Western Cape Budget Speech 2017/18
Honourable Speaker and Deputy Speaker
Honourable Premier and Cabinet Colleagues
Honourable Leader of the Official Opposition
Honourable Leaders of Opposition Parties
Honourable Members of the Western Cape Legislature
Executive Mayors and Deputy Mayors
Speakers and Councillors
Senior officials of the Western Cape Government
Leaders of the Business Community
Citizens of the Western Cape
Ladies and Gentlemen
Honourable Speaker, it is my honour to table the Western Cape Government’s 2017 Budget.
Two weeks ago Premier Helen Zille defined the Western Cape Government’s vision and clear plans to deliver on that vision.
Her State of the Province Address gave a detailed account of what was already achieved during the mid-term assessment.
It also puts a razor sharp focus on this Government’s plans, projects and time frames for the future.
Today, I am presenting the fiscal framework to fund these plans and projects as outlined in this Government’s delivery Agenda.
Today I am tabling:
- A Budget for Growth;
- A Budget for People; and
- A Budget for Prosperity.
Madam Speaker, there is consensus in this Government and in this Cabinet that nothing is more important than growing the economy and creating jobs.
This Budget will support growth and job creation.
Madam Speaker, nations prosper when they:
- Show respect for their Constitution and institutions that support constitutional democracy;
- Show respect for individual freedom, individual choices, and accept individual responsibility for their own future;
- Accelerate investment in infrastructure;
- Boost support for small, medium and micro enterprises;
- Create jobs and reduce unemployment;
- Promote smart and inclusive growth; and
- Have access to basic services like water, energy, sanitation and refuse collection.
Madam Speaker, Premier Zille is right when she stated in her SOPA that:
“For any government, at any level, to create conditions for sustained progress towards prosperity for all, requires three pre-conditions: The Rule of Law; a culture of accountability, (in which all members of society take their responsibilities seriously), and a capable state that undertakes its duties efficiently, honestly, and cost-effectively.”
Today, I want to thank all citizens who take up their responsibility of active citizenship.
In all communities we find people who come together and take ownership of their communities.
One such community is a group of people I met in Hessequa.
The mayor introduced me to Oom Maans and his committee who have taken ownership and in partnership with the municipality have brought significant changes to Jongensfontein.
We salute you Oom Maans and your Committee as well as all the other Oom Maans in every town across the Western Cape.
Through partnerships and active citizenship we are indeed better together.
The Western Cape 2017 – 2020 Medium Term Budget Policy Statement tabled in this House on 22 November 2016 outlined our fiscal and budget policy framework which shaped the 2017 Budget, while taking into account the current constrained economic and fiscal environment and its associated risks.
The Western Cape Government’s Fiscal and Budget Policy Principles which underpin the 2017 Budget continue to promote:
- Allocative efficiency: allocation of resources towards priorities of government to programmes that are effective;
- Fiscal consolidation: which generally entails reducing government expenditure and/or increasing revenues;
- Fiscal sustainability: maintaining stability in key government programmes and managing risks; and
- Fiscal discipline: being financially accountable by ensuring that there is no irregular or wasteful spending by any department or entity.
Madam Speaker, to maintain the sustained progress made by this Government in achieving the goals outlined in the Provincial Strategic Plan 2014 ‑ 2019, this Budget will continue to focus on creating public value and investing in initiatives that promote inclusive growth.
I also wish to reaffirm the Western Cape Government’s unfaltering commitment towards the principles of good governance and sound financial management practices.
To demonstrate this I signed a declaration on good financial governance earlier today.
The declaration acknowledges that the effective and efficient management of public resources in an open, transparent and accountable manner is the foundation of democratic governance.
The declaration further serves as our commitment to, at all times, uphold the principles and values enshrined in the Constitution and other fiscal legislative frameworks.
By means of this declaration, we solemnly pledge to promote a culture of fiscal discipline and allocative efficiency within the provincial departments of the Western Cape Government and public entities under the jurisdiction of this Government.
Madam Speaker, I now turn to the economic context and outlook underpinning the 2017 Budget.
Economic Context and Outlook
Madam Speaker, global economic growth slowed to 3.1 per cent in 2016 from 3.2 per cent in 2015.
This was due to slower growth in advanced economies while growth in emerging economies remained unchanged.
