Department of Economic Development and Tourism Budget Speech 2012 | Western Cape Government

Speeches

Department of Economic Development and Tourism Budget Speech 2012

27 March 2012

Honourable Speaker,
Honourable Premier,
Cabinet Colleagues,
Leader of the Opposition,
Members of the Provincial Parliament,
Heads of Departments,
All the staff of the Department of Economic Development and Tourism,
Citizens of the Western Cape,

It is an honour to address you today on the 2012/2013 Budget Speech for the Department of Economic Development and Tourism (DEDAT).

I speak to you two days before the beginning of "Africa's Grandest Gathering" and one of the top 20 festivals in the world - the Cape Town International Jazz Festival.

I would like to extend a warm Mother City welcome to all local and international visitors who have come to our beautiful province to attend the festival.

This year's Jazz Festival promises to be yet another success with performances by phenomenal artists such as Hugh Masekela, Zahara, James Ingram, Lauryn Hill and others.

The Western Cape is a proud host of this prestigious international music festival.

In 2011, the Cape Town International Jazz Festival contributed R498 million to the economy of the Western Cape, R800 million to the national economy, created 2 700 jobs and saw 33 500 tourists visit our province.

The Cape Town International Convention Centre (CTICC) has hosted the Jazz Festival for many years with attendance growing from 14 000 in the first year to a staggering 34 000 last year.

The Western Cape Government would like to see the Jazz Festival grow even bigger.

We will lend our support to the achievement of this goal.

Last week, the team of architects who will oversee the expansion of the CTICC to almost double its current size was announced.

This expansion means that the CTICC will no longer have to turn down bookings and can play an even bigger role in creating growth and jobs in the Western Cape.

The Department of Economic Development and Tourism will allocate R161.7 million over the medium-term to aid in the construction costs necessary for the expansion.

This is money well invested that will benefit the Western Cape, and the country as a whole.

The macro-economic benefits of the CTICC's expansion have been calculated as follows:

  • A contribution of R452.9 million to the national GDP by 2014, increasing to R1.44 billion by 2018.
  • A cumulative contribution to taxes amounting to over R469 million.
  • A creation of R2.63 billion in indirect household income.
  • The generation of net foreign exchange of R470 million by 2018.
  • An increase in total delegate and visitor number to 238 000 in 2014 to 470 000 in 2018.

Speaker, before I outline the rest of the exciting and innovative programmes that the Department of Economic Development and Tourism has planned for the upcoming financial year, it is imperative that we understand the labour context that we are currently operating in, and its influence on our programmes.

During the State of the Nation Address in Parliament this year, President Jacob Zuma said: "During 2011, a total of 365 000 people were employed. This is the country's best performance since the recession of 2008. What is most important is that all new jobs are in the formal sector of the economy, in sectors such as mining, transport, community services and trade just to name a few." The employment figures referred to by the President are based on data released in the Quarterly Labour Force Survey (QLFS).

The QLFS is a household-based sample survey conducted by StatsSA, targeting 30 000 households in both formal and informal employment activity, as well as the agricultural sector and household workers.

One would therefore expect that, in the second employment survey released by StatsSA - the Quarterly Employment Survey (QES) - a similar increase in employment figures in the formal sector would be recorded.

Conducted among 20 208 private and public enterprises in the formal non-agricultural sector, the QES is a more accurate indicator of employment trends in the formal sector.

According to the QES, only 130 000 jobs were created in the formal sector in 2011 and not the approximately 365 000 indicated in the Quarterly Labour Force Survey and in the President's State of the Nation Address.

Indeed, the QES claims that a net total of 159 000 new jobs in the formal sector have been created since 2006. This is far cry from the 349 000 jobs lost during the 2009 recession.

In the DA-led Western Cape, in contrast, we have managed to return the province's unemployment figure to pre-recession levels by creating jobs, many of which are in the formal sector.

Speaker, we have come far, but we have even further to go.

It is with this understanding that we will intensify our efforts in the medium-term in creating the conditions necessary for increased economic growth and job creation in line with our number one Strategic Objective: Creating Opportunities for Growth and Jobs.

Speaker, our department's vision is of a Western Cape that has a vibrant, innovative and sustainable economy characterised by growth, employment and increasing equity built on the full potential of all.

This is a vision we cannot deliver on our own.

We will work in collaboration with government, business and citizens because we know that we can create the conditions necessary for inclusive growth Better Together.

To ensure that we have a smooth running department in order to deliver on our vision.

Programme One: Administration will receive R27.738 million in 2012/2013. The strategic leadership for the attainment of our goal of inclusive growth will be provided by the Western Cape Economic Development Partnership (EDP). R3.5 million will be allocated to the EDP in 2012/2013 for this purpose.

