Madam Speaker,
In a work called “Hope – new philosophies for change”, Belgian philosopher, Isabelle Stengers, in reply to the challenge of where hope exists for the world, says:
“I would say that the adventure of thinking is the adventure of hope. What I mean by ‘adventure’ is adventure as creative enterprise, in spite of the many reasons we have to despair. We have all the reasons we wish to despair – to think is to succeed in not following those reasons, one way or another. Thus I would say that hope is the difference between probability and possibility. If we follow probability there is no hope, just a calculated anticipation authorised by the world as it is. But to ‘think’ is to create possibility against probability… to try and feel and put into words a possibility for becoming.”
This budget, based as it is on the strategy of iKapa elihlumayo, is unapologetically a budget of hope because it refuses to succumb to despair. It operates in the realm of shaping our possibility, and avoids the hopeless fatalism of probability. It holds out a vision of what we are becoming as a nation, a people, a province. Put differently, and using the words of Nobel prizewinner, Ilya Prigogine: “We cannot predict the future, but we can prepare it.”
Despite this being an election year, this budget continues the task we set about two years ago of overcoming our past, and managing our current complexities, by galvanising our collective human agency in constructing the future. This is a hard task. Populism would have been easier. This is a long term project. Short term gains would have easily won the election.
Yet, somehow, Madam Speaker, the fact that the ANC nationally is assured of victory, and that in this Province the ANC/NNP Coalition government is set to continue after the 14th of April, has given us the confidence to proceed on the path to the future, to make the hard choices, and to continue to give shape to iKapa elihlumayo.
Our orientation to the future is the reason why we have once again invited our high school learners to participate in the budget, through the Budget Essay Competition. Some of them are here today, and their wisdom has found its way into our thinking and is reflected in this budget. Ntsikelelo Mthalane of Kwamfundu Secondary shares our sense of optimism and hope: “I am pleased to be part of this discussion and presentation about budgeting. My mouth is filled with laughter and my heart with joy, for our democratic government to incorporate our ideas, and value the future leaders of South Africa.”
Madam Speaker, these words are enough reason to believe in the future and to construct it.
Just over two years ago the newly-formed ANC/NNP government in this Province undertook, not to achieve everything our people require, for that would have been a false promise, but to work hard, to put our people before ourselves, and to create conditions of political stability so that a vision of a better life could emerge, so that a strategy to deliver the better life could be formulated, and so that a partnership could be formed with our social partners in order that we work together towards common goals which ultimately are proving more powerful than the differences and interests which ordinarily would have kept us apart. This budget is more of a collective effort because it is informed by the goals we set ourselves at the Growth and Development Summit last year.
This is in line with the very vision of iKapa elihlumayo. Over the last year we have been developing and refining our vision of iKapa elihlumayo, the essence of which is ‘hluma’ or the growth of different parts that benefit each other in a mutually advantageous manner. We have made significant progress in delivery while we have been developing the Elihlumayo vision into a strategy. But what are the ideas behind this strategy? I’m reminded of the challenge thrown out by Martin Luther King Jnr:
"Every man must decide whether he will walk in the creative light of altruism or the darkness of destructive selfishness. This is the judgement. Life's persistent and most urgent question is 'What are you doing for others?"
Halfway through the previous century John Maynard Keynes asked this question differently:
"Is there enough clear-sighted public spirit left to preserve the balanced and complicated organization by which we live? … Unless people are united by a common aim or moved by objective principles, each one’s hand will be against the rest and the unregulated pursuit of individual advantage may soon destroy the whole.”
At the opening of the World Summit on Sustainable Development in Johannesburg in 2002 President Mbeki gave our answer to this question: “We do not accept that human society should be constructed on the basis of a savage principle of the survival of the fittest”.
The people-centred society that President Mbeki referred to in his State of the Nation Speech is the essence of this ‘clear-sighted public spirit’. But what is a people-centered society? ‘n Menslike samelewing? Umanyano eluntwana?
iKapa elihlumayo translates this ‘public spirit’ into a vision of dignity, equity and prosperity – waardigheid, billikheid en welvaart. This vision has as its goal a society where the engine of the economy is entrepreneurship and hard work. Where all people of working age would have the opportunity to work. Where business people and their employees can equitably pick the well-deserved fruits of their labour. But where those who are vulnerable are not left to fend for themselves. Where the economy grows at the required levels, but sustainably, so that we allow our children even better opportunities than we are getting now. iKapa elihlumayo is about an inclusive society, a society where women are treated equally, where children are protected, where our youth are nurtured, where the aged are cared for, where the disabled are valued, where rural dwellers find development, and all race groups can declare that indeed this Province is a home for all.
Kunyanzelekile siphumelele ekwenzeni I-Ntshona Koloni ikhaya lomntu wonke apho kungekho Kafile okanye Qhakancu kwaye urhulumente osebenzela bonke abemi.
Over the last decade we have made significant strides towards the realization of a people-centered society. But internationally the very notion of development is not a simple, linear progression. Jan Nederveen Pieterse, Assoc. Professor of Sociology at the ISS, describes the dynamism of development as follows:
“There is a growing awareness of development as an asymptomatic rendezvous, an undertaking that like the horizon recedes and changes as we approach. Development by this understanding is intrinsically uncertain and contested: coherence is a moving target; concertation is never fully achieved; dialogue is ever imperfect; software is never complete; learning never ends.”
No one needs to remind us in this Province about the difficulties of trying to achieve our developmental goals in a context where we are integrated into a national and global economy. Our current GDPR is R160 billion. Of this Tourism, which largely depends on foreign visitors contributes about 22% and agricultural exports another 4%. One can just imagine the impact of the strengthening Rand on this and other export intensive sectors. The other major player in our provincial economy, namely the financial and property sector is equally hard hit by currency volatility and the interest rate adjustments that follow. It poses challenges to our unemployment figures which stand at 23,15% (i.e. about 500 000 unemployed people). On the other hand, the growth in the tertiary sector of the economy provides us with a skills challenge, especially when large proportions of our population have no tertiary qualifications. Parts of our economy have learnt to ride this tiger, but others like clothing, manufacturing and agriculture have found this more difficult. These are factors which shape our economic direction, and our success in managing these, in turn, impact on our ability to direct our broader development agenda.
These difficulties merely underscore our many achievements and make them all the more admirable. The past ten years have seen us make some significant quantitative gains. The table is therefore laid for us to build on these and extract the necessary qualitative advances so urgently required.
