medium term budget policy statement 2018 - western cape€¦ · foreword the western cape 2018...

Western Cape Government Provincial Treasury

Medium Term Budget Policy Statement 2018

Provincial Treasury Business Information and Data Management Private Bag X9165 7 Wale Street Cape Town tel: +27 21 483 5618 fax: +27 21 483 6601 www.westerncape.gov.za Afrikaans and isiXhosa versions of this publication are available on request. Email: [email protected]

PR450/2018 ISBN: 978-0-621-46885-4

Foreword The Western Cape 2018 Medium Term Budget Policy Statement (MTBPS), themed “consolidation for maximum citizen impact”, is set in the context of a volatile, uncertain, complex and ambiguous environment. South Africa entered into a technical recession in the first half of 2018, resulting in a weaker economic and fiscal outlook for the country.

Despite the current volatility, the Western Cape Government remains steadfast in its commitment to unlocking and driving growth opportunities and jobs. In this regard 95 000 of jobs were created in the Western Cape over the last year.

Our fiscal response follows an integrated, coordinated and strategic approach to policy, planning, budgeting and implementation in order to ensure that our finances are stable.

The Western Cape Government Fiscal Strategy is designed to maintain fiscal stability and manage fiscal risks in this period of uncertainty. Consultation and collaboration with various stakeholders from the private sector, government as well as academia informed and guided the established fiscal and budget policy principles that support the provincial fiscal framework.

The integrated planning and budgeting approach which is focused on formulating a responsive and sustainable Budget over the 2019 Medium Term Expenditure Framework promotes service delivery impact while being cognisant of the economic and fiscal risks.

This Budget Policy Statement lays the basis for the 2019 Medium Term Expenditure Framework Budget which will respond to a myriad of socio-economic challenges. These include, amongst others, improving education and opportunities for youth development, increasing wellness, safety and tackling social ills, and enabling a resilient, quality, sustainable and inclusive living environment.

This MTBPS is also responding to risks such as the drought, the fiscal shortfall and the challenges relating to the promotion of safety in the Western Cape.

The MTBPS remains focused on the core mandate of the provincial government, namely, the provision of education, health care facilities, road infrastructure, social services and interventions aimed at the youth.

The Western Cape Government remains committed to its Infrastructure-led growth strategy.

I would like to thank my Cabinet colleagues for their continued support and for ensuring that we create opportunities for economic growth and jobs, maximise service delivery, and enhance citizen impact through targeted interventions.

Dr Ivan Meyer Minister of Finance 22 November 2018

2018 Medium Term Budget Policy Statement

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Contents Chapter 1 Economic outlook Introduction 1 Developments in the global economy 2 Developments in the South African economy 4 Economic developments in the Western Cape 6 Socio-economic developments 11 Conclusion 14

Chapter 2 Fiscal Strategy and Response Introduction 15 Medium term economic and fiscal risks 16 Budget policy priorities implementation risks 18 Provincial response to budget policy priority implementation risks 21 Western Cape Government Fiscal Strategy 22 2019 MTEF: Provisional fiscal framework 23 Conclusion 35

Chapter 3 Budget policy priorities Introduction 37 Global, national and provincial policy context 38 Medium term provincial budget policy framework 38 Medium term budget policy priorities 41 Improve education outcomes and opportunities for youth

development 49

Increase wellness, safety and tackle social ills 56 Enable resilient, quality, sustainable and inclusive living

environment 63

Embed good governance and integrated service delivery 67 2018 Adjusted Estimates 71 Conclusion 72

Chapter 4 Unlocking economic and social opportunities for maximum citizen impact

Introduction 73 Unlocking opportunities for growth and jobs in a volatile,

uncertain, complex and ambiguous world 74

Strengthening infrastructure investment to support opportunities for growth and jobs

74

Construction procurement as a lever for growth and jobs 76 Infrastructure portfolio, custodianship and delivery 77 Infrastructure Delivery Management and improvement 84 Infrastructure policy priorities 85 Conclusion 88

Glossary 89


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Tables

Chapter 1: Economic outlook

1.1 Global economic outlook, 2018 - 2019 2

1.2 South African economic outlook, 2018 - 2021 5

1.3 GDPR growth rates of the Western Cape economy by district 9

1.4 Labour market aggregates, 2013 and 2018 10 Chapter 2: Fiscal Strategy and Response

2.1 Fiscal framework of the Western Cape 2018/19 - 2021/22 24

2.2 Summary of PES data updates 25

2.3 Conditional grant baseline allocations for the 2019 MTEF 27

2.4 Summary of estimated provincial own receipts by vote 31

2.5 Western Cape own receipts by source 2018/19 - 2021/22 32

2.6 Overall Fiscal Framework 2019 MTEF 34

Chapter 4: Unlocking economic and social opportunities for maximum citizen impact

4.1 Provincial Treasury Instruction 16B 85

Figures


1.1 Performance of the Western Cape economy relative to the global and national economies, 2006 - 2017

6

1.2 Western Cape industry performance, 2013 - 2017 7

1.3 Western Cape manufacturing industries performance, 2013 - 2017 8 Chapter 3: Budget policy priorities

3.1 Integrated policy, planning, budgeting and implementation cycle 39

3.2 2014 - 2019 Provincial Strategic Plan 40

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Acronyms AIDS Acquired Immune Deficiency Syndrome

APFYD Agricultural Partnership for Youth Development

ART Anti-retroviral Therapy

ASIDI Accelerated Schools Infrastructure Delivery Initiative

BLMEP Better Living Model Exemplar Project

CBD Central Business District

CPI Consumer Price Index

CRDP Comprehensive Rural Development Programme

CYCC Child and Youth Care Centre

DGS Digital Government Strategy

DQM Data Quality Management

DSP District Safety Plans

DTPW Department of Transport and Public Works

ECD Early Childhood Development

EDB Ease of Doing Business

EMS Emergency Medical Services

EPWP Expanded Public Works Programme

EU European Union

FPL Forensic Pathology Laboratory

GDP Gross Domestic Product

GDPR Gross Domestic Product per Region

GIAMA Government Immovable Asset Management Act

GIPTN George Integrated Public Transport Network

HIV Human Immunodeficiency Virus

HSDG Human Settlements Development Grant

ICAN Interactive Community Access Nodes

ICT Information Communication Technology

IDMS Infrastructure Delivery Management System

IDP Integrated Development Plan

IDZ Industrial Development Zone

IMF International Monetary Fund

IRM Infrastructure Reporting Model


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ISSP Informal Settlement Support Plan

ITIH Integrated Transport Intelligence Hub

LAN Local Area Network

LDW Logical Data Warehouse

LURITS Learner Unit Record Information Tracking System

MDM Master Data Management

MOD Mass participation: Opportunity and access; Development and growth

MTBPS Medium Term Budget Policy Statement

MTEC Medium Term Expenditure Committee

MTEF Medium Term Expenditure Framework

MVL Motor Vehicle Licence

MYPE Mid-Year Population Estimates

NCDs Non-communicable Diseases

NDP National Development Plan

NEF National Empowerment Fund

NHI National Health Insurance

NHWs Neighborhood Watches

NPOs Non-Profit Organization

NSC National Senior Certificate

NSNP National School Nutrition Programme

PER Property Efficiency Report

PES Provincial Equitable Share

PHA Philippi Horticultural Area

PHC Public Health Care

PSDF Provincial Spatial Development Framework

PSP Provincial Strategic Plan

PV Photovoltaic

PWDG Province Wide Data Governance

RSEP Regional Socio-Economic Projects

RTR Red-Tape Reduction

SBIDZ Saldanha Bay Industrial Development Zone

SDG Sustainable Development Goals

SEA School Evaluation Authority

SEDIC Strategic Economic Development Infrastructure Company


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SEZ Specific Economic Zone

SPLUM Spatial Planning and Land Use Management

SSEG Small-Scale Embedded Generation

Stats SA Statistics South Africa

TVET Technical and Vocational Education and Training

UK United Kingdom

US United States

VAT Value Added Tax

VPUU Violence Prevention through Urban Upgrading

WAN Wide Area Network

WCCCRS Western Cape Climate Change Response Strategy

WCED Western Cape Education Department

WCG-GGI Western Cape Government Good Governance Index

WCHSF Western Cape Human Settlements Framework

WCIDWRP Western Cape Integrated Drought and Water Response Plan

WCISSP Western Cape Informal Settlement Support Plan

WoSA Whole of Society approach

WoW Western Cape on Wellness

YWP Youth Work Programme

SCOA Standard Chart of Accounts

PSG Provincial Strategic Goal

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1 Economic outlook

In summary

Global economic growth for 2018 is expected to be 3.7 per cent, lower than earlier forecasts.

The South African economy is forecasted to grow by 0.7 per cent in 2018.

Economic growth in the Western Cape is projected to be 0.2 per cent in 2018 mainly as a result of a contraction in agriculture, caused by the crippling drought.

On average education and health outcomes have improved over the years, however unemployment remains a challenge.

█ Introduction

The Western Cape is faced with the challenge of slow economic growth, coupled with a growing number of global and domestic downside risks which have resulted in a weak economic outlook over the medium term. Reduced output levels in the primary sector for the first half of 2018 resulted in South Africa entering into a technical recession. This recession occurred at a time where South Africa’s growth trajectory was already trailing that of other emerging economies due to lower investor and business confidence because of extended policy uncertainty.


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█ Developments in the global economy

According to the International Monetary Fund’s (IMF) October 2018 forecast, global growth is expected to remain at its 2017 level of 3.7 per cent for 2018 and 2019. This reflects a 0.2 percentage point downward revision for each year compared to their July 2018 forecast (see Table 1.1).

Table 1.1 Global economic outlook, 2018 - 2019

Forecast Difference from

July 2018 forecast

2017 2018 2019 2018 2019

World output 3.7 3.7 3.7 -0.2 -0.2

Advanced economies 2.3 2.4 2.1 0.0 -0.1

Emerging and developing economies 4.7 4.7 4.7 -0.2 -0.4

Source: International Monetary Fund, 2018

In advanced economies, output is forecast to grow by 2.4 per cent in 2018, from 2.3 per cent in 2017, before slowing to 2.1 per cent in 2019. The latter is 0.1 percentage point lower than the July 2018 forecast. The downward revision comes mainly from an anticipated slowdown in the United States of America (US). In 2018, growth in the US is supported by expansionary fiscal policy in the form of tax cuts and ramped up public spending and the ongoing strength in the labour market. However, trade tariffs imposed on Chinese imports into the US are expected to be a bigger drag on growth in 2019 than previously estimated. This comes on top of a further tightening of monetary policy and the winding down of expansionary fiscal policy.

After growing faster than the US in 2017 (2.4 per cent vs 2.2 per cent), a slowdown in growth is forecast in the Euro Area to 2.0 per cent in 2018 with a further deceleration to 1.9 per cent in 2019. Meanwhile, persisting uncertainty surrounding the final Brexit agreement between the United Kingdom (UK) and the European Union (EU) weighs on the outlook for the UK. Growth of just 1.4 per cent and 1.5 per cent is forecast for 2018 and 2019. This relatively subdued forecast is despite the IMF’s assumption that the UK and the EU will reach an agreement before the March 2019 Brexit deadline as current uncertainty weighs on confidence and growth. A disorderly or no-deal Brexit could negatively impact both UK and EU growth prospects.

Advanced economies forecast to grow by 2.4 per cent in 2018


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Economic growth in emerging and developing economies is anticipated to remain steady at its 2017 level of 4.7 per cent from 2018 to 2019. This is lower than the growth forecast issued in July 2018. The ongoing and escalating trade tension between the US and the rest of the world is expected to weigh on growth in emerging and developing economies in general and China in particular. In China, growth is forecast to slow gradually to 6.2 per cent in 2019, down from a forecasted growth of 6.6 per cent in 2018 and an estimated growth of 6.9 per cent in 2017. In contrast, growth in India is forecast to benefit from structural reform and accelerate further, reaching 7.4 per cent by 2019.

Emerging and developing economies with twin deficits1 and high external debt have experienced significant capital outflows, resulting in weaker currencies and lower growth prospects. In some emerging and developing economies such as Brazil, Turkey and Argentina, underlying weakness was exacerbated by country-specific geopolitical factors. Growth in Turkey for example, is forecast to slow to just 0.4 per cent in 2019, which is 3.6 percentage points lower than the forecast formulated in April 2018.

In sub-Saharan Africa, growth appears to be on the mend and is forecasted to accelerate from 2.7 per cent in 2017, to 3.1 per cent and 3.8 per cent in 2018 and 2019 respectively. About half of the acceleration in 2018 stems from Nigeria - the region’s biggest economy. Growth in Nigeria is being supported by higher oil prices and output and forecast to register 1.9 per cent in 2018 (from 0.8 per cent in 2017) before ticking up further to reach 2.3 per cent in 2019.

Downside risks which have increased during 2018 include:

Rising trade barriers that will negatively affect global growth, even impacting countries that are not directly affected by trade tariffs or restrictions.

A reversal of capital inflows to emerging markets (including South Africa) on the back of weaker fundamentals and higher political risks. This could also be triggered by more US interest rate hikes than currently anticipated by the markets.

1 A twin deficit means that both the current account and government budget are

in deficit.

Emerging market outlook revised downwards due to trade tensions between the US and the rest of the world

Moderate growth forecasted for Sub-Saharan Africa


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█ Developments in the South African economy

After slowing to 0.6 per cent growth in 2016, growth increased to 1.3 per cent in 2017 (matching 2015’s rate). However, the economy entered into a technical recession in 2018 with quarter-on-quarter economic growth contracting in the first (-2.6 per cent) and second quarters (-0.7 per cent) of the year. The main drag in both quarters was a significant contraction in value added by the agricultural sector. However, the weakness was broad based as the wholesale and retail trade, catering and accommodation services sector also contracted in the first and second quarters of 2018.

Agriculture output is expected to pick up as the Western Cape recovers from the crippling drought and the delayed harvesting of summer crops which will boost gross value added in the third quarter of 2018. High-frequency data from Stats SA also points to the economy exiting the technical recession in the third quarter. Nonetheless, the recovery is likely to be fairly weak and the National Treasury expects economic growth of just 0.7 per cent in 2018. An acceleration to 1.7 per cent is forecast for 2019, with further growth to 2.1 and 2.3 per cent in 2020 and 2021 respectively (see Table 1.2). Overall, National Treasury’s forecast for real GDP growth has been revised down by an average of 0.3 percentage points over the 2018 - 2020 period compared to when the National Budget was tabled in February 2018.

Consumer spending grew by 2.3 per cent during the first half of 2018, up from 1.6 per cent during the same period last year. This was supported by higher spending on durable and semi-durable goods on the back of a relatively stronger rand and lower food inflation. Going forward, continued growth in household credit extension from exceptionally weak levels could provide support to consumption expenditure. However, this is to a large extent countered by higher inflation weighing on real disposable income growth. Employment growth is also expected to remain weak, providing little support to income growth. In all, spending is expected to increase by 1.6 per cent in 2018, slowly accelerating to reach 2.6 per cent by 2021.

Fixed investment outlays have fared poorly in recent years and rose by an insignificant 0.1 per cent during the first half of 2018. Weak investment growth is a result of poor demand, low business confidence and prolonged policy uncertainty. Capital outlays could be supported by the South Africa Infrastructure Fund, announced as part of the national government’s stimulus package and recovery plan, and by a continued focus on infrastructure

SA economy expected to grow by 0.7 per cent in 2018


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funding. Overall, investment is forecast to grow by just 0.9 per cent in 2018 and to pick up to 2.9 per cent by 2021.

The current account deficit widened significantly during the first half of 2018 and rose to 4.0 per cent of GDP from 2.4 per cent in 2017. This was mainly due to a smaller trade surplus, higher net income payments and deteriorating terms of trade2. The deficit is expected to narrow somewhat during the second half of the year and to average 3.2 per cent in 2018 and 2019, before widening to 3.7 and 3.9 in the subsequent outer two years.

Table 1.2 South African economic outlook, 2018 - 2021

Actual Estimate Forecast

2017 2018 2019 2020 2021

Percentage change unless otherwise indicated

Final household consumption 2.2 1.6 1.9 2.3 2.6

Final government consumption 0.6 0.8 0.2 1.2 0.9

Gross fixed capital formation 0.4 0.9 1.5 2.1 2.9

Exports -0.1 1.0 2.7 2.9 3.3

Imports 1.6 2.2 2.9 3.3 3.4

Real GDP growth 1.3 0.7 1.7 2.1 2.3

GDP at current prices (R billion) 4 651.8 4 949.1 5 317.2 5 724.1 6 167.2

CPI inflation 5.3 4.9 5.6 5.4 5.4

Current account balance (% of GDP) -2.4 -3.2 -3.2 -3.7 -3.9

Source: South African Reserve Bank, National Treasury, 2018

Mainly driven by lower food inflation, headline inflation decelerated through the first months of 2018. However, on the back of renewed rand weakness, higher oil and administered prices, inflation is expected to rise going forward. In all, inflation is forecast to pick up from 4.9 per cent in 2018 to 5.6 per cent in 2019 before slowing marginally during 2020 and 2021. The medium term outlook is based on an assumption of a 10 per cent increase in electricity prices per year, but the potential for additional tariff hikes remain a key upside risk to the inflation outlook.

The combination of weak domestic demand and a rising inflation forecast complicates the interest rate outlook. A rate hike could be on the cards if the rand remains under pressure, as this will have second-round effects on inflation going forward. However, a rate cut is unlikely, even with the weak GDP forecast as the South African Reserve Bank has repeatedly expressed the view that monetary stimulus is not going to reignite a growth recovery given the current conditions.

Added growth could come from the national government’s expressed intent to boost the tourism sector. This could benefit the 2 South African export prices increasing at a slower rate than import prices.

Current account deficit widened in the first half of 2018

Weak rand and high oil prices expected to drive consumer inflation


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Western Cape more than is currently reflected in the forecast, as the Province remains an attractive destination to many international tourists. Tourism in general has a higher multiplier effect than other sectors, thus growth in this sector can foster activity in up-and downstream sectors with a greater positive spin-off potential for overall employment growth than similar growth in other sectors.

█ Economic developments in the Western Cape

Economic growth in the Western Cape slowed to 1.2 per cent in 2016 from 1.5 per cent in 2015. It is estimated that growth ticked up marginally to 1.3 per cent in 2017. In 2018, however, economic output in the Western Cape is predicted to grow by just 0.2 per cent. This slowdown is mainly caused by the crippling, drought which is weighing heavily on the agriculture and closely-linked agri-processing sectors.

Figure 1.1 Performance of the Western Cape economy relative to the global and national economies, 2006 - 2017

Note: The Western Cape figure for 2017 is an estimate.

Source: International Monetary Fund, Statistics South Africa, Western Cape Provincial Treasury, 2018

The drought and water shortage seems to have abated in the second half of 2018. However, the Province remains vulnerable to the broader impact of climate change which has the potential to disrupt not only the agricultural value chain, but also negatively impact tourism, construction and other indirect, yet related sectors. While growth in the agri-processing value chain may accelerate significantly in 2019, a full recovery in the level of output will likely only be achieved beyond 2022. Therefore, the value added by the agriculture sector is not expected to reach its pre-drought level within the forecast horizon.

-2

-1

0

1

2

3

4

5

6

7

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

y-o

-y %

ch

ang

e

Global South Africa Western Cape

WC economy set for recovery after better rains

Climate change poses a risk to WC agriculture, tourism and construction


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The Western Cape has a relatively larger services sector. This presents the potential downside of added vulnerability to changes in consumer spending which may weigh disproportionately on growth should spending disappoint. Alternatively, should consumer spending perform better than anticipated, the Western Cape may benefit more.