The EDP will be launched on 26 April 2012 as an independent, membership-based not-for-profit company to lead, coordinate and drive the Western Cape economic delivery system.

Speaker, traditional approaches to economic development are no longer working.

The EDP will provide a new way of working together to deliver better outcomes.

In its first year, the EDP will focus on:

Under the leadership of Andrew Boraine and his team, I am confident the EDP will deliver on these objectives for the benefit of the people of our province.

Speaker, entrepreneurs operating in the small to medium enterprise (SMME) sector are the backbone of our economy.

It is estimated that 80% of new jobs globally are created in this sector.

We will continue to support new and emerging SMMEs so that they can become self-sustaining and successful businesses, and by doing so, employ more people.

Programme Two: Integrated Economic Development Services will receive R45.28 million in 2012/2013 for the purpose of, firstly, creating an enabling environment for inclusive growth, and secondly, providing demand-led support to businesses.

In the 2011/2012 financial year, partnerships between our department and other SMME support organisations saw about 7 900 existing and start-up businesses supported.

Amendments to procurement regulations on the BBBEE scorecard saw the extensive roll-out of workshops, awareness sessions and hands-on assistance to SMMEs.

In partnership with Provincial Treasury, the Department of Health and the Department of Transport and Public Works, awareness sessions were held throughout the province.

In collaboration with the South African Supplier Diversity Council, support was provided to 200 SMMEs that were identified as preferred suppliers to major building contracts and other blue chip procurement opportunities.

In addition, the Partnership Network, a co-funded DEDAT, SEDA, the Business Place and the West Coast Business Development Centre saw 2 332 existing businesses and 3 956 businesses being developed.

This year, we intend to build on these successes by providing even more support to SMMEs.

R6.4 million will be allocated to ensure SMMEs are supported in accessing procurement opportunities offered by corporates.

Through a partnership with a major commercial bank, R2.3 million will be allocated to supporting SMMEs to improve their chances of accessing commercial funding and increasing business sustainability.

To continue the process we embarked upon in 2011 - making it easier to do business in the Western Cape - we will allocate R3.7 million to the Red Tape Unit in 2012/2013.

This funding will be used to, amongst other things, continue our Business Support Helpline. Through this helpline, troubled businesses and individuals can:

The Red Tape Unit will also ensure that ongoing interaction with businesses takes place with the view to devising strategies that resolve issues inhibiting business growth, and, ultimately, job creation.

Speaker, this government is committed to creating a climate that encourages entrepreneurs to establish their businesses in our province.

As Premier Helen Zille noted in her opening address, the Western Cape Government believes in appropriate regulation that promotes a competitive business climate. We must remove the barriers to business that deter job creating investment.

The improvement of the regulatory environment that businesses operate in is the single most important element of our economic growth strategy and reduction of red tape remains a high priority of ours.

In am pleased to announce that since its operationalization in the latter part of 2011, the Red Tape Unit's Call Centre recorded more than 300 cases for investigation and resolution - at a resolution rate of more than 80%.

The Red Tape Unit has also set up South Africa's first Mediation and Arbitration Centre, in collaboration with the University of Stellenbosch, to drastically reduced red tape in the commercial litigation process by both cutting settlement dispute costs and the time for settlement.

This Centre, which is housed within the Cape Chamber of Commerce, is another example of how we are helping businesses to grow through our "better together" approach.

In 2012, we intend to roll out Red Tape Units in all municipalities in the Western Cape.

The Cape Winelands District Municipality has already agreed to collaborate with our department to achieve this, and we hope to see the other municipalities coming on board soon.

Speaker, we will also stimulate economic growth and job creation through industry development, trade and investment promotion.

Programme Three: Trade and Sector Development has seen a year-on-year increase of 36% from R63.4 million in 2011/2012 to R95.6 million in 2012/2013.

Approximately 67% of this budget will be allocated to four priority Special Purpose Vehicles that we have set up to grow the Western Cape's most competitive sectors. They include the Oil and Gas, Green Economy, ICT and the Business and Process Outsourcing (BPO) industries.

We have focused on these sectors to attract international markets and drive growth in the Western Cape economy.

A key industry in the achievement of this goal is the BPO sector.

The sector employs approximately 30 000 people. Despite the economic downturn, the BPO industry has managed to realise 20% growth per annum.

This is the most cost-effective sector in creating employment, particularly for the youth. Nearly all revenue generated by the BPO sector goes towards salaries, and in nearly all cases, these jobs are permanent and full-time.

