Debate on the Special Adjustment Budget 2020: Speech by David Maynier
When the storm finally hit we found that national government had run out of money to fight Covid-19 in South Africa.
Which is not surprising because while we are mobilising funding to support the fight against Covid-19, national government are mobilising funding to support zombie state-owned airline, South African Airways.
We are in such deep fiscal trouble that, despite all the kicking and screaming, we have now taken a soft loan, with stringent commitments, from the International Monetary Fund.
Which is why, President Cyril Ramaphosa was dead wrong when he told us that “cost is not the issue” when it comes to the fight against Covid-19 in the Western Cape.
And which is why, at our moment of greatest need, as we faced the storm beyond anything we had experienced, our budget was cut by R113.1 million in the Western Cape.
So cash-strapped was national government that support for the fight against the pandemic in the province was funded by slashing inter alia the:
- Human Settlements Development Grant by R202.2 million;
- Provincial Roads Maintenance Grant by R161.6 million;
- Education Infrastructure Grant by R159.4 million; and
- Comprehensive Agricultural Support Programme by R21.2 million.
Which, of course, compromises our ability to deliver housing, maintain roads, build schools, and support small farmers in the Western Cape.
We have to face the fact that we are, effectively, on our own when it comes to the fight against Covid-19, in the Western Cape.
A Budget to Beat Covid-19
Which is why we tabled “A Budget to Beat Covid-19 in the Western Cape”, to support the immediate response to the fight against Covid-19, last week in Parliament.
We worked hard to mobilise every cent available, and have allocated R3.05 billion to support the fight against Covid-19 in the Western Cape.
We allocated inter alia an additional:
- R1.8 billion to the Department of Health for personal protective equipment, temporary field hospitals, testing and screening, and additional bed capacity;
- R400 million to the Department of Transport and Public Works for the hiring of venues and the purchase of services for quarantine and isolation facilities; and
- R310 million to the Department of Education for personal protective equipment, and the sanitisation of schools in the Western Cape.
We allocated inter alia an additional:
- R84 million for humanitarian relief including inter alia:
- R25.9 million to the Department of Social Development for an emergency food relief programme;
- R18 million to the Department of Education for an emergency school feeding scheme; and
- R17.8 million to the Department of Local Government for an emergency food relief programme in the Western Cape.
We funded the allocation inter alia by:
- committing R1.4 billion from the provincial reserves, set aside for unforeseeable and unavoidable expenditure, service load pressures, and fiscal stabilisation;
- committing R1 billion in savings realised from baseline reductions implemented by departments and public entities; and
- committing R605.5 million in national conditional grants made to support the response to the pandemic in the Western Cape.
Which resulted, after taking into account reductions in national conditional grants of R665.3 million, and baseline reductions of R1.2 billion, in a net upward adjustment to the main budget of R1.1 billion in the 2020/21 financial year in the Western Cape.
Which is how we have supported the extraordinary work done by government, and the people in government, in the fight against Covid-19, in the Western Cape.
Which includes building temporary hospitals, providing quarantine and isolation sites, distributing food parcels, feeding vulnerable children, keeping older persons safe, supporting businesses and rolling out communication campaigns in the Western Cape.
A Fiscal Mountain to Climb
We estimate that the total finance requirement to respond to Covid-19 will be R5.1 billion, including estimated direct costs of R4.4 billion and revenue shortfalls of R720 million in 2020/21 in the Western Cape.
However, there is still uncertainty when it comes to the total finance requirement for several reasons.
First, we may face a possible prolonged peak, or even a second wave, of Covid-19 infections in the Western Cape.
Second, work has begun on a provincial recovery plan, but the full cost implications still have to be determined in the Western Cape.
And third, there is always the danger that national government may impose further budget cuts:
- if the R150 billion in public sector wage bill savings penciled in over the medium term do not materialise; and/or
- if the R230 billion in general unspecified savings penciled in over the medium term are imposed in provinces like the Western Cape.
Which is why we have decided to implement a three-phase budget process designed to reprioritise expenditure over time so that we can recalibrate our response to the changing environment in the Western Cape.
We still have a significant fiscal mountain to climb and will have to reprioritise about a further R2 billion between now and the next adjustments budget towards the end of 2020.
The letter of intent, signed by the Minister of Finance, Tito Mboweni, making commitments to the International Monetary Fund in return for the soft loan, is a clear indication of what is to come because it states clearly:
“The October MTBPS and the process leading up to the February 2021 budget will propose fiscal consolidation measures that will allow public debt to decline after peaking at 87.4% of GDP in FY2023/24.”
We may look back and think of these as the easy days because the really tough fiscal decisions - on what stays, and on what goes - are still coming in the Western Cape.
We face a pandemic which is costing lives, and costing jobs, and we now estimate that we will lose 10.2% in Gross Value Add and 167 000 jobs this year in the Western Cape.
We have worked around the clock to support business, and back business, not just to open, but to open safely in the Western Cape.
We have dealt with 3887 queries supporting businesses, 1325 queries supporting workplace safety and 11 0000 “Covid-19 Safety Kits” are being distributed across the Western Cape.
We have allocated an additional R14 million to support small businesses, to support workplace safety and to support the opening of the George Airport, which is vital for the economy in the Western Cape.
However, work has begun on a provincial recovery plan, which includes economic recovery, and will be funded in the second adjustment budget, towards the end of 2020.
Procurement Disclosure Report
We have to do everything to ensure that the “vultures” who feed off Covid-19 do not settle in the Western Cape.
So, we have put in place a number of new measures designed to mitigate risks when it comes to the procurement of personal protective equipment, including implementing a new “Procurement Disclosure Report” in the Western Cape.
We will for the first time, begin making public regular, standardised reports, on a monthly, quarterly and annual basis, on the procurement of personal protective equipment in the Western Cape.
The first “Procurement Disclose Report”, which covers the period 01 April 2020 to 30 June 2020 will be published at: westerncape.gov.za/provincial-treasury
We consider the “Procurement Disclosure Report” as an excellent example of transparency, and another innovative step towards maintaining clean government in the Western Cape.
So, in the end, we recommend “A Budget to Beat Covid-19 in the Western Cape” to you for debate because it is a budget that funds field hospitals, that funds isolation and quarantine facilities, that funds emergency food relief, that funds school feeding schemes, that funds schools opening safely, that funds businesses opening safely; and in the end, saves lives, and saves livelihoods, in the Western Cape.
To view the Special Adjustment Budget documents visit: https://www.westerncape.gov.za/provincial-treasury/news/special-adjustment-budget-address-budget-beat-covid-19-western-cape
Spokesperson for the Provincial Minister of Finance and Economic Opportunities
(Responsible for the Provincial Treasury and the Department of Economic Development and Tourism)
Cell: 071 087 5150