P Makgoe: Free State Prov Budget speech 2007/08

28 February 2007

Introductory remarks

Honourable Speaker
Madame 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
Delegates from National Treasury
Distinguished guests
Members of the media
Invited learners
Ladies and gentlemen

Another year has rapidly passed and it is yet again my privilege to present
the Free State Appropriation Bill for 2007/08 and related provincial budget
statements for the 2007/08 - 2009/10 Medium Term Expenditure Framework (MTEF)
period to this House.

In order to build on just over a decade of redistributive service delivery
and strategies to reduce provincial levels of poverty, inequality and
unemployment it is important to ensure that public service delivery continues
to have the maximum impact on social and economic growth and development. To
ensure that this is successfully achieved over the coming years, public service
delivery should not only focus on the achievement of output goals as such but
also ensure that public service delivery always has the maximum beneficial
impact on the prevailing socio-economic conditions within which provincial
government services are delivered.

Mr Speaker, before I continue to briefly share with this House some of the
key considerations informing the 2007/08 - 2009/10 provincial budget strategy
allow me to briefly deal with the 2007/08 - 2009/10 provincial revenue
estimates and to give an indication of the components constituting the
provincial fiscal envelope.

2007/08 - 2009/10 provincial revenue estimates

Estimated provincial receipts for 2007/08 amounts to R13,413 billion which
represents an overall increase of some R1,735 billion or some 15 percent
compared to the 2006/07 voted main appropriation. It is furthermore estimated
that total receipts will grow with a further 13,2 percent in 2008/09 to R15,184
billion and a further 11,3 percent in the outer MTEF year to an amount of
R16,896 billion.

In respect of three-year MTEF period:

* Eighty percent of the provincial fiscal envelope will be made up of an
equitable provincial share of nationally collected revenue.

* 16,5 percent of total provincial receipts will be made up of conditional
grant allocations to the province from national departments.

* Revenue derived from own provincial resources of revenue accounts for the
remaining 3,5 percent of the fiscal envelope.

It is important to appreciate that although the relative contribution of own
revenue is shaded by significant increases in respect of conditional grants and
the provincial equitable share, this source of receipts also show significant
year-on-year growth of 17,8 percent in 2007/08, 7,2 percent in 2008/09 and a
further 6,8 percent in 2009/10 due to improvements in provincial revenue
collection by collecting departments and more effective co-ordination of such
efforts by the Provincial Treasury. In an effort to strengthen provincially
raised revenue sources, two own revenue workshops were held in this financial
year. Given the improvements in own revenue collected so far its clear that
these workshops have laid a solid foundation on which collecting departments
can build to strengthen their collection effort. Mr Speaker, growing this
source of revenue remains of paramount importance as it strengthens provincial
discretion in the utilisation of funds and creates more opportunities to
redress uniquely provincial specific challenges without compromising national
objectives.

Mr Speaker, from the aforementioned figures it is clear that growth in the
total provincial receipts over the whole forthcoming MTEF period is substantial
and significantly above expected inflation rates.

Allow me to now turn to some key considerations informing the 2007/08 -
2009/10 provincial MTEF budget strategy.

Building a broad front for development: some key considerations informing
the 2007/08 - 2009/10 provincial MTEF budget strategies:

Speaker, this government has always viewed the provincial budget as
representing much more than a mere statistical exercise in estimating expected
provincial revenue and expenditure for the coming financial years. On the
contrary, we view the budget as the single most important and appropriate
instrument that gives the most practical expression to the common development
aspirations of all the people of this province.

Mr Speaker, allow me to briefly indicate to this House that the strategy and
framework to guide provincial public resource allocation over the next MTEF
period is firstly informed by a socio-economic review of the state of affairs
in the province since 1996, so as to be able to identify and highlight key
provincial challenges that need to be addressed. Time does not allow me to
outline the provincial socio-economic outlook in any detail to this House, save
to indicate that such detailed review forms part of the provincial budget
statement.

It is, however, important to briefly outline the following salient features
of the province as these are informative in setting a strategy and rationale
for particular budget proposals:

* Though the Free State's population increased in absolute terms (from 2,7
million in 2001 to 2,9 million in 2005), the province's relative share of the
country's population decreased from 6,5 percent in 2001 to 6,3 percent in
2005.