Sectoral performance in the Western Cape

The tertiary sector in the Western Cape accounts for approximately two thirds of the Province’s overall Regional Gross Domestic Product (GDPR). The tertiary sector registered average annual growth of 0.9 per cent, whilst the secondary sector contracted by 0.1 per cent between 2016 and 2017. This decline can largely be attributed to the 0.13 per cent fall in annual growth in the manufacturing industry. Figure 1.2 shows the performance of the primary, secondary and tertiary sectors in terms of output between 2013 and 2017.

The tertiary sector experienced subdued growth as consumer disposable income has come under tremendous pressure. Most recently, consumers have faced higher administered prices in the form of fuel and electricity price escalations, which has been further compounded by the increase in the Value Added Tax rate which was effected in the first half of 2018. In addition, the fluctuating rand has added to the adverse economic environment.

Figure 1.2 Western Cape industry performance, 2013 - 2017

Note: Gross Value Added measured in R millions at constant 2010 prices.

Source: Western Cape Department of Economic Development and Tourism, 2018

The food, beverages and tobacco sub-sector remains one of the most significant contributors to the Western Cape economy, expanding by 5.2 per cent from R15.791 billion in 2013 to an estimated R16.616 billion in 2017 (see Figure 1.3). On the other hand,

0 50 000 100 000 150 000 200 000 250 000 300 000 350 000

2013

2014

2015

2016

2017

Tertiary sector Secondary sector Primary sector

Tertiary sector experienced subdued growth


8

the petroleum products, chemicals, rubber and plastic sub-sector makes up a significant proportion of manufacturing in the Province which has been stagnant over the last few years.

Figure 1.3 Western Cape manufacturing industries performance, 2013 - 2017

Note: Gross Value Added measured in R millions at constant 2010 prices.

Source: Quantec Research, Western Cape Department of Economic Development and Tourism, 2018

The decline in other, smaller, sub-sectors of the manufacturing sector mirrors the overall stagnant performance of the manufacturing sector as a whole in the Western Cape. These sub-sectors include: textiles, clothing and leather goods; wood and paper, publishing and printing; other non-metal mineral products; electrical machinery and apparatus; radio, TV, instruments, watches and clocks; and transport equipment. The poor performance of the manufacturing sector can also be attributed to a slowdown in consumer demand.

Spatial aspects of the Western Cape economy

The Cape Town Metropolitan Area is the hub of economic activity in the Province and accounts for 71.8 per cent of total provincial economic output. The second biggest district economy in the Province is that of the Cape Winelands (11.4 per cent), followed by the Garden Route (7.6 per cent).

0 5 000 10 000 15 000 20 000

Food, beverages and tobacco

Textiles, clothing and leather goods

Wood and paper; publishing and printing

Petroleum products, chemicals, rubber and plastic

Other non-metal mineral products

Metals, metal products, machinery and equipment

Electrical machinery and apparatus

Radio, TV, instruments, watches and clocks

Transport equipment

Furniture; other manufacturing

2017 2016 2015 2014 2013


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Table 1.3 GDPR growth rates of the Western Cape economy by district

Metro/District GDPR 2016 R’million

% of WC GDPR

% GDPR growth (2006 - 2016)

Cape Metro 380 677.9 71.8 2.5

West Coast 27 169.7 5.1 2.7

Cape Winelands 60 555.9 11.4 2.9

Overberg 18 418 3.5 3.2

Garden Route 40 271 7.6 2.8

Central Karoo 2 835.7 0.5 2.7

Western Cape 529 927.7 - 2.6

Source: Western Cape Provincial Treasury, 2018

Between 2006 and 2016 the economy of the Western Cape grew by an average of 2.6 per cent per annum, with all districts except the Cape Town Metropolitan Area recording growth above that of the Province. Although from a comparatively low base, the fastest growth over the period was recorded in the Overberg District, which grew at an average of 3.2 per cent - this growth was driven by strong economic performance in Swellendam and Theewaterskloof. Growth in the district continued to be strong in 2017 and is estimated to have been 2.0 per cent, which is higher than the 1.3 per cent growth rate for the Western Cape during the same period. The Cape Town Metropolitan grew at an average rate of 2.5 per cent per annum over the 10-year period.

Labour market trends

Employment in South Africa is estimated to have grown by 1.7 per cent per annum between the third quarters of 2013 and 2018 and, while this has matched the rate of expansion of the working age population, it has been slower than labour force growth over the period. In absolute terms, the economy has added 1.3 million jobs over the five-year period, but narrow unemployment has grown by a very similar number. Therefore, the rate of growth of the narrowly unemployed has been almost thrice that of the employed (4.9 per cent per annum compared with 1.7 per cent). The ranks of the non-searching unemployed have also grown more rapidly than employment, with an additional 355 000 individuals in this group over the five-year period.

Employment trends in the Western Cape have been more positive. An additional 357 000 jobs were added over the five years, equivalent to an average annual growth rate of 3.1 per cent. At the same time narrow unemployment has remained virtually unchanged at around 640 000.

Overberg District was the fastest growing district between 2006 and 2016

Employment in SA has grown by just 1.7 per cent between 2013 and 2018


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However, the non-searching unemployed have grown rapidly (10.2 per cent per annum), although this comes off a small base of just 83 000 in the third quarter of 2013. The Western Cape’s share of the national non-searching unemployed has risen from 2.6 per cent to 3.8 per cent over the period.

Table 1.4 Labour market aggregates, 2013 and 2018

2013Q3 2018Q3 Change

Thousands Thousands Thousands Per cent

Western Cape

Working age population 4 108 4 574 466 2.2 p.a.

Employment 2 138 2 494 357 3.1 p.a. *

Narrow unemployment 641 638 (2) -0.1 p.a.

Narrow labour force 2 778 3 133 354 2.4 p.a. *

Expanded unemployment 724 774 50 1.3 p.a.

Expanded labour force 2 862 3 268 406 2.7 p.a. *

Non-searching unemployed 83 135 52 10.2 p.a. *

South Africa

Working age population 34 868 37 985 3 116 1.7 p.a.

Employment 15 036 16 380 1 344 1.7 p.a. *

Narrow unemployment 4 880 6 209 1 329 4.9 p.a. *

Narrow labour force 19 916 22 589 2 673 2.6 p.a. *

Expanded unemployment 8 075 9 759 1 684 3.9 p.a. *

Expanded labour force 23 111 26 139 3 028 2.5 p.a. *

Non-searching unemployed 3 194 3 550 355 2.1 p.a. *

Note: An asterisk (*) denotes a statistically significant change between 2013 and 2018 at the 95 per cent level of confidence. A dagger (†) denotes a statistically significant change between 2013 and 2018 at the 90 per cent level of confidence.

Source: Development Policy Research Unit, Statistics South Africa (2013; 2018)

In the past 12 months, employment in the Western Cape is estimated to have expanded by 3.9 per cent since the third quarter of 2017 to 2.5 million. This rate is observed both within the Cape Town Metropolitan Area, and in the rest of the Province. This growth is primarily driven by a 15.3 per cent expansion in agricultural employment and a 15.0 per cent expansion in informal non-agricultural employment, albeit the employment growth in both sectors comes from very low bases. In comparison, employment nationally grew by 1.2 per cent to 16.4 million.

While the percentage of narrowly unemployed individuals remained virtually unchanged nationally, it declined by 4.9 per cent in the Western Cape. Thus, by the third quarter of 2018, while the Province accounted for 15.2 per cent of the country’s employed population, it contributed only 10.3 per cent to national narrow unemployed.

WC employment at 2.5 million in third quarter of 2018


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In the third quarter of 2018 the official unemployment rate in the Western Cape is estimated at 20.4 per cent, with the rate in the Cape Town Metropolitan area slightly higher at 21.1 per cent. The provincial unemployment rate is 1.5 percentage points lower than was the case 12 months earlier and it is estimated to have fallen by 2.1 percentage points in the Cape Town Metropolitan area over the period. It is 7.1 percentage points lower than the national rate of 27.5 per cent. While the national unemployment rate has risen on a quarter-on-quarter basis since the fourth quarter of 2017 at 27.5 per cent, in the third quarter of 2018 it is marginally lower than a year earlier.

Working-age adults in the Western Cape are more likely to participate in the labour force than is the case nationally: the labour force participation rate is estimated at 68.5 per cent in the third quarter of 2018 in the Province, compared with 59.5 per cent nationally. Combined with relatively low unemployment rates in the Province, this means that the employment-to-population ratio in the Western Cape is more than ten percentage points higher than is the case nationally (54.5 per cent compared with 43.1 per cent).

█ Socio-economic developments

Educated and healthy citizens are better able to take advantage of economic opportunities, while a low crime rate reduces the cost of doing business thereby encouraging economic activity. Safer communities also encourage a better sense of belonging amongst citizens which fosters greater social cohesion.

Education

The learner enrolment figures of the Western Cape have grown by 17.3 per cent over the last five years, resulting in a total of 1 111 098 learners enrolled at schools in the Province in 2018. In 2019 it is projected that 18 432 additional learners will enter the public education system. Annual systemic testing is conducted to assess the performance of learners in Grades 3, 6 and 9 in Language and Mathematics in the Western Cape. On average, over the last five-year period there has been an increase in the pass rates of both language and mathematics performance in all three grades. However, performance has not been consistent with notable performance declines occurring in all but one performance indicator between 2016 and 2017.

WC unemployment rate at 20.4 per cent in third quarter of 2018

Systemic test performance on average improved in all grades over 5-year period


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From 2014 to 2017, the results of the National Senior Certificate (NSC) show that the percentage of learners who successfully completed matric improved from 82.2 per cent in 2014 to 86.0 per cent in 2016, however the performance regressed to 82.8 per cent in 2017. However, the number of learners who obtained the NSC has grown from 39 237 in 2014 to 40 440 in 2017. This growth has been accompanied by a growth in the number of learners passing maths and science over the period. Over the same period, the number of schools with a Grade 12 pass rate under 70 per cent has also declined from 71 to 33.

Health

Life expectancy in the Western Cape is higher than the national average life expectancy, despite the prevalence of social ills such as interpersonal violence and substance abuse. Life expectancy amongst men in the Province rose from 63.7 years in 2012 to 66.2 years in 2018 and rose from 67.9 years to 72.1 years for females over the same period. A key contributor to the improved life expectancy was the introduction of Anti-Retroviral Therapy (ART) for pregnant women in the mid-2000’s, resulting in a substantive reduction in infant and child mortality rates. This, in conjunction with other initiatives aimed at improving maternal, infant and child health, has resulted in an infant mortality rate of 17.1 per 1 000 live births and child mortality rate of 21.1 per 1 000 live births in the Western Cape. The maternal mortality rate has also declined from 78.64 deaths per 100 000 live births in 2012 to 57 deaths per 100 000 live births in 2018.

The leading cause of death in the Province in 2015 was HIV/AIDS (8.5 per cent), followed by ischaemic heart disease (8.3 per cent) and diabetes mellitus (7.5 per cent). HIV/AIDS (11.7 per cent) was also the leading cause of premature mortality in the Province in 2015, followed by interpersonal violence (10.5 per cent) and Tuberculosis (8 per cent). Despite substantive progress on HIV testing, treatment and retention rates, the contribution of HIV/AIDS to deaths and premature mortality has increased in the Province compared with the previous year. The leading cause of premature mortality amongst men in 2015 was interpersonal violence, while HIV/AIDS was the leading cause of premature mortality amongst women.

HIV/AIDS responsible for most deaths in the WC


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Crime

According to the Victims of Crime Survey of 2017/18, citizens of the Western Cape were among the most sceptical on crime trends, with 84 per cent of the population believing that crime had remained the same or increased in recent years. However, the report provided numerous positive crime trends between 2013/14 and 2017/18. The estimated number of crime cases experienced by households in the Western Cape has declined by 38.2 per cent from 345 600 cases to 213 697 cases over the period. Similarly, the estimated number of individual crime cases declined by 37.7 per cent in the Province. Consequently, the percentage of households and individuals that were exposed to crime in the Western Cape declined from 13.4 per cent to 8.7 per cent and from 7.6 per cent to 4.6 per cent over the period respectively. The Western Cape was one of four provinces that recorded an estimated decline for both household and individual crimes between 2016/17 and 2017/18.

The report also recorded individual crime category trends between 2013/14 and 2017/18. In this respect, robbery at residential premises in the Province has increased by 48.4 per cent. The increase, although more significant in its extent, correlates with the national trend that recorded an increase of 15.4 per cent. Similarly, murder and culpable homicide increased by 23.7 per cent in the Western Cape and by 14.4 per cent nationally over the 4-year period. Contrary to the declining national trend in malicious damage to property and arson reported (-9.7 per cent), the Western Cape was the only Province which recorded growth in this crime category (3.3 per cent).

From a quality of life and service delivery point of view, crime has an undeniably negative impact on the economy and on the cost of and demand for public services. Minimising the risk of crime is a priority for the Western Cape Government. The Province’s approach to minimising the impact of crime on service delivery is through a combination of ensuring the security of physical property to prevent theft and vandalism; providing proactive forensic services to all departments to foster a zero-tolerance environment towards fraud, theft and corruption; providing oversight of policing efforts in the Province and the activation of residents along strategic partnerships and targeted interventions to fight crime; ensuring the reduction of crimes on the road, thereby creating a safer environment for road users; and ensuring the safety of tourists in the Province.

Citizens’ perception of crime prevalence very negative in the WC


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█ Conclusion

The economic outlook for the Western Cape is weaker than was anticipated in the beginning of 2018. The economic performance of the Province has been hard hit by the impact of the drought on agriculture output, which is only expected to recover to pre-drought levels after 2022. The economy has been unable to grow at the levels required to absorb new entrants in the labour market which has resulted in high unemployment, thereby slowing socio-economic development. Although socio-economic indicators have improved in the areas of health and education, some indicator results, such as crime remain mixed. The Western Cape Government remains committed to prioritising strategic interventions which have the potential to spur economic growth and create jobs in response to the economic environment through implementing the Western Cape Fiscal Strategy.

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2 Fiscal Strategy and Response

In summary

South African economic growth and tax revenue collection outlook remains low.

Provincial fiscal consolidation measures are implemented, however with revenue collection constrained, national policy decisions are not fully reflected in current budget trends.

Major transversal service delivery risks include the impact of the drought on the economy, increasing population growth and urbanisation and the impact of crime on society.

Provincial revenue enhancement strategies remain a priority.

█ Introduction

South Africa has entered into a technical recession. The implications are adverse for both the economic and fiscal outlook. Subsequently, the national fiscal outlook will see an under collection of projected tax revenues, resulting in an increase in the national budget deficit which will drive up the costs of servicing national debt. The response of the Western Cape Government to the technical recession and subsequent increase in service demands is articulated in the Provincial Fiscal Strategy. Implementing the Fiscal Strategy will inspire confidence in both the investor community and the citizens of the Province and thereby unlocking and driving growth opportunities and jobs.


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█ Medium term economic and fiscal risks

Economic environment

Within the context of the global growth outlook fuelled by the US fiscal stimulus package, low interest environment in developed economies and sterling economic growth from emerging and developing Asia, the South African economy is still in a grip of below potential economic growth.

South Africa entered into a technical recession in the first half of 2018. The technical recession resulted in a weaker economic outlook for the country. Consequently, the projected economic growth rate for South Africa has been revised downward. The South African economy’s prospects remain modest amid uncertainty in the run-up to the 2019 general elections, the pace of structural reform implementation and the level of policy credibility will determine the extent of economic recovery.

Weak economic growth together with a twin deficit are factors that will be considered by the rating agencies when revising South Africa’s credit ratings. The South African credit rating standing will determine to a large extent the access to and cost of capital available to the country. This will impact on the national fiscus which currently needs to finance its budget deficit and debt obligations.

National fiscal environment

Weak economic growth threatens the sustainability of the national fiscal framework, amongst other, an under collection in projected tax revenues, an increase in the national budget deficit and an increase in the relative size of national debt service costs to tax revenue. The increase in the size of national debt service costs will crowd out resources available for the remaining spending items which will consequently impact on Provincial Equitable Share and Conditional Grant transfers to provinces and municipalities.

Apart from the pressure of lower economic growth on the national fiscus, the national government is under increasing pressure to lower its fiscal deficit, clamp down on corruption, fruitless and wasteful expenditure and poor performing state owned enterprises while simultaneously stemming the growth of the national debt to GDP ratio.

SA entered into a technical recession

Sustainability of the national fiscal framework threatened

Chapter 2: Fiscal Strategy and Response

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The 2018 National Medium Term Budget Policy Statement has underlined the importance of budget consolidation measures which will include compensation ceilings and reprioritisation towards efficiency and effective government programmes, more particularly that:

The public service wage bill constitutes the largest share of government expenditure by economic classification, crowding out other spending items. The 2018 wage agreement adds to these pressures.

In its commitment to fiscal discipline, the national expenditure ceiling remains unchanged from the 2018 National Budget.

The national departments compensation ceilings will be retained which implies continued restrictions on personnel budgets and public employment.

Gross debt is projected to stabilise at 59.6 per cent of GDP in 2023/24. Currency depreciation accounts for about 70 per cent of the upward revision to gross loan debt in the current year.

Stimulus package and recovery plan

After the South African economy entered a technical recession in the first half of 2018, the national government announced a stimulus package to restore investor confidence and to ignite economic activity, prevent further job losses and to create new jobs. As such, the stimulus package presents economic reforms and spending plans in an effort to boost the South African economy. The measures announced prioritised areas of economic activity that will have the greatest impact on youth, women and small business. The central element of the package would be "reprioritisation" of spending between government departments due to the limited fiscal space to increase spending or borrowing.

The stimulus package and recovery plan have five broad parts. Firstly, implementation of growth enhancing economic reforms. Secondly, reprioritisation of public expenditure to support job creation. Thirdly, the establishment of an Infrastructure Fund. Fourthly, addressing urgent and pressing matters in education and health. Lastly, investing in municipal social infrastructure improvement. Although this package is a step in the right direction, on its own it is not enough to restore investor confidence, ignite economic activity, prevent further job losses and create new jobs. Much still needs to be done to strengthen political and policy certainty in the country which is a key driver in attracting private sector and foreign investment to South Africa.

Economic measures announced prioritised areas of economic activity that have impact on youth, women and small business


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█ Budget policy priorities implementation risks

Notable transversal risks will affect socio-economic development in the Province and subsequent service delivery demands.

Impact of drought on agriculture, business and households

The good rainfall received in the 2018 winter months has brought about much needed relief to the drought that commenced in 2016. However, the drought had a much higher impact than initially anticipated with an estimated R5.9 billion Gross Value Add loss to the Western Cape economy. Furthermore, the employment losses in the agricultural sector is estimated at 30 000 with export losses in the sector expected to be between 13 and 20 per cent for the year. The drought has also affected tourism businesses in the City of Cape Town, with 18 of the City’s major tourism businesses reporting annual losses of approximately R90 million as a result of the drought.

Households in the City of Cape Town had to endure level 6B water restrictions where residents were asked to curb their daily water usage to only 50 litres per person per day. Residents not only had to cut their water consumption but also make alternative provisions in the form of rainwater collection in containers and stocking up on bottled water supplies. The restrictions have since been adjusted from 1 October 2018 to level 5 which allows for daily water usage of 70 litres per person per day.

Impact of crime on business and international tourism

Crime has a detrimental effect on businesses in South Africa. According to the Victims of Crime Survey of 2017/18, 65 313 people or 9.8 per cent of victims of personal property theft occurred in a shop or a place of business. Also, 18.4 per cent of households perceived business robbery as the most common crime. Furthermore, 9.3 per cent of households were prevented from starting a home business as a result of crime in their area in 2017/18.

Crime also has a negative effect on tourism in the Province. Crime is affecting tourism profits with South Africa’s tourism only growing by 2.4 per cent compared to a global growth rate of 7 per cent in 2016. Between September 2017 and February 2018, the number of UK visitors dropped by 13.8 per cent; Dutch visitors by 13.6 per cent and visitors from France by 11.0 per cent. A significant portion of the decline can be attributed to crime.

