Western Cape Adjustments Appropriation Bill & Medium Term Budget Policy Statement: Provincial Treasury briefing

Budget (WCPP)

22 November 2018
Chairperson: Mr D Joseph (DA)
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Meeting Summary

The Provincial Treasury briefed the Committee on the Western Cape Adjustments Appropriation Bill, and Medium Term Budget Policy Statement (MTBPS).

The Provincial Treasury said the theme for the 2018 Western Cape MTBPS was: Consolidation for Maximum Citizen Impact. This meant balancing maximum service delivery and citizen impact whilst taking cognisance of the economic, fiscal, environmental and service delivery risks. The 2019 Medium Term Expenditure Framework (MTEF) budget spending plans and priorities were as follows: creating opportunities for growth and jobs through initiatives such as Project Khulisa and Philippi Horticultural Area; improving education outcomes and opportunities for youth development by increasing access to and the quality of education in poorer communities; sprucing up safety at schools; increasing wellness, safety and tackling social ills; enabling resilient, quality, sustainable and inclusive living environments; and embedding good governance and integrated service delivery throughout the province. The main allocations for the Budget were over 2019 MTEF as follows: Maintenance of Tygerberg Hospital (R475 million); easing service load pressures within the Department of Health (R511 million); curbing crime through regulatory impact assessment and camera technology (R132.8 million); Public Transport: Rail (R255.5 million). The allocation to major investments in economic development and job creation in the Atlantis Special Economic Zone, Saldanha Bay Industrial Development Zone, Economic Stimulus, EPWP and Agriculture amounted to R456 million. Major additional investments into safety and public transport initiatives amounted to R388 million. Moreover R31.6 billion and R86 billion was allocated over the next three years to create opportunities for growth and jobs for youth and to improving learner outcomes respectively. The R29.5 billion infrastructure investment over the next three years consistent with the 10-year Infrastructure Plan would be allocated as follows: R2 billion into Tygerberg hospital; R3.5 billion into Roads; and R1.5 billion into Maintenance.

Members said the unavailability of job opportunities within the province was a cause for concern. They wanted to hear about a comprehensive jobs creation plan and how it would be funded. They wanted to know why Knysna and the Garden Route municipalities were receiving larger sums of money for fire-fighting as compared to others. For instance, thousands of people have been victims of fire incidents in Hout Bay and Khayelitsha, but were not set to receive as much support as the aforementioned areas. Further, the recent crime statistics reflecting an increase in cases of murder were worrying. A rise in crime prevalence was a cause for concern and should be addressed accordingly through adequate budget allocations. They emphasised the need for budget alignment to key priorities.

Meeting report

The Chairperson welcomed everyone and invited the Provincial Treasury to take the Committee through its presentation on the Adjustments Appropriation Bill and Medium Term Budget Policy Statement (MTBPS).

2018 Western Cape Medium Term Budget Policy Statement

Ms Ronel Slinger, Senior Manager: Provincial Government Budget Office, Western Cape Provincial Government, highlighted key messages that came from the 2018 National MTBPS. South Africa finds itself at a crossroads with economic growth revised down from 1.5 percent to 0.7 percent, and outlook unlikely to improve. The rising debt to GDP ratio, poor performance of state-owned entities and debt obligations, the twin deficit problem as well as the unsustainable fiscal path were flagged as risks to economic growth. The Western Cape could not detach itself from the risks facing national economy. Fiscal risks included lower revenue collections, debt service costs, and an increasing wage bill. Further, a growing population, poverty and inequality on the back of high unemployment would likely lead to further increased demand for public services. Although the good rainfall received in 2018 winter months brought some relief to the drought, there was still significant pressures in certain areas. On crime and safety, the Constitutional Court ruling on the private use of cannabis could result in an increased demand for substance abuse treatment.

2018 Western Cape MTBPS

The theme for the 2018 Western Cape MTBPS was: Consolidation for Maximum Citizen Impact. This meant balancing maximum service delivery and citizen impact whilst taking cognisance of the economic, fiscal, environmental and service delivery risks. The 2019 MTEF budget spending plans and priorities were as follows: creating opportunities for growth and jobs through initiatives such as Project Khulisa and Philippi Horticultural Area; improving education outcomes and opportunities for youth development by increasing access to and the quality of education in poorer communities; and sprucing up safety at schools; increasing wellness, safety and to tackle social ills; enabling resilient, quality, sustainable and inclusive living environments; and embedding good governance and integrated service delivery throughout the province.

