L Brown: Western Cape Prov Budget 2007/08

6 March 2007

Speaker,
Premier,
Members and distinguished guests,

In his recent State of the Nation speech, President Mbeki challenged us to
ask ourselves squarely: What progress have we made in those objectives which we
set for ourselves and promised our people in 1994? Although we can say, yes,
much has been accomplished and undoubtable gains have been made. But we can do
more, and better. We must move with bold leadership to ratchet up and roll out
our best practices. We must close the remaining gaps of inefficiency. Where
progress to eradicate backlogs has simply been too slow, we must speed up our
action and co-operation.

We are now mid-term, past the theory of policy and strategy. As the Premier
emphasised two weeks ago, we are at a transition point where we launch from
policy into implementation, and from detailed sophisticated planning, into
on-the-ground delivery. Siyasebenza siphumile ekuplaneni.

Minister Manuel spoke of three overriding objectives in his 2007 national
Budget Speech. Those objectives were to: accelerate growth, modernise our
public service and infrastructure, and reduce poverty and inequality.

Correspondingly the 2007/08 Budget for the Western Cape boils down to four
key themes which support these national objectives while addressing
province-specific goals. The four themes of this provincial budget are:

* infrastructure investment
* learnerships, training, skills development
* quality of education and healthcare and access to social services
* responsive and responsible governance.

Over the 2007 Medium Term Expenditure Framework (MTEF), this Provincial
Government will spend just under R70 billion towards these goals. Budget
2007/08 provides for expenditure of R20,7 billion, which is R1,3 billion more
than last year's revised estimate.

Over the next three years, the budget is projected to grow on average by 8,9
percent, so that by 2009/10, it reaches R25 billion. Our chief responsibility
is to use those resources to achieve maximum impact and accountability.

Ons moet verby die bou van lugkastele kom, die moue oprol en die daad by die
woord voeg!

This means spending on the right programmes — ones which ideally have
demonstrated evidence of impact and have shown themselves to be effective in
tackling our social and economic challenges. It means spending efficiently, so
that for every Rand, we buy or experience value. It means being smart in where
we spend: targeting our funds towards the geographic areas in the province
which have the greatest economic potential, while also ensuring an adequate
level of social support to our most vulnerable communities.

Finally, it means spending co-operatively, in synergy with our local
government partners, between provincial departments, with our national
counterparts, and with our civil society and private sector partners.

As we examine the 2007/08 Budget in this legislature over the next few
months, the question we need to ask ourselves is whether we are allocating
these funds in the best way to support the goals of the Provincial Growth and
Development Strategy (PGDS). As the Premier asked, how can we use our resources
to intensify the struggle against poverty? The Budget tabled here directly
supports the ten programmes of concrete on-the-ground delivery which the
Premier described.

This Budget is also specifically designed to respond to the concerns
expressed in a population survey commissioned by Provincial Treasury which
gathered information on how people perceived their living conditions, the
performance of provincial departments, service delivery and the most important
problems facing the Western Cape. The answer came back clearly: crime,
unemployment, housing and drug abuse. In making resource allocations decisions
for Budget 2007/08, we listened to these results.

Economic analysis

The province aims for a type of economic growth which leaves everyone better
off, does not widen the gap between rich and poor, but instead translates into
real improvements in the daily lives of vulnerable groups who struggle with
poverty and other social challenges. We are fortunate that the economic outlook
for the Western Cape remains upbeat and the provincial economy continues to
expand. Between 2000 and 2005, real GDPR averaged 4,7 percent a year. In 2006,
estimates indicate 5,5 percent growth. With growth anticipated to quicken in
the run-up to the 2010 FIFA World Cup, it is forecasted to reach 5,7 percent in
2009/10, thanks to strong performance of the tertiary sector and superb
double-digit growth in the construction sector.

However as our provincial economy enjoys growth, jobs are not being created
at a comparable rate. Unemployment in our province is dropping; latest figures
reveal that the unemployment rate as at March 2006 was 15,9 percent and
remained the lowest in South Africa. However the lack of job opportunities in
the formal and informal sectors is still unacceptable. With the increase in our
working age population, the economy comes under mounting pressure to produce
job opportunities, yet employment creation has grown at an average rate of only
1,50 percent per year between 2000 and 2005.

Historically the agriculture and manufacturing sectors have been able to
play an important part in absorbing labour. However, these sectors have
recently been shedding jobs and have yet to experience a turnaround. The formal
job sector remains our main source of employment, accounting for over 84
percent of total employment in 2005. Besides the construction sector, the
transport and communication and retail trade and catering sectors are set to do
well.

In this climate, the key message from the economic indicators is that we
must address our skills shortage and improve our infrastructure. This evidence
provides the rationale for the thematic focus of this budget on skills
development and infrastructure, especially roads and public transport.

Efficient and effective transport networks are critically needed to improve
the mobility of goods and people, thereby eliminating bottlenecks and reducing
the costs of doing business in the Cape. In a competitive environment,
investment in economic and human capital is non-negotiable.