Drought had a much higher impact than initially anticipated

Crime is detrimental to businesses and tourism


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Staff safety

Frontline service delivery staff are exposed to a number of security and safety risks. Within the health sector, this mainly manifests in the provision of emergency medical services in certain hotspots such as Hout Bay, Du Noon and Manenberg, and from psychiatric patients at public health facilities. The increase in violence perpetrated against Emergency Medical Services (EMS) staff has compromised the capacity of EMS to deliver an efficient service with optimal response times.

The increasing volume of acutely ill psychiatric patients at emergency centres, fuelled by the epidemic of substance abuse in our communities, places not only staff but patients and those accompanying them at risk. Social Development staff are also subjected to violence within communities, often as a result of wanting to remove abused or neglected elderly, children or disabled persons.

Crime has a dilapidating effect on the educational outcomes, especially in the most vulnerable communities. Not only do crimes such as burglary and vandalism pose a risk to physical school infrastructure and assets, but crimes like gang violence and substance abuse also create environments which are not conducive to learning and teaching for both learners and educators.

Cannabis was the primary substance of abuse amongst youth under 20 years of age and accounted for 22 per cent of all admissions in the Province. While the full impact of the recent Constitutional Court ruling on the private use of cannabis is unknown at this stage, the risk of an increased demand for substance abuse treatment remains.

Urbanisation and population growth

The future population growth of the Western Cape will hold significant budget, service delivery and spatial development and planning implications for the Western Cape Government. In 2018, the Western Cape became the third most populated province in the country with an estimated 6.621 million citizens, surpassing the Eastern Cape. In 2030, the projected population will increase by 1.4 million people to 7.9 million people. This increase will have significant service delivery implications, particularly for education, health, social services and human settlement sectors.

The Western Cape is in line with global trends of increasing urbanisation where the share of global citizens that lived in urban areas has increased from 29 per cent in 1950 to 50 per cent in 2010.

Violence perpetrated against staff has compromised service delivery

Population growth will have significant service delivery implications


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Urbanisation holds many risks where weak infrastructure and institutions will have negative consequences in land use, transport connectivity, environmental impacts, dysfunctional labour markets and crime. However, urbanisation also presents development opportunities for the Province in the clustering of infrastructure and services, and improved interconnectedness of the economy.

Service demand

The increasing population, high unemployment, high poverty and inequality, and growing complexity of the burden of disease has placed severe pressure on public health and social service provision. The current fiscal environment has also negatively impacted on the Non-Profit Organisation (NPO) sector, who partners with the Western Cape Government on the provision of a variety of health outreach and social services.

There is increased demand for education, as result of the general population increase trends as evidenced by the growth in learner enrolment at public schools. The trend in the general population increase has carried over into total learner enrolment which has increased by 8.8 per cent over a one-year period.

The number of educators is not growing at a rate fast enough to absorb the additional learners in order to keep the teacher: learner ratio within acceptable levels. The growth in learner enrolment also places additional pressure to provide adequate school and learner teacher support materials.

Municipal Interface

Municipalities are widely regarded as being at the frontline of service delivery and therefore central to building a prosperous and inclusive society. This requires municipalities to be administratively stable and financially sustainable to give effect to the service delivery agenda of government. However, although most municipalities in the Province have consistently performed well due to the application of good governance principles, some municipalities are struggling due to, amongst others, systematic financial mismanagement, lack of suitably qualified staff, rising cost pressures and declining revenue which is exacerbated by the persistent low economic growth environment.

Most municipalities have performed well but some are struggling


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█ Provincial response to budget policy priority implementation risks

Overcoming an environment of volatility, uncertainty, complexity and ambiguity will require the Western Cape Government to remain steadfast in its commitment to unlocking and driving growth opportunities and jobs. The Western Cape Government’s fiscal response will follow a more integrated, coordinated and strategic approach to policy, planning, budgeting and implementation in order to maximize citizen impact.

Coordination will occur between all spheres of government but also internally within the respective provincial government departments. Based on the Whole of Society approach, the participation of the public with bottom-up planning will be essential in ensuring a citizen centric approach where citizens take joint ownership in responding to the current socio-economic environment aimed at maximising citizen impact.

The approach will respond to the current fiscal environment through partnerships between all spheres of government, related agencies and entities as well as non-governmental organisations in order to leverage and focus limited resources toward spatial economic development and integration.

Within the spatial planning and budgeting context, partnerships between provincial and local government will materialise through Joint Planning Initiatives that address economic, social sector and skills development, human settlements, and environmental management on a municipal level. A spatially integrated approach utilises the economic infrastructure investments as a lever for maximum citizen impact. Infrastructure investments are a key component to bolster growth in employment and economic activity. This includes the provision and maintenance of public works and roads infrastructure, the facilitation of integrated land transport services and a safe, reliable and sustainable public transport system.

The Western Cape Government will improve its economic resilience by adapting to the era of the 4th Industrial Revolution. This will require the cultivation of the digital economy through appropriate skills development initiatives and building of Information and Communication Technology (ICT) infrastructure. One such initiative, the Broadband project, strives to make the Western Cape economy more competitive and enable innovative solutions that is required within a modern economy.

Chapter 3 and 4 sets out the bold, innovative and focused projects that have been identified by the Western Cape Government which

Whole of Society approach ensures a focus on a citizen centric approach


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will be prioritised to make substantial improvements in citizen’s lives. It is envisaged that these budget policy priorities, projects and programmes will have a catalytic impact on exiting socio-economic challenges.

█ Western Cape Government Fiscal Strategy

The provincial fiscal framework is designed to maintain fiscal stability and manage fiscal risks. Consultation and collaboration with various stakeholders from the private sector, government sector as well as academia informs and guides the established fiscal and budget policy principles that support the Western Cape Government Fiscal Strategy.

2018 Fiscal Policy Seminar

The Western Cape Fiscal Policy Seminar provides an interactive platform for stakeholders to build and share economic and fiscal ideas and to provide intelligence to influence and assist the Western Cape Government in its response to the economic, fiscal, environmental and service delivery risks to ensure maximum citizen impact. The 2018 Seminar underlined the stark realities of the South African economy, and as a consequence, the national fiscus. The most likely stimulus options to the underperforming economy was identified as fixed capital investments and export growth.

It was envisaged that fixed capital investment will only be realised by creating an enabling environment for the private sector to operate to its full potential. The importance of national budget consolidation was underscored while realistic and pragmatic solutions to land reform were emphasised. The pre-emptive de-industrialisation of South Africa was noted as an issue of concern, since the economy now relies mainly on the services industry as its main source of employment creation. Focusing on the citizen therefore requires not only governance for government but governance for results, embedding a zero tolerance for corruption and providing an enabling environment for growth, which will provide the basis for maximum citizen impact.

Fiscal Strategy

The challenges and risks that impact on the Province will be dealt with by embedding the fiscal and budget policy principles established in the 2016 Provincial Budget. These principles will continue to underpin the 2019 MTEF integrated policy, planning, budgeting and implementation process. The principles are Fiscal Consolidation, Allocative Efficiency, Fiscal Sustainability and Fiscal Discipline.

Fiscal Policy Seminar underlined the stark realities of the SA economy

Embedded fiscal and budget policy principles deals with challenges and risks


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Reducing government expenditure and/or increasing government revenues is achieved through Fiscal Consolidation. An allocation of resources that reflects the priorities of the provincial government and considers programme effectiveness based on evidence is achieved through Allocative Efficiency. Maintaining stability in key provincial government programmes and managing risks in an uncertain economic and fiscal environment is achieved through Fiscal Sustainability. Ensuring that all provincial departments and entities remain within budget limits and avoids irregular, fruitless and wasteful expenditure will be achieved through the final principle of Fiscal Discipline.

The Western Cape Government Fiscal Strategy is supported by the established fiscal and budget policy principles. The Fiscal Strategy includes a balanced budget with specific rules and approaches to revenue and expenditure budgeting. The aim of the Fiscal Strategy is to ensure sustainability in public finances while providing sufficient fiscal room to cope with adverse shocks resulting from the current economic and fiscal environment.

█ 2019 MTEF: Provisional fiscal framework

National transfers comprised of Provincial Equitable Share and Conditional Grants as the main source of revenue for meeting provincial expenditure responsibilities, and account for 76.7 per cent and 17.9 per cent respectively of available funding over the 2019 MTEF. Provinces have limited revenue raising options, with the result that own revenue accounts for less than 5 per cent of the available fiscal envelope over the 2019 MTEF.

Provisional Fiscal Envelope

The Constitution, establishes national, provincial and local government as autonomous spheres that are “distinctive, interdependent and interrelated”. South Africa’s fiscal system is based on a revenue-sharing model of intergovernmental fiscal transfers to address, among others, the “vertical imbalances” across the different spheres of government.

The equitable division of revenue aims to provide each sphere of government with the necessary funds to provide the services and perform the functions assigned to it under the Constitution. In so doing, through the vertical division, provinces are allocated 42.9 per cent of the available fiscal envelope over the 2019 MTEF.

Allocations across the three spheres of government receiving priority allocations are healthcare, education, basic services and social grants. Recognition is also given to assisting provinces with the

Fiscal Strategy ensures sustainability in public finances


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pressures they face in delivering their mandates through policy additions to the Provincial Equitable Share (PES).

Overall fiscal framework

Table 2.1 provides the consolidated position of the provisional fiscal framework. National transfers (which include the Provincial Equitable Share and Conditional Grants) to the Province amounts to R63.364 billion in 2019/20, R68.254 billion in 2020/21 and R72.805 billion in 2021/22; this amounts to a total of R204.423 billion over the 2019 MTEF.

Table 2.1 Fiscal framework of the Western Cape 2018/19 - 2021/22

Adjusted Estimate Medium term estimate Total

R'000 2018/19 2019/20 2020/21 2021/22 2019 MTEF

Transfers from National 59 668 525 63 364 496 68 253 605 72 804 844 204 422 945

Equitable share 47 447 464 51 291 096 55 282 324 59 120 142 165 693 562

Conditional grants 12 221 061 12 073 400 12 971 281 13 684 702 38 729 383

Own receipts 2 967 069 2 923 237 2 999 528 3 163 560 9 086 325

Asset Financing Reserve 354 049 674 791 645 931 334 555 1 655 277

PRF Financing 1 406 517 532 381 293 845 23 363 849 589

Total 64 396 160 67 494 905 72 192 908 76 326 322 216 014 136

Percentages

Transfers from National 92.7% 93.9% 94.5% 95.4% 94.6%

Equitable share 73.7% 76.0% 76.6% 77.5% 76.7%

Conditional grants 19.0% 17.9% 18.0% 17.9% 17.9%

Conditional grants rollover 0.0% 0.0% 0.0% 0.0% 0.0%

Own receipts 4.6% 4.3% 4.2% 4.1% 4.2%

Asset Financing Reserve 0.5% 1.0% 0.9% 0.4% 0.8%

PRF Financing 2.2% 0.8% 0.4% 0.0% 0.4%

Total 100.0% 100.0% 100.0% 100.0% 100.0%

Provincial Equitable Share

To ensure that the PES formula remains relevant, the formula is regularly reviewed. The 2018 MTEF saw the adoption of the Department of Basic Education’s new Learner Unit Record Information Tracking System (LURITS) which tracks learners throughout their entire schooling career. This new approach is now in its second year of implementation. The second sub-component of the education formula is the age cohort data.


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The 2019 MTEF sees the replacement of the 2011 Census data with the use of 2018 Mid-Year Population Estimates (MYPE). This change was made possible as Stats SA, for the first time, was able to include age cohort data for each province. With this change, it is possible to get the 5 - 17 age cohort using a frequently updated dataset unlike with Census, where such an update is only possible every 10 years. Given the significance of these changes, which can be destabilising, a special phase-in has been introduced which will enable a gradual path to the recalibration of the equitable share formula to provinces.

Data updates

To ensure that the formula is reflective of inter-provincial changes, the data used in the formula is updated on an annual basis to accommodate population and service delivery changes. Provinces, whose population growth exceeds that of the national average, either through natural population growth and/or in-migration, face severe service delivery load pressures.

Table 2.2 summarises the data sources used to update the various components of the PES formula. The impact of these data updates on the PES will be phased-in over the three year MTEF period (2019/20 to 2021/22), so as to smooth the impact of data changes on any one province.

Table 2.2 Summary of PES data updates

Weight Component Data used

48% Education 2018 MYPE (no longer Census 2011) - age component 5 - 17 years

2018 LURITS (Preliminary Enrolment) (new data)

27% Health 2018 MYPE (new data)

Insured population (2017 GHS) (new data)

Risk adjusted index (Risk Equalisation Fund)

Patient load data (DHIS 2016/17 - 2017/18) (new data)

16% Basic 2018 MYPE (new data)

3% Poverty 2018 MYPE (new data)

Income and Expenditure Survey 2010/11

1% Economic GDPR 2016

5% Institutional Distributed equally amongst provinces

Revisions to the Provincial Equitable Share

The 2019 MTEF sees a number of other changes affecting the PES formula. Key amongst these includes the incorporation of a number of Social Development sector grants into the PES from 2019/20. These include the Social Worker Employment Grant and the Substance Abuse Treatment Grant.

Data updates on the PES to be phased-in over the MTEF period


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The National Food Relief Programme will become a provincial responsibility from 2020. The national Department of Social Development has agreed to cede the contracts they have with nine Provincial Food Distribution Centres and 84 Community Nutrition Development Centres to the provincial departments of Social Development. Given this additional responsibility provincial departments have been allocated funding through the PES to manage these contracts.

The national Department of Women recognises that uninterrupted monthly education for indigent school girls is not guaranteed as the access to menstrual products often arises at the expense of their education. Provision for the roll out of this programme has been provided for in the 2019/20 PES.

As from 2021/22 additional funding has been provided to accommodate medical interns. This is to provide for an estimated expansion of 40 per cent in the intern cohort, largely as a result of South African students returning from medical training in Cuba. Furthermore, this funding provision is also to accommodate greater intern and registrar absorption.

Provinces play a central role in providing support and assistance to the local government level. Additional funding has been added to the PES to assist provinces to strengthen their support interventions to municipalities.

The effectiveness of the delivery of infrastructure is supported through additional funding to Provincial Treasuries to assist with increased technical capacity within their infrastructure units.

Provincial conditional grants

Table 2.3 presents indicative baseline conditional grant allocations over the 2019 MTEF. Conditional grant allocations however are not yet finalised as final consultations between national departments and their stakeholders regarding allocations are yet to be completed.

National Food Relief Programme to become a provincial responsibility in 2020


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Table 2.3 Conditional grant baseline allocations for the 2019 MTEF

R'000 2019/20 2020/21 2021/22 Total

2019 MTEF

Education 1 378 512 1 511 701 1 594 845 4 485 058

Maths, Science and Technology Grant 34 416 36 856 38 883 110 155

Education Infrastructure Grant 919 146 1 019 882 1 075 976 3 015 004

HIV and AIDS (Life Skills Education) 21 800 22 878 24 136 68 814

National School Nutrition Programme 374 952 401 586 423 673 1 200 211

Learners with Profound Intellectual Disabilities Grant 28 198 30 499 32 176 90 873

Health 6 123 995 6 589 171 6 951 576 19 664 743

Comprehensive HIV, AIDS and TB Grant 1 666 738 1 848 202 1 949 853 5 464 793

Health Facility Revitalisation Grant 608 575 642 046 677 359 1 927 980

Health Professions Training and Development Grant 606 334 639 682 674 865 1 920 881

National Tertiary Services Grant 3 221 651 3 437 406 3 626 463 10 285 520

Human Papillomavirus Vaccine Grant 20 697 21 835 23 036 65 569

Social Development 41 067 43 818 46 228 131 113

Early Childhood Development Grant 41 067 43 818 46 228 131 113

Human Settlements 2 150 307 2 302 475 2 429 111 6 881 893

Human Settlements Development Grant 2 097 130 2 246 376 2 369 927 6 713 433

Title Deeds Restoration Grant 53 177 56 099 59 184 168 460

Transport and Public Works 1 917 395 2 034 790 2 146 703 6 098 888

Provincial Roads Maintenance Grant 911 213 961 194 1 014 060 2 886 467

Public Transport Operations Grant 1 006 182 1 073 596 1 132 644 3 212 422

Agriculture 219 797 233 756 246 612 700 165

Comprehensive Agricultural Support Programme Grant 155 763 166 199 175 340 497 302

Ilima/Letsema Projects Grant 58 779 62 012 65 422 186 213

Land Care Programme Grant 5 255 5 545 5 850 16 650

Cultural Affairs and Sport 242 327 255 570 269 626 767 523

Community Library Services Grant 186 263 196 526 207 335 590 124

Mass Participation and Sport Development Grant 56 064 59 044 62 291 177 399

Total 12 073 400 12 971 281 13 684 702 38 729 384

The indicative allocation for conditional grants to the Western Cape will be R38.729 billion over the 2019 MTEF where R12.073 billion in 2019/20, R12.971 billion in 2020/21, and R13.685 billion in 2021/22 will be allocated. The largest conditional grant allocations over the 2019 MTEF are the National Tertiary Services Grant of R10.286 billion, the Human Settlements Development Grant of R6.713 billion, and the Comprehensive HIV, AIDS, and TB Grant of R5.465 billion.

Changes to national conditional grants proposed over the 2019 MTEF

The section below reflects changes to national conditional grants where Provincial allocations are yet to be determined.


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Social Sector

The Social Worker Grant and the Substance Abuse Grant will be phased out and absorbed into the PES from 2019/20 onwards, while the Food Relief programme Grant will be phased out and absorbed into the PES from 2020/21 onwards. The phase-in of the PES will happen over three financial years since provinces can now operate completed treatment facilities and recruit social workers funded from their equitable share allocations.

Human Settlements

The national Department of Human Settlements has proposed that a new grant be created to finance informal settlements upgrading utilising funding from the Human Settlements Development Grant (HSDG). R7.3 billion has been reprioritised resulting in an allocation of R3 billion in 2020/21 and R4.3 billion in 2021/22. A new window with specific conditions regarding informal settlement upgrading will be introduced in the HSDG in 2019/20 for the 2019 MTEF period. The National Department of Human Settlements and the National Treasury are currently collaborating on how this new window will be structured and included in the HSDG.

An amount of R950 million will be reprioritised away from the Finance Linked Individual Subsidy Programme component of the HSDG to the National Housing Finance Corporation to make the subsidy more streamlined and effective between banks and subsidiaries.

The Title Deeds Grant will end in 2020/21 and be phased back into the HSDG resulting in an additional R603.6 million being added back to the HSDG.

Health Sector

Three new components have been added into the Schedule 6 National Health Insurance Indirect Grant and are the following, the Beds and Laundry Services component, the Human Resources Capacitation component, and the Human Papillomavirus component. The Human Papillomavirus component was introduced to allow for the proper conclusion of incomplete programmes to ensure that there is uninterrupted service delivery when this function is handed over to provinces. Nationally, R30 million has been reprioritised from the national Department of Health into the Human Papillomavirus component.

Over the 2019 MTEF, an amount of R318.8 million is proposed through reprioritisation for the malaria prevention window within the Comprehensive, HIV, AIDS and TB Grant.

Social Worker Grant and the Substance Abuse Grant to be phased out and absorbed into the PES from 2019/20

Additional funds allocated toward recruitment of medical staff


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Additional funds are to be allocated to allow the National Department of Health to recruit medical staff so as to ensure continuity of service delivery. R350 million is allocated into a new component within the National Health Insurance Indirect Grant, the Human Resources Capacitation Grant, during the current year. This additional funding will continue over the 2019 MTEF. To assist in addressing the critical shortage of specialists and nurses in the health sector an amount of R1.2 billion over the 2019 MTEF is reprioritised from the National Health Insurance Indirect Personal Component to the Direct National Health Insurance Grant.