The Western Cape has become a choice destination for the world's most prominent brands including Amazon, Shell, Lufthansa and ASDA, who have set up operations in our province.

Our department intends on attracting even more international companies to the Western Cape.

We will allocate R7.6 million to BPeSA for this purpose in 2012/2013 and over R28 million over the medium-term.

The balance of the funding for the Trade and Sector Programme - R10.5 million - will be allocated to employment sustaining sectors such clothing, textiles and fashion and the agri-, aqua- and food processing sectors.

The funding that we will provide will largely go toward skills development to ensure that the firms within these sectors move up the competitiveness ladder towards world class production.

Major inroads have also been made in creating linkages across the value chain, particularly within major retailers.

I am pleased to report that after many years of decline, the clothing and textile sector seems to have turned the corner, and along with strong national and provincial government support, is moving towards a more sustainable model of development.

Exciting developments are also expected within the aquaculture sector. In 2012, we will conduct a feasibility study into the building of an "Aquaculture Development Zone".

Speaker, from 1 April 2012, Wesgro will serve as the economic development delivery agent within the strategic context of the EDP, and will take up a new role of tourism destination marketing.

This decision was jointly agreed upon by the boards of Cape Town Routes Unlimited (CTRU) and Wesgro, and will entail the winding down of CTRU. CTRU's functions will be transferred to Wesgro from 1 April 2012, along with its allocated budget for the financial year 2012/2013 and its fulltime staff members.

Incorporating trade, investment and tourism marketing under one roof will bring greater efficiency in these strained economic times. It will also ensure coordination of the Western Cape Government's outward-facing marketing initiatives, the optimisation of the Future Cape 2040 brand, and the enhancement of the Western Cape's image as a world-class business and tourism destination. In 2012/2013, Wesgro receives a total budget of R22 million, plus the R25 million allocated to CTRU for destination marketing purposes.

Speaker, without the proper development and maintenance of infrastructure in our province, our economic growth plans are doomed to fail.

Within the next two years, as part of a pilot project, the Western Cape Government aims to create the largest mesh network in the world that will connect all households in Khayelitsha, Mitchell's Plain and Saldanha Bay, including the Industrial Development Zone footprint.

Along with the funding allocated to this programme by the Department of the Premier and the City of Cape Town, DEDAT will allocate a further R12 million in 2012/2013 to:

This is an ambitious plan. However, by working Better Together with industry and other government spheres in a coordinated manner, it is achievable.

We have conducted extensive research into this programme that has shown us its immense potential to drive economic growth and jobs for all the people of the Western Cape. It will also increase the competitiveness of the Western Cape by bringing us on par with our competitors in the developed world, the developing world and the rest of Africa, securing our relevance in a world economy that is being increasingly driven by global networks and broadband connections.

This is a bold project, but one that is necessary at this stage.

In the Western Cape Government Budget Speech I outlined our plan to stimulate job creation through a multi-billion-rand infrastructure investment programme.

Included in this is an additional allocation to the budget of R1.097 billion over the medium-term.

The proposed IDZ in Saldanha Bay is entering a very exciting phase.

At present, we are devising the application for the official designation of the IDZ through a specially formed Licensing Company. The content of the application will go before Provincial Cabinet and the Saldanha Bay Municipal Council as early as possible in the new financial year, before being submitted to the Department of Trade and Industry.

Once submitted, the approval process is in the hands of that department, but we are confident that the partnership between all three spheres of government, including Transnet, has been very thorough on this project, meaning that National Cabinet approval and official designation by the DTI should be possible by the end of the year.

In the coming year, we have allocated R5 million to this initiative.

The first phase Cape Town Port Precinct Development project is finally out of the blocks, and has been allocated R2 million for the coming year.

On the basis of expert recommendations, we will start to define the areas to be addressed in a detailed exercise that will create a vision for the role of the port in the Western Cape Economy.

Focused attention will be given to the related infrastructure in order to improve the logistics functions supporting this major economic asset, including road and rail access, inter-modal facilities, as well as other industries like the Ship and Rig Repair sectors that are directly dependent on the Port to be able to create the much needed jobs for our province.

Through the Fringe project, we aim to develop a design-focused precinct in the Eastern Quarter of the CBD in Cape Town. This will become a prime space to develop and showcase African design, innovation, creativity and entrepreneurship. The project has already delivered the following:

There is already tremendous support for the Fringe as it is an ideal project through which we can address social and economic issues in society.

Design is fast becoming one of our region's talking points. This year's Design Indaba attracted over 50 000 visitors, 12 000 more than in 2011. Congratulations to Ravi Naidoo and his team for once again hosting a successful event.

