L Brown: Western Cape Treasury Prov Budget Vote 2006/07

17 May 2006

Speaker, the underlying imperatives and objectives of this Budget stem from
the national initiative for accelerated and shared economic growth as well as
our own Western Cape development strategy, Ikapa Elihlumayo. Following from the
8-point battle plan presented by the Premier in his State of the province
Speech, this Budget contains the ammunition for that battle plan. The 2006/07
Budget takes its clear direction from our Ikapa Elihlumayo strategies, and
places an exciting opportunity before us to make a substantial contribution to
the national goal of attaining a sustainable shared economic growth rate of 6-8
percent per annum.

The Western Cape has undoubtedly benefited from the current good fortune of
the South African economy. The 2006 Provincial Economic Review and Outlook
(PERO) indicates that real Gross Domestic Product (GDP) growth in the region
reached 5,3 percent in 2004/05. In the same fiscal year, total output in the
Western Cape contributed 16,0 percent of South Africa's GDP. Based on current
trends, the provincial economic growth is set to maintain its high pace of 5,3
percent in 2005/06 and then average 4,8 percent a year over the medium
term.

Given the potential we encompass, we must set our expectations high and aim
for above-average growth by getting those difficult things in place, both
provincially and locally, which will allow us to reach and maintain the target
of an annual 6-8 percent shared growth rate within the next three to four
years. Within the public sector, this is going to require a great deal of
political leadership to see this through, as it asks politicians and private
sector investors, amongst others, to think far beyond the horizon of their
current term of office and to consider the type of legacy they wish to leave
behind.

Shared growth means that we must ensure that the gains from higher economic
growth reach the poor, as we cannot afford to contribute to greater income
inequality in this country, nor this province. As I noted at the tabling, these
ideas are at the core of the Western Cape's Budget 2006/07.

This Budget provides for expenditure totalling R18,4 billion in 2006/07,
representing a nominal increase of 12 percent from 2005/06. Today I wish to
first remind ourselves of the four main themes of the 2006/7 Budget tabled in
this chamber on 17 February. I do this by highlighting developments since then,
in order to contextualise our debate on the budget in this Chamber.

Speaker, over the last three weeks, my colleagues MEC Essop and MEC Dyanti
and I have led a provincial team from Treasury, Economic Development and Local
Government to visit each of our 30 municipalities including the Metro. The
immediate purpose of the engagements was to assess the draft municipal budgets
in terms of our Municipal Finance Management Act (MFMA) responsibilities and to
consider whether these adequately reflect the evolving municipal Integrated
Development Planning (IDPs) and Local Economic Development (LED) strategies. In
other words, we asked: Is there a credible link between the medium term
municipal strategic plans and the 2006/07 municipal budgets? In many cases we
were pleasantly surprised, and gained much from this exposure, auguring well
for the future development of this province.

But more so, the exercise was an illuminating and productive two-way
exchange between our spheres of government on the constraints and imperatives
for real economic growth and development in our province. Our chances of
success with ASGISA, the Ikapa Elihlumayo strategies, and the emerging
Provincial Growth and Development Strategy (PGDS), fundamentally depend upon
our municipalities as building blocks for growth and development. If we are to
achieve an aggregate level of 8 percent growth in this province, local
governments must be empowered - with the required leadership and technical
capacity, and the appropriate national and provincial assistance - to generate
the required resources to properly carry out their core responsibilities of
providing and maintaining bulk infrastructure; supplying basic services; and
boosting local economic development.

My two colleagues, MECs Dyantyi and Essop will expand more on this with
respect to their portfolios when presenting their votes to this House.

The April/May provincial-municipal engagements additionally served to
reinforce key elements which the 2006 Provincial Budget seeks to address.
First, we saw that although economic growth is apparent at the local level, we
are also seeing growing poverty, income disparities, and unemployment in our
municipalities. Challenges of rising drug-related crime, high TB and HIV rates,
and illiteracy are also common to many areas of the Western Cape.

The 2006 Provincial Economic Review and Outlook (PERO), released since the
tabling of this Budget, tells the same story. The research it contains provides
the economic backdrop and reinforces the objectives expressed in this budget.
It shows that all individuals in the province experienced an increase in their
per capita expenditure over the five-year period from 1995 to 2000, but the per
capita of the poorest group grew the most slowly. Clearly the gains and pains
of economic trends are not felt equally among us.

The second clear message which emerged from the provincial-municipal
engagements was that our bulk infrastructure at the local level is under severe
strain, as seen from the perspective of our nascent Strategic Infrastructure
Plan under development by MEC Fransman. If government doesn't focus on building
infrastructure, our water, sanitation and electricity systems will become over
burdened due to population and economic growth and will subsequently become
serious constraints to growth and development.