An additional new component to the National Health Insurance Indirect Grant, the Beds and Laundry Services component, of which R150 million as a once-of allocation has been added to allow for the purchase of beds and linen.

Drought and disaster relief allocations to the Province

The Western Cape recently experienced a severe drought and a provincial state of drought was declared in 2017. Drought is one of the most devastating natural hazards as it contributes to crippling food production, depleting pastures, disrupting markets and in its extreme, causing widespread human and animal mortality.

At a national level, funds have been allocated for national programmes, indirect grants and direct conditional grants to national departments, the Province and certain municipalities. The Province, in total received R1.256 billion from national resources for drought related disasters during the 2017/18 and 2018/19 financial years.

R761.339 million was directly allocated to municipalities for drought related projects. In the main, R696.364 million has been allocated to the City of Cape Town for the drilling and equipping of boreholes and work on the Atlantis, Cape Flats and Table Mountain Aquifers. Other municipalities that received funds were Bitou, R19.407 million, Theewaterskloof (R3.134 million), Cederberg (R7.962 million), Matzikama (R7.627 million), and Drakenstein (R26.845 million).

R177.142 million has been allocated to national departments through indirect grants and national programmes to be specifically spent in the Western Cape. In this regard, the national Department of Environmental Affairs received R54.537 million for environmental projects relating to fires in the Knysna area and R63.686 million for drought related projects across the Province. The Department of Water and Sanitation received R28.919 million for the drilling of emergency boreholes in Theewaterskloof, as well as R30 million for work on an emergency pipeline in Oudtshoorn.


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The Western Cape Government received R317.161 million as provincial allocations in the 2017/18 and 2018/19 financial years. This includes an allocation of R40 million, received by the Department of Agriculture in October 2017 for fodder relief. A further R277.161 million received through national conditional grants will be allocated in the 2018/19 Adjusted Budget for disaster relief purposes, made up of the following:

R38 million for the provision and transportation of livestock feed as disaster relief funds from the nationally unallocated Provincial Disaster Grant (Department of Cooperative Governance and Traditional Affairs). The Division of Revenue Act, 2018 (Act No. 1 of 2018) (DoRA) provides that such funds be released immediately to a province that has declared a disaster and successfully applied through the National Disaster Management Centre (NDMC) for funding;

R170.000 million for livestock feed and transport thereof to farmers;

R41.900 million for various land care relief and infrastructure development projects; and

R27.261 million as an unforeseeable and unavoidable allocation for repair and reconstruction of 22 schools, 3 houses and 15 farms in the Bitou and Knysna area for the fires that occurred in the area in 2017.

The Provincial Minister of Finance, as part of the 2018 Main Budget speech, announced a R100 million Drought Reserve. From this reserve the 2018/19 Adjusted Budget allocates R20.440 million for the following purposes:

R4.6 million for a communication campaign;

R1 million for food aid to agrifarm workers and farmers;

R8.700 million to fund Phase 2 of Lower Olifants River Water Users Authority (LORWUA) Emergency Supply Project: Matzikama Municipality;

R4.640 million for the appointment of geo-hydrologists; and

R1.500 million for use within the Beaufort West Municipality.


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Provincial own receipts

Provincial own revenue generated within the Province comprises less than 5 per cent of the total revenue envelope. Even though own revenue is a relatively small component of the total revenue envelope, it remains an important source of funding as it allows a department to allocate supplementary expenditure in areas allowing it to advance its mandate.

Provinces and municipalities are allowed by sections 228 and 229 of the South African Constitution to generate own revenue through, for example, the imposition of taxes, levies and duties other than income tax.

Table 2.4 shows the own receipts budget per department during the 2018/19 Adjusted Budget and over the 2019 MTEF. Departments with the largest own receipts budgets are the Departments of Transport and Public Works, Health and Provincial Treasury.

Table 2.4 Summary of estimated provincial own receipts by vote

Provincial department R'000

2018/19 2019/20 2020/21 2021/22

Adjusted Budget Medium Term Estimate

Department of the Premier 1 798 1 899 2 002 2 112

Provincial Parliament 464 817 821 75

Provincial Treasury 540 353 570 263 599 518 632 492

Community Safety 32 099 33 897 35 761 37 729

Education 27 046 28 401 29 822 31 312

Health 563 068 465 142 465 142 490 725

Social Development 1 070 1 130 1 192 1 258

Human Settlements 60 000 63 360 66 845 70 521

Environmental Affairs and Development Planning 4 000 4 224 4 456 4 701

Transport and Public Works 1 699 978 1 721 193 1 759 248 1 856 005

Agriculture 30 440 29 781 31 419 33 147

Economic Development and Tourism 3 918 333 351 370

Cultural Affairs and Sport 2 779 2 738 2 889 3 048

Local Government 56 59 62 65

Total 2 967 069 2 923 237 2 999 528 3 163 560

In total, Provincial Own Revenues are projected to grow at an average annual growth rate of 2.2 per cent from R2.967 billion in 2018/19 to R3.164 billion 2021/22 equating to an increase of R196.491 million over the period. Foremost contributors to this increase is the projected growth in motor vehicle licence fees of R138.805 million and gambling taxes of R91.904 million which is however offset by a decline in transfers received from the Global Fund of R127.255 million, as the funding agreement is scheduled to expire at the end of March 2019.


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The Department of Transport and Public Works is estimated to contribute 57.3 per cent to the own revenue budget in the 2018/19 adjusted budget, with its share increasing to 58.7 per cent in 2021/22. In particular, the Department of Health’s contribution to the total own revenue budget is expected to decline from 19 per cent in the 2018/19 adjusted budget to around 15.9 per cent in 2019/20 due to the transfer funding agreement from the Global Fund ending on 31 March 2019. Hospital patient fee revenue is also expected to come under pressure over the 2019 MTEF.

Provincial Treasury’s contribution to the total own revenue budget is expected to increase to around 20 per cent in 2021/22 from 18.2 per cent in 2018/19.

Table 2.6 presents the own receipts during the 2018/19 adjusted budget and over the 2019 MTEF period in accordance with the Standard Chart of Accounts (SCOA) classifications.

Table 2.5 Western Cape own receipts by source 2018/19 - 2021/22

Provincial Department R'000

2018/19 2019/20 2020/21 2021/22

Adjusted Budget Medium Term Estimate

Tax receipts 2 172 465 2 219 787 2 283 153 2 408 726

Casino taxes 509 401 537 572 565 028 596 105

Motor vehicle licences 1 601 767 1 617 482 1 649 832 1 740 572

Horseracing taxes 29 616 31 280 33 001 34 816

Other taxes (Liquor licence fees) 31 681 33 453 35 292 37 233

Sales of goods and services other than capital assets 591 585 575 755 584 096 616 148

Transfers received 109 018 27 118 27 120 27 820

Fines, penalties and forfeits 5 238 5 525 5 825 6 140

Interest, dividends and rent on land 4 245 4 315 4 464 4 703

Sales of capital assets - - - -

Financial transactions in assets and liabilities 84 518 90 737 94 870 100 023

Total provincial own receipts 2 967 069 2 923 237 2 999 528 3 163 560

Motor vehicle licence fees

Motor vehicle licence (MVL) fees are expected to contribute R1.602 billion, or 54 per cent, to the 2018/19 adjusted budget. This revenue source is projected to increase to R1.617 billion in 2019/20, to R1.650 billion in 2020/21, and to R1.741 billion in 2021/22. The average annual growth rate of motor vehicle licence fees over this period is projected to be 2.8 per cent. Growth in MVL fees is driven by an anticipated increase in registered motor vehicles in the Province, and below inflation adjustments to motor vehicle licence fee tariffs.


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Hospital patient fees

Hospital patient fees are budgeted to be R405.297 million in the 2018/19 adjusted budget and is projected to decline to R384.445 million in 2019/20, remain unchanged in 2020/21, and increase to R405.589 million in 2021/22.

The projected lower budget for hospital patient fees in 2019/20 and 2020/21 is due to the national Department of Health changing the classification of patients for the determination of fees, which is a means test used to determine whether patients qualify for discounted or free tariffs when receiving health services at public hospitals. The classification of patients for the determination of fees was not adjusted since 2002 and the update, effective from the 1st of April 2017, allows more people of lower income groups to access quality healthcare more easily. Although a positive development for healthcare in the Province, discounted hospital patient fees possibly will have a negative effect on hospital patient fee revenues over the 2019 MTEF.

Liquor licence fees

The Department of Community Safety has sought to expand the scope and operations of the Western Cape Liquor Authority to address the harmful effects of alcohol on society. Increases in liquor licence fees since the 2017/18 financial year have been applied to allow the Western Cape Liquor Authority to accordingly expand its capacity for alcohol harms reduction work, and become more self-sustaining.

Liquor licence fees budgeted at R31.681 million in the 2018/19 adjusted budget are projected to increase to R33.453 million in 2019/20, R35.292 million in 2020/21, and to R37.233 million in 2021/22.

Casino and horseracing taxes

Gambling taxes, consisting of casino, horse racing, limited pay-out machines, and sports betting taxes, is projected to grow at an average annual growth rate of 5.4 per cent from a 2018/19 adjusted budget of R539.017 million to R630.921 million in 2021/22.

Financial transactions in assets and liabilities

Financial transactions in assets and liabilities are projected to increase at an average annual growth rate of 5.8 per cent from the 2018/19 adjusted budget of R84.518 million to R100.023 million in 2021/22. The bulk of this category of revenue is from the recovery of previous year’s expenditure and amounts received in respect of rental debtors. Relatively small amounts in the form of debt repayments from employees have also been budgeted to this item.

Projected lower budget for hospital fees due to reclassification of patients


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Financing

The Province makes optimal use of financing resources to provide support to provincial departments, allowing them to absorb funding shortfalls while enabling them to better achieve their service delivery mandates.

Table 2.6 shows the overall fiscal framework for the Western Cape. The overall revenue envelope for the Province to fund proposed expenditure is R67.495 billion in 2019/20 increasing to R72.193 billion in 2020/21 and R76.326 billion in 2021/22.

Table 2.6: Overall Fiscal Framework 2019 MTEF

R'000

Revised estimate Medium term estimate

% Change from

Revised estimate

2018/19 2019/20 2020/21 2021/22 2018/19

Provincial receipts

Transfer receipts from National

59 668 525 63 364 496 68 253 605 72 804 844 6.19

Equitable share 47 447 464 51 291 096 55 282 324 59 120 142 8.10

Conditional grants 12 221 061 12 073 400 12 971 281 13 684 702 (1.21)

Financing 1 760 566 1 207 172 939 776 357 918 (31.43)

Asset Finance Reserve 354 049 674 791 645 931 334 555 90.59

Provincial Revenue Fund 1 406 517 532 381 293 845 23 363 (62.15)

Provincial own receipts 2 967 069 2 923 237 2 999 528 3 163 560 (1.48)

Total provincial receipts 64 396 160 67 494 905 72 192 909 76 326 322 4.81

Provincial payments and provisions

Provincial payments 63 168 010 66 173 230 70 188 119 74 261 947 4.76

Provincial provisions 908 106 1 321 675 2 004 790 2 064 375 45.54

Direct charge 43 497 45 933 48 459 51 124 5.60

Unforeseen and unavoidable 157 148 197 628 208 498 219 965 25.76

Service Load Pressures 362 065 474 156 489 686 516 619 30.96

Fiscal Stabilisation 328 863 446 166 470 982 496 884 35.67

Acquisition of Property Reserve 16 533 50 000 52 750 55 652 202.43

ICS Reserve - 107 792 734 416 724 131 100.00

Total provincial payments and provisions 64 076 116 67 494 905 72 192 909 76 326 322 5.34

Surplus (Deficit) 320 044 - - - (100.00)

Financing amounts to R1.207 billion in 2019/20, R939.776 million in 2020/21, and R357.918 million in 2021/22 and allows the Western Cape Government to implement a balanced budget.

A balanced budget is a key element of the Western Cape Government Fiscal Strategy which entails a budgeting approach and adjusted budget process that balances revenue and


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expenditure, taking into account transfers from the national fiscus, own revenue and the utilisation of own revenue to ensure sustainable service delivery and responsiveness to fiscal shocks. Therefore, the strategy of accumulation and management of reserves will continue over the 2019 MTEF to deal with service demands and also be responsive to service delivery risks.

Funding has been set aside in the fiscal stabilisation reserve amounting to R446.166 million in 2019/20, R470.982 million in 2020/21, and R496.885 million in 2021/22 to deal with the potential volatility in the fiscal framework, particularly to offset any negative impacts or changes in the fiscal framework relating to national transfers (PES and Conditional Grants). Funding held in reserve for unforeseen and unavoidable expenditure is R197.628 million in 2019/20, R208.498 million in 2020/21 and R219.965 million in 2021/22. Given the uncertainty in the economic and fiscal environment, it is imperative to continue with this policy practice of providing sufficient reserves to deal with uncertainty over the MTEF.

Amounts of R474.156 million is provided in 2019/20; R489.686 million in 2020/21 and R516.619 million in 2021/22 is specifically reserved to deal with service load pressures resulting from increased demand for services in departments. While the aim is maintaining sustainability in the fiscal base and service delivery, provincial departments, particularly in the social sector, are unable to maintain the current levels of service delivery due to increasing service demands, increasing cost of delivery and the shrinking fiscal envelope.

█ Conclusion

The Western Cape Government will continue to pursue fiscal consolidation and fiscal sustainability without jeopardising growth prospects in a challenging economic environment. Going forward, the Western Cape Government will continue to prioritise revenue enhancement, together with employing an optimal mix of capital, goods and services, labour, and innovation to reach its goal of fiscal consolidation. The Western Cape Government Fiscal Strategy supported by the fiscal and budget policy principles will seek to maintain fiscal stability and manage fiscal risks in this period of volatility, uncertainty, complexity and ambiguity by implementing the Budget Policy Priorities as set out in Chapter 3 over the 2019 MTEF.

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3 Budget policy priorities

In summary

The weak economic and fiscal environment places critical service delivery in the Province at risk.

While being cognisant of the economic and fiscal risks, the Western Cape Government’s Fiscal Strategy places emphasis on maintaining a sustainable fiscal path by giving effect to policy priorities, aimed at ensuring maximum citizen impact.

The Western Cape Government’s budget policy priorities focus on responding to the socio-economic challenges facing the citizens of this Province by implementing the 2014 - 2019 Provincial Strategic Plan.

The embedding of good governance with a focus on the citizen (service governance) will underpin the approach of the Western Cape Government.

█ Introduction

Amid the constrained economic and fiscal environment, the Western Cape Government will continue to invest in initiatives that focuses on stimulating economic growth and creating opportunities for jobs, responding to the myriad of socio-economic challenges by improving education and opportunities for youth development, increasing wellness, safety and tackling social ills, and enabling a resilient, quality, sustainable and inclusive living environment. These will be underpinned by an environment and systems that support good governance, connectivity, evidence-based integrated planning and coordinated delivery, aimed at achieving maximum citizen impact.


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█ Global, national and provincial policy context

The global strategic context is largely framed by the 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals (SDGs). At a continental scale, the African Union Agenda 2063 Goals, which are aligned to the SDGs, mention seven aspirations for the continent: an integrated Africa, prosperous Africa, democratic Africa, peaceful Africa, with a strong cultural identity, people driven and an international dynamic force.

The National Development Plan (NDP) 2030 provides a detailed policy framework for eliminating poverty and reducing inequality by 2030. It offers a long term vision for South Africa with sector specific goals. The NDP is aligned to Agenda 2063 and the SDGs. According to the NDP, South Africa can realise the goals outlined in the plan by drawing on the energies of its people, growing an inclusive economy, building capabilities, enhancing the capacity of the state, and promoting leadership and partnerships throughout society.

The Western Cape Government budget policy priorities are aligned to the NDP strategic outcomes which aim to address the triple challenges of poverty, inequality and unemployment and the OneCape 2040 vision of a highly skilled, innovation-driven, resource-efficient, connected, high opportunity society for all. Further, the Western Cape Government’s Strategic and Policy Framework comprises of long term plans and medium term plans such as the Provincial Spatial Development Framework (PSDF), and Standard for Infrastructure Procurement and Delivery. These are captured in the Provincial Medium Term Budget Policy Framework.

█ Medium term provincial budget policy framework

The integrated policy, planning, budgeting and implementation cycle (Figure 3.1) focuses on formulating a responsive and sustainable budget which promotes service delivery impact. Implementing an Integrated Management approach is a key deliverable of Provincial Strategic Goal 5 and involves the review and implementation of Provincial Strategic Goals (PSGs) and budgets from a spatial perspective, the uptake of the partnering methodology and joint planning and implementation with municipalities, aimed at maximum citizen impact.

Chapter 3: Budget policy priorities

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Figure 3.1 Integrated policy, planning, budgeting and implementation cycle

The 2018 Provincial and Municipal Economic Review and Outlook (PERO and MERO) serve as economic intelligence as part of the evidence-based practices and inform policymakers, departments and municipalities about key economic issues that will impact planning, policy-making and budgeting.

In support of accelerating delivery in the final year of the 2014 - 2019 Provincial Strategic Plan (PSP), the Integrated Management approach was further strengthened through the Provincial Government Medium Term Expenditure Committee (PG MTEC) engagements. The Provincial Strategic Goal (PSG PG MTEC) engagements, informed by the July 2018 planning engagement, centred on collective delivery against the PSGs.

Key themes which emanated from the July 2018 Planning and PG MTEC 1 engagements, which are taken forward as part of the Provincial Medium Term Budget Policy Framework, include:

Infrastructure investment as a key lever for employment creation and socio-economic development;

Impact of the 4th Industrial Revolution and Innovation;

Economic and social impact of crime and creating safer communities;

Continued focus and investment in Education, Health and Social Development;

Focus on Skills Development as an enabler to grow the economy and create jobs;

2018 PERO and MERO - economic intelligence as part of evidence-based practices

Key themes included in the Provincial Medium Term Budget Policy Framework


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Climate Change and Resource Resilience (Water, Waste, Energy) and the associated impact on employment and jobs;

Resilience thinking, Whole of Society approach, Whole of Government approach and Behavioural and Change Management initiatives;

Good Governance for citizen/service delivery impact: from Governance for relationships and reporting to Governance for results - data management for decision-making (service governance);

Development of a clear and coherent Provincial Economic Development Strategy;

Strengthening the Municipal Interface, particularly with the City of Cape Town, and being responsive to disasters such as fires, floods, drought, and alien vegetation from a fire and water security perspective; and

Public Transport and it’s impact on the economy and on the citizen.

Figure 3.2 2014 - 2019 Provincial Strategic Plan

Source: 2014 - 2019 Provincial Strategic Plan

The 2014 - 2019 PSP is the Western Cape Government’s vision and strategic priorities together with an action plan to create conditions for economic growth, provide better education, achieve better health, become sustainable and resilient, and improve safety and social outcomes for the residents of the Western Cape. In addition to the PSP, Game Changers were adopted to support the Western Cape Government to robustly tackle critical problems that prevent growth and development.


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█ Medium term budget policy priorities

The Western Cape Government will continue to focus on consolidation for maximum citizen impact over the 2019 MTEF while being cognisant of global economic risks and the constrained domestic economic environment. In response, the budget policy priorities, which include the themes from the integrated planning and budgetary engagements; endeavour to drive growth while creating opportunities for a sustainable and enabling environment that will shape the future. To address gender inequality the budget also incorporates a gender based budgeting approach towards creating an equal society where both women and men can prosper.