Revenue

Aggregate provincial receipt budget grows by 7 percent from R19,4 billion in
2006/07 to R20,8 billion in 2007/08. Provincial receipts are set to grow at an
annual average rate of 9,36 percent over the 2007 MTEF to reach R25,389 billion
in 2009/10.

National transfers increase by 10 percent to R18,8 billion in 2007/08 and at
an annual average rate of 7 percent in real terms over the 2007 MTEF.

Equitable share transfers increase between 2006/07 and 2007/08 in nominal
terms by 12 percent and, over the 2007 MTEF, continues to climb at an annual
average nominal rate of 12 percent, to reach R19 billion in 2009/10.

Although the Western Cape is not affected by the demarcation of provincial
boundaries, data revisions have resulted in the province's overall share of the
equitable share decreasing somewhat. However, the overall impacts of both data
revisions and increased baselines result in a R1,99 billion net increase over
the 2007 MTEF. The equitable share increases by R212 million in 2007/08, R528
million in 2008/09 and R1,25 billion in 2009/10.

Eighteen percent of our provincial budget in 2007/08 comes from conditional
grants, which amount to R3,7 billion in 2007/08. Between 2006/07 and 2007/08,
conditional grants will increase by 3 percent and, over the 2007 MTEF, at an
average annual real rate of 5 percent.

Overall, conditional grants grow by R2,2 billion, of which: R900 million has
been earmarked for the N2 Gateway Programme; R545 million for the Hospital
Revitalisation Grant; R283 million for the Provincial Infrastructure Grant
(PIG); and another R139 million for the National Tertiary Services Grant
(NTSG). Over the 2007 MTEF, additional funds amounting to R135,8 million are
added to the HIV and AIDS Grant. A new grant, the Community Library Services
Grant, is introduced over the 2007 MTEF.

Provincial own receipts are estimated to total R1,614 billion in 2007/08 but
will continue to decline slowly in real terms over the MTEF, at an average rate
of 2,53 percent each year.

Motor vehicle license fees are the largest contributor to tax receipts
estimated to reach R776 million in 2007/08. With Western Cape motor vehicle
licence fee tariffs currently the highest in the country, explaining why we
have some of the best roads in the country, the province has taken a policy
decision not to increase motor vehicle licence fees in 2007/08. An analysis
being conducted by the Provincial Treasury will help us to understand the
impact of the current licence fees on consumer behaviour, to determine to what
extent vehicles are being licensed in neighbouring provinces to avoid higher
fees and to consider adjustments ahead of the introduction of the provincial
fuel levy in 2008/09.

Moving to casino taxes, revenue is projected to contribute R246 million to
provincial own receipts in 2006/07, and is set to grow at an annual nominal
growth of 9,6 percent in 2007/08. The contribution to total own receipts from
horseracing taxes will drop to R18,5 million in 2007/08 and then rise slightly
in the next two years.

With the Western Cape Liquor Bill scheduled for enactment at the end of
March 2007, the Department of Economic Development and Tourism is anticipating
that revenue from licence fees will more than triple to R20,5 million in
2007/08.

The Western Cape's financing situation is under stress over the medium to
long term as the province has been financing infrastructure sending by running
fiscal deficits, but by 2009/10 the Asset Financing Reserve is expected to be
depleted. Therefore to meet future expenditure obligations, the province will
have to augment its resources by additional streams of own revenue. The net
deficit in 2007/08 will total R91 million and R18 million in 2008/09, offset by
a net surplus of R109 million in 2009/10.

A number of taxes have been identified for consideration and exploration,
including a fuel levy, tourism related levies and other levies. Apart from the
fuel levy, a passenger movement tax, which would be paid by each passenger
arriving or departing by air, tour bus or rented car, appears to be the most
attractive option from the standpoint of tax administration, feasibility and
revenue issues.

The bottom line is that the province's own revenue is a small component of
the R20,7 billion budget tabled today. With a relatively small equitable share
discretionary budget in 2007/08, it becomes increasingly important to do two
things: to add to own revenue and to much more closely examine the baseline
budget, because if we limit our attention to the additional earmarked funds in
this budget, we are only seeing the tip of the iceberg. The prioritisation and
assessment processes we build into the budget process must be further developed
to ensure that our entire budget — new funds and baseline amounts—will achieve
the intended impact on service delivery and socio-economic outcomes.

Strengthening infrastructure, including roads, public transport, schools and
housing

Speaker, the first theme of the 2007/08 Budget, a well functioning network
of public infrastructure, is vital for boosting economic growth. Business
activities can become more productive, costs are lowered, and public and
private resources are released for investment into high-yield areas. Job
creation follows. kulandele imisebenzi.

Infrastructure both gives access to existing opportunities and helps create
new ones. The province has budgeted R2 billion in 2007/08 and R6,6 billion over
the MTEF – or 10 percent of the total MTEF budget - to carry out its direct
infrastructure responsibilities which include the building and up-keep of
roads, public transport, social services and corporate infrastructure. 57 per
cent of these resources will be spent on transport and related infrastructure,
and 29 percent on social service infrastructure.

Over the MTEF period, the main infrastructure implementing agency in the
province, the Department of Transport and Public Works receives R6,9 billion,
or just over 10 percent of the total provincial budget.