- The Education Department has had to accommodate a substantially increased number of learners in the schools system. Today we have almost one million learners in 1 462 schools and 6 colleges, taught by 24 828 teachers who collectively have matriculated almost 184 000 learners successfully. This is our reason for hope in meeting the skills challenge;
- The Department of Social Services and Poverty Alleviation plays a pivotal role in the protection, development and care of 50 000 young children in 566 early childhood development centers. This is significantly more than was the case 10 years ago and radically different to the race-based funding of before;
- Our Department of Economic Development and Tourism has implemented more than 120 projects related to mentorship, training and tender advice, and thereby assisted more than 4 000 potential and existing entrepreneurs since 1994. Library Business Corners were established within 31 rural libraries. Our Export Development Programme is also assisting 200 SMMEs to become export ready. By 2002, Western Cape companies exported products and services to the value of R50 billion. Today, exports sustain more than 600 000 jobs in the Western Cape;
- Over the six years from 1997-2002, investments into the Western Cape ranged from R13 billion to R17 billion per annum and has created more than 20 000 sustainable new direct jobs in competitive industries. Some notable investments over the past ten years include Trident Steel, Herdmans and the Lufthansa Call Centre;
- Since 1994 an estimated 7 million tourists have visited the Province spending over 57 million bed nights here. The Department pursued greater equity in the industry by assisting 30 communities to develop routes, signage, guesthouses, curio shops, local information offices, bush camps and cultural museums. Tourism support programmes also reached 450 entrepreneurs over this period;
- Agriculture has to date supported the settlement of 4 000 beneficiaries on farming land, and provided the attendant extension or advisory services;
- Despite the challenges faced, our Department of Housing facilitated the construction of 192 202 houses, 55 245 of which were built for women-headed households. Several low cost housing applications were also reviewed which included Masiphumelelo, Imizamo Yethu, Du Noon, Wesbank, Plettenberg Bay and George. The Department succeeded in securing land tenure for 40 000 low cost housing units in Khayelitsha, Ikapa, Mossel Bay, George, Oudtshoorn and Beaufort West;
- Social security remains the main poverty alleviation intervention by government. The Department succeeded in dramatically increasing the reach of social security benefits to eligible beneficiaries. In April 1994, there were 261 989 grants in payment. In April 1999 this increased to 319 459, while at the end of February 2004, 505 353 grants were in payment.
- It is worth noting that 10 years ago, a pension was worth R270 (with Africans only receiving it every 2nd month). April 2004 will see it rise to R740 per month. Ek is baie bly dat van die Provinsie se vooraanstaande senior burgers – almal oor ‘n honderd jaar oud - vandag saam met ons is om te getuig van hierdie dramatiese verbetering;
- In 1994 the Social Services department supported 117 social service organisations. By 2004 this has increased to 178 such organisations involved in a range of social capital building activities targeting the youth, families and the aged;
- Access to clinics is now a reality for all people throughout the Province. Since 1994, 45 new clinics have been built and 23 upgraded. Since 1994 a total of 24 secondary and tertiary health facilities have also been upgraded. Access to clinics has therefore improved greatly and now stands at about 4 visits per uninsured person per year;
- The prevention of mother–to-child HIV transmission programme is now available at all health facilities in the Province. Transmission rates have been reduced from a high of 25% to 12%;
- TB cure rates have increased from 65% to 74%;
- Under Bambanani, 3 500 volunteers, trained over the past few years, were deployed alongside the police to make a significant impact on crime, in addition to the reduction of motor vehicle accidents over the last festive season; Abaphuli-mthetho bafunda ukuhlonipha umthetho;
- Over the last ten years the Department of Environmental Affairs and Development Planning finalised 4 500 applications and 3 000 appeals for the change of land use rights, while 4 581 environmental applications were also processed, and
- The Western Cape has also made progress in awareness of the Proudly South African Campaign. Our province has the second largest number of accredited members constituting 25% of national members. Dit is gedeeltelik die resultaat van arbeid, regering en besigheid se harde stryd om werk in die klere bedryf te behou.
Despite the gains described above, we still have some way to go. Government services are clearly directed to the poor and marginalized, but the goals of iKapa elihlumayo are not only about cash grants and basic services. They are about sustainable development, critical to which is the creation of work. The building blocks and all our quantitative achievements must now be the platform from which we seek to make the qualitative shifts, especially those which help us overcome the inability of a large number of our population to share in the economic growth and job creation that some sectors of the provincial economy have enjoyed.
The November 2003 Statistics South Africa data show that the Western Cape economy grew in real terms by an average of 3% between 1995 and 2002. Initially it grew faster than the national economy, but its growth rate has been slowing over the last few years. While the Western Cape labour market has performed better than nationally, the labour market experience of African workers in the Western Cape remains decidedly worse when compared with others. Unemployment also has a very strong youth dimension with the youth making up 82% of all unemployment. Dit is hoekom Nadia van der Walt van Hoërskool Zwartberg sê: “As aansoek gedoen word is die eerste vereiste ondervinding… want as jy dit nie het nie, is dit taboe! Kyk waar skiet die werkloosheidsyfers die lug in”.
The result of these labour market trends is that the Gini coefficient for the Western Cape remains significantly higher than the national figure, which is itself one of the highest in the world.
Despite high matriculation pass rates there is a dramatic drop off in enrolment in the Western Cape after Grade 8. Only half of learners who enrol in Grade 1 reach Grade 12. The result is that only 1 in 4 people over 20 had a qualification of matric or higher by 2001.
With high levels of unemployment and high school dropouts, it is no surprise that the very fabric of our communities is under pressure. Crimes against persons and gender violence in particular are significantly higher in the Western Cape than in South Africa as a whole. The environmental conditions of children under 5 years in the Province are also not what it should be, with infant diarrhoea rates and our disproportional share of TB cases remaining unnecessarily high. And the Western Cape transport network shows signs of stress on a number of fronts such as harbour congestion, high levels of motor vehicle accidents, unsatisfactory public transport, and road maintenance backlog.
The Ten Year review prepared by the Presidency submitted the national development landscape to a similar review and concluded by defining four sets of development objectives for the next decade:
- To realize the social and developmental vision that draws on the RDP goals and the United Nations Millennium Declaration targets;
- To improve the performance of the State;
- To address the consequences of South Africa’s social transition, and
- To improve the regional environment and implementing the New Partnership for Africa’s Development.
The eight expenditure priorities proposed in the 2003 national MTBPS support these policy imperatives in the Ten Year Review by a specific focus on employment creation; supporting economic sector departments and sustained funding for the social sectors.
These socio-economic challenges and national policy priorities were the driving forces that marked a radical departure from previous spending priorities when the ANC/NNP government came to power 2 years ago. These spending priorities were however not yet fully developed when the Premier in his 2003 Opening of Provincial Parliament Address presented the iKapa elihlumayo approach. The commitment of government to respond to adverse socio-economic conditions was however already displayed in the strategic allocations for the Economic Stimulation Package and the General Education and Training and Further Education and Training interventions in the Education Department. A coherent and strategic approach behind these interventions still had to reach fruition and be consulted with the Province’s development partners in civil society, other spheres of government, labour and the business community. The period between March and December 2003 saw intensive consultation and negotiation both inside and outside of the provincial government to deliver a practical rendition of the iKapa elihlumayo vision.
External to the provincial government itself the process was marked by various summits, ‘berade’ and izimbizo. These external processes culminated in the Provincial Growth and Development Summit and the agreement between the social partners that followed from it. Parallel and linked to this external process were a series of events internal to the provincial government that was marked by a process that culminated in the Framework for the Development of the Western Cape 2004-2007. This framework outlined and developed the philosophy of iKapa elihlumayo. It presented the eight priority areas that embody elihlumayo and guided the Province’s fiscal commitments to the realisation of this vision as contained in the provincial Medium Term Budget Policy Statement 2004-2007.