* It is also important to note that no real change has been recorded between
2001 and 2005 with regard to the share of the economically active population
(i.e. those between 15 to 64 years) in the total provincial population, with
this share remaining around 64 percent over this period of time. At the same
time the decline in the agricultural and mining sectors of the province
resulted in the province losing people to other provinces, with Gauteng
accounting for some 46,9 percent of those who left the province between 1996
and 2001. In addition, the province also experienced somewhat erratic migration
trends between districts within the province as is evidenced by the fact that
no municipal district had consistently been the largest in terms of population
size between 1996 and 2005, with Motheo being the only district recording a
significant increase in its share of the provincial population over this period
of time.

* The Free State also had the fifth highest worker dependency ratio in the
country in 2003 at 2,0 meaning that in an average Free State household, each
worker supports two non-workers. The proportion of households with incomes
described as low also decreased form 57,73 percent in 1996 to 46,2 percent in
2006 whilst households with income described as very high, increased from 2,3
percent to 4,5 percent over the same period of time.

* With regard to the employment of labour in the province between the period
1996 to 2005:

a) unskilled labour declined from 39,7 percent to 25,3 percent

b) semi-skilled labour increased from 40,2 percent to 49,7 percent

c) skilled labour increased from 2,7 percent to 4,6 percent

d) highly skilled labour increased from 17,3 percent to 20,4 percent.

In postulating deductions from the aforementioned changes it is also
important to be cognisant that the so-called Human Development Index (HDI), a
composite index based on measures of life expectancy, literacy and income and
used broadly as a measure of people's ability to live long and healthy lives,
to communicate, to participate in the life of the community and to have
sufficient resources to make a decent living, increased from 0,53 to 0,55
between 1996 and 2004.

However, over the same period, income inequality also proportionately
increased (i.e. worsened) as shown by an increasing Gini coefficient (which
measures the distribution of income within an economy) from 0,59 to 0,64. What
is, maybe, of even more significance is that although the level of human
development in the Free State (at 0,55 in 2004) is significantly lower than the
national average of 0,59 for South Africa, the level of inequality prevailing
in the province in 2004 is exactly the same as the national average. It is no
exaggeration, Mr Speaker, when we say that the quality of life is improving in
our province.

With regard to the sectoral composition of the Free State, the relative
contributions of sectors are as follows (2004):

* finance, insurance and real estate: 16%
* general government: 13%
* wholesale and retail trade: 12%
* manufacturing: 11%
* community and social services: 11%
* mining and quarrying: 10%
* transport and storage: 9%
* agriculture and forestry: 4%
* electricity and water: 3%
* construction: 2%

An outstanding feature is that the tertiary sector contributed 67,6 percent
to the output of the provincial economy and employed 61,7 percent of all
workers in the Free State in 2005.

Mr Speaker, from this brief outline of some of the features of the
provincial socio-economic outlook the needed service delivery focus of
government becomes evident.

As the Free State Growth and Development Strategy (FSGDS) is the most
important planning instrument articulating the development agenda and strategic
policy direction of the provincial government, it was important to determine
the extent to which provincial departments hitherto gave effect to the
provincial policy priorities and to ascertain what would be necessary to ensure
that departmental budget proposals underpin key development priorities and
particular areas in need of focus emanating from the provincial socio-economic
outlook.

In addition, it was necessary to ensure that budget proposals serve the
goals and objectives of Vision 2014, is aligned to the strategic thrust of 8
January Statement, the national Cabinet Lekgotla, the Provincial Executive
Council Lekgotla and sector priorities reflected in the 2006 medium term budget
policy statement.

Based on a review and assessment of all of the aforementioned, the budget
strategy and rationale guiding expenditure proposals is thus one that seeks to
ensure meaningful provincial focus on:

* expanding progressive social services and investing in human
development
* accelerated economic growth, development, job creation and poverty
reduction
* modernising services and improving the effectiveness of governance and
administration
* promoting effective justice and crime prevention in preparation for 2010.

Expenditure proposals in respect of key provincial priorities

Mr Speaker, last year I indicated in the 2006/07 provincial budget speech
that it was the view of this government that the provincial cluster approach to
resource planning and service delivery integration and co-ordination, holds the
promise of a sharpened focus on macro provincial priorities that will move this
province towards the attainment of its broad development objectives as opposed
to the Department specific silo approaches to service delivery that may lead to
unnecessary duplication of efforts that might not always, meaningfully
contribute towards the attainment of broader provincial objectives.

