Wyndham Hartley

CAPE TOWN — Government is to increase spending R97bn over the next three years, and the lion’s share of the additional expenditure — 61% — will go to provinces and local government.

Targets for expenditure across the provinces will be provincial and municipal infrastructure, including massive allocations of R23,5bn over the next three years for the provision of housing.

While some R50bn more will go to provinces and local government, the key to this contributing to accelerated growth will be their capacity to spend it all.

Transfers to the provinces will rise 6,3% in real terms over the three-year period.

This raises the allocations to the provinces from the revised final position for 2005-06 of R209,7bn to an estimated R290bn in 2008-09. This includes both the equitable share allocation and conditional grants for targeted spending.

The increases in equitable share will mainly go to bolstering education, health and social development while conditional grants will focus on housing, HIV/AIDS and infrastructure.

Local government gets an apparent bonus of R24bn in grants from national treasury to replace Regional Services Council (RSC) levies — but this is simply an allocation to metropolitan and district councils, which still have RSC levies, allowing for when RSCs are scrapped next July.

The revised position of local government spending for the current financial year is R17,1bn.

For 2006-07 to 2008-09 the allocation to local government increases more than R2bn. Of this R1,5bn will be for free basic services and basic infrastructure, job creation and poverty relief initiatives, and building capacity and governance.

Currently, local government is owed a massive R40bn in arrears service payments and most municipalities have displayed an inability to collect the money.

Over the three years R1,9bn will be spent on capacity building in local government. There is also an additional R500m over the next three years for the municipal infrastructure grant.

"Local government plans to spend R25,3bn on municipal infrastructure over the next three years," the policy statement read.

A special amount of R241m has been set aside for capital projects in cities that will host matches in the 2010 Soccer World Cup tournament.