Elihlumayo is not just a restatement of the development goals of the Province, but also marks a qualitative shift in the way that we do business. Each of the eight provincial priorities that constitute iKapa elihlumayo will be developed, driven and coordinated by a designated provincial department. The lead role of departments has an important strategic dimension because it also entails the coordination and incorporation of important actors that fall outside of their immediate sphere of influence. It is for this reason that many of the strategies and plans are being designed in partnership with other significant developmental partners and service providers in the Province.
This speaks of a more pro-active and interventionist approach to governance that has begun to mark governments across the world. This reverses the effective abdication of the state which started in the 60’s and 70’s and left all issues of distributive justice to the ‘invisible hand’ of the marketplace to resolve. The socio-economic conditions in our Province show that this ‘invisible hand’ is neither succeeding, nor did it reach out to blacks, women and people with disabilities. Clearly we require more interactive and innovative approaches to governance. This is also what society is asking of our government: not just to deliver services, but also to provide strategic leadership to society. Not just to spend taxpayer’s money, but also to find creative ways of obtaining the maximum return for every Rand spent. And this often means greater cooperation and coordination with other governments, civil society, labour and the private sector. It is for this reason that Cabinet designated five departments as lead agents to intensify and extend their sphere of activity.
While these departments have assumed a leadership role in realizing iKapa elihlumayo, the strategic nature of their leadership confirms that they will not be able to realize these goals by themselves. In his 2004 State of the Nation address, President Mbeki emphasized the need to work in partnership through:
- Seamless cooperation between government departments: In the Western Cape this is embodied in our system of lead departments, but also in the cluster system and number of issue specific fora such as the integrated Law Reform Project.
- Greater coordination between the three spheres of government: The acknowledgement of the common development challenges faced by provincial and local government has led to a series of interactions between provincial and local governments initiated by the Cooperative governance summit in November last year.
- Greater cooperation with the private sector: The co-operation that was established at the provincial Growth and Development Summit is being consolidated through a myriad of post-Summit processes. Input from the private sector has also been facilitated through the work of the Western Cape Investment Council, some of the members of which are in the chamber today.
In die Premier se 2004 Openingsrede vir die Parlement het hy die Provinsie se verbintenis bevestig tot ‘n begroting met ‘n diensleweringsfokus en fiskale dissipline, gepaste werkskeppings inisiatiewe, die bou van menslike en maatskaplike kapitaal, verhoogde infrastruktuur-belegging, verskerpte veiligheidsmaatreëls en hernude pogings tot grondhervorming en landelike en stedelike ontwikkeling.
The Premier also outlined the long-term strategic framework that will turn these goals into practical interventions. While some components of this framework have already borne fruit, this long-term strategy is essentially designed to guide government and its development partners over the next ten years to 2014.
While we have been developing the vision we have also been funding and delivering on key interventions. This reflects the long and short-term time-horizons of the Elihlumayo vision. While we are planning for the next 10 years of freedom, we are mindful of the immediate needs of our people because as Keynes said:
" this ‘long run’ is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again."
Kenqu Nandipha, a student at Luhlaza Secondary, sets a very high standard for us when he said that the “budget can help us overcome our challenges and turn them into opportunities”. Yet again the youth are warning us about the despair of probability, and encouraging us to embrace the hope of possibility. Let us see the possibilities of an R18,3 billion budget.
Relative to Budget 2003 total expenditure increases by R1,93 billion or 11.76% and by R4,8 billion over the MTEF period. This represents an augmentation of R669,7 million on the total baseline allocation for this year. The total budget therefore amounts to R18,3 billion in 2004/05, R19,7 billion in 2005/06 and R21,1 billion in 2006/07, signifying an anticipated spend of just over R59 billion by the Province over the next three years.
Actual cost inflation rates are however higher than CPIX inflation due to, amongst others, the impact of improvements in conditions of service of government employees at 9,5% in 2003/04, 7% in 2004/05, 6% in 2005/06 and 6% in 2006/07.
The Western Cape is therefore again facing a tight budget having to balance rising cost pressures from mainly Health and Social Security against other key deliverables.
The augmented allocations from the national fiscus over MTEF 2004 are much lower than in the previous year mainly due to sluggish performance of the economy, unsettled global economic and political conditions and the appreciation of the Rand, all of which have contributed to lower than expected inflows into government coffers.
Looking forward, the intended review of the national financing formula for the Budget 2005, the diminishing liquidity in the Province’s bank accounts and the resultant reduction in investment revenue, as well as from declining interest rates will pose additional challenges. As a result the Budget 2004 is tight with limited maneuverability and not without risks, although much less so than Budget 2003.
Despite these continued revenue and expenditure pressures, Budget 2004 builds broadly on the policy priorities laid down in Budget 2003, but with a further consolidation and deepening of these priorities. As members will know by now, we have organised the vision of iKapa elihlumayo around 8 strategies to be developed and implemented by designated lead departments. These eight priorities were derived from an overview of development challenges in the province, thorough assessments of provincial service delivery and extensive deliberations through the process that culminated in the Provincial Growth and Development Summit.
Through this Budget we illustrate our commitment to the eight strategies of iKapa elihlumayo as well as the delivery targets agreed to at the Provincial Growth and Development Summit. I will now turn to each of these eight strategies:
The 2003 Socio-Economic Review showed that one of the key determinants of poverty and inequality is the variable educational attainments of people in the Province. That is why Brandon Philips of Bonteheuwel High told us that:
‘No child can look into the future when he or she is illiterate. With a quality education system in place you will build an intelligent and responsible youth. Education is also a vital component in the foundation phase of character building.’
In addition to its contribution to building social capital, a key goal of the human resource development strategy will therefore be to ensure that the entire labour force has appropriate skills to enter the labour market, on the one hand, and to facilitate additional investment by supplying enterprises with appropriately skilled workers on the other hand.
Over the MTEF the Province will allocate a total of R17.4 billion or around 29.4% of its overall expenditure plans for the build-up of human capital. This allocation will increase by almost R1 billion from its 2003/04 level of R5.1 billion to R6.1 billion by 2006/07. Through its leadership role the Department of Education is the main driver of this strategy. It therefore gets the bulk of this allocation, increasing by R373 million year on year and R987 million from 2003/04 to 2006/07. The Department’s two key priorities are to ensure that:
- General Education and Training in our schools provide the bedrock for all human resource development in the Province, and
- Further Education and Training in schools and FET colleges provides further opportunities for developing skills and knowledge needed to enable learners to participate fully in the economy.
Kunyazelekile sixhobise ulutsha ngezakhono ukuze lubenako ukusebenza.
In this regard, Education will focus its activities on ensuring an improved throughput rate throughout the system, providing our learners with career choice information, supporting them in making these crucial decisions, and providing them with information about financial support in this regard.
Specific activities for 2004/05, to ensure continued human resource development, include the following:
- Introducing the revised national curriculum, starting with the Foundation Phase in 2004;
- Continued development of FET in schools and colleges, with a view to restructuring the schooling configuration and aligning curriculum and training programmes with economic development opportunities;
- Supporting early childhood development, adult basic education and training, and learners with special education needs;
- Developing appropriate and effective learner assessment practices, and
- Applying scarce resources as effectively and equitably as possible.