In her State of the Province Address (SOPA), the Premier indicated that we
are pursuing the implementation of government's Programme of Action through the
cluster system as a mechanism of enhancing greater co-ordination and
integration of departments which pursue the same objectives of the Growth and
Development Strategy (GDS). I am happy to report that this approach is starting
to pay dividends as the cluster system has proved to be a very effective and
efficient system with regard to the:

* effective co-ordination and integration of cross cutting strategic
provincial issues

* implementation of projects and special focussed programmes emanating from
the alignment of the FSGDS, Integrated Development Plans (IDPs) of
municipalities and cross cutting projects in support of national initiatives
such as the Accelerated and Shared Growth Initiative for South Africa (AsgiSA),
JIPSA and the National Spatial Development Perspective (NSDP)

* effective redress of barriers and challenges in supporting lead
departments in co-ordinating province wide lead projects

* implementation of effective evaluation, strategic support and monitoring
in respect of the implementation, impact assessment and sustainability of key
projects implemented in the province by provincial departments, municipalities,
state-owned enterprises (SOEs), public entities and national departments
operating in the province as well as key private sector stakeholders and role
players operating in the province.

Given these positive developments and in line with the approach that this
government took in tabling the 2006/07 budget estimates, I will again
concentrate more closely on expenditure proposals in support of key provincial
priorities rather than line-by-line and item-by-item comparisons between
provincial departments and historical trends.

Expanding progressive social services and investing in human development

Mr Speaker, given the reality of a provincial status quo of a relatively
small population unevenly distributed between towns and regions growing at a
slow rate with high unemployment, skills shortages, low life expectancy and
high levels of poverty and inequality it goes without saying that education
would be one of the main preconditions for development given the fact that the
level of education like life expectancy constitutes some of the most important
contributors to the Human Development Index (HDI). Furthermore, life expectancy
as one of the most important indicators of quality of life is influenced mainly
by adequate living conditions, access to housing and basic services and access
to a health system capable of addressing common health needs.

In line with the aforementioned, funding in respect of this provincial
objective is largely focused on ensuring the achievement of decisive progress
towards the alleviation and ultimate eradication of poverty and meaningful
improvement in the ability of the poor to access government services
through:

* expansion and strengthening of education, health and social development
services

* enhanced support in respect of sport and cultural programmes

* enhanced support for housing delivery initiatives in the province.

Mr Speaker and honourable members of this House, it is the considered view
of this government that focus on these areas remain of paramount importance to
further enhance key achievements of recent pro-poor budgets as such expenditure
will further internalise benefits emanating from redistributive expenditure
programmes in social development, health, education, land restitution and
housing that will go a long way in ensuring that better public service
delivery, in the final analysis does in fact meet the actual social needs of
the poor through increasing the social wage.

Mr Speaker, the proposed allocation in respect of this priority area dealing
with social and human development amounts to R10,665 billion in 2007/08
wherafter it grows with 12 percent to R11,948 billion in 2008/09 and a further
12 percent to R13,390 billion in 2009/10.

As a proportion of the total provincial budget, expenditure in support of
this objective thus accounts for some 80 percent of the provincial budget over
the MTEF period.

Proposed allocations to specific departments that directly support this
priority area are as follows:

Department of Education

Education is key to sustaining long-term growth and reducing inequality. The
proposed allocation to the Department of Education amounts to R5,692 billion in
2007/08, representing an increase of some eight percent compared to the 2006/07
voted main budget.

It is proposed that the allocation to this Department grows with a further
11 percent to R6,331 billion in 2008/09 and a further 11 percent in 2009/10 to
grow to an amount of R7,013 billion in this last year of the MTEF period.

Mr Speaker, some of the critical matters that this budget will address
includes:

* implementation of no-fee schools in respect of the first two poorest
quintiles, through which more than 375 750 learners, comprising 57 percent of
the total learners in Public Ordinary Schools will benefit. This represent 22
per cent improvement from last year's 35 per cent. It is also important to note
that we are well above the national target of 40 per cent by 17 per cent.

