P Makgoe: Free State Prov Budget 2009/10

27 February 2009

Introduction
Honourable Speaker,
Madam Premier,
Members of the Provincial Executive Council,
Members of National Parliament,
Permanent delegates to the National Council of Provinces (NCOP),
Members of the Free State Legislature,
Marena, Dikgosi le Mafumahadi,
Honourable Mayors and Councillors,
Accounting Officers,
Representatives from National Treasury,
Members of the media,
Distinguished guests,
BoMme le BoNtate

This is a special and unique moment....

It is special and unique as the global financial system in 2008 experienced
its worst crisis since the great depression of the 1930s. In his first
inaugural address in 1981, one American President made a startling
announcement: "Government is not the solution to our problem. Government is the
problem!"

Twenty-nine years later, the world has rediscovered the lost truth. In a
rather unexpected and unorthodox response to the global financial crisis, the
International Monetary Fund (IMF) recommends three types of measures, namely
the need to repair the financial system by recapitalising banks and isolating
bad assets, secondly the use of monetary policy to increase demand and thirdly,
the need to implement fiscal stimulus. Central to these recommendations is the
role of government!

Honourable Speaker, I have to emphasise that he African National Congress
(ANC)-led government has been a fervent proponent of the view that "the
developmental state will play a central and strategic role in the economy."
This view represents the point of departure of the ANC Election Manifesto.

This moment is special and unique as it brings us to the cross road. The
cross road where we as a people must decide whether we are going to abandon the
struggle for a democratic, peaceful and non-racial South Africa or we are going
to defend it? This moment ushers in a new era of political and administrative
leadership!

Honourable Speaker, I am reminded of the tragedy that took place some
ninety-two years ago. On 21 February 1917, during World War I, transporting 823
members of the 5th Battalion to France, most of whom had never seen the sea
before this voyage and very few of them could swim, the SS Mendi sank and
drowned 616 South Africans, 607 of them black troops plus 30 British crew
members. Of note is that, regardless of clan, tribe, race and language, these
men faced death together as South Africans.

Prior to the sinking of the ship, it is reported that chaplain, Reverend
Isaac Dyobha, calmed the panicked men by raising his arms aloft and crying out
in a loud voice: "Be quite and calm my countrymen, for what is taking place now
is what you came here to do. We are all going to die, and that is what we came
for. Brothers, we are drilling the death drill. I, a Zulu, say here and now
that you are all my brothers, Xhosas, Swazis, Pondos, Sothos and all others,
let us die like warriors. We are the sons of Africa. Raise your war cries my
brothers, for though they made us leave our assegais back in the kraals, our
voices are left with our bodies."

Honourable Speaker and Deputy Speaker, what is evident from this is that
even at a defining moment like that, nothing could shake the unity,
determination and commitment of these South African heroes, to their call!
This, Honourable Speaker, is a lesson that all of us who are at the cross road,
the cross road of abject poverty and loss of self-esteem; the cross road of
illiteracy and unemployment, the cross road of crime and corruption, the cross
road of HIV and AIDS and perhaps the cross road of changes in political and
administrative office must learn and embrace!

The global financial and economic crisis represents yet another cross road,
the cross road of either drowning or emerging there from. As we continue to
budget for development, what is unique about today is that we are forced by
circumstances to find a balance between hope, service delivery and caution.

Our Socio-economic state

Honourable Speaker, looking back, we have seen democracy deepening. It has
been 15 years of nation-building, 15 years of advancing worker rights, 15 years
of a bitter struggle for gender equality, 15 years of peace and stability, 15
years of building the economy and 15 years of a struggle to push back the
frontiers of poverty!

Fourteen years ago, I stood before this house to table the first
post-apartheid budget of the Free State Province for nineteen votes, my first
budget speech ever as MEC for Finance. Given the extraordinarily huge, yet
legitimate expectations on the new government, I sounded a word of caution that
"the important thing was the need to strike a balance between the extension of
an affordable level of service and the need for belt-tightening in the public
sector."

Furthermore, I indicated then already that our developmental state "does not
mean that government spending can or should try to provide all good things to
all who have been disadvantaged in past. No government has this amount of
revenue at its disposal. What we should do, is to direct our spending into
those avenues that make a maximum contribution to increase the capacity and
capabilities of our people."

I'm happy to say that for the people of the Free State; indeed the past 15
years have been good. In my budget last year, I spent a lot of time detailing
this government's successes in service delivery, including the construction of
new schools, new clinics and hospitals, refurbished roads, affordable houses,
etc.

The rapid urbanisation of the province has brought with it some challenges,
thus reminding us all about the need to redirect public resources towards rural
development programmes and policies.

