M Coleman: Mpumalanga Budget 2006/07

22 February 2006

The Honourable Speaker, Mrs YN Phosa
The Honourable Premier, Mr TSP Makwetla
Other Presiding Officers (Deputy Speaker, Chair of Chairs and her Deputy)
Colleagues in the Executive Council
Members of the legislature
Honourable Mayors and Councillors
Chairperson of the House of Traditional Leaders
Members of the House of Traditional Leaders
Former MECs for Finance, Mr Jacques Modipane, Mr Lassy Chiwayo,
Mr Jacob Mabena
The Director-General
Heads of Departments and Public Entities
The Business Community
Social partners
Distinguished guests
The media
Ladies and gentlemen
Family and friends

Madam Speaker, Honourable Premier, Honourable Members, the coming to power
of the African National Congress in 1994 has had such a positive impact on the
lives of ordinary South Africans that a leading English language daily, after
the Minister of Finance had delivered the Nation's Budget for the 2006/07
financial year, opened its editorial with the following observation:

“Once upon a time South African economic policy making was a dodgy business
and full of surprises. It was worth staying awake when listening to the Central
Bank Governor hold forth, or the Finance Minister presents a budget. Not a bit
of snooze is usually unlikely to do much harm. In recent years, monetary and
fiscal policy has become increasingly transparent, predictable and stable in
other words, boring. And we are discovering the joys of boring. We have higher
growth and lower interest rates than we had in many decades. And we have the
tax cuts, on a fairly regular basis”.

However, Madam Speaker, the Honourable Minister of Finance used Ben Okri's
line, stating that “There are no joys without mountains having being climbe”.
Within a similar context, allow me to use Charlotte Bronte', not only to
balance the gender scale, but to remind all South Africans of our past the past
when you needed to stay awake when the minister of finance presented the budget
the past of dodgy, unpredictable economic policies the past of neglect:
“If we had no winter, the spring would not be so pleasant. If we did not
sometimes taste of adversity, prosperity would not be so welcome”.

Indeed our country is on the threshold of prosperity. We have entered the
“Age of Hope” as the Honourable President noted in the State of the Nation
Address, as he expatiates in the following quote:

“This year opened with the inspiring news that our people were highly
optimistic about their future and the future of our country, ranking eighth in
the world on the optimism index. Gallup International, which issued this
report, said we were three times more optimists than pessimists, and that
optimism figures had doubled even since 2002.”

We, the Province of Mpumalanga, have contributed in many ways towards the
optimism in the country, in the areas of tourism, sport, hosting of
international events, an increase in business confidence as many companies
including multi national conglomerates are considering investing in the
province, etc.

Mbombela Local Municipality has been confirmed to be one of the hosts of the
FIFA 2010 World Cup. Mpumalanga Province is presented with an opportunity, that
many provinces would have wished for, to make a direct and meaningful
contribution to better the lives of its citizens through the enormous economic
opportunities, which arise from the building of the stadium and related
infrastructure (of global standards), the establishment of related businesses,
and the direct and indirect jobs to be created.

The people of Mpumalanga are advised to start identifying opportunities now
and securing their participation and a share of the 2010 cake, but do so within
global standards, if I were to emphasise the Honourable Premier's caution.

Madam Speaker, Honourable Premier and honourable members, allow me at this
juncture, to review the economy at national and provincial level.

The Mpumalanga economic outlook

Madam Speaker, Honourable Premier, last year in my 2005/06 Budget Speech, I
quoted an Economist Ndumiso Matlala as saying, “ If Mpumalanga were a listed
company, I would be buying stocks by a bucketful”. Little did I know then that
this year he would be in our midst as an Economic Advisor to our Premier.

You are welcome sir, because your presence will add to the limited pool of
experienced economists of your calibre in the Province.

As mentioned before, Our President, in the State of the Nation Address
emphasised that we are in the “Age of Hope”. In the theme of the “Age of Hope”,
he set the tone for an accelerated growth path, and further challenged us as
government to the “high expectations of the people” and for maintaining that
optimism. With the tabling of our budget today, we support the President and
accept the challenge to meet the expectations of our people.

In order to meet these expectations, we will continue to strive towards
alleviating poverty, growing our economy, and accelerating service
delivery.

