Medium Term Budget Policy Statement (MTBPS) And Adjusted Estimates Speech 2009 | Western Cape Government

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Medium Term Budget Policy Statement (MTBPS) And Adjusted Estimates Speech 2009

25 November 2009
Speaker, Premier and members of this House

We have just entered a new electoral cycle, and with this comes the opportunity to strengthen existing policies, and develop and introduce new ones that better the lives of all of our people living in the Western Cape.

The first medium-term budget of the new DA administration is being delivered just as we are technically emerging from recession. While these figures look positive, it will be a while yet before ordinary citizens feel any repercussions of this recovery. The economic climate in which we currently find ourselves has posed a number of critical challenges. Key amongst these are more company closures, job losses, lower employment rates, less revenue available for government expenditures, and therefore, a greater need for government assistance to cope with the effects of reduced incomes and lack of access to economic opportunities.

Speaker, in the current economic environment, any government worth its salt will have to focus on better targeting of resources to areas where it can have the biggest impact. In pursuit of more efficient, economical and effective government spending, the concept of achieving value for the financial and human resources we expend has become de rigueur

Our Medium Term Budget Policy Statement highlights our intended budget choices over the next three years. It presents the framework within which this government will strive to deliver on the 10 strategic objectives: maximising inclusive economic and employment growth; improving school education outcomes; increasing access to efficient and safe transport; maximising health outcomes; reducing crime; optimising human settlement integration; maximising sustainable resource management and use; increasing social cohesion; alleviating poverty; and clean, value-driven and responsive government.

In addition, this Government has embarked on a Modernisation process to improve the functioning of the various departments, which will be phased in over time.

Economic outlook 2009/10 - 2010/12

The development of the Western Cape's Budget over the next three years provides our policy response to ongoing regional, national and international affairs, and cannot be done in isolation of these larger economic realities.

I have covered this in detail with the tabling of the 2009 Provincial Economic Review and Outlook two days ago, and will therefore not repeat them now.

Suffice to ask what does all of this mean for the Western Cape? It means that: the fiscal projections and budgets have to be revised to take into account the impact of the recession; falling production and falling incomes mean less revenue available to government to pursue its objectives, therefore, we have to do more with less; we need to look at ways to facilitate economic growth and support the economic recovery, save and create jobs; and government has the responsibility to mitigate the impact of the recession on the poor and vulnerable in our society.

The Resource Envelope and Financing Issues

The 2010 MTEF, in addition to our economic woes, is presented with higher than anticipated salary increases and the need to continue improving provision of quality education and health care for the poor.

Provincial expenditure is financed through three main sources: national transfers (which include the Provincial Equitable Share and Conditional Grants with a combined 94.1 per cent contribution to the 2010/11 budget), provincial own receipts (taxes and fees/user charges, which account for 5.1 per cent) and the Asset Financing Reserve together with the Provincial Revenue Fund contributing under 1 per cent in the 2010/11 budget.

National transfers are expected to increase by an annual average of 7.6 per cent from R28.48 billion in 2009/10 to R30.83 billion in 2010/11, R33.55 billion in 2011/12 and R35.48 billion in the outer year of 2010 MTEF. Provincial Equitable Share (PES) increases seek to address mainly increased personnel costs (i.e. OSD agreements in education and health as well as general salary increments) and policy priorities in education and health.

Conditional grant allocations to the Province are estimated to increase by an annual average of 5.5 per cent from R6.72 billion in 2009/10 to R7.89 billion in 2012/13. Specific increases to scale up both the preventive and treatment components of HIV and Aids programmes are expected. Other estimated conditional increments go to the Dinaledi Schools, National School Nutrition, Hospital Revitalisation Programme Grant (Mitchell's Plain Hospital), Infrastructure Grant to Provinces and the Integrated Housing and Human Development Grant.

