Better Together in Fighting Joblessness and Growing the Economy | Western Cape Government

Speeches

Better Together in Fighting Joblessness and Growing the Economy

22 November 2012

Honourable Speaker, Premier and Cabinet colleagues, Leader of the Opposition, Members of the Provincial Parliament, Director-General, Heads of Department, The Media, Special Guests, Citizens of the Western Cape, 2012 will go down in South Africa’s history as a year of violent protests.

This year, more violent protests were recorded in our country than in any other year since the end of Apartheid.

I would like to extend our sincere condolences to families that lost a mother, a father, a sister, a brother, a child, a grandparent, a friend, or a loved one as a result of violent protests.

Our sympathy, also to those who lost their means of living as a result of looting and destruction of property.

Speaker, National Treasury estimates that since the beginning of 2012, R10.1 billion worth of production value has been lost solely as a result of the disruptions in the gold and platinum mining sector.

While the Western Cape was largely unaffected by the unrest in the mining sector, the spate of protests in the agricultural sector during the past two weeks will not leave our economy unscathed.

The agricultural sector is a very important component of the Western Cape economy and sustains thousands of jobs.

The sector is also, by far, the most dominant export industry in our Province.

The agricultural sector exports more than 30 per cent of its annual production, with the wine industry contributing nearly 50 per cent of these exports.

Directly, the sector contributed R13.8 billion to Western Cape GDPR in 2010 and 23.2 per cent of national agricultural GDP.

Speaker, our agricultural sector is well-positioned to capitalise on the demands that have arisen in light of a growing global food shortage. To do so, we must prove that our products are of high quality and that our supply chains are stable.

Let it be clear, I have no doubt that many workers have real concerns. These should be addressed in constructive and sustainable ways.

We must engage in a meaningful, peaceful and constructive manner in creating a better labour regime in our country.

Economic Outlook for the next three years:

Speaker, developments in our region must be considered in the context of the global and national economic environment.

Despite initial optimism, global economic recovery has been slow, with high levels of sovereign debt and high unemployment in developed countries.

The negative impact of the sluggish global economy on South Africa was already evident with weaker export volumes in the second quarter of 2012. 

National Treasury expects growth in the South African economy to ease from 3.1 per cent in 2011 to 2.5 per cent in 2012. GDP growth is expected to recover to 3 per cent during 2013.

A more meaningful increase in GDP growth is only expected from 2014 onwards.

In the Western Cape, growth is predicted to slow to 2.9 per cent in 2012 before accelerating to 3.6 per cent in 2013.

Thereafter, growth is forecast to remain stable at just above 4 per cent between 2014 and 2017, averaging growth of 3.9 per cent over this forecast period.

Labour Market Trends:

Nationally, expanded unemployment grew by an average of 8.3 per cent per annum between the first quarter of 2008 and the first quarter of 2012.

The growth in expanded unemployment was driven primarily by a massive increase in the number of discouraged work seekers. 

Speaker, the number of people in South Africa as a whole who feel that they have no prospect of finding a job has grown by 25.3 per cent per annum, and is now at 11.4 per cent.

The Western Cape differs from the rest of the country in that it has relatively few discouraged work seekers - just 1.3 per cent.

This means, Speaker, that there is a high degree of hope amongst people in our province that they are able to find a job.

We will continue to work hard to meet this expectation and further drive the unemployment rate down.

The youth of our country continue to face significant employment challenges.

The Provincial unemployment rate for 15 to 24 year olds was at 45.1 per cent in the first quarter of 2012, twice the average of the unemployed in the Province as a whole (22.8 per cent).

We will make a special effort to address joblessness amongst our youth.

Indeed, we have already begun to tackle this task through a Youth Wage Subsidy called the Work and Skills Programme.

The Department of Economic Development and Tourism has set aside R15 million over the Medium Term for the Work and Skills Programme, the ICT initiative and the Artisan Programme.

These are all initiatives that are specifically targeted at creating employment opportunities for our youth.

I am extremely pleased to announce that Jobs Fund administered by the Development Bank of South Africa (DBSA) on behalf of National Treasury, has allocated R65 million over three years to these youth initiatives.

In addition, R32 million will be provided by SETA and host companies, bringing the amount to be spent by the Department of Economic Development and Tourism on our youth employment initiatives – the Work and Skills Programme, the ICT initiative and the Artisan Programme - to R112 million over the Medium Term.

