The Western Cape Department of Economic Development and Tourism presented the budget adjustments as indicated in the current financial year and the changes on various programmes which had been as a result of such. Of key interest was the five-year growth for jobs strategy which was said to receive input from the Western Cape Economic Development and Partnership as the focus was more on partnerships and how the private sector will join the public sector in terms of delivering on or enabling the growth areas. Amongst the programmes which benefited from the adjustments was the I-CAN Centre in Elsies River which, in the previous year, could not be funded due to budget cuts.
Upon deliberations, the Standing Committee also reported on Vote 12: Economic Development and Tourism in the schedule to the Western Cape adjustments appropriation Bill [B3 – 2022]. The vote was supported and the ANC and Al Jama-ah expressed their minority view to not support the vote.
Ms Mireille Wenger, Provincial Minister of Finance and Economic Opportunities, stated that the presentation would be based on the budget for Vote 12: Economic Development and Tourism and that it would be a very brief summary. She explained that funds were going in and out such as the R851 000 set aside for skills development initiatives, programmes currently underway, and rollovers taking place. She added that there were rollovers for projects being run over multiple years by beneficiaries from the booster fund. Some funds were also being shifted to other departments, namely the Department of Cultural Affairs and Sport (DCAS) for the Cape Town E-Prix and some shifts between programmes to support youth entrepreneurship programmes and upgrade the maintenance of IT infrastructure at the I-CAN Centre in Elsies River. There was also an R1.4 million shift for purchasing an additional subscription to increase data intelligence for the growth for jobs strategy and to intensify stakeholder engagement.
Mr Velile Dube, Head of Department, Western Cape Department of Economic Development and Tourism (DEDAT), highlighted that the Minister had mentioned the overarching contributions in the adjustments as indicated in the previous presentation. He added that the Department was in a period of transition and that once the strategy had landed, the entity would like to have an opportunity to put concrete plans that would help the economy's growth.
Ms N Nkondlo (ANC), addressing the Minister, said that in the budget, there was a reference to the growth for jobs strategy that would be developed and completed in the current financial year. She stated that she wanted to understand what this meant, as the Premier also mentioned it during the Standing Committee on Public Accounts (SCOPA). She asked for an explanation and clarity on the matter.
She said that when she read the budget adjustment aims, the Department mentioned a five-year growth for jobs strategy in place and, at the same time, mentioned that the entity was supporting the provincial growth strategy. She added that she did not quite understand what this meant as Mr Dube also indicated that there was a review of the strategy that still needed to be presented before the Portfolio Committee, although the provided document stated that the strategy is on course. She inquired on who exactly was responsible for driving the Western Cape growth for jobs strategy and whether the Department served as a support system to those in charge. She emphasised that she was trying to understand the elements of the strategy as these were not clear to her.
Minister Wenger said that due to the COVID-19 pandemic, there had been a Jobs Now Plan and, later, a recovery plan. As the Department moved past these, the focus was shifted towards long-term growth for job strategies, which would continue until 2035. She mentioned that the current strategy would be completed by the end of the financial year and that the Department would coordinate the growth in jobs plan for the provincial government.
Mr Dube said that the growth for jobs strategy was coordinated by the Department, which also coordinates other departments that vary on the economy. He mentioned that the strategy had long-term ambitions to grow and double the economy, to grow it at a much higher Gross Domestic Product (GDP) than had been achieved in the past, and to have an inclusive economy that is job-rich. He stated that the Department was transitioning from the current strategy that informed its plans to a new strategy that would inform new plans and this would be presented to Members. He added that the presentation would elaborate on specific pillars that had been identified in the development of the strategy. It would also touch on the key aspects of accelerated and inclusive growth and, more importantly, job-rich growth. He said the plans would be communicated once the strategy landed.
The Chairpersons inquired whether Ms Nkondlo had received clarity on her question.
Ms Nkondlo indicated that Mr Dube had answered her as he explained that the Department was going through a transitioning period which had not been captured in the provided document.
Consideration of Vote 12: Economic Development and Tourism
The Chairperson stated that the meeting was moving on to the consideration of Vote 12: Economic Development and Tourism, particularly concerning the Western Cape Adjustments Appropriation Bill, and that pages 301 to 320 would be tabled. She stated that previously the Committee may have looked at it on a page-by-page basis but in the current sitting, the entire vote would be tabled and questions would be raised on a question-by-question basis.
Mr A van der Westhuizen (DA) highlighted that the reason given for the adjustments mentioned was the delay experienced in filling vacant positions. He said that earlier it had been stated that the process of vetting candidates took longer than anticipated and expressed that for him, it was important to determine the reasons behind the abnormal vacancy rate as it reflected badly on the office of the Premier, to say that the only valid reason was a delay in the process. He asked the extent to which this could be the reason, the causes for the delays, and whether the Department could assure the Committee that the vacant positions had been advertised and interviews had been finalised in good time.