Global economic growth prospects is expected to improve over the medium term. The expected performance in advanced and developing economies will result in growth in world output accelerating to 3.4 per cent in 2017 and 3.6 per cent in 2018.
After a bleak performance in 2016, the Bureau of Economic Research projects the South African economy to accelerate to 1 per cent in 2017 and 1.8 per cent in 2018.
The recovery is anticipated to be driven by higher consumer spending and, in 2018, an improvement in fixed investment.
Madam Speaker, our fiscal situation still faces a number of risks.
Despite the tax increase announced in 2016/17, National Treasury projects to collect R30 billion less than the expected revenue in this fiscal year.
The South African public sector wage bill has now reached unsustainable levels and is currently crowding out other much needed expenditure programmes aimed at the poor.
Debt service costs pose a very serious risk in South Africa.
The debt service costs will rise from R142 billion in 2016/17 to over R200 billion per annum over the MTEF.
Madam Speaker, we are still in the middle of a serious drought which is impacting on both the rural and urban parts of the Province.
As a result of the drought, we are now facing an increasing food security risk.
The economic growth of the Western Cape is expected to accelerate to 1.3 per cent in 2017 and by 2 per cent 2018, mainly driven by faster-than-expected growth in the finance, insurance, real estate and business services sector.
Labour market performance
In the Western Cape, there were almost 2.4 million employed individuals in the fourth quarter of 2016.
The Western Cape’s broad unemployment rate stood at 20.5 per cent in the fourth quarter of 2016.
Madam Speaker, life expectancy continues to increase in the Western Cape, currently standing at 64.2 years for men and 69 years for women.
The matric pass rate increased from 75.7 per cent in 2009 to 86.0 per cent in 2016. However, challenges, such as crime, still remain one of the great impediments to an improved socio-economic environment, an issue affecting all provinces in South Africa.
South Africa has nearly 9 million people who are unemployed.
This budget brings hope to the lost generation:
These are the nearly six million, mainly black young South Africans, who can't find work.
The lost generation is the half a million mainly black children who disappear from our education system each year.
The lost generation is the three million South Africans under the age of 25 who are Not in Education, Employment or Training.
This budget will provide hope to the lost generation on that it focusses on growing the economy and creating jobs, improving the retention rate within the education system and providing much needed training opportunities, targeted at the youth.
This Budget is about People, Growth and Prosperity Budget Priorities and Spending Plans.
Madam Speaker, let me now turn to the Budget Priorities and Spending Plans of this Government.
The 2017 Provincial Budget provides for total expenditure amounting to R59.3 billion in 2017/18, R62.1 billion in 2018/19 and R65.3 billion in 2019/20.
PSG 1: Creating Opportunities for Growth and Jobs.
Investment Promotion and Support to key economic sectors.
Madam Speaker, the focus of the Agri-processing sector over the 2017 MTEF will include maintaining and expanding the Western Cape’s share of the Halal market through Halal export promotion and Industrial Parks.
Furthermore, exports of wine and brandy to Angola and China are being explored through market access initiatives.
Over the 2017 MTEF, the Tourism sector will focus on securing direct access routes from key visitor markets; positioning the Western Cape as the Cycling Capital of Africa and the development of the Madiba Legacy tourism route to maximise culture and heritage tourism.
The Oil and Gas sector will focus on the Saldanha Bay Industrial Development Zone (IDZ) and the West Coast Industrial Plan.
Over the 2017 MTEF, R125 million is allocated towards the operationalisation of the Saldanha Bay IDZ.
Ease of Doing business: This Government continues to support interventions seeking to reduce red tape facing businesses in the Province.
Over the 2017 MTEF R30 million is allocated towards red tape reduction initiatives.
The Western Cape Government has recently adopted the Regulatory Impact Assessment Methodology to amongst others minimise the impact of regulation on economic growth and job creation.
The Western Cape Minister for Economic Opportunities, Alan Winde will elaborate on this during his budget address.
Infrastructure for Growth:
Madam Speaker this budget is about growth.
I am glad to announce that over the 2017 MTEF, approximately R28 billion will be invested in infrastructure within key sectors such as education, health, social development, human settlements and public works.
