Budget speech by the Minister of Transport and Public Works, Donald Grant
Speech delivered on 23 March 2018 by Minister Donald Grant.
- Speaker/Deputy Speaker
- Chairperson and other members of the Standing Committee
- Leader of the Official Opposition
- Honourable Members
- Head of Department, Ms Jacqui Gooch, and senior officials
In addressing this House yesterday, I emphasized that a budget is not simply a random collection of numbers but is an instrument designed to ensure that a government at any level is able to deliver on its values, aspirations and commitments. As such, the budget is shaped by these commitments on one hand – but also by emerging realities and emerging needs. One such emerging reality in the Western Cape in recent time has been the change in the availability of water and the impact of this reality on virtually all sections of the economy and across all communities. I will return to aspects of this reality during the course of this speech.
Another such reality is, of course, the existing overall economic context within which the country as a whole is located at the moment. This reality we are less able to lay at the door of environmental and weather considerations and more at the feet of a national government under the leadership of the former President whose grasp of economic realities was at best sketchy. His parting gift to the country of having it fund a promise of partial free higher education will have a fiscal impact for many years to come – and not necessarily only the sort of impact he may have had in mind when he took the decision.
Perhaps the macro-economic context to which I am referring is best described in an extract from the Budget Speech of the then Minister of Finance, Malusi Gigaba, just a month ago on 21 February. In describing the economic circumstances leading up to the tabling of the National Budget he said:
It would be remiss of me not to acknowledge that last year was particularly difficult for our economy. The year was characterized by slow economic growth, recession, ratings downgrades, and heightened concerns regarding the governance and sustainability of key state–owned companies.
It goes without saying that the consequences of these economic realities have had to be absorbed by budgets at both national and provincial levels.
In his Western Cape Budget speech on 6 March Minister Meyer went to considerable lengths to set out the measures which the Province has been able to take to protect the frontline services mandate particularly in Health, Education and Social Development. These measures are obviously necessary, commendable and right, once again giving the lie to the Official Opposition’s constant denials of the focus of the overall Provincial budget on the poor.
Let me now turn to the overall Vote 10 budget for 2018/19.
The total amount to be appropriated for Vote 10 – Transport and Public Works – is R7.7bn. The increase of R180.8m on the previous budget is below inflation and of the total budget R1.7bn consists of own revenue. Approximately a quarter of the budget amount is linked to conditional grants. However, as these national conditional grants were almost without exception cut at source the DTPW has augmented these amounts from own revenue.
The DTPW – in line with other Provincial Departments – operates on the basis of various programmes. The allocations to the 6 programmes within the Department are as follows for the 2018/19 financial year:
- Administration – R197.45 million
- PW Infrastructure – R1.808 billion
- Transport Infrastructure – R3.588 billion
- Transport Operations – R1.303 billion
- Transport Regulation – R776.10 million
- Community – Based Programmes – R55.79 million
As the DTPW is the implementing agent for both Education and Health infrastructure in the Western Cape, the DTPW is scheduled in the financial year under discussion to spend on behalf of these crucial delivery departments the following amounts:
- Education – R1.2 billion
- Health – R478.64 million
These amounts for Education and Health include funds for capital works and scheduled maintenance. The strategic decisions about these education and health infrastructure projects remain with those departments and the three departments co-operate to ensure that their Rands go as far as possible without sacrificing quality and safety standards. In healthy economic times, this would simply be good housekeeping – in the existing tough times, co-operation is essential to service delivery.
It is one of the great challenges facing any government that as budgets shrink and resources are reduced, more and more people are put under financial and employment pressure and demand for government services increases. To meet this increased demand for services and support any responsible government has to minimize wastage and ensure that every cent is well – spent.
Speaker, having unpacked in broad terms the quantum of Vote 10, it would be remiss of me not to alert this House to two factors which can and will reduce the real purchasing power of this budget.
Firstly, the recently announced 1% change to VAT has significant implications for the DTPW - a department which devotes a considerable amount of its budget to supply chain transactions – transactions which attract VAT. The estimated impact of the 1% change is in the order of R51 million – not an inconsiderable amount seen against the needs of the population of the Western Cape.
Secondly, the widespread water limitations will further reduce in real terms the disposable budget of the Department as reduced water consumption and water sales begin to have a negative impact of the income of many Municipalities. In cases where these Municipalities have to increase property rates and service charges to compensate for the loss of income there will be implications for the DTPW as the department responsible for rates and charges on provincial properties. Water is also an essential component in construction and road building.
Speaker, Minister Meyer has correctly stressed the importance of investment in public infrastructure for the provision of services as well as for underpinning economic growth and providing jobs. The budget amounts I have already referred to for public works and transport infrastructure as well as education and health speak for themselves. The proper development and maintenance of infrastructure needs to be understood as critical in leveraging the potential of a country and in securing effective, efficient and fit for purpose service delivery. While new assets are obviously required to support growth, considerable resources must be invested in maintaining the existing infrastructure portfolio and renewing it where necessary. A Brookings Institute report puts the overwhelming logic of proper maintenance simply in three rules, as follows:
- Poorly maintained infrastructure increases costs.
- Maintenance is an investment with a very high rate of return.
- Deferred maintenance makes fixing later more expensive and is a genuine debt burden on future generations.
