Two years ago, in my capacity as Minister of Finance and Economic Development, I addressed this audience on our plans to embark on a systematic process of evidence-based policy development under the rubric of iKapa Elihlumayo, our strategy to grow and to share the Cape. At that stage you could detect our determination to move the provincial government away from a reactive positioning to one that was far more forward-looking, strategic and intelligent. It was also based on partnership as we convened both the Growth and Development Summit and recreated the Provincial Development Council as a platform for social dialogue.
Last year, in my capacity as Premier, I could provide you with a comprehensive update on our progress with the strategies and the then, emergent, analysis and priorities. Each of the Cabinet Committees could also outline the way in which Cabinet was dealing with the challenges of the Province and the role expected of our social partners like business.
Furthermore, we could also locate our analyses and planning in the broader context of the Ten Year Review conducted by government and the country as a whole as we took stock of a decade of democracy. It was clear that we had much to be proud of as a young and vibrant democracy; but simultaneously, we also had to concede that despite major strides towards creating a better life for all our people, we were confronted with daunting challenges in the wake of large-scale unemployment and systematic poverty.
Today, we are even further down the track in positioning the state to deal effectively with the challenges facing us a s a nation but we need to act more urgently, more cohesively, and more creatively. Clearly, good macro economic management and stable democratic governance has proven to be decisive in positioning South Africa favourably in the global economy, but we need to build on it now to root out the challenges of particularly youth unemployment and poverty.
The evidence tells us that despite the addition of 194 000 new jobs between 2000 – 2003 in the Western Cape (4% p/a), unemployment expanded at an even faster rate manifested in a jump from 22.6% in 2000 to 26.1% in 2003. The majority of the unemployed are below 35 years of age and in the Western Cape almost 50% of the labour force younger than 24 year are unemployed.
These trends persist despite the fact that growth rates have broken through the 3-4% barrier. These trends also impose an unsustainable burden on the social expenditure of government. These trends persist despite the massive and most efficient transfer of Social Welfare benefits in the Province. Our world class health system with some of the most dedicated staff are buckling under shear patient loads, and we are simply battling to keep up with he demands for classrooms in education.
These trends furthermore lead us down a path of social disintegration because the dysfunctionality that characterise poor communities will not be contained in those communities forever. Considering these factors, the Ten Year Review, published by the Presidency, made it clear that as a developmental state we have to make some hard choices to catapult us beyond our current growth trajectory of 3 to 4 % and to pursue a higher and shared trajectory almost single-mindedly, in recognition that:
“there are hundreds of thousands of things that government does and should continue to do; but it should [also] define a new trajectory of growth and development, identify the key things required to attain it, and make strategic choices in expecting effort and allocating resources in order to blaze along this new trail.’ (MTSF 2004-2009)
It is against this political agreement that the President and national Cabinet issued and edict at their Lekgotla in July that the country will pull out all stops to get onto the 6%+ growth trajectory. This challenge was taken into our provincial Cabinet Lekgotla at the beginning of August. Our Lekgotla was dominated by one question: Do we have the appetite to govern? Put differently: do we have the will to make the necessary choices and trade offs in pursuit of this higher and shared growth?
The question arose from the consideration that, despite the need and desire for a 6% growth in GDP in the Western Cape, the medium-term projections reflect a drop in provincial growth levels from 4.3% in the current year, to 4% in 2006, and further 3.9 in 2007. In other words, it will require a massive effort to shift this reality. Thus, the primary challenge is: How can we act against this reality and move the trend line upwards, not just to 6%, but to growth levels of 7-8% in accordance with the true potential of our province?
This challenge and political focus reflects the national determination to pursue the following development agenda:
- First and foremost, grow the economy;
- Intervene decisively to promote the involvement of the marginalised in economic activity, including sustainable livelihoods;
- In as far as able-bodied South Africans are presently on welfare grants, these should be seen as only temporary measures that should diminish in proportion to the success of our economic interventions;
- The performance and capacity of the state, especially in relation to fighting crime and strengthening international relations, must improve dramatically in support of economic growth and social inclusion.
This national development agenda is premised on projections that if we remain on the current rate of 4%, average household incomes will double only in 25 years, unemployment will remain above 20% by 2014 and progress in reducing poverty will be slow. However, at 6%+ growth levels, average household incomes double in 15 years and unemployment will significantly fall whilst we would have succeeded in achieving the MDG target of halving poverty by 2014.