Create opportunities for growth and jobs

Provincial Strategic Goal 1 focuses on priority initiatives to support and enable growing the economy and creating employment opportunities. The Western Cape Government recognises that without growth in private sectors, reducing unemployment will be difficult. In response, the Province seeks to enable key strategic sectors and enhance skills development that provides an enabling environment for job creation and economic growth.

The Western Cape Government’s approach to create opportunities for growth and jobs is achieved through the following strategic objectives:

Provide support to increase the gross value add and employment levels of strategically selected economic sectors;

Improve the level of artisan and technical skills and influence an improved labour market environment;

Improve the regulatory environment to enhance the ease of doing business;

Nurture innovation throughout the economy;

Optimise land use;

Improve Broadband rollout for the economy;

Help ensure sufficient water and energy for growth; and

Improve the efficiency of the region’s transport system.

Continued focus on consolidation for maximum citizen impact over the 2019 MTEF

Enable key strategic sectors and enhance skills development


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The creation of opportunities for growth and jobs is the joint responsibility of the Western Cape Departments of Economic Development and Tourism, Agriculture, Transport and Public Works, and Environmental Affairs and Development Planning. Over the 2019 MTEF, R31.587 billion will be collectively dedicated to creating opportunities for growth and jobs.

Project Khulisa

Agri-processing, tourism and the oil and gas sectors have been identified as the three sectors with the greatest potential for accelerated and sustained growth and employment creation. Sound water management remains a key requirement for the agri-processing sector to flourish. In this regard, the Western Cape Government is an important stakeholder in the improvement of the Brandvlei dam canal inlet and subsequent distribution and usage of additional water capacity to emerging farmers. The Province will carry out one of the flagship water management projects in the Western Cape, the Fruitlook project, which will provide registered farmers with actual crop water usage and crop requirements information on a weekly basis.

In order to ensure international market access to local cheese and dairy exporters the Western Cape Government has invested in a new residue testing facility which will be in full operation in 2019/20. Furthermore, the promotion of wine and brandy in targeted markets of Angola and China has provided the Province with some dividends with exports to China that increased by 109 per cent between 2014 and 2017. The Western Cape Government will facilitate the promotion of events of agricultural and processed agricultural products with three events for each of the targeted countries planned over the 2019 MTEF.

The large global Halal market has presented the agri-processing sector with market penetration opportunities. The Halal export promotion initiative will enable companies to take up opportunities in the global Halal market, and participate in international Halal trade shows, which will ensure that the Western Cape generates additional export growth and increase its export marketing capability of its Halal offering. In essence, this will translate into regional economic growth and creation of new job opportunities while sustaining the existing ones.

Notwithstanding the impact of the drought on the tourism sector, tourism remains a significant economic and social activity in the Western Cape. During 2017, international arrivals in the Western Cape increased by 10.2 per cent. Foreign spending in the Western Cape increased from R18.1 billion in 2016 to R23.1 billion in 2017. As

Khulisa sectors have the greatest potential for accelerated growth

International Halal export promotion presents an increase for additional export growth in the Western Cape


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a result, the Air Access project increased inbound international seats by expanding routes to Cape Town by 800 000 seats. Three new international routes have been expanded during the 2018/19 financial year. The Western Cape Government will implement initiatives over the 2019 MTEF which will include positioning the Western Cape as the cycling capital in Africa.

The Saldanha Bay Industrial Development Zone (IDZ) is a catalytic project linked to oil and gas, energy and industrial sector, and is a catalyst for economic growth and jobs for the region. The IDZ further improves freight routes and access to the IDZ. Similarly, the Atlantis Special Economic Zone (SEZ) is aimed at improving asset management of economic development infrastructure projects, supporting private sector by creating a conducive environment and to achieve growth and job creation in the region. These key investments supported by the Western Cape Government have the potential to accelerate growth towards sustainable development. Further details of the IDZ and SEZ are discussed in Chapter 4.

Philippi Horticultural Area

In response to increased concerns raised on land use policy and the protected area status of the Philippi Horticultural Area (PHA), a socio-economic plan has been adopted for the area. The PHA plan is based on the Whole of Society approach with a partnership envisaged between the City of Cape Town and Western Cape Government. The PHA plan will stabilise the area by improving policy and planning certainty; safety and security; land use and environmental regulation; the establishment and management of Cape Flats Aquifer protection zones and the establishment of a dedicated PHA management precinct structure.

The PHA will be consolidated through an agrarian reform programme which includes proactive land acquisition accompanied by a comprehensive farmer support programme. The PHA plan will ensure proper management of the Cape Flats Aquifer while also aiming to address the needs of informal settlements within the PHA. Furthermore, the PHA plan will provide a platform to promote complimentary economic activity such as informal vegetable traders and agro-tourism.

Green economy

The Western Cape Government enables the promotion and stimulation of the green economy to expand investment into green industries and to improve the resource efficiency of businesses. In this regard, the Province will stimulate the green economy through innovative initiatives such as economic water resilience, financial

Saldanha Bay IDZ and Atlantis SEZ - a catalyst for economic growth and jobs

Philippi Horticultural Area will stabilise the area by improving policy and planning certainty; safety and security; land use and environmental regulation


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models for economic water resilience, sector-specific economic water resilience, waste economy strategic coordination, as well as waste economy strategic projects.

The SmartAgri project is based on a push-and-pull model which includes an innovative new radio programme on Radio Sonder Grense (RSG), “Die Kwik Styg”, which promotes awareness among the general public on climate change and climate smart agriculture. The Western Cape Government will support the creation and facilitation of climate change awareness on various levels which will be subject to an evaluation study.

The Western Cape Government also supports the Agri-Sector Desk which includes the GreenAgri information portal, a website with information resources to farmers on sustainable agriculture. Furthermore, seven case studies have been approved to demonstrate the uptake of sustainable agriculture in the Western Cape.

The Energy Security Game Changer was developed to ensure energy security in support of economic growth that incorporates diverse and low carbon sources of energy and improves energy efficiency. To date 70MW of rooftop Photovoltaic (PV) have been installed across the Western Cape. Efforts in Small Scale Embedded Generation (SSEG) resulted in legal rooftop PV to the electricity grid connections in 22 municipalities, of which 19 have nationally approved tariffs in place.

The rollout of the Smart Grids project focuses on the execution of tariffs and guidelines for rooftop PV as part of SSEG, and in building capacity around SSEG, as well as on engaging with businesses to install large scale rooftop PV systems.

Skills for growth

In addressing the persistent high unemployment in the Western Cape a strategy towards skills development in the Province is crucial. The Western Cape Government will maintain skills development initiatives such as partner support to scale for impact, while the district and rural footprint is strengthened. The broader goal is to address the whole- of- economy skills needs and to enable an economic environment conducive to the development of competitive skills to combat youth unemployment.

The Apprenticeship Game Changer aims to introduce at least 11 300 qualified apprentices into the labour market by 2019 by working with schools, Technical and Vocational Education and Training (TVET) colleges and employers across 5 priority sectors in the Province. The importance of skills development in a rural context has

SmartAgri - Promotes awareness among the general public on climate change and climate smart agriculture

Address the whole-of-economy skills needs, and enable development of competitive skills to combat youth unemployment


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been acknowledged and the Western Cape Government will offer agri-processing focused skills in beer brewing, drying of fruit, cheese and yogurt, and mushroom cultivation and courses in manufacturing essential oils. Between 2015 and 2018, 10 642 agri-workers, smallholder farmers and beneficiaries of land reform projects have benefited from short courses in agricultural skills. The Western Cape Government will train a further 1 550 participants in agricultural skills development courses in 2019/20.

The Agricultural Partnership for Youth Development’s (APFRYD) main purpose is to address inequality in education and skills opportunities for rural youth, specifically children of agri-workers. The project comprises bursaries, scholarships, learnership, internships and ultimately formal qualifications. The Western Cape Government, through the Premier Advancement of Youth programme, plans to provide 30 matriculants with workplace experience in the agricultural space. Further opportunities include the appointment of 120 graduate interns for skills development within the Comprehensive Agriculture Support Programme. Upon commencement, each graduate will be placed with external hosts on farms to maximise the accumulation of practical agricultural skills over a two-year period.

Moreover, the Western Cape Government aims to explore the use of Thusong Service Centres as implementers of capacity building and small scale economic development projects for community members over the 2019 MTEF. The pilot initiative conducted within the 2018/19 financial year, provided capacity building and mentorship programmes to ten young entrepreneurs from the Grabouw area. A project support grant was introduced within the Grabouw Thusong Service Centre, which serves as a benchmark initiative.

The promotion of the waste economy has supported small and micro “wastepreneurs”, enabling the creation of jobs while offsetting the expense of developing new landfill space. The Wastepreneurs Project aims to address the skills gap and access to resources for small and micro waste related enterprises in the Western Cape by developing and implementing a support programme for these waste entrepreneurs.

The Western Cape Government supports and funds Cultural Tourism through festivals which open up opportunities for the youth to gain exposure to the industry and develop skills which make them more marketable to the job market. Cultural Tourism funding not only promotes training and upskilling in the creative arts, but more importantly opens up new visions and insight into the broader

Capacity building and small scale economic development projects for community members

Cultural Tourism funding - opportunities for youth to gain exposure to the industry


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opportunities that exist in the arts sector, and also exposes young people to new careers and possibilities.

Further capacity building initiatives relate to the various bursary initiatives and opportunities offered by the respective departments aimed at enhancing skills and investment in the youth.

Accelerating land reform

The Western Cape Government fully supports the Constitutional injunction to restitute land and reform the skewed patterns of land ownership.

The Province supports individuals’ right to own land, but it should not be state-owned. Flowing from the latter, a proposal is to distribute government owned farms and fallow land, as an alternative to maintaining emerging farmers as permanent tenants. Initiatives in this regard include giving residents of tribal land security of tenure; providing a budgetary allocation to settle all remaining land restitution claims, and implementing relevant land reform initiatives. Emerging farmers will receive the bespoke support to ensure success, through the transfer of skills and by providing access to the resources and markets required.

The promotion of partnerships and joint ventures are envisaged between established and emerging farmers; aimed at matching new farmers with access to land with skilled and experienced agri-business practitioners. The promotion of co-operation and collaboration between farmers inclusive of new entrants is envisaged in order to share expensive capital equipment as well as pool skills and resources. This is aimed at establishing market opportunities for products, and the boosting of collective bargaining power (relating to both procurement and marketing). The business model relating to farm equity schemes could enhance the complex business models that modern commercial farming requires to be competitive, whilst driving the diversification of ownership and the promotion of economic inclusion.

Moreover, the Western Cape Government is participating in a commercialisation programme with the objective to make 50 black commercial farmers self-sufficient. As part of this programme the Western Cape Government has partnered with National Treasury and the deciduous fruit industry through the Jobs Fund that will empower 20 emerging fruit farmers towards commercialisation. The project has already delivered 360 hectares of planted fruit and 500 permanent jobs.

Emerging farmers to receive the bespoke support to ensure success


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In addition, the Western Cape Government supports a vibrant, inclusive rural economy that will contribute to economic growth, create jobs and help relieve poverty. Successful land reform should include a focus on cities and metro areas, bearing in mind that, South Africa experiences profound land pressures.

Digital economy

The Western Cape Government is responsible for addressing the socio-economic objectives of the Western Cape Broadband Strategic Framework, and therefore, aims to improve digital access, skills and usage of citizens and businesses within the Province. The Western Cape Government will focus on the rollout of Wi-Fi Hotspots; digital economy interventions to stimulate growth such as Mzanzi Digital Village; the Interactive Community Access Nodes (ICAN) in Elsies River; the Khayelitsha Bandwidth Barn; the Digital Business Toolkit; the ICAN Play centres; and the Citizen Awareness model with a strong emphasis on rural digital rollout.

4th Industrial Revolution

The Western Cape Government will improve its economic resilience by adapting to the era of the 4th Industrial Revolution. The Province will be significantly affected by this new era of extreme automation and connectedness. The Western Cape Government envisages a desired end-state where the youth will be attracted into developing the necessary digital skills and capabilities required to embrace the opportunities offered by the 4th Industrial Revolution. The Province will focus on promoting awareness; knowledge sharing; accelerating responsible technology adoption and repositioning perceptions of agriculture within the 4th Industrial Revolution context. In addition, this will require the cultivation of the digital economy through appropriate skills development initiatives and building of ICT infrastructure.

Nurturing Innovation

The Western Cape Government uses innovative solutions such as the Smart Pen, Cape Farm Mapper, Tractor Tracker and Fruitlook to build resilience in the agricultural sector predominantly against environmental and fiscal challenges. Partnerships and the Whole of Society approach will form part of the innovative solutions needed to improve service delivery efficiencies and effectiveness.

The Comprehensive Rural Development Programme (CRDP) provides for partnerships between all three spheres of government as well as inputs from citizens which enhance bottom up planning of development initiatives. The CRDP is based on social facilitation

Cultivation of the digital economy through appropriate skills development initiatives

Adopting the new era of the 4th Industrial Revolution


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where partnerships materialise spatially through 16 rural nodes which addresses both rural and urban investment. This innovative approach to planning and development will be further pursued over the 2019 MTEF.

Ease of Doing Business

The Ease of Doing Business (EDB) programme is a key priority toward improving the business and regulatory environment, and ultimately enabling an environment for broader economic growth and job creation. The Western Cape will enable a vibrant and growing economy in local municipal areas where new and maintained infrastructure will support economic growth and EDB characterises an enabling business environment.

In this regard, the Western Cape Government will focus on initiatives that promote EDB such as the Western Cape Funding Fair, Emerging Business Support, Municipal Support to Business (MS2B), Red Tape Reduction (RTR) Case Management and Advocacy, EDB Impact Assessment, procurement promotion tender workshops; policy development/implementation; access to finance including the National Empowerment Fund; Enterprise Development Fund and contract financing.

Public Transport

The provision of affordable, safe and efficient modes of transport is important to improve access to economic opportunities and services, increasing labour productivity, raising the competitiveness of the region, and promoting of socio-economic development. The Western Cape Government will implement sustainable transport systems, in partnership with key stakeholders, through the rollout and management of the George Integrated Public Transport Network (GIPTN). Over the 2019 MTEF, the launch of the fourth phase of the GIPTN will improve the lives of the citizens of Thembalethu, which is the largest township in George.

The Western Cape Government will strive to provide more reliable and affordable public transport with better coordination across municipalities and between different modes, aligned with the requirements of the Provincial Spatial Development Framework. Initiatives over the medium term include continuous engagements with the management structures of the Passenger Rail Agency of South Africa and the City of Cape Town to seek solutions to the current challenges, stabilise the rail service, and improve and expand services.

Ease of doing business is a key priority toward improving the business and regulatory environment

Affordable, safe and efficient modes of transport, important to improve access to economic opportunities


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The establishment of a Rail Enforcement Unit, following a memorandum of agreement between the Western Cape Government, the City of Cape Town, and the Passenger Rail Agency of South Africa, focuses on the safety and security of Metrorail commuters and infrastructure. This Unit will provide assistance to the existing security services following sustained attacks on the urban rail network infrastructure. The economic success of the Cape Town region and surrounding areas, is dependent on a stable and sustainable rail network.

The management of bus subsidised operations in the Cape Town Metropolitan area has been impacted by the additional demand stemming from population growth and the rail crisis. An assessment of the services provided will determine opportunities for improved efficiencies, and lobbying national government in reviewing the policy and funding of Public Transport Operations Grant contracts.

█ Improve education outcomes and opportunities for youth development

Provincial Strategic Goal 2 is focused on improving the quality of education which is directly linked to economic development and social cohesion. It is therefore critical that the Western Cape Government continuously improves education outcomes. The aim is not only to improve the skills and capabilities of youth but also to end poverty and tackle social ills such as crime and substance abuse.

The Western Cape Government’s approach to improve education outcomes and opportunities for youth development is achieved through the following strategic objectives:

Improve the level of language and mathematics in all schools;

Increase the number and quality of passes in the national senior certificate and equivalent qualifications;

Increase the quality of education provision in poorer communities;

Provide access to more social and economic opportunities for the youth; and

Improve family support to children and youth, and development programmes.

Rail Enforcement Unit established between Western Cape Government, the City of Cape Town, and the Passenger Rail Agency of South Africa


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The pursuit for improved learner outcomes and creation of opportunities for youth is the joint responsibility of the Western Cape Departments of Education, Social Development, Community Safety and Cultural Affairs and Sport. The Western Cape Education Department is the lead department, however the other departments play a critical role in facilitating programmes and interventions that support the improvement of learner outcomes and creating opportunities for youth. Over the 2019 MTEF, R86.524 billion will be collectively dedicated to improve learner outcomes and to create opportunities for youth.

Improving learner outcomes

The holistic development of the Province’s youth, delivered through the provision of quality education and inclusive after-school activities, which give young people an opportunity to participate in sporting, cultural and educational activities is a priority for the Western Cape Government. Learner performance in language and mathematics is a critical measurement of cognitive development and learner performance in these areas and is tracked through systemic testing results of learners in Grades 3, 6 and 9. The performance of Grade 12 learners is assessed through the National Senior Certificate (NSC) results.

To embed the culture of evidence-based monitoring and evaluation in education, the Western Cape Government has prioritised the establishment of a new School Evaluation Authority (SEA) in 2019. The SEA aims to improve the school quality assessment framework and will conduct credible and independent evaluations of school quality which will improve the Western Cape’s ability to effect suitable and problem-specific school interventions in the Province.

The eLearning Game Changer aims to enhance the experience of learners particularly in mathematics and languages, through the use of technology. eLearning focuses on improving digital infrastructure at schools. To date, 338 schools have a Local Area Network (LAN), which connects every instruction room to the internet; and 1 243 schools are connected to the internet by at least one point. Progress has also been made in creating an e-Culture in schools where internet usage is embedded in the daily learning, teaching and management of schools and teachers are trained on how to effectively use technology in their lesson delivery. The Western Cape Government e-Portal has over 12 000 digital resources that teachers and learners can access. To date, more than 400 000 unique users have access to these resources.

Improved learner outcomes and creation of opportunities for youth

Establishing School Evaluation Authority - evidence-based monitoring and evaluation in educatio.

Improving digital infrastructure at schools


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The After School Game Changer academic support projects, YearBeyond, Grade 4 and Maths eLearning, provided support to improve literacy and numeracy outcomes for learners in the 64 targeted schools.

Transform to Perform

The most recent initiative targeting the improvement of education outcomes in poorer schools is the Transform to Perform strategic initiative.

The Transform to Perform Strategy is based on the understanding of the fundamental shift in global expectation on the role of education and the contribution it makes to transforming society. The strategy is an integral part of the Western Cape Education Department’s Strategic Framework and addresses the attitude and values which influence the actions and behaviours of all layers within the education system and, consequently, the culture within which education operates in this Province.

The project is designed in conjunction with the Strategic Vision and objectives of the Western Cape Education Department to incorporate all aspects related to the transformation of the mindset of all officials, teachers, learners and parents. The organisation is shifting systemically to become a values-driven organisation embedded by the mantra: ‘Enter to learn, Leave to Serve’, that influence attitude. 2017 has been declared the year of ‘The Teacher’ and raised the status of the teacher in the teaching community and general public. 2018: The year of ‘Values-Driven Learning’ focused on the application of values, values-driven behaviour and accountability across all schools and the organisation. 2019 has been declared 2019: The Year of the Learner.

All four programmes have been piloted with the results supporting the decision to continue a provincial roll out. The implementation of the Transform to Perform Programme include four pillars namely, Leadership Development (Officials/Principals); Values in Education (District and School Communities); Change Mind-set (32 000 teachers) and Growth Mindset (1.2 million learners).

The Values in Education Pillar includes activities that aim to address the attitudes and values which influence the actions and behaviours of individuals. It aims to influence and shift the organisation to become a values-driven organisation through living our values across all layers of the organisation. All schools and corporate officers should have been exposed to, and adopted the values programme in their daily operations.