Honourable Speaker, without repeating the achievements that the Honourable
Premier so eloquently articulated in her State of the Province Address (SOPA)
last Wednesday, allow me to briefly outline some of the major outcomes of this
government's service delivery track record. As a result of the new schools that
this government has constructed, coupled with the increased employment of
educators in the public sector, there are now on average 27 learners per
educator in our public schooling system. For the past 15 years, the ANC-led
government has laid a solid foundation and we are beginning to see the rewards
of our commitment and investment in the education of the youths of this
province.

Whilst the stubborn increases in the HIV prevalence rate, the infant
mortality rate and tuberculosis (TB) are some of the indications of the
challenges that the province is confronted with, they also point to acute
shortages in the resources directed towards service delivery in the health
sector. This is a situation that requires us to put our heads together to find
a sustainable solution for.

Honourable Speaker, sometimes you hear reports that suggest that there are
now more poor people in the Free State than there were in 1994. However, those
of us coming from the townships and informal settlements do not have to try to
understand nor define poverty, because we see it every day, we leave with it
every day, we experience it every day! We see it through the mushrooming of
shacks, homelessness, unemployment, casualised labour, poor infrastructure and
lack of access to basic services. We understand poverty as some sort of
deprivation. Whilst this government is under no illusion about the scourge of
poverty facing our people, this should not stop us from celebrating the
victories in this regard.

It is a fact that more people have access to decent houses, electricity,
piped water and sanitation today than was the case in 1994. It is also true
that more children have access to education than it was the case before. More
people have access to health care services than it was the case before. Over
the past 15 years, we have seen a buoyant performance in the provincial
economy. Honourable Speaker I can go on and on about our victories over the
past 15 years.

Honourable Speaker, "one of the universe's great truths is that energy
follows intention!" Driven by its unwavering intentions, this government has,
over the past 15 years, used all its energy in making sure that the limited
public resources at its disposal are utilised to the maximum benefit of its
people. Over the past 15 years, this government has conceived and implemented
policies consistent with its intentions, guided of course by the knowledge and
principle that working together we could do more! And yes, it is a fact that
the quality of life of the people of the Free State has in general improved
over the past 15 years.

Our province's financial challenges

Honourable Speaker, our province has recently developed a chronic problem of
over-spending in the past couple of years. In the 2008/09 financial year, our
net financial position was exacerbated by adverse conditions on both sides of
the provincial budget, namely over-expenditure on the one side and
under-collection on the revenue side of the budget. In dealing with the
over-expenditure, vigilant and decisive leadership was vital. During this time,
ours was not a quest to be popular, but rather a sheer determination to restore
prudence in fiscal management.

In the process austerity measures were taken. This included the introduction
of cost-containment measures as well as the reprioritisation of departmental
budgets. As I speak, the projected over-expenditure of R1,7 billion reported in
July 2008 has significantly decreased to R616 million for 2008/09. In this
regard, I would like to extend a word of appreciation to the departments of
Education Health and Public Works for their co-operation in this regard.

Provincial Treasury has since issued a circular in January this year
reminding all Members of the Executive Council (MEC) and Accounting Officers of
Departments and Public Entities of their roles and responsibilities with
regards to financial management, as well as the steps that Provincial Treasury
will take in the future. I can assure you that we will not rest until fiscal
prudence returns to our province! On this note, let me welcome the newly
appointed CEO of the Provincial Treasury, Dr M. Eugene Mokeyane.

We look forward to benefiting from his immense experience both in the
private and public sector.

The way forward...tackling poverty, unemployment and inequality

BoMme le BoNtate, without timely, decisive and intelligent government
intervention, an economic downturn can become a vicious cycle with rising
unemployment and lost income leads to reduced consumer spending, which reduces
demand for goods and services, which leads companies to impose additional
production cutbacks and lay-offs, and so on. In times like these, a balanced
approach to budget balancing is essential. This includes spending cuts, drawing
down budget stabilisation funds, otherwise known as reserves or "rainy day
funds" and raising revenues. In the absence of reserves, the only two options
that we have as a province is firstly for departments to reprioritise their
budgets in such a way that service delivery will not be adversely affected, and
secondly to investigate, identify and implement innovative ways of increasing
the revenue from all our sources of funding.

The challenge facing South Africa and the Free State today is to deliver a
better quality of life for its entire people in a sustainable way. In
recognition of this, our efforts should be geared towards restoring the hopes
of the marginalised, vulnerable and poor. Equally so, we need to remain
vigilant about the efficient and effective use of the limited public resources
at our disposal. Hence, Honourable Speaker, I submit that budgeting for the
next three years required a careful balancing of hope, service delivery and
caution.

Revenue proposals for 2009/10 to 2011/12

Honourable Speaker, the budget that we table in this House today is
essentially a balanced budget.