These are in line with the outcome of the HRD task team led by Dr Franklin Sonn and Naledi Pandor and we are providing earmarked funds of R23,5 million in 2004/05, increasing to R125 million in 2005/06 and to R131,4 million in 2006/07 as specific human resource development interventions. These include assessments in Grades 3, 6 and 8, and career counselling and bursaries to FET students. In addition to these earmarked interventions, the existing allocation to FET institutions will also increase by R14,6 million this year. Many of our young people cannot afford the fees charged by FET colleges and a R12 million loan scheme has been established which will provide for poor learners. Over 600 young people accessed this loan scheme this year.
Another 400 learners received bursaries to attend short courses for skills development which will lead directly to employment. ABET centres will also be supported by an increase of 17.6% in their allocation for this year.
The learner support materials budget of the department grows from R195 million in 2003/04 to R259 million in 2006/07. This represents growth of 32.8% over the MTEF. The Department projects an increase in its per capita spending on LSM from R230 per learner to R279 in the outer year of the MTEF. Continued provision is also made for spaces for learners in Grade R through quality educational programmes to attain the annual target provision of 5 000 to 6 000 additional children accessing early childhood programmes in order to achieve the overall 40 000 target by 2010.
The total allocation to Education also includes a conditional grant for HIV/Aids life skills programmes in primary and secondary schools amounting to over R33.57 million over the next three years. This is intended to improve access to an appropriate and effective integrated system of prevention, care and support.
Education will continue to work closely with other departments to ensure a well-integrated approach to effective government in the Province. These include:
- Economic Development, on the issues of human resource development and fighting poverty;
- Transport and Public Works, who are responsible for building schools;
- Health, especially on HIV/Aids;
- Community Safety, who assists with the Safe Schools’ programme; and
- Social Services, who address broader social issues which impact on our schools, especially in our poorest communities.
While the Department of Education has a key role in conceptualising and driving the HRD strategy, a number of parastatal and private players are also important in this regard, namely tertiary institutions, SETAs and FET colleges. The HRD strategy also needs to embrace the internal HRD strategy being developed by the Provincial Administration. The formulation of an internal Human Resource Development strategy for the Province will be supported by allocations of R3,8 million in 2004/05 and R4 million and R4,3 million in 2005/06 and 2006/07. This strategy will guide all internal training provided by the Province to its staff of 70 000. These allocations will also allow the extension of provincial training initiatives to the George area.
Federico Mayor, in his introduction to his book ‘The World Ahead’, provides the most compelling reason for us at this level of the economy to forge ahead creatively to create an equitable prosperity as iKapa elihlumayo demands. He says:
“… the globalisation that accompanies the third industrial revolution is in the process of splitting the world into two halves: at a time when a world of ‘globalisers’ – that ‘one fifth’ society that is itself under the hegemony of a self-confident ‘hyperclass’ – is savouring its triumph, are we going to forget the world of the ‘globalised’ – those four fifths of humanity who are acted upon more than they are actors in their destiny?”
We must self-consciously put in place a strategy that turns more and more of our people into actors in the economy, and create the conditions for a greater and more rapid achievement of equity.
The lead role of Economic Development and Tourism in the development of a comprehensive, detailed, credible and widely agreed micro-economic strategy for the Province will underpin all interventions made by the Province in the economy. In order to do this, the Department will build capacity to deliver global business intelligence, attract public funding into the Province and address blockages in the business environment.
The key partner of Economic Development and Tourism in the delivery of the Micro-economic strategy is Agriculture. To this end Economic Development and Tourism will integrate its work with that of the Department of Agriculture as well as the range of public entities.
The Province will allocate a total of R946 million to the stimulation of economic activity, including Agriculture, in the Province over the next three years. Of this amount R369 million will support the implementation of the micro-economic strategy with R99.6 million to be spent on supporting the Tourism industry and R127 million will fund other interventions in key sectors in the provincial economy as identified in the Micro-economic strategy.
Apart from pro-active support through strategic financing and information provision, the Micro-economic strategy will also ensure that the regulatory environment in the Province does not function as a barrier to employment and business activity. Economic Development and Tourism therefore has a key role to play in the integrated Law Reform Project driven by Environmental Affairs and Developmental Planning.
The development and implementation of the Micro-economic strategy is to be co-ordinated and integrated with the Human Resource Development and Strategic Infrastructure Plan strategies as well as with the job-creation and poverty alleviation aspects of the social capital strategy described below. The interface, especially with the latter, would need to ensure maximum absorption of workers into the labour market and ensure markets for the goods and services that are produced by these interventions. In this way we will try to respond to the wish of Madigah Hendricks of Harold Cressy High who asked that “…job opportunities should be created in the private and public sectors. The state should create conditions that are favourable for job creation”.
The first wave of deliverables of the Micro-economic strategy would include:
- Planning and implementing the first phase of a comprehensive package of support and services to small, micro and survivalist enterprises;
- Fast-tracking the development of the oil and gas industry service sector;
- Driving the transformation of ownership of and employment in the tourism industry; and
- Ensuring that the capacity to deliver on economic development is established at local government level.
Speaker, ons moet deurslaggewend ingryp om landelike armoede te bekamp. Die lewe is moeilik vir landelike plaaswerkers, township bewoners en ons mense in vissersdorpies. Ons maak staat op Landbou om te reageer op Uys Krige hulpkreet:
“Ken jy die see, Meneer, ken jy die see?
Hy lyk nou soos jou voorstoep blink geskuur,
En kalm soos min dinge hier benee,
Maar hy’s gevaarliker as vlam of vuur.
Dan sê jy nog, Meneer, die vis is duur.
Wat van die storms wat nooit ophou raas?
Jy sit pal in jou kliphuis, klam en guur,
En hoor die wind al woester, wreder blaas.
En daar’s geen sprokkel hout meer vir jou vuur.
Dan sê jy nog, Meneer, die vis is duur.
Sien jy die krom ou vroutjie daar, mevrou Mathee,
wat telkens ver, vèr oor die golwe tuur?
Sy dink die briesie bring haar seuns betyds vir tee.
Hul slaap al drie agter die kerkhofmuur.
Dan sê jy nog, Meneer, die vis is duur…”
Over the next three years R713 million will go to Agriculture to support emerging farmers, promote rural development and consolidate exports. Agriculture increases by R54 million year on year, increasing by 22% from R169 million in 2003/04 to R250 million in 2006/07, signaling our strong intention to realize sustainable land reform and general agricultural development.
In addition to the support for the Micro-economic Strategy, the Department of Agriculture is the key player in land reform in the Western Cape, requiring close synchronisation with the national Department of Land Affairs so that we know what our provincial target for the land resettlement programme is, what the resource envelope is from national together with the applicable delivery time intervals.
Given the experience that land reform is more than access to the land and involves water rights, availability of seed and the need for implements, the allocation to the Farmer Support and Development programme will increase by R31,9 million this year.