Also, referring to the Cost of Employees (CoE), he mentioned that various departments had made a number of adjustments due to the expected 3% salary increase and had not referred to this in terms of their adjustments. He asked why there was such a discrepancy, and what was the Department’s financial position should the public service increase be implemented. He asked how the entity would manage if the increase came in at a higher percentage and added that according to his understanding, National Treasury would make good any difference but shortfalls may still be encountered in the budget. He asked for clarity on the matter and mentioned that his questions referred, but were not limited, to pages 306 to 307.
Ms Nkondlo asked what the particular shortfall was that the Department needed to make provision for, given that the adjustment budget by National Treasury for CoE had been allocated. She asked for clarity on the matter.
On page 302, she indicated that there had been four shifts from different sub-programmes for funds to be allocated to the Elsies River skills development centre. Since the Department had not budgeted for the funds, she asked why these funds were allocated to the centre and the processes followed for other centres.
On page 305, under enterprise development, she stated that she was interested in the Small, Medium and Micro Enterprises (SMME) Booster fund, where it was mentioned that projects must be correctly classified. She asked what the “correct classification” meant, what the previous classifications entailed, seeing that there were changes in place, and what this meant in monetary terms.
She said she wanted to understand why funds directed towards township revitalisation were also being shifted and what the Department meant when they referred to a method being reviewed. She asked for an explanation of what was being reviewed, where the funds were being moved to, and why they were being shifted.
Mr R Mackenzie (DA) referred to page 304 and stated that it had been mentioned that funds were being shifted to make provision for the 3% increase but according to his understanding, the increase formed part of direct funding. He asked for clarity on the matter in case there was a misunderstanding on his part.
On the same page, under bullet point 5.6, it was stated that there was an increase in transfer payments to support the operations of a centre in Elsies River aimed at improving digital literacy. He asked for clarity on the matter.
On the bullet below, it had been stated that funds would be utilised for the finalisation of the Department’s internal programmes. He asked what this meant, whether someone was being paid or consultants were being used. Similarly, in bullet point 2.1, he highlighted a shift in economic classification to provide for the purchase of equipment for township businesses. Referring to a previous meeting, he mentioned that he had asked about the issue of loadshedding and whether these businesses would be supplied with backup generators. He asked what the equipment to be supplied was.
Ms Mymoena Abrahams, Chief Financial Officer, Western Cape Department of Economic Development and Tourism, said that the questions were all related and that she would cover them as such. With regards to the CoE percentage, she explained that the way the Provincial Treasury looked at the salary increase was whether the departments were able to absorb the 3% increase. What was seen within the adjustment estimates is where the Department was able to absorb the 3% CoE salary increase in certain programmes or sub-programmes.
She clarified that the underspending was not only a result of delays experienced due to filling vacant positions but also about 26 posts where, for various reasons, mainly promotional reasons, staff members had left the Department during the 2022/23 financial year. She added that as members of staff are promoted, the vacant positions left behind usually take an average of three months to fill but this takes between three to six months for the Department to accomplish. She gave an example that if a staff member had vacated a post in April until the present day, there would have been savings generated which are then used for various expenditures, one of which is the 3% CoE increase and others are projects that could not be funded at the beginning of the year.
She stated that the Elsies River project had been funded for a considerable number of years. However, in the previous year, due to budget cuts, it could not be funded. The current year's CoE savings allowed funds to be directed toward operational support.
In terms of the growth for jobs, she said that the CoE savings have also been allocated to the strategy, where they are used for a group of consultants who guide and support the Department in the development of the strategy.
Regarding the questions on the SMME Booster fund classifications, she said that the programme operates in such a manner that at the beginning of the financial year, entities to be funded have not been identified. At the beginning of each financial year, the Department has a broad allocation, allocated to a transfer payment item. Once processes such as adjudication or approval of proposals and later evaluations have been completed, then beneficiaries can be identified. The adjustment estimates are then used to allocate funds to qualifying entities, which is why there is mention of reclassification. She said that in the current year, more support had been gathered because the Booster programme primarily works with partners. Township allocation had also been included within the programme which is why there was a shift from the allocation of the township revitalisation programme towards the booster programme.
Mr Joshua Wolmarans, Director: Enterprise Development, Western Cape Department of Economic Development and Tourism, said that the Department was, as mentioned by the Minister, supporting predominantly township-based businesses and organisations such as Warm-Up. A business development support programme was also established which looked into supporting township-based businesses and ten businesses were being supported. He added that the issue of generators to ensure the sustainability of businesses was also being looked into.
Mr Tim Parle, Chief Director: Digital Economy, Western Cape Department of Economic Development and Tourism, clarified the question by Ms Nkondlo and stated that there was only one centre in Elsies River. He mentioned that a separate I-CAN Learn project was done in partnership with the Department of Cultural Affairs, Sport and Social Development. He explained that the centre focuses on digital skills training and training young, fresh entrepreneurs by teaching them elements such as prototype design thinking and operational support for equipment at the centre.