Balanced because the current economic conditions as well as the challenges
that have been experienced by some departments, notably health, education and
public works and roads, have forced us to draw down on the reserves that we had
accumulated for the past financial years. These reserves amounted to a total of
R362,5 million, of which R70,4 million was allocated during the Adjustment
Budget for 2008/09, and the remainder is allocated as follows, R135,1 million
in 2009/10 and R157 million in 2010/11.

Honourable Speaker, in an attempt to afford members an idea of the size of
the forward estimated provincial fiscal envelope and the relative size of its
constituent components, let me turn my attention to the revenue proposals for
the next three years. Currently, the main components of the provincial fiscal
envelope are the equitable share, conditional grants and provincially raised
revenue.

In total, the provincial budget grows from R16,2 billion in 2008/09 to R18,4
billion in 2009/10, R20,4 billion in 2010/11 and R21,8 billion in 2011/12,
representing year-on-year nominal growths of 13,5 percent, 10,8 percent, and
7,2 percent, respectively. In real terms, these translate to growths of 8,3
percent, 5,6 percent and 2,5 percent, respectively, thus confirming the
increased strain on the fiscal resources of the province and the need for
prudence.

Starting with the equitable share, this source of revenue represents
approximately 77,4 percent of the province's funding envelope. During the 2007
and 2008 Budget Lekgotla, my department outlined the factors that influence the
revenue-sharing formula and further explained what is likely to happen going
forward. It became clear from those discussions that none of the factors used
to allocate the equitable share between all the nine provinces currently work
in our favour.

Honourable Speaker, it is for this reason that our province continues to get
the second smallest portion of the equitable share, a slice only bigger than
that of the Northern Cape. Added to this is the fact that the equitable share
is increasingly becoming more of a conditional source of revenue, with the
discretionary utilisation thereof dwindling by the day.

As a result of the downward revision of the country's economic growth
projections, nationally collected revenue for the current Medium Term
Expenditure Framework (MTEF) was reduced by R16 billion. Subsequently, the
province's share of the equitable share was reduced by just less than
half-a-billion over the MTEF, namely R123 million in 2009/10, R152 million in
2010/11 and R180 million in 2011/12.

Consequently, funding from this source of revenue grows from R12,7 billion
in 2008/09 to R14,2 billion in 2009/10, R15,5 billion in 2010/11 and R16,5
billion in 2011/12, representing year-on-year nominal increases of 11,9
percent, 8,6 percent, and 6,5 percent respectively. In real terms, these
translate to increases of 6,7 percent, 3,4 percent and 1,8 percent,
respectively. Over the MTEF, the relative contribution of this source of
revenue decreases from 78,4 percent to 75,4 percent.

Honourable Speaker, real increases in the latter years of the MTEF clearly
show that if the economic conditions do not change for the better, then
government would have to find innovative ways of delivering more and better
quality services with fewer resources.

Turning to the second main source of revenue for the province, Conditional
Grants, funding from this source of revenue grows from R2,9 billion in 2008/09
to R3,6 billion in 2009/10, R4,2 billion in 2010/11 and R4,7 billion in
2011/12, representing year-on-year nominal increases of 24 percent, 19,1
percent, and 10 percent respectively. In real terms, these translate to
increases of 18,8 percent, 13,9 percent and 5,3 percent, respectively. Over the
MTEF, the relative contribution of this source of revenue increases from 17,6
percent to 19,3 percent. The strong growth in this source of revenue is the
result of both substantial increases in the allocations to the province in
terms of the Hospital Revitalisation Grant to the Department of Health (DoH),
National School Nutrition Programme to the Department of Education, Integrated
Housing and Human settlement Development Grant to the Department of Local
Government and Housing, and a doubling in the allocation of the Mass Sport
Participation Grant to the Department of Sport, Arts and Culture, as well as
three new grants, namely the Expanded Public Works Programme (EPWP) Incentive
Grant to the Department of Public Works (DPW), the Public Transport Operations
Grant to the Department of Community Safety and Transport as well as the
Ilima/Letsema Projects Grant to the Department of Agriculture (DoA).

Then, the provincially collected revenue

Honourable Speaker, revenue collected from within the province by various
departments is expected to increase from R594 million in 2008/09 to R616
million in 2009/10, R654 million in 2010/11 and R698 million in 2011/12,
representing year-on-year nominal increases of 3,7 percent, 5,9 percent and 6,9
percent, respectively. In real terms, these translate to a decrease of 1,5
percent in 2009/10 and marginal increases of 0,8 percent and 2,2 percent,
respectively.