* addressing the backlog with regard to social infrastructure thus
contributing towards poverty alleviation

* the strengthening of special schools

* the expansion of the Education Management Information System (EMIS)

* implementation of the National Curriculum Statement (NCS) in respect of
grades 7 to 10

* teacher development programmes through in-service training focused towards
improving learner reading, writing and numeracy as well as mathematics/science
and technology and managing the curriculum and Integrated Quality Management
Systems (IQMS)

* expanded allocations for Further Education and Training (FET)
recapitalisation, Adult Basic Education and Training (ABET), Learners with
Special Educational Needs (LSEN), special schools and Early Childhood
Development (ECD) pre-grade R and public school,

* the expansion of the nutrition scheme

* provision for the carry through costs of educators' pay progression,
employment of administrative staff components in schools, provides for the
scaling up of the remuneration packages of schools managers (principals), hire
teaching assistants especially in the foundation phase of the schooling system
and providing targeted incentives to teachers in critical subjects

* the improvement of human resources management systems

* e-education and Information and Communication Technologies (ICT) in
schools.

Mr Speaker, it is encouraging to note that R98,933 million has been
allocated for the construction of new schools, R88,250 million for the
rehabilitation and upgrading of school infrastructure, R8,500 million for
day-to-day recurrent maintenance and R47,927 million for other capital projects
for 2007/08 only with an amount of R839,334 million being dedicated to the
improvement of school infrastructure over the MTEF period. It is the view of
government that these allocations will go a long way in creating conducive
conditions for the improvement of the provincial matric pass rate.

Department of Health

The proposed allocation to Health is R3,643 billion in 2007/08 which
represents nominal year-on-year growth of 12 percent compared to the 2006/07
main voted budget. Hereafter, it grows with 11,5 percent to R4,061 billion in
2008/09 and a further 12 percent to R4,547 billion in 2009/10.

Main priorities to be addressed include:

* improved access to quality health services especially for rural
communities

* initiatives to address the backlog with regard to health
infrastructure

* the health remuneration review for nurses in 2007/08 and other health
professionals from 2008/09 onwards as part of government's efforts to attract
and retain health professionals in our province.

In addition, in support of the 2010 World Cup, the budget for Emergency
Medical Services (EMS) has been upwardly adjusted over the next three years
leading to the World Cup for the implementation of the national model with
particular focus in training programmes for EMS personnel, additional posts for
EMS programmes, improved ambulance communication system, vehicle replacement to
ensure that all ambulance and emergency vehicles are in a good condition to
deal with any eventualities that may occur during the World Cup. As a
consequence, the EMS programme allocation grows from R145,07 million in 2006/07
to R189,13 million in 2007/08 a 30 percent increase and further increases by 15
percent to R210,32 million in 2008/09 and R299,48 million or 24 percent
increase in 2009/10.

Mr Speaker, it is our considered view that the last mentioned increases will
improve medical rescue and ensure that patients are rapidly stabilised and
transported to get the necessary care within the shortest possible time. To
ensure integration and co-operation, the EMS unit of the Department of Health
is part of the provincial disaster management team. We will closely monitor
progress in this regard and ensure that the Department reprioritise within the
baseline for any budgetary shortfalls that may arise out of unforeseen
eventualities.

Furthermore, R48,750 million has been allocated for new construction of
clinics and hospitals, R93,579 million for rehabilitation and upgrading of
health infrastructure, a further R64,581 million for recurrent maintenance with
a total infrastructure budget of R206,910 million for 2007/08 only.
Construction of two new hospitals in Trompsburg and Ladybrand will start in the
new financial year. Mr Speaker, in line with the social objectives of the FSGDS
a total of R818,319 million will be spent on health infrastructure over the
MTEF period.

Department of Social Development

The Department of Social Development continue to play a pivotal role in
alleviating poverty through the use of developmental social services, to create
a socially cohesive and empowered Free State community through meeting the
human and social needs of poor and vulnerable communities, through
inter-sectoral and integrated developmental social services.

To fund these programmes the proposed allocation is R453,092 million (i.e.
an eight percent increase from the previous year) in 2007/08, growing by 16
percent to R525,629 million in 2008/09 and a further 22 percent to R642,970
million in 2009/10.

Additional funds will be utilised to appoint social workers and social
auxiliary workers to expand the services to the most vulnerable within our
society. This funding stream also takes cognisance of various pieces of new
legislation, namely the Older Persons Act No 13 of 2006, Child Justice Bill and
the Children's Bill.