We must make sure the bulk infrastructure is put in place by our local
government partners so that we can unlock that economic potential and share its
benefits, particularly in areas where viable and sustainable economic
opportunities exist. Furthermore, this investment in bulk infrastructure is
required to prevent sanitation problems, severe environmental degradation and
river pollution with all its concomitant detrimental social and economic
hazards. This could most likely require a different approach to augmenting
municipal budgets through the Municipal Infrastructure Grant (MIG) and local
equitable share arrangements.

Through its four themes, the 2006/07 Budget addresses these core issues, in
alignment with national and municipal priorities. Let me now recap the main
points of the 2006 Western Cape Budget and what it will buy:

Schools and building skills to access the job market

Developing the educational and skills base is a central priority for South
Africa and the first theme of this Budget. The PERO provide further evidence of
the unemployment situation in this province and the particular skills shortages
we confront in the Western Cape. It shows that we are confronting a clear
mismatch between the skill levels required in the workplace, and the levels of
educational attainments and skills of our school-leavers and young
graduates.

The Human Capital Development Strategy, launched in March, provides the
province with an overall plan for improved education and skills development. In
meeting this challenge the Department of Education receives 38 percent of the
total provincial Budget-that is R7 billion or R728 million more compared to
Budget 2005.

The need to ensure that all learners have access to good quality education
and skills opportunities is central to ensuring that all South Africans are
able to participate and benefit from the economic growth gains that our economy
is currently experiencing. Furthermore, it is only by providing a solid
foundation in the area of human capital, that we can place the economy on a
sustainable higher economic growth path.

The main areas that the Department of Education will concentrate on in
2006/2007 are:

* improving access and equity by declaring the poorest quintile of our
schools no-fee schools and ensuring more learners have access to quality Grade
R programmes;
* iaking steps to make schools safer, build new schools and provide better
equipment in existing schools;
* re-capitalising our Further Education and Training (FET) colleges; and
* improving the quality of our education outcomes, particularly in the areas of
mathematics, science and technology by strengthening schools and their link to
skills development and the labour market.

Growing the economy and creating jobs

Growing the economy and providing employment opportunities forms the second
overall theme of this year's budget. The Department of Economic Development and
Tourism receives R188,433 million in 2006/2007, which is R43 million, or 30
percent more, than was budgeted last year. The Department will proactively
support sector strategies in those areas of the economy that have high
potential to create jobs and foster Broad Based Black Economic Empowerment. Key
sectors for support include: business process outsourcing; the Information and
Communication Technology (ICT) industry; film; creative and craft industries;
clothing and textile; oil and gas; metals and engineering; agribusiness;
fishing and aquaculture.

The goal of accelerated and shared growth calls us to make interventions
which can ensure that all our people have access to the opportunities offered
by economic growth and can share in its benefits. To achieve this, the
Department will play an active role in building bridges between the first and
second economies. The RED Door centres help provide the business support
services that small businesses require so that they can get the advice and
support they need to grow and develop. Similarly, the support offered to local
economies through the 'Plek Plan' will assist municipalities to finalise their
local economic development plans and to start moving on implementation.

To play its role in facilitating the increased participation of previously
marginalised actors in the agricultural sector, the Department of Agriculture
receives R254 million in 2006/07, which is R15,8 million more than what was
budgeted in 2005/06. Over the Medium Term Expenditure Framework (MTEF), the
extra resources will be used to increase access to water for new land reform
beneficiaries and to improve water use; as well as to build capacity and
improve skills in the sector. Skill development initiatives include technical
training programmes for farm workers; programmes to recognise prior learning;
and financial support for children of farm workers to study at Elsenburg
College.

As part of government's job creation and skills development strategy, this
year the Expanded Public Works Programme will be rolled out in the social
sector. An amount of R53 million in 2006/2007 is allocated for the expansion of
services for Early Childhood Development as well as Community Home-Based Care
Workers and Community Health Workers. We have learned that the success of our
Expanded Public Works Programme (EPWP) programme, whether in the social sector
or with roads or construction projects, is dependent on us striking the correct
balance between short-term poverty relief, medium-term skills development, and
longer term expansion of services and the creation of essential infrastructure.
Right now our EPWP projects pursue dual aims: the goal of skills development
and employment creation, alongside the goal of infrastructure and service
expansion. We therefore must work to reach a consensus and common understanding
on what constitutes EPWP projects, and when and how labour-intensive methods
are best applied.

