Medium Term Budget Policy Statement 2017/20 and Adjusted Estimates Speech | Western Cape Government



Medium Term Budget Policy Statement 2017/20 and Adjusted Estimates Speech

24 November 2016

2017 – 2020 MTBPS and 2016 Adjusted Estimates of Provincial Expenditure Speech by Minister Ivan Meyer

Honourable Speaker and Deputy Speaker
Honourable Premier and Cabinet Colleagues
Honourable Leader of the Official Opposition
Honourable Leaders of Opposition Parties
Honourable Members of the Western Cape Legislature
Senior officials of the Western Cape Government
Ladies and Gentlemen

Good morning, Goeie môre, Molweni

Honourable Speaker, it is my honour to table the 2017 – 2020 Western Cape Medium Term Budget Policy Statement and 2016 Adjusted Estimates of Provincial Expenditure and the Provincial Gazette indicating the allocations to Municipalities.

I am tabling the MTBPS under the theme Hard Truths and Hard Policy Choices.

These key Provincial policy and budget documents are set within the context of a continued constrained economic outlook and fiscal framework and reflects this Province’s commitment to fiscal prudence and sustainability.

Under the leadership of Premier Helen Zille, it is this Government’s fiscal policy approach to continue promoting and strengthening fiscal consolidation, fiscal discipline and fiscal sustainability over the medium term.

This Provincial Government remains committed to a more coordinated and integrated approach to government–wide planning, budgeting and delivery, while promoting inclusive, sustainable and smart growth.

Honourable Speaker, we are striving to ensure that public value is created and recognised. This includes working towards greater effectiveness in addressing problems that are affecting our citizens most by means of creative and innovative solutions while fostering partnerships to collectively deliver public value.

Madam Speaker, since tabling the Western Cape Provincial Budget of R55 billion in March 2016, we have seen geo-political changes.

First, we have seen the increase in immigration into Europe, mainly in Germany.

Secondly, we have seen Brexit and its implications for Europe and for South Africa.

Thirdly, we have seen the rise of nationalism in France and Austria. More recently we have witnessed Donald Trump becoming the president elect in the USA.

All of these geo-political developments will have a profound impact on South Africa’s economy. There is one trend emerging from many of these developments, namely, many countries are now developing an inward looking approach.

Last night Premier Helen Zille, during her speech at the Premier’s Entrepreneurship Recognition Awards 2016, spoke about the need to internally examine a problem but to externalise the opportunities.

I want to congratulate Premier Zille and my cabinet colleague, the Minister of Economic Opportunities, Alan Winde, for promoting and recognising entrepreneurs and their contribution to job creation and growth.

Entrepreneurs have created 50 000 jobs in this Province.

Last night we witnessed how entrepreneurs look at a problem and externalise it into an opportunity. These entrepreneurs understand how tough the economy is, but through passion, commitment, resilience and innovation succeed to break through barriers to create jobs.

Honourable Speaker, Lee Kuan Yew, the former Prime Minister of Singapore in his book Hard Truths to Keep Singapore Going encourages leaders to face hard truths. Under the leadership of Premier Helen Zille this cabinet is dealing with hard truths.

One of the hard truths in South Africa is that the government wage bill, plus total social grants plus debt servicing costs equals 69 per cent of government expenditure. This is not a sustainable fiscal path. The Western Cape has therefore introduced Cost of Employment (CoE) upper limits and we have assented this into legislation.

Honourable Speaker, because we are in this together, we must find solutions together. For this reason Premier Helen Zille has invited Minister Pravin Gordhan (and he has agreed) to a Western Cape Cabinet meeting to engage constructively and share best practices in various ministries. We are looking forward to working with Minister Pravin Gordhan because we want South Africa to succeed.

Economic context and outlook
Honorable Speaker, the global economy is expected to grow at 3.1 per cent in 2016 from 3.2 per cent recorded in 2015.

The South African economy is expected to slow further to 0.5 per cent in 2016 from 1.3 per cent in 2015.

In addition to the impact that global risks has had on our economy, political uncertainty, electricity constraints, water shortages and drought has adversely impacted the South African economy.

The Honourable Minister of Finance, Pravin Gordhan, in his 2016 National MTBPS, proposes to contain the fiscal deficit, continue prioritising of capital investment, stabilise national debt as a share of GDP and bolster confidence in the domestic economy through a balanced or measured fiscal consolidation.

