J Mahlangu: Mpumalanga Prov Budget 2009/10

25 February 2009

Madam Speaker, Mrs YN Phosa
Honourable Premier, Mr T S P Makwetla
Honourable Deputy Speaker, Mr B J Nobunga
My predecessor, former MEC for Finance, Mrs Mmathulare Coleman
Colleagues in the Executive Council
Honourable members of the provincial legislature
Members of the House of Traditional Leaders
The Acting Director General, Mr J S Mgidi
The Head of the Department of Finance, Mr R S Tshukudu
Other Heads of departments
Religious leaders and representatives of the civil society
Comrades and friends
Members of the media
Distinguished guests
Ladies and gentlemen

There’s always sunshine, after a storm!
Madam Speaker, honourable members, when we tabled the Adjustment Budget
in
November last year, we were optimistic that the current global economic turmoil
shall come to pass. It is not yet over, as the Minister of Finance indicated
that “it is even more severe than anyone anticipated.” Despite all this, we
must take solace as a country and a province, that there’s always sunshine,
after a storm!

In the words of President Kgalema Motlanthe when delivering the State of the
Nation Address on 6 February 2009, and I quote: “Whatever economic storms may
pound our shores, whatever political uncertainties may visit our collective
consciousness in a transition our nation is in a good state. Ours is a journey
of hope and resilience.”

We are indeed on a journey of hope, which tomorrow will be better than
today, just as today is better than yesterday. It is forecast that output
growth will improve in 2010 and beyond.

Although the price of petrol went up once more earlier this month, the price
of diesel and paraffin continues to go down, bringing a sigh of relief to our
people. Further good news is that economists predict that inflation will
continue to go down to within the Reserve Bank’s three to 6% target range, as
early as the second quarter of this year. Our main challenge now, is to work
together to rebuild our economy, in order to continue to create descent job
opportunities, thereby addressing poverty.

When delivering the African National Congress (ANC’s) 8th January statement
on the occasion of the 97th anniversary of the organisation, ANC President,
comrade Jacob Zuma urged us to, and I quote: “We must protect our democracy and
continue to put the struggle for a better life for all South Africans at the
centre of our work. Despite major achievements since 1994, much still needs to
be done. Many households and communities remain trapped in poverty.
Unemployment remains stubbornly high.”

This call by the ANC President Madam Speaker cannot be over-emphasised.
We
acknowledge as government that indeed, much still needs to be done. However in
order to achieve all what we planned to do, we strongly believe that working
together we can do more.

Our struggle for the total emancipation of our people from the bondages of
poverty and hunger continues. We commit to speed up change and deliver services
in a more efficient and faster way. Our track record as the ANC led
administration, speaks for itself we can only do more, to continue to better
the lives of our people.

It is therefore against this background, that we commit our budget to
address the following priorities:
1. Creating decent work opportunities and sustainable livelihoods,
2. Providing food security for all (No one shall go hungry)
3. Harnessing rural, agricultural development and land reform
4. Working towards a free and compulsory education for all children (ensuring
that the doors of learning and culture are opened)
5. Providing quality health care for all.

As we look beyond the storm, it is imperative that we share with this August
house, what the prospects of the country and the province’s economy are for the
year ahead and beyond.

Outlook for the South African economy

Although South Africa has to a large extent escaped the direct impact of the
negative international economic developments during the course of 2008, the
indirect effects of the global recession on the country is already
noticeable.

The South African economy grew at an annualised 0,2% in the third quarter of
2008, recording the lowest quarterly economic growth in a decade. Economists
forecast that the economy will grow by 1,2% in 2009, down from more than 3% in
2008. The good news is that inflation has improved considerably since September
last year. Year on year Consumer Price Index (CPIX) inflation peaked at
13,6% in August 2008 and dropped to 10,3% in December 2008.

A downward trend of inflation is now firmly in place, which will impact
positively on interest rate cuts during 2009. This has been attributed to the
falling fuel prices, which fell significantly towards the end of last year.

Furthermore, the lower inflation and interest rates, coupled with the
country’s infrastructure programme of billions of Rands, are likely to help
boost growth this year. One of the major challenges facing the country is to
reduce the unemployment rate.

