Western Cape Adjustments Appropriation Bill: Economic Development and Tourism

Meeting report

Opening
The Chairperson greeted everyone present and asked all to introduce themselves.

The Minister of Finance and Economic Opportunities in the Western Cape, Ms Mireille Wenger, greeted everyone and said that the Department was there to present the adjustment budget for Vote 12.

After the introductions, the Chairperson outlined the rules for the meeting to ensure a smooth running process and handed over to the Minister for opening remarks.

Minister’s opening remarks
Minister Wenger said the Department had an initial allocation of R512 700 000 for the current financial year, but in the Adjustment Bill, the amount was decreased by R29 800 000 which would reflect a total Appropriation of R482 900 000. The adjustments were mainly because of receipts of the shifting of funds between votes within the energy space and financing.

Ms Mymoena Abrahams, Chief Financial Officer (CFO), Department of Economic Development and Tourism (DEDAT), said that the Minister had mostly covered what she was going to say.

Discussion
The Chairperson mentioned that the Committee would now discuss vote 12, looking at pages 281-303 specifically, which would be considered holistically.

Ms N Nkondlo (ANC) referred to page 285 and said that she noted the money from goods and services on the reprioritisation of funding due to initiative project being cancelled. Why was said project cancelled? Money was being issued to Non-Profit Institutions. What was the allocation for this and who were these institutions?

Referring to page 286 on ‘Sector development’, she asked what the R1 000 000 which was re-directed to Tourism growth to supplement tourism safety; was for.  

The Chairperson alerted Ms Nkondlo that they could no longer hear her due to her poor network.

Mr A Van der Westhuizen (DA) asked about pages 291 and 292- he noted the severe underspending on some of the votes, such as the Skills Development and Innovation, where only 16.8% was spent in the first six months, the transfers to municipalities and provinces was 10%. Public Corporations and Enterprises had only 8.3% expenditure and household expenditure had 12.33% but the full amount was still predicted to be spent by the end of the financial year. 27% for Transfers to Non-Profit Institutions and 25% for households. He was aware that other entities relied heavily on the funding stream from the province. What was the explanation for the severe underspending? And to what extent did this affect the intended recipients? What was classified under the heading of ‘households’?

Ms Nkondlo said she had poor network due to loadshedding and referred to page 286; what was the R1 000 000 reprioritised for Tourism Safety for? What was the money budgeted for in the initial budget? And what would it be spent on?

On page 288, there was a re-classification of funds for the G4J Tourism Fund under Tourism Growth and Development. Could the Department elaborate on this programme? Was said programme in the annual plan of the Department? When did it come about?

The Chairperson referred to page 289 under the ‘skills programmes and projects’; she asked for clarity on the delays and how they would be addressed in future.

Minister Wenger responded on Tourism Safety saying that this was a new allocation to the Department to help boost the Tourism law enforcement in the city. The Department expected a bumper tourism season where there would be a 25% increase in the number of tourists. It was bringing 1 000 000 inbound seats into Cape Town this summer which was good as it would help grow the tourism industry and there was a lot of interest in the city. The Department is aware of the studies conducted which revealed that the main reason why tourists were reluctant to travel to South Africa was because of safety issues. One of the most notable instances was in national parks, where there were many attacks on both local and foreign visitors. It wanted to increase everyone's safety in the tourism industry and not tarnish its reputation as a great tourism destination.

Mr John Peters, Chief Director: Economic Enablement, responded on the Mutual Maturity Index, explaining that this project was not cancelled. Said project had two parts: basic assessment and the improvement on the challenges picked up in the assessment. The Department decided that it had enough capacity in-house to conduct the assessment. The project had been implemented, and the R500 000 was transferred to the Booster fund.

Ms Ilse van Schalkwyk, Chief Director: Economic Sector Support, reminded all that about three years ago, the Department started the Tourism Development Project Fund which ran for two years and focussed on project development. In the current year, it launched the G4J Tourism Challenge Fund, which focuses on project development and infrastructure upgrades. There were different applicants and beneficiaries who had been listed. The Department planned to have a second round for the fund in the future to support the tourism industry.

Ms Abrahams responded regarding pages 291-292. On page 292 was the comparative figure from last year and on page 291 was the expenditure from the current financial year, and both years were being compared. In the latter part of the year, the Department generally spent on the programme two and seven areas. It planned for projects such as Booster, the Tourism Challenge Fund and the exponential training programmes. The training programmes took place within the first half of the year and the implementation occurred in the latter part of the year.