Honourable Members, the economy of the province depends to a large extent on
the health of the country's economy.

The revised economic growth of our country for 2005 is estimated at 5%. Our
economy has achieved positive GDP over the past 10 years and inflation and
interest rates have remained moderate over the previous Medium Term Expenditure
Framework (MTEF) period. The economic expansion since 1999 has been boosted by
strong demand for commodities, sustained increases in consumer purchasing
power, low domestic inflation, low interest rates, consumption and increases in
both private and public investment. The consumer and business confidence
remained at higher levels during 2005. However, low savings and job creation
remain a challenge, as this growth requires sustainability and capacity
utilisation.

As a follow up to our Budget Speech of 2005, the level of savings in South
Africa continues to decline, with the latest figures for the third quarter of
2005 standing at 13%. According to data released by Statistics South Africa on
29 November 2005, the province contributed 6,8% to the national Gross Domestic
Product (GDP) in 2004. The provincial economy has grown (GGP) by 4,2% in 2004,
a significant increase from 2,7% growth in 2003, and has averaged three percent
between 1996 and 2004. It will be interesting to see how we perform come
November 2006, when annual growth figures are released.

However, growth is not enough if it cannot optimally translate into reduced
poverty levels, less income disparities and job creation in the province, hence
the utilisation of this MTEF budget as a tool to spearhead programmes and
initiatives to address these challenges. Inflation is expected to remain within
the inflation target range of 3 to 6% for 2006. The inflation outlook has
significant implications for the province; hence its developments should be
pursued.

The unemployment rate in the province for September 2005 was 26,9% as
compared to the rate of 24,8% during September 2004. Honourable Members, more
integrated efforts are demanded from our government and other partners to
increase employment in the province.

The economic expansion has a positive impact on the employment levels. The
Official Labour Force Survey indicated an expansion of employment over the past
year in formal sector job creation. Between March 2005 and September 2005, a
1,8% increase in employment was recorded.

The slow pace of creating employment has contributed to the growing informal
economy and the informal settlements in the province, as more people try to
position themselves closer to economic centres of the province.

It is worth noting that between 2003 and 2004, sectors like manufacturing
grew amongst other reasons because of demand for manufacturing inputs (steel,
petro-chemical, etc) and performance of economic clusters (wood,
agro-processing, etc).

Manufacturing was the best performer with a Gross Value Added of 30,1%
followed by mining at 21,4% to the provincial economy. Other sectors that grew
include the trade, and community services (general government services)
sectors.

However, sectors such as mining declined in their contribution owing to the
strong Rand and other challenges such as the mines closing down. Electricity
and agriculture sectors had a decline in their contribution to growth. The
agriculture and mining sectors that once played a major role in the economic
development and job creation in Mpumalanga have declined slightly during 2004.
The plight in the agricultural sector results from unfavourable weather
conditions.

The tourism sector remains a significant contributor to employment and
growth in the province.

Nationally, the electricity and mining sectors contributed significantly to
the growth of the economy at 29, 4% and 20, 5% respectively.

There is scope to grow our financial services sector further especially with
the growing trends nationally, towards call centres and business process
outsourcing industries. I will urge the province to take advantage of this
trend in boosting the sector activities, including enhancing the potential of
attracting Foreign Direct Investment.

The sector has a bigger role to play in ensuring equitable transformation
and broad based participation. Access to banking by the low income earners and
the previously unbanked is encouraging. Five months after the launch of the
Mzantsi Account, the number of account holders of this type of account stood at
500 000 and a year later, the total number of Mzantsi account holders is
standing at 1,8 million. This is an indication that more low income earners are
accessing banking facilities.

Let me take this opportunity to thank the banking sector in the province for
the expansion of their services to the previously disadvantaged areas of our
province. This indeed helps Gogo Mthembu at KaNyamazane to access banking
services locally and save transport money to town, as that would have reduced
her pension and not being able to buy bread instead. The financial services
sector also had a positive growth that was boosted by the expansion in the
property market and other factors.

