Budget Speech: Second Reading Speech-2009/2010 | Western Cape Government

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Budget Speech: Second Reading Speech-2009/2010

17 June 2009
Mr Speaker, this budget was tabled four months ago by my predecessor. We've had an election and a change of government between then and now. The PFMA require us to pass this budget before the end of this month so as to avoid any expenditure restrictions. So I find myself in a strange position where I will be asking this house to vote for a budget that is more aligned to the opposition than the Governing Parties Policies. I will today identify certain areas of emphasis for how we will use it. I hope through this to set the scene for this 2nd reading political debate on the budget.

This government is guided, in everything it does, by its overriding objective of combating poverty and promoting opportunities for all, through policies that encourage sustained economic growth; that attract, develop and retain skills and capital; and that will drive infrastructure development.

Creating a favourable environment for improved economic growth, job creation and development, has become more challenging in light of the wide-ranging economic downturn:
· Gross Domestic Product declined by 1.8 percent for the last quarter of 2008 and by 6.4 percent for the first quarter of 2009, confirming South Africa's first technical recession since 1992. Further contraction is expected for the second quarter of 2009, but at a more moderate pace.
· Domestic demand is subdued with retail sales recording declines of 5.3 percent year-on-year in March and new vehicle sales declining by 44 percent year-on-year in April.
· The CPI forecast looks relatively unchanged in the near term with inflation expected to average at 6.9 per cent in 2009 and 5.7 in 2010.
· The Global Outlook shows that there are tentative signs that the downturn is bottoming out. There are however few convincing indications that recovery will be quick. I am of the opinion, along with most analysts, that we will only see recovery starting towards the end of this year and early next year; and
· The Rand's appreciation has reduced risk to the domestic inflation outlook but has also had an impact on exports;
· On the positive side, interest rates have come down providing much needed relief to already indebted households.

Speaker, as the Premier stated in her opening address, this administration intends to turn crisis into opportunity. My colleagues in Cabinet will elaborate on this as they put their plans for delivery to this house in their budget votes.

Relative to last year's budget, we see a 16.6 percent increase, equaling an added R4.120 billion so that the 2009 budget totals R29 billion. This budget was originally drafted to achieve eight main outputs, namely to:
1. Support decent work opportunities and skilling
2. Strengthen education and improve access and nutrition
3. Strengthen health services, infectious disease control and health research and development
4. Protect and enhance the focus on youth, women, the elderly and the poor
5. Round off preparations for 2010 FIFA World Cup
6. Extend agrarian reform and rural development and sustainability of food security
7. Improve the built environment, including housing and roads
8. Strengthen financial prudence, corporate governance and inter-governmental relations

Between now and the adjustments appropriation, we will be tweaking some of these outputs, and bringing amendments to others to align them to our new strategic plan. I do not want to pre-empt that process, so I will simply provide an overview of the main budget.

The Department of the Premier has been allocated R491.920 million for the monitoring and evaluation of departments, which includes the coordination of the various skills development initiatives that are being driven within them. The greatest increase will be for the strengthening of IT systems, which amounts to R235 million, up from R200 million in the previous financial year. A total of R52.983 million has been allocated to the Department of the Premier for the purpose of coordinating the delivery of certain key Provincial Government's 2010 responsibilities and activities, such as the delivery of the Philippi training stadium and further strengthening of our emergency medical services related to the event.

The Department of Economic Development and Tourism receives a total budget of R276.466 million in 2009/10, representing a 26.1% year-on-year increase from 2008/09. This increase has been allocated for the implementation of a number of interventions, such as skills development, entrepreneurial tourism, and addressing training gaps in specific sectors such as engineering and manufacturing.

Education remains a top priority, as reflected in the R1.3 billion addition to that Department's budget, bringing it to over R10.3 billion in 2009/10, and R34 billion over the MTEF period. This increase accommodates:
· improvements in Conditions of Service,
· general inflation, and
· an inflationary adjustment for learner and teacher support materials.

The Education Department is focused on adding value to the classroom environment. At its core, the Department's vision entails going 'back to basics'. To equip our citizens with the skills they need to compete in the global knowledge economy, the Education Department will prioritize quality instruction in the fields of literacy and numeracy and expand the number of learners in the disciplines of science, technology engineering, and mathematics.

The expansion of early childhood education is a key priority for the Education Department. The budget has increased by 37.5% from the previous year to R313,468 million for 2009/10. The National School Nutrition Programme has been allocated R112,548 million to feed 335 000 primary school learners within Quintile 1 to 3 on all school days. Other educational priorities are the increased investment in school infrastructure, maintenance and school safety.