Infrastructure-led growth – Education, Health, Transport
Madam Speaker, the Municipal Infrastructure Skills Development Grant will develop capacity within municipalities by creating a pool of young professionals with technical skills related to municipal services such as water, electricity and town planning.
This grant also places interns in municipalities.
Honourable Speaker, I wish to announce proposals are also being investigated to introduce an infrastructure incentive grant for municipalities.
As part of our commitment to incentivise behaviour we would like to encourage mayors and councillors to increase their infrastructure capacity in order to benefit from such incentives once it is ready for implementation.
R4.8 billion will be spent on Education Infrastructure over the 2017 MTEF.
The following key infrastructure projects will be delivered over and beyond the 2017 MTEF:
16 new schools will be built consisting of:
- 637 classrooms
- 220 additional classrooms
- 15 replacement schools will be completed beyond the current MTEF.
Health Infrastructure has been allocated R2.5 billion over the 2017 MTEF.
Capital projects planned over the 2017 MTEF include, amongst others:
- Upgrades and additions to Emergency Centres at Helderberg, and Victoria Hospitals;
- Groote Schuur and Tygerberg Hospitals prioritised maintenance and upgrade;
- New acute psychiatric unit at Khayelitsha, Eerste River, and New Somerset Hospitals;
- Observatory Forensic Pathology Laboratory (replacement of Salt River Mortuary);
- Avian Park, Napier, PA Hamlet, and Wolseley clinics; and
- Hanover Park and Ravensmead Day Centres.
Over the 2017 MTEF R9.8 billion is allocated for roads infrastructure and R1.8 billion for Transport and Public Works.
The Department plans to deliver the following key projects during the 2017/18 financial year:
- Reseal of Melkbos Road which is expected to be closed-out during September 2017;
- Thirty-six (36) Large projects including Simonsvlei, Paarl-Franschhoek, Oudtshoorn-De Rust, Kalbaskraal Road rehabilitation, amongst others which are in the planning stages of infrastructure delivery;
- Sixteen (16) Mega projects currently under construction including the Worcester (Nekkies) road,
- Piketberg-Velddrif and Robertson-Bonnievale projects; and
- The anticipated handover of 11 projects during the 2017/18 financial year.
The Western Cape Minister of Transport and Public Works, Donald Grant, will outline further plans regarding strategic infrastructure projects.
R7.2 billion has been allocated to Human Settlements.
Departmental catalytic priority projects over the 2017 MTEF include the following:
- Southern Corridor: 51 540 opportunities;
- Transhex: 8 000 opportunities
- Vlakkeland: 2 556 opportunities
- Belhar: 3 000 opportunities;
- George: 15 000 opportunities; and
- Investment in bulk infrastructure in the non-metro municipalities to the value of R64 million will assist in accelerating housing delivery and will augment the Municipal Infrastructure Grant allocations of the municipalities.
The Western Cape Minister of Human Settlements, Mr Bonginkosi Madikizela, will expand on these projects during his Budget Speech in this House.
Madam Speaker, the Department of Agriculture receives an allocation of R2.5 billion over the 2017 MTEF.
Key priorities for the Department include veterinary services, farmer support and development, agricultural economic services and rural development.
Green Economy: Over the 2017 MTEF, R73.8 million has been allocated for Green Economy initiatives across the Western Cape Government.
Madam Speaker, we welcome the R1 billion investment into Atlantis facilitated by this Government, the City of Cape Town and National Government.
This investment will bring economic growth and jobs to Atlantis.
The transversal Green Economy programme focuses on the Smart Grids project, exploring opportunities for Liquefied Natural Gas and preparation work around the designation of the Atlantis Special Economic Zone.
Furthermore, the assessment of the feasibility of further solar PV installations in Western Cape Government buildings as well as the implementation of electricity and water saving measures will be prioritised.
Energy Security Game Changer: This Game Changer aims to ensure energy security that supports economic growth by incorporating diverse and low carbon sources of energy and improving energy efficiency.
The key focus areas for the 2017 MTEF include facilitating and enabling independent generation of Solar Panel (PV) installations and doubling the current installed capacity over the next year.
Madam Speaker, this budget is about people and giving hope to the lost generation.
Skills Development: I am glad to announce that the Province will allocate R193.3 million over the 2017 MTEF for skills development and innovation initiatives.