Department of Sport, Arts and Culture

Mr Speaker, this Department remains of cardinal importance in uniting all
the people of the province through operations aimed at managing and promoting
sport and recreation development, promoting arts, culture and heritage
awareness as well as library and information services aimed at developing a
literate and informed community that can meaningfully participate in the civil
and economic life of a democratic information society.

This Department's allocation of R168,492 million in 2007/08 is 28 percent
higher than the 2006/07 budget whilst the allocations for the two outer years
will be R199,869 million and R231,401 million, given the proposed increases of
19 percent and 16 percent respectively.

Mr Speaker, adequate provision has now been made to strengthen support
functions related to sport as well as the full integration of Mmabana Cultural
Centre, Basotho Cultural Village and the Free State Science Sport Institute
into the Department.

Furthermore, the allocations include a new library services conditional
grant of R16,470 million in 2007/08, R30,927 million in 2008/09 and R42,639
million in 2009/10 to step up and institutionalise community library services
in currently under-served areas through recapitalising library infrastructure
and facilities.

Department of Local Government and Housing

The allocation to programme two of this Department to cater for housing
delivery will be R707,829 million, R830,881 million and R955,499 million
respectively which represents annual growth of 23 percent, 17 percent and 15
percent respectively over each of the MTEF years.

Allocations further enhance the development of a provincial multi-year
housing delivery plan, the improvement of the housing subsidy system and
repositioning to mobilise government social partners to consolidate hands-on
support to municipalities in line with the five-year local government strategic
agenda.

Accelerated economic growth, development, job creation and poverty
reduction

Mr Speaker, let me now deal with the objective of accelerated growth,
development and employment.

Speaker, casual observers, analysts, researchers and commentators all agree
that it is of the utmost importance that the provincial transformation agenda
needs to move beyond short term relief options to carefully crafted and well
informed long term sustainable definitive solutions.

To ensure that the recent improvements in economic growth is internalised
and benefits all, allocations in support of this objective aim to:

* promote investment in provincial infrastructure including the provincial
road network so as to strengthen and support economic initiatives in key
sectors such as agriculture, tourism, manufacturing and mining

* support efforts that seek to give effect to the 'massification' of the
Expanded Public Woks Programme (EPWP), so as to enable absorption and
capacitating of greater numbers of unemployed in labour intensive programmes.
Speaker, allow me to pause at this point to congratulate the Department of
Public Works, Roads and Transport on winning a national award for the best EPWP
project.

Mr Speaker, proposed allocations in respect of this priority area dealing
with accelerated growth, development and employment amount to R2,141 billion in
2007/08 which is some 40 percent higher than the previous year wherafter it
will grow with 18 percent to R2,533 billion in 2008/09 and a further nine
percent to R2,762 billion in 2009/10.

As a proportion of the total provincial budget, funding proposals in support
of this objective will thus account for 16 percent over the MTEF period
compared to 13 percent in 2006/07.

Specific allocations to respective departments directly supporting this
priority area are as follows:

Department of Tourism, Environmental and Economic Affairs

Proposals are that R262,727 million be allocated to this Department in the
first year of the MTEF period R294,836 million in the second year and R321,071
million in the outer year, resulting in nominal growth of 14 percent, 12
percent and 9 percent respectively over the three-year period.

Some key areas funded over the 2007/08 - 2009/10 MTEF period include:

* R7 million in 2007/08 for the establishment of the Free State Investment
Promotion Agency with a total MTEF allocation of R22,2 million for this
agency

* R36 million in 2007/08 for the upgrading and revitalization of public
tourism facilities in the province, with a total amount of R136,9 million to be
spent over the MTEF in this regard in preparation for accommodation needs for
the 2010 World Cup

* R5 million in 2007/08 for the establishment and operationalisation of the
Free State Liquor Authority growing to R17,2 million for the full MTEF
period

* R3,5 million in 2007/08 for the development of the Integrated Management
Plan of Vredefort Dome with the total MTEF allocation amounting to R11,6
million

* R11,2 million is allocated to Free State Tourism Authority for marketing
the province as a tourist destination with the total amount of R36,593 million
to be spent over the MTEF.