Medium – Term Expenditure Priorities:

Speaker, in light of the challenges facing our Province, our government’s key objective in the medium term is to grow the economy and create employment opportunities for all.

As a Province functioning within the structure of the three spheres of government, we do not have the macroeconomic, trade and industrial policy instruments that national government has at its disposal to directly influence economic outcomes.

However, with the functions that we do have - Basic Education, Health services, Social welfare, Human Settlements, Public Works, Transport and Agriculture - we will utilise these fully to achieve our goal of driving economic and employment growth.

Speaker, as a first step, we are creating an enabling environment for growth.

Our Red Tape to Red Carpet Campaign has, thus far, had a 90% resolution rate. 

We have already put in place a plan to ensure that the majority of citizens will have easy access to the low cost broadband and are suitably skilled to engage government through this channel.

We intend to ensure public ICT access within a 2 km radius of every person living in our province by 2019, and universal broadband access by 2020. We will set aside R240 million over the Medium Term for broadband connectivity.

We are building partnerships in economic development – the EDP has been established to lead, co-ordinate and drive economic development in the Province.

Together with a broad range of stakeholders, the EDP has devised an economic vision and action plan for our province up to 2040 that is focused on making our society more skilled, more connected, more innovative and more resource efficient. One Cape 2040 will be tabled at Cabinet shortly for approval, after which time it will be debated more broadly.

The One Cape 2040 vision is aligned to Minister Trevor Manuel’s National Development Plan as well as the plans and visions of the City of Cape Town.

Speaker, for an economy to grow and attract investors, a well-maintained, well-organised and safe transport network is necessary.

The Department of Transport and Public Works has set a target of reducing our road maintenance backlog by 16 per cent by 2014. Close to R1.5 billion over the Medium Term has been directed towards this objective.

The Department of Transport and Public Works will also oversee the upgrading of a number of key roads in our Province.  These include the remaining section of the Divisional Road between Gansbaai and Bredasdorp; the Wingfield interchange and the road network that will support the proposed Saldanha Bay IDZ.

The Wingfield Interchange is a node of strategic importance as its upgrading will improve the accessibility into the Cape Town CBD and the Port of Cape Town on both the N1 and N7.  It is anticipated that 50 per cent of the Wingfield design stage will be completed by the end of the 2014/15 financial year. The total cost of this mega project is estimated to amount to R1.255 billion and should be completed at the end of 2019.

The upgrading of the remaining 27.5 km of road between Gansbaai and Bredasdorp will commence in March 2013 and is planned for completion by the 2015/16 financial year.

This road will be transformed from a rural to a scenic tourist route that passes through the Elim Valley, linking Gordon’s Bay to Cape Agulhas via Hermanus and Bredasdorp and the Whale Route. The project has been approved for implementation at an estimated cost of R292.96 million.

The regional freight links between Saldanha Bay and Vredenburg, as well as Cape Town and the N7 will be maintained and upgraded to ensure adequate access to and from Saldanha Bay to account for higher demand once the IDZ has been implemented. The total estimated cost of this project is R524.31 million.

Speaker, as the Western Cape Government we believe that we must grow our economy while taking cognizance of our natural environment. The Department of Environmental Affairs and Development Planning intends to build and expand the sustainable resource use agenda within the Province.

Within each department, we will pilot a project called the ‘Guidelines for the Embedding of Sustainability’ and implement them sequentially over the Medium-Term.

To achieve the promotion of sustainability at local government level, municipalities will be assisted to devise sustainable development frameworks, climate change adaptation plans, sustainable energy as well as integrated waste management plans.

To further promote sustainability in our province, we have prioritized initiatives to grow the green economy. Our ultimate aims are to identify possible private sector investment cases in support of green investment growth; and to identify economic opportunities and to facilitate their realisation.

Our government’s 110% Green Initiative was launched earlier this year. This initiative demonstrates the Western Cape Government’s commitment and leadership to create connections between the green and the general economy through practical action at all levels of society.

Speaker, for our economy to grow and create employment, we require an educated populace.

Unemployment amongst those with incomplete secondary education has grown rapidly, with the number of unemployed matriculants growing at a similar rate.  Together, these two groups account for 82 per cent of unemployment and 95 per cent of unemployment growth, respectively.

In order to improve educational outcomes and increase employment for our youth, the Department of Education intends to improve our Grade 1 and 9 pass rates and retain more learners in Grades 10 to12.