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The Leadership and Development Pillar includes one-on-one coaching/mentoring (Personal Mastery) sessions; Ethos Leadership; Change Mindsets. It is directed at all layers of leadership both corporate and academic. All layers of leadership should have completed at least one round of development over the next two years.

The Change Mindset Pillar aims to positively impact on the mindset of teachers to prepare them for change. The shift aims to move them towards a willingness to experiment, learn and apply innovative ways of thinking and working within the continued pressures of their daily reality. The implementation should see the completion of the staff up to 150 schools per year over the next five to seven years.

The Growth Mindset programme focuses on transforming the mindset of learners from a “fixed mindset”, which is a state of believing that one is born with certain abilities that cannot be changed, to a “growth mindset”, which is a belief that effort and hard work have the ability to grow one’s abilities. The pilot was a partnership between the World Bank Group, the Department of the Premier and the University of California Daus who worked together to design and deliver the Growth Mindset initiative to learners in primary and high schools spread across 20 no-fee and low-fee paying schools in the Province. The pilot ran from September 2017 to March 2018 and preliminary results of the pilot show that the intervention yielded significant improvements in the performance of high school learners in mathematics.

The rollout target date for the Transform to Perform projects is 1 April 2019. We will target up to 150 schools for 2019 and this number will increase annually to complete the implementation of all schools by 2025/26.

Increasing access to and the quality of education in poorer communities

The Western Cape Government has put a number of interventions and additional resources in place to improve the quality of the teaching and learning experience delivered to schools in poorer communities. The biggest intervention in this regard is ensuring that schools in poorer communities are given adequate resources to ensure that education infrastructure and learner teacher support materials are in line with the regulations relating to minimum norms and standards prescribed for public schools. In addition to this, almost 60 per cent of the schools in the Western Cape provide no fee education to 608 649 learners. The Western Cape Government also allows fee paying schools to apply for compensation for fee

Improve quality of teaching and learning experience delivered to schools in poorer communities


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exemption in cases where parents cannot afford the full school fees. In 2017, R49.4 million was paid to support fee exemption for 80 895 learners in 554 schools.

All learners in all quintile 1, 2 and 3 schools are provided with nutritious lunch and breakfast meals as part of the National School Nutrition Programme (NSNP). The Western Cape Government has also expanded its nutrition programme to include eligible learners in quintile 4 and 5 schools. In the first quarter of 2018, the NSNP reached 474 394 learners in 998 schools. The Province will over the 2019 MTEF, improve the nutritional value of the meals provided to learners.

Learner Transport Scheme is provided in predominantly rural areas to almost 60 000 learners who live more than 5 kilometres away from the nearest appropriate school.

The five-year Collaboration Schools Pilot was launched in 2016 as yet another model to close the education gap between poorer and more affluent communities. The model works by leveraging funds and expertise from the private sector to give intensive support to teachers and principals in no-fee pilot schools by way of individual training, provision of additional resources and constant monitoring and evaluation. This private sector contribution is combined with that of the Western Cape Government, which continues to provide funds and services to the schools as per policy. The pilot is being implemented across both primary and secondary schools and includes older and more recently established schools. A mid-term review of the pilot illustrated significant improvements particularly in the systemic assessments of almost all of the pilot schools in 2017.

The After School Game Changer was established to close the opportunity gap between resourced and under-resourced learners in no and low fee schools. The team has worked to create an enabling environment for after school programmes to take place including working on mobilising the leadership in schools to support an extended day, recognising and rewarding efforts in the sector and addressing after school safety and nutrition. It has also worked to enhance the quality of provision through building the capacity of practitioners and the toolbox to ensure quality provision. This year an NQF 6 qualification was introduced along with basics training for practitioners. Over 200 practitioners have been trained in 2018 and more than 500 since the inception of this Game Changer. To support quality, an audit tool was developed. This allowed for audits of government funded projects conducted; and an online map of the sector has been developed. Finally, the team has worked on crowding in partnerships to further expand the sector, including working to bring scouts into schools, skipping and skateboarding in schools. Finally, the ASGC has developed the evidence base to

A mid-term review of collaboration schools show significant improvements


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support the sector, in partnership with the Cape Higher Education Consortium.

Almost 200 000 learners have been registered in After School Programmes as at August 2018 with over 80 000 attending at least twice a week, 70 per cent of the time. The goal is that by 2019, 112 000 no and low fee learners will be regular and consistent participants in After School Programmes. The After School Programmes keep young people away from socially deviant behaviour and in turn keep communities safer.

The Western Cape Government supports 181 MODs and 134 Neighbourhood Schools (NHS). Participation at the MOD and NHS improved over time and as at the first quarter of 2018, 37 767 learners benefitted from the MOD and NHS Programme. A number of success stories have emanated as a consequence of the access and opportunities that are presented via the MOD Programme.

Early Childhood Development

The Western Cape Government expanded Early Childhood Development (ECD) opportunities over the last year, with more than 75 000 children between the ages of 0 and 4 years accessing funded ECD facilities and programmes across the Province. The intent is to further improve the quality of and expand access to 87 000 children between the ages of 0 and 4 years by 2020. Key policy developments underway within the ECD space include the development of a new Provincial ECD Strategy in response to the recently launched National ECD Strategy.

The ECD School Readiness Project, aims to improve English language and cognitive development at identified sites where school readiness is poor. The project will be expanded over the 2019 MTEF.

The Western Cape Government is determined to extend access to quality Grade R education at public ordinary schools and independent sites to lay a foundation of learning in learners prior to them entering Grade 1. The intervention focuses on the improvement of the language capabilities of children aged 4 - 5 to enable them to assimilate into formal education once they enter Grade 1. This outcome is also supported by the Grade R-3 Living Labs initiative which aims to ensure that all Grade 3 learners in the targeted schools can read and write at the required level.

Extend access to quality Grade R education at public ordinary schools and independent sites


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Safety at schools

A number of safety initiatives are in place to try and curb the effects of crime on education. In addition to the installation of secure perimeter fencing, restricted electronic access and monitored alarm systems, strategic partnerships between the schools and the communities are also key to tackling the issue.

An example of such partnerships is the Walking Bus programme, which is a model of learner transport where children walk to school chaperoned by adults and the School Safety Committees whose members come from the school communities. Launched in 2016 in Wesbank, the successful project has since been implemented at 197 schools and won gold in the 2017 Provincial Service Excellence Awards. Over the 2019 MTEF the Western Cape Government will roll out the programme to other schools.

The Safe Schools Call Centre was established to provide support to both learners and teachers regarding matters relating to their safety in a range of categories, such as abuse, gang activity, bullying and vandalism. The Safe Schools Call Centre provides support with an initial online debriefing and then refers each case for in-depth counselling where necessary. The Call Centre is part of a wide network of service providers that support the needs of clients. Furthermore, the Western Cape Government provides support to youth involved in substance abuse and has placed youth support services at 10 high-risk secondary schools across the Province.

The Western Cape Government is in the process of developing a tool that will assist departments in determining their levels of security risk. The Security Resilience Scorecard will provide departments with a holistic view of the state of security of a particular facility determining their level of risk. The Scorecard has already been tested and is in the process of further enhancements. Over the 2019 MTEF, the Security Resilience Scorecard will be piloted at schools in the Province.

Empowering the youth

Targeted youth and after school interventions are a priority for the Western Cape Government to deliver on the objectives of the Youth Development Strategy, which seeks to promote the holistic development of young people by affording them with educational, labour market and social opportunities.

Safety at schools is a key priority area

Security Resilience Scorecard provide a holistic view of the state of security at schools


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The Western Cape Government recognises the importance of work experience as a means to enhance the employability of youth. The Western Cape Government will therefore continue with the Implementation of the Youth Work Programme (YWP), whereby graduates of the Chrysalis Training Academy are placed at safety partners for a minimum period of 12 months and paid through a grant received via the Expanded Public Works Programme (EPWP). The Chrysalis Academy plans to train and graduate 1 000 learners annually over the 2019 MTEF.

Through the After School Game Changer programmes - YearBeyond, Grade 4 and Maths eLearning - and the Jobs Fund ‘partnership pathways to employment’ have been created for over 250 youth in 2018. Over three quarters of these youth find employment or conduct further studies each year.

Skills development programmes and training opportunities are also provided at the 9 Youth Café sites across the Province, targeted at young people not in education, employment or training. Youth Cafés provide an opportunity for these young people to participate in training programmes, develop their skills base and access entrepreneurial opportunities. To improve access for hearing impaired youth, Youth Café staff commenced with an accredited sign language training programme during the 2017/18 financial year. The establishment of an additional 4 Youth Café sites is envisaged going forward.

Religious leaders and the religious fraternity play a key role in building moral fibre and making the communities safe. The Western Cape Government has entered into formal partnerships with religious organisations to run programmes aimed at keeping youth off the streets during school holidays. Since its inception the partnership with religious fraternities has reached more than 100 000 children. The partnership with the religious fraternity will be maintained over the 2019 MTEF.

█ Increase wellness, safety and tackle social ills

Provincial Strategic Goal 3 is focused on creating healthy, inclusive, safe and socially connected communities. The Western Cape Government is focused on client-centered interventions that improve physical health, safety, provides protection for the most vulnerable and build resilience to social challenges.

Skills development programmes and training opportunities provided at Youth Café sites

Creating healthy, inclusive, safe and socially connected communities


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The Western Cape Government’s approach to increase wellness, safety and tackle social ills is achieved through the following strategic objectives:

Build inclusive, safe and healthy communities;

Nurture resilient and healthy families;

Ensure safe and healthy children (0 - 14 years of age); and

Promote engaged and healthy youth (15 - 25 years of age).

Increasing wellness, safety and tackling social ills is the joint responsibility of the Western Cape Departments of Cultural Affairs and Sport, Transport and Public Works, Health, Social Development, and Community Safety. Over the 2019 MTEF, R114.296 billion will be collectively dedicated to increase wellness, safety and tackle social ills.

Whole of Society approach

The Whole of Society approach (WoSA) provides an opportunity for government to deliver services in a way that realises better results through collective impact and calls for collaborative action across all spheres of government and all sectors, guided by a shared purpose to impact meaningfully on the lives of citizens. Importantly, the approach does not replace or reinvent what is working currently. Instead it builds on existing initiatives and networks.

A WoSA Learning Network has been established and Learning Champions have been designated from Western Cape Government and the local municipalities to support intentional learning and the sharing of lessons in order to encourage adaptive management. The Whole of Society approach is being rolled out across four learning sites in the Province, i.e. Saldanha Bay, Drakenstein, Manenberg/Hanover Park and Khayelitsha. In addition, due to substantive engagement with the WoSA Champions over the last several months, progress has been made in linking this approach with other projects founded on similar principles such as the Regional Socio-Economic Projects/Violence Prevention through Urban Upgrading (RSEP/VPUU) and Living Cape, including the rollout of workshops with government officials on building networks for improved partnering and collaboration. Based on the experiences in the four learnings sites, the intent is to rollout the approach across the Western Cape Government over the 2019 MTEF.

Whole of Society approach learning to support intentional learning


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Encouraging community wellness

The Western Cape on Wellness (WoW!) programme was developed as one of the responses to the growing burden of disease complexity and rising incidence of non-communicable diseases (NCDs). The WoW! programme encourages healthier eating habits, increased physical activity, healthy weight management to prevent and reduce the burden of non-communicable diseases, as well as better self-management through community, school and workplace clubs. The WoW! website also hosts a Health Passport, which enables participants to record and track their healthy lifestyle status, as well as educational content on the benefits of physical activity and appropriate dietary choices. In addition to regular wellness screening and physical activity events, the programme will be piloting the Healthy Tuckshop Guidelines at schools and Community Catering Guidelines going forward. The Western Cape Government contributes to encouraging community wellness by promoting participation in cultural activities, sport and recreation.

Supporting and empowering persons with disabilities

The Western Cape Government prioritises and supports integrated programmes and services that promote the rights, well-being and socio-economic empowerment of persons with disabilities and their families. In 2017/18, almost 95 000 persons with disabilities, their family members and carers accessed essential and community care services, empowerment opportunities and support services. Service expansion during the 2017/18 financial year included the addition of 40 bed spaces for children with disabilities at day care centres and 24-hour residential care facilities. A Provincial Framework for Persons with Intellectual Disabilities is currently in development. The purpose of this Framework is to ensure that support and interventions for clients, families and caregivers are appropriate, available and accessible, and will provide clarity on various roles and responsibilities of stakeholders. Over the 2019 MTEF, the residential and day care provision for persons with intellectual disabilities will be further expanded.

The High Court order in 2010 indicated that the children with intellectual disabilities should be provided transport to and from their special day care centres. This is a fundamental right of the children to ensure that they access services on a daily basis. In order to adhere to the High Court order, the Western Cape Government conducted a costing analysis in order to determine the budgetary implications for the purchasing of 2 vehicles per annum as from the 2018/19 financial year. These vehicles will be converted and customised in order to transport children with special needs.

WoW! Programme to reduce the burden of non-communicable diseases

Promote rights, well-being and socio-economic empowerment of persons with disabilities


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Making communities safer

Crime and safety are significant issues for individuals, communities and businesses. The Western Cape Government’s response to the needs of the entire community is addressed through a collaborative approach to solve social ills – which aims to increase the promotion of safer and stable communities.

Court Watching Briefs ensures that significant numbers of serious crimes are being placed back on the court roll and appropriate disciplinary steps are instituted against police officers who did not perform their duties as required. The Court Watching Briefs programme is in operation in 42 district courts. Inefficiencies are compiled in a report and referred to the South African Police Service Provincial Commissioner. The Western Cape Government will continue with this initiative over the 2019 MTEF.

Neighbourhood Watches (NHWs) form an integral part in the Whole of Society approach towards safer communities. To date, 231 NHW structures with more than 16 400 members participate in Community Safety Integrated Partnership areas, Police Needs and Priorities sessions, Community Police Forums and the Alcohol Harms Reduction Game Changer. The Western Cape Government will persist in its support to accredited NHWs with equipment and training over the 2019 MTEF.

District Safety Plans (DSP) were successfully piloted in the Overberg region. The implementation of the DSP will continue in partnership with the local authorities in the West Coast region and the Cape Town Metropolitan area, in Lingelethu West and Khayelitsha respectively. Valuable lessons learned in the development of the Overberg DSP have been utilised in developing DSPs in other regions.

Safer roads and transport

The Western Cape Government will continue using innovative technology to gather information and intelligence, planning and operations for improved transport regulation, road safety and traffic law enforcement. The Integrated Transport Intelligence Hub (ITIH) has demonstrated success since its inception and this hub requires the integration of multiple information sources and sub-systems across Transport Operations, Regulation and Enforcement. The ITIH will monitor programme results by scanning vehicle number plates and driver’s licences at intervals on their journeys, focusing on public transport and freight vehicles. This will generate specific data, including average speed, and time spent resting versus time spent behind the wheel. By making more effective speed control,

Promoting safer and stable communities

Making roads safer for all residents and visitors a priority


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overloading control and fatigue management control possible, the ITIH is helping to make Western Cape roads safer.

The Safely Home Programme remains focused on changing the behaviour of road users by effectively utilising high impact messaging and communication on various media platforms. There will be a particular focus on innovative road safety awareness initiatives targeting young drivers and pedestrians.

Improving child health

The First 1000 days initiative aims to ensure optimal health and development outcomes for mothers and children, through focused health interventions for pregnant women and children from conception to 2 years of age. The initiative also recognises the need to support parents and caregivers during this critical development phase of the child. Over the 2019 MTEF, key areas have been identified to further improve health outcomes. These include health system interventions addressing avoidable causes of death; the monitoring, evaluation and response system across the care continuum; the development of a service design framework which includes wellness maps and a package of care, and the identification and inter-sectoral support for households at risk in four prioritised geographic areas.

The Western Cape Government aims to improve child health and keeping children safe by promoting participation in primary school sport.

The Western Cape Government provides a 24-hour child care and protection service. This service includes aid to children who are victims of abuse and neglect, as well as children in conflict with the law. Over the 2019 MTEF, additional bed space is planned through the expansion of the Clanwilliam Child and Youth Care Centres, while the maintenance of existing facilities will also be prioritised.

The implementation of the Hanover Park Reintegration Pilot Project, provides a series of interventions involving job skills, mentoring and psychosocial support to assist the reintegration of offenders. The project will be expanded over the 2019 MTEF.

The Eye on the Child project aims to enhance current child abuse and neglect prevention services for children in rural and semi-rural disadvantaged communities by facilitating an effective response where a risk of child abuse, neglect and exploitation has been identified. The project is currently being piloted in 14 areas, and will be expanded to a further nine areas including Calitzdorp, Montagu, Delft, Beaufort West, and the West Coast region over the 2019 MTEF.

Ensure optimal health and development outcomes for mothers and children

24-hour child care and protection service

Eye on the Child - Keeping children safe


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After a policy guideline for the establishment of the Office of the Children’s Commissioner was approved by the Western Cape Provincial Cabinet in 2017, a draft Bill was finalised and tabled in the Provincial Legislature in 2018. The envisaged powers as regulated in provincial legislation of the Commissioner relate to monitoring and reporting, investigating, researching, educating, lobbying and advising on matters pertaining to children. The intention is to protect and promote the rights and interests of children in the Province.

Engaged and healthy youth

The Young Women and Girls project empower young women and girls to make informed life choices through projects targeted at specific age demographics. Aimed at young women out of school, Rise Out School and Women of Worth projects provide life skills and empowerment opportunities to assist with employability and healthcare.

As announced in the 2018 National Medium Term Budget Policy Statement, the Sanitary Dignity Project will be implemented from 2019 to ensure that young women from poor communities in Grade 4 upwards have an improved opportunity to access uninterrupted monthly education by providing them access to sanitary wear. The Western Cape Government will develop a framework for the implementation of the project.

The Western Cape Government contribute to engaged to health youth by promoting participation in high school sport.

In response to the increasing incidence of substance abuse amongst youth, the Province will provide drug treatment services at all provincial government child and youth secure care centres as well as school-based drug treatment at 10 high-risk secondary schools. Over the 2019 MTEF, the school-based substance abuse treatment programme will be rolled out to further high-risk schools identified.

Empowering victims of crime

In 2017/18, just over 2 000 victims of crime and violence accessed Victim Empowerment Programme service centres in the Province. The increased incidence of crime and violence has necessitated the expansion of bed spaces in shelters for victims, as well as upgrading security at these facilities. One of the initiatives aimed at supporting the reintegration of victims of violence back into their communities is the Women Empowerment Initiative, which aims to provide skills, training and economic opportunities to residents of shelters for abused women. An expansion of the current service provision is planned over the 2019 MTEF, including in rural areas.

Sanitary Dignity Project - promoted uninterrupted monthly education to young women


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Resilient families

The Families-at-Risk project provides essential social services to families in need of support in order to stabilise these families. The project provides preventative services such as parenting skills, marriage counselling, and other forms of psychosocial support to build resilience within the family. Statutory services such as parenting rights and responsibilities agreements, parenting plans, temporary safe care of children, foster care and family reunification services, amongst others, are also provided. Over the 2019 MTEF, the project aims to stabilise high risk families, before shifting focus to medium risk cases.

The continued escalation in social work caseloads will impair the quality of services to families at risk and lead to a narrow focus on placing children into alternative care. In response, the Western Cape Government will place social work graduate interns to reduce pressure points, increasing focus on community-based child and youth care, early warning systems, and targeted family interventions for families at risk, increased collaboration on referral mechanisms for efficiency in early detection of at-risk families starting in pilot sites.

Efforts to improve not only the resilience of families, but also communities at large include the intensification of social crime prevention programmes at primary and high schools in high-risk areas over the 2019 MTEF. These programmes provide support to learners, parents, educators and community members, by equipping them with the necessary skills to combat the social risk factors of crime and violence, thereby improving their resilience to these risk factors.