The Department of Health's budget has been increased by 14.5 percent, or R1.3 billion, to R9.893 billion. Current focus areas include:
· Improving the quality of health care service delivery,
· The strengthening of TB and HIV/AIDS programmes, and
· The provision of new vaccines to reduce infant/ child mortality.
We are looking at mechanisms to improve the salary packages of health professionals (nurses, doctors and other medical specialists), and to prioritize the funding of new infrastructure for health facilities, hospitals and clinics. Funding has already been set aside for the building of the Khayelitsha Hospital, and we are also seeking a solution to the funding shortfall of the Mitchell's Plain Hospital. A dedicated budget has been allocated to the Health Department for the delivery of emergency medical services and the establishment of a casualty unit at Somerset Hospital in preparation for the FIFA World Cup.

The Department of Social Development will receive R1.163 billion in 2009/10. This government will be dealing with the scourge of drug abuse and addiction, and therefore will provide centres for treatment and rehabilitation. We will also prioritize places of safety for children at risk. In addition, we will be focusing on the expansion of the Early Childhood Development programme, and have allocated R74.55 million for this.

The Department of Community Safety has been allocated R260.259 million. This funding was earmarked by the previous administration to strengthen the implementation of the Gang Framework Strategy, civilian oversight mechanisms and the Motor Vehicle Accident Strategy.

In the Department of Agriculture, the budget has been increased to R398.607 million in 2009/10. The strategic direction of this department is largely driven by the Land and Agrarian Reform Programme's strategic objectives, which include increasing the number of emerging entrepreneurs in agri-business, access to agricultural support mechanisms and production. We will revitalize extension services, facilitate market access and training, and skill emerging farmers and farm workers.

The Department of Local Government and Housing's 2009/10 budget amounts to R1.891 billion. The Department's allocation is budgeted to grow at an average annual rate of 18.86 percent over the MTEF period. This growth stems from the increase in the national Integrated Housing and Human Settlement Development Grant (Housing Grant). In this financial year, the bulk of this department's housing budget (45%) will go towards project-linked subsidies for contractor-led housing developments. A significant portion (26%) will be spent on the Upgrading of Informal Settlements Programme, with just over ten percent being spent on People's Housing Projects. The rest of the funds are earmarked for providing low-cost rental accommodation, including a 'rent-to-buy' scheme, the Emergency Housing Programme and individual subsidies.

Out of a total budget of R3.523 billion allocated to the Department of Transport and Public Works in 2009/10, R1.675 billion has been dedicated to roads infrastructure. This funding will be ploughed into the design, construction, upgrade and maintenance of our provincial roads. A portion is included for the rounding off of current projects, in anticipation of heavier traffic flows during the 2010 FIFA World Cup. This budget will be used for round-off preparations and infrastructure investment, including the upgrade of road infrastructure projects along the N2, the Koeberg interchange and Table Bay Boulevard. It is envisaged that the enhanced road network will further improve traffic management well after the event.

The implementation of phase two of the Expanded Public Works Programme has been bolstered by the allocation of an additional R500 000 in 2009/10 to this Department's budget. These funds will be used for programmes that create jobs and develop skills in labour intensive sectors.

R5.8 million has been allocated to the Department of Environmental Affairs and Development Planning (in collaboration with the Department of Local Government and Housing and pilot municipalities) to implement the Built Environment Support Programme. This programme is aimed at supporting focused housing and infrastructure interventions, underpinned by credible Spatial Development Frameworks and Human Settlement Plans, in chosen pilot municipalities.

The Department of the Premier and Provincial Treasury have collaboratively identified a number of 'nodes' throughout all baselines of departments, from which efficiency gains could be leveraged. This exercise was supported by our commitment to greater efficacy in service delivery. We have judged that this exercise is necessary to soften the adverse effects of the tightening fiscal envelope on our key priorities. There is a renewed emphasis on ensuring that departments table credible budgets.
This administration will focus on business basics, which include:
· meaningful supportive mechanisms to better inform managerial decision-making,
· the development of effective monitoring and evaluation systems, and
· adherence to appropriate compliance requirements

Speaker, having had the insight of the tabled budgets of provincial departments and municipalities, it is my observation that there are substantive challenges ahead with regard to the sustainability of budgets over the medium term. However, there are also opportunities for renewed thinking about the effectiveness of our programmes, and the current lack of efficiency and synergy across departments and government spheres. We will work hard to amend these faults, with the goal of achieving improved service delivery.

It is uncontested that much remains to be done, but we embark on this journey knowing that our hard work and careful spending will improve the environment and access to opportunity for all in the Western Cape.

I thank you.

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