As I already alluded to earlier, the right type of physical investment at
the right time and in an optimal location has the power to improve social and
environmental conditions, open up economic opportunities and reduce costs for
businesses (particularly start-ups) in the Western Cape. Physical investment is
therefore another critical part of our provincial strategy for achieving shared
economic growth. Total infrastructure spending, across all departments, is
budgeted to reach R2 billion in 2006/07 - 21,6 percent higher than in the
2005/06 Budget.

We also know that transport infrastructure is a crucial constraint to our
growth and development in this province and must be addressed with urgency and
sound planning. Good infrastructure enables the timeous and affordable movement
of people and goods across areas, connecting economic nodes in the space
economy of the province. Allocations for transport infrastructure on the budget
of the Department of Transport and Public Works total R2,1 billion in 2006/07 -
a 21 percent increase compared to what was originally allocated to the
Department for 2005/06. The province has prioritised expenditure on roads and
protected that priority through earmarked allocations which amount to R3,5
billion over the MTEF. Key highway infrastructure will be upgraded to allow
better connection with the rest of the province and to accommodate dedicated
public transport lanes, especially relevant to hosting 2010 FIFA Soccer World
Cup. Extra funds for public transport will be used to restructure the public
transport network in the metro area in partnership with the City; to improve
public transport in large towns in the province; and to address safety and
regulation enforcement in the sector.

Supporting families and communities

Supporting families and communities forms the third theme of the 2006
Budget. The hope of a "Home for All" cannot be realised in a society
characterised by broken families, discrimination, crime, poverty and poor
health. The Social Capital Formation Strategy (SCFS) with an emphasis on youth
is an attempt by the Western Cape government to address these social ills. In
alignment with national priorities, the SCFS aims to strengthen social cohesion
by creating safer and healthier communities, strengthening networks, and
increasing access to government services and information.

In 2006/07 the Departments of Health, Social Development, Cultural Affairs
and Sport and Community Safety will together spend R7,420 billion, including
expenditure to accelerate and expand their SCFS programmes.

In 2006/07 the Department of Social Development will continue working with
non-governmental organisations to support, protect and equip our most
vulnerable groups-women, children and youth-to participate in economic
activities and opportunities. It will begin work to implement the Children's
Bill and the Child Justice Bill, as well as the Older Person's Bill as soon as
they are passed. Additional amounts of R4,8 million have been given in 2006/07,
R34,6 million in 2007/08 and R72 million in 2008/09, for the progressive
realisation of these three bills to protect our children and the aged.

As substance abuse appears to be on the rise throughout the province,
initiatives will be strengthened to reduce the supply and demand for drugs and
make quality treatment available to those who seek it. The Department of Social
Development is adding 40 percent to its substance abuse budget to a total of
R32 million in 2006/07. One thousand community-based fieldworkers will be
recruited to support substance abusers after their first phase of
rehabilitation, to assist them to avoid relapse. The Department of Health has
set aside R1,6 million for the upgrade and expansion of detoxification
facilities at Stikland Hospital.

The Department of Community Safety has joined forces with the Western Cape
Department of Education to create a safer environment at schools. An extra R6,7
million has been provided this year to deploy 500 volunteers to schools most at
risk. The focus will be on enhancing security at the same time harnessing
community energy and promoting participation and social networks.

When it comes to motor vehicle accidents on our roads, our fatality and
injury rate remains unacceptably high in the province. Community Safety in
liaison with municipalities and the Departments of Transport and Public Works
and Health, will implement the Motor Vehicle Accident Intervention strategy to
create a safer road system in the province.

The Department of Cultural Affairs and Sport's budget includes R2 million to
begin the process of establishing a sport school at the Old Education College
in Kuilsriver, to keep our youth away from drugs and violence by providing them
with positive alternatives. The total allocation made available for the
establishment of the School Sport over the MTEF period is R10,4 million.

R14,5 million has also been allocated over the next three years to prepare
the province for the Western Cape leg of the 2010 FIFA World Cup. The
Department of Cultural Affairs and Sport will use these funds to capacitate a
high-powered unit to co-ordinate preparations for the Western Cape leg of this
event.

In the current year Health's budget grows by 10 percent and makes up 34
percent of the total provincial budget, amounting to R6,3 billion. The key
priority for the Department of Health in the 2006/07 will be the finalisation
and implementation of the service plan, which will give effect to Health Care
2010. The Department will also continue with the research conducted with the
four provincial institutions of higher learning on the burden of disease, so
that we can better understand the causes and risk factors for disease in our
communities.

Emergency medical services receive an injection of R62,5 million over the
MTEF period to allow for the implementation of the new expanded and improved
national ambulance model, cutting response times and improving patient
transport systems.