In total, 385 exhibitors participated at the event, of which 128 were there for the first time. Over 400 buyers attended the trade event, 30% more than last year.

This year, we made a direct contribution of R250 000 to the Design Indaba.

Through economic partnerships between government and the private sector, the Western Cape is positioning itself as the design capital of South Africa.

Speaker, Programme Four: Business Regulation and Governance has a critical role to play in economic development by ensuring the realisation of an equitable and socially responsible business environment. This programme will be allocated R19.929 million in 2012/2013 to ensure that legal liquor traders operate according to the laws of the province and to educate consumers on their rights.

In December 2010, this House approved the Liquor Amendment Act, clearing the way for us to implement the Western Cape Liquor Act of 2008.

I am pleased to report that we are on track with the implementation of this act.

Earlier this month, based on the recommendations I received from the Standing Committee, I duly appoint the Western Cape Liquor Board on a part-time basis, retrospective from 12 March 2012, for a period of three years.

The board will now oversee the important task of the implementation of the remaining sections of the Western Cape Liquor Act, which comes into effect on 2 April 2012.

The Liquor Act will assist in tackling one of the biggest problems currently facing our province - alcohol abuse. Currently, over 50% of all injury-related deaths in the Western Cape are linked to alcohol abuse and about 80% of murders are associated with alcohol abuse.

Liquor has eroded the sense of community in our province, and as of 2 April, we are taking our communities back.

Speaker, the department has made considerable progress with its efforts to implement the Western Cape Consumer Affairs Act of 2002.

We have completed the process of formulating and developing the required Regulations which will inform the processes to be followed and implemented by the Consumer Tribunal.

The Consumer Tribunal will play an important role in protecting the rights of consumers in making appropriate rulings in matters where they determine that an unfair business practice has occurred.

The Tribunal has will be allocated R500 000 in 2012/2013 for this purpose.

Not everyone in our province is aware of the existence of the Consumer Tribunal, particularly in our rural areas. We will embark upon an education project that will focus on rural consumers, so that levels of exploitation of this category of consumer are reduced.

The total allocated for consumer education is R800 000.

Speaker, Programme Five: Economic Planning will receive R19.9 million in 2012/2013 to provide us with relevant and well-researched situational data to enable us to formulate the best possible economic development plans.

In line with the Strategic Objective One, the Economic Planning Unit will also provide high-level support to the EDP in terms of resource allocation for operational costs and exercise oversight on how resources are spent.

As I mentioned previously, Wesgro will receive an additional R25 million for the purpose of aggressively marketing the Western Cape as a tourist destination to world markets with a unified brand-focused on promoting business and tourism trade.

As highlighted in the Western Cape Budget Speech, tourism currently contributes over 10% to the region's GDP. We hope to grow this figure to 15% by 2015. R53.04 million will be allocated to Programme Six: Tourism, Arts and Entertainment to assist in achieving this goal.

In the 2012/2013 financial year, the Conventions Bureau will prepare 16 bids for conferences and conventions worth an estimated economic value of R360 million. In addition, five Joint Marketing Agreements will be secured, with an estimated value of R42 million. Support will also be provided to six mega events, with an estimated economic value of R1 billion.

These initiatives will play a crucial role in boosting tourism to our destination. In 2012/2013 we aim to achieve the following key indicators:

Arrivals at the Cape Town International Airport (CTIA) as well as visitor numbers at popular attractions throughout the Western Cape indicate that we are well on the way to achieving this growth. The latest tourism figures indicate that international arrivals at CTIA increased by more than 17% in December and January, and by more than 12% compared to February last year.

We are having our best summer ever.

Well-deserved congratulations must be extended to the management of Cape Town International Airport, who recently ensured that our airport was named the Best Airport in Africa by the Airports Council International (ACI) in the Airport Service Quality (ASQ) global awards.

Cape Town International is Africa's most award-winning airport. In the past year, it also scooped the ACI Best Airport in Africa Award, the Best Improved Airport as well as the Internationally recognised Skytrax Award for Best Airport for staff service excellence.

Our province racked up a number of other exciting international accolades last year - Table Mountain was voted one of the New7Wonders of the World, Cape Town won Design Capital 2014 and over 45 million voted Cape Town the best destination in the world in TripAdvisor's Top 25 Destinations in the World online survey.

We hope to win even more awards this year.

Speaker, Programme Seven: Skills Development and Innovation will receive R25.12 million in the coming year. With this money we will continue to run our successful Work and Skills Programme.

South Africa's youth unemployment has been described as a "crisis" and a "ticking time-bomb".

The unemployment rate among 15 to 24 year olds is 51%.