Department of Agriculture

Appropriation to this Department will grow by 22 percent in 2007/08 to
R273,444 million, 13 percent in 2008/09 to R308,669 million and 10 percent in
2009/10 to R339,882 million.

The 2007/08 - 2009/10 consolidated MTEF allocation of R921,995 million makes
provision for the following areas of development and support:

* R15 million for the appointment and operational costs of agricultural
technical staff is allocated in 2007/08 with the total amount to be spent over
the MTEF amounting to R66 million in this regard

* R10 million for upgrading of Glen and agricultural infrastructure projects
is allocated in 2007/08 with the total amount to be spent over the MTEF
amounting to R51,2 million

* R38,084 million is allocated in 2007/08 to facilitate the planning,
development and implementation of comprehensive agricultural supporting
programme projects with the total amount to be spent over the MTEF amounting to
R122 million

* an amount of R4,8 million is to be spent on food security in 2007/08, R5,5
million in 2008/09 and R13,4 million in the last year of the MTEF. An amount of
R24 million to be spent over the MTEF for the implementation of food
security

* LandCare conditional grant has been allocated R3,2 million in 2007/08,
R3,4 million in 2008/09 and R4,1 million in the last year of the MTEF to
co-ordinate and facilitate the planning, development and implementation of
LandCare projects.

Department of Public Works, Roads and Transport

Allocations to this Department to support its roads and public works
component (i.e. excluding traffic management which is a monitoring function)
are as follows, R1,444 billion in 2007/08 representing an increase of 54,3
percent compared to the previous year's allocation, growing by a further 20,9
percent to R1,746 billion in 2008/09 and 9,2 percent to R1,907 billion in
2009/10.

Mr Speaker, the huge increase of some 30 percent in the 2006/07 allocation
to the Department of Public Works, Roads and Transport raised more than just an
eyebrow in this House and many other quarters this time last year. Mr Speaker,
I had indicated that such changes in budgets are vitally necessary as the work
done by the Department of Public Works, Roads and Transport forms one of the
most important pillars in achieving the developmental objectives of the
FSGDS.

Indeed, Mr Speaker, today's significant further increases to the budget of
this Department over the next three years represents the financial
ramifications of a paradigm shift that fundamentally seek to link social and
economic development as a single holistic and long term sustainable solution to
reducing poverty, unemployment and deprivation.

Last year, I used the occasion of the 2006/07 budget speech to sound a
warning to infrastructure delivery departments that provincial infrastructure
delivery will remain one of the highest priorities of government over the
coming years.

Mr Speaker, I am happy to report that the Provincial Treasury with the full
support of the provincial Executive Council (ExCo) pulled out all the stops,
short of being ruthless to ensure that this province turned the tide and that
infrastructure delivery becomes a key catalyst in propelling this province on
the road to a higher growth trajectory.

In this regard several strategies and initiatives such as inter alia:

* the turnaround strategy of the Department of Public Works, Roads and
Transport to hasten the implementation of infrastructure projects that even
resulted in the successful completion of some infrastructure projects scheduled
for completion in 2007/08 within the 2006/07 financial year

* the introduction of the Infrastructure Delivery Improvement Programme
(IDIP) currently being rolled out in the departments of education, public
works, roads and transport and health

* the combined use of financial and non-financial performance evaluation and
assessment measures to track performance in the delivery of infrastructure
projects

* the institution by the Provincial Treasury of physical site visits to
verify and confirm that infrastructure projects are delivered within time and
at acceptable levels of quality

* the institution of quarterly review infrastructure meetings to assess
performance in the delivery of infrastructure and deal with emerging challenges
have started to pay dividends.

Mr Speaker, allow me to indicate that for the departments of health,
education and public works, roads and transport there are 168 construction and
maintenance projects currently being rolled out at a total cost of R962 million
of which 124 projects or 74 percent to a total value of R900,6 million are
already in implementation. Of this aggregate R407 million is in respect of
construction projects while R555 million relate to maintenance projects. This
significant spend on maintenance is informed by the need to redress the
existing backlog in rehabilitation by accelerating infrastructure
maintenance.