Aimed at reducing alcohol related injuries and fatalities, the Alcohol Harms Reduction Game Changer has been implemented in three target areas namely, Khayelitsha Town 2, Gunya and Paarl East. Progress on the implementation of the Game Changer includes increased coordination of efforts in target areas by law enforcement, the judiciary, regulatory and oversight to improve the enforcement of liquor trading laws, promote a legalised trading environment and increase safety in and around alcohol outlets. Strategic partnerships have also resulted in the introduction of new recreational alternatives for young people including a new ICAN Gaming Centre in Khayelitsha and Hip-Hop workshops and an Open Mic competition with the Nyanga Yethu programme. The Western Cape Government intends expanding the Game Changer to the four Whole of Society approach pilot areas over the 2019 MTEF.

Families-at-Risk project provides essential social services to families


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The Western Cape Government is responsible for the development and implementation of alternative recreational activities in the designated targeted areas.

█ Enable resilient, quality, sustainable and inclusive living environment

Provincial Strategic Goal 4 focuses on improving resilience, sustainability, quality and inclusivity of urban and rural settlements in the Province. The Western Cape Government therefore envisages an environment that promotes economic development, social equity, resilient infrastructure, improved access to services, and inclusive recreational facilities while ensuring the sustainability of the environment. This approach takes into account the protection of natural resources as well as the adjustments that are required in order to adapt to changing long term, trends.

The Western Cape Government’s approach to enable a resilient, quality, sustainable and inclusive living environment is achieved through the following strategic objectives:

Facilitate improvements in Western Cape settlement development and functionality;

Improve management and maintenance of the ecological and agricultural resource-base; and

Improve climate change response.

Improving resilience, sustainability, quality and inclusivity of urban and rural settlements is the joint responsibility of the Western Cape Departments of Environmental Affairs and Development Planning, Agriculture, Human Settlements, as well as Transport and Public Works. Over the 2019 MTEF, R37.759 billion will be collectively dedicated to improve resilience, sustainability, quality and inclusive urban and rural settlements.

Climate change and environmental resilience

Resilience thinking requires a different approach in addressing the complex problems facing our economic, social and environmental systems. It requires adaptive leadership, collaboration and learning.

The Western Cape Government’s response to climate change adaptation will be guided by planned vulnerability assessments, the review of the provincial-wide Western Cape Climate Change Response Strategy (WCCCRS) and implementation thereof. The Western Cape Integrated Drought and Water Response Plan (WCIDWRP) for the period 2020/21 - 2034/35 is being finalised. This

Improve resilience, sustainability, quality and inclusivity in the Province

Institutionalising resilience thinking


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aligns with initiatives related to Water for Sustainable Growth and Development, the Berg River Improvement Plan and the Western Cape Sustainable Water Management Plan. Various projects aimed at improving water quality, sustainability, security and augmentation. These entail putting in place a centralised water quality monitoring system and water communication campaign, including the re-use of water; as well as the update of infrastructure operating and maintenance plans within municipalities. A system facilitating synchronised environmental authorisation and processing of water use licences; as well as mining permits has been introduced.

As part of the drive to preserve the coastal environment, the Western Cape Government will focus on coastal and estuary management and the implementation of the coastal management and coastal access programmes; while recognising and responding to coastal opportunities and vulnerabilities. Through planning for water resilience through joint planning, the Province will support the implementation of an Ecological Infrastructure Investment Framework in strategic watershed areas.

Disaster preparedness and relief

The Western Cape Government will incorporate resilience in supporting municipal disaster management by facilitating improved risk profiling, capacity building, increasing awareness and developing readiness plans. This includes strengthening business continuity planning within the provincial and local government context.

The Western Cape Government and local authorities are guided by an approved Disaster Management Framework, which informs their respective Disaster Management Plans. These Plans outline strategies on prevention, mitigation, preparedness, response and recovery within the Province. The Provincial Disaster Management Centre, in conjunction with Municipal Disaster Management Centres, primarily focuses on disaster reduction, whilst ensuring integrated/co-ordinated disaster management response and recovery.

Waste management

The Western Cape Government promotes and implements integrated waste management programmes in order to reduce negative environmental and health impact. Waste management has been identified as a potential future provincial risk, and thus will be managed accordingly to mitigate against negative future impact.

Promoting and implementing integrated waste management programmes


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Guided by the Waste Awareness Strategy, the Western Cape Government has embarked on various interventions to facilitate improved waste management within the Province. Over the 2019 MTEF, the Province will rollout awareness of waste management and drive recycling/waste diversion programmes; and the implementation of the Western Cape Integrated Waste Management Plan. Additional initiatives include providing municipal support and facilitating regionalisation of waste management facilities; and promoting the uptake of alternative waste management technology which will enable the beneficiation of waste as a resource and improve waste diversion to protect limited landfill airspace.

Integrated human settlements

With regard to Integrated Human Settlements, specific strategies include the drafting of a Western Cape Human Settlements Framework (WCHSF) renamed to Living Cape Framework the compiling of a Western Cape Informal Settlements Support Plan (WCISSP) and the implementation of the Southern Corridor projects. The Living Cape Framework serves as a key decision-making document; as well as a roadmap to guide sustainable, integrated and resilient human settlement development in the Province. This framework focuses on how to effect improvements within the current policy regime, exploring innovative human settlement solutions and identifying possible levers to encourage partnerships with communities and the private sector. It further focuses moving the role of the state from that of sole provider to that of enabler.

Three strategic priorities have been identified, namely the upgrading of informal settlements, the provision of Affordable/GAP Housing opportunities and the prioritising of the most deserving for subsidised housing. The overarching objective of the Western Cape Government is to ensure the resilience, sustainability, quality and inclusivity of urban and rural settlements in the Province. The Informal Settlement Support Plan (ISSP) forms part of the Living Cape Framework, and advocates for a move towards improving the living conditions of people at the places where they stay.

The Western Cape Government will prioritise the implementation of catalytic projects, which include the development of the Belhar Central Business District (CBD), the Airport Precinct, Forest Village, iThemba, Penhill, Kosovo Philippi and Thabo Mbeki and Tsunami, Syferfontein, Thembalethu and Wilderness Heights, amongst others.

The Transit-Oriented Development initiative is aimed at optimising the location of future residential areas for all income groups in relation to economic and work opportunities. In partnership with the

Implementation of catalytic projects prioritised


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City of Cape Town, the Western Cape Government’s work on the Conradie Better Living Model Exemplar Project and the Two Rivers Urban Park projects will progress over the 2019 MTEF.

The Better Living Model Game Changer is a priority project for the Western Cape Government and brings with it the potential to focus on spatial integration and correct the inefficiencies of the past. This Game Changer proposes the development of the 22-hectare former Conradie Hospital site into an integrated, sustainable, and affordable residentially-led, mixed use neighbourhood. The project will provide 1 800 subsidised rental units and 1 800 open market units. In addition to well-located affordable housing, the development will catalyse the upgrade of the surrounding roads infrastructure and public transport, and bring new social services to the neighbouring communities. This multimillion-rand project will be developed through a partnership between the private sector, Western Cape Government and the City of Cape Town.

Spatial and development planning

The Western Cape Government ensures that there is integrated, coordinated and spatially targeted planning and delivery of development. Key focus areas are implementing the assembly, rapid urbanisation, catalytic initiatives and regeneration programmes; the Spatial Development and Infrastructure Support Strategy; the Western Cape Government Rural Development Programme; as well as the Regional Socio-Economic Programme and Violence Prevention through Urban Upgrading Programme (RSEP/VPUU). The implementation of the RSEP/VPUU Programme aims to reinforce the Western Cape Government’s role in providing municipal support for Whole of Society solutions to address socio-economic challenges at the local level.

The rollout of rapid urbanisation and spatial upgrading and social integration initiatives will progress further through the implementation and maintenance of the Western Cape Spatial Planning and Land Use Management (SPLUM) and spatial governance system. Additional focus areas include the enhanced development facilitation and land assembly services; enhanced development planning intelligence management and research; and implementation and maintenance of a responsive Provincial Environmental Impact Management System.

Integrated, coordinated and spatially targeted planning and delivery

Institutionalisation of RSEP/VPUU Programme


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█ Embed good governance and integrated service delivery

Provincial Strategic Goal 5 focuses on transversally supporting the work of the other four PSGs by ensuring effective and efficient system of governance, through enhanced governance practices and a focus on integrated service delivery across the Western Cape Government and with other spheres of government. A guiding principle is that good governance is a fundamental ingredient for business confidence. The Western Cape Government therefore continues to invest in the development and maintenance of an environment and systems that support good governance, connectivity, evidence-based integrated planning and coordinated delivery for maximum citizen impact.

The Western Cape Government’s approach to embed good governance and integrated service delivery through partnership ad spatial alignment is achieved through the following strategic objectives:

Enhanced corporate governance maturity in the Western Cape Government and municipalities (enhanced governance);

Significantly improved stakeholder participation and satisfaction with Western Cape Government services (inclusive society); and

Integrated management and implementation of the Provincial Strategic Plan (PSP) and the Game Changers through partnerships and spatial alignment (integrated management).

Embedding good governance and integrated service delivery is the joint responsibility of the Western Cape Departments of the Premier, Local Government and the Provincial Treasury. Over the 2019 MTEF, R6.599 billion will be collectively dedicated to embed good governance and integrated service delivery.

Governance for Results

The drive and institutionalisation of good governance practices has enabled a shift from governance for compliance to governance for results. In support of this fundamental shift, the Western Cape Government is in the process of developing and finalising the Western Cape Government Good Governance Index (WCG-GGI) which aims to measure the degree to which enhanced governance has been realised at both provincial and local government levels. The WCG-GGI will draw on a set of robust and ambitious indicators across six domains, namely accountability; participation; government effectiveness; transparency; responsiveness; and rule

Embedding effective and efficient governance

Governance for compliance to governance for results


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of law. Within the corporate environment, the relevant focus areas include the improvement of stakeholder and demand management, procurement processes and service chartering, including transversal contract and integrity management.

Within government, evaluations are critical for an objective analysis of the evidence on provincial policies, programmes and projects in order to determine its relevance, effectiveness, value for money, impact and sustainability; and to recommend ways forward to improve service delivery. Evaluations of various initiatives in department will continue over the 2019 MTEF.

Province-wide Data Governance

The objective of Province-wide Data Governance (PWDG) is to drive business performance through better evidence and decisions. The aim is to improve the use and application of Business Intelligence for improved government operations and performance for service delivery improvement. There is a need to improve the use and production of quality data and information for better development outcomes and service delivery. PWDG includes the management of the availability, usability, integrity, and security of data assets. The approval of the Master Plan on PWDG marked the completion of the conceptualisation, design and pre-implementation phases of PWDG. Over the 2019 MTEF, several key initiatives have been identified for implementation. A Data Competency Centre has been established to drive value of data sharing agreements and facilitate coordination across departments. In addition, a Data Office has been established to drive the delivery of the PWDG programme in collaboration with departments.

Integrated management approach and Partnering

The Integrated Management approach seeks to strengthen joint planning, budgeting and the collective impact in a specific policy area, strategic issue or an identified geographic space for service delivery impact. The approach is captured in the Integrated Work Plan, and the practical implementation thereof in the 2018/19 Integrated Implementation Plan.

The mode of engagement across provincial government and with local government resonates with the principles of Whole of Government, Whole of Society, Change Management and Business Continuity as well as Resilience Thinking approaches. As such, the governance arrangements for a Whole of Society approach will be further refined over the 2019 MTEF. Other key deliverables facilitated by this approach over the 2019 MTEF include the finalisation and

Improve the use and production of quality data and information

Strengthen joint planning, budgeting and collective impact


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approval of the 2019 - 2024 PSP and monitoring of implementation thereof, a review of the impact of the Integrated Management approach and the Integrated Work Plan and strengthening partnerships and alignment across the provincial government.

The 2014 - 2019 PSP is in its final year of implementation. The Western Cape Government has embarked on an End-of-Term Review to assess the implementation of the current PSP, as well as an implementation evaluation of the Provincial Transversal Management System, which is the framework within which the Western Cape Government’s PSGs are managed. The Western Cape Government aims to develop a shared purpose and a globally connected and locally relevant approach to policy and planning which will involve further alignment of the PSP with the SDGs, Africa Agenda 2063 and the NDP 2030. Key lessons and recommendations from there reviews will inform future planning in the Province.

Partnerships have been categorised in terms of the following levels -

i. Transversal level (between and within governmental departments);

ii. Inter-governmental level (between spheres of government);

iii. Cross-boundary level (across municipal and other service delivery boundaries); and

iv. Cross-sectoral level (between the public sector and the private sector, civil society or academia). The key success factor of partnering include:

Shared goals, objectives and resources;

Joint activity and efficient/effective use of processes, technologies and systems; and

Integrated governance and collaborative leadership as well as effective communications.

The Western Cape Government envisages to mainstream a Partnering Framework and Methodology (at the provincial and municipal spheres) in order to ensure optimum leverage from and realising of partnering opportunities, in conjunction with identifying feasible future partnering opportunities over the 2019 MTEF. The emphasis will be on building of partnering capabilities and providing systems change and partnering knowledge management, including organisational learning.

Western Cape Government envisages to mainstream a Partnering Framework and Methodology


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Support to local government

A key priority over the 2019 MTEF is the provision of support to local government, based on a differentiated approach and the development of bespoke support plans. The good governance agenda is contingent on improved political and administrative leadership underpinned by values-based leadership i.e. doing the right things for the right reasons which is vital in terms of working towards a turnaround in respect of the Province’s growth agenda.

A further milestone is facilitating adequate preparation for the impending national/provincial government elections. Further areas of support provided by the Western Cape Government is the district-based support approach. This approach aims to drive improvements in supply chain management practices in municipalities, in partnership with district municipalities to enhance local economic development.

Broadband

Phase 2 of the Broadband Initiative has been identified as a key enabler in enhancing the digital interface with the public. This Phase aims to ensure that minimum network connectivity speeds at 100 megabytes per second for all Western Cape Government sites by September 2022 are materialised. A key element is improved data management for decision-making. The theme of balancing maximum service delivery and citizen impact; whilst factoring in the economic, fiscal, environmental and service delivery risks is embodied within PSG 5. The maximising of service-delivery citizen impact is facilitated through efficient/effective use of resources and enhanced citizen-centric accountability.

Service Interface

The promotion of participatory or active citizenry has been identified as a key priority, in line with Whole of Society principles. Several approaches are currently being developed to improve the quality of interaction of Western Cape Government officials with communities, including mainstreaming Community Capacity Enhancement training. The aim is to empower officials with both hard and soft skills and relevant tools to enable more effective community engagement and public participation. Over the 2019 MTEF, further work includes engagement with stakeholders from several Western Cape Government initiatives toward developing a coherent policy approach to community engagement.

The Digital Government Strategy (DGS) vision is geared towards optimising and transforming existing public services and creating new public services for citizens of the Western Cape by maximising

Broadband - key enabler to enhance digital interface to the public

Optimise and transform existing and new public services for citizens


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the value of data assets, digital technology and related human resources. The leveraging of investment in respect of modern platforms such as Opentext, Sharepoint and Oracle are pivotal in order to ensure information and data integrity and security. This leverage is enabled through the infrastructure backbone, namely broadband and cloud technologies.

█ 2018 Adjusted Estimates

Through the 2018 Adjusted Estimates, the Western Cape Government addresses in-year and immediate service delivery challenges, whilst still continuing to achieve the 2018 Main Budget outcomes and principles of allocative efficiency, fiscal sustainability, fiscal consolidation and fiscal discipline. The 2018 Adjusted Budget provides the basis to prepare for the 2019 Main Budget. In total, a net amount of R463.308 million in additional spending is included in the 2018 Adjusted Budget.

The Western Cape recently experienced one of the most severe droughts, as well as various disastrous fires. Included in the 2018 Adjusted Budget is a provision of R327.601 million in this regard. Of this allocation, R277.161 million is from national resources, in the main for fodder relief and the transportation of livestock feed due to the droughts, while a further R50.440 million was added from provincial reserves, inter alia for the fires in the Garden Route and Cape Town areas.

In addition, provision is made for the rollover of 2017/18 unspent funds amounting to R236.700 million to enable departments to continue services in the current financial year, in the main for the following:

R138.396 million for infrastructure related expenditure;

R30.440 million related to information technology (IT) services;

R10.044 million for learner (sport) equipment in the After School Programme;

R30.298 million for health related services, such as the Global Fund HIV and Aids Programme; and

R3.314 million for bursaries at nursing facilities.

2018 Adjusted Estimates immediate response to service delivery challenges, while managing Main Budget outcomes

Provision made to enable departments to continue services


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Departments retain 2017/18 over collected own revenue for once-off pressures in the current financial year. R136.078 million is therefore included in the 2018 Adjusted Budget, in the main R48.325 million for infrastructure related expenditure, R30 million to provide for agency fees regarding the collection of motor vehicle licence fees, and R17.765 million for transport regulation.

The critical importance of people management in the achievement of the strategic goals of the Western Cape Government has been articulated and accepted in the Western Cape Government People Management Strategy. The aim is to ensure structural appropriateness to enable and unlock maximum organisational effectiveness, engender an enabling culture and lead to overall people responsiveness that will translate into continuous service delivery improvement and public value. In response to fiscal consolidation and discipline, the 2018 Adjusted Budget enabled departments to surrender R259.382 million, mostly due to a review of the allocations for Compensation of Employees to ensure more credible budgets.

Policy funding of R32 million has been allocated in 2018/19 to drive service delivery impact and community initiatives which align to delivering on the policy priorities. The majority of this funding is to address various safety initiatives amounting to R26.250 million.

█ Conclusion

The Western Cape Government has taken cognisance of a number of transversal budget and service delivery risks over the 2019 MTEF. The current economic and fiscal environment has necessitated departments needing to consider trade-offs in allocation and reallocation of resources in order to fulfil delivery services that will maximise citizen impact. Through the provincial Government’s Budget Policy, the Western Cape Government will endeavour to shape and drive governance for results, provide an enabling and sustainable environment that will bring economic and social gains for the future.

R32 million has been allocated in 2018/19 to drive service delivery impact

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4 Unlocking economic and social opportunities for maximum citizen impact

In summary

Delivery of infrastructure based on societal and business needs is an economic enabler and leads to growth and job creation.

Infrastructure is the catalytic enabler that fundamentally shapes society, improves access to opportunity, enhances safety, increases mobility, aimed at restoring dignity to the citizens of the Western Cape.

Public procurement has increasingly become the focal point in being considered an effective instrument to drive the socio-economic agenda of Government.

The Strategic Economic Development Infrastructure Company is being established to create and manage catalytic economic development infrastructure projects in the Western Cape.

█ Introduction

The Western Cape Government’s committed path of fiscal consolidation calls for vigilance and improvement in infrastructure budget execution through integrated planning, the formulation of good procurement strategies and strengthening processes for monitoring infrastructure implementation and delivery. Infrastructure investment is critical in promoting economic development, broadening the economic base and raising growth potential, unlocking economic opportunities, promoting job creation and addressing socio-economic needs and challenges facing the citizens of the Western Cape. Over the medium term, the investment in infrastructure aims to maximise citizen impact through government spend, by addressing existing backlogs and capacity constraints in its physical infrastructure and creating a solid foundation for increased private sector participation in fixed investment aimed at expanding productivity, creating jobs and growing the economy.


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█ Unlocking opportunities for growth and jobs in a volatile, uncertain, complex and ambiguous world

Enabling the economy through the delivery of infrastructure based on societal and business needs can lead to growth and job creation. Therefore, an Infrastructure-led growth strategy requires coordinated efforts between the community, public and business sectors to deliver and meet social and economic needs. The importance of infrastructure investment to support growth has been recognised within the Western Cape, hence the unwavering drive in supporting the effective and efficient delivery for maximum citizen impact and service delivery.