As argued in the PGDS, it is the improvement of the transport elements of
the public infrastructure network that will have the biggest positive impact on
economic and social development. Public, private and non-motorised transport
need to be brought into better balance with each other to improve efficiency.
The Service Delivery Survey has confirmed our assessment - that it is the
public transport network, and the services which run on it, that need the most
attention. This Budget directly responds to this need. The province has
provided additional earmarked funds of R115,4 million specifically for
improving public transport over the MTEF.

In Cape Town, the province is running a restructuring initiative together
with the City and South Africa Rail Commuter Corporation. Bus services will be
reconfigured to complement, rather than compete, with the rail-based public
transport backbone of the City, which itself will be improved to carry more
people in greater safety and convenience.

Successfully hosting the 2010 FIFA World Cup will require that we are able
to effectively manage and facilitate the movement of spectators, by shortening
travel times and keeping routes to the main stadium, practice venues and fan
parks uncongested. The province is partnering with the City to ensure that the
movement needs of players and spectators in Cape Town are met in a manner that
creates a lasting positive impact on transport in the metro. To date, R638
million has been secured for Cape Town from the national Public Transport
Infrastructure Fund to help fund the required transport investments for World
Cup 2010.

Already the upgrading of the N2, from the R300 into the heart of the City,
is well advanced. Apart from contributions to the upgrade of the Granger Bay
Boulevard, the planning and design for the upgrading of the Koeberg Interchange
will begin next year, with construction scheduled for 2008 and 2009. The
upgrade will considerably ease traffic flows along the N1, a main feeder route
to Green Point.

The province will also give R212 million of its own resources in 2008/09 to
support the construction of the Green Point Stadium.

Outside of the metropolitan area, the Transport and Public Works Department
will assist municipalities, where necessary, to improve their public transport
planning and subsequent implementation.

Over the last year the Department has put much energy into improving the
functioning of the Taxi Registrar and Operating Licensing Board. Taxi license
applications are now processed faster, and the authorities are rapidly getting
to a position where they can pinpoint illegal taxi operations in the province.
A strategic framework to better co-ordinate the efforts of enforcement agencies
has been developed. These arrangements lay a strong foundation for the
successful implementation of taxi recapitalisation in the province – a central
pillar for improving safety on road-based public transport.

In 2006/07 the province attained a higher funding level for roads which it
plans to maintain over the 2007 MTEF. R3,8 billion has been budgeted for roads
over this MTEF period. The higher funding levels have allowed the province to
improve the condition of the surfaced roads trafficked by 95 per cent of the
province's motor vehicle flows and also provided for the surfacing of key
tourist routes in the Western Cape.

To increase the efficiency of administrative operations, and allow for
greater synergy and integration between departments, the province is developing
a plan for consolidating and upgrading its office building holdings in the
Central Business District (CBD) of Cape Town. This should increase efficiency,
reduce costs over the long run and add to the revitalisation of the City inner
bowl in collaboration with the City. An additional R109 million has been set
aside for these tasks.

Although the province has drastically reduced under-spending on its
infrastructure budgets in recent years, infrastructure planning needs to be
integrated more closely into the multi-year budget process so that we can
ensure that infrastructure projects are delivered efficiently within cost and
time estimates. The National Treasury launched its Infrastructure Delivery
Improvement Programme in 2006/07 to support provinces to improve all aspects of
infrastructure planning. Our Treasury, the Department of Transport and Public
Works, and the education and health departments have embraced the programme. A
number of areas for improving education infrastructure planning have already
been identified – for instance, the programme is working on developing a more
refined demographic model that will allow for more accurate school planning and
more nuanced infrastructure design solutions.

Subsidised housing is another critical priority identified by the
respondants in the Service Delivery survey and targeted in this Budget. Housing
is ranked as the most important infrastructure priority — above roads,
community facilities, basic service and local social service
infrastructure.

Indeed, providing well-located and good quality housing to poor people gives
them a strong foothold in the first economy. Well-located houses allow their
occupants to more readily access job opportunities in their cities and towns.
Higher quality houses, when owned, can be used as collateral for starting or
expanding small businesses.

In recognition of the importance ascribed to housing, the national
government has boosted the housing grant budget of the Western Cape. The grant
budget climbs steeply from an original amount of R598,8 million in 2006/07
budget to R1,47 billion in 2009/10 – an average increase of 35 percent per
year. Over the MTEF the province receives just over R1 billion in additional
subsidy funding. As the Premier has pointed out – the Department is developing
a number of responses to the housing problem, each geared to the economic
characteristics of the different beneficiary groups. The increases will be used
to provide higher quality and better-located houses, often through the in situ
upgrade of informal settlements - and so create assets of greater economic
value to beneficiaries. Most of 90 percent of the additional funds have been
earmarked for the N2 Pilot Project – this allows funds set aside out of the
provincial grant for the N2 project to be released for other priority
projects.

Subsidised housing delivery is constrained by the lack of well-located land
affordable to housing agencies. The province intends to release strategic
pockets of land in such a way as to supply the subsidised housing market and
leverage private resources for subsidised housing delivery. The Local
Government and Housing Department will co-ordinate closely with Department of
Transport and Public Works to achieve these aims.