Mr Speaker, indications from the January 2007 provincial expenditure
outcomes, indicate that the Department of Public Works, Roads and Transport
have done sterling work in consultation with client departments and current
indications are that this province will exhaust all funds allocated for
infrastructure projects and that some over expenditure is likely due to the
early start and/or completion of projects initially scheduled for
implementation or completion in the 2007/08 financial year. Mr Speaker, let me
hastily add that such over-expenditure does not stem from bad planning and
implementation processes but actually signals that this province's
infrastructure delivery processes from planning, implementation to review and
reporting have significantly improved.

We believe that infrastructure provides a strong platform for accelerated
future growth, job creation and reduction of poverty. In the 2007 MTEF period
we will continue to robustly invest in infrastructure as follows:

* R1,281 billion expenditure on the construction of new buildings and
infrastructure such as building of new schools, clinics, hospitals and
roads

* R2,386 billion expenditure on the rehabilitation of existing provincial
infrastructure with specific focus on the upgrading of schools, clinics,
hospitals and roads

* R1,750 billion expenditure on recurrent day-to-day maintenance

* R149,116 million expenditure on special capital projects for the
departments of agriculture and tourism, environmental and economic affairs.

Mr Speaker, these proposals will bring the provincial spending on
infrastructure over the MTEF period to R5,570 billion.

Apart from the construction and upgrading of stadiums which has been
provided for by the national government, it is also necessary that the province
ensures that our road network supports and facilitates mobility within and
outside the province. It is for this reason that the Department of Public
Works, Roads and Transport has set aside an amount of R3,505 billion of the
2007 MTEF period for the construction and maintenance of strategic roads that
contributes to the successful hosting of the 2010 FIFA World Cup by Mangaung
Municipality. In order to enhance and improve effective public transport system
the Department will be upgrading and rehabilitating taxi ranks simultaneously
with the process of implementation of the taxi recapitalisation programmes.

Supporting role of non-housing programmes of the Department of Local
Government and Housing

Mr Speaker, from the aforementioned it is evident that the programmes of the
Department of Local Government and Housing that support local government
functions are equally important from both a support and lead planning and
oversight perspective in ensuring that planning and delivery of infrastructure
services at local government level supports the developmental objectives of the
FSGDS.

Proposed allocations in this regard (net of the Department's housing
programme) will grow by 19 percent to R170,199 million in 2007/08 wherafter it
will grow by a further eight percent and seven percent respectively to R183,936
million in 2008/09 and R196,342 million in 2009/10.

Modernising services and improving the effectiveness of governance and
administration

Mr Speaker, to continue to strengthen government's ability to deliver public
goods and services to the people of this province that do not only serve the
need of beneficiaries or end-users but that also ensure that broader
development objectives of government are served in the process, concerted
efforts are necessary to ensure transparency in planning and implementation and
that effective oversight and monitoring occurs to evaluate the impact of
services rendered on the lives of Free State citizens.

To ensure that the objective of continuous improvement in the effectives of
governance and administration is well served, the following allocations are
proposed in respect of departments whose operations directly supports this
objective:

Department of the Premier

R103 million is allocated in 2007/08 (13 percent increase), R110 million in
2008/09 (seven percent increase) and R118 million in 2009/10 (seven percent
increase).

Free State Provincial Legislature

The legislature receives R82 million in 2007/08 (11,0 percent increase), R88
million in 2008/09 (7,0 percent increase) and R94 million in 2009/10 (7,0
percent increase).

Free State Provincial Treasury

This Department receives R127 million in 2007/08 (six percent increase),
R136 million in 2008/09 (seven percent increase) and R146 million in 2009/10
(seven percent increase).

Key issues for attention over the MTEF period include assessment with regard
to how the gap between provincial socio-economic needs and the use of key
delivery indicators can assist in drawing more informed developmental budgets
as well as the strengthening of core functions related to the responsibilities
of the municipal finance management unit, supply chain management and
sustainable resource management.

Promoting effective justice and crime prevention in preparation for 2010

The Department of Public Safety, Security and Liaison and the traffic
management component of the Department of Public Works, Roads and Transport
have been tasked to perform and oversee functions that contribute towards
attaining the FSGDSs priority of ensuring that effective justice and crime
prevention programmes are maintained at all times to create a safe and secure
environment for all the people of the province.

During the 2007 SONA, the President made a commitment on behalf of
government that we must address the relationships between crime and poverty.
This budget seeks to concretise such relationship by ensuring that the
necessary monitoring and evaluation takes place to create a safe and secure
environment within which economic development can take effect.