‘Households’ referred to the experiential training programme which had all the stipend payments linked to it. Ms Abrahams said that the Department did not see the underspending as a risk because this was part of how it had planned and implemented. There was a moratorium on filling most of the posts in the provinces, and the Department was unable to fill most of its key posts which would lead to a delay due to the various processes it would have to follow.

Mr Van der Westhuizen referred to the reclassified R12 000 000 page 284 and asked for clarity on why this amount was originally classified under a different heading. He observed a reduction in broadband spending, saying he understood this was the roll-out of internet access to communities. What was the reason for the reduction? In the past, this was considered to be a very important initiative. Studies revealed that good internet access contributed to economic growth, and this was a priority for the province.

The Chairperson highlighted that Ms Nkondlo’s questions were in the group chat. She asked for clarity on the delays mentioned on page 290.

Minister Wenger responded that the broadband project was still in effect and it was not true that the provincial government was no longer rolling out this project.

Ms Abrahams responded on re-classification, saying that when the SMMEs were put together, the goal was to make a transfer payment to municipalities to assess if this was viable. During the year, the Department implemented on its own which meant that the money had to be transferred from transfer payments to the goods and services item. The project was moving forward but as a goods and services item.

Regarding the SMME Booster funds, when the Department initiated the project, it was unsure who the recipients would be. During the planning, the project was advertised and there was an application process. Through the governance process, the Department was able to identify the beneficiaries and entities that would receive funding from the Department. It was trying to reclassify against the initial allocation to the entities who were successful in their applications to the Booster fund.

Mr Peters responded that the Municipal Maturity project was not cancelled; they decided to do in-house assessments, which took away from the money for service providers. The funding was in the Booster fund, whose beneficiaries were non-profit institutions and other institutions. Regarding the alternative energy project, the Department said it aimed to address the municipalities on the existing projects they had undertaken under the Booster fund. Two years ago, the Department provided funding for the Booster fund, and the municipality also provided funding to construct the training hubs. They wanted to provide alternative energy to the training hubs. They did not want to haphazardly transfer money to the municipalities as there could be challenges in terms of spending, so the Department decided to undertake this themselves. Due to the nature of being highly technical and the standards in the industry, the Department had to receive permission from the municipality. It looked at situations where safety was compromised, and for this, it appointed a service provider to look at the specifications for each hub, which was time-consuming. The Department tried to assess the hubs in about five clusters, which were to be completed by March 2024.

Ms Abrahams responded to Ms Nkondlo’s written questions by saying 36 positions would need to be reprioritised in terms of funding requirements and affordability.

Ms Jo-Ann Johnston, Deputy Director-General: Strategic Economic Accelerators and Development, responded by saying the broadband was driven by the Department of the Premier; with whom the Department worked very closely. They were moving to Broadband 2.0 which would accelerate broadband in the communities especially with access to WI-FI.

The monies being shifted were assigned to the Venture Capital which was aligned to the growth of jobs strategy. This was done because often there were innovative projects and entrepreneurs within the province who could not access the capital to start up. A feasibility study was done to see if they could set up the Venture Capital. Fiscal constraints meant that the project was re-conceptualised and ongoing but in a different manner. The money was shifted away to deal with the fiscal constraints, but they still intended to take the project forward.

Minister Wenger said the energy packs were in the Department of the Premier, and that this question would be best directed to Vote One. The funding for tourism came from the Provincial Revenue Fund.

The Chairperson thanked the Department for its participation, and expressed that she enjoyed working with them and hoped that they would take rest this holiday so that they would return more energised in the following year to be more productive. She dismissed the Department.

Committee matters

The Chairperson moved on to the next item. She asked for indication of support for the draft Committee report on the adjusted amendment for Vote 12: Economic Development and Tourism.

Mr I Sileku (DA) supported the report, and Mr Van der Westhuizen seconded.

Mr G Brinkhuis (A-Jama-ah) did not support the report.

The Chairperson requested that the report be flighted so she could read it out aloud to everyone. Thereafter the report was adopted, noting no support from the ANC and Al-Jama-ah.

She then called for any resolutions, which there were none.

The Chairperson thanked everyone for their time and participation; she hoped all the comments were duly noted. She had learnt so much from the Committee and hoped they would continue working well. She wished them a wonderful festive season. She looked forward to seeing them next year.

The meeting was adjourned.