Page 58 - Provincial Treasury Estimates.pdf

Overview of the Provincial Revenue and Expenditure (OPRE) Financial Year 2023/24
The health component was adjusted in the 2022 MTEF with changes to a new risk-adjusted index sub-component
which carries through in the 2023 MTEF. The new risk-adjusted index was designed to include factors that consider
the relative cost of health care needs by age and sex, the total fertility rate of the female population and the burden of
disease through premature mortality. In addition, a deprivation index takes into account the effect of socio-economic
factors and sparsity takes into consideration the costs associated with delivering health care needs. The Government

Employees Medical Scheme (GEMS) data is used in the age and sex variable, and the data that inform the sparsity or
multiple deprivation index variables are updated periodically as these are not expected to change significantly from
year to year. The remainder of the health component data have been updated as part of the annual technical updates.
Datasets such as mid-year population estimates (MYPE), the Council for Medical Schemes and the General Household
Survey (GHS) were used for uninsured population. The total fertility rate was updated using the average total fertility
rate published in the MYPE. The premature mortality was also updated using the mortality and causes of death report

that were published by Statistics South Africa. The health component has also been updated using the 2020/21 and
2021/22 District Health Information Services (DHIS) patient load data from the Department of Health.

Further to the above changes, the other PES components were updated with the MYPE, the 2010 Income and
Expenditure Survey and the 2019 regional Gross Domestic Product (GDP-R) datasets.

The 2022 Census results are expected to come into effect in the 2024 MTEF period and will affect population numbers,
living conditions, access to basic services, income and the PES formula will thus reflect the provincial population data
changes. As a result, provinces with positive changes in their population data will receive more resources for their
growing service-delivery responsibilities, while the provinces with negative changes to their population data will receive

reduced amount of funding.

Over the 2023 MTEF, additional provincial equitable share of R12.251 billion was made available to the province of
which R906.137 million is due to the impact of new data updates in the PES formula. An amount of R2.561 billion has
been added for the purpose of supporting provincial education department to address education budget pressures and
R3.013 billion has been allocated to the health department for the compensation of employees, service backlogs
including antiretroviral therapy and tuberculosis, medicine and other goods and services.
An amount of R3.992 billion has been allocated for the carry through of the cost of living adjustment and an amount of

R1.778 billion has been added through Budget Facility for Infrastructure for the Coega Special Economic Zone for the
construction of a new bulk sewer connection pipeline; the upgrading of bulk infrastructure to accommodate the
expected increase in demand; and construction of critical bulk water infrastructure to support economic growth and
enable a human settlement development in Motherwell.

The higher than anticipated revenues at a national level have improved the short term cash position, but most of the
windfall tax receipts are expected to fall away and government cannot rely on revenue gains to fund permanent
spending increases. The provincial funding increases in the 2023 MTEF compared to previous years where the
province lost funds mainly due to the decreasing population numbers, however this increase only reflects nominal
recovery and does not translate to real growth in available resources in the long term. The province remains severely

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