To achieve this, Minister Gordhan proposes reductions to the National expenditure ceiling of R10 billion in 2017/18 and R16 billion in 2018/19 and tax measures to raise an additional R13 billion in 2017/18 and R15 billion in 2018/19.

Honourable Speaker, it is a hard truth that we will see tax increases in 2017.

Honourable Speaker, labour market conditions has seen a period of meagre and uneven recovery since the global financial recession. The recently released Q3 Quarterly Labour Force Survey by Stats SA indicate that the unemployment rate in the Western Cape declined from 22.2 per cent in the second quarter to 21.7 per cent in the third quarter.

Madam Speaker, while this Province has seen improvements in several key socio-economic indicators, the weak economic outlook coupled with high levels of unemployment, will place greater pressure on front-line services which are personnel intensive.

Provisional Fiscal Envelope
Honourable Speaker, our provincial departments are fully aware that there is limited room for fiscal expansion and any additional funding requirements for expansion of current or new programmes are to be funded within the current budget allocations.

Honourable Speaker, indicative national transfers to this Province before adjusting for changes in conditional grants, which will only be communicated later, are calculated to amount to R56.023 billion in 2017/18, R59.796 billion in 2018/19 and R64.083 billion in 2019/20. This amounts to a total of R172.903 billion over the 2017 MTEF.

Honourable Speaker, the current tight fiscal environment presents us with an opportune time to investigate new sources of own revenue while also further improving efficiencies and finding additional own revenue sources.

Madam Speaker, I was recently mandated by the Western Cape Cabinet to explore additional revenue resources. I will make further announcements during the main Budget in March 2017.

Budget policy implications of the economic and fiscal outlook
Honourable Speaker, the policy principles of Constitutionalism, Rule of Law, Whole-of-Society, Evidence-Based, Partnerships, Citizen Centric and Public Value continue to inform the Budget Policy Framework of this Government.

Within the Provincial Strategic Plan 2014 – 2019, we commit to seven priority interventions called Game Changers which focus on Apprenticeships, Energy Security; Broadband; eLearning; After Schools Programme; Alcohol Harms Reduction; and a Better Living Model. These Game Changers have now been mainstreamed in the budgets of provincial departments with clear lines of accountability.

Honourable Speaker, I will now highlight some of the key medium budget policy priorities which include initiatives to grow our economy and create jobs, improve education outcomes, wellness and safety while building inclusive and sustainable living environments for our citizens to thrive.

Create opportunities for growth and jobs
Honourable Speaker, this Government continues to be committed to creating an enabling environment which is conducive to attracting investment, growing the economy and creating jobs.

My colleague, Minister Alan Winde takes the lead in Project Khulisa, the economic strategy of this Government. This strategy focuses on productive and enabling sectors that contribute to the region’s competitive advantage.

The Province will continue to promote agri-processing through growing the Western Cape’s share of the global halal market, stimulating local production and supporting the increase of exports of wine and brandy to China and Angola. The ease of doing business programme will continue to be supported with interventions which seek to reduce red tape.

My colleague, Minister Donald Grant continues to focus on providing more reliable and affordable public transport with better coordination across municipalities and between different modes of transport.

Extending bus services, refurbishing commuter trains, linking high-volume corridors and integrating all these into an effective service is important. To this effect, the George Transport Hub will provide a modern, user and environmental friendly facility.

Improve education outcomes and opportunities for youth development
Honourable Speaker, this Government continues to be dedicated to creating opportunities for children to remain in school for as long as possible while having access to quality education and creating opportunities for the youth to realise their full potential.

Improving the level of language and mathematics in all schools and increasing the number and quality of passes in the National Senior Certificate continue to be at the forefront of education policy in the Western Cape.

My colleague, Minister Debbie Schäfer continues to drive the Language and Mathematics Strategy which covers the thirteen years of schooling from Grade R up to Grade 12 and offers a single framework to analyse a school/ circuit/district and to devise a comprehensive improvement plan.

Honourable Speaker, in order to give effect to the objectives of improving education outcomes it is critical to safeguard resources such as school infrastructure, buildings and equipment and to ensure that these resources are available for delivery in key priority areas.