While on this, I would like to appreciate the Minister of Finance in
abolishing the transfer duties on properties below R500 000, and at the same
time, caution the Property Management Services about any possible price
manipulation, which will in turn defeat the intended purpose of relieving the
tax burden of the poor. Formal employment contribution during 2004 in the
province was dominated by agriculture at 22,1%, followed by government and
community services absorbing 19,1%, trade 14,2% and manufacturing sector at
10,7%. The lowest contributor to formal employment was the electricity sector,
which only employed 2%. The employment trend in these sectors is a cause for
concern as many sectors are capital intensive, requiring highly skilled people,
while the large segment of the population is unskilled or semi skilled.

This creates a challenge for our education and skills development policies
as to how to align skills gaps and needs from industries, to the existing
skills availability in the province. We hope the Skills Development Strategy
for the province will fast-track the alleviation of this challenge.

Our province has intensified efforts to accelerate performance in the
sectors such as the agricultural sector through initiatives such as the
Masibuyele eMasimini, which will address some of the challenges facing our
agricultural sector and support growth in the province.

We need additional strategies to alleviate poverty through methods that take
into account the unique socio economic context of the province. In the State of
the Nation Address, the President referred to the Expanded Public Works
Programme (EPWP), land restitution, and land reform as measures to transform
and grow the economy. The province has an opportunity to translate these
programmes into viable economic activities that will help to alleviate poverty
and address the challenges of the second economy.

Mpumalanga, like other provinces, faces many land claim challenges that have
the potential of hampering economic growth. We are encouraged by the commitment
of government to contribute to the empowerment of the poor, especially in the
rural areas through the initiative by the Minister of Agriculture and Land
Affairs in 2006 to review the willing buyer – willing seller policy, land
acquisition models and manipulation of land prices, and regulate conditions
under which foreigners may buy land. The Minister will further ensure that the
land distribution programme is aligned to the Provincial Growth and Development
Strategies (PGDS), and the Integrated Development Plans (IDPs) of
municipalities.

The province is also expected to indicate its contribution towards the
national target of six percent growth between 2010 and 2014, as stated in the
Accelerated and Shared Growth Initiative of South Africa (AsgiSA).

We will, through the Moloto Rail Development Corridor, the Maputo
Development Corridor and its associated initiatives such as the development of
a dry port around the Komatipoort area, the Kruger Mpumalanga International
Airport Industrial Park, the Cargo Terminal, the Maputo Corridor Logistic
Initiative, contribute to the AsgiSA objectives. This is in addition to the
already existing economic focus areas namely Agro processing, Petro Chemicals,
Tourism, Manufacturing and Energy programmes.

Broad-Based Black Economic Empowerment (BBBEE)

Our focus in this speech will be around the performance on the Preferential
Procurement Policy Act (PPPA) and Supply Chain Management (SCM) Framework. We
have since adopted the provincial policy on SCM and expect departments to adopt
their own for the full implementation of procurement as a decentralised
function. One of the main objectives of Supply Chain is to enable government to
assist businesses to benefit from being awarded contracts.

While there is an expectation for government to create a positive business
environment for business to prosper, a similar commitment is expected from
business itself. Quoting the Honourable Premier in the State of the Province
Address, he said:

“There is a need for previously disadvantaged people to elevate their
standards, professionalism, efficiency and quality of goods and services,
delivered as part of government procurement. Only in this way will black
business be a true partner to government in the delivery of services to the
people”.

Government is moving towards bringing to book those businesses that are
defrauding it at the expense of service delivery. We welcome the announcement
of a workshop by the Honourable Premier, and we would like to further propose
that other business formations be included in the pool of prospective
participants, in order to cover the broader categories of enterprises doing
business with government.

We believe that through this type of dialogue, we will make every role
player understand and begin to play their meaningful roles. We also, in the
same wavelength, congratulate the Department of Trade and Industry on the
launching of the Small Enterprise Development Agency (SEDA) and its service
centres throughout the province. We hope that this initiative will enhance the
level of professionalism within entrepreneurs in the province through their
training and mentoring services.

We also hope that the small, medium and micro enterprises (SMMEs) in the
province will bring to fruition, the tax benefits as pronounced by the Minister
of Finance during his 2006 Budget Speech.

The President has emphasised the need to support entrepreneurial training,
assistance to marketing, the development of cooperatives and commitment to
reforming the procurement programme.