Two new grants, the Land Care Grant and Comprehensive Agricultural Support Programme will support land reform in particular. The goal of the Land Care Grant is to promote the sustainable use and management of natural resources. The Comprehensive Agricultural Support Programme has been introduced to provide effective agricultural support and to streamline the provision of services to meet the needs of emerging farmers, especially in support of the Land Redistribution for Agricultural Development programme. These grants are worth R61 million over the current MTEF. Additional allocations of R8,1 million, R11,8 million and R11,9 million have been made available to Agriculture over the MTEF through the Provincial Infrastructure Grant for the extension of agricultural development, but particularly aimed at emerging farmers.
Additional allocations of R3 million to the Structural Agricultural Training Programme will broaden the training of farm workers, land reform beneficiaries and prospective students with academic schooling lower than matric level. Currently, we train about 1 200 resource poor farmers and farm workers per annum and aim to settle another 4 000 new farmers within the next five years. In addition the Technology Research and Development Programme’s allocation will increase by 20,3% from last year in order to support established and emerging farmers with research on appropriate agricultural techniques.
Strategies three & four: Strategic Infrastructure Investment and the Spatial Development Framework
The 2003 Socio-Economic Review gave preliminary indications of the impact of insufficient investment in the provincial transport network. The goal of the Strategic Infrastructure Plan is therefore to provide the physical infrastructure that supports growth, labour market participation and general well being in the Province. Given the fiscal constraints that the Province is under, this plan will contain a strategy for progressive rollout according to the position of relative priorities in it. The leadership role of Transport and Public Works encompasses the formulation and implementation of the Provincial Strategic Infrastructure Plan and its linkages to other provincial strategies, most notably the Micro-Economic Strategy and the Spatial Development Framework.
The key components of the Strategic Infrastructure plan will include:
- A plan for the geographical targeting of Roads and Public Transport expenditure that is based on the economic and social needs of the provincial population;
- A plan for the strategic management of the Provincial Property portfolio;
- A logical balance between expenditure on Works and Transport in the Department, and
- A logical balance between Works expenditure on Health and Education on the one side and economic development projects on the other.
Environmental Affairs and Development Planning will take the lead in developing a balanced and predictable Provincial Spatial Development Framework. The Spatial Development Framework will consist of a set of maps, backed with written documentation, indicating a preferred spatial pattern for the entire Province, identifying growth areas, corridors, nodes, and areas for the conservation of natural resources as well as our cultural-historical heritage. Such a spatial guide will be incomplete without a poverty map to direct our interventions for the alleviation of poverty and unemployment. As such the Spatial Development Framework will provide a common framework for the geographical targeting of provincial service delivery and regulatory interventions. It will also provide an indication of provincial plans to local authorities and thus facilitate improved development linkages between these two spheres.
In addition to the development of the Spatial Development Framework, the second key priority of Environmental Affairs and Development Planning rests in the integration and rationalization of regulatory legislation. This Integrated Law Reform Project will be developed further to embrace all regulatory functions of Provincial Government, especially those performed by Economic Development & Tourism and Culture & Sport. Coordination with national and local government regulatory functions will also be investigated in order to provide a red-tape free interaction between government and the private sector. To support these key functions and the Western Cape Nature Conservation Board, this Department will be allocated a total of R419.8 million over the next 3 years.
The R60,9 million allocation to the Western Cape Nature Conservation Board will, amongst other, provide for 50,000 hectares of new land area to be put under biodiversity management and 4 000 people to benefit from youth development programmes. One thousand learners will also be exposed to awareness raising programs in pollution management.
To turn all these aspirations into reality the provincial budget will allocate R8,2 billion to infrastructure over the next 3 years, rising from R2,2 billion in 2003/04 to R2,4 billion in 2004/05 and to R3 billion in 2006/07, a 38% increase overall. Of this overall amount R5.9 billion will be used for delivery by the Department of Transport and Public Works, with the balance of R2,3 billion being channelled through the departments of Housing, Environmental Affairs and Development Planning and Agriculture.
The budget of the Department of Transport and Public Works will increase by R168.5 million (10,9%) from last year to R1,7 billion in 2004/05 and thereafter sharply rising to R2,2 billion in 2006/07, a very significant jump of 45% from 2003/04. The total investment of R5.9 billion in the Strategic Infrastructure Plan over the MTEF period shows our seriousness towards our commitments made at the Provincial Growth and Development Summit.
Public Works, currently the largest programme in this department, illustrates the Provincial Government's commitment to social infrastructure investment as a vehicle to improve service delivery and create job opportunities. The Province will spend R2.1 billion on this programme over the next three years. To date 22 000 workers have found employment through the Community Based Public Works programme. But these numbers will be scaled up significantly as the Extended Public Works Programme is rolled out. The latter will not only find expression in the Infrastructure budget, but in a range of provincial departments, most notably Agriculture.
Betalings vir kapitale bates by Vervoer en Publieke Werke verhoog vanaf ‘n basis van R642,5 miljoen in 2003/04 na R1,167 miljard in 2006/07. Dit verteenwoordig ‘n verhoging van R524,5 miljoen of in persentasie terme 81,8 persent.
Koliwe Tambo of the Centre for Science & Technology makes the point in her essay that “…(S)ince most people cannot afford cars, public transport should be made more accessible to people….” Our response to this starts with the roads infrastructure budget increases of 22.5%. Over the MTEF this programme will spend R2,4 billion largely to reduce the maintenance backlog. Also reflecting the ethos of Elihlumayo is the continued sharp growth in the provision for Public Transport in 2004/05. The allocation for this programme will grow by 47,9% in 2004/05. This large increase will fund the first phase of the N7 upgrading project from Piketberg to Citrusdal (including Piekenierskloof), the proposed Klipfontein Corridor development and for the first major new road construction project in a long time, the Gansbaai-Elim project which will add a major injection to tourism and the economy in that area.
Siyakwakha umgaqo I-Klipfontein ukuze unike ulutsha imisebenzi, abasebenzi babenokuya lula emisebenzini, isidima namathuba kubahlali.
The Province will spend R1,7 billion on Housing over the next three years. Within this amount are earmarked allocations of R21,5 million to improve on housing delivery by restructuring and supplementing its staff component. This budget provides for the subsidising of about 20 000 housing opportunities per year and for the upgrading of 3 hostels.
The Department of Housing will prioritise the analysis of delivery constraints and formulate a service delivery plan addressing key socio-economic outcomes. This intervention will also include the clarification of the respective roles of the Department and municipalities in this regard and the promotion of an integrated approach to service delivery that would involve other social service departments, as well as Economic Development and Tourism and Transport and Public Works.
Digter Pieter Snyders illustreer die siel-dodende effek van sosiale afhanklikheid in sy gedig ‘Dis-ability’:
“Ek sit hiesa elke dag
Onder die boem
Met my doppie,
Ek henner niemand nie.
Elke end van die maand
Trek ek disability-nei,
War veterans-
Dit betaal meerderer
Ma kry nog maintenance grant vir Kettie,
sy’s mos nog altyd onder Valkenburg
Maar ek is specially bly
dat Ma oek nou Old Age trek-
dis darem ietsie meerder.
Ja, ek is heeltemal heppie
hier tussen die groente;
die goewerment sorg:
hy moét.”
iKapa elihlumayo wil nie net die ekonomie maak groei nie, maar ook die waardigheid van ons mense herstel. Om hierdie rede moet ons welsynstoelaes betaal, maar ter selfde tyd ons mense die geleentheid gee om aan die ekonomie deel te neem waar hulle kan.