According to Statistics South Africa’s Quarterly Labour Force Survey, the
country’s unemployment official rate improved from 23,5% in the first quarter
of 2008 to 23,1% in the second quarter, but worsened slightly to 23,2% in the
third quarter.

Overall, employment opportunities declined by 0,5% or 74 000 job
opportunities in the third quarter of 2008. Our banking system remains sound,
thanks to the financial infrastructure and the effective regulatory framework
in place. However we must not be complacent, as according to Minister Manuel,
“it is incumbent on us to remain vigilant, to sharpen our regulatory oversight
and to work with banks to identify any potential problems early and deal with
them decisively.”

Economic prospects of the province

The economy of Mpumalanga is forecast to grow at a slower growth rate of
2,7% in 2009, which is 0,7% less compared to 2008. Our largest contributors to
the diverse provincial economy continues to be manufacturing at 19,4%, mining
(18,1%), community and government services (15,3%), trade and finance (13%
each).

It is forecast that the provincial economic growth will average 3,8% for the
period 2007 to 2012. During this period, the construction sector is expected to
grow at a rate of 7,5%, the manufacturing sector at 4,5% and the electricity
sector at 4%.

Madam Speaker, honourable members, we further believe that growth and
development in the province should be promoted and stimulated by increased
focus on the following, among others:
* Promoting the Mpumalanga flagship projects that should impact on
economic
growth and poverty reduction, and should also generate multipliers
through
linkages to the broader economy.
* Identifying and promoting viable and bankable projects in order to attract
private sector funding and foreign investment.
* Maximising and utilising the potential and competitive advantages of the
tourism industry.
* Maximising the agricultural potential of the province through the
manufacturing of bio-fuel and agro-processes.
*Expanding in the construction industry, especially in new infrastructure
developments.
*Promoting and developing small enterprises by establishing co-operatives in
the
growth sectors.
*Promoting growth in sectors like transportation and logistics, bulk water
and
sanitation infrastructure.

The Mpumalanga Growth Fund has been launched. The fund is a focused
government
intervention to unlock growth, in sectors and areas with potential for economic
growth. We can report that the fund has been registered with the High Court in
Pretoria as a legal entity, and that two fund trustees have been appointed. We
will soon appoint additional three trustees, who will represent the private
sector. We have, as the provincial government, already pledged a seed capital
of R200 million for the fund, and hope that the private sector will soon come
to the party, and support our commitment towards growing our economy. Our aim
is to attract at least R1 billion from the private sector.

Our major challenge as a province is to reduce poverty, which is still very
high. According to a credible source like global insight, Mpumalanga’s poverty
rate declined from 55,1% in 2001 to 51,1% (that is 1 878 421 poor people) in
2007. As government, we continue to provide a safety net to the poor, in the
form of social security grants to millions of our vulnerable people. Children,
orphans, the aged and people with disabilities remain our premier
beneficiaries.
As a further intervention, we have just recently launched the Anti-Poverty War
Room Campaign at Sikhwahlane in Nkomazi, with the sole purpose of fighting
poverty by providing a cushion for families living in hardship. Priority areas
for the roll out of the programme have been identified, and all poverty
stricken areas of the province will eventually be covered.

With regard to unemployment, Statistics South Africa’s Quarterly Labour
Force Survey indicates that the province’s unemployment rate stood at 23,2% in
the third quarter of 2008, which is the same as the national average. This is a
decrease from 23,7% in the first quarter, and 24,8% in the second quarter of
2008.

Our challenge now as the province, is to convert economic growth into
employment, especially jobs in the formal sector. It should be a priority to
increase the education and skills levels of the population and labour force, in
order to increase the employability of our citizens and to integrate them into
the economic mainstream.

Economic prospects for the districts

As far as the contribution of our districts to the province’s economic
growth is concerned, Nkangala continues to contribute the highest at 38,7%,
followed by Gert Sibande at 32% and Ehlanzeni 29,3%. Gert Sibande is very
prominent in the province with agriculture accounting for 41,3 % and
manufacturing 54,6%.