Honourable Speaker, I am pleased to announce that the Western Cape Education Department under the leadership of Minister Debbie Schäfer and in partnership with a group of donors, launched the new collaboration schools pilot programme in 2016 which aims to test a new model in 5 schools in the Western Cape. It involves harnessing strong managerial and training resources from the private sector to strengthen the education outcomes in public schools that need additional support, through school operating partnerships.

The Department of Social Development under the leadership of my Cabinet colleague, Minister Albert Fritz has refocused on the quality of ECD education, specifically in respect of the provision of a safe environment, nutrition and language development ahead of primary school enrolment.

We are currently transferring R1 billion to NPOs. Many are performing outstanding work. Minister Fritz has undertaken to examine value for money in all these NPOs and improve financial governance.

The Western Cape Youth Development Strategy, Honourable Speaker, emphasises that not only are our youth our future but also the most affected by unemployment. It is therefore a priority of this Government to strengthen programmes and initiatives aimed at the youth being educated, healthy and productive citizens who take responsibility for themselves.

My Cabinet colleague, Minister Anroux Marais continues to take the lead on the very successful MOD programme which continues to focus on after school activities for school-going children at 181 school-based MOD centres located within previously disadvantaged communities.

Minister Albert Fritz continues to implement Youth cafés located across the Province in Nyanga Junction, Rocklands, Vangate Mall (Athlone), Oudtshoorn, George and Vrygrond.

It is a hard truth that parental responsibility and an investment in education should be encouraged more.

These Youth cafés provide access to skills development programmes, training workshops, seminars, entrepreneurial opportunities and support to young people who are not in education, employment or training.

The Chrysalis Academy, under the leadership of my colleague Minister Dan Plato, will continue over the medium term as the Province’s youth leadership development organisation and a social crime prevention initiative which empowers young people to take responsibility for their personal growth.

Honourable Speaker, another transversal project involving the Departments of the Premier, Cultural Affairs and Sport and Education is the YearBeyond (YeBo).

This is an initiative which is underpinned by the Western Cape Provincial Youth Development Strategy is aimed at the academic expansion of the MOD programme while seeking to improve educational outcomes in under-resourced schools, and offer bright and motivated young people the opportunity to develop their own skills and expand their networks over the course of a year.

The full YeBo programme is currently operating in 22 no-fee schools benefiting approximately 100 learners per school each, while the YeBo-Lite Programme (eLearning and life skills only) is operating in 5 schools in Kraaifontein.

Madam Speaker, hard truths, need hard policy choices. This Government has made a deliberate choice to focus on the youth in this Province and we are partnering with SAPS, communities, municipalities, youth organisations and sport bodies to create opportunities for our youth.

Because the youth and their education is our priority the following infrastructure projects are planned over the medium term:

  • Eight new secondary schools
  • 6 new primary schools
  • Scheduled maintenance at 123 schools
  • 21 replacement primary schools
  • 2 schools for learners with special needs
  • 45 Grade R classrooms at 23 primary schools
  • 5 replacement secondary schools.

Increase wellness, safety and tackling social ills
Honourable Speaker, this Government continues to be committed to promoting safe, healthy and inclusive communities, where citizens take active ownership of their personal safety and wellness and, that of their families.

Guided by the Healthcare 2030 strategy, the Department of Health under the leadership of my fellow Minister Nomafrench Mbombo remains committed to transforming public health care services in this Province.

Priority projects in the health sector includes:
The First 1000 Days initiative which provides education, awareness and support to communities to improve health and development outcomes of children. The Western Cape on Wellness ‘WoW” campaign, which partners with provincial departments, the City of Cape Town, NGOs, academia and the private sector, aims to promote healthy lifestyles through improving eating habits and increasing physical activity. A further priority is the HIV/TB 90-90-90 campaign which provides that, by 2020, 90 per cent of all people living with HIV will have tested and know their HIV status; 90 per cent of all people with a diagnosed HIV infection will receive sustained antiretroviral therapy; and 90 per cent of people receiving antiretroviral therapy will achieve viral suppression.

Honourable Speaker, this Province will continue to support and fund various structures and services aimed at empowering and improving the socio-economic conditions of persons with disabilities, including protective workshops, residential care facilities and the Disability Desk within the Ministry of Social Development. A partnership between the provincial Departments of

Health, Education and Social Development and NGOs has led to the initiation of referral pathways for children and youth with disabilities.