Provincial own receipts are projected to remain under R1.8 billion over the 2010 MTEF. This overall trend in projections is as a result of policy and other developments within the three bigger own revenue sources (Hospital Fees, Motor Vehicle Licence and Gambling revenue). Motor Vehicle Licence revenue increases remain limited over the 2010 MTEF as efforts are geared towards other provinces aligning their fees to more or less the same level as in the Western Cape. Casino taxes declined in 2009/10 as a result of the declining economic environment with the Province expected to post a potential revenue loss of up to R40 million per annum over the MTEF.

The overall fiscal envelope therefore would remain tight with limited room for expansion of current services. Given the current pressures on the Asset Financing Reserve (AFR), coupled with need to create a Working Capital Reserve fund for unforeseen and unavoidable cash/liquidity requirements, it is becoming increasingly challenging to fund provincial priorities from this source over the 2010 MTEF.

Departmental Performance and Plans

The forecasted overall 2010 MTEF allocations, when compared to those proposed during the 2009 MTEF, increase by R5.890 billion. This includes R3.944 billion more for Health and Education together and R2.303 billion to Transport and Public Works.

In light of the economic outlook and the pressure on the revenue envelope, the focus of government and all provincial departments is to leverage from efficiency gains and reprioritise expenditure toward key priority areas. These key priority areas are encompassed in the 10-point Provincial Strategic Framework for 2010 - 2014 which has to guide departmental plans over the next five years

Speaker, one of the DA's primary election campaign promises was to facilitate proper education opportunities for all. At present, our literacy and numeracy pass rates are shocking. At present, only 65% of children entering our school system matriculate. This phenomenon has created a major skills crisis in our province and country. The effect of this on our government is detrimental, and it is imperative that we urgently address it. We have allocated over 30% of our annual budget to education. We will endeavour to spend approximately R38 billion over the 2010 MTEF divided as such: R11.774 billion in 2010/11, R12.748 billion in 2011/12 and R13.477 billion in 2012/13. The Department of Education has affirmed its commitment to improving school education outcomes by providing better quality education. In so doing, it will improve the life chances of all children in the Province. Key objectives for the Department are to improve literacy and numeracy in the Foundation phase (Grades 1 to 6); increase the number and quality of Grade 12 passes with a particular focus on mathematics, science and computer science and improve the number of those who qualify to register for a university degree.

In order to achieve these objectives the Department will direct resources to amongst others the foundation phase, the provision of quality texts and learning materials, grades 3, 6 and 9 testing, education infrastructure, school safety and early childhood development.

As part of a nationwide strategy to improve literacy and numeracy, workbooks will be provided to learners in grades 1 to 7 attending underprivileged schools over the period 2010/11 to 2011/12. Also as part of the nationwide strategy to improve mathematics and science, additional resources in the form of equipment, textbooks, teachers and teacher training will be targeted towards Dinaledi schools in the two outer years of the MTEF.

Addressing school infrastructure backlogs inclusive of new infrastructure and maintenance, requires a coordinated approach between the Department of Education, Local Government and Housing, and Transport and Public Works. Additional funds in the outer year of the MTEF will be made available for school infrastructure through the Infrastructure Grant to Provinces.

Competent and motivated educators are key to the delivery of an effective education system. The occupation specific dispensation (OSD) for educators aims at providing for recognition of experience of educators, salary progression, grade progression and improvement of conditions of service for educators.

FET Colleges are currently managed as a concurrent function between the national and provincial departments of Education. Responsibility for FET Colleges is meant to shift to the national government. In the interim, funding for FET Colleges will be secured through a new conditional grant requiring a function shift from the current provincial equitable share funding.

The premier and MEC Donald Grant revealed the full new strategy for education on Tuesday, and in years to come, we look forward to seeing the results of our policy interventions.

The DA Government of the Western Cape reaffirms its commitment to strengthening public health services for all. Pregnant women, children born with mental and physical challenges, and the elderly are just some of the groups that our facilities provide for, and we need to ensure that we reach a level where we are able to adequately meet their healthcare needs. In this regard expenditure levels around R37.522 billion are expected over the MTEF, with amounts of R11.754 billion in 2010/11, R12.513 billion in 2011/12 and R13.255 billion in 2012/13.

