T Manuel: Provincial Budgets and Expenditure Review

18 September 2007

Mister Speaker
Honourable Premier
Members of the Executive Council
Honourable Members of the Provincial Legislature
Representatives of Local Government here present
Ladies and gentlemen
Dear friends

I am grateful to the Speaker, Honourable Byneveldt and the Rules Committee
for the opportunity to address this house on the Provincial Budgets and
Expenditure Review. The historic step of allowing a member of the Executive in
another sphere of government to address you bodes exceedingly well for the
spirit of co-operative governance. This is surely good for our democracy.

The review we are debating today expresses in very simple terms the
relationship between the policies that were pronounced in the last four years,
the resources that were allocated to implement them, the expenditures thus
incurred and the services that the money bought. It also reflects on the impact
that the services have had on the quality of life of our people. The timing of
this debate, Mr Speaker, could not be more propitious for, in the next
fortnight, every department is required by the Public Finance Management (PFMA)
to table before this House its Annual Report for 2006/07. These annual reports
add significantly more information about the outcomes against commitments made.
The information will indicate whether we are fulfilling our contract with the
people in providing public services of the highest quality to all citizens,
with an unashamed bias towards the poorest amongst us.

It is the role of developmental states to unequivocally intervene on behalf
of the poor and to amongst others, provide access to equal opportunities in all
areas in society. The review we place before you today is a barometer by which
all of us should evaluate the progress we are making towards progressively
realising the social and economic rights enshrined in the constitution.
However, we need to be mindful of the limitations of the exercise the best
source of information available is the amount of finance allocated to the
provision of particular public services each year for a period of
seven-years.

This allows the reader to measure the relationship between the broad stated
policies of government and the allocations made towards the implementation
thereof. It does not yet provide all the answers about what the impact of these
allocations is on the broader endeavour to progressively improve on the quality
of life of our people. The review raises a series of questions that are
fundamental to oversight including:

1. Are our budgets and policy priorities sufficiently aligned?
2. Have departments been spending the money on what it was intended for?
3. What impact has the expenditure had on the intended beneficiaries?
4. Are we getting value for money or is our spending efficient?
5. What kinds of interventions are needed to ensure that we can better our past
performance?

These are some of the questions that this review allows members to debate
more vigorously. We must ask these questions, for if we do not we shall be
failing our democracy and our people. When honourable members drill through the
reams of data available in the review they will see that Western Cape has made
good progress in addressing the needs of our people who live in the province.
There are many goods things to be proud of here across all sectors.

The review shows that Western Cape's healthcare system works in the sense
that:

1. The province has the highest number of visits per person, at 3,9 visits
per person in 2005/06.
2. The tuberculosis cure rate is highest: equal to 69 percent.
3. The province also has the highest ratio of doctors per 1 000 uninsured
persons (at 0,67 in 2005/06 compared to a national average of 0,32)

This is a reflection of the wise choices that the successive governments
have made over the years. Yet, we will all share the concern about the
appropriate balance between the extension of primary health services and the
ability to maintain high-end tertiary public health facilities. Governance is
about choices and the objective of oversight is to honestly evaluate the
choices made. The decisions we make today will impact on the lives of our
people for years to come.

The Western Cape province has been able to maintain good services amidst
sizable inward migration from neighbouring provinces such as Eastern Cape. The
net inward migration in population into this province in 2006 totalled 244 416
people with an additional 193 524 people projected to enter the province from
2006 to 2011. This places a greater burden on social services thus requiring
approaches to funding that respond to this challenge.

The Review we are debating today enables Western Cape to benchmark itself
against the other eight provinces across a range of public services covered in
the sector chapters. As a country we are also able to compare ourselves against
countries at similar stages of development and income levels. The fact that
South Africa spends a much larger proportion of its budget on education than
many middle income countries such as India, Chile and Turkey is commendable and
testimony to our commitment to deliver to the poor.

The question we have to pose is whether we are getting value for money. And
while we spend more on education than most countries with similar sizes in
Gross Domestic Product (GDP) we attain lower outputs and outcomes than those
other countries. It suggests that we might be able to improve outputs and
outcomes by simply improving the efficiency and the effectiveness of our
education system. The challenge to all of us, not just in the education sector
though, is how to achieve the efficiency and qualitative improvements that are
required.

As we indicated earlier, the most extensive information in this volume is of
a financial nature, largely because the PFMA compels such reporting. We should,
however, draw to the attention of this House that the review is limited by the
unevenness in respect of non-financial information, both within and between
different social services. I offer to this august house the challenge of
improving on the quality, quantity and timeliness of non-financial
information.