Nkangala is responsible for 65,8% of the provincial mining activities and
71,4% of electricity. The economy of Ehlanzeni is very diverse and dominating
in the construction (42,7%), trade (46,8%) and community and government
services
sector (45,2%). Nkangala District contributes 9,4% more to the provincial
economy than Ehlanzeni, while Gert Sibande contributes 2,7% more to the
provincial economy than Ehlanzeni. There is no doubt that Ehlanzeni District
has the potential to make a bigger contribution to the provincial economy than
it does at present. We say this because Ehlanzeni does not only have the
largest population, that is, 41,9% of the population of the province, but also
that it has a wider industrial base than the other two districts.

The three districts should therefore, take full advantage of the competitive
advantages they have in their respective sectors, in order to enable the
Mpumalanga Economic Growth Agency (MEGA), to formulate appropriate sector and
investor targeting strategies. This will not only stimulate economic growth,
but will also impact positively on poverty and unemployment reduction in the
province.

Budget Policy as we look beyond the storm

As indicated earlier, we cannot avoid the current global economic turmoil,
but we can adjust our policies in order to provide a cushion for our people,
who are facing serious economic hardship. It is therefore going to be
exceedingly significant that as a province, we take bold steps to improve cash
and budget management in order to reduce fiscal risks to the provincial budget.
In this regard, all departments are urged to monitor spending closely and
ensure that we remain within our budget, by taking specific cost curtailment
measures for the remainder of the financial year, and the coming financial
year. Such cost curtailment measures, should focus on areas of spending that
are non-core and would not adversely impact on pro-poor service delivery.

Departments are further urged to shift funds from non-core areas of
spending, towards programmes that meet the broader social and development
objectives of government. We should thus warn that the executive council will
take steps against any accounting officer, who does not adhere to these
measures, and who continues to incur irregular or unauthorised expenditure.

Technical adjustments to the Provincial Fiscal Framework Compensating for
inflationary pressure

In order to compensate for higher than projected inflation, an amount of
R1,2 billion will be allocated to the province over the Medium Term Expenditure
Framework (MTEF). An amount of R384,8 million will be allocated in the budget
for the 2009/10 financial year, R408,3 million in 2010/11 and R423,3 million in
2011/12. Other inflationary adjustments will be in education and health. For
learner and teacher support material, the Department of Education will receive
a special allocation of R10,050 million during the 2009/10 financial year,
R11,353 in 2010/11 and R6,876 million in 2011/12. The Department of Health will
receive the medical goods and services special allocation of R55,917 million
during 2009/10, R67,485 million in the 2010/11 and R40,871 million in the
2011/12 financial years.

Policy priorities funded through the equitable share

Given the tight fiscal framework, adjustments will be made mainly for
education and health. Further adjustments will also be made for roads
infrastructure, housing and agriculture.

Education

Madam Speaker, Honourable members, our investment in education by far
remains the highest. Currently education receives a lion’s share of our total
budget, being 44,7%.

Key funding priorities in education include:

* extending the no-fee schools policy to quintile three schools: Learners on
quintile three schools will be exempt from paying school fees from the 2010/11
financial year. An amount of R65,610 million has been provided for, during
2010/11 and R81,831 million during 2011/12 financial years to cater for this
priority
* reduction of teacher-learner ratio: An amount of R20,503 million has
been
provided for in the 2010/11 and R14,295 million in the 2011/12 financial
years budget, to appoint more educators in order to reduce the
teacher-learner
ratio in quintile one schools
* support of inclusive education: A special allocation of R24.549 million will
be added in the 2011/12 budget, to increase the number of places available
for
learners with disabilities in both mainstream and special schools.

Health services

In order to ensure that the public health service continues to meet the
health needs of society, the following currently funded priorities will be
expanded:
* Personnel costs and the OSD (Occupation Specific Dispensation) for
nurses
and doctors: In order to address budget overruns for nursing OSD for three
categories of health workers (nurses first, then doctors and specialists and
then related professionals), R90,414 million has been set aside in 2009/10,
R90,214 million in 2010/11 and R90,014 million in 2011/12 financial years. For
the phasing in of the OSD for doctors and specialists, R41,097 million has
been
provided in the 2009/10, R82,013 million in the 2010/11 and R122,746 million in
2011/12 financial years. However these funds will only be added to the baseline
of the Department of Health after finalisation of guidelines by the
National Department of Health, the National Treasury and the Department
of
Public Service and Administration.