The province will intensify its efforts in procurement programmes to ensure
that broad-based black economic empowerment (BBBEE) is adhered to and that the
development of women and the youth is enhanced. The fast tracking of the
implementation of the APEX fund will guarantee that the poor and marginalised
participate in the economy of the province. The government is busy with the
review of the regulatory and administrative reforms that are aimed at easing
the compliance burden on small businesses and facilitating integration into the
formal economy.

Mpumalanga experienced severe drought and water shortage in some parts of
the province, such as in White River and Nelspruit in 2005. Many dams could not
reach full capacity and hence water usage had to be regulated and this had
adverse effects on the agricultural sector. Water is important for the economy
as sectors such as agriculture and others depend on it. Since the beginning of
2006, some regions of the province have been blessed with positive rainfalls.
This will expand agricultural productivity and strengthen the capacity to deal
effectively with agricultural land and environmental issues.

The importance of investment in infrastructure cannot be over emphasised.
Co-operative Governance and Inter-governmental Fiscal Relations, encourage
integrated planning and cooperation between the three spheres of government,
both on financial and non-financial planning, co-ordination, implementation and
monitoring of programmes with the aim of accelerating service delivery for the
betterment of the lives of our people.

It is in this spirit that the Executive Council took a deliberate effort
during its lekgotla to ensure that this principle is activated and put to
fruition.

Departments will elaborate further when presenting policies and budget
speeches, as to how are they going to put the above into actual
implementation.

The impact of our budget
As a government, our over-arching goal remains to eradicate poverty, increase
levels of income and ensure equitable share of income and other scarce
resources. Our budget has played a role in ensuring a move towards achieving
those goals.

The budget for 2005/06 played an instrumental role in alleviating poverty
through various reforms that addressed some backlogs in the province. Our
budget addressed the social security for our disabled, children and the elderly
by creating a safety net for them from which they were able to participate in
the economy. It created an economic voice for the people who would normally
have no access to income.

The various relief funds, schemes and packages for the agricultural sector
ensured that our agricultural sector survived the hardships of drought
experienced in the province. The budget also assisted in extending farmer
support.

Our efforts did ensure that school nutrition programmes and the scholar
transport initiatives were progressive. Although we acknowledge that we could
not extend our services further, the budget has managed to address some of the
challenges of nutrition and supporting our education initiatives.

The annual average growth of social grants beneficiaries for the province is
29,4%, indicating our commitment as a province to provide a social wage for our
people. Our contribution has been well above the national benchmark of 27%.

Our school nutrition programme reached 492 687 learners against the targeted
491 362, indicating our seriousness in alleviating hunger amongst our learners
for effective learning.

We will continue to ensure that the budget we are presenting today has an
impact on the lives of the people we serve, hence intensifying our contribution
to the maintenance of the expectations of our people.

Our total infrastructure spending during the year under review is R834,738
million, which translates to 63,7% of the allocated budget. We have exceeded
the national average of 55%.

Accelerated service delivery

The State of the Nation Address highlights local government delivery as a
critical area of intervention. Reconstituted municipalities in many parts of
the country included vast areas previously neglected regarding service
delivery.

With this budget, we emphasise our commitment to governance through
improving service delivery, eradicating corruption, creating safety for our
communities, developing our social security networks and growing the
economy.

We aim to create quality education with more emphasis on mathematics and
science in our schools, efficient health services and offer social security to
the elderly and the children, and improving our infrastructure delivery.

The budget for 2006/07 will ensure that we continue to build roads and
bridges, build the clinics and classrooms, feed the children, assist
businesses, market the province and make us contribute to the goals and vision
of AsgiSA. Our budget will address critical skills shortages of doctors, nurses
and other specialized health specialists, project managers and other skills
required to address primary, up to the tertiary healthcare needs in the
province.

The world and national economic outlook suggests that the provincial economy
will continue to expand further during the medium term period. In the long term
our economic growth needs to be supported by continued macro-economic
stability.

The Mpumalanga economy is growing and this trend is expected to continue
because of the government's expansionary fiscal policy stance.

* Fiscal policy and the budget framework
Additional resources will be provided for infrastructure investment, increasing
social and economic spending programmes. Growth in capital expenditure will
rise relative to current expenditure.

* Social Services Priorities
During October 2005, Budget Council considered the revised fiscal framework for
2006 MTEF. The revision of the provincial equitable share is to consolidate
education, health, welfare and economic provincial functions, and to fund
programmes that lend themselves to employment creation.