In this regard it is instructive to look at the total replacement costs of two classes of assets for which the DTPW is responsible, as follows:
- Road network – replacement cost of R102.8 bn
- 8.3 m square meters of property portfolio – replacement cost of R105.8 bn
My department has over a number of years applied the principle of the importance of maintenance to our road network and more particularly to that part of the network which carries the overwhelming flow of traffic. This approach has paid dividends time and again. The cost of having to replace any infrastructure instead of maintaining it to lengthen its useful life is simply short-sighted economics. Where new investment is made in the road network it is usually where it best supports economic growth.
A full list of planned road and other infrastructure projects over the MTEF is, as members will know, available in the Estimates of Provincial Revenue and Expenditure – the so-called Blue Book.
Speaker, while on the subject of the sensible use and preservation of our assets it is also encouraging that the findings of our latest Property Efficiency Report show continued improvement in our utilization of both owned and leased in property used by the Western Cape Government. The performance matrix analyses efficiency, quality and the environment in which the building operates by concentrating on cost, consumption of natural resources and space utilization.
While time does not allow me to unpack the significant data available in this Report it is informative to table a few trends as follows:
- Workspace use efficiency has increased by a further 7.6%.
- Energy consumption is down by a further 6%. Overall consumption in our government used buildings is 158 kWh per square metre per annum as opposed to a private sector average of 246 kWh per square metre per annum. This is indeed significant.
- Water consumption is down by a further 20%. Here I must stress that this decline in consumption predates the introduction of further reduction measures associated directly with the current water situation.
Speaker, as Minister of Transport in this Province, it would be remiss of me not to refer to the continued abysmal and dangerous rail commuter service provided to the residents of the Western Cape – and particularly of Cape Town – by the National Government through its state-owned entity, PRASA. Members will be aware of the on-going governance challenges which have developed over time. Hardly a week goes by without media reports of further dubious procurement deals, Board-level clashes and management instability. I will now be working with the third National Cabinet Minister of Transport in a space of 6 months.
PRASA continues to be governed by an Interim Board and although there has been a call for nominations to a new PRASA Board the closing date for such nominations is such that this new Board will be appointed only after yet another Interim Board is put into place for a further period. This does not bode well for the 600 000 commuters reliant on a safe, dependable service. I must emphasise that my Department has assisted Metrorail Western Cape and PRASA in every way legally possible over the last few years to stabilize and improve services.
In this regard, Members will find in Vote 10 a provision of R16 million to be transferred to the City of Cape Town in the new financial year as the Province’s share of the costs of an agreed to rail security initiative involving the Province, the City of Cape Town, PRASA and the Chamber of Commerce. As Minister of Transport, I will be chairing a working group of these various entities with the intention of supporting a PRASA turn-around strategy aimed at improving the safety, reliability and cost of the rail commuter service – a service that is essential to the wellbeing of hard working and often poor residents of this Province.
Given the technical and practical nature of much of the work of the DTPW it is entirely appropriate that it continues to implement the National Youth Service (NYS) Programme aimed at unemployed youth across all regions of the Western Cape. The Department has invested significant resources in addressing shortages in critical and scarce skills in construction related trades. The Department continues to train and to test Red Seal Artisans in Electrical and Welding trades. This Strategic intervention forms part of the Western Cape Apprenticeship Game Changer.
In addition, during the 2017/18 Financial year the Department trained 216 unemployed youth over a 12-month period in various Learnerships, such as:
- Electrical wiring
- Road Works
In 2018/19 financial year the NYS programme will be in its 10th year of implementing Skills Interventions in the Western Cape. The NYS Phase 10 commenced in February 2018 with 210 learners across the Western Cape in the following trades:
- Air-conditioning and Refrigeration (Eden)
- Plant Operator (Eden)
- Welding (Cape Winelands / Metro)
- Masonry (Cape Winelands / West Coast / Overberg / Metro)
- Carpentry (West Coast / Overberg)
- Electrical (Central Karoo / Metro)
- Plumbing (Central Karoo / Metro)
The Western Cape DTPW Skills Development Programme was recognized by a runner up award at the National Achievers’ Awards in the category Best Public Service Programme.
The Masakh’iSizwe Bursary and Professional Development Programmes work together to address skills shortages to drive economic growth through infrastructure development, whilst creating a conducive environment for training and development of youth. The underpinning concept of these programmes is empowerment of financial disadvantaged youth through access to tertiary education and providing a coherent package of support that puts bursars in an advantaged position to perform academically and to obtain experience, employment, and attain professional registration with the respective statutory councils. The DTPW is proud to report that in this way sixteen graduates have been placed within the department for professional development.
Speaker, we are approaching a number of public holidays and long weekends. These are well – deserved breaks for many hardworking people – but they are also times of risk and danger for road users. These risks are often aggravated by the irresponsible actions of some who chose to drive at excessive speeds, when tired and after having consumed alcohol. Western Cape Provincial Traffic officers will implement an Easter and Freedom Day long weekend traffic operational plan aimed at reducing fatalities, crashes and injuries and improving the safety of road users and pedestrians. The Western Cape remains the only province in which this operational programme is implemented on a 24/7 basis. While details of the operation will be announced at a media event on 29 March aspects have already been implemented and I want to appeal to all road users over this period to exercise restraint and to act responsibly. I also want to thank all our officers for the additional time sacrifices they will make during this period.
Speaker, in closing I should like to thank my Cabinet colleagues and the members of the Standing Committee on Transport and Public Works. In thanking also the excellent HOD of my department, Ms Jacqui Gooch, and her staff, some of whom are present here this afternoon, I want to add my congratulations on the various high – level awards which she individually and the department collectively have received as a department truly in the service of people.
I thank you.