* Additional funding to fight Tuberculosis (TB): Additional funding will
be
provided to fund teams to track down treatment defaulters (of extreme
drug
resistant and multi-drug resistant TB) and bring them back into
treatment.
The funding is also meant to strengthen TB programme teams at provincial
and district office level for better programme management, support and
monitoring. The following amounts are set aside for this purpose: R8,219
million in 2009/10, R14,352 million in 2010/11 and R15,793 million in
2011/12.

* Reduction of infant and child mortality rate: Funding amounting to
R32,878
million (2009/10), R49,208 million (2010/11) and R65,464 million (2011/12)
is
budgeted to introduce three new vaccines, which have proved effective in
reducing the infant and child mortality rate.

* General health capacity: With regard to general health care, additional
funding amounting to R114,563 million is set aside in the 2011/12
financial
year, to support various programmes intended to improve and support the
rendering of primary health care services.

The Department of Health is allocated 24,1% of the overall budget.

Social Development

Funding amounting to R40,915 million has been set aside in the 2011/12
financial year for Early Childhood Development.

Roads Maintenance

An amount of R40,915 million will be provided for in the 2011/12 financial
year to cater for provincial roads maintenance and other economic
functions.

Mpumalanga policy priorities funded through conditional grants.

Madam Speaker, honourable members, the baseline for conditional grants has
been
increased by 6% over the MTEF starting 2009/10 financial year, to cover
inflationary pressures. For the 2009/10 financial year, an amount of R3,1
billion is made available, R3,3 billion in 2010/11 and R3,9 billion in
2011/12.

In order to ensure the provision of more classrooms for Grade R, additional
funding amounting to R7,260 million is set aside in the 2010/11, and R29,041
million in the 2011/12 financial years.

The allocation on the infrastructure grant to the province is R771,968
million in 2009/10, R973,877 in 2010/11 and R1 billion, 126 million, and 770
thousand in 2011/12. The infrastructure allocation is made available in order
to recapitalise schools which form part of the public school system, including
upgrading school infrastructure, secure school facilities, increase maintenance
and installation, purchase of new books and equipment in libraries and
laboratories. Included in this allocations, are funds to support the
rehabilitation and maintenance of the coal haulage routes in the province. For
the 2009/10 financial year, R50 million is made available for this purpose,
R100 million in 2010/11 and R120 million in 2011/12.

The School Nutrition Programme will receive additional funding to ensure
that all quintile one to three primary school learners receive food every
school day, and to further progressively expand the programme to secondary
schools. The comprehensive HIV and AIDS grant will receive a boost over the
MTEF, in order to
meet the greater demands that arise due to the faster (Antiretroviral) ARV take
up rate.

The Ilima/Letsema Campaign Grant will receive R65 million over the MTEF to
help
farming communities falling within poor economic and disaster prone areas to
achieve an increase of 10 to 15% in agricultural production. In order to scale
up food security, the Comprehensive Agricultural Support Programme Grant will
increase by R70,892 million in 2009/10 financial year, R85,456 million in
2010/11 and R95,691 million in 2011/12.

An amount of R5,519 million is allocated to the overload control grant over
the MTEF, to fund initiatives that support the preservation of road
infrastructure by reducing overloading.

In order to accelerate the provision of houses, R795,447 million is provided
in 2009/10, R975,863 million in 2010/11 and R1 billion, R184 million and R400
thousand in 2011/12 for the Integrated Housing and Human Settlement Grant. Two
new conditional grants, namely the Expanded Public Works Programme (EPWP)
incentive grant and the public transport operations grant, will be introduced
from the 2009/10 financial year.

The EPWP incentive grant, which is aimed incentivising provinces to create
more jobs by meeting or exceeding the agreed targets, will be allocated R5,047
million, whereas the public transport operations grant will receive R370,650
million. The latter grant is aimed at improving monitoring and control of
expenditure related to bus subsidies and other transport operations.

Infrastructure delivery

Madam Speaker, the slow delivery of infrastructure in the province remains a
worrying factor.

The Department of Health continues to spend the Hospital Revitalisation
Grant at a snail pace, the consequence of which became the withholding of the
grant in terms of the Division of Revenue Act. Spending on this grant was at
28,28% as at end of December 2008 and currently R153 million has been withheld
by the national Department of Health.

The slow maintenance of health facilities is also a worrying factor, and in
order to speed it up, the Provincial Treasury and the Department of Public
Works are closely working with the Department of Health to replace obsolete
equipment under what we call, a quick win programme.