The Education Department will dedicate all available resources to improve the quality of education offered in all our schools: In the medium-term, this department will continue to focus on three goals:

  • Improving language and mathematics in primary schools;
  • Improving the number and quality of passes in the National Senior Certificate; and
  • Reducing the number of under-performing schools.

Over the Medium Term, in excess of R2.353 billion in capital spending will be invested in Education.

R1.318 billion will be invested in new, replacement and expanding primary and secondary schools. R376.143 million will be utilised to renovate schools in various districts around the Province.

Despite having better living conditions and income levels than other provinces in South Africa, the Western Cape has a particular set of social ills.

Speaker, the Province has one of the highest homicide rates in South Africa, largely due to the ineptitude of the South African Police Service (SAPS) to address crime.

We have established a Commission of Inquiry to investigate the breakdown of relations between SAPS and the residents of Khayelitsha, where community members have taken justice into their own hands.

To increase our oversight role of SAPS, the Community Safety Bill was tabled in 2011/12. The Bill is expected to be promulgated in early 2013.

Speaker, investment in health is key.

While life expectancy in the Western Cape is the highest in South Africa, it remains low compared to peer developing countries.

The Province faces a quadruple burden of disease consisting of HIV and TB, communicable diseases associated with Child and Maternal health, Mental Health and non-communicable diseases such as diabetes and cardiovascular diseases, and injuries.

In response to the burden of disease, the Department of Health has set the key target of achieving the overall aim of a healthier and more vibrant population by improving women’s health, mental health and promoting healthy lifestyle strategies.

The Department of Health will also invest R2.875 billion in health capital infrastructure.

This investment will encompass various projects which are under construction and planned for construction over the Medium-Term:

  • New community health and emergency centres;
  • New Observatory Forensic Pathology Laboratory;
  • Replacement of GF Jooste Hospital;
  • Valkenburg Hospital Upgrading;
  • Brooklyn Chest Hospital; and
  • Lentegeur Hospital Laundry replacement

Speaker, the 2011 Census results indicate that the Western Cape is one of two Provinces that experienced huge in-migration. The Western Cape population now stands at 5.4 million, up from 4.5 million.

The Department of Human Settlements is committed to the optimal use of resources to address the need for improved human settlements. However, the reality is, we do not have the funds, or urban land to provide homes for all the people that require them.

In the Medium Term, via municipalities, the Department of Human Settlements will continue to deliver opportunities through the provision of serviced sites, rental units, housing finance assistance and a limited number of top-structures.

Through this process, it is envisioned that everyone living in informal settlements, backyards, and over-crowded areas will have access to basic services.

The results of Census 2011 show that we are well on our way with achieving this goal:

  • 99.1 per cent of Western Cape residents have access to piped water both inside and outside the yard
  • 91.1 per cent Western Cape residents have refuse removal
  • 93.4 per cent Western Cape households have electricity
  • 96.9 per cent Western Cape residents have toilet facilities

Our goal is to see to it that 100% of our residents have access to basic services.

The Western Cape has a particular set of social ills that mark its socio-economic environment.  Alcohol and drug abuse trends in the Province remain a concern, due to the associated link with other social risk factors such as crime and violence.

The Department of Social Development’s Substance Abuse Programme gives those at risk of substance abuse access to prevention, treatment and rehabilitation programmes.

In April this year, our single most single largest intervention to reduce alcohol abuse and its related harms, the Western Cape Liquor Act was enacted. Over the Medium Term, we will monitor its effect in reducing alcohol abuse in our Province.

To assist in addressing the multi-faceted socio-economic challenges within our Province, the Department of Cultural Affairs and Sport is focused on promoting social inclusion and reducing poverty.

Together with the Department of Social Development, an after–school care Mass Opportunity and Development (MOD) centre programme has been developed as a response to expose children, communities, farm workers and senior citizens in poorer communities to a holistic development regime that contributes to the realisation of a more socially inclusive society.

To date, 181 MOD centres have been established in impoverished communities. Plans are in place to continue to support these centres. We will also roll out a further 60 MOD centres over the Medium-Term.

Speaker, the Western Cape Government is committed to ensuring that at least 60 per cent of all agricultural land reform projects in the Western Cape succeed by 2014.

Ten rural development nodes have been established in the Province by the Department of Agriculture. The organisational structures required to prepare these communities for economic development has also been established. About 530 temporary jobs have been created and another 1 000 are planned.

Speaker, the achievement of all these goals is hinged on efficient, responsive transparent and prudent governance.

