Over the past few financial years provinces have continued to overspend on their budget allocations for health.  In the main, however, this has not been matched with increased levels of service provision.  While much of this overspending was as a result of poor financial management, a significant proportion of it relates to the compensation of employees. Of particular concern here is the state’s inability to resolve longstanding issues relating to the Occupational Specific Dispensation and ensure that the process is properly formulated, funded and implemented.

This provincial overspending has resulted in growing provincial debt that must then be serviced out of subsequent budgets.  This effectively reduces the budget available for the delivery of services in the current year, as old debts have to be paid first out of the new allocations.  We have already seen the impact of this debt in Gauteng and the Eastern Cape, where there have been reports of hospitals running out of funding well before the end of the financial year and suppliers have been forced to suspend services due to non-payment.  This has happened all too often in the past few years.

The Integrated Support Team (IST) reports into the functioning of provincial health departments – which were commissioned by former Minister of Health Barbara Hogan in 2009 – provide a clear indication of what needs to be done to rectify problems within provincial systems.  These reports offer a range of findings and recommendations that need to be integrated into strategic and turnaround plans and must be implemented as a matter of urgency.

Revitalisation of the public health system

SECTION27 and TAC welcome the additional funding for Family Healthcare Teams, infrastructure, and district-based maternal and child health services.  These are important components in the delivery of primary healthcare and will play an important role in the revitalisation of this sector and in laying the foundations for NHI.

Funding for the Family Healthcare Teams is a particularly important addition to this year’s budget as it starts the process of bringing community healthcare workers – who play a critical role in the delivery of primary healthcare – into formal employment.  For far too long the livelihoods of these essential health care workers been made vulnerable as a result of shortages of funding, poor management and them being kept at an arm’s length from the public service. We urge government to ensure that this programme is carefully implemented and monitored and that civil society is consulted throughout the process.

Conclusion

We urge Parliament, the National Treasury and the DoH to fulfill their constitutional obligations and provide the necessary oversight and assistance to provinces to ensure the end of poorly formulated budgets and an inability to track expenditure adequately.  Without such interventions, the state will be unable to deliver on the constitutional promise of access to health care services.

One area that does show some promise in this regard, however, is the introduction of measures to combat corruption by tightening controls over tenders and public procurement. That said, we will continue to work with government to ensure that the increased controls do not limit the DoH’s ability to ensure the sustained availability of essential medicines and other health products.

This statement is endorsed by the Treatment Action Campaign.

SECTION27 and TAC will release further statements in the coming weeks once it conducts a more detailed analysis of the national and provincial health budgets.

For more information, contact Daygan Eagar on 072-249-3873 or eagar@section27.org.za


[1] This submission is available at http://section27.org.za_old/2010/03/04/submission-on-the-division-of-revenue-bill-2010/