South Africa News

WC submits petition to Ramaphosa over constitutionality of R2.3bn budget cuts

The Western Cape government has submitted a petition to President Cyril Ramaphosa questioning the constitutionality of a bill empowering R2.396 billion in budget cuts in the 2020/21 financial year.

Finance and Economic Opportunites MEC David Maynier and Premier Alan Winde are concerned that the National Treasury has transferred significant risk to provinces by pre-emptively cutting its budgets, ’’especially since it’s based on the assumption it will win its court case against the unions on the wage agreement, an assumption which is far from certain’’.

They are of the belief that it would ’’infringe on the ability of the provinces to comply with their current contractual and legal obligations to all their employees’’.

Winde and Maynier submitted a section 79 petition to Ramaphosa on Friday ’’to bring to his attention material concerns over the constitutionality of certain aspects of the 2020 Division of Revenue Second Amendment (DoRA 2) Bill’’, which was passed by Parliament on Thursday.

In tabling his Medium Term Budget Policy on October 28, Finance Minister Tito Mboweni confirmed that the Western Cape budget would be cut by R2.396 billion in the 2020/21 financial year for compensation of employees following National Treasury’s decision to freeze wages.

’’Importantly, while the Western Cape does support National Treasury’s overall goal of decreasing the public sector wage bill, the way that they have proceeded in the 2020/21 financial year has raised significant concern for the Western Cape, as it has with other provincial governments as well,’’ Maynier said in a statement on Monday.

Should Treasury lose its court case, provinces, including the Western Cape, ’’will face a significant and immediate liquidity squeeze as we will have to immediately implement the wage agreement but without necessarily having funds made available from national government’’, said Maynier.

’’We are also concerned with the figure arrived at by National Treasury of a R2.396 billion reduction to our budget. We suspect that the numbers have been bungled, and assuming that a ’wage freeze’ will hold, we believe that they may have cut our budget by up to R500 million too much.

’’Our concerns pertaining to the DoRA 2 Bill are material and urgent and were raised with the Minister of Finance, Tito Mboweni, and his officials in National Treasury prior to the Bill being presented to Parliament, to no avail, and despite our repeated attempts to engage with National Treasury on ways to resolve our concerns, they were not resolved prior to the bill being introduced into Parliament.

’’The result now is that the DoRA 2 Bill, if brought into law by the president’s assent, will infringe on the ability of the provinces to comply with their current contractual and legal obligations to all their employees, and will impact on provincial revenue allocations in an unlawful and unconstitutional manner.

’’And so, we will have no option but to seek legal redress in this regard, impacting as it will on our capacity to service existing collective agreements, deliver services and continue to perform as a functional organ of state.

’’While we support the overall objective of decreasing the public sector wage bill, the in-year approach is unconstitutional. Put simply, we cannot be expected to cough up R2.3 billion that we do not have in the Western Cape.

’’We trust that President Cyril Ramaphosa and his legal team will engage with our arguments and will return the DoRA 2 Bill to Parliament on the grounds of our valid constitutional concerns.’’


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