Key focus areas over the medium term include skills programmes, vocational and technical related skills initiatives with a particular focus on bridging the skills gap in the tourism, ICT, and agri‑processing sectors.
Apprenticeship Game Changer: Through this Game Changer the Province aims to develop sufficient, appropriately qualified technical and vocational skilled people to meet the needs of prioritised economic growth sectors in the Province.
Over the 2017 MTEF, the focus will be placed on introducing 32 500 technically skilled persons into the labour market by 2019.
Madam Speaker, our continued investment in the economy is an investment in people, growth and prosperity.
PSG 2: Improve Education Outcomes and Opportunities for Youth Development.
Madam Speaker, an allocation of R65.7 billion to the Department of Education will be directed to improving education outcomes over the next 3 years.
Key focus areas include: improving the level of language and mathematics in all schools; increasing the number and quality of passes in the National Senior Certificate; and increasing the quality of education provision in poorer communities.
e-Learning Game Changer:
This Game Changer aims to use technology to enhance teaching and learning for all Western Cape learners, predominantly in mathematics and languages towards revolutionising teaching and learning in our schools.
Minister Schäfer will expand on some of these key innovative initiatives in her budget address.
Over the next three years, the focus will be on ensuring that all teachers and learners will be exposed to a level of technology that is linked to the wide area network that is being rolled out to all Western Cape schools.
Early Childhood Development: The Department of Social Development and the Western Cape Education Department will continue to focus on improving access to and quality of ECD education.
The Western Cape Minister of Social Development will make further announcements in this regard during his Budget Speech later this month.
In support of this an additional R83.9 million has been allocated over the 2017 MTEF.
Social and Economic Opportunities for the Youth:
Youth development in the Western Cape places specific emphasis on equipping the youth to transition into responsible, independent, and productive adults.
The MOD programme receives an allocation of R152 million over the 2017 MTEF.
After School Game Changer:
The After School Game Changer aims to provide quality after school programmes to 20 per cent of learners in no-fee and low-fee schools in the Province.
Madam Speaker, our continued investment in improving education outcomes and opportunities for youth development is an investment in people which is an investment in growth and prosperity.
As previously stated it is an investment in “the lost generation”.
The Western Cape Minister of Cultural Affairs and Sport, Anroux Marais will make additional announcements regarding arts, culture and sport during her budget speech.
PSG 3: Increase wellness, safety and tackle social ills.
One of the key tenets of inclusive growth is promoting the well-being of our citizens, so that they may access opportunities that enable both social development and economic growth.
Inclusive and Healthy Communities, families and children:
Speaker, I am glad to announce that the Department of Health is allocated R68.5 billion over the 2017 MTEF for the provision of public health services that improve the health outcomes and contribute towards creating public value and overall well-being of the population.
The Department is implementing a number of inter-sectoral interventions that target unhealthy lifestyles which contribute to the burden of disease.
The Western Cape Minister of Health, Dr Nomafrench Mbombo, will make further announcements in this regard during her budget speech.
These include the First 1000 Days initiative; the Western Cape on Wellness (WoW) project; and the Integrated Service Delivery Model in Drakenstein, Saldanha, Gunya and Town 2 in Khayelitsha.
Furthermore, the Community-Oriented Primary Care is one of the initiatives aimed at intensifying and scaling up the whole of society and whole of government behavioural initiatives toward improving wellness.
Social development services for the poor and most vulnerable:
Persons with Disabilities
The Department of Social Development has allocated R512.6 million over the 2017 MTEF to empower and improve the well-being of persons with disabilities.
Included in this amount is an additional allocation of R12.7 million over the 2017 MTEF to expand access to appropriate residential care, as these individuals require infrastructure, stimulation and nutrition specific to their needs. The majority of the additional bed spaces unlocked will be within rural areas.
Further, the Western Cape Education Department receives R77.789 million over the 2017 MTEF to provide the necessary support, resources and equipment to care centres and schools for the provision of education to children with severe to profound intellectual disabilities.
Included in the Departments budget is an amount of R39 million over the 2017 MTEF to address the need for social workers.
The Minister of Social Development, Albert Fritz, will announce the details of this support in his Budget Address later this month.
The Western Cape Education Department receives R77.8 million over the 2017 MTEF toward, resources and equipment to care centres and schools for the provision of education to children with severe to profound intellectual disabilities.