In summary, the Department of Local Government and Housing will see its
budget grow by 10,5 percent per year on average over the MTEF. R4,3 billion
will flow to this Department over the MTEF.

The province's natural habitat and reserve areas also constitute a network
that should be considered part of the public infrastructure network – a "soft,
green infrastructure" if you will, as opposed to the "hard, brown
infrastructure" of the built environment. The province's green infrastructure
fulfils a number of important functions – for instance, it creates
opportunities for recreational and cultural activities which in turn have
employment creation spin-offs. CapeNature will receive an additional R52
million over the MTEF to develop eco-tourism infrastructure and facilities in
its reserve areas.

Green infrastructure also gives the space to natural processes important for
human life. For instance, natural water purification and storage processes
occur in mountain catchment areas. Often where space is not provided for
natural processes, disaster occurs – flooding, for example. Our changing
climate also presents us with many challenges as we confront a future climate
that is warmer, drier and more variable. The province's green infrastructure
thus forms an important bulwark against climate change. An additional R36
million has been allocated to CapeNature to scale-up fire management and remove
alien vegetation in water catchment areas in the province's nature
reserves.

Siyasebenza siphumile ekuplaneni

Skills development, learnerships and job creation

Speaker, two weeks ago, the Premier singled out the issue of scarce skills
as "the Achilles heel of our rising prosperity and growth". Our response to
this challenge is based on a holistic strategy to skills development, and
constitutes the second major theme of Budget 2007/08. On the part of the
education sector, our interventions are designed to start before learners enter
our schools and to extend beyond schooling into the workplace and second
economy. Our response is also holistic in the sense that it does not rest with
the education sector alone. If we are to transform the Western Cape into ‘a
premier learning region in South Africa', skills development and the creation
of work opportunities must become the concern of all our departments. Budget
2007/08 therefore provides funds to multiple departments across the economic
and social clusters so that they can roll out skills development interventions
including learnerships, training programmes and Expanded Public Works Programme
(EPWP) projects in various fields.

As a struggling sector, Agriculture faces a skills shortage which hampers
its growth. From 2000 to 2005, the sector grew by an annual average of only 1,6
percent. Over the same period, agriculture's share of the employment in the
Western Cape dropped from 15 percent to just 7 percent. Given the sector's
historical importance in the province and its key role in creating jobs and
sustainable livelihoods, the total budget for the Department of Agriculture is
R290 million in 2007/08, which is R21 million more than the revised estimate
for 2006/07.

In order to address the shortage of scarce skills in the agricultural
sector, the Department receives an earmarked allocation of R39 million over the
MTEF which helps to push the budget for Structured Agricultural Training up by
22 percent to reach R29,5 million in 2007/08. The focus of the skills-based
training programmes is to empower emerging farmers, rural youth, women and land
reform beneficiaries to enter into mainstream agriculture. Together with
additional resources from the National Skills Fund, the Department plans to
increase the amount of learnerships, internships and bursaries offered in
2007/08. The Department will also implement a mentorship programme for target
groups, inclusive of re-skilling evicted and unemployed farm workers to assist
them in finding meaningful employment.

Also in partnership with the National Skills Fund, the Department of
Transport and Public Works will provide 1500 learnerships over a three-year
period, in fields such as masonry, plumbing and carpentry, through the
Learnership 1000 programme. The Department receives R26,5 million over the MTEF
to augment Learnership 1000 and to fund bursaries for studies covering
technical and professional courses and degrees. R48 million will be set aside
over the MTEF to enhance the internal technical capacity of the Department,
particularly within the Public Works programme.

The Service Delivery survey results reinforces that there is a critical link
between education and training on one hand, and improving people's
opportunities to find employment on the other hand. When asked what actions the
government should take to improve people's employment prospects, 43 percent of
survey respondents felt that the provision of education and training for jobs
in demand would have the greatest positive impact. The Departments of Education
and Economic Development and Tourism receive extra funding in this Budget in
order to meet this challenge.

First, the allocation for Further Education and Training increases by 17
percent to R309,6 million in 2007/08. The Department of Education has made
considerable progress in realigning its course offerings at Further Education
and Training (FET) Colleges to meet both national needs, as outlined by the
National Human Resource Development Strategy, and provincial needs identified
in the Micro Economic Development Strategy.

However, developing a more responsive curriculum to the needs of the economy
will yield little benefit unless people have access to these colleges. In order
to widen access to FET Colleges, R26 million is allocated to promote equity and
provide bursaries to poor and academically deserving learners.

The Department of Economic Development and Tourism receives R50,8 million
over the 2007 MTEF for "Workforce Development". This funding will enable the
Department to expand existing skills interventions as well as develop new
interventions. The success of "Calling the Cape" can be used to illustrate the
impact of well-planned and implemented interventions. "Calling the Cape" runs a
learnership programme targeted at historically disadvantaged individuals. 90
percent of the participants have gained employment in the sector upon
completion of the programme. The funds will also be used by the Department to
undertake research on labour market and sector skills needs, in order to ensure
a better match between the supply and demand for skills.