Over the MTEF, the relative contribution of this source of revenue decreases
from 3,7 percent to 3,2 percent. Of the total own revenue collected within the
province, motor vehicle licenses contribute on average 42 percent. In this
regard, the estimated revenue from this source is expected to increase from
R256 million in 2009/10, to R271 million in 2010/11 and R296 million in
2011/12, thus representing growth of 3,4 percent, 6,1 percent and 9,2 percent
in the three respective years of the MTEF. The Department of Public Safety and
Transport will outline the factors behind these increases at an appropriate
time.

The second biggest component of total own revenue collected within the
province is interest. Interest contributes on average 12 percent. The estimated
revenue from this source is expected to increase from R75 million in 2009/10,
to R78 million in 2010/11 and R82 million in 2011/12, thus representing growth
of 41,4 percent from the projected outcome for 2008/09, 4,3 percent and five
percent in the outer years of the MTEF. Similarly, the Provincial Treasury will
outline its plans in this regard.

At 10,5 percent, patient fees make the third largest contribution to total
own revenue collected within the province. The estimated revenue from this
source is expected to increase from R67 million in 2009/10, to R69 million in
2010/11 and R71 million in 2011/12, thus representing negative growth of 0,3
percent in 2009/10, marginal increases of 3,6 percent and 2,3 percent in the
outer years of the MTEF.

The fourth biggest component of total own revenue collected within the
province is Casino Taxes. These contribute on average 6,9 percent. The
estimated revenue from this source is expected to increase from R42 million in
2009/10, to R46 million in 2010/11 and R49 million in 2011/12, thus
representing growth of 25 percent, 7,6 percent and 7,9 percent in the three
respective years of the MTEF.

The sale of game and other things is the fifth biggest component of total
own revenue collected within the province, and contributes on average 3,8
percent. The estimated revenue from this source is expected to decrease from
R26 million in 2008/09 to R22 million in 2009/10, then increases to R28 million
in 2010/11 and again drop to R26 million in 2011/12, thus representing negative
growth of 14 percent in 2009/10, positive growth of 27,6 percent in 2010/11 and
negative growth of 6,6 percent in 2011/12. The Department of Tourism,
Environmental and Economic Affairs will in due course share with the Free State
community details of these revenue proposals.

Honourable Speaker, the reason I took the liberty to deliberate on
provincial own source revenue is because it is important for Members of the
Executive Council and Accounting Officers to understand that at the moment,
revenue projected to be collected from this source is appropriated prior to its
collection. As a result, under-collection in this regard creates a serious
imbalance in the provincial fiscal framework. Honourable Speaker, R2 million of
revenue not collected, for whatever reason, deprives those that are homeless of
thirty-six Reconstruction and Development Programme (RDP) houses in a year. R2
million of revenue not collected deprives fifty learners of decent transport to
and from school for the whole year.

Whilst we appreciate the work being done by departments in this regard, the
challenges on revenue budgeting in the province are immense. As a result, we
remain firmly convinced that the revenue that can be raised within the province
is currently grossly understated. In this regard, Provincial Treasury will
continue to work with all departments to ensure that this shortcoming is
addressed a process which will culminate in the development of a Provincial
Revenue Strategy.

Budgeting for development, balancing hope, service delivery and caution

Honourable Speaker, the progress that the ANC-led government has made over
the past 15 years demonstrates that, indeed, we can! At the same time, the
remaining backlogs remind us that more still needs to be done. Together, these
facts continue to give people of the Free State hope that tomorrow will be
better than today. On the other hand, the limited public resources available,
aggravated in part by unfavourable global economic conditions, prescribe limits
to what can be done and equally so, what can be realistically achieved. It is
this fine balance between hope, service delivery and caution that we will have
to contend with, more so for the next three years.

Unlike in the past, it is now accepted that the reduction of social
inequalities and poverty is also a legitimate concern of government and the
goal of economic policy. Notwithstanding the nobility of allocations to
departments, these have always been contested. On the one hand, the recent
crisis in the Departments of Health, Education and Public Works has been
reportedly due to under-allocation, whilst on the other hand, the departments
that under-spent have never argued that they were being over-funded.

In a paper entitled "Allocation formula in Budgeting", Patricia Moore from
the New Jersey's Kean University, argues that "a good allocation formula [or
tool] should be free from perverse manipulations, open to review, and should
distribute resources equitably across governmental units. Moreover, it should
be understandable, equitable, adequate, and predictable. It should also be
reasonable in reporting requirements, fiscally accountable, and politically
acceptable." We believe that the manner in which we allocate the budget in this
province is not very far from international best-practices.

Allocations for 2009/10-2011/12

Honourable Speaker, a blueprint for minimising the impact of the global
financial crisis on South Africa was finalised last Thursday by government,
business and labour. Whilst new challenges have forced us to reprioritise, this
government has made a firm commitment to at least maintain levels of
infrastructure investment.

