Speaker, it gives me great pleasure to present Vote 13: Economic Development & Tourism. During the elections we promised the people that we will build a PEOPLES' CONTRACT with them. We have as the entire Provincial Government committed ourselves to building that contract, creating a HOME FOR ALL & ensuring that Ikapa Elihlumayo is the developmental path we all walk.

This budget in many respects starts building the basis for A GROWTH & DEVELOPMENT CONTRACT WITH THE PEOPLE. It is aimed at ensuring that the next five years will be the best ever for the people of the Western Cape.

Now I would like to reflect broadly on the plans for this portfolio over the next five years and then focus more directly on the highlights of what we hope to deliver over the current budget year. However, before we look into the future, let me reflect on some of the considerable achievements in this portfolio under the stewardship of my predecessor, Premier Ebrahim Rasool, during the previous fiscal year. I will just deal with it very briefly:

• The long-awaited Cape Town International Convention Centre [CTICC] was officially opened by President Mbeki on 28 June 2003. This public-private sector partnership was brought in some two months ahead of schedule and under the budget of R582-million. BEE companies did over 48% of the project work [worth over R288-million ], the great majority of these were Western Cape companies.
• The Provincial Growth and Development Framework Agreement, forged in the heat of a few weeks' intense negotiations among the four social partners, was signed at the ground-breaking Provincial Growth & Development Summit in November 2003.
• A pilot project to incubate and graduate 100 emerging entrepreneurs (30% of whom will be women) providing the full spectrum of services in a co-ordinated and integrated system

As an immediate gesture to make good on some of these undertakings, this House voted an amount of some R45-million to undertake immediate interventions, which would impact positively on all sectors of the economy under the broad banner of the iKapa elihlumayo Programme.

In supporting local authorities with their economic development responsibility, five District and 25 B-Municipalities were assisted in the assessment of their integrated development plans to ensure that they were aligned with the provincial economic development policy as well as provincial strategic direction.

Some examples of local economic development (LED) projects we undertook, include:

• The establishment of a pilot hydroponics-farming greenhouse in Beaufort West, employing 14 facility workers, of which 11 are women who had lost their grants.

Since 2001 the number of enterprises assisted directly by our SMME unit with expert advice and interventions increased from 25 per annum to more than 300 per annum.

We co-operated with the City of Cape Town in running a Small Business Week. The event, comprising seminars on topics such as procurement and access to finance, and exhibitions attracted an audience of over 2 000 entrepreneurs over the 5 days in 2003.

The provision of consumer protection services to all citizens of the Western Cape has been a priority. The number of consumer advice offices located in the province has increased from 12 to 23 since 2001. The number of consumer complaints attended to by the Consumer Protector has increased from about 300 per month in 2001 to more than 1 500 per month at present.

As part of the Department's concern about the social cost of liquor abuse to society in general and to the people of the Western Cape in particular, it has embarked on an education and awareness programme among farm workers and rural communities about the danger of foetal alcohol syndrome (FAS) associated with the drinking of alcohol by women during the term of their pregnancy.

Tourism in the Western Cape has grown significantly during the past two years. Overseas visitor numbers to the Western Cape have increased to more than 1 million for the first time.

The growth in tourism has been accompanied by a major increase in Foreign Direct Investment in hotel development. Various new hotels have been built or announced, including the 480-room Arabella Sheraton.

Various global events have been smoothly staged. These include the World Cricket Cup opening match and ceremony and the President's Golf Cup at Fancourt in George. These experiences are catalysts for hosting either the opening event, or the semi-finals for the soccer in 2010.

The challenges

So much for looking back, I would like to begin looking into the future by examining the challenges. So what are the key challenges in this portfolio?

The Premier answered that question in this House in April as follows and I quote:

" … the two key issues confronting our people [are] creating work and confronting poverty."

This department will be called upon to play the anchor role in creating sustainable jobs and will be required to make an important contribution to reducing poverty.

The challenge around jobs is enormous. At present, Unemployment stands at about 24 percent. This translates into roughly 500 000 people, some 80 percent of whom are classified as youth.

In general there are fewer jobs for lower-skilled workers and the decline in employment opportunities for this group is continuing.

Most critical, is the need to address the very low success rate for African job seekers in the Western Cape. The actual Provincial rate is about 10 percent of the success rate for African job-seekers nationally.

Our successes show the global confidence the Western Cape enjoys, but it is in urgent need of micro-economic interventions to realise its full potential. To ensure that we create an environment to build broad black economic empowerment so that those previously excluded are brought into mainstream of the economy as workers, as owners, as active participants.

In the Primary Sector [Agriculture, Forestry and Fishing] and in the Secondary Sector [Manufacturing] growth and employment is either stagnant or in decline. This is not peculiar to the Western Cape. It is, in fact, a global trend.

