The Dine & Dash dilemma
An unfunded mandate can be defined as any devolved responsibility not accompanied by the necessary resources to fulfil it.
To put it in plain terms, it is like going to dinner with work colleagues and the boss orders drinks for everyone and then leaves the employees to pick up the bill. Some of us may have been victims of this or maybe even guilty of it.
This is a phenomenon common to most countries across the globe that have systems of multi–tiered government. In Australia it is referred to as ‘cost shifting’ and in Canada it is referred to as ‘service responsibility downloading’. In South Africa and in the United States of America (USA), it is commonly referred to as ‘unfunded mandates’.
One of the most obvious examples of this phenomenon happened when former President Jacob Zuma issued a proclamation in 2014 to the effect that the then 3 100 Izinduna in KwaZulu-Natal (KZN) were to be remunerated salaries of R80 875, backdated to April 2013.
With no treasury certificate, this has remained an unfunded mandate.
The situation is made worse in KZN, where the traditional authority is distinctively different from other provinces with a plethora of Inkosi, Izinduna, Amakhosi and other traditional authorities. Numerous pleas to national government to relieve the province of the burden of paying for this unfunded mandate has over the years been met with deafening silence.
As a result, the province is paying – as per the last treasury report – R367 million per annum with no assistance from national treasury. To fund the payment of Izinduna, funding is being cut from KZN’s Education, Health and Transport budgets which is now impacting on service delivery.
More recently, KZN was threatened with the collapse of service delivery by an unfunded mandate in terms of wage negotiations – a process the province has played no part in. This, while budgeted wage increases fall far short of the final negotiated increase. This has now compounded KZN’s fiscal constraints.
To make matters worse, national treasury has tried to pull the wool over KZN’s eyes, stating that it will contribute R3.7billion to help fund the wage agreement shortfall. Yet, the reality is that it is only funding R2.5billion.
This as the balance of R1.2billion will be taken from vital conditional grants and as KZN’s Department of Education (DoE) faces a R315 million cut, Health faces a R365 million cut and Human Settlements faces a whopping R423 million cut.
Critical areas that face cuts are the education infrastructure grant, the health facility revitalisation grant and the human settlements development and informal settlements grants. All of these cuts will have a further negative impact on KZN’s already failing infrastructure.
To outline the dilemma facing KZN, provincial government departments face the following wage agreement shortfalls;
• Agriculture and Rural Development – R80 million
• COGTA – R34.5 million
• Health – R2.189 billion
• Human Settlements/Public Works – R26.471 million
• Social Development – R97.213 million
• Education – R3.661 billion
• Sports/Arts and Culture – R23.128 million and;
• Community Safety and Transport – R41 million.
These staff need to be paid and national treasury are not putting their hand up. Unfunded mandates therefore refer to situations where finance does not follow function. This is a controversial matter as central provincial governments have competing interests.
On the one hand, central governments may see unfunded mandates as a ‘sly means’ of offloading their own policy responsibilities without paying the costs. On the other hand, subnational governments can perceive this opportunistic behaviour as a threat to their financial sustainability and their capacity to implement regional policies efficiently.
In decentralised and provincial government systems, provincial and local governments object to unfunded mandates because they shrink policy space, limit expenditure choices and ultimately local government’s accountability to their electorates.
Unfunded mandates reflect systemic weaknesses of decentralised or provincial allocation of powers and functions. Although there are principled objections, unfunded mandates remain constitutional. Given the wide number of unfunded mandates, the critical question is how, in a decentralised system, one level of government can impose mandates with cost implications on another.
Despite being constitutionally permissible unfunded mandates run against the grain of democratic ideology. The principal critique is that unfunded mandates undercut the key constitutional notion of the different spheres of government being accountable to the public – because it confuses the public as to who does what.
There have been various responses to unfunded mandates. The measures for curbing or containing unfunded mandates are twofold, namely, radical intervention to impose a clear prohibition on the imposition of unfunded mandates similar to that done by the United States of America and Australia, and the more common approach is to admonish the transferring legislature or authority to stop, evaluate and consider before imposing a mandate.
The DA is pleased to report that KZN’s Finance MEC, Francois Rodgers, has taken that stand on behalf of our province. He has successfully convinced the national budget council to place a moratorium on unfunded mandates, particularly in relation to wage increases.
MEC Rodgers has also fought for a fair bite at the equitable share pie for KZN. For the first time since 2011, KZN’s share of the national fiscus will reflect the reality of our province in terms of population and needs. And finally, Deputy Minister of Finance, Ashor Sarupen, last week committed additional funds to KZN to deal with climate related disasters.
These two champions of KZN – representing the Government of Provincial Unity (GPU) and the Government of National Unity (GNU) respectively – have shown what can be done in coalition governments where all views are heard and respected.
There is a strong sense that the days of unfunded mandates imposed by national government are numbered. As proud members of KZN’s GPU, the DA will stand steadfast against agents of financial delinquency and make sure the drinks bill is paid by those who order it.