Consistent with the publicly held view that infrastructure spending will
greatly assist in cushioning the impact of the global financial crisis, the
budget for infrastructure in the province increases to R2,303 billion in
2009/10, a growth of 6,3 percent, R2,590 billion in 2010/11, growth of 12,4
percent and 2 850 billion in 2011/12, representing growth of 10 percent.

Social and Human Development cluster

This cluster remains one of the most important areas for government to
deliver services to its people and comprises of the departments of Education,
Health, Social Development, Sport Arts and Culture as well as the Housing
programme from the Department of Local Government and Housing.

Honourable Speaker, it is a fact that social and human development needs to
be stimulated to ensure a bright and secure future for all citizens of the Free
State. The proposed allocations for this area of government operations amounts
to a total of R14 599 billion in 2009/10 which represents an increase of 13
percent from the adjusted allocation of 2008/09. Hereafter it grows by 12,48
percent to R16,420 billion and 7,12 percent to R17,590 billion in 2010/11 and
2011/12 respectively. Expenditure in support of this objective of the Free
State Growth and Development Strategy would therefore represent 79,45 percent,
80,93 percent and 80,95 percent over the three respective years of the
MTEF.

Honourable Speaker, it is our wish that the resources allocated to this
cluster will be used efficiently and effectively so as to avoid the many crisis
that we have had to live through during the 2008/09 fiscal year. It is worth
noting that the increases to departments in this cluster are well above
inflation, thus providing scope for these departments to do more. Detailed
proposed allocations for the specific departments whose operations directly
support this priority area are as follows:

Department of Education

The Department of Education will receive an allocation of R7,383 billion in
2009/10, which is an increase of 9,6 percent from the adjusted budget of R6,721
billion in 2008/09. The budget further increases by 10 percent to R8,124
billion and with 7,5 percent to R8,734 billion respectively in 2010/11 and
2011/12.

The following priorities will be funded in 2009/10 financial year:

* The implementation of the no fee policy to quintile 1 to 3 schools, which
will benefit about 79 percent of learners in public ordinary schools.
* Provision of Learner Teacher Support Materials (LTSM) in line with the new
curriculum statement.
* Inclusive and special education – the department identified three schools to
be converted into full service schools in the upcoming financial year in order
to ensure the full functioning of special schools as centres for learning and
development.
* Nutrition programme, the department will still continue to enhance learning
capacity through school feeding.
* Provision of full personnel expenditure which includes the improvement in
conditions of service (ICS), pay progression and incentives targeted for
school-based educators.
* School infrastructure delivery, the completion of 11 new schools and the
upgrading of four schools with additional facilities is envisaged for November
2009. As mentioned in the last year's budget speech, this initiative will
assist in terms of eliminating platooning schools in the province.

Department of Health

Strong growth is proposed in the allocations for this department. The budget
of the department grows by 16,3 percent to R5,197 billion in 2009/10, 13,2
percent to R5,883 billion in 2010/11 and 7,0 percent to R6,298 billion in
2011/12.

The proposed allocations will cater for the following priorities:

* General expansion and strengthening of health services to stabilise the
public health systems.
* Provision has been made for reduction in infant and child mortality,
* The allocation also makes provision for the carry-through effects of
Occupation Specific Dispensation (OSD) over the MTEF period.
* TB Direct Observed Treatment Support (DOT) will continue to cater for
patients on TB treatment.
* Further additional emergency medical vehicles will be procured to reduce the
shortage of emergency medical service (EMS) vehicles in the province.
* Funds have been allocated for maintenance of all facilities to address major
backlogs such as sewerage reticulation, replacement and refurbishment of
boilers, upgrading of lifts and general maintenance of all buildings.

Department of Social Development

In recognising the compelling needs to prioritise the social development as
one of the key social transformation instruments of our democratic government,
an amount of R683 million or 22,9 percent more than the 2008/09 adjusted budget
is allocated to the department. The allocation to this department increases
further with 7,5 percent and 9,2 percent respectively over the two outer years
of the MTEF.

This will increase this department's allocation to R734,975 million and
R802,435 million respectively in 2010/11 and 2011/12.

The proposed allocations cater for the following key welfare programmes,
namely:

* The expansion of the social development component of the Early Childhood
Development (ECD) programme. This includes an increase in subsidy levels from
R9 per child per day to R12 per day in 2009/10 and the take-on of an additional
4 000 children per year over the MTEF period, thus extending the positive
impact of this programme to some 48,558 children by the end of this MTEF
period,
* the upgrading of secure care facilities for children in conflict with the
law
* the implementation of the masupatsela (youth pioneer) as a national
priority
* increase the capacity for monitoring and evaluation for welfare
services
* support for services to residential care through an increase in subsidies
from r1 750 per bed per month to r1 925
* to support and increase the capacity of the npo's to ensure key deliverable
are met and service delivery is rendered in areas where they are needed
* to provide and marshal funding support and necessary resources to implement
the poverty alleviation strategy.