The main allocations for the Budget over the 2019 MTEF were as follows: Maintenance of Tygerberg Hospital (R475 million); easing service load pressures within the Department of Health (R511 million); curbing crime through regulatory impact assessment and camera technology (R132.8 million); Public Transport: Rail (R255.5 million). The allocation to major investments in economic development and job creation in the Atlantis Special Economic Zone, Saldanha Bay Industrial Development Zone, Economic Stimulus, EPWP and Agriculture amounted to R456 million. Major additional investments into safety and public transport initiatives amounted to R388 million. Moreover R31.6 billion and R86 billion was allocated over the next three years to create opportunities for growth and jobs for youth and to improving learner outcomes respectively. The R29.5 billion infrastructure investment over the next three years consistent with the 10-year Infrastructure Plan would be allocated as follows: R2 billion into Tygerberg hospital; R3.5 billion into Roads; and R1.5 billion into Maintenance. Close to R1.6 billion was further provided to deal with the drought. 

Ms Analiese Pick, Provincial Government Finance, Provincial Treasury, took the Committee through the 2018 adjusted estimates of provincial revenue and expenditure. The province was allocated a total of R1.3 billion by national government for drought-related disasters during the 2017/18 and 2018/19 financial years. R761.3 million was directly allocated to municipalities for drought-related projects, and R177.1 million was allocated to national departments through indirect grants and national programmes to be spent in the Western Cape specifically. On second quarter performance of the 2018/19 financial year, there were no major concerns in respect of financial performance as risks had been accommodated in the 2018 Adjusted Estimates. The overall performance average was 78 percent. Notably, all departments within the Governance Cluster achieved more than the Western Cape Government (WCG) average, together with four departments within the Social Cluster, namely Education, Human Settlements, Community Safety and Cultural Affairs and Sport. However, all departments within the Economic Cluster achieved less than the WCG average.

Discussion

The Chairperson appreciated the presentation and invited clarity-seeking questions and comments from Members.

Ms P Makeleni (ANC) said the unavailability of job opportunities within the province was a cause for concern. She was hoping to hear about a comprehensive jobs creation plan and how it would be funded. She wanted to know why Knysna and the Garden Route municipalities were receiving larger sums of money for fire-fighting as compared to others. For instance, thousands of people have been victims of fire incidents in Hout Bay and Khayelitsha, but were not set to receive as much support as the aforementioned areas. 

Ms N Nkondlo (ANC) identified critical risks facing the province. The recent crime statistics reflecting an increase in cases of murder were worrying. A rise in crime prevalence was a cause for concern and should be addressed accordingly through adequate budget allocations. She asked who the ultimate beneficiaries of job opportunities created by the province would be. This had to be precisely evaluated to demonstrate the Economic Cluster performance against set targets.

Mr R Mackenzie (DA) emphasised the need for budget alignment to key priorities. There was a lot of fat built into the budget as well as reserves created that were not being utilised.

Mr Harry Malila, Head: Fiscal and Economic Services, Provincial Treasury, in response, said there were clear outcome indicators to determine maximum citizen impact of service delivery. The crux was how best should government interact with citizens and pool resources together to attain this- integrated planning and collaborative efforts would ensure maximum citizen impact. Evaluating governance in terms of service delivery and audit outcomes gives a more holistic overview of the performance of the Western Cape government. WCG had requested additional funds from the national Department of Human Settlements to curb fires within the province. The funds would assist farmers in fencing and alien clearing as well as fodder harvesting for their livestock.  The Department was transparent about its reserve position and the budget as a whole to ensure it is well-understood by the public as a whole. On what was being done to deal with crime in the adjustment budget, a number of safety initiatives were highlighted on the annexure of the presentation document. 

The Chairperson thanked the Provincial Treasury and Members for the engagements.

The meeting was adjourned.

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