Honourable Speaker, the Department of Community Safety, under the leadership of Minister Dan Plato has developed a service delivery model called the Community Safety Improvement Partnership as the blueprint for increasing safety.

In addition, the Western Cape Police Ombudsman is an institution unique to the Western Cape and deals with police complaints related to service delivery.

The Department of Transport and Public Works under the leadership of Minister Donald Grant will continue to strengthen innovative solutions to make roads in the Province safer. This includes the introduction and maintenance of enforcement technology such as the network of Automatic Number Plate Recognition cameras on key national and provincial routes.

Enable resilient, quality, sustainable and inclusive living environment
Honourable Speaker, this Government continues to be committed to improving the resilience, sustainability, quality and inclusivity of the urban and rural settlements in the Province.

Under the leadership of my colleague, Minister Anton Bredell, the Provincial Spatial Development Framework (PSDF) communicates government’s spatial development intentions to the private sector and civil society. The Regional Socio-economic Programme/Violence Prevention through Urban Upgrading (RSEP/VPUU) programme provides practical application to building safe and sustainable neighbourhoods, reducing social, cultural, economic and institutional exclusion of former townships and improving the quality of life in these areas.

Honourable Speaker, the Western Cape is historically prone to rainfall variability, unseasonal dry spells, and drought. This has underlined the need for new approaches to resource management such as the launching of the Western Cape Climate Change Response Framework and the Implementation Plan for the Agricultural Sector (the “SmartAgri Plan”).

This initiative has emanated from a collaborative effort between the Department of Agriculture, Department of Environmental Affairs and Development Planning as well as the private sector and academia.

Water has been identified as an enabler for sustainable economic growth and development. Honourable Speaker, this Government in partnership with various other role-players will continue to promote and facilitate optimised water usage in agriculture through a coordinated approach.

I want to highlight that this Government has identified drought relief as a key priority. The coordination of drought relief and water security will be led by the Department of Environmental Affairs and Development Planning.

Embed good governance and integrated service delivery
Honourable Speaker, this Government continues to remain committed to building a capable state and developing the tools, structures and processes that support and improve departmental service delivery initiatives.

Good governance, and in particular good financial governance, translates into improved service delivery through ensuring that taxpayers’ money is spent in an effective, efficient and transparent manner.

Provincial Treasury has implemented and will continue with broader capacity building initiatives to strengthen and improve the standards for financial governance.

The Department of Local Government, under the leadership of Minister Anton Bredell, remains focussed on providing municipal support primarily on service delivery and governance-related support.

Honourable Speaker, this Province is currently undertaking a mid-term review of the Provincial Strategic Plan 2014 – 2019. The preliminary findings indicate that the strategic goals and their related Game Changers and projects are appropriate to address some of the most pressing economic and social challenges in the Western Cape.

The Data Governance initiative, driven by the Department of the Premier under the leadership of Premier Helen Zille, aims to improve the overall management of the availability, usability, integrity and security of data assets within the Western Cape Government. The objective is to facilitate better development outcomes and service delivery.

Honourable Speaker, infrastructure investment is one of the key components underpinning economic growth. This Government remains committed to improving efficiency and effectiveness in the delivery of infrastructure investment. As such, the Western Cape Ministerial Infrastructure Coordinating Committee chaired by myself provides the necessary leadership for the efficient and effective delivery of infrastructure in the Western Cape.

Honourable speaker, my colleague, Minister Debbie Schäfer, leads the Education Action Plan 2019, which outlines the strategy that focuses substantially on the most urgent replacements. This implies resource shifts towards maintenance and achieving significant impact in the process.

Honourable Speaker, the Healthcare 2030 strategy, led by my colleague, Minister Nomafrench Mbombo, plots the way forward in the delivery of health services through modernisation, management and maintenance of health infrastructure and technology in an economical, efficient, cost effective manner; while at the same time taking cognisance of the continuous development of medical technology.

Honourable Speaker, this Government owns and maintains approximately R200 billion worth of immovable assets and roads under the custodianship of my fellow colleague, Minister Donald Grant. This portfolio of assets is critical to the realisation of the Western Cape’s socio-economic, service delivery and growth objectives.