The revised equitable share baselines are intended to strengthen the
delivery of social services in the following priority areas:

1. With respect to Education , the revision to the provincial fiscal
framework seeks to ensure further access, improved quality, and greater equity.
Access, for example, refers to the expansion of Grade R, with the aim of
improving access of children to quality Grade R programme prior to entering
Grade one and by increasing the number of Grade R learners to 800 000 over the
MTEF period.

2. With respect to Health, the proposed revisions seek to further boost
primary health care, the recruitment of health professionals and expand
emergency medical services.

3. In Social Services, the revisions seek to enable the sector to deal with
the demands of different social welfare services legislation, e.g. the
implementation of the Child Justice, Older Persons and Children’s' Bills when
they become laws, and the expansion of social welfare services.

4. In addition to social services, the revisions to the provincial baselines
provide for economic functions, namely the maintenance and rehabilitation of
provincial roads, and to strengthen the agricultural sector in the provision of
much-needed extension and veterinary services.

* Movements in Inflation
This year's budget framework has been adjusted to take account of movements in
inflation since the 2005 Budget. Revised inflation projections published in the
2005 Medium Term Budget Policy Statements are:

1. 5.1 per cent in 2006/07
2. 4.8 per cent in 2007/08
3. 4.5 per cent in 2008/09

It should be noted, however, that in creating the 2008/09 equitable
baseline, the 2007/2008 baseline was increased by seven percent (2,5 percentage
points more than the assumed inflation) to provide for a significant increase
in provincial spending from 2008/09 onwards.

* The Provincial Equitable Share
Forty percent of public servants are within the low-income bracket and are
without medical aid schemes. The Government agreed on specific incentives to
allow for low-income public servants to have access to medical coverage at
affordable cost. The implementation of the Government Employees Medical Scheme
(GEMS) has commenced on 1 January 2006.

The amounts earmarked for the Government Employee Medical Scheme (GEMS)
(R59,519 million; R119,677 million and R180,475 million in 2006/07, 2007/08,
2008/09 financial years respectively), remain unallocated, pending final
decision by the Department of Public Service and Administration on the
allocation criteria.

* Conditional Grants
I wish to advise Madam Speaker, that a major challenge, in the provincial
fiscal framework, after the publication of the Medium Term Budget Policy, is
the shift of social security grant function from the provincial to the national
sphere of government, which impacts directly on the composition of the
conditional grant framework. The South African Social Security Agency is now in
a position to administer the social assistance function. From 1 April 2006, the
delivery of social security assistance will longer be administered through a
conditional grant.

* Financial Governance

1. The Public Finance Management Act (PFMA)

Madam Speaker, Honourable Premier, we reported to this house in our
provincial Budget Speech of 2005, that the province managed to get only one
qualified report in the preceding financial year. Our aim to produce twelve
unqualified has not been achieved, as we not only got one qualified report,
but, in addition, a disclaimer. The Treasury has taken extra-ordinary steps to
address all the issues raised by the Auditor-General, including emphasis of
matter, to ensure that come the next audit, we will achieve a clean slate.

A Plan of Action per department is in place, and Internal Audit units of
each department are charged with ensuring that all issues identified by the
Auditor-General are attended to and corrected.

Madam Speaker, we reiterate our comments in the Budget Speech of 2005,
namely that there is no justification by departments to overspend on their
allocated funds, while equally, there is no justification for under-spending,
while we still have the scourge of poverty.

As we reported in 2005, in pursuance of improved quality of spending,
departments have been clustered and assigned a dedicated staff member. Although
we have clustered and assigned dedicated staff to departments, we still lack
the requisite skills to perform the functions as prescribed by the PFMA.

2. The Municipal Finance Management Act (MFMA)

The Department has embarked on a programme to assist the municipalities,
delegated to the department as from 1 September 2005, in the following
areas:
1. Compliance with the provisions of the Municipal Finance Management
Act;
2. Financial Management.

The unit, under my leadership, has visited 14 of the 16 delegated
municipalities in the current financial year. Delegations from municipalities
were led by the mayors, and included municipal managers, CFOs and other
officials. Discussions centred on compliance with MFMA, Financial Management,
areas of weakness identified and corrective action to be taken. The Unit has
organised workshops, in order to further capacitate municipality officials in
their tasks.