Maximising health outcomes is a particular provincial priority for the next five years. Medium term spending priorities for the Department of Health will focus on reducing and managing the burden of disease, developing and maintaining a capacitated workforce to deliver the required health services and providing and maintaining appropriate health technology and infrastructure. A greater focus will also be placed on improving the quality of care in the delivery of health services. The challenge for the Department over the MTEF is to ensure more efficient and effective delivery of health services given the very tight resourcing constraints.

In the fight against HIV and Aids, the Department has enrolled approximately 1 500 patients monthly for ART at 66 accredited facilities during 2008/09. At the end of June 2009, approximately 63 143 patients were receiving antiretroviral treatment. Additional funding has been received via the HIV and Aids conditional grant to expand the roll out of the antiretroviral programme. The Western Cape is setting the example for ART care in South Africa, and provides more than 90% of HIV positive persons with the treatment that they need to ensure a good quality of life.

TB is also a high priority. Resources continue to be targeted towards strengthening staff capacity and TB control at all TB hospitals with a specific focus towards dealing with multi-drug and extreme drug resistant strains. Although TB incidence is still a significant challenge in the Province, the TB cure rate increased from 68.6 per cent in 2004/05 to 76.1 per cent in the first quarter of 2009/10.

Emergency Medical Services also receives additional funding so that it is strengthened ahead of the FIFA World Cup tournament. The Department's FIFA 2010 World Cup unit currently coordinates all health planning and preparation for the tournament. Investments made in previous MTEFs are showing signs of return with continued improvement in EMS response times.

Investment in the human resource capacity of the health sector is critical to improvements in service delivery. The OSD for nurses was introduced in 2007. This financial year saw the implementation of the OSD for doctors, dentists, pharmacists and emergency medical personnel. Funds have been made available over the MTEF for the revised dispensations of these critical categories of health professionals to aid in recruitment and retention within the public health sector.

The Department of Social Development is the lead department in developmental social welfare services, anti-poverty interventions and the strengthening of social cohesion. This is done through Developmental Welfare Services to the poor and vulnerable and Community Development Services by providing sustainable development programmes, which facilitate the empowerment of our communities.

Amounts exceeding R4 billion over the 2010 MTEF allocated to the Department aim to protect, care and support the most vulnerable members of our communities, especially children, persons with disabilities, older persons and the poverty-stricken. In addition, the Department provides a comprehensive range of services aimed at developing youth and strengthening the family unit. The role of the relationship between parents and children cannot be under-emphasised in the fight against drugs and other substance abuse. Without the assistance of this province's parents, our interventions will be that much less effective.

Over the 2010 MTEF special attention will be given to child-poverty through well packaged programmes including early-childhood development, after school care and nutrition intervention in partnership with other departments. Access for Early Childhood Development (ECD) at registered ECD sites will be increased over the 2010 MTEF.

Awareness and prevention of substance abuse and the promotion of healthy lifestyles will be a key priority in improving school education outcomes, maximising health outcomes, reducing crime and increasing social cohesion. Access to rehabilitation facilities will also be prioritised over the 2010 MTEF.

Additional resources have been made available since the 2009 MTEF to provide for OSD for social services professions and occupations. The implementation of the OSD will not only ensure an occupation specific remuneration and career progression system for Social Workers, but will also attract and retain employees in the social services professions and occupations of the Public Service.

The programmes within the Department of Cultural Affairs and Sport (DCAS) support the Provincial Government's social cohesion implementation framework by developing sports, arts, culture and language; supporting library services and hosting major events.

The work of DCAS is premised on the saying - 'a child in sport is a child out of court'. Sports development, particularly in schools, develops life skills and improves school education outcomes by engaging learners in healthy lifestyle activities. Through strategic partnerships and cooperation, sports infrastructure will be strategically provided to historically excluded communities. The Department over the 2010 MTEF will ensure that each child in school has an opportunity to engage in a form of meaningful sport activity.