On the other hand, it is encouraging to see that infrastructure departments
have already submitted draft infrastructure plans for 2009/10 to the Provincial
Treasury, as per the Division of Revenue Act requirements. We will work hard to
assist these departments, to conclude the key programme management documents
before the beginning of the 2009/10 financial year, to allow early
implementation of the projects. Departments are also encouraged to put projects
under design on tender, and to further close those under retention.

Honourable members you will recall that, we contracted what we call
operational support teams in November 2006, to assist departments to improve
infrastructure delivery. We are currently in the process of withdrawing this
support, as their contract can not be extended to exceed three calendar years,
as per the supply chain management regulations. We are however working with
these teams, to come up with an exit strategy which will ensure that
departments are sufficiently capacitated by the time they exit.

Allocation per vote (Department)

Madam Speaker, honourable members, you will recall that we tabled the main
budget of R18 billion, R739 million, R619 thousand on 4 March 2008, which was
subsequently appropriated by this house.

However due to the financial constraints caused by the current negative
economic
downturn, the budget we are proposing this afternoon, has only increased by a
moderate of 20,3% or R3 billion, R805 million, R835 thousand.

I now have the honour to table the proposed budget for the 2009/10 financial
year to the house, as mandated by Chapter 13 of the Constitution of the
Republic of South Africa, Act 108 of 1996, and Chapter 4, Sections 26 and 27 of
the Public Finance Management Act, Act 1 of 1999, as amended by Act 29 of 1999,
per vote.

Vote One: Office of the Premier

It is proposed that the Office of the Premier receive a total amount of
R196,689 million to amongst others, fund the marketing and branding of the
province, to ensure corporate compliance, to fund provincial priorities, namely
the Executive Accelerated Capacity Development Programmes, and for 2010 World
Cup co-ordination.

Vote two: Mpumalanga Provincial Legislature

The Provincial Legislature is proposed to receive a total amount of R158,838
million to amongst others, continue with their oversight role, public
participation and education programmes and law making.

Vote three: Department of Finance

The Department of Finance will receive a budget totalling R236,397 million
to amongst others; ensure efficient allocation of resources, prudent financial
management, to render advice and support to provincial departments and
municipalities for enhanced service delivery.

Vote four: Local Government

The Department of Local Government will receive the proposed amount
totalling R414,775 million to amongst others, fund the implementation of the
Mpumalanga Traditional Leadership and Governance Act No 5 of 2006, construction
of the Disaster Management Centre, and Community Development Workers.

Vote five: Agriculture and Land Administration

It is proposed that the Department of Agriculture and Land Administration
receives a total amount of R799,635 million to amongst others, fund the
Comprehensive Agricultural Support Programme, Masibuyel’ Emasimini, and other
value adding projects.

Vote six: Economic Development and Planning

The Department of Economic Development and Planning will receive the
proposed total amount of R490,443 million to amongst others, fund the
provincial ICT (Information Communication and Technology) Strategy, the Small
Medium and Micro Enterprise (SMME) Strategy, and the identification of business
linkages for Project Kusile.

Vote seven: Education

The amount totalling R10,073 billion is proposed to be allocated to the
Department of Education to cater for amongst others, the appointment of
additional educators to reduce the teacher learner ratio, to ensure greater
access to places of education by increasing the number of places for learners
with disabilities.

Vote eight: Public Works

It is proposed that the Department of Public Works receive a total amount of
R476,899 million to amongst others, fund the Expanded Public Works Programme,
to fund the implementation of Government-wide Immovable Asset Management Act,
and to finalise the development of own and shared building maintenance
plan.

Vote eight: Safety and Security

The Department of Safety and Security will receive the proposed total amount
of R90,415 million to amongst others, cater for the integration of municipal
safety plans with departmental plans, the assessment of the impact of
departmental programmes on communities, and to fund Community Policing
Fora.

Vote nine: Health

The amount totalling R5,429 billion is proposed to be allocated to the
Department of Health to cater for amongst others, the reduction of infant and
child mortality rates, funding for teams to track TB treatment defaulters, and
to improve and support the rendering of primary health care services.