When it comes to small business, entrepreneurs simply want a decent chance
to access the market and compete. When asked how government can facilitate
business development in the Western Cape, the overwhelming request was not for
financial support. 39 percent of respondents from the Service Delivery survey
pointed to the need for better information and communication regarding business
development services. Most others pointed to weaknesses in regulation, and
problematic or time-consuming interactions with government departments. The
President reiterated this message when he emphasised that our economy will grow
faster when bureaucratic red tape that hobbles business is tackled head on.

In response, interventions of the Department of Economic Development and
Tourism regarding SMME development firstly aim to facilitate the migration of
second economy entrepreneurs into the first economy. The Department's Real
Enterprise Development, "Red Door" initiative, provides information to small
firms on business development services. In 2007/08 the budget allocation for
enterprise development will expand by 20 percent to R37,7 million.

Finally, the Expanded Public Works Programme is becoming an increasingly
important pillar in our skills development and job creation strategy, in the
province and in the country as a whole. EPWP projects are no longer limited to
roads and construction.

In the health sector, learners are receiving training in home-based care and
treatment adherence. Over R200 million will be spent by the Department of
Health on EPWP programmes over the MTEF.

On its part, the Department of Education has committed R150 million over
the
2007 MTEF for EPWP programmes in the area of Early Childhood Development (ECD).
The funds will be used to provide resource kits to ECD community sites, to
increase the number ECD practitioners in poor communities, and to upgrade the
skill level of those practitioners. This year we will add 1 500 practitioners
to the 900 practitioners currently enrolled in accredited training through this
programme.

Over the 2007 MTEF, the Department of Social Development will invest R164
million on EPWP programmes for ECD, HCBS and youth to increase the number of
beneficiaries reached in these programmes. Youth are undergoing learnerships
where they receive training as ECD practitioners, and home-based carers. Young
people also receive entrepreneurial and life skills training, and learn to
assist with referrals for victims of substance abuse and to provide support
services to youth abusing substances and drugs. The progress and the
possibilities are exciting.

Together, over R578 million is planned for EPWP projects by the province
over the 2007 MTEF, excluding roads and public works EPWP projects. Added to
this are national resources made available via the Provincial Infrastructure
Grant to expand the creation of work opportunities and the provision of
accredited training beyond current levels achieved by the Roads Infrastructure
Programme. This initiative is referred to as "upscaling the Expanded Public
Works Programme (EPWP) on roads".

Siyasebenza siphumile ekuplaneni

Improving quality and access to services in the social sector

The third overarching theme of the 2007/08 Budget is the improvement of the
quality of services in the social sector, and people's access to those
services. This year we will see over 75 percent of our provincial budget going
to the departments of education, health and social development.

Education

Beginning with education, a number of features in this Budget are aimed
specifically at improving the quality of our schools. Our commitment to
education is demonstrated in the steady rise in per capita spending since
2002/03. In 2007/08, the Department is planning to spend R6 507 per capita on
public ordinary school education. This is R445 more than the national average,
and the third highest in the country.

In 2007/08, Education's share of the total Provincial budget rises to 37
percent, and the Department's budget is set to expand over 9 percent a year on
average over the 2007 MTEF.

However, as Minister Manuel emphasised, the important thing is that with the
marked increase in investment in education, we must see a concurrent step
change in education results. With over R25,5 billion to be spent on education
in this province in the next three years, the result should be a fall in the
dropout rates and better matric results.

To further strengthen this endeavour, the Department intends to
substantially rearrange the way that it does business over the next three
years, so that the schooling and district delivery system is considerably
enhanced.

Teacher development programmes are aimed at upgrading the qualifications of
existing teachers, while specific training programmes will improve the
leadership and management skills of school principals. An amount of R121
million over the 2007 MTEF has been specifically earmarked for this
purpose.

Over the 2007 MTEF an additional amount of R809 million is allocated for
personnel related issues in education:
• to improve the level of remuneration of teachers
• to increase the number of clerical and support staff in schools and
districts
• to hire teaching assistants especially in the foundation phase of the
schooling system
• to provide targeted incentives to teachers in critical subjects.

Effective teaching can only take place if we have highly qualified teachers
operating in well-resourced schools. To ensure that all schools receive the
basic minimum resource package, we will be adding R386,9 million over the 2007
MTEF for the Quality, Improvement, Development, Support and Upliftment
Programme (QUIDS-UP). For 2007/08 the Department is targeting the poorest
primary schools in the National Quintile 1 in order to ameliorate the
deterioration of and backlogs in equipment such as laboratories, libraries, and
photocopiers.

Besides our focus on the quality of education, we must also continue our
push to expand access to education. In the Service Delivery population survey,
38 percent of respondents indicated that being unable to pay for school fees
was a problem they often encountered. Over the 2007 MTEF R622 million is
earmarked for the expansion of the no-fee status schools. The number of no-fee
schools for 2007 will be increased to 652 including both the poorest primary
and secondary schools in National Quintiles 1 to 3. It is anticipated that more
than a third of learners or 344 000 learners will be enrolled at public
ordinary no-fee status schools.