Integrated housing and human settlement

The allocation to the Department of Local Government and Housing to cater
specifically for housing delivery and the promotion of sustainable human
settlements will be R1,021 billion in 2009/10, R1,361 billion in 2010/11 and
R1,441 billion in 2011/12. This represents growth of 20,1 percent, 33,4 percent
and 5,8 percent respectively over the MTEF. This huge growth is mainly
attributed to growth of 21,7 percent, 35,1 percent and 6,11 percent over the
three years of the MTEF on the Integrated Housing and Human Settlement
Development Conditional Grant.

Some of the biggest challenges that are facing the province in terms of
housing delivery are:
* the development of a provincial multi year housing delivery plan
* identification of suitable and well located land for housing
development
* improved management of the housing subsidy system, working together we can do
more!

Department of Sport, Arts and Culture

The department is continuing with its momentum to revive and raise the
profile of sport, arts and culture in the province in collaboration with
various role players and is making strides in doing so.

The proposed budget for this department is R313,440 million in 2009/10, a
decrease of 2,4 percent from 2008/09, R316,658 million in 2010/11, increasing
by 1,02 percent and R314,300 million in 2011/12 financial year, a slight
decrease of 0,74 percent. The reduction is due to the infrastructure budget
being cut as most of the infrastructure projects are coming to an end as the
world cup is approaching.

The increase in the conditional grant by R16 million (R9,388 million for
library services and an additional R6,236 million for mass sport participation,
club development and school sport) is providing the department with more
project opportunities and challenges.

The infrastructure enhancement funds of R74,740 million will be utilised to
focus mainly on the remaining legacy projects for the purpose of 2010 FIFA
World Cup-events in the Free State.

Economic Growth, Employment and Investment Cluster

This cluster comprises of the Department of Agriculture, The Department of
Tourism, Environmental and Economic Affairs, The Department of Public Works as
well as the Roads and Public Transport components of the Department of
Community Safety and Transport.

The proposed allocations for this area of government operations amounts to a
total of R2,885 billion in 2009/10 which represents an increase of 17,9 percent
from the adjusted allocation of 2008/09. Hereafter it grows by 1,4 percent to
R2,927 billion and 7,5 percent to R3,145 billion in 2010/11 and 2011/12
respectively. Expenditure in support of this objective of the Free State Growth
and Development Strategy would therefore represent 15,7 percent, 14,4 percent
and 14,5 percent over the three respective years of the MTEF. This includes the
impact of two new conditional grants totalling an amount of R174,8 million to
this area of work. The new grants were however only allocated in the 2009/10
financial year and allocations for the two outer years of the MTEF must still
be confirmed by National Treasury.

Department of Agriculture

The proposed allocation for this department is R400,515 million in 2009/10,
R434,501 million in 2010/11 and R486,888 million in 2011/12. This represents
growth of 7,5 percent, 8,5 percent and 12,1 percent respectively over the three
years of the MTEF. The provincial specific social and economic functions and
expanded support for agriculture will be implemented through land care, the
Comprehensive Agricultural Support Programme (CASP), the Infrastructure
Enhancement Allocation and the new Ilima/Letsema Projects Grant. The
Agricultural Disaster Management Grant will assist the department to support
farmers who have been affected by the occurrence of the recent runaway veld
fires in the province. The new Ilima/Letsema projects grant is aimed at
assisting vulnerable farming communities to achieve an increase in agricultural
production.

Some of the projects which will be funded trough this grant includes:
* Vredefort/Parys Commonage: Fezile Dabi
* Water project: Thabo Mofutsanyane
* Lejweleputswa Poultry project: Lejweleputswa
* Boitumelo vineyard: Xhariep
* Motheo livestock project: Motheo

Public Works

Honourable Speaker, in an effort to contribute towards sustained economic
growth, reduce unemployment and increase investment in the province, the
department contributes toward achieving the goals of this priority by promoting
economic growth and development through contractor development programmes as
well as infrastructure programmes. Other efforts include the accelerated
delivery of infrastructure through fast tracking projects in an attempt to save
on the total cost of delivery, co-ordinating and massification of EPWP in the
province amongst all departments and spheres of government and by actively
supporting the utilisation of the National Youth Services (NYS) programme.

Speaker, the 2008/09 financial year has also seen the full transfer of the
Public Transport and Traffic Management and Roads functions from the Department
of Public Works and Roads to the Department of Community Safety and Transport.
This will therefore leave the Department of Public Works as a stand alone
department from the beginning of the 2009/10 financial year.