The ANC government has consistently paid lip service to the commitment to create more employment opportunities but have allowed themselves to be held at ransom by the unions. It is our youth that suffer as a result of the ANC's political posturing.

The DA-run Western Cape Government, on the other hand, is determined to create jobs for youth that are willing to seize the opportunities that we are providing.

The ANC need not look any further than the Western Cape Government to witness the success of the Youth Wage Subsidy - our Work and Skills Programme.

To date, more than 2 370 young people have been put through our Work and Skills Programme at a placement rate of 92%.

This is not the only initiative we have in place to ensure that our youth are employed.

In recognition of the skills shortage in the business analysis industry, in collaboration with the private sector we launched the Capaciti 1000 programme in February 2011.

This programme is designed to grow the Western Cape's pool of business analysts by training and mentoring unemployed graduates in order to meet this industry's skills shortage.

We are pleased to announce that 38 previously unemployed graduates who entered the programme in 2011 are now employed in the business analysis industry - with an average starting salary of R16 800.

Due to the programme's high demand, 40 new prospective business analysts started their training this year.

In recognition of the excellent results the programme has achieved, Capaciti 1000's allocation from will increase from R500 000 in 2011/2012 to R2.5 million in 2012/2013.

In addition, the Provincial Skills Development Forum, which brings together stakeholders from business, labour, civil society, government, and education institutions, will continue to identify interventions necessary to create employment opportunities.

In the upcoming financial year, the Forum will:

We will also significantly increase our funding to universities and technikons. Educational institutions in our province will received R10.080 million more in the 2012/2013 allocation than they did in 2011/2012.

While these initiatives will go some way toward tackling youth unemployment, there is still much more to be done.

National Treasury is currently sitting on the R5 billion that was intended for the Youth Wage Subsidy.

We have piloted the Youth Wage Subsidy in our province. It works. We will ask Minister Pravin Gordhan to release these funds.

Speaker, the work that this department will do in 2012/2013 is vital to achieving our first strategic objective: creating growth and jobs. We will undertake this work with vigour and a keen sense of what can be achieved if we are joined in our efforts by stakeholders across the spectrum.

Before I conclude, I would like to issue my warm thanks and appreciation to the Head of the Department of Economic Development and Tourism, Solly Fourie, as well as all his programme managers and staff for putting together a plan that does justice to our goals. These goals will not be easy to achieve, but we are determined to succeed so that we can create a better life for all the citizens of the Western Cape.

I hereby table the budget for the Western Cape Department of Economic development and Tourism for consideration by this house.

I thank you.

  • Formulating a co-constructed, strategically coherent plan for the Western Cape economy that includes an analysis of our risks and opportunities.
  • Building effective partnerships between citizens, business and government.
  • Coordinating a strategy towards contested markets and building a strong economic and business brand through an integrated platform.
  • Continuously monitoring the performance of the economic delivery system and make recommendations for service delivery improvements.
  • Coordination of a regional market attraction, retention and expansion strategy.
    • Report red tape blockages.
    • Receive assistance from staff with an extensive network of contacts within government and private institutions and organisations.
    • Enquire about support services available to SMMEs. A partnership with the Cape Town Activa Programme will ensure that SMMEs are able to access support agencies that form part of the enterprise support eco-system.
    • The staff at the Red Tape Unit will ensure that all issues, including cross-cutting and transversal issues are identified and prioritised by government.
    • Create a Broadband Leadership Council consisting of key stakeholders to drive the strategic direction and ongoing investment in the broadband environment in the Western Cape.
    • Drive the development of a provincial fibre optic backbone network that connects to every municipality in the Western Cape by 2016.
    • Connect all schools in the Western Cape by 2014.
    • Extend free public access to ICT to all communities by ensuring that every ward in the Western Cape has a facility by 2014.
    • Build an alternate last mile access for the Western Cape, by installing an open access wireless mesh network in a suitable area. We have chosen Khayelitsha and Mitchells Plain in the Metro to roll-out the pilot project, and the Greater Saldanha area outside the Metro.
    • Business feasibility study.
    • Urban Design Framework.
    • An economic analysis of the area.
    • Marketing and stakeholder engagement with over 100 relevant stakeholders including the CT Design Network, City of Cape Town and the District Six Trust.
    • Number of international arrivals to the Western Cape: 1 658 929.
    • International Foreign Direct Spend: R24 billion.
    • Number of domestic visitors: 3 000 000.
    • Provide oversight over the Premier's Advancement of Youth Programme.
    • Continue to support and assist individual companies, industries in dealing with skills shortages.
    • The FET Support Group will support FET Colleges to improved their offerings.
    • Host a Western Cape Skills Summit.