The allocation for Early Childhood Development increases by 43 percent to
R153 million in 2007/08. This significant increase in the budget is to improve
the quality of Grade R and increase the number of learners, particularly in
poor and rural communities.

Health

Wat die gesondheidsektor betref, het die Departement van Gesondheid goeie
vordering gemaak met die verbetering van dienslewering deur primêre
gesondheidsorg na die mense te bring. 2006/07 saw nine community health centres
(CHC) in the Metro extend their operating hours. This is in line with the
district health system outlined in Healthcare 2010 and the Comprehensive
Service Plan, which identifies and emphasises Primary Healthcare (PHC)
facilities as the initial take-up point for non-life threatening
emergencies.

We can be proud that since 2002/03, we have achieved a steady increase in
per capita health spending in this province. In 2007/08, per capita health
spending in the Western Cape is the highest in the country, at R1812. This is
achieved despite significant cost pressures brought about by a rapidly
increasing number of hospital admissions, partly due to in-migration and
utilisation of Western Cape health facilities by individuals from other
provinces.

Over the three years, we will see a shift as additional resources, both
financial and personnel are ploughed into district level services, affording a
more efficient and higher quality service to our people. In doing so, we
acknowledge the value of nurse-led initiatives at primary healthcare (PHC)
facilities and the importance of an effective district health services in the
Western Cape.

The total health budget for 2007/08 rises 9,6 percent to R7,095 billion, and
is set to continue to rise 9 percent on average each year, to reach R8,4
billion in 2009/10.

The shift to a district-level system and other planned improvements to
services, will depend on the appointment of additional staff at facilities,
especially nurses. The public health sector battles with a chronic shortage of
professional medical staff, especially nurses. In an effort to attract and
retain medical staff in the public sector, the working conditions and salaries
of professional medical staff will be reviewed and addressed. As part of a
national plan, initially nurses' salaries will be targeted, followed by doctors
and other health professionals in subsequent years. R97 million has been
earmarked in 2007/08 for this purpose, and a total of almost R304 million for
the remaining 2007 MTEF years.

Additional posts for health professionals will also be introduced as part of
a national drive to increase the number of health professionals in the public
sector over the next five years. Specifically, salaries of medical students in
their second internship year and nurses completing community service will be
funded by an earmarked amount of R128 million for the next three years.

Emergency Medical Services also receive additional funding, on top of the
amounts already given in last year's budget, to further reduce ambulance
response times and prepare the Emergency Medical Services for the 2010
FIFA World Cup. R178 million has been earmarked over the 2007 MTEF to establish
and ensure the full operation of call centres throughout the province, acquire
additional ambulances, upgrade equipment and appoint additional staff.

Social Development

A key feature of Budget 2007/08 is the substantial 22 percent increase to
the budget of the Department of Social Development. The Department receives a
budget of R892 million in 2007/08, rising to R1,14 billion in 2009/10, or 5
percent of the total provincial budget. The Western Cape's real per capita
spending grows to R120 per person in 2007/08, the second highest in the
country. The boost in the budget enables the Department to redefine its role,
post the establishment of South African Social Security Agency (SASSA), and to
push forward in its expansion and improvement of social welfare services as its
core business.

Over the next three years, R182 million is allocated for the further
implementation of the three pieces of social welfare services legislation,
namely the Childrens' Bill, the Child Justice Bill and the Older Persons'
Act.

The Department of Social Development renders its social welfare services
through its partnership with 1 600 non-governmental organisations (NGOs) and
non-profit organisations (NPOs). It's imperative that we avoid micro-management
while guaranteeing accountability and alignment between NGOs and government on
our broad social development objectives. Towards this end, the Department is
working with institutions of higher learning to develop a plan to train service
providers (NGOs and NPOs) and especially to capacitate emerging and new
organisations. The monitoring and evaluation function has also now been
decentralised to district offices in order to improve communication and
accountability.

The focus in this Budget 2007/08 on social sector personnel also applies to
Social Development. In 2007/08, the Department of Social Development is
receiving R7 million to recruit and employ social auxiliary workers who will
perform tasks that do not legally require a social worker, thereby lessening
the workload of social workers. Over the 2007 MTEF, R35 million is earmarked
for this purpose.

The scope and growth of the substance abuse problem has necessitated
national intervention and is underlined as an urgent priority in the Western
Cape. An additional R42 million over the next three years is being provided to
cover infrastructure needs and equip rehabilitation centres. The Department is
concentrating on reducing the supply of and demand for substances, and
strengthening treatment, prevention, after-care support, community based
services, co-ordination and integration.

With regard to Early Childhood Development, the Department made significant
progress to increase the ECD subsidy from R5 per child per day to R6,5 per
child per day. To date 45 679 children have access to ECD facilities. In the
coming year the Department of Social Development has budgeted R96 million to
increase the number of children who have access to ECD services and increase
the subsidy per child from R6,5 to the national norm of R9.