The Provincial Minister of Education, Debbie Schäfer, will make further announcements in this regard.
Arts and Culture: The Department of Cultural Affairs and Sport is allocated R328 million over the 2017 MTEF towards identifying and enhancing talent within the arts in partnership with various institutions.
Madam Speaker, a nation will also prosper when the nation reads.
I am therefore pleased to announce that R1 billion has been allocated over the 2017 MTEF for the continued support of 370 public libraries across the Province.
Inclusive and Safe Communities, families and children:
R923.8 million is allocated towards increasing the safety of our citizens over the 3‑year period.
The Department of Community Safety has developed a service delivery model called the “Community Safety Improvement Partnership” as its blueprint for increasing safety.
Key elements of the service delivery model include the promotion of professional policing through effective oversight and ensuring that public buildings and public spaces are safe.
The Department facilitates the identification of policing needs and priorities with Community Police Forums and institutionalised the Court Watching Briefs to monitor police conduct within the court environment.
Provincial Traffic Service
The Department of Transport and Public Works will continue to render a 24/7 provincial traffic service.
R2.3 billion has been allocated over the 2017 MTEF for traffic regulations to ensure that traffic services are rendered and the registration and licensing of motor vehicles are monitored.
This is to ensure that our biggest own revenue source is protected.
Furthermore, systems and procedures for improving the evidence required to secure convictions will be elaborated on by my colleague, Minister Grant, during his budget address.
Madam Speaker, our continued investment in creating a safe and healthy environment is an investment in our people which is an investment in growth and prosperity.
PSG 4: Enable a resilient, sustainable and inclusive living environment.
Integrated human settlements
The Department of Human Settlements is allocated R7 billion over the 2017 MTEF towards the creation of sustainable, integrated and resilient human settlements.
The three priority areas include, directing more resources to the upgrading of informal settlements and the provision of basic services to backyard dwellers who continue to wait for houses, increase Affordable/GAP Housing and to prioritise the most deserving people.
Spatial and development planning:
The Provincial Spatial Development Framework (PSDF) continues to guide the Western Cape’s spatial agenda towards balancing the space-economy.
The Regional Socio-economic Project/Violence Prevention through Urban Upgrading project will be rolled out to three additional towns (Saldanha, Darling and Touwsrivier).
The Violence Prevention through Urban Upgrading (VPUU) Programme will continue in the CoCT covering the areas of Manenberg, Hanover Park, Gugulethu-Nyanga (Gunya) and Khayelitsha.
This Programme directly addresses the needs of communities in the Province as it delivers service delivery projects which are visible in poorer communities.
An allocation of R101.4 million has been made towards the RSEP/VPUU initiative over the 2017 MTEF.
I also want to acknowledge the substantial contribution of 5 million Euros of the German Development Bank, KFW.
Water: Water has been identified as a top priority and an enabler for sustainable growth and development.
Water security has, however, also been identified as a key risk.
For this reason, various initiatives related to water security will be conducted by a number of Departments, notably the Departments of Environmental Affairs and Development Planning, Agriculture and Local Government.
Just over R84 million over the MTEF has been allocated to these departments for the development and implementation of an integrated sustainable water security strategy.
Fire and Disaster Management:
The Department of Local Government received R42.5 million over the 2017 MTEF towards this.
Furthermore, CapeNature has been allocated R30 million over the 2017 MTEF towards disaster prevention measures which include the management of wildfires, floods and other risks.
Madam Speaker, our continued investment in the building of resilient, sustainable and inclusive environments is an investment in growth and prosperity.
PSG 5: Embed good governance and integrated service delivery through partnerships and spatial alignment.
Madam Speaker, national and provincial treasuries have agreed to strengthen management in municipalities.
These will be strengthened with the:
- Introduction of the Municipal Standard Chart of Accounts from 1 July 2017;
- Supply Chain Management reform to reduce costs and combat corruption;
- Enhanced revenue management; and
- Improving asset management and maintenance of infrastructure.
Agbare Speaker, en lede van hierdie Huis, ons is almal dit eens dat plaaslike regering ook onder finansiële druk verkeer.
Tydens die Kabinet en Munisipaliteite se ontmoeting het die burgemeesters ons eerstehands ingelig van hul operasionele uitdagings en gepaardgaande fiskale tekorte.