The Western Cape Sports School is also developing athletes holistically. The athletes, who are mainly drawn from poor communities, are achieving at the highest levels in each of the codes of sport offered at the school.

The Department supports a network of 333 public library service points through the provisioning of materials that addresses the informational, educational and recreational needs of communities. The Department also provides for additional personnel at public libraries as well as expanded services to remote rural areas, by providing five mobile library depots at Avontuur (Eden District Municipality), Vleiland (Laingsburg Municipality), Mandlenkosi (Beaufort West Municipality), Kurland and Bossiesgif (both in the Bitou Municipality). An increase in visits to the established sites indicates that adults and children are using these mobile libraries extensively to access books and information. We have therefore decided to implement mobile libraries at a further five sites, which will be identified in 2010/11.

The increase of staff members at public libraries enabled municipalities to open additional service points (mostly mobile library depots), extend library hours, provide enhanced services to their respective communities and place libraries in a better position to promote the services and offer literacy programmes.

The Department of Community Safety will expand its civilian oversight function to ensure effective and efficient policing in the Western Cape. The aim is to transform the Provincial Secretariat for Safety and Security into the eminent institution for police accountability. The Provincial Secretariat will provide research on all aspects of community safety, develop safety and security frameworks, demand specific interventions and plans with responsible agencies for implementation by these agencies, and manage the various community safety and crime prevention partnerships and coordinate all interventions.

Over the 2008/09 financial year, road fatalities in the Western Cape declined by 18 per cent on roads patrolled by our Provincial traffic police. This is the result of the implementation of the Road Safety Strategy, which has brought about more effective management and retention of the 24hr, 7-days-a-week cycle, heightened traffic police presence and ongoing education and awareness campaigns. While this improvement is positive, we have identified that road fatalities, and especially those caused by alcohol abuse, bear a huge burden of cost to the Province. Going forward, Traffic Law Enforcement will continue its efforts in improving service delivery and will also explore options to empower viable local authorities to better discharge some traffic management functions within their areas of jurisdiction.

The Department of Local Government and Housing will refocus its efforts to improve efficiencies and better empower communities through developmental and a well-governed local government, maximising integrated and sustainable human settlements, accelerating service delivery and promoting social inclusion.

The 2009 National MTBPS emphasised that Government's priority was to spend on housing and working towards a goal of eradicating informal settlements. The national budget makes provision for an increase in the housing subsidy and for additional units to be built.

The promotion of inclusive growth and development includes continued investment in the built environment and infrastructure with a focus on increasing housing delivery and access to basic services such as water, sanitation and electricity. Government further aims to improve coordination between provinces and municipalities to expedite housing delivery. High potential municipalities will be assisted to become accredited as housing developers and support to the other municipalities will be strengthened. Improvements in the built environment, through the built environment support programme, aim to improve both Spatial Development Frameworks (SDF) and Human Settlement Plans (HSP). These provide provincial and local government with an opportunity to work toward quality Spatial Development Frameworks and a better understanding of housing development within improved spatial contexts.

The agricultural sector has the potential to stimulate economic growth and create employment opportunities. The medium-term key priorities for the Department of Agriculture include human capital development, improved market access for all farmers, revitalisation of extension services, increased agricultural production, rural development and research and technology.

The Department will continue to support human capital development by offering bursaries, learnerships, internships, short courses and training to learners at colleges, beneficiaries of the Land and Agrarian Reform Programme (LARP) and its employees. To improve the sustainability of new farming enterprises, land reform beneficiaries and emerging farmers will receive heightened support in the form of skills training and mentorship.

Many adults and children in the Western Cape experience hunger and do not have access to food. Specific interventions over the MTEF period aimed at improving food security, further support to the provincial food garden initiative, funding specific commodity groups to enact transformation and increasing agricultural production will continue. The coordination of especially household food security projects and programmes will receive dedicated attention.