The Western Cape Government believes that a country’s competitive economic advantage depends on the quality and accessibility of its infrastructure. An efficient roads system gives the Province a competitive edge in moving goods economically and also helps attain an efficient distribution of population, industry and income.

Key priority projects to support economic growth are the Borcherds Quarry Interchange on the N2 and the N1/N7 upgrade.

Honourable Speaker, key for this Government is developing sustainable integrated human settlements in the Western Cape that will allow its residents to access social and economic opportunities close to where they live. My fellow colleague, Minister Bonginkosi Madikizele has set three priority areas, on which to focus for the Medium Term Strategic; These are the Upgrading of Informal Settlements Programme; Increase Affordable/GAP Housing; and prioritise the most deserving people in relation to the allocation of Breaking New Ground free houses.

Speaker, to strengthen governance and oversight requirements in terms of their constitutional responsibilities and for Financial Management of Parliament and Provincial Legislatures, Act 10 of 2009 (FMPPLA), Parliament receives R5 million in 2017/18, R7.5 million in 2018/19 and R10 million in 2019/20.

Western Cape Government Fiscal Risk Statement
Honourable Speaker, this year I am including a Western Cape Government Fiscal Risk Statement as part of our provincial MTBPS acknowledging national risks, our own provincial specific risks and our response to mitigate these risks. To this effect we have developed and implemented a Western Cape Government Fiscal Strategy designed to ensure sustainability in public finances whilst providing sufficient policy room to manage adverse shocks resulting from the current weak economic and fiscal environment.

2016 Adjusted Estimates
Honourable Speaker, the 2016 Adjusted Estimates lays the basis for the 2017 MTEF and makes provision for additional net spending amounting to R908.166 million of which and additional R139.982 million has been received and a rollover of R59.894 million for Health Infrastructure from additional national conditional grants. The 2016 Adjusted Estimate allocations are in line with provincial policy priorities and includes:
R439.464 million is allocated for infrastructure related projects, in the main to Transport and Public Works (R216.805 million), Education (R142.492 million), Economic Development and Tourism for the acquisition of land for the Saldanha Bay Industrial Development Zone (R100 million), Health (R59.894 million) and Human Settlements (R20.173 million).
R65.293 million is allocated for various ICT related projects in the Departments of the Premier, Education and Transport and Public Works.

In support of measures to address water security and the spillover effects of drought, R25 million has been allocated from provincial sources. The Department of Environmental Affairs and Development Planning receives R5 million to ensure the availability of water for sustainable growth and development, the Department of Agriculture receives R10 million for food and water security and the Department of Local Government receives R10 million as part of a support package to municipalities.

These amounts have been extended over the 2017 MTEF.

Honourable Speaker, fiscal consolidation remains a priority over the 2017 MTEF and requires a review of programmes and projects to identify what this Government should prioritise in line with our fiscal and strategic imperatives.

Fiscal consolidation is necessary. However it needs to be balanced, as it may also impose service delivery risks and reverse some of the gains made in improving socio-economic outcomes.

The fiscal and budget policies outlined in the 2017 - 2020 Western Cape Medium Term Budget Policy Statement , in part, intends to mitigate economic and fiscal risks while ensuring that the Western Cape Government continues to deliver on its core mandates.

Honourable Speaker, my cabinet colleagues will outline in their respective budget votes the detail and rationale for their adjustment budgets as it pertains to their relevant budget votes.

Honourable Speaker, there is hope and enthusiasm in the air. There is hope because entrepreneurs and businesses are growing and create jobs in the Western Cape. There is enthusiasm because a capable state, accountability and the rule of law are the foundations of this government, led by Helen Zille.

The hard truths are that we have to cut our expenditure to maintain our current service delivery standards and will continue to maintain fiscal discipline.

The Western Cape however is dealing with the hard truths.

Honourable Speaker, I hereby table the 2017 – 2020 Western Cape Medium Term Budget Policy Statement, the 2016 Western Cape Adjusted Estimates of Provincial Expenditure, the Western Cape Adjustments Appropriation Bill, 2016, Western Cape Gazette of Allocations to Municipalities and this speech for deliberation and consideration by the House.

I thank you.

Dr IH Meyer
Minister of Finance

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