The Social Capital Formation Strategy therefore aims to arrest and reverse the decline in social capital in the Province that is visible in high levels of crime particularly amongst the youth, motor-vehicle accidents caused by driver attitude and fitness, alcohol and drug dependency, Aids, TB and gang activity. Social capital will be rebuilt by the co-ordination and integration of the social capital interventions of especially the departments of Social Services, Housing, Health, Community Safety, Cultural Affairs and Sport but also civil society, local government and the business community, using a single targeting framework.
Over the next three years the Province will spend R31 billion on supporting the poor, improving our health status and restoring the social fabric of our society. Of this amount R14.9 billion and R15.1 billion will be spent on Health and Social Services respectively with the balance of R952,8 million being shared between Community Safety and Cultural Affairs and Sport.
The first step of the development of this strategy would be an assessment of the state of social capital in the Province. This strategy will address existing priority areas of Youth, parenting, families as well as cultural integration. The Social Capital Formation strategy will also have important links to especially Education, Sport and Culture, as well as Community Safety. Obviously, coordination of interventions will be a key success factor.
The budget of the Department of Social Services and Poverty Alleviation will increase by 19.4% to R4,5 billion for 2004/05. A key component of the provincial and national development strategy is the provision of short-term support to the poor while long-term opportunities are created. For this reason the provincial budget makes generous provision for both the extension of the Child Support Grant to children between the ages of 7 and 14 as well as the increases in the grant values. The Old Age and the Disability grants will increase by R40 each while the Child Support grant increases by R10 per month from 1 April 2004. The allocation to the Social Assistance Grants programme increases by 19.3% to R3,8 billion in order to fund these increases.
The Department will also fund a range of Social Capital interventions through its Social Welfare Services and Development & Support Services programmes. The allocations to these two programmes will increase by 14% and 22,2% respectively in the 2004/05 financial year. Together these programmes are allocated a total of R1,3 billion over the MTEF period much of which will be channeled through our private and NGO partners.
A stable Health system forms a key part of the Social Capital formation strategy in the Province. The primary responsibility of the Department of Health is to ensure the implementation of Health Care 2010. But it does so in the context of cuts in national conditional grants and the increased demands generated by HIV/Aids, migration and rising pressures to integrate municipal rendered primary health care services into its overall envelope. The Department’s budget will grow by 11,2% or R478 million to R4,8 billion in 2004/05, further increasing to just over R5 billion in 2006/07 signifying a gross anticipated spending on direct health care of R14,9 billion over the MTEF.
Ingesluit in Gesondheid se allokasie is 'n spesiale bedrag van R205 miljoen, wat groei na R210 miljoen en R231 miljoen onderskeidelik oor die MTEF, vir befondsing van skaars vaardighede en landelike toelaes en ander personeeldruk areas, asook vir algemene ondersteuning van gesondheidsdienste. Van die R205 miljoen is R50 miljoen vir terugwerkende betalings vanaf 1 Julie 2003 aan gesondheidspersoneel vir skaars vaardighede en landelike toelaes.
The Department of Health’s budget makes provision for the purchase of machinery and equipment amounting to R311,9 million over the MTEF period. This includes an earmarked allocation for health equipment of R153,6 million also over the MTEF period. This budget continues the doubling of equipment investment from the 2002 Budget base. Similar trends in Health infrastructure spending have also been provided for, totalling R732 million over the MTEF.
Met die stewige verhoging by Gesondheid, die investering in toerusting, infrastruktuur en personeel en die praktiese uitvoering van die 2010 Gesondheidsplan, behoort Gesondheid nou 'n keerpunt in die Wes-Kaap te bereik met 'n baie meer 'gesonde' toekoms.
Far from halving the budget, the allocation to the District Health Services programme, which include Primary Health Care, will increase by 12,5% in 2004/05 to a total of R1,3 billion. This allocation increases by 72% to R1,96 million from 2003/04 to 2006/07. In a similar vein the allocation to Provincial Hospital Services will increase by 14,1% in 2004/05.
The HIV/Aids conditional grant is one of the key funding streams to mitigate the impact of the disease. An amount of R147,6 million has been added to the baseline over the MTEF, with the promise of more, provided spending keeps up with the allocation, together with demonstrated efficacy and capacity to spend. These increases will allow the extension of the comprehensive antiretroviral treatment programme.
The HIV/Aids grant increases from R24,2 million in 2003/04 to R115,7 million in 2006/07 to support various aspects of the programme. In addition to providing for ARV treatment rollout, the grant provides for post exposure prophylaxis for victims of sexual abuse, rollout of mother-to-child transmission prevention and targeted interventions for commercial sex workers – whilst maintaining other HIV and AIDS prevention programmes in line with the Comprehensive Treatment and Care Plan approved by the National Cabinet in November last year.
The combined total of conditional grants and the equitable share set aside for HIV/Aids in Health, amounts to R357,1 million over the next three years, rising from R47 million last year to R90 million in 2004/05 and to R151 million in 2006/07. This allocation does not include the $60 million over a 5-year period that the Department of Health is to receive from the Global Aids Fund.
This additional allocation will fund the expansion of antiretroviral treatment in the current 16 sites and allow for the rollout of treatment to the rest of the Province at an estimated 45 sites. These funds will provide for the provision of drugs and laboratory tests as well as for strengthening the general infrastructure at all the treatment sites. The rollout of treatment over the next year is estimated to reach at least 5 000 patients who are in need of treatment and meet the clinical criteria for the initiation of treatment.
The division of responsibilities between Health and municipalities remain a challenge, given various constitutional interpretations, associated acts or proclamations and the current funding distributional history. As primary health care services are integral to a good health system, a great deal of work will still have to be done over the next three years to draw this to a satisfactory conclusion.
As part of building social capital, the department of Community Safety was allocated an additional R4 million in 2004/05 to develop a motor vehicle accident intervention strategy together with the Department of Health. The formulation of a decisive motor vehicle accident intervention is a priority as it will enhance the quality of life and lower the intensity and incidence of accidents while reducing the budgetary pressure on Health. This money will be well spent if it brings about a reduction in the accident rate and associated costs as a result of the deployment of law enforcement personnel.
The rise in allocations of R6,8 million under Civilian Oversight will support the priority of mobilising communities against crime and an increase of R10,2 million will enable the rollout of 24 hour traffic law enforcement. Through the amalgamated Philippi and Gene Louw colleges the Department will also train 800 municipal police officers per year. In short, we are saying through this that we want now to remain on the front foot in the fight against crime, to continue to drive down the crime figures, to continue jailing entire gangs like the Sexy Boys, and to make life safer for all our people.
The Department of Cultural Affairs and Sport has a key partnership role to fulfil with the Department of Social Services and Poverty Alleviation in the conceptualization and implementation of the Social Capital Formation strategy. It would also support the Human Resource Development strategy through public libraries and play a key role in the integrated Law Reform Project. Library Services will utilize R54,4 million to finance 250 000 items of library material.