In order to mitigate the impact of the global economic crisis, a review of the Department of Environmental Affairs and Development Planning's role in the environmental economy was conducted. The Department envisages leveraging from opportunities that are unlocked within the "Green Economy" as well as to engage with land-use and planning/environmental applications more strategically to ensure that these translate into meaningful development-related projects. The Department's contribution from an environmental-health perspective is captured in the implementation of the Provincial Air Quality Management Plan (AQMP), the amended Noise Control Regulations as well as healthcare- and hazardous waste management.

CapeNature provides leadership and innovation in the sphere of biodiversity (including biodiversity crime), ecosystem, fire as well as integrated catchment management. In order to facilitate social cohesion, the focus on the youth and community development commitments are to be strengthened. Likewise community-based natural resource management, local economic development (LED) as well as partnership development with SMMEs have been elevated.

The Department of Economic Development and Tourism is currently undergoing a revision process aimed at maximising the impact of the Department's interventions. The focus of the Department will shift to that of a facilitator of economic growth, investment and job creation in the Province. This will enable the Department to concentrate more on leveraging private sector funding and deepening collaboration between provincial departments and national and local government. The DA government recognises the importance of public private partnerships for the successful growth of our economy and employment spheres, and will strive toward forming such partnerships to tackle these integrated issues.

The shortage of appropriate skills has been identified as one of the binding constraints to economic growth and employment creation. The Department is engaged with a number of initiatives aimed at responding to the mismatch between skill supply and skill demand. Key amongst these is the building of institutional capacity and cohesion among strategic role players in order to address skills shortages in targeted sectors and to unlock funding.

Marketing the Province as an investment destination of choice is critical in creating both direct and indirect jobs. Similarly, the Department, through Cape Town Routes Unlimited, plays a vital role in marketing the Province to both domestic and international visitors. A key objective of the Department is to promote the spatial spread of tourism, benefits and opportunities throughout the entire province.

The enactment of the Western Cape Liquor Bill will be one of the most important deliverables for this Department. Speaker, this is imperative if we are to limit the social and economic harms that liquor brings to our communities. Presently, alcohol related road deaths alone costs this province roughly R6.5 billion per year. Around 300 lives are lost to alcohol related injuries every month. We will therefore be taking a strong stand against irresponsible vending and drinking of alcohol. Our approach is one of zero tolerance.

To a large extent, public transport is utilised by our less fortunate. It is the provision of this service that enables access to education, health care and economic opportunities, amongst others. Recent legislation has redefined the role of provinces and municipalities in the provision of public transport. This has given the Department of Transport and Public Works a unique opportunity to position itself as the nexus of strategy and policy direction in the development of and access to public transport in the Province, with the municipalities fulfilling the role of implementation.

The coordinated response to public transport needs, in partnership with the City of Cape Town and in preparation for the 2010 FIFA World Cup, embodies this new direction with the City being the principle facilitator, coordinator and provider of the Integrated Rapid Transit (IRT) System in the metro, supported by the Department. Where municipalities in the Province are not able to take up the provision of an IRT system, the Department has and is willing to take the lead.

The Expanded Public Works Programme has continued to train and provide work opportunities in the Province. The Province has been able to access the EPWP incentive grant during this financial year and already surpassed targets set for work opportunities created by September 2009 by utilising labour intensive methods in both construction and maintenance projects. At present, eligibility for the incentive grant is limited to infrastructure work opportunities created, but will expand to social and non-government sector jobs in 2010/11 and the remaining sectors in the following year

Staying with the infrastructure theme, a number of projects related to expansion of road capacity in anticipation of the 2010 FIFA World Cup tourist influx will be completed early in 2010, including phase one of the Koeberg Interchange and the Table Bay Boulevard projects. Beyond the World Cup, the Department will shift its focus to the over 32 000 kilometres of provincial roads in order to address the maintenance backlog and further reduce the requirement for major road rehabilitation works in future.