The proposed allocation for the new Department of Public Works is R785,915
million or a projected increase of 10,3 percent in 2009/10. The allocation
further grows to R810,140 million or 3,1 percent and R866,834 or 7,0 percent in
the two outer years of the MTEF. The slow growth in the 2010/11 financial year
can be attributed to the EPWP Incentive Grant to the amount of R23,008 million
which was only allocated for 2009/10 and for which allocations for the
remaining years of the MTEF still need to be finalised by National
Treasury.

Roads and Public Transport Programmes

Honourable Speaker, as mentioned earlier, the Roads and Public Transport
budgets will in future form part of the newly established Department of
Community Safety and Transport and the proposed allocation for these functions
are as follows: The proposed allocation for the 2009/10 financial year for
these programmes is R1,370 billion, this amount includes the R151,805 million
for the new Transport Operators Conditional Grant which include bus-subsidies.
The growth to these programmes is therefore 33,1 percent when the new Grant is
included and 18,2 percent if the impact of the Grant is excluded from the
allocation. The allocation for 2010/11 (excluding the impact of the new Grant)
grows with 9,6 percent to an amount of R1,336 billion. The allocation further
grows to R1,426 billion or 6,7 percent in the 2011/12 financial year.

Department of Tourism, Environmental and Economic Affairs

The allocation to this department increases with 8,2 percent to R328,730
million in 2009/10 and it grows further with 5,4 percent to R346,532 in 2010/11
and a further 5,6 percent to R365,971 in 2011/12. The department will transfer
R59,787 million, R62,019 million and R65,347 million respectively over the
three years of the MTEF to support the operations of public entities. The
processes for the finalisation of the listing of The Free State Liquor
Authority and the Free State Investment Promotion Agency as public entities
should be completed in the 2009/10 financial year.

The following are some of the major events which are planned by this
department for the 2009/10 financial year:
* Game Auction in April 2009
* Cleanest Municipality Awards
* Business Awards and Business Week
* Opening of Phillip Sanders

Governance and Administration cluster

Honourable Speaker, in order to get a more informed view of the funding
envelope dedicated towards ensuring good governance and transparency and
effective oversight and monitoring in ensuring a better live for all Free
Staters, it is important to also include the proposed allocations to the
Provincial Legislature here. This is done for the sake of enabling external
assessment of this province's programmes and initiatives to improve the
effectiveness of governance and administration throughout all provincial
operations.

In line with this functional classification, aggregate allocations to
departments and operations that directly support the objective of improved
governance and administration, grows with 2,9 percent to R636,161 million in
2009/10, with 6,2 percent to R675,618 million in 2010/11 and a further 5,4
percent to R612,321 in 2011/12, accounting for an average of 3,4 percent of
total provincial expenditure over the forthcoming MTEF period. The 2009/10
increase do not pose any risk for the province as an amount of R30 million was
allocated to the Legislature in the 2008/09 adjustment budget as a once-off
payment to fund political parties in the forthcoming elections. If the impact
thereof is removed, the increase comes to 8,1 percent.

Proposed allocations to departments whose operations service this strategic
objective are as follows:

Department of the Premier

The proposed allocation to the department of the Premier for 2009/10 will be
R133,904 million, which is an increase of 7,6 percent from adjusted budget of
R124,506 million in 2008/09, furthermore the budget for this department will
grow with 5,9 percent to R141,809 million and five percent to R148,826 million
respectively in 2010/11 and 2011/12.

The main focus of this department in the upcoming financial year will
be:
* strengthening co-ordination and integration of service delivery between all
spheres of the government through the cluster system
* communicating with communities through strategic awareness campaigns and
media liaison
* providing strategic direction and advice with regard to organisational
development, information technology (it) and pro-active legal services
* continue to strengthen the implementation of the Free State growth and
development Strategy.

Provincial Legislature

The legislative authority processing of bills and legislation), and ensuring
that organs of state in the province are accountable to the people are
fundamental to the responsibility of the legislature. The legislature needs to
be allocated more resources to execute its mandate in terms of the Constitution
of the Republic of South Africa.

Therefore, the increase for both 2010/11 and 2011/12 are proposed at 5,5
percent and 5,4 percent respectively. The allocation is therefore proposed at
R121,497 million in 2009/10, R128,142 million in 2010/11 and R 135,001 million
in 2011/12.

Provincial Treasury

Proposed allocations to Provincial Treasury are as follows: R152,389 million
in 2009/10 or a growth of eight percent, R162,290 million in the 2010/11
financial year and R170,972 million in the 2011/12 financial year which
represents a growth rate of 6,5 percent and 5,4 percent respectively for the
two outer years of the MTEF.