Also we are at the mercy of very powerful forces in the global economy.

In the global division of labour, there are some roles in design, marketing and hi-tech manufacturing which countries of the North guard very jealously for themselves while the role of provider of primary products and limited low-tech manufacturing is assigned to countries of the South.

This limits our options as a Province quite severely.

Competition is cutthroat. China and India are able to offer much lower labour rates than we are able to for equivalent quality while they offer the added attraction of large domestic markets

In the globalized environment, small economies like ours are very vulnerable to so-called "exogenous shocks"

Tourism has shown its vulnerability to events like 9/11; the situation in the Middle East; the Bali and Spain bombings; SARS and so on

If sustained, the current high price of oil on the world markets could result in another global economic slowdown.

As part of my Department's exercise to develop a Micro-economic Strategy for the Province, an exercise was undertaken recently using an economic instrument to plot the trajectory of 50 sectors and sub-sectors in the WC economy over the next five years. It was assumed that there would be no significant government intervention.

The overall conclusion, supported by academics participating in the exercise, was: "The outlook is grim, particularly for lower skilled workers."

Points of departure

I would like to focus on a few key "points of departure" on which the proposals for our work over the next five years are based.

Firstly, we need a common vision for promoting rising levels of growth, investment, job creation and people-centred development.

This vision should be aimed at making the Western Cape:

[a] A destination of first choice for investors whilst retaining and expanding social equity and fair labour standards
[b] A productive economy with high levels of service, a highly skilled workforce and modern systems of work organization and management
[c] A society in which there are economic opportunities for all, poverty is eradicated, income equalities are reduced and basic services are available to all.
[d] A society in which our people, our most precious resource, are given the opportunity and support to develop to their fullest potential
[e] A society that promotes the values of social equity, fairness and human dignity in the global economy.

Arising from this vision, our priorities are:

• Promoting and mobilizing investment and creating decent work for all;
• Ensuring economic empowerment for all, especially for black people, workers, people with disabilities, women and youth;
• Eradicating poverty and addressing the legacy of under-development; and
• Strategically engaging globalisation to the best advantage of the country
• As much as I would like to claim responsibility, this is not actually something that I dreamt up overnight. I have adapted the Vision contained in the national GDS document to suit the needs of the Province
• Then there is the challenge presented by the numbers. Even to the lay economist, it is not difficult to do the basic arithmetic to help understand the dimensions of the mountain we have to climb.
• The Provincial GDS Framework Agreement promises 100 000 net new jobs in the next five years. If current broad labour market trends continue, unemployment will grow by 105 000 over the same period.
• Which means that we will need to create 205 000 new jobs in five years if we intend to keep our promise in the PGDS Framework Agreement. Even if we achieve this mammoth target, this means that we will still have 400 000 unemployed citizens.

The 5-year Plan

Against this background, I would like to outline the broad brushstrokes of the work I intend to undertake in this portfolio over the next five years.

Lets begin with the obvious. We all need a comprehensive WC Socio-economic Development Strategy:

• which unifies all Provincial policies, strategies & mandates,
• which blends seamlessly into national policies, strategies & mandates and
• which adapts constantly to relevant global trends

This is the task being undertaken by the entire PGWC and is essential for effectiveness in our work.

Our part of such a strategy is to develop and continuously update a comprehensive, detailed, intellectually sound, and widely agreed Micro-economic Strategy [MES] for the Province, which will inform all interventions made by the PGWC in the economy.

We are also tasked with implementing major interventions flowing from the MES in conjunction with our social partners and other spheres of government in a manner which crowds in all available domestic and international resources required for success.

We anticipate that interventions arising from the MES will fall into five main categories:

• Sector-based interventions;
• Theme-based interventions;
• Economic Participation Promotion;
• Economic stimulation;
• And Regional Development Initiatives

Let me elaborate on these briefly.

Firstly, Sector-based Interventions:

Our Micro-economic Strategy and the Provincial GDS/PDC processes will yield Provincial Strategies and Interventions agreed by all social partners in the following sectors:

• Primary: Agriculture, aqua-culture and associated value chains;
• Manufacturing: Clothing, textiles, leather; Metals, engineering, boat-building, ship repair; Oil & Gas Service Hub; Furniture; Cultural Industries: crafts & Jewellery;
• Services: Tourism; Call centres and business process outsourcing, information and communication technology; film

Secondly, Theme-based Interventions:

We will develop strategies and interventions in the following crosscutting or transversal themes which contribute significantly to global competitiveness in ALL sectors: R&D; Innovation; New materials; New Technology; A Provincial Manufacturing Technology Strategy; Design in industry; Energy; Logistics; ports; road, rail and air transport; the Knowledge economy; ICT; e-commerce, hi-tech; an HRD strategy and HIV/Aids to name just some.