As a key component of the building of social capital, a national conditional grant has been made available to fund the promotion of mass participation within disadvantaged communities in a selected number of developmental sport activities and the empowerment of communities to manage these activities in conjunction with local municipalities. Funds amounting to R8 million over three years have been allocated accordingly. Its goal is to support the aspiring and upcoming youth of our country in reaching their sport and recreation goals. This will start addressing Ashley Andrews of Sao Bras High School’s concern: “There is also a scarcity of sports equipment in a lot of our schools. Many schools are demanding to have the right sport equipment to development people skills. By providing this equipment to all schools a huge difference can be made in the Western Cape… The youth would have things to occupy their time with things they like, rather than spending their time forming new gangs.”
To render the first five priorities effective would require excellent cooperation and a well articulated common sense of purpose between the provincial and local government spheres on the one hand and between them both and civil society labour and the business sector on the other. Without diligent and well-targeted use of finite financial resources, the ideals articulated in iKapa elihlumayo will also not be fully attained. To the twin goals of governance and efficiency improvement the Province will therefore allocate R1,4 billion over the next three years.
The primary responsibility of the department of Local Government is to ensure appropriately capacitated and well functioning municipalities and an efficient intergovernmental cooperative system. This would need to be done against the broader background of common socio-economic challenges, establishing developmental linkages between provincial and local government and rationalisation of functions between the two spheres. To this end the Department is provided with R15.8 million over the MTEF period for the strengthening of the municipal oversight function. Funds have also been made available for Treasury’s own role in the implementation of the Municipal Finance Management Act, 2003.
The Treasury also has responsibility for the consolidation of the Internal audit function. To this end it has been allocated R15,8 million over the next three years. In a similar vein, Vote 1: Provincial Administration has been allocated R4,7 million over the MTEF for the strengthening of legal services in order to cater for the demands placed on them by the Constitution, new legislation and increasing contractual and administrative practice demands.
Over the MTEF R517,3 million will be allocated within the Provincial Administration vote for the consolidation and rollout of the Centre for e-Innovation. This programme will optimise government service delivery and facilitate public participation by transforming internal and external relations through the use of information and communication technology. It will also assist Education in equipping 1 600 schools with computer labs for the teaching of learners as part of the Khanya and Multigrade projects.
A long outstanding issue relates to the rationalisation of services between provincial and municipal spheres so as to achieve optimisation and clear accountability lines. The acknowledgement of the common development challenges faced by provincial and local government has led to a series of interactions between provincial and local government initiated by the Cooperative governance summit in November last year.
Apart from the work that needs to be done to clear up the assignment of functions, there are obvious areas that require cooperation across spheres such as housing, transport planning and disaster management. There are however many areas of exclusive provincial, local and national responsibilities that impact directly on the work of other spheres such as indigence policies, environmental policies and human resource development. Apart from the requirements for cooperative governance, the common development challenges of the three spheres therefore demand much deeper coordination in planning, budgeting and service delivery.
Receipts
Taking account of national revenue trends, provincial tax and administrative policy charges and macroeconomic projections, total provincial revenue is calculated to be R17,98 billion in 2004/05, which is 7.2% more than the 2003/04 revised estimate. Between 2003/04 and 2006/07, provincial receipts are expected to grow at an annual average rate of 7.94% per year.
In Budget 2004 and over the MTEF, national payments comprise an average of 93.9% of total provincial receipts and own revenue the balance of 6.1%. Of national transfers 79.7% flows through the equitable share. The remaining 14.3% flows as conditional grants.
From 2000/01 to 2003/04 overall provincial receipts grew at an annual average rate of 12.1%. This growth was largely attributable to growth in national payments (mainly as a result of buoyant growth in national tax revenue) in the form of the equitable share (12.1%) and conditional grants (6.5%), which comprised 92.5% of total provincial revenue in 2003/04. Provincial own receipts, an important source of funding at the margin, also experienced strong revenue growth over this period (averaging 17.9% per year) following comprehensive policy reforms and administrative improvements. Only marginal increases are projected over the MTEF due to changes in revenue patterns, the diminishing liquidity in the provincial revenue fund, declining interest rates and the concurrent reduction in investment revenue.
Financing
In spite of significant increases in the revenue envelope, it remains insufficient to cater for the combination of cost related spending pressures as well as key government priority objectives. The net result manifests in fairly substantial, albeit declining, shortfalls or deficits between estimated receipts and spending of R366,69 million in 2004/05, R122,68 million in 2005/06 and R113,23 million in 2006/07. The deficits will be financed by way of draw downs from accumulated capital revenues totalling R515,91 million.
The provincial equitable share
Over the course of the MTEF the equitable share allocation will rise from an adjusted estimate of R13,2 billion in 2003/04 to R16,8 billion in 2006/07, representing an average annual growth of 8.4% from 2003/04 to 2006/07.
The current equitable share formula was designed to be phased in over a five-year period achieving ultimate target shares in 2003/04. The Western Cape’s share declined annually over the four-year period from 9.8% in 1999/2000 to 8.9% in 2003/04, an annual shift of over R1,4 billion in 2004/05 Rands, away from the Western Cape.
Updates of the data variables driving the equitable share formula are affected on an annual basis, depending on availability of official data. Government agreed that the structure and components of the formula principally be kept the same for Budget 2004, but that some of the individual components of the formula be updated. For Budget 2005, government agreed to a more wide-ranging review, covering aspects pertaining to the restructuring of the formula, weights of components and other economic development and poverty related policy considerations. This comprehensive review is also timed to coincide with the imminent change in the financing and administrative arrangements relating to the delivery of social security grants.
The outcome of the Census 2001 data saw significant population movements primarily from predominantly rural to urban provinces, resulting in shifts in relative demand for public services and resources thus impacting on the equitable share. In the case of the Western Cape the percentage share of population increased from 9.7% to 10.1% between 1996 and 2001, reflecting a five-year change in population growth of 14.3% or annually at an average of 2.7%, with population being attracted chiefly from the Eastern and Northern Cape provinces.
For the 2004 Budget a number of data updates to the formula were affected using 2001 Census data, but in order to ensure stability in provincial budgets, it was agreed to smooth the impact of the Census 2001 updates by adopting a three-year phasing-in period. This phasing allows the equitable share allocation to the Western Cape to grow slightly slower than what it would otherwise have been.
Conditional Grants
In total, conditional grants will grow by R566 million over the next three years. Overall, conditional grants will amount to R2,6 billion, R2,8 billion and R3,1 billion in 2004/05, 2005/06 and 2006/07 respectively. This represents an average annual increase of 10.4%. With the exception of major additions in grant funding for HIV/Aids, Provincial Infrastructure and the Extension of the Child Support grant, the level of funding for programmes already funded through conditional grants remains broadly stable. As part of the full review of the current fiscal transfer system the Budget Council resolved that a full assessment of all conditional grants and their formulae should also be conducted this year.
Health grants constitute about 60% of conditional grants, totalling R1,6 billion in 2004/05, and are budgeted to increase at an annual average rate of 5,2% to R1,76 billion by 2006/07. The National Tertiary Services grant has declined in real terms for this province (and Gauteng) in line with interprovincial equity considerations and the building up of tertiary care services in other provinces. This has resulted in the proposed restructuring of health services in the Western Cape, Healthcare 2010, which will shift resources to lower levels of care, and direct patients to the appropriate facilities, whether that be at primary, secondary or tertiary level.