Om gehoor hieraan te gee het Premier Zille opdrag gegee dat ons in die Kabinet, deur middel van die geïntegreerde beplanningbestuur en begrotingsmetodiek, die versoeke moet evalueer en oorweeg.
The provincial allocations to municipalities are important fiscal instruments to support spatial governance and service delivery for the people.
The provincial allocations to municipalities are also aimed at supporting regional economic growth.
Madam Speaker, in line with our value of responsive governance, the Premier requested the Cabinet Ministers to approach governance from the perspective of the end-user – in this case the citizen.
Madam Speaker, honourable Members, Executive Mayors, Speakers and Councillors, I am pleased to also table today this Government’s commitments to Municipalities in support of the delivery of services to their citizens.
The allocation per region is as follows:
Cape Town Metro R40 billion
Eden R4.9 billion
West Coast R3.1 billion
Cape Winelands R7 billion
Overberg R1.9 billion
Central Karoo R678 million
The Department of Local Government is allocated R784.3 million over the 2017 MTEF to support municipalities which include, but are not limited to, coordinating a single support plan for municipalities to assess governance maturity and looking at indirect and direct impact on communities for broad based community development.
Honourable Speaker, I also wish to announce that the updated data from the 2016 Community Survey will be used over the MTEF to determine the local government equitable share.
This is a welcome new development for local government financial support.
Supported by strong political leadership Provincial Treasury and the Department of the Premier will continue to fulfil the key role of ensuring achievement of our integrated service delivery agenda in Departments and Municipalities.
This budget that I am tabling today will:
- Provide the resources for investment in essential public services;
- Provide ordinary citizens and families with improved quality public services;
- Give certainty to the people of the Western Cape of a better future; and
- Keep the province on a growth trajectory.
Broadband Game Changer: The allocations for the roll-out of Broadband for the Province equates to R1.7 billion over the 2017 MTEF and is part of our smart growth and digital strategy.
Broadband services will be delivered to 1900 sites which consists of Schools, Hospitals, Emergency Medical Services and Clinics, Rural libraries, Cape Access centres and Government Corporate offices.
The purpose of the broadband roll out throughout this province is to bridge the digital divide between urban and rural communities.
Financing this Budget
Madam Speaker, the budget commitments announced earlier will be financed as follows in 2017/18:
- R44.5 billion from Provincial Equitable Share
- R11.6 billion from Conditional Grants
- R2.7 billion from Own Revenue, mainly from motor vehicle license fees, gambling taxes and hospital fees
- R1.5 billion from Financing
The Province will continue to focus on Domestic Resource Mobilisation initiatives to further strengthen its fiscal approach.
I will soon table proposals at Cabinet in this regard.
Madam Speaker, afford me this opportunity to thank all the Ministers and their respective departments for participating in and assisting us during the 2017 planning and budgeting process, where we robustly interrogated the departmental budget proposals and associated plans and their alignment to the Provincial Strategic Plan.
I would also like to take this opportunity to give a special word of gratitude to the Department of the Premier, my Cabinet Colleagues, the Budget Policy Committee, Environmental Affairs and Development Planning, Department of Local Government who together with the Economic Development Partnership assisted the Provincial Treasury during this budget process in our adjudication and final assessments.
Thank you to the staff who assisted in putting together the technical detail in this Budget. We are indeed Better Together.
A special word of thanks to the Head Official of Treasury and his talented, proficient and capable budget team who is listening to this speech in the Boardrooms of Treasury.
The committed support of my staff in the Ministry as always makes my tasks so much easier.
Finally, to my wife and children, thank you for your understanding and for unselfishly allowing me the space to serve the people of the Western Cape and to my father, thank you for the advice which I most certainly value and appreciate.
Honourable Speaker, I also want to thank our friends and colleagues from the Bavarian State Ministry of Finance who are in the gallery today.
To our friends in Bavaria we say: “Wir schaffen dass”.
Speaker, it now gives me great pleasure to table the 2017 Overview of Provincial Revenue and Expenditure, Estimates of Provincial Revenue and Expenditure, the 2017 Western Cape Appropriation Bill, the Western Cape Gazette of Allocations to Municipalities, and this Speech, for discussion and consideration by this House.
I thank you