Cultural Affairs and Sport

Beyond health, education and social welfare services, the realisation of
social cohesion in our province requires concerted efforts to ensure that young
people are afforded opportunities that will enable them to discover their full
development potential. The Department of Cultural Affairs and Sport plays an
important role in building social capital and strengthening communities. The
Department receives a budget of R224,5 million in 2007/08. Over the 2007 MTEF,
R12 million is earmarked for the new sports school located in Kuils River.
Furthermore, over R15 million is allocated over the 2007 MTEF for the
Department to roll out sports development and cultural legacy projects which
capitalise on the energy of World Cup 2010.

Libraries play an important role in a number of priority provincial
objectives, such as our provincial objectives around skills development, human
capital development and social cohesion. The Libraries conditional grant
introduced this year results in R91,5 million set aside over the 2007 MTEF. The
funds will be used to step up and institutionalise community library services
in underserviced areas, to stock books, recapitalise library facilities and
expand services.

Responsible and Responsive Governance

The fourth overarching theme of Budget 2007/08 is the broad category of
governance. The need to improve the organisational capacity of the state will
remain high on our agenda because it's a critical requirement for achieving
accelerated growth and service delivery.

A number of initiatives are planned by the Department of the Premier, in
keeping with the President's attention on strengthening the public service. As
part of its internal social and human capital strategy, the Department will
continue to use Project Khaedu as an action learning programme and implement
the Executive Leadership Skills Development programme with the purpose of
improving Senior Management Skills. In the upcoming year, the Premier will also
initiate the assessment and improvement of the competencies of our senior
managers in the province, given that they are the key delivery drivers of
departmental programmes. More details will follow in the Premier's budget
speech.

The re-engineering initiative undertaken by the Department has broadened the
focus and function of the Department away from simply providing support
services to departments, to that of providing a strategic oversight,
co-ordination and leadership function for the province as a whole. Over the
2007 MTEF, the Department will spend over R48,6 million to strengthen strategic
and implementation capacity. The Department also receives an initial R23
million in 2008/09 and 2009/10 to boost ICT requirements. Depending on the
outcome of the assessment underway, these allocations and the role of ICT in
the province should receive further attention in following budgets.

Related to its policy co-ordination and integration role, the Department
also receives R11 million over the 2007 MTEF to provide strategic leadership,
co- ordination and communication to ensure that the province is prepared to
host a successful 2010 FIFA World Cup.

Good governance also involves adequate security and protection from
disasters. As we have seen in other the parts of the world, climate change is
likely to give rise extreme weather events that will trigger disasters.
Additional funds of R27,5 million over the MTEF are allocated to allow the
Provincial Disaster Management Centre to scale up the support it gives to
municipalities to avoid and recover from disasters.

2006 saw an improvement in the co-ordination of security services by the
Department of Community Safety and subsequently there has been a gradual
decrease in the loss of state property. The Department of Community Safety
receives R7 million in the new financial year to further capacitate security
risk management and upgrade access control and monitoring systems for the
Provincial Government. Over the MTEF, R38 million will be spent for this
purpose.

As custodian of our province's financial resources, Provincial Treasury
centres on the three pillars of financial management: Internal Controls, Risk
Management and Good Governance. In essence, the term ‘governance' refers to our
ability to provide stakeholder assurance that all due care is applied when
decisions are made, such that objectives set by individual departments are
achieved effectively and efficiently in an agreed ethical environment. To this
end, the province has set itself the goal of attaining Level 4 financial
capability status over the 2007 MTEF but this will depend upon the consistent
design and application of effective internal controls, good planning and
delivery, sound risk management and proper monitoring and evaluation practices
in all financial and operational decisions.

Contributing to this is the strengthening of Internal Audit and its planned
decentralisation to Health, Education and Transport and Public Works over the
next three years. An initial R15,3 million over the 2007 MTEF has been set
aside for this purpose, which includes the introduction of internships.
Responsible and responsive governance also relates to the rule of law and the
safety of our communities. In his 2007 State of the province Address, Premier
Rasool, states that drug merchants and gangsters continue to make our schools
the market places for drugs and gangsterism. Poor school safety significantly
undermines learning at schools and makes schools dangerous places for learners.
Ukukhusela abafundi bethu iR24 million over the next three years is set aside
on Community Safety's Vote for the deployment of Bambanani volunteers to 109
schools across the Western Cape which have become the targets for drug
merchants and gangsters. Furthermore, the Department of Education has allocated
R15,790 million in 2007/08 to help address school safety. Through the Safer
Schools Programme, the Department will run a range of interventions focused on
community engagement, peer guidance programmes, training, school management and
safety infrastructure.

A further R17 million is set aside by the Department of Community Safety for
the deployment of Bambanani volunteers on trains and train stations. Already
700 volunteers have successfully signed up as Group D reservists in the police
force, while 829 volunteers are in the process of being signed up.

Our safety and well-being also requires safer roads and effective traffic
law enforcement. Two weeks ago, the Premier's speech noted the success of the
‘Arrive Alive Campaign' over the past three years, as motor vehicle accidents
dropped by 8,9 percent. As road traffic accidents continue to have serious
financial implications for the Western Cape economy in terms of traffic
management and health care costs, the Department of Community Safety has
finalised the Motor Vehicle Accident Intervention Strategy (MVAI) that seeks to
extend the coverage of the law enforcement service and to improve education and
communication initiatives. Traffic enforcement is now provided 24-hours a day
and seven days a week. The implementation of MVAI strategy intends to reduce
road fatalities by 5 percent in 2007.