In other words, Mr Chairperson, we simply do not have a choice but to do everything in and beyond our power to raise the growth rate in a sustainable fashion beyond the elusive 6%. I can assure you, coming out of a our Provincial Lekgotla there was a unanimous agreement that we have the appetite to drive this agenda as hard as we need to so that we can succeed in moving our fate from the realm of the probable to the realm of the possible.
At this point you may ask, what is that we are going to do to act against reality and realize our full potential in a manner that also leads to more equitable outcomes?
The first task is to take the findings of our extensive scientific research into economic, social and environmental trends and squarely confront the unique challenges of the province. On the economic front, we must acknowledge that we have effectively become a predominantly tertiary economy in which manufacturing and agriculture have a vital role to play if they can adapt to the more competitive global environment.
My personal work in these sectors suggest that we have the know-how and determination to reposition these components of the economy to move up the value chain and carve out niche areas well suited to our regional mix of skills, know-how and design flair.
The second task is to identify and deal with the critical trade-offs we need to make in the short-, medium- and long-term. For example, if the majority of those who are unemployed do not complete secondary school, what is it that we can do to dramatically increase the rate of learner throughput in our schools?
Moreover, if most future jobs will be in the service sector, do we have a choice but to compel all secondary school learners to do maths and sciences, and ensure that each matriculant leaves school with basic entrepreneurial skills? And if this is a non-negotiable for our future economic survival, will we move limited money from other areas of spending to ensure we can draw in the requisite numbers of new teachers to realize this policy objective? And if we move resources away from other sectors will we be able to count on the support and defence of yourselves as we carry through implications of making tough choices for a more inclusive and sustainable future.
These merely illustrate that if we are going to exercise the appetite to govern it will mean hard acts of reprioritisation. Taking this admittedly harder path requires confidence that our partners in the business community, who share our desire for accelerated and shared growth, will stick with us and do their bit to soften the impact on society at large.
Today I ask you bluntly, do you share our appetite to take the challenges of this province by the scruff of the neck and do what is historically necessary to deliver a more prosperous future for all of us?
The third task involves identifying lead interventions – to complement a suite of national strategies – that can aggregate our investments at the most strategic (potential-rich) points in order to address key infrastructure deficiencies; but in a manner that also crowds in private investment.
The more we deliberated this issue as a Cabinet, we realized that the most fertile opportunity in this regard is the World Cup 2010. We are convinced that WC 2010 must become the over-riding metaphor for our shared determination to accelerate growth and foster inclusion. Chairperson, allow me to explore this example a little deeper.
The WC 2010 affords us an unprecedented opportunity to drive a tightly interwoven set of interventions to transform the heart of the Cape Flats, at the nexus of three major infrastructure projects:
- The Klipfontein Transport Corridor
- The Athlone Stadium upgrade to World Cup standards
- The N2 Gateway Human Settlements Project that will house 100 000 people by 2007.
Each of these major interventions – some already under construction – offers expansive opportunities for private sector participation. For example, we envision the Klipfontein Corridor will unlock a basket of opportunities for retail development, middle-and lower-income housing, and a general improvement in the quality of the larger public transport system.
Similarly, if properly designed, the Athlone Stadium upgrade can and must lead to a general growth in the value of surrounding property markets, directly contributing to the growth of productive assets amongst some of the poorest segments of our communities.
This likelihood will be further enhanced if we are able to bring the Klipfontein Corridor to fruition on time. Thus it is no accident that we have been punting Athlone Stadium as the primary venue. This World Cup is firstly about long-term developmental opportunities and secondarily about football, without diminishing the glory of the beautiful game.
Similarly, the N2 Gateway is being designed and built to ensure that economic opportunities are an integral part of everyday life in these communities, apart from the value that will be realized from these assets once they are transferred to the poor people who will benefit. The strategic spatial location of the N2 Gateway will provide us with an opportunity to truly stimulate secondary housing markets within poor neighbourhoods; laying the foundation for migrating the poor from the Second to the First economy.