Integrated planning

A key component of integration is impactful, citizen-centric service delivery which aims to create public value. At a provincial and strategic level, there is a need to align land assembly and a long-term capital investment framework to the Built Environment Performance Plans (BEPPs), Integrated Development Plans (IDPs), Spatial Development Frameworks (SDFs) and long-term plans of municipalities through a joint planning mechanism. A systematic analytical process which results in a long term integrated provincial infrastructure pipeline, as derived from the User Asset Management Plans (U-AMP) and Custodian Asset Management Plan (C-AMP) and consultation with other spheres of government is envisaged.

█ Strengthening infrastructure investment to support opportunities for growth and jobs

Infrastructure is the catalytic enabler that fundamentally shapes society, improves access to opportunity, enhances safety, and increases mobility, ultimately restoring dignity to the citizens of the Western Cape. Increased investment in social and economic infrastructure will be a focus of economic acceleration over the medium term in response to the national government stimulus package and recovery plan. The Western Cape Government’s Fiscal Strategy is premised on the principles of allocative efficiency, fiscal consolidation, fiscal sustainability and fiscal discipline. Strict adherence to these principles is now bearing fruit and allowed the Province to create a Long Term Financing Plan to support the Infrastructure-led growth strategy resulting in an additional investment of R6.8 billion over the next ten-year period up to 2028/29. The Province plans to spend in excess of R29.5 billion over the 2019 MTEF on infrastructure and associated costs.

Joint planning mechanism to align land assembly and long-term capital investment with long term municipal plans

Long Term Financing Plan to support the Infrastructure-led Growth Strategy


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Maintenance and repairs

The economic life of all asset components and the funding required over the next five years to maintain the portfolio in a condition where the desired level of service is met, is a growing concern for the Western Cape Government.

The performance of capital assets is essential to the health, safety, economic development and quality of life of recipients of these services. Budgetary pressures often impede capital programme expenditure for maintenance and replacement, making it increasingly difficult to sustain the asset in a condition required to maintain expected service levels. The rapid rate of population growth and in-migration places pressure on the maintenance of infrastructure due to the demand of new capital works. A strategic shift in focus toward maintenance of existing infrastructure and consideration of lifecycle costs of infrastructure assets places significant demand on annual infrastructure budgets.

With a strong focus on accurate information on building conditions and lifecycle costing, the Western Cape Government has seen an increase in maintenance funding over the years. The Western Cape Government will continue ‘protecting the asset base’ by increasing maintenance funding to ensure a more balanced allocation across condition categories 1 to 5.

Expanded Public Works Programme

The Expanded Public Works Programme (EPWP) focuses, amongst others, on skills development. It is one of the important ways the Western Cape Government is working toward reducing the levels of poverty and unemployment in the Province. It does this through:

Giving unemployed people access to temporary work;

Helping unemployed people through skills programmes and work experience;

Ensuring that unemployed people receive an allowance for any work they have completed as part of the EPWP; and

Enhancing EPWP participants’ chances of finding jobs or starting their own businesses.

The programme provides short-term job opportunities for unemployed people and aims to provide training for participants to acquire the relevant skills to enter the job market. Over the past five years, more than 300 000 work opportunities were created in the infrastructure environment and in the social and economic sectors

Strategic shift to infrastructure maintenance and lifecycle cost management


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by using more labour-intensive construction and maintenance methods.

Over the 2019 MTEF, the Western Cape Government’s additional contribution to the EPWP totals R99 million to create work opportunities across the social and economic sectors.

█ Construction procurement as a lever for growth and jobs

The Western Cape Government has a mature infrastructure procurement system that is being used as an effective instrument to drive the socio-economic agenda of Government. In this context, the South African procurement reform agenda attempts to balance the twin objectives of:

Good governance and achieving value for money; and

Socio-economic transformation and inclusion.

Key to the Western Cape Government’s procurement focus is making sustainable procurement choices that account for the full value of a service or product over its entire lifecycle, including costing of social and environmental risk and opportunities. Initiatives that were driven through this approach include specific sourcing strategies to improve efficiencies within the provincial procurement environment, procurement planning, localisation of procurement to stimulate regional economic development, supplier development, green procurement, promoting the use of small business in procurement activities, E-procurement and Supplier Database Management, and sustainable procurement. Public procurement will focus on cost effectiveness (including savings), quality assurance, supplier relationships, industry innovation, procurement ethics, supply market analysis and sustainable procurement. The Western Cape Government’s Economic Procurement Policy has the following objectives:

To institute a uniform approach to increasing the economic impact of the public budget spend across departments;

To increase the transparency of public procurement processes, both internally in government and to the public;

To expand the focus of targeted procurement beyond a sole focus on preferential procurement and to include a focus on diversified spatial development and sustainability;

To provide access to markets and increase the participation of Small, Medium and Micro-sized Enterprises (SMMEs), in particular,

Procurement reform aims to promote socio-economic transformation and inclusion


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businesses located in townships, rural areas, and secondary towns.

To continue decreasing procurement red-tape;

To improve information on the challenges faced by all businesses (including those that have never worked with government) in supplying or attempting to supply goods and services; and

In the infrastructure space there has been over the last few years, an intensive drive around contractor development, addressing the shortage in built sector professionals through initiatives of the Department of Transport and Public Works (DTPW), which include the Masak’iSizwe and Artisan programmes, amongst other, all of which have seen a very high success rate, and which will continue to be the focus of DTPW.

█ Infrastructure portfolio, custodianship and delivery

The Western Cape Government owns more than R200 billion worth of immovable assets (land, buildings and roads) for which the DTPW is the appointed Custodian in terms of the Government Immovable Asset Management Act, 2017 (GIAMA). This portfolio of assets is critical to the realisation of the Province’s socio-economic, service delivery and growth objectives. It is of the utmost importance that these assets are properly maintained in order to maximise the return on investment and to preserve these assets for the benefit of future generations.

There will be a continued focus to make the school infrastructure more climate change resilient, by exploring alternative water resources such as harvesting of rain water and boreholes. This will assist schools to reduce their water consumption from municipal provision and as such, reduce their water bills.

Transport and Public Works

All user departments must manage their assets in terms of GIAMA to ensure effective immovable asset management within government and that the value of immovable assets are optimised throughout their lifecycle.

The DTPW is the Custodian of all provincial government properties in the Western Cape, except for those properties allocated to the Department of Human Settlements. As Custodian, DTPW must ensure that user asset management plans are compiled for all immovable assets under its responsibility and that a custodian

Western Cape owns more than R200 billion worth of immovable assets


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immovable asset management plan is submitted to the Provincial Treasury as part of its strategic plan. All activities that are associated with common law ownership are executed, including:

Managing an immovable asset throughout its lifecycle;

Assessing the performance of the immovable asset;

Assessing the condition of the immovable asset at least every fifth year;

Identifying the effect of the condition of an immovable asset on service delivery ability;

Determining the maintenance required to return the immovable asset to the state in which it would provide the most effective service; and

Estimating the cost of the maintenance activities identified.

Property Efficiency

The Western Cape Government published a Property Efficiency Report where 39 selected office buildings from the Province’s real estate portfolio have been monitored with the view to improve efficiency, effectiveness and sustainability in both leased in, as well as owned properties. The efficiencies realised through this process of improved stewardship are contained in the 7th edition of the Property Efficiency Report (PER).

A focus of the Western Cape Government has been to research and develop sustainable delivery practices in order reduce the dependency on non-renewable resources. Through this strategic drive, total electricity consumption in the 39 selected office buildings was driven down by 8.15 per cent to 145.28 kWh/m2/pa which outperforms the industry benchmark by more than 38 per cent and water consumption, was reduced by 24 per cent to 0.69 kl/m2/pa, to mitigate the severe drought, amongst others.

The Provincial building portfolio spans some 8 375 683 m2 with a replacement value of R105 billion. The Modernisation programme has been implemented to realise efficiencies in office accommodation in the Province. As part of the drive to be more efficient and cut the cost of office accommodation (both lease-in and -owned), the Custodian is in the process of implementing its current provincial norms and standards. The Western Cape Government intends to reduce the amount of leased-in office accommodation in the long run by the development of new office accommodation. The intention in the geographical area of Cape Town, is to provide office space closer to the areas where the staff

Western Cape Government strives to reduce the dependency on non-renewable resources


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(mainly head office staff) are staying instead of the central business district (CBD). This will make a positive impact on traffic congestion.

The ongoing work on the Conradie Better Living Model Exemplar Project (BLMEP) as well as the Vredenburg Urban Revitalisation Project aims to leverage the contribution Government can make in both the infrastructure planning and delivery space, while addressing the legacy of spatial planning and the historical disempowerment of communities.

Roads and Transport

The Provincial road network consists of 6 863 km of paved roads and over 25 000 km of gravel roads. The total replacement value of the roads portfolio is R143 billion, excluding bridges and culverts.

Road infrastructure is a vital, strategic asset and is a prerequisite for social and economic development. Furthermore, the roads are critical enablers of the Western Cape economy. Given the nature of roads infrastructure, the focus on maintenance i.e. protecting the asset base, will be maintained. A focus will also be on the re-graveling of the gravel roads which in some cases are in a very poor state.

Taking this and the Infrastructure-led growth strategy into account, the 2019/20 Roads Asset Management Plan emphasises the prioritisation of an asset preservation strategy over the long term to maximise the value of assets over their lifecycles. Where new roads investment is made, it will be where it best supports economic growth. The Province continues to direct its available resources to the most economically critical roads. Notable progress has been made on several major road projects aimed at supporting economic growth and investment in the Western Cape.

These projects include:

Addition of a 3rd lane to the N1 at Durban Road Interchange;

Extensions to the road network in support of the Saldanha Bay IDZ; and

N1/N7 interchange upgrade.

General Buildings

Eighty per cent of the building portfolio consist of assets dedicated to education and health service delivery, and whilst the departments of Education and Health have been allocated the budget for new construction and maintenance, the DTPW performs the function of delivery within the parameters of the Western Cape

Investment in maintaining road infrastructure is vital toward social and economic development


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Infrastructure Delivery Management System. The remaining portfolio, the general building portfolio, consisting mainly of office accommodation for the Western Cape Government, is managed and funded by the DTPW.

Education

The Western Cape Education Department prioritises the needs of learners that are not currently accommodated for through the User Asset Management Plan over those learners currently accommodated for in terms of the Norms and Standards. In an attempt to eliminate backlogs, the following strategies have been adopted:

Building new schools in areas where the highest pressure is felt;

Meeting Norms and Standards, adding classrooms and other facilities (halls, laboratories, libraries, connectivity and eLearning, etc.) at existing schools where land is available;

Providing temporary accommodation, usually in the form of mobile classrooms in “hot spot” areas;

Moving excess demand to nearby under-utilised accommodation schools;

Replacing inappropriate school infrastructure; and

Maintenance of schools.

Accelerated delivery of schools in poorer areas

Great strides have been made since the inception of the Accelerated Schools Infrastructure Delivery Initiative (ASIDI) that has been implemented to replace a number of inappropriate school structures with newly built schools.

Health

The Western Cape Government continues to build on the Healthcare 2030 strategy that is underpinned by a patient-centred, outcome based approach where patient experience and health outcomes are primary focus areas and geographically-centred approach for investment is strongly advocated.

The benefit of having clear spatial and adjacency norms for Public Health Care (PHC) facilities, regional and large metro hospitals, Forensic Pathology Laboratory (FPL) facilities and ambulance stations enable, the Western Cape Government to focus over the 2019 MTEF on rural district hospitals. Furthermore, a set of technical

Accelerated delivery of schools in poorer areas

Population growth in the Province places pressure on health facilities


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memoranda; ICT systems, access control, CCTV and fire prevention, water conservation and recycling in healthcare facilities are now being implemented where relevant on all projects. Additionally, the gap in infrastructure provisioning is underpinned by a rigorous mechanism as well as sound service need analysis.

Lifecycle costing principles are key to prioritising maintenance of facilities. Recently constructed health facilities are supposed to receive the necessary funds to ensure appropriate ongoing maintenance.

The Western Cape Government has recognised the risks posed by climate change with the following initiatives to reduce the carbon footprint:

Gradual elimination of wasteful steam reticulation systems;

Implementation of building management systems to ensure energy is not wasted;

Revision of air conditioning systems to reduce heating and cooling loads;

Introduction of speed controls on fans and pumps for reduction of energy consumption; and

Installation of high efficiency water to water heat pumps.

Social Development

The Western Cape Government is committed to providing (in partnership with stakeholders and civil society organizations) social welfare services to the poor and vulnerable. This entails providing sustainable development programmes that facilitate empowerment to a growing population that faces ever-growing needs. Specific infrastructure being implemented so as to achieve service delivery objectives include the Child and Youth Care Centres (CYCCs) and maintenance of Early Childhood Development (ECD) facilities to achieve full registration. The following CYCC’s will be prioritised over the 2019 MTEF; Outeniekwa, Clanwilliam, Bonnytoun, Vredelus, Horizon, Lindelani, De Novo CYCC/Substance Abuse Treatment Centres and Kensington Substance Abuse Treatment.


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Human Settlements

The Department of Human Settlements is the Custodian of social housing. Given the constrained fiscal environment, the Western Cape Government intends to maximise citizen impact through prioritising the following key programmes:

Increased focus on the Upgrading of Informal Settlements Programme in pursuit of the creation of dignified and conducive settlements;

Amplifying the delivery of free subsidised housing to the most deserving citizens;

Increasing affordable housing opportunities in order to provide shelter for people who earn too much to qualify for free subsidised houses and too little to qualify for bonds. A partnership strategy, particularly with financial institutions, will be integral in unlocking this market;

The roll out of catalytic and provincial priority projects at scale; and

Ensuring security of tenure through the title deed restoration programme.

Upgrading of Informal Settlements Programme

The Province has concluded the Informal Settlement Support Plan (ISSP), which aims to provide a clear roadmap on how to address the challenges faced by residents of informal settlements in a systematic way. Therefore, more resources have been shifted into the upgrading of informal settlements to broaden access to basic services. To date, the Province has prioritised the upgrading of seventy-one (71) informal settlements, which includes high growth potential towns such as Paarl, Grabouw, Robertson, Heidelberg, Ceres and Mossel Bay. In this regard, eight NGOs have been appointed to assist in the participatory planning processes. Furthermore, consulting enterprises have been appointed to undertake investigations on geotechnical, civil and structural services that needs to be provided to develop the settlements.

Prioritising the most deserving

The Province will continue to prioritise the delivery of fully developed housing units to the vulnerable groups, disabled persons and those who are of the age of 35 and above.

Priority areas for Human Settlements include the upgrading of informal settlements, ensuring security of tenure, and the rollout of catalytic and provincial priority projects


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Affordable Housing

While affordable housing initiatives in the Cape Metro is continuing, planning for the acceleration of affordable housing outside of Cape Town is gaining momentum. Social Housing Restructuring Zones have now been gazetted in 11 non-Metro Leader Towns, which will provide significant impetus within key central rental housing precincts. Municipalities are now focusing on establishing formal social housing partnerships, which will facilitate sustainable relationships through streamlining access to resources.

Furthermore, the Province has partnered with financial institutions and commenced with a rehabilitation programme to benefit potential beneficiaries.

Catalytic projects programme

The following projects are in full construction phase and reflect the number of human settlements opportunities:

Southern Corridor: 51 540 opportunities

Transhex: 8 873 opportunities

Vlakkeland: 2 653 opportunities

Belhar: 4 188 opportunities

George: 10 281 opportunities

Conradie Hospital: 3 605 opportunities

Provincial Priority Projects

Dal Josafat: 2 078 opportunities

Ceres (Vredebest and Bella Vista): 3 417 opportunities

Grabouw: 8 000 opportunities

Louis Fourie: 4 000 opportunities

Vredenburg Urban Regeneration: 1 400 opportunities

De Novo: 300 opportunities

Greater Retreat: 7 500 opportunities

Greater Hermanus: 3 500 opportunities

Du Noon: 11 000 opportunities

Hout Bay: 1 400 opportunities

Bokaap, Oranjezicht, Inner City Infills: 10 000 opportunities

Leonsdale: 2 000 opportunities

Scottsdene: 668 opportunities


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Security of tenure

The Province has since 1994, registered 247 058 title deeds, of which 43 399 was registered since 2014. In doing so, beneficiaries have been granted security of tenure and asset wealth. The Title Deeds Restoration Team strives towards establishing an enabling environment for municipalities as implementing agents to address the backlog by making funding available, providing GIS capabilities and inculcating a sense of reporting on title deeds registered and issued.

CapeNature

The absence of rain brings sharply into focus the importance of maintaining a steady flow of clean, potable water from mountain catchments to the people of the Western Cape to sustain livelihoods and its economy. The importance of the maintenance and restoration of ecological infrastructure (rivers and streams, wetlands and estuaries) associated with mountain catchments can no longer be underestimated and this is where the contribution of CapeNature is to be recognised.

CapeNature is a Schedule 3C public entity responsible for nature conservation in the Western Cape and manages nature reserves that amount to 824 056 hectares. The purpose is to develop and promote access to a diverse range of tourism products and maintain the tourism products in a way which contributes to the sustainable management of biodiversity. Infrastructure for CapeNature extends beyond staff and office accommodation, and includes stores, tourism facilities, hiking huts, roads, bridges, fences, jetties, amongst other. Over the 2019 MTEF, CapeNature will continue to invest in the maintenance of existing facilities and the investment in new revenue generating infrastructure.

█ Infrastructure Delivery Management and improvement

In 2001, a National Treasury review of infrastructure service delivery systems recommended that a framework be developed to guide and structure the management of infrastructure delivery, resulting in the development of the One Infrastructure Delivery Management System (IDMS). Four versions of the IDMS and supporting Toolkits have been developed since the first release in 2004, moving from an initial infrastructure project management focus, to that of an infrastructure asset management focus.

Maintenance and restoration of ecological infrastructure is important


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In the Western Cape, a Framework, Instructions and Standards for Infrastructure Delivery was adopted by Cabinet, clearly defining the key roles and responsibilities of all parties responsible for the delivery of infrastructure as set out in Table 4.1 below.

Table 4.1 Provincial Treasury Instruction 16B

Maintenance type

Service area

Health facilities Education facilities Transport infrastructure

Social rental housing stock

Accommodation (office,

residential, etc.)

Scheduled Department of Transport and Public Works

Department of Transport and Public Works

Department of Human Settlements


Routine

Department of Health - appropriate workshop, located within specific hospitals or central workshops located across the Province

Overseen by Education Department but prioritised, managed and implemented by the school itself or by a contractor appointed by Education Department

Institution or Department of Transport and Public Works

Day-to-day Department of Health or Department of Transport and Public Works

Institution or Department of Transport and Public Works

Emergency Department of Transport and Public Works


To improve infrastructure delivery in the Province, the Western Cape Government will embark on a process to review the current IDMS model.

█ Infrastructure policy priorities

Catalytic Infrastructure

Over the 2019 MTEF, the Western Cape Government will place a particular focus on the development of the provincial economy and the creation of employment opportunities through further development and expansion of key catalytic economic infrastructure. Infrastructure investment is critical for ensuring the effective functioning of the economy and investment in key catalytic economic infrastructure enable and enhance economic growth that underpins increased economic benefits for the Western Cape.

Frameworks, Instructions, and Standards for Infrastructure Delivery adopted by Cabinet


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Saldanha Bay Industrial Development Zone

As introduced in Chapter 3, the development of the Saldanha Bay Industrial Development Zone (IDZ) will continue as a key driver of the Project Khulisa’s Oil & Gas and Marine Engineering sector. The first elements of the customised infrastructure of the Oil & Gas and Marine Engineering hub are in place in Saldanha