The effective use of the Provinces' property portfolio is also high on the agenda for the Department. Efforts have been geared towards the development of a Strategic Provincial Property Plan which will feed into the 'Central City Development Plan' championed by the City of Cape Town. The purpose of this collaboration is ultimately address the increasing demand for accommodation and reduce the costs of leasing accommodation, thereby creating investment opportunities for emerging and established businesses whilst optimising the Provincial property portfolio.

A key initiative driven by the Department of the Premier is the Modernisation Project which has as key outputs, the completion of the relevant 'blueprints' in relation to organisational design, stakeholder consultation process, legislative frameworks, organisational capacity building, physical resource management as well as E-Governance. In addition, a good governance project has been initiated which addresses governance issues raised in a number of reports - which includes the various Auditor-General and audit committee reports. The Premier at some point or other will say more about this. Again suffice for me to say that continued improvement of service delivery and accessibility to government information and related services, is to be strengthened through a variety of initiatives. In order to host a successful 2010 FIFA World Cup, the provision of leadership and co-ordination in this regard remains a top priority.

2009/10 Provincial Adjustment Estimates

Speaker, through the tabling of the Western Cape Adjustments Appropriation Bill, 2009, the executive seeks Parliamentary approval for its revised spending plans for the current financial year.

This year's Adjustments Appropriation Bill increases the Main Budget allocation by R1.6 billion or 5.6 per cent. In the main, the budgetary increases provide for:

  • The wage agreements, implemented from 1 July 2009, which was 5 percentage points higher than what the Province had foreseen when the 2009 Main Budget was tabled, R345 million;

  • To cover the shortfalls as a result of the occupation specific dispensation (OSD) for educators R134 million, medical professionals R209 million and social workers, R18 million;

  • For the rehabilitation of roads and transport networks and agriculture infrastructure damage, mainly in the West Coast floods of July 2008 and the November 2008 floods in the Cape Winelands, Overberg and Eden, as well as livestock feeding relief as a result of the dry conditions in the Karoo: overall R481 million;

  • R180 million is additionally allocated to Health for hospital revitalisation (R31 million), preparation strategies regarding the 2010 World Cup (R3 million), Health infrastructure projects (R31 million), Forensic pathology services (R16 million), HIV/Aids treatment (R99 million), of which R25 million is from revenue retention to strengthen the HIV and Aids prevention, care and treatment programmes through the Global Fund;

  • R190 million is allocated to Transport and Public Works and in the main consists of public works maintenance and capital projects (R77 million), roads infrastructure projects (R65 million) and public transport (R32 million);

  • For the payment of property rates, R104 million; and

  • R18 million has been rolled over from 2008/09 for the upgrading of the Philippi Stadium as a venue specific training site for the 2010 FIFA World Cup, and as a retainer fee.

However it should be noted that no provision has been made for the pro rata Auditor-General's costs, which relate to the agreed upon audit in respect of the outstanding municipal debt between the City of Cape Town and the Province. It is anticipated that these costs will only be paid in the new financial year and dealt with in the 2010/11 Adjusted Estimates.


I would like to thank the Premier, my colleagues in the Provincial Cabinet, heads of departments and their staff, for their role in crafting the 2010-2013 Medium Term Budget Policy Statement and the 2009/10 Adjusted Estimates.

I wish to thank Dr JC Stegmann and his dedicated team in the Provincial Treasury for their very hard work. This budget has been carefully considered, and I am pleased to see that departments within the Western Cape are moving away from operating in silos and are beginning to work together. Through our combined efforts, we are sure to see positive change over the next three years

Speaker, it is with pleasure that I table the 2009 Adjustments Appropriation Bill, the Adjusted Estimates of Provincial Expenditure 2009, the Adjustments to Local Government Allocations and accompanying Provincial Gazette, Province's Medium Term Budget Policy Statement 2010-2013 and my Speech for discussion and consideration by this House.

I thank you

Mr A Winde
Minister for Finance, Economic Development and Tourism

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