Provincial-Local Government Interface and Spatial Planning

Working with local government is another vital aspect of better governance.
Over the last year, the Department of Local Government began to test the
application of the "shared service" concept through which municipalities will
pool specialised service resources at district level to increase economies of
scale for these high-cost services. The Department also plans to deploy
department officials to specific districts to enable the Department to give
"hands-on support" to municipalities. An additional R34 million has been
provided to the Department to gear up its municipal capacity building
programme.

Another exciting aspect of governance improvements is the developing
interface between provincial and local government. The Local Government MTEC
(LG MTEC) process is an important vehicle for improving relationships and
co-ordination between provincial line departments and municipalities, in their
planning and budgeting.

The objectives, format and approach for the engagements will continue to
evolve this year as together we learn more about the communication that is
needed and the work that must take place together. The engagements centre on
draft budgets, the new generation IDPs, financial health and expenditure
performance. In 2007/08, these discussions will focus on:
* the relationship between the district and local municipalities;
* the socio-economic environment, developmental challenges and capacity
constraints which municipalities confront
* how the province and local government can better co-ordinate to target their
efforts and improve efficiency, especially with regard to spatial planning.

The Provincial Spatial Development Framework (PSDF) indicates where in the
provincial territory the province sees economic growth occurring and what
sectors this growth will be in. The PSDF should also inform the province's
social infrastructure investment programme, its targeting of housing subsidies
and its social services programmes.

This will require that we have a clear understanding of:
* where the social needs are
* where economic potential is concentrated
* where provincial financial flows are currently concentrated or targeted.

The Socio-Economic Profiles of Local Government (SEP-LG), which I tabled in
this house in November, are a key source of information to understand where the
social needs are the most severe and where economic growth potential is
located. One of the main messages from the SEP-LG data is that key
socio-economic variables which determine the province's delivery response are
unevenly distributed geographically throughout the province.

With regard to financial flows from province to local government, in 2007/08
transfers by provincial departments to districts and local municipalities
amounts to R1,28 billion, 48,8 percent up from the 2006/07 original budget.

Of the total R20,7 billion provincial budget, 68 percent stays within the
boundaries of the Cape Town Metro. The remainder of the provincial budget is
spent in non-metropolitan municipal areas. The West Coast receives 6 percent of
the budget; Cape Winelands 13 percent; Overberg 3 percent; Eden 8 percent; and
Central Karoo 2 percent. What this indicates is that, although allocations are
unevenly spread across the map of the province, the allocations are roughly
proportionately aligned to the municipalities' relative sizes and their ranking
in terms of their contribution to provincial growth in nominal terms.

In the next year, we intend to explore how we can better use tools, such as
the SEP-LG and geographical incident benefit analysis, to more effectively
target economic and social spending, as per the PSDF.

Conclusion

Speaker, I have argued that the four themes of Budget 2007/08—economic
infrastructure, skills development, the quality of social sector services, and
governance—support the province's development goals of rapid, shared economic
growth.

At the end of the day, our overall purpose is to not only make everyone
better off, but to significantly lessen the gap between the rich and poor in
our province and to make sure that all people feel a real improvement in their
daily lives.

This will require that we work together in action—with greater solidarity, a
clear plan, and a passion to drive and accomplish our objectives. Saam kan ons
‘n werklike verskil maak.

Summing up our progress against the goals we set out in 1994, the President
said: "We are not there yet. But no one, except ourselves, shall ensure that
this dream is realised. And so, let us roll up our sleeves and get down to
work, fully understanding that the task to build the South Africa for which we
yearn is a common responsibility we all share." Siyasebenza siphumile
ekuplaneni.

The poet Marge Piercy also managed to capture the dignity and value of work
which is undertaken to accomplish honest, shared goals. I conclude with her
words:
The work of the world is as common as mud.
Botched, it smears the hands, crumbles to dust.
But the thing worth doing, well done
Has a shape that satisfies, clean and evident.
The pitcher cries for water to carry
And a person for work that is real.
- ‘To be of use', Marge Piercy

Speaker, in conclusion -
Please allow me to thank:
• The Premier and my Cabinet colleagues
• Dr Stegmann and the officials of my department, Provincial Treasury
• Colleagues in the Provincial Legislature
• Head of Department (HODs) and officials of the Provincial Government of the
Western Cape
• My office staff
• Yourself, Speaker, for convening the House
• My special guests in the gallery today

Speaker, it gives me great pleasure to table the 2007/08 Western Cape
Budget, the Western Cape Appropriation Bill, the Estimates of Provincial
Expenditure, the Budget Overview, Local Government Allocations and accompanying
Provincial Gazette, the Budget Summary, and of course this Speech, for
discussion and consideration by this House.

I thank you.
Lynne Brown

Issued by: Provincial Treasury, Western Cape Provincial Government
6 March 2007