* Financial Management

The Province continues to be one of the best performers in relation to
spending its budget allocation. As it was the case with the six months budget
spending patterns, we are still spending consistently within our schedule.

This is further proof that the spending performance was not a mere
coincidence, but a direct result of effective monitoring and good governance.
We had spent 72% of our adjusted budget by the end of the third quarter.

The challenge still remains, being able to equate the actual expenditure and
the deliverables. This means that we have to look at the actual impact made and
ask ourselves whether it is relevant to the said expenditure. This will be the
focus for the year. We need to continue to foster the spirit of co-operation
and programme spending interrogation, so as to realise the greater impact of
our programmes.

* Revenue Generation

Madam Speaker, in terms of our own revenue collection, the Province is
performing well after exceeding the yearly budget at the end of 10 months of
the financial year. The Province raised their R289,526 million of the target of
R272,407 million. Six departments exceeded the own revenue budgets.

As a Province, we continue to rely on four major sources of revenue and
these are:
1. Road Traffic Act Fees (mainly vehicle licenses)
2. Gaming Levies
3. Hospital Patient Fees
4. Interest Revenue

* Road Traffic Levies

At the end of 10 months, an amount of R123 million was collected in terms of
the Road and Traffic Levies Act. This amount constituted 97,9% of the R126
million target. This is above the National Treasury norm of 82%. Our revised
projections indicate that we will not only meet, but also exceed our target.
According to our analysis, this success is largely due to the increase in the
motor vehicle population in the province, and therefore the increase is
associated.

Our focus in 2006/07 will be to ensure that all departments with traffic
levies, revenue-generating opportunities not only increase their capacity, but
also review and revise their tariffs so as to ensure maximum revenue
collection.

We will, as a Provincial Treasury, be issuing the tariff review schedule so
that departments do not continue to review their tariffs and levies as and when
they please, since this trend has a tendency of disorganising our budgeting
procedures. This also implies that departments must also sharpen their revenue
management capacities.

* Gaming Levies

The gaming industry has achieved steady growth since its inception in
October 1997 up to 31 December 2005. The Casino sector realised an average
growth rate of 13,99%, with Limited Payout Machines (Machines Outside Casinos)
reaching 85,29% growth. The introduction of the Limited Payout Machines in June
2003 increased the contribution of Gaming Levies to revenue by an average of
12,76%. By 31 December 2005 gaming levies recorded were R15,2 million from
casinos and R2,5 million from Limited Payout Machines. Although the budgeted
Gaming Levies for Casinos was R17,8 million for the 2005/06 Financial Year, it
is projected that this will reach the R20,2 million mark by the end of the
current financial year.

Limited Payout Machines were estimated to generate R2,9 million in the
2005/06 Financial Year, we project to collect R3,3 million by the end of the
current Financial Year. We should also note that these figures exclude the
budgeted income of R1,7 million for licence fees for the fore-mentioned
Financial Year.

Research conducted by Mpumalanga Gaming Board reveals that the fixed rate of
five percent of gross gaming revenue as a determinant of casino levies has been
overtaken by years of operations of regulated gaming activities in our Province
and the related growth rate. We are therefore in the process of reviewing the
methods for determining gaming levies for casinos.

Despite all these, our people are encouraged to gamble responsibly and there
is a greater need for adequate counselling and treatment programs in order to
deal with social ills associated with this form of recreation.

* Hospital Patient Fees

At the end of the 10 months of the current financial year this
revenue-generating item has collected R10, 959 million against a target of
R20,26 million, which amounts to 55% of the target.

The national Department Health revised tariffs for 2002 during 2004 with
implementation of revised tariffs being 1 January 2005. The revised tariffs
brought about a dramatic increase in Out Patients and Emergency consultations
fees. Based on the recommendations by the UPFS steering committee, a decision
was taken to reduce tariffs with effect from 1 September 2005, which meant that
provinces experienced two revisions in one fiscal year.

There has been a need to update the management of information systems that
are used for billing and administration of patients accounts through the PAAB
systems. PAAB servers have been decentralised to all provincial hospitals,
which will improve the downtime and the slowness of the system.

PAAB training is being offered to the newly appointed staff on an ongoing
basis. Five hundred and forty two officials have been trained to use the PAAB
system.