These three major projects totaling a potential investment in the region of R3bn over medium-term, will merely be catalysts. For instance, if we proceed with these projects, it becomes imperative to launch an IDZ around the airport to increase the number of job opportunities for poor communities in that vicinity. Furthermore, it will serve as a spark to overhaul, rationalize and integrate the larger public transport system so that we can have a truly integrated, world class African system well before 2010. Such a transport system will greatly contribute to shop floor stability and productivity apart from the considerable positive environmental impacts.
These three projects will dramatically strengthen the foundation for the tourism industry in the province, especially if we approach Athlone-Langa, and its surrounds, as a gateway into the Cape Flats – the real Cape Town experience. A direct spin-off could be the foothold small black businesses have been yearning for in the tourism industry.
Furthermore, Chairperson, a plethora of other spin-offs are identifiable once construction and upgrade of infrastructure is prioritized as a major force for job creation and increasing the logistics and space efficiency of the economy:
- Building new housing and upgrading the built environment, particularly higher density rental and social options to give people access to social and economic opportunities, while preventing further urban sprawl.
- Leveraging publicly owned land at Youngsfield, Wingfield, Acacia Park and other smaller sites to catalyse social, economic and functional integration;
- Redevelopment and expansion of the Port and Cape Town, Paarden Island, and Culembourg linked to the Foreshore precinct, District 6, Woodstock and Salt River so as to dramatically improve the through-put of goods and passengers and create spaces for innovative, high value-added businesses (e.g. design intensive, ICT and business tourism).
The point here is not to suggest a specific list of projects but rather to capture the broader principle, that if we think in more concrete terms around lead projects for shared investment, we can dynamise the regional economy.
Chairperson, I could go on with many other project-based examples, such as a series of oil, gas and metal related projects in Saldanah Bay; or investment into road infrastructures to expand tourist routes to the Overberg region where the Continent finds its most southern point in Agulhus. However, I will leave the details to further engagements during our deliberations.
What I want to do now is ask some had questions in the wake of sketching our thinking and planning to accelerate growth in the province. We are clear as a team that unless you move in behind us to support this strategic approach, we will not maximize the potential that resides in our palms. Thus, we wonder, where are the entrepreneurs and risk takers that will use the agenda as a signal to pursue the prospects of a thriving Industrial Development Zone adjacent to the airport?
We wonder where are the visionaries that will put proposal on the table to transform the corridor from Culembourg into town into a design-rich mixed-use corridor for innovation and new lifestyles? We hold our breath to hear the investors that will follow the public sector into the Khayelitsha CBD to transform a largely government precinct and nascent retail mall into a truly buzzing commercial hub for the South-East region of the city.
We puzzle why it is that many in the business community allow fruitless debates around the film studio initiative as opposed to finding ways of really expanding this burgeoning sector.
In other words, Chairperson, we have the appetite to govern and do what is required to shift our reality into a more dynamic growth path, but we need to hear if our partner sin business can rise above their sectional interests and embrace the larger agenda for growth and transformation.
Chairperson, we have deliberately chosen to focus my input on behalf of the Cabinet on the central resolution of our recent Lekgotla; to demonstrate our appetite and determination to lead this province onto a higher growth path that also addresses fundamental questions of economic, social and spatial equity.
In the process I have not addressed that many ongoing delivery measures we are pursuing in the normal course of the exercising effective governance. For example, we have chosen not to make too much of a meal of the fact that we have increased the number of police from 12 000 in 2002 to 22 000 in 2005.
We have chosen to be modest about the fact that we run a health service that service 12 million people through the primary health-care system despite years of financial contraction in this domain. We have not trumpeted the successes of our investment attraction efforts over the course of the past few years despite a strong Rand. We have not made a song and dance of the fact that we have ensured that 75% of the procurement of the provincial government goes to HDIs; A jump from 48% just two years ago!
In other words, I can go on at length about the substantial delivery record of my team, but instead decided to focus on how we can, together, achieve a fundamental paradigm shift so that we can exploit every once of opportunity to get us onto the 7-8% growth trajectory within the next three years.
Lastly, Chairperson, on the eve of the floor crossing period I simply need to state that we are supremely confident about a continued ANC government. As you would have gathered, we are acting with the determination and focus of a team that is possessed. We trust that you will embrace this opportunity for partnership-based governance and look forward to a robust exchange in the interest of finding the clearest route to shared prosperity.
I thank you.