An examination for example, of the Health Chapter tell us much about the
spending levels, the use of the health system quantitatively, the number of
health professionals employed and the number of facilities available. It sadly
does not tell us much about the disease profile, the content of the service
provided or even the imputed cost of the visit. Part of the difficulty is that
health workers who may be exceedingly overstretched tend to find the provision
of such information bureaucratic and burdensome. In the consequence, we do not
know sufficient about what the money buys. There is absolutely no reason why
this province should not provide leadership on this issue it would both improve
on the quality of oversight and give us a better measure of the reach of
democracy.

Education

There have been positive changes in this province. The Western Cape has an
education budget of R7,7 billion in 2007/08 and will grow to R9,3 billion in
2009/10. This province spent over R24,4 billion on school education between
2003/04 and 2006/07. Over this period 1 677 classrooms were built and 41 new
schools completed, providing an environment that is conducive to effective
learning and teaching. The number of learners at primary and secondary schools
has increased by 62 442 since 2000.

Enrolment figures for 1999 to 2000 show that only 50 percent of learners
that enrolled in grade 1 reached Grade 12. This is indicative of a high school
drop-out rate. The province needs to try and understand the factors that
underlie this pattern. With a matric pass rate of 83,7 percent last year,
Western Cape continues to have the highest pass rate across all the nine
provinces, but as a country we should all be worried that a proportion of
learners who pass matric has been on a decline.

In a study undertaken by Professor Charles Simkins the distribution of
senior certificate mathematics demonstrates that the divisions of race and
class in 2004 were as strong as those inherited in 1994. The study of more than
6 000 schools shows that 79 percent of the country's high schools fall into the
poorly performing category, producing only 15 percent of all higher grade (HG)
passes in mathematics. The overwhelming majority of children attending these
schools are poor and African. We need to look beyond matric pass rates to get a
sense of the quality of education.

The results from the Trends in International Mathematics and Science Study
(TIMSS) are exceedingly worrying because they seem to suggest that all of the
history of disadvantage is being carried into the future. If education cannot
break the inter-generational cycle of poverty and disadvantage, then nothing
else will. The quality of outcomes at every level has to improve yet, of the
budget of R7,7 billion, R5,9 billion is committed to educators salaries. How do
we drive change?

Relative to other provinces the Western Cape has the smallest number of
schools that fall into the category of the poorest 40 percent of learners (the
so-called quintiles one and two). As a result the province was in a position to
extend the no-fee school policy to schools that fall within the next 20 percent
(i.e. quintile three). A total of 407 schools have been declared as no-fee
schools with a targeted allocation of R738 per leaner. The number of learners
benefiting from the no-fee schools is 132 560 or 14 percent of the learner
population.

The challenge we face with the "no-fee" schools is ensuring that the quality
of education is at least as good as schools where fees are paid. We must ensure
that the governance structures of the no-fee schools are in place and strong
enough to hold teachers accountable and to ensure that our children receive the
best education our system has to offer.

We must make sure that those learners living in the poorest communities have
at least an equal chance of making it through our education system. This can
only be attained by improving on the quality of the oversight this is
distinctly not a task for the education department through its district offices
alone, nor can it ever be a task for the education department and members of
the Standing Committee alone each one of us, deployed into communities through
the system of constituency offices should be called upon to account for the
quality of this public service. Oversight may appear cumbersome, but it is the
only guarantee we have of removing the long shadow of disadvantage cast by
history.

Yet, the affordability of education is just one of the numbers of challenges
that confronts us in education in this province. Or, even more pertinently in
this province, a discussion on the outcomes of education will be quite
incomplete in the absence of dealing with the need to create an adequate
environment for learning and teaching in "high risk areas" where the prevalence
of drugs and gangsterism in schools presents a huge impediment. This problem
will not disappear of itself; it calls for commitment and effort from all
legislators, parents and public servants working in close collaboration. The
challenge of access to education, in the context of developing and maintaining
a culture of learning and teaching, is something we must invite this
legislature to debate.

Health

Let me turn to the second largest item of expenditure on the province's
budget which is health. There have been a number of notable interventions at a
national level with the aim of improving access to health services which have
yielded positive results in all provinces. Spending on health remains strong
and by 2009/10 government will spend R500 per uninsured family per month.
Government's efforts to increase the number of professionals in the health
sector are beginning to yield results in the province. Western Cape has been
able to take advantage of our intervention in respect of rural and scarce
skills allowances.

The health budget of Western Cape has been growing at an average annual rate
of 7,4 percent above inflation from 2003/04 to 2006/07 which is from R4,5
billion to R6,4 billion. In the context of concerns about hospital budgets, it
is worth noting that health spending per capita in the Western Cape is 30
percent higher than the national average. As this review shows, primary
healthcare visits now average 3,7 utilisation per person per year. This is the
highest utilisation rate in the country.