The total allocations split between the two departments amount to R189,6
million in 2007/08 (which equals a 17 percent increase compared to the previous
year), a further R214,5 million in 2008/09 (i.e. an increase of 13 percent) and
an amount of R218,5 million in 2009/10.

In order to ensure that the relationship between crime and poverty is
addressed, the mass mobilisation of communities against crime as well as the
strengthening of oversight mechanisms and structures such as Community Police
Forums (CPFs) becomes important and crime prevention and road traffic
management will thus be strengthened through the following expenditures in
2007/08 namely:

* R6,1 million to oversee the effectiveness and efficiency of the South
African Police Services (SAPS) through the civilian oversight programme

* R7,2 million to co-ordinate social crime prevention activities to ensure
effective community policing forums

* R4,5 million for public education and crime awareness programme

* R155,7 million to ensure the effective management of road traffic and
safety in the province.

The 2007/08 – 2009/10 provincial budget proposals in retrospect: concluding
remarks

Mr Speaker, the Provincial Treasury together with the provincial ExCo went
to a detailed exercise to draw the 2007/08 - 2009/10 MTEF budget proposals
tabled here today. In going through this exercise, this government had but one
objective in mind to ensure that all budget proposals, in the final analysis,
supports the attainment of the objectives of the FSGDS.

This government is convinced that this exercise paid dividends as
allocations indeed reflect priorities. Mr Speaker, what remains is for line
departments to ensure that whatever minor deficiencies that might still exist,
is addressed to make sure that all departmental operations, programmes and
project, addresses provincial priorities.

Mr Speaker, allow me to re-commit the Provincial Treasury as a vigilant and
active partner in the process of ensuring that these appropriations are used
for the common good of all the people of this province, regardless of race,
cultural orientation or political affiliation. As a service Department to other
departments we believe that this budget has laid a strong enough foundation to
support future performance. Furthermore, the strong focus on infrastructure
delivery heralds the start of a new era for the development of this
province.

Mr Speaker, it goes without saying that the implementation of these
expenditure proposals offers exciting possibilities for the attainment of the
objectives of broad government policy. The Premier in her SOPA committed the
Free State provincial government to procure at least 70 percent from HDIs in
our province. Mr Speaker, let me quickly indicate that the operationalisation
of the provincial suppliers' management information system is now proceeding at
full thrust. Invitation of bids had been completed and the evaluation process
of bids is on track. The system will be fully operational in the first quarter
of the 2007/08 financial year and will afford this government the technical
means to evaluate progress in meeting this government's procurement target of
achieving 70 per cent spend with small, medium and micro enterprises (SMMEs)
especially those owned and operated by historically disadvantaged
individuals.

Mr Speaker, allow me to use this platform to raise one concern affecting all
the members of this House. Those of us with good memories will remind
themselves that in last year's budget speech, I indicated that although
legislature approval will ultimately only be in respect of the coming financial
year it remains important that debates of the House adequately focus on the
indicative outer year estimates, as these form the basis of the medium term
resource envelope to support the attainment of the FSGDS.

Mr Speaker, South Africa has developed multi-year budgets and a medium terms
expenditure framework analysis that is the envy of many developed countries. It
is therefore of critical importance that the oversight functions and
responsibilities of this House as the representatives of the voting public,
ensure that the lengthening of the resource planning horizon becomes a
manifested reality in this province as it will bring with it the added benefits
of enhancing the credibility of forward projections which will further
facilitate better co-ordination in service delivery between the different
spheres of government.

Mr Speaker, allow me to conclude by extending my gratitude to the Premier
and my colleagues in the provincial ExCo for their support in the finalisation
of this budget. I wish to thank,

* the Chairperson and members of the Finance Committee
* all members who gave valuable inputs in committees of the legislature
* my Department for their assistance in the preparation of this budget
* my family for their support.

Mr Speaker, all that remains for me to do is to table the 2007/08
Appropriation Bill and the 2007/08 - 2009/10 MTEF budget statements in this
House and wish members well in the debates that will ensue.

Mr Speaker as we are moving towards 2010 let those who have ears hear, let
those who have eyes see, opportunities are everywhere.

Let the good times roll!

I thank you!

Issued by: Provincial Treasury, Free State Provincial Government
28 February 2007