An area that needs urgent attention is hospital debts. During 2006/07, the
Provincial Treasury will assist the department in ensuring that a strategy is
in place for recovering outstanding hospital fees. Our focus during 2006/07
will be to assist the Department of Health and Social Services in setting
reliable projections especially in hospitals.

* Interest on Bank Balances

Interest on bank balances has become an important source of revenue in our
province, due to good cash flow management.

Revenue Strategies for 2006/07

We will focus on the following strategies in order to improve revenue
generation and collection for the year:

1. Annual review and revision of tariffs by all Provincial Departments
before the finalisation of the budget process, as well as timeous
implementation of revised tariffs, by implementing departments.
2. Continue to encourage all people residing in Mpumalanga to register their
cars in the Province.
3. Ensuring the development of debt management policies as well as adherence by
departments to debt policy and reduction of the provincial debt book.
4. Continuous identification of potential risks in revenue collection and
assist in instituting preventative measures.

* The Phasing-out of RSC Levies

The Honourable Minister for Finance, Mr Trevor Manuel announced, during the
Budget Speech of 23 February 2005, that for the decade ahead, the
intergovernmental framework will see significant changes. He indicated that RSC
levies will be abolished in 2006.

During the Medium Term Budget Policy Statement the Minister reiterated what
he announced in February, that RSC levies, which are a significant source of
revenue at the Local Government level, will fall away with effect from 30 June
2006.

Government has come to recognise that the RSC levies perform rather poorly
with regard to the generally accepted principles of sound taxation (e.g.
equity, efficiency, certainty, simplicity, ease of administration).

Some of the problems with RSC levies are administrative issues:

1. No local access to account of levy payers;
2. Poor collection practices;
3. High costs of collection;
4. Horizontal equity;
5. No clear linkage between revenue collected and expenditure
responsibility.

RSC levies are therefore not well designed as a tool for redistribution,
i.e. to address the infrastructure backlogs in under-serviced communities
(redistribution is best achieved through the fiscus).

For local government to meet their obligations, particularly in terms of
poverty alleviation and social and economic development, it is important to
maintain existing levels of revenue. In support of this national government
will provide compensating transfers to the relevant municipalities. The current
budget framework contains allocations for this purpose of R421,574,000 in
2006/07, R481,799,000 in 2007/08 and R542,024,000 in 2008/09. The removal of
this levy is effectively a tax relief amounting to R1,445 billion over the
three –year period.

* Provincial Revenue and allocations per Department

Madam Speaker, allow me to present departmental budget allocations, and
remind you of the wise words of Mahatma Gandhi, “The future depends on what we
do in the present”.

The budget we are tabling for the 2006/07 financial year is R12,906 billion,
which represents a 9,9% increase from the previous year's budget of R11,748
billion. The R12,906 billion is made of R11,227 billion of equitable share,
R1,207 billion of conditional grants, R322,722 million of own revenue and
R148,605 million from the provincial surpluses.

Vote 1: Office of the Premier

The Office of the Premier is allocated an amount of R148,779 million to
continue with the governance co-ordination role, and management of
international relations.

Vote 2: The Provincial Legislature

The Provincial Legislature is allocated an amount of R111,824 million in
order to fulfil its oversight functions. These functions include bringing
government closer to the people.

Vote 3: Department of Finance

The Department is allocated an amount of R133,741 million. The Department is
responsible for, among others, financial governance, which includes municipal
finance. As the MEC for Finance has been delegated 16 of the 21 municipalities
by the Minister of Finance, the focus in 2006/07 will be the overall
improvement of all the 16 municipalities in their financial management.

Vote 4: Department of Local Government and Housing

The Department of Local Government and Housing is allocated an amount of
R625,770 million, amongst others, to continue eradicating the bucket
system.

Vote 5: Department of Agriculture and Land Administration

The Department of Agriculture is allocated an amount of R631,736 million,
which will be used amongst others for the expansion of support for
agriculture.

Vote 6: Department of Economic Development and Planning

The Department of Economic Development and Planning is allocated an amount
of R200,257 million, which will be used for amongst others, boosting the
provincial tourism industry.

