PROVINCIAL BUDGET: 2017 MTEF Address to the Western Cape Property Development Forum

Dr. IH Meyer Provincial Minister of Finance 5 May 2017 Macroeconomic context Western Cape economic performance

Western Cape growth compared to the rest of South Africa (2004 - 2014)

7 6 Slowing economic performance 5 Finance, insurance, real estate and 4 business services sector was biggest 3 contributor to growth in 2014 2

1 Construction sector was fastest

% % growth rate 0 growing sector over 10 years with -1 average growth of 6.7% -2 Key sectors: Agri processing, tourism 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 and oil & gas SA (ex-WC) Western Cape SA (ex-WC) average Western Cape average Building plans can be used as a

Fastest growing sectors in the Western Cape (2004 - 2014) leading indicator of future building and construction activity Construction 6.7 Finance, insurance, real estate & business services 4.5 General government 3.9 Transport, storage & communication 3.8 Wholesale & retail trade, catering & accommodation 3.8 Total 3.7 Agriculture, forestry & fishing 3.3 Community, social & personal services 2.5 Manufacturing 2.4 Electricity, gas & water 0.9 Mining & quarrying 0.3 0.0 2.0 4.0 6.0 8.0 Average growth rate (%)

• Constitutionalism • Partnerships

• Evidence Base • Whole-of-society approach

• Public Value • Citizen Centric

• Rule of Law

Fiscal and Budget Policy Principles: • 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 • Fiscal discipline: being financially accountable by ensuring that there is no irregular or wasteful spending by any department or entity

Theme: Budget for Growth

1.Inclusive

2.Sustainable Government

3.Smart Growth

The 2017 Provincial Budget

1.Infrastructure – led growth

2.Growth potential: Towns Regions

3.Asymmetrical

Provincial Strategic Plan 2014 - 2019

PSG 1: Promoting investment and providing support to key economic sectors, artisan and technical skills, ease of doing business, green economy and toward infrastructure – led growth Project Khulisa Ease of doing business programme Saldanha Bay IDZ Agriculture Atlantis SEZ Energy Security Game Changer Catalytic Infrastructure Apprenticeship Game Changer

PSG 2: Improving Language and Mathematics, Matric pass rate, Quality education in poorer communities, e-Learning, Early Childhood Development, Grade R, Youth Development and After School Programme

No-fee schools and learner transport Youth Cafés scheme Chrysalis Academy Collaboration Schools eLearning Game Changer MOD programme After Schools Programme Year Beyond

PSG 3: Inclusive, healthy and safe communities and families and children, social development services for the poor and most vulnerable and alcohol harms reduction

WoW 1st 1000 days Supporting arts and culture 90-90-90 campaign Community Safety Improvement Integrated Service Delivery Model Western Cape Police Ombudsman Services to persons with disabilities, Road safety children and older persons PSG 4: Integrated Human Settlements, Spatial and development planning, sustainable ecological (water and climate change) and agricultural resource-base and Better

Living Model Catalytic housing projects Water security/drought/climate change RSEP/VPUU Fire and disaster management Provincial Spatial Development Plan Better Living Model Game Changer PSG 5: Enhanced Governance, Integrated Management, Inclusive Society and Broadband Good financial Management Data Governance Supporting Municipalities Broadband Game Changer

Infrastructure: A lever for economic growth

Infrastructure

Infrastructure investment is a key priority to support growth and socio-economic transformation

Integrated Management Approach for infrastructure delivery

• Partnerships and governance

Emphasis on maintenance - Minimal sustainability

Optimising human resource capacity

Majority of infrastructure investment in Roads, Education, Health and Human Settlements

• 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.

• 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.

Social Development Broadband R1.9 m 1.7 bn Environmental 0.1% Affairs and 6% Education Development R4.8 bn Planning 17% R113.1 m 0.4% Health R2.5 bn Human Settlements 9% R7.2 bn 26%

Public Private Partnerships R230.8 m 0.1% Transport and Public Works R11.6 bn 41% Infrastructure investment of R28 billion over the 2017 MTEF Majority of infrastructure investment in Roads, Education, Health and Human Settlements

2,500

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1,500 R'000000 1,000

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- 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 Audited Audited Audited Rev Est

Financial period

Education: R4.8 billion over the 2017 MTEF.

• 16 New schools (637 classrooms); • 220 classrooms to be added to existing schools; • 15 Replacement schools will be completed beyond the current MTEF.

The 2017 Provincial Budget…

Health: R2.5 billion over the 2017 MTEF.