To support better governance at local level, the Department of Local Government will continue to provide support to municipalities.

To achieve this, the Department will provide advisors from a pool of experts to assist municipalities with projects such as organisational design, performance management systems and change management.

At Provincial level, Provincial Treasury and the Department of the Premier aim to progressively raise the bar on accounting and financial governance standards and the introduction of purposeful steps that will result in better data integrity, the reduction of irregularities and corruption towards sustainably attaining clean audits within departments, entities and municipalities.

The Resource Envelope and Financing Issues:

Speaker, in the Medium Term, we have reprioritised spending away from programmes that are not meeting performance requirements.

This reprioritisation has enabled funds to be reallocated to infrastructure investment and other priorities without reducing social expenditure particularly for education and health services.

Over the Medium-Term, provincial expenditure remains mostly dependent on national transfers, including the Provincial Equitable Share and Conditional Grants contributing approximately 95 per cent with provincial own receipts (taxes and fees/user charges) contributing around 5 per cent.

Over the 2013 Medium Term, national transfers are proposed to increase with additions to the Equitable Share for all provinces of R6.3 billion in 2013/14, R8 billion in 2014/15 and R13.4 billion in 2015/16. 

Nationally, additions to conditional grants amount to R500 million in 2013/14, R2.5 billion in 2014/15 and R7.4 billion in 2015/16.

Provincial equitable share additions are to provide for the carry through cost of higher-than-anticipated wage agreements concluded in 2012/13.

Provincial Treasury’s own calculations indicate that the net estimated national transfers to the Western Cape are adjusted by R940.338 million over the Medium Term.

The aggregate net adjustment in the Equitable Share baseline to the Province amounts to R1.265 billion over the Medium Term.

The calculated new overall Equitable Share allocations for the Western Cape amount to R31.117 billion, R33.227 billion and R35.146 billion in 2013/14, 2014/15 and 2015/16, respectively.

The Equitable Share formula is largely population driven, a component that accounts for 60 per cent of the formula. 

Following the release of Census 2011 and the increase in population numbers in the Western Cape, National Cabinet, National Finance Minister’s Committee on Budget, the Technical Committee of the Finance and Budget Council have agreed on an appropriate phasing-in approach in order to cushion and mitigate the impact on funding for our Province.

Adjusted Estimates:

As at the second quarter of the 2012/13 financial year, the Western Cape’s spending amounts to R18.512 billion or 46.4 per cent of the 2012 Main Budget. We are well on our way to achieving the 99% budget spend milestone we achieved in the 2011/12 financial year.

The 2012 Adjusted Budget proposes spending of an additional R294.979 million for the 2012/13 financial year. 

All departments, with the exception of Education and Health, will absorb the costs of the 2012 wage agreement, which was 1.2 per cent higher than what was budgeted for in the main budget.

The additions taken up in the 2012 Adjusted Budget are mainly for the following:

•  R163.158 million to cover the higher than anticipated wage settlement cost at the Education and Health Departments and Further Education and Training (FET) colleges;

•  R44.997 million for ICT services including broadband connectivity;

•  R50 million for capital roads infrastructure projects; and

•  R60.388 million as financial assistance to various municipalities to provide bulk infrastructure to unlock housing delivery.

Conclusion:

Speaker, it is with pleasure that I table the 2012 Adjustments Appropriation Bill, the Adjusted Estimates of Provincial Expenditure 2012, the Provincial Gazette for the Adjustments to Local Government Allocations, the Province’s 2013 to 2016 Medium Term Budget Policy Statement and my Speech for discussion and consideration by this House.

These documents encompass our shared vision for a Western Cape that is a better place to invest, do business, get a job and earn a living.

I look forward to engaging with this House and the public with regards to how we can Better Together achieve this vision.

I would like to express my gratitude to Premier Helen Zille and my colleagues in the Provincial Cabinet, as well as heads of departments and their staff, for their valuable contributions in the process of drafting this Medium Term Budget Policy Statement and the 2012/13 Adjusted Estimates.

Thank you to Dr JC Stegmann and his dedicated team in the Provincial Treasury for their very hard work. Under his leadership, the departments of the Western Cape Government continue to be more efficient and financially sound than anywhere else in the country, an achievement of which we can all be very proud.

I thank you.

Media Enquiries: 

Phumzile Van Damme
Spokesperson for Minister Winde
Cell: 082 378 2235