Ms Nkondlo said she was interested in knowing further about the R3 million allocated towards tourism which has been taken from the tourism programme and skills development for the Formula E. She asked whether this was a once-off decision, if there had been applications by those involved, and how the allocation was done, seeing that there would be a number of events within the province. She also inquired about the R2 million directed towards the Western Cape Economic Development and Partnership (WCEDP). She added that she always asks about the enterprise development programme and whether any reporting is done. She asked about the legal standing of the project, if it is under the Department, if it forms part of a partnership under a civil society organisation that the Department funds, and whether it is treated as a transfer payment.
Referring to page 312, the Chairperson asked about the increase in revenue amounting to R815 000. She asked about the measures the Department was taking to monitor and ensure that the training provided results in tangible job opportunities for the beneficiaries. She also inquired about the number of beneficiaries for the programme in the year under review.
Minister Wenger stated that the Economic Development Partnership (EDP) is a non-profit organisation that is legislated through the membership of the WCEDP Act, which serves to encourage the formation of effective partnerships between a range of stakeholders. It also monitors how partnerships work together across the Western Cape and across various elements such as improving livelihood, safety, and well-being within the province. It was established in terms of the Provincial Act in 2013.
Ms Abrahams mentioned that because the Western Cape EDP is established similarly to public entities, the Department supports the entity from its operational support perspective through transfer payment. The funding which goes towards the entity has been through transfer payment and the mandate of the entity is to support the Department in terms of developing and enabling partnerships mainly between the Department and the public sector.
Mr Dube stated that a massive opportunity has risen for the Western Cape both from a brand positioning and an investor potential point of view, where the whole world will witness the event taking place in Cape Town. He mentioned that the Department felt it was important to support the initiative and assist with a small amount. He added that about R1 million had been set aside.
Mr Nezaam Joseph, Chief Director: Skills Development, Western Cape Department of Economic Development and Tourism, stated that the Department, in all its programmes, compels firms to absorb learners and on average, about 80% of the learners are typically absorbed. He added that there are punitive measures that the entity is able to exercise if companies do not absorb the numbers conveyed to the Department.
Ms Nkondlo said she wanted to check whether the EDP was treated as a transfer payment as it had to assist the Department as part of its mandate. She asked what the governing structure was and how the entity reported the work done. She further inquired about the specifications of the reporting, the sub-programme under which the reporting was done, whether the reporting was to the Minister or was supposed to be done before parliament and how the entity was treated differently since it was established through the Provincial Act.
The Chairperson allowed members of the public to ask questions and there were none.
Minister Wenger explained that the EDP comprised of a management structure and a board of directors that had a number of prominent figures, which the Department would be happy to share with the Committee.
Regarding the EDP reporting, Ms Abrahams stated that the Department was very strict in managing and reporting processes within the sub-programme. She said that the relationship between the entities was managed through a transfer payment agreement which is a business plan that accompanies the TPA. There are also quarterly reports, feedback, and meetings in terms of performance management. She added that the entity would become key in the growth for jobs strategy because, as has been stated, the focus is more on partnerships and specifically how the private sector will join the public sector in terms of delivering on or enabling the growth areas.
The Chairperson thanked the Minister, Department officials, and members of the public and excused all in attendance except Committee Members who were to remain for the resolutions.
The Chairperson asked Members to express their support or rejection of Vote 12 clearly and added that the Committee could not abstain at present due to a ruling already made prior to the sitting.
Mr van der Westhuizen said that he supported the adjustments as per the appropriation budget presented. He added that he thought some matters needed to be pursued further but in terms of the financial adjustments, he said: “I think I support all of that”.
Ms Nkondlo said that the Chairperson should note the minority vote of the African National Congress (ANC) not to support the budget in line with rule 90 as the party was not in support of budget cuts to CoE, goods, and services which are believed to result in adverse effects on service delivery.
Mr G Brinkhuis (Al Jama-ah) said that the party would like to express its minority view not to support the budget because it is fuelling the inequality in the Western Cape.
For the record, the Chairperson read the report and it stated
“Committee report reports for the Standing Committee on Finance and Economic Opportunities and Tourism on Vote 12: Economic Development and Tourism in the schedule to the Western Cape adjustments appropriation Bill B3 of 2022. Dated 28 November 2022.
The Standing Committee on Finance and Economic Opportunities and Tourism reports that it has concluded its deliberation on Vote 12: Economic Development and Tourism in the schedule to the Western Cape adjustments appropriation Bill of 2022 referred to the Committee in terms of standing rule 188 and it supports the vote referred to it. Noting the minority view in terms of standing rule 90, the ANC and Al Jama-ah expressed their minority view to not support the vote.”
The report was adopted and supported by Mr van der Westhuizen and Mr Mackenzie.
The meeting adjourned.
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