The Provincial Treasury continues to focus on its core functions and
responsibilities emanating from the Public Finance Management Act and also
performs oversight and support functions to be executed in respect of
municipalities in terms of the Municipal Finance Management Act. It will
continue to do so in a manner that:
* facilitates effective and efficient management of provincial assets,
liabilities and financial management systems
* promotes accountability and transparency through substantive reflection of
financial activities of the province, as well as effective compliance with
prevailing financial norms and standards
* promotes the use of government service delivery as a catalyst for enhanced
economic growth and development and social equity.

Non-housing programmes of the Department of Local Government and Housing

The non-housing programmes of the Department of Local Government and
Housing, provides an ideal vehicle to render assistance in fostering effective
governance and administration in local and district municipalities. It is thus
proposed that the funding envelope created for operations that can support the
attainment of this objective be set at R228,371 million in 2009/10, R243,377
million in 2010/11 and R257,522 million in 2011/12.

This constitutes growth of 4,1 percent, 6,6 percent and 5,8 percent in the
three years of the MTEF. The low growth in the 2009/10 financial year is
because of a decline in the allocation for traditional leaders. This allocation
declines in 2009/10 from the adjusted budget in 2008/09 because of the once-off
purchase and costs related to the housing needs for traditional leadership in
the province in the 2008/09 financial year.

Justice, Crime Prevention and Security cluster

The Department of Community Safety and Transport is responsible for
overseeing the maintenance of effective justice and crime prevention. The
cluster therefore only consists of this department excluding of course the
roads and transport components which was already mentioned at the Economic
Growth, Employment and Investment cluster.

Honourable Speaker, for this area of work I propose that the following
amounts be allocated to the department; R253,849 million or an increase of 13,9
percent in 2009/10, R266,998 million or an increase of 5,2 percent in 2010/11
and R281,246 million or an increase of 5,3 percent in 2011/12.

Some of the focus areas which this cluster will be focusing on in this MTEF
are:
* social crime prevention
* rural community safety
* the continuation of our successes related to Arrive Alive.

Conclusion

Honourable Speaker, Deputy Speaker, Madame Premier and Honourable Members of
this House, despite the severe conditions under which this budget was drawn, we
have a reason to celebrate!

Throughout the past 15 years, we have had to manoeuvre carefully around
obstacles before us, at times, where possible, bull-dose our way through these.
During all these years, we have learnt a lot of lessons, but more importantly,
we have conquered! Let me remind this House that our province was the first to
pass its own Exchequer Act in 1994!

Honourable Speaker, as I conclude, the budget that we table here today
sustains the gains and the progress that we have made in terms of the Free
State Growth and Development Strategy. Furthermore, this budget is not only a
classy act of finding a balance between hope, service delivery and caution, but
is equally designed to adequately and comprehensively deal with the challenges
that we face today. The budget we table before this House today demonstrates
our commitment to the priority areas for the next five years, namely creation
of decent work and sustainable livelihoods; education, health, rural
development, food security and land reform and the fight against crime and
corruption.

I take this opportunity to thank:

* Our glorious movement, the ANC, for we are what we are because of this
great movement of the South African people.
* All Members of the Provincial Executive Council, past and present, for
inputs, support and advice in laying the developmental path for the Free State
Province.
* Colleagues in the Provincial Legislature, both past and present, for the
insightful debates that ultimately shaped the nature of the work we do.
* My wife, Ivy, who has always been by my side during both easy and trying
times.
* My kids, Palesa, Maki and Junior and the rest of my extended family, for
their ongoing and unwavering support.
* Former Chief Executive Officer (CEO) of the Provincial Treasury, Donald
Barlow, for his immense contribution in the establishment of the Provincial
Treasury and for serving this department with distinction for twelve of his
youthful years.
* Dr M Eugene Mokeyane, for his inputs during the finalisation of this
incredibly difficult budget.
* All Treasury officials, especially those in my department, who always work
around the clock to ensure that the budgets we present to this house are not
only sound, but credible too and that the associated budget documents and
database are error-free.
* Your good self, Honourable Speaker, for convening the House.
* Representatives from the media, and other invited guests and everyone that
took time out to listen to this Speech.

Qetellong, ke rata ho leboha setjhaba sa Foreistata ka kakaretso ka monyetla
o se mphileng ona wa hore ke se sebeletse. Ho nna e bile dilemo tse
leshome-le-metso-e-mene tsa katleo, mme ke dumela hore le ho lona ho bile feela
joalo!

Dames en here, baie dankie, kea leboha!

Issued by: Free State Provincial Government
27 February 2009
Source: Free State Provincial Government (http://www.fs.gov.za)