• Upgrades and additions to Emergency Centres; • Prioritised maintenance and upgrades at Groote Schuur and Tygerberg Hospitals; • New acute psychiatric unit at Khayelitsha; • The Eerste River and new Somerset Hospitals; • Observatory Forensic Pathology Laboratory (replacement of the salt river Mortuary); • Avian Park, Napier, Prince Alfred Hamlet and Wolseley clinics; • Hanover Park and Ravensmead Day centres.

The 2017 Provincial Budget…

Roads: R9.8 billion over the 2017 MTEF. • Reseal Melkbos Road; • implementation of 36 large projects including Simonsvlei, Paarl-Franschhoek, Oudtshoorn-De-Rust and Kalbaskraal Road rehabilitation; • Sixteen Mega projects currently under construction, including the Worcester (Nekkies) road; the Piketberg - Velddrif and Roberson – Bonnievale projects, and

Public Works: R1.8 billion Over the 2017 MTEF. • Optimising provincially owned office space across the province through an Office Accommodation Modernisation programme.

Human Settlements: R 7.2 billion over the 2017 MTEF.

• Three priority areas will be focused on: 1.Directing more resources towards the upgrading of informal settlements; 2.Accelerating affordable housing; and 3.Prioritising the most deserving people in allocating free Breaking New Ground Houses.

Human Settlements: R 7.2 billion over the 2017 MTEF.

• The Department’s Catalytic Priority Projects over the 2017 MTEF includes:

1.The City’s Southern Corridor (51000 opportunities); 2.Transhex (8000 opportunities)- Worcester 3.Vlakkeland (2556 Opportunities) - Drakenstein 4.Belhar (3000 opportunities); George (15000 opportunities), and 5.Investment in bulk infrastructure in non-metro municipalities to the value of R64 million, to speed-up housing delivery.

CapeNature: R113 million over the 2017 MTEF. • Improvements at Kogelberg Nature Reserve: Phase 2 – the development of new chalets, a conference centre and an eco-pool. • Focus on implementing a more rigorous maintenance programme and upgrading of existing assets across a number of provincial Nature Reserves.

Broadband: R1.7 billion over the 2017 MTEF. • The roll-out of Broadband Infrastructure across the province.

• R5.6 billion will be spent on infrastructure maintenance and repairs; • R3.0 billion on upgrades and additions; • R6.0 billion on refurbishments and rehabilitation of existing infrastructure assets; • R3.4 billion will be invested in new infrastructure assets, and • R7.3 billion spend on infrastructure transfers.

Infrastructure spend per category: 2017 MTEF

3% 15%

36%

29%

17%

Upgrades and Additions Refurbishments and Rehabilitation New Infrastructure Assets Infrastructure Transfers Non-infrastructure Expenditure

Infrastructure expenditure, in particular new infrastructure needs to be informed by sustained population growth and regional economic growth.

The proportional allocation towards districts are depicted below.

Spatial Distribution of Infrastructure Spend West Coast 7% Overberg 6% Across Districts 30% Eden 10%

Cape Winelands City of Cape Town 15% 31% Central Karoo 1% Across Districts Cape Winelands Central Karoo City of Cape Town Eden Overberg West Coast

As noted by both WCED and WCGH, significant progress has been made to establish joined up government in infrastructure delivery and efforts will continue to entrench the IDMS in these relationships

Strategy to be revised to make portfolio sustainable – innovative delivery through repeat designs and

standardisation, comprehensive facility management

Unlock potential of portfolio itself to move to sustainability – consolidation, release and partnerships for development

Fiscal constraints require a shift from new capital projects to maintenance of the existing portfolio

Brackenfell Secondary School 2014

Mitchell’s Plain Hospital

The Department of Human Settlements’ investment pursuant to a vision of enabling a resilient, sustainable, quality, inclusive and transport orientated human settlement development.

Zwelihle Housing Project, Hermanus 2016 Pelican Park Housing Project, 2014

Spier Rd Upgrading 2014

The Western Cape’s roads are used by millions of commuters every day. Commuters value the importance of high-quality road infrastructure as a critical component of an effective transport system that also makes a substantial contribution to productivity, safety and economic development in the Province.

Construction at Annandale Road 2014

The Departments of Transport and Public Works: Branch Public Works infrastructure budget has increased over the period 2009 to 2014, from R159.7 million to R605.8 million. During this period, Cabinet also approved a Modernisation and Regeneration programme

The focus for the 2017 Budget includes balancing public finances and managing fiscal risks while giving effect to National and Provincial policy imperatives

The 2017 Budget maintains its commitment toward service delivery impact and delivering a budget for growth

Effective delivery of government programmes is supported by Integrated Management and Partnering to deliver a budget for growth

Infrastructure-led growth and the spatial distribution of provincial expenditure remain critical focus areas

Investment in growth and people is critical (Education, Health, economic infrastructure)

Budget for prosperity, people and growth