Vote 10: Roads and Transport

The Department of Roads and Transport will receive the proposed total amount
of R2,139 billion to amongst others, fund the construction and maintenance of
provincial roads infrastructure, the promotion of improved safety on the public
transport system, and the implementation of the National Road Traffic Act, Act
93 of 1996, as well as the coal haulage routes.

Vote 11: Culture, Sport and Recreation

In order to cater for the provision of libraries, cultural and archive
infrastructure, acceleration of sport and school sport mass participation, the
Department of Culture, Sport and Recreation is proposed to be allocated a total
amount of R278,696 million.

Vote 12: Social Development

The Department of Social Development is proposed to receive a total amount
of R792,343 million to amongst others, fund social welfare services,
development and research.

Vote 13: Housing

The amount totalling R968,727 million is proposed to be allocated to the
Department of Housing to cater for amongst others, the building of houses in
terms of the Breaking New Ground Strategy.

Total proposed budget: 2009/10

The total budget proposed to be appropriated by this house for the 2009/10
financial year, to fund the requirements of the province is R22 billion, 586
million, R551 thousand.

Tabling of the bill and the other budget document

Madam Speaker, I now have the honour of tabling the Mpumalanga appropriation
bill 2009, the 2009 Estimates of Provincial Expenditure, the 2009 provincial
budget speech, and the 2009 budget made easy booklet in terms of Chapter 4,
Section 27, sub-Section 3 of the Public Finance Management Act (PFMA), Act 1 of
1999, as amended by Act 29 of 1999.

Conclusion

Madam Speaker, honourable members, the road ahead might be thorny and steep,
but as optimists, we know that there’s always sunshine after a storm. As we
prepare for the sunshine, we must work together as government, civil society
and the private sector, to rebuild our economy in order to create more job
opportunities, and ensure a better life for all our people. There is no doubt
that the budget we are proposing to this august house this afternoon, will go a
long way in addressing priority areas determined by our caring government. We
have improved the lives of our people in the past 15 years, and commit to even
do more through this budget and beyond.

As I conclude Madam Speaker, allow me to pass my extreme appreciation to the
African National Congress and the people of Mpumalanga, for having given me an
opportunity to represent them since 1994, as a Member of Parliament, Chief Whip
of the Provincial Legislature, MEC for Local Government and Housing, MEC for
Culture, Sport and Recreation, and currently as MEC for Finance. It has been an
honour to be given such challenges by the ANC and the people of our province,
which were aimed at fulfilling our quest to provide a better life for all.

My appreciation also goes to the honourable Premier, Mr TSP Makwetla, for
his leadership and guidance in our work over the term of office of the current
administration. My high regard further goes to colleagues in the executive
council, who continue to support and give me strength to carry out my mandate
with zoom, zeal and zest.

To the members of the Budget and Finance Committee under the leadership of
the
Honourable Premier, thank you for continuing to shape the provincial fiscal
stance. I also would like to thank members of the Portfolio Committee on
Premier’s Office, Finance and Safety and Security under the chairpersonship of
honourable N S Mtsweni, for their leadership and continuing guidance. Tributes
further go to all members of the legislature, for your oversight role and
engagements over the past five years of the current administration.

To the Head of the Department of Finance, Mr Rabeng Tshukudu and his team,
thank you for managing our provincial coffers and ensuring compliance with
financial prescripts. My gratitude also goes to the support staff in my office
under the capable stewardship of Mr Sarel Mtsweni, who continues to make my
work easy. To my wife and children, I appreciate your perseverance and
understanding that I am a servant of our people. To our esteemed guests and the
members of the media, your presence is highly appreciated and thanks for
showing interest in your future.

Madam Speaker, honourable members, in the words of President Motlanthe,
indeed, “Ours is a journey of hope and resilience!”

I leave you with an inspiring quotation by American writer and motivator,
Grenville Kleiser, who said and I quote:
“Be grateful for the joy of life. Be glad for the privilege of work. Be
thankful
for the opportunity to give and serve. Good work is the great character
builder,
the sweetener of life, the maker of destiny. Let the spirit of your work be
right, and whether your task be great or small, you will then have the
satisfaction of knowing, it is worth while”.

Ngiyathokoza!

Issued by: Mpumalanga Provincial Government
25 February 2009
Source: Mpumalanga Provincial Government (http://www.mpumalanga.gov.za/)