Funds totalling R20 million in 2006/07 and R127 million over the MTEF have
been provided to ensure that highly trained and experienced staff are recruited
and retained in our hospitals and clinics, especially nurses. In 2006/07 the
Department expects to conclude the provincialisation of Primary Health Care
services that were previously the domain of the non-metro municipalities. An
additional R27,9 million has been set aside for this in the new financial year
to bring the total allocation for PHC to R1,4 billion in 2006/07.

Over the MTEF, an additional R94,8 million will be spent to replace medical
equipment in specialist hospitals, strengthen cancer oncology services and
increase the number of medical specialists, while R382 million will be used to
revitalise provincial hospitals.

The HIV and AIDS epidemic remains a key concern. R12,5 million is set aside
to strengthen the tuberculosis programmes, while conditional grants and grant
funds from the Global Fund are also available to strengthen and expand
programmes to effectively manage the dual epidemic caused by TB and HIV. The
Department, working with the non-government organisation (NGO) sector, plans to
recruit, train and deploy 4876 HIV and AIDS peer educators in communities and
schools to guide and counsel young people on the prevention of diseases and the
adoption of healthy lifestyles.

More housing and basic services

Speaker, the fourth theme of this Budget is sustainable human settlements.
The province has to make sure its investment into housing and infrastructure is
used to the maximum effect and that it has the greatest economic spin-offs. The
Department of Environmental Affairs and Development Planning has received
additional resources of R2 million in 2006/07 to facilitate the implementation
of the Provincial Spatial Development Framework (PSDF), the policy framework
for achieving sustainability in our settlements. This Department will also
continue guiding legislative reform aimed removing a key block on development
in the province, the time taken to get a decision on an application, and
improving the quality of the decision. The draft Bill for Integrated Law Reform
is due for release soon.

Environmental Affairs is also spearheading the development of a
comprehensive, cross-departmental response to climate change in the Western
Cape. This strategy will have a strong focus on improving the management of
water quality and demand, addressing the serious constraint that water exerts
on the growing provincial economy.

In 2006/07 the Department of Environmental Affairs and Development Planning
receives a total budget of R175,5 million or R16,8 million more than in
2005/06.

The Department of Local Government and Housing will soon unveil a strategy
to expand the number of subsidised housing units that are delivered, improve
the quality of subsidised housing, the coverage of basic municipal services,
and the overall governance of neighbourhoods and settlements in which they
fall. At present the Housing Programme receives R2,4 billion over the MTEF and
R663 million in 2006/07. This is a sizable R135 million or 26 percent more than
was allocated for 2005/06. As municipalities finalise their spatial development
frameworks, in line with the Provincial Spatial Development Framework, it will
be necessary for us to be willing to take the tough decisions required to
realise our long-term goals of sustainable development and integrated housing
settlements, thus reversing the apartheid spatial planning which has divided us
in the past.

Over the MTEF the Department aims to establish a network of emergency
management centres at district-level in collaboration with municipalities,
drawing on approaches to resource-pooling with Departments of Health and
Community Safety in the setting up of the provincial centre. Such integration
will allow for better response times to emergencies.

The Department will also spend R14,5 million over the MTEF on a new capacity
building programme for local government. The programme is different from past
attempts in that it aims to create measures to retain and expand existing
capacity from within local government itself, and to encourage municipalities
to take ownership of the process. Overall the Department receives R777 million
in 2006/07, up 23 percent from its 2005/06 allocation.

Conclusion

As demonstrated in its four themes, this 2006 Budget internalises the
visions and goals of Accelerated and Shared Growth Initiative for South Africa
(AsgiSA) and Ikapa Elihlumayo. This type of internalisation will be necessary
in every municipal budget as well as provincial departmental strategic plan if
we are to effect change. The important research, strategising and planning
associated with our Ikapa Elihlumayo strategies will come to fruition when the
rubber hits the road in implementation. The purpose of all our development
planning is to bring the provincial and local spheres together and to be
jointly proactive, rather than reactive - to alleviate backlogs at the same
time that we identify and address future needs that we only see hints of at
present.

With 2006/07 as the year when the implementation of the Ikapa Elihlumayo
strategies moves forward full-force, it will be important that we have
effective monitoring and evaluation systems to track our progress and identify
blockages. The key deliverables listed in the 2006/07 Budget Overview provide a
succinct provincial list of what this budget will buy, and will give us a
reference point as we progress through the year. We must hold ourselves
accountable for these our commitments to shared growth and development, as we
work closely with local government and the private sector to reach these
aims.

Issued by: Department of Finance and Tourism, Western Cape Provincial
Government
17 May 2006
Source: Western Cape Provincial Government (http://www.capegateway.gov.za)