In 2002, tuberculosis was the leading cause of death in both South Africa
and Western Cape. The second-highest cause of death in Western Cape was
ischemic disease. While the review shows that the burden of disease has risen
for a variety of reasons, it also confirms that the health sector is better
prepared to respond to these challenges. The uptake of the anti-retroviral
(ARV) treatment programme nationally now has about 264 000 people on it, up
from 143 000 a year ago. There are 26 097 people or 10 percent of the total in
the country who are currently on treatment in this province.

Yet, we should be conscious that even as we speak there is litigation
underway on the very topic of the health budget. Whilst I am sure that this
sensitive matter has been frequently debated in this chamber, I have
nonetheless to ask that additional attention is paid to the communication of
your decisions. I would also welcome debate on the longer term challenge of
building, equipping, staffing and effectively organising our health
services.

The public commentary focuses too often on this year's allocations and short
term adjustments that can only properly be understood as part of a longer term
strategy. Modern, effective health services, accessible to all our people,
require careful, considered plans and implementation of reforms progressively
year by year. We recognise that the Western Cape's academic hospitals are both
regional health service assets and national centres of excellence.

Indeed, you have trusteeship in this House for a network of health
facilities that enjoys international renown not just for excellence in medical
teaching and research, but also for innovative community health programmes
addressed at difficult and sometimes desperate local conditions. The national
budget includes substantial grants to support central hospitals and
professional health training. The hospital revitalisation grant also grows
strongly over the period ahead. We need to appreciate, however, that the public
sector cannot carry the entire burden of meeting health service needs.
Particularly in this province, which has a high proportion of insured patients,
we need to find better ways of combining public and private sources of finance
in the development and improvement of our major hospitals.

Social development

With the growth in substance abuse and gangsterism the social development
sector in Western Cape faces unique challenges. This province currently spends
about R1 billion a year on crime and safety functions (national, provincial and
local government combined). Despite these significant resources and investment,
criminality and violence remain a major challenge afflicting communities. We
need to deal with this scourge and save our children.

The Western Cape Substance Abuse Provincial Forum was launched in February
2005. There was also a summit held on 10 to 11 March 2007 on the National Drug
Master Plan across the three spheres of government. The Provincial Integrated
Strategy on Substance Abuse will be finalised this month. The Western Cape has
132 homes for the aged all of which are managed by non-profit organisations
(NPOs). The per capita distribution of these old age homes is one for every 2
514 of the aged. This is the most favourable per capita distribution in the
country. Counselling services for the elderly totalled 6 950 or 9,5 percent of
the total clients counselled in the country in 2006.

Expenditure on the care and services to older persons decreased from R96,6
million in 2003/04 to R96 million in 2006/07. The budget for this programme is
projected to grow significantly by R36 million over the MTEF to R132 million in
2009/10. The measure of the quality of our democracy is care and we should not
be found wanting in respect to the most vulnerable of our citizens. The
provision of social development services needs a radical overhaul, not by way
of copying the most expensive systems from the world's wealthiest countries,
but rather by developing a distinctly African approach to caring that expresses
unequivocally that "human life has equal worth."

Other services covered

The report also covers a range of other services including Housing, Land,
Agriculture and Roads and Transport. Here the picture is more mixed and
understandably, this situation obtains for a variety of different reasons. One
aspect not covered by the review but which merits additional attention is the
inter-governmental delivery of particular services. We have experienced
instances where there is a misalignment between policy and spending plans on
concurrent functions. We have also witnessed cases where there have been delays
as results of decisions which are dependent on local government, for example,
land release. It is for this reason that the Intergovernmental Relations Act,
on the one hand and the local government capacity building initiatives, on the
other, are so vitally important to the success of provincial outcomes.

Conclusion

Mister Speaker and honourable members, as we reflect on the successes we
have achieved over the last four years we should not be complacent. Those of us
who are elected political office-bearers need to remind ourselves that the
contract we entered into is a commitment to serve the people of this country
and our constitution. We have to organise the provision of public services to
intercede in the interests of all citizens, with an unashamed bias towards the
poorest amongst us. This task will always be difficult in a developing country,
especially one where the needs are as great as in our country.

The efficacy of any democracy depends on the degree to which elected
representatives are accountable to the electorate for the decisions they make.
This must happen here, in this legislature and our Parliament. The central
tenet of the omnibus of public sector reforms that we are implementing requires
us to be accountable. It is only when we are able to engage in constructive and
honest debate that we can rise to the collective responsibility that our people
have entrusted us with to deliver a better life for all. This is what our
people expect of us, and we cannot fail them.

In conclusion, I invite members of this House to join hands and work with us
in improving our reporting and in making use of the information we are making
available in the budget documents and reports to ensure that together we can
continually assess whether we are delivering on the promises we made to our
people when they gave us the mandate to govern them for another five-years.
This review is a step in that direction. We shall not rest.

I wish to thank you all, Ndiyabulela!

Issued by: National Treasury
18 September 2007