Vote 7: Department of Education

The Department of Education is allocated an amount of R6,218 billion which
will be used to reduce backlogs in school equipment, expand Grade R, teacher
development and human resource management (HRM) systems, extend new curriculum
to grades 10 - 12, provision of norms and standards for school funding, special
schools and expand information management systems, amongst others.

Vote 8: Department of Public Works

The Department of Public Works is allocated an amount of R295,193 million,
amongst others, to co-ordinate the EPWP (Expanded Public Works Programme)

Vote 9: Department of Safety and Security.

The Department of Safety and Security is allocated an amount of R41,724
million, to enhance the capacity of police stations to fight crime and ensure
that our communities are safe.

Vote 10: Health (Department of Health and Social Services)

The Health component of the Department of Health and Social Services is
allocated an amount of R2,912 billion, which will be used to enhance human
resource management, recruit health professionals, expand Emergency Medical
Services, implement new national ambulance service model, expand primary
healthcare, improve services in rural areas, modernise tertiary services,
amongst others.

Vote 11: Department of Roads and Transport

The Department of Roads and Transport is allocated an amount of R961,821
million, which will be used for amongst others, the rehabilitation and
maintenance of provincial roads.

Vote 12: Department of Culture, Sport and Recreation

The Department of Culture, Sport and Recreation is allocated an amount of
R93,604 million, for the construction of the Provincial Archive Centre, amongst
others.

Vote 13: Social Services (Department of Health and Social Services)

The Department is allocated an amount of R430,279 million, which will be
used for expanding welfare services, phase-in the implementation of the
Children's Bill, Older Persons Bill and the Child Justice Bill, and
contributing to the EPWP (health workers, community-based care and Early
Childhood Development).

Madam Speaker, Honourable Premier, an additional amount of R41, Mpumalanga
996 million will be made available to fund the construction of the Provincial
Archive Centre, repairs of critical bridges and for the 2010 FIFA World Cup
logistics. This amount will be appropriated in the Provincial Adjustment
Budget.

Madam Speaker, allow me to table the following documents for consideration
by this house:

1. The 2006 Policy Budget Speech;
2. 2006/07 Appropriation Bill;
3. 2006/07 Budget Statement;
4. 2006 Budget Made-Easy booklet.

Let me conclude by wishing the Honourable Premier, Members of the Executive
Council, Members of the Legislature, public servants especially those from my
department under the leadership of Mr Rabeng Tshukudu, and all our guests, a
very happy and rewarding 2006, while at the same time thanking them for their
support and continued confidence in me and the Department.

To my family, thank you for always giving me a shoulder to lean on. To our
learners in Mpumalanga, especially those in grade 12, the road to success has
already started. Almost half of the Provincial budget, 48,56% to be precise,
has been committed towards ensuring your success.

As we approach the municipal elections on the 1 March 2006, I wish to direct
the following words from Hendry Drummond, to our ever-toiling
politicians:
“You will find, as you look back upon your life,
That the moments that stands out,
Are the moments when you have done things for others?”

Finally Madam Speaker, 2006 marks the 30th anniversary of 16 June (Youth
Day), in the same breath, marking the 50th anniversary of Women's Day in 9
August – the day the women of South Africa began the process of bringing hope
to the people of this country, by marching to the Union Buildings in Pretoria,
against the pass laws.

It is the day when the women of South Africa said enough is enough; we have
seen our men-folk suffering.
We have seen them trying everything within their power to fight the injustices
of this country;
It is that time now, when everything else, seem to have failed.
That the strength of a woman needs to be felt;
That strength that passes every understanding;
The strength that continues to hold the knife at the sharp end;
The strength that is shuttle, but deep;
This is the very strength that was felt by Strydom,
Who in turn was forced to forget the door exit?
But rather found alternative way-out of his office

Madame Speaker, to me that was the cutting edge; the beginning of the “AGE
OF HOPE” – hence today I want us to commit ourselves to honour them through
making the objectives of this budget, a reality.
Let's honour those women;
Those who have passed on and those who are still with us
We have put a token on the member's tables,
That we hope will remind them that,
The struggle for women still continues.
Wa Thinta Abafazi wa Thinta Imbokodo. Wena Uzokufa.

Madame Speaker, I thank you.

Issued by: Department of Finance, Mpumalanga Provincial Government
22 February 2006
Source: Mpumalanga Provincial Government (http://www.mpumalanga.gov.za)