Thirdly, Economic Participation Interventions:

To deal with the equity issues, we will develop several comprehensive strategies and interventions including the areas of BEE, Women's EE, Youth EE and economic empowerment for people with disabilities, rural dwellers and workers

We will develop the detailed plans for the Real Enterprise Development or RED Initiative and undertake the task of ensuring that all social partners contribute fully to deliver effectively on this huge intervention, particularly in the areas of:

• Access to finance;
• Access to support services;
• Skills development;
• Access to business opportunities;
• And Export-readiness.

In our Local Economic Development work our major focus will be on:

• Building capacity to undertake such work on the ground in municipalities and townships;
• Establishing economic development units in municipalities;
• Assisting in broadening and deepening IDPs

Fourthly, Economic Stimulation Interventions:

We will continue and deepen our export, investment and tourism promotion activities but will accelerate growth through the following activities as well:

• Facilitating increased market access, particularly in Africa;
• "Scoping and dimensioning" large industrial projects for the purpose of recruiting investment;
• Setting up a capacity to maximize the finance, donor funds, incentives and grants available to our Provincial businesses;
• We will assist Provincial businesses to land Provincial, National and International contracts to supply goods and services;
• We will play an active role in optimising all public spending in the Province to achieve maximum bang for the public buck

Fifthly, Regional Development Interventions:

We will also play a role in driving development plans for sub-regions of the Province, including Industrial Development Zones [IDZs] and major economic infrastructure developments.

We will focus our work in such a way that we contribute significantly to:

Finally, there will also be other interventions like:

• Putting in place a Provincial Liquor Act;
• Establishing an independent Provincial Liquor Board;
• Amending the Businesses Act;
• Establishing a research capacity for relevant provincial business statistics and trends;
• Establishing Consumer Protector offices in every municipality and large urban township

First Year Deliverables:

Over the next year, we have set ourselves very specific goals.

Firstly, in sector-based work, we will "scope and dimension" major intervention propopals arising from the Provincial GDS process. This process involves all players in 11 sectors reflecting on the state of their sectors and making recommendations on what they believe to be the most important interventions needed to take their sectors forward.

Beside these, there are several on-going major interventions, which we will continue to drive like:

• In the BPO & Call Centres area we are planning a major international investment promotion drive;
• The Oil & Gas Service Hub Strategy has captured the DTI's attention and we are working to obtain a significant share of the West African market;
• We hope to take the Film Studio project to the "sod-turning" stage;
• We hope to finalize a Provincial fishing strategy and begin the rollout of the first stages of the mariculture strategy;
• In tourism the HRD and BEE Strategies will be completed and we hope to have our first successes;
• We will put enormous energy into making a Cape Flats Tourism Route a reality;
• We will put legislation to govern the registration of Tourism Businesses in place;
• And we will drive a process which will lead to the development of a Passenger Liner Terminal feasibility study.

Our theme-based interventions will include:

• Rolling out the Provincial Manufacturing Technology Strategy;
• Launching the first Provincial Tooling Training Centre;
• Establishing the Global Business Intelligence Unit;
• Establishing a Manufacturing Technology Transfer Promotion Unit;
• And establishing a HIV/Aids Business Support Unit

Our interventions to increase the rate of participation in our economy by the previously excluded will include:

• Completion of a Provincial Economic Empowerment Strategy;
• Launching a Provincial Broad-Based Black Economic Empowerment Strategy;
• Opening the first 7 RED Door Offices, one in each district and two in Unicity townships;
• Establishing the RED Skills Training Curriculum and rolling it out;
• Raising finance to capitalize the RED Finance Fund at R50-million initially;
• Holding a provincial SMME Conference to launch the first phase of the RED Initiative;
• Establishing at least five rural economic development units with at least one in each district

In a year's time, I would like to be able to report to you that we have achieved the following as a result of economic stimulatory activities:

• Announcements of interest to invest in BPO with a minimum of 1 000 jobs envisaged;
• Have matched at least 100 Western Cape exporters with importers in Africa;
• Tourism growth at higher than national average attributable to the DMO;
• Completed a feasibility study for a downstream petro-chemical industry in the Southern Cape;
• Have landed at least 10 major international contracts for Western Cape companies;

We hope to have at least one major industrial project "scoped & dimensioned" in each of the following areas: the West Coast, the South Cape, the Central Karoo and a Cape Flats township and to have launched one major economic project in each Presidential node.

• That the Consumer Tribunal is running effectively across the Province;
• That there are 7 new Consumer Protector Offices, 5 rural, 2 in Unicity townships