The Democratic Alliance (DA)-led Western Cape government has warned that service delivery, including healthcare, education, law enforcement and social development, could be hamstrung by the reduction of critical services and grants worth billions of rand in various provinces.

Premier Alan Winde and Finance and Economic Opportunities MEC Mireille Wenger announced on Tuesday that the province had formally declared an intergovernmental dispute with National Treasury.

The dispute relates to the centrally negotiated and agreed public-sector wage bill, which was implemented after the Western Cape parliament approved the annual budget.

With a shortfall of more than R1-billion to pay public servants, the move has led to unprecedented budget cuts.

The province said the effect of the wage increase meant a hike in the Western Cape's wage bill of R2.9-billion, something the province simply could not afford.

The provincial government is now demanding a meeting with Finance Minister Enoch Godongwana before next Wednesday to thrash out their concerns or face a court showdown. 

From the start of the process, Winde said, it was evident they could not afford the wage deal and signs of the irrationality of the agreement were seemingly ignored.

He said this is an issue that affects all provinces and every government department. What is desperately needed is prudent fiscal consolidation, management, and discipline. This appears to be lacking in national government.

"Our highest priority is protecting our citizens from the eventual impact of this nonsensical approach to managing the country's finances. We will do everything we can to keep providing the best possible services for our residents even in the face of this calamity."

Godongwana announced earlier this month that National Treasury had allocated R111.4-billion over the next three years to the adjustment of the remuneration of public servants in departments and professions deemed critical, such as education, health, police, defence and correctional services.

During her medium-term budget policy statement on Tuesday, Wenger outlined which services and programmes were reduced due to the budget cuts.

She said that as a result of the public-sector wage bill, they had a R1.1-billion shortfall, with a reduction of R642.284-million for conditional grants.

"The unconscionable consequence for provinces means that deep cuts are putting committed budgets on the line and our frontline services in education, health, and social development – the very forefront of our Constitutional obligations to the people of our province – are at risk," she said.

Wenger said that as a result of significant in-year reductions, several departments have had to reassess priorities internally.

This involves restructuring funding across financial years by rescheduling projects, including those with earmarked allocations for energy.

Among key projects that had to be reduced internally include the province's flagship safety programme, the Law Enforcement Advancement Programme (LEAP) initiative, which had to be cut by R22-million.  

Education infrastructure grants to the province have been reduced to R156.875-million, as well as a reduction of R14.038-million to the Early Childhood Development Grant's maintenance component. 

The HIV and Aids grant was also reduced to R3.88-million, and the Expanded Public Works Programme integrated grant for provinces was reduced to R207-million.

Wegner said: "We are taking this fight to the highest levels so that the people of the Western Cape receive what is right and, frankly, what they should lawfully receive as the people of South Africa."

Meanwhile, Finance MEC Jacob Mamabolo also delivered Gauteng's 2023 medium-term budget policy statement, which did not mention budget cuts.

Mamabolo told MPLs during his address that the provincial government was in the final stages of settling its R12.9-billion e-tolls debt.

He said: "To this extent, we will submit our concrete proposal to the national government before December 15, 2023 and expect feedback and finality before the State of the Province Address next year."

He added that Gauteng was intensifying revenue enhancement efforts and exploring alternative sources to maintain funding of key priorities.