* "Wasteful patterns" place strains on finances
* Too many costs, too few taxpayers
* Money returned due to lack of planning
By Jon Herskovitz
JOHANNESBURG, Nov 3 (Reuters) - The massive funds South Africa sets aside to fix its schools and heal its health care system might be more effective if bureaucrats spent the money on properly run programmes and not on luxury cars.
In its three-year budget policy statement last week, the National Treasury said too much money was lost due to incompetence, suspected corruption and inefficiency, harming the long-term prospects for Africa's largest economy.
"South Africa needs a culture of responsible stewardship of public resources geared toward obtaining better quality frontline services for every rand spent," it said.
The Treasury, widely praised by economists for its fiscal prudence, has tried to set an example of efficient operations and the government has set up a task force to cut costs, but few think the country can quickly change its ways.
"There is not enough management skill or general policy implementation skill in government ministries and local departments to effectively use the money," said Gary van Staden, political analyst with NKC, a group of independent economists.
But the Treasury needs maximum efficiency because some basic numbers do not stack up in its favour.
It has to provide money for the nearly 14 million receiving social grants and welfare services. But with about 13 million in the workforce and only about 6 million earning enough money to pay income taxes, its sources of revenue are constrained.
It spends about 40 percent of its tax revenue on personnel costs for state employees, leaving little over for other priorities.
Even so, the government has spent hundreds of billions of dollars since the end of apartheid 16 years ago to provide houses, electricity and basic schools to millions living in crippling poverty. The results have not been promising.
The African economic power ranks near last in the world in terms of the quality of its education system, health care provision and its police, according to the World Economic Forum's Global Competitiveness Report.
"There are too many departments where administrative capacity is excessive or inefficient," Finance Minister Pravin Gordhan told parliament last week.
COSTLY RIDES
The committee to slash state spending said it sees low-hanging fruit of at least 27 billion rand a year it can cut, with additional savings coming from greater fiscal discipline.
The country has also had its share of white elephants costing billions of dollars, such as a post-apartheid plan to overhaul the curriculum at its schools that was dropped earlier this year despite the hefty spending on its implementation.
Wasteful spending by ministers has caused outrage among the public, and President Jacob Zuma earned some praise this week by sacking seven ministers seen as not up to the job or as being financially irresponsible.
Those removed included Siphiwe Nyanda, a communications ministers who has been lambasted in the media for spending more than 1.1 million rand ($160,000) each on two, top of the line German sedans for his use.
Even when the Treasury allocates money, it still faces the problem of having some of the funds returned because local officials cannot draw up plans to spend the cash.
During 2009/10, some 12.4 billion rand allocated for capital projects was unspent, the Treasury said. (Editing by Giles Elgood)