Eastern Cape health bail-out set to ‘fall short’ - analyst

Abstract

Only time – and new senior management intervention – will tell whether the Eastern Cape health department’s financial rescue package will fully honour its R1.6 billion accumulated debt, including Occupation Specific Dispensation (OSD) pay hikes.
This is according to Daygan Eagar who runs the health desk of the Public Service Accountability Monitor (PSAM) at Rhodes University, a unique outfit that has built a country-wide reputation for boosting the transparency of its provincial government.

Eagar told Izindaba that the national R793 million ‘general base adjustment’ for the coming financial year, plus a R400 million overdraft by the provincial treasury (read bail-out), had to cover not only existing debt but also ‘carry through costs’.
‘So the real question is, is the increase, minus the accrued debt, enough to cover the OSD? Only time will tell. My guess and prediction is that it won’t be enough. They’ll incur further debt this year,’ he stated confidently.

The PSAM has been monitoring Eastern Cape provincial government performance for a decade, during which time the health department had remained within an ‘acceptable range’ of over- or under-spending by an average of 2%. Over the last 8 years the department has received 5 audit disclaimers, 2 adverse opinions and only 1 unqualified opinion from the Auditor-General. These audit opinions show that while the money is being spent ‘they cannot always account for how it is being spent and every year there is evidence of financial mismanagement and corruption,’ said Eagar.
What was different in the last financial year was an over-spend of 13%, mainly because of poor budgeting for OSD implementation, HIV/AIDS and a build-up of debt due to infrastructural development.

Provincial health department spokesman, Sizwe Kupelo, said the bail-out meant the department would be able to pay its creditors, which included the National Health Laboratory Services (R150 million), the South African National Blood Services (about R30 million) and Telkom (about R23 million), a process that would be complete by 1 May this year.