Audit results show that Parliament and the Executive are still failing to ensure public money is spent effectively

Johannesburg 28 October 2019: SECTION27 notes with mounting frustration the deplorable audit results presented by the Auditor-General’s (AGs) office to Parliament on 23 October. At a time of massive strain on the fiscus resulting from years of state capture made worse by debilitating austerity, it is unacceptable that national and provincial government departments continue to spend public money illegally and wastefully.

The report details how R61.4 billion of public funds were spent irregularly in the 2018/19 financial year. Irregular expenditure is spending that is not in accordance with the requirements of law, particularly the Public Finance Management Act of 1999, often related to procurement. This represents a 23% increase from last year, which itself set a new record.

The report finds:

• Departments also recorded R1.4 billion of wasteful expenditure. Unlike irregular expenditure, fruitless and wasteful expenditure could – and should – have been avoided. It includes interest on late payments to service providers, which remains endemic, and litigation against the state.
• The Western Cape still has by far the largest proportion of departments with clean audits.
• The report also found that 9% of auditees were now in a vulnerable financial position. This means they may soon lack the finances necessary to continue their operations, up from 8% last year.

We call on Parliament, Premiers and Provincial Legislatures, as the representatives of the people charged with holding departments to account, and President Cyril Ramaphosa, to hold Ministers and MECs with audit findings responsible for their performance.

The impact of irregularly spent and wasted funds on education and health care is literally a matter of life and death, as money for school books, medicines, teachers and healthcare workers is lost.

We are particularly disappointed that provincial departments that have blamed budget shortfalls for a failure to deliver services are at the top of the AG’s list of delinquent departments. These include the KZN Departments of Education

and Transport, which are claiming in court papers this week that they cannot afford to provide transport to school for learners in the province who need it.

We call on the Minister of Finance, in the Medium-Term Budget Policy Statement (MTBPS), to implement measures that will help departments to perform and execute their mandates. Central to this will be ensuring that there are no cuts in public spending on social services.

Austerity will only limit access to health care and other critical social services further, and put the quality and pace of education, transport, water, energy and other reforms at risk.

Cabinet must instead find a way to invest in the financial and human capacity of departments to work with greater efficiency and effectiveness. The Departments of Planning, Monitoring and Evaluation (DPME), Cooperative Governance (COGTA), Public Service and Administration and the National Treasury hold the mandates to ensure this is the case. And Parliament must begin to fulfil its oversight role as envisaged by the Constitution.

For more information or interviews contact: Daniel McLaren, budget analyst at SECTION27 on 079 910 1453