At a technical level, the national Department of Health and National Treasury has agreed on the need for a comprehensive review of the funding of academic (central) hospitals. Such a review must inform government on the long-term vision for such hospitals and for tertiary services in particular, the distribution between provinces, the restructuring required to effect such transformation, and financing of academic hospitals, linked as they are to university medical schools.
Provincial own receipts (Own Revenue)
Currently, own revenue sources of the Province remain fairly limited, consisting of motor vehicle licence fees as the chief source, together with hospital fees, interest revenue and gambling and betting taxes. Although own revenue forms a mere 6.09% of the total provincial revenue envelope in the 2004/05 budget, it does remain an important source of funding. As the current sources have upper limits, it is projected that own revenue/receipts, as a percentage of total provincial revenue, will fluctuate around 5.7% over the MTEF.
Motor vehicle licences continue to represent the biggest single proportion of provincial own receipts in the Province, representing in excess of 60% of total own receipts over the MTEF. A key concern is the fact that the licence fees structure in the Western Cape is still the highest in relation to the rest of the country, mainly as a result of systematic annual increases in licence fees to soften the reducing equitable share impact on infrastructure spending. Other provinces have been less aggressive in revising their fees annually. In this regard the Provincial Treasury has requested Transport and Public Works to conduct an economic and impact analysis of the annual increases on vehicle licences together with an assessment of whether the current licensing structure has had an effect on motor vehicle migration. Until this process has been completed, motor vehicle licence fees will only increase by the projected annual inflation rate over the 2004 MTEF, i.e. 5.5%.
The proposed fuel levy
The proposed introduction of a fuel levy has attracted much attention in the media. There have been proposals around the creation of a special purpose vehicle for collection and earmarking of the relevant receipts and concerns, while concerns referred to possible cross border shopping and the impact on the tax burden. While the levy will be subjected to a full public consultation, I will deal briefly with some of the concerns that have been raised.
International best practice shows that using special purpose vehicles for the collection of such taxes is inefficient. Apart from entailing unnecessary administrative costs and burdens, such a levy can be collected through similar mechanisms to that used by national government. The Province is committed to using proceeds of the levy for infrastructure, even though other studies show that narrow earmarking of any tax robs government of the flexibility to respond to its economic environment. In fact this budget, as I have demonstrated, commits vastly greater amounts to infrastructure development than the fuel levy is likely to raise. However, without the fuel levy it is unlikely that we will be able to raise or release enough other revenue to simultaneously reduce infrastructure backlogs, to build new economic infrastructure and create enough jobs.
Cross-border shopping and factor mobility will also not be cost effective on such a small levy. To travel from Beaufort West to Richmond, for example, would cost over R100, whereas the saving on a full tank would only be about R6. While provinces’ equitable share has increased, the Western Cape’s share of this cake has decreased from 9.8% to 8.9%, a shift of over R1.4 billion. These shortfalls put pressure on infrastructure expenditure. The proceeds of the proposed fuel levy will alleviate these pressures, but will have no material impact on the tax burden. The R250 million that will be raised from the fuel levy only amounts to 0.16% of the provincial economy of R160 billion.
The process through which the iKapa elihlumayo concept is being transformed from theory into practice reflects the values inherent in it: teamwork, sacrifice, passion and synergy. These are also the values that mark the growing sense of hope and anticipation that is spreading through the Province. The spirit of elihlumayo also permeates the pages of this year’s budget.
In provincial government all departments cooperated in the realization of the elihlumayo vision. To pull it all together and to emphasize the chief priorities as articulated in the Western Cape Medium Term Budget Policy Statement (MTBPS) 2004-2007, Cabinet decided that Education, Transport & Public Works, Social Services & Poverty Alleviation, Environmental Affairs & Development Planning and Economic Development &Tourism should lead the development and implementation of the key components of iKapa elihlumayo. However, all other departments are playing a key role in supporting the lead departments. To name a few examples: Agriculture is helping Economic Development & Tourism to formulate the Micro-Economic Strategy; Cultural Affairs & Sport is helping Environmental Affairs & Development Planning to reform the regulatory environment and Community Safety is helping Health address the loss of life and strain on health services brought about by motor-vehicle accidents.
In a similar vein the Provincial Growth and Development Summit was marked by an unprecedented rapprochement between Government, Community organizations, Labour and Organised Business. This spirit has been consolidated and enhanced through the restructuring of the Provincial Development Council, the establishment of the Western Cape Investment Council and a number of other processes. Even the relations between provincial and local government is being strengthened by a growing sense of common purpose.
This common purpose was articulated by the eight long-term provincial growth and development priorities espoused in the Provincial MTBPS and reconfirmed by the Premier in his 2004 Opening of Parliament address because, as Churchill said: ‘we must learn to be equally good at what is short and sharp and what is long and tough’.
In this Budget we present the fruition of a year of ‘long and tough’ work by all provincial departments. The Provincial MTBPS and the subsequent Framework for the Development of the Western Cape 2004-2007 set out the provincial policy and fiscal commitments for the medium term. This budget presents the Province’s serious efforts at incorporating these commitments into our expenditure plans. No doubt we have a long way to go, but Budget 2004 already shows that our intention and commitment can no longer be in doubt.
Madam Speaker, the last 2 years have been tough because this Coalition of the ANC and the NNP have inherited much baggage. This included service delivery backlogs, instability, and a lack of credibility with the people of our Province. We were the laughing stock of our country as they tried to keep up with who was Mayor and who was Premier. But Mr Premier, despite all of this and our historical enmity, we managed to fashion a path that once again gives our people hope. We managed to say that we will occupy the realm of the possible, and I thank you for that, Premier and colleagues in cabinet.
I record my thanks to Ludwig Anderson, Chair of the Standing Committee as well as all members of the committee, for poring through the documents and presentations, understanding it all and being able to give direction to this House.
Ten years of democracy cannot be celebrated without Dr JC Stegmann. For these 10 years he was the golden thread in this administration, keeping it sane when others played with watchdogs and bunkers, remaining constant as political bosses played musical chairs, and remaining alive, alert and hardworking when others would have succumbed to cancer. Thanks JC and the entire team in Treasury, also for making me, a novice in matters fiscal, even sound intelligent at times.
I wish to record my thanks to Minister Manuel who was not just my senior, but actively, yet unobtrusively, guided me through this world of finance and economics.
Many people contributed to this budget, and I thank our social partners, our advisors at the Universities, and the Western Cape Investment Council.
If I may be permitted one personal note, Thanks to all my parents, my family, and especially Rosieda who makes enormous sacrifices despite being busy herself, and yet she still allows me to think that my non-sexism is intact.
To the ANC: thanks for the opportunity to serve. Hopefully it’s a budget that’s on message – after all, it is about a people’s contract to create work and fight poverty.
In his State of the Nation Address the President asked us to believe in our ability to shape the future of this province, this country and this continent. Through iKapa elihlumayo we say with Martin Luther King that:
"I have the audacity to believe that people everywhere can have three meals a day for their bodies, education and culture for their minds, and dignity, quality, and freedom for their spirits. I believe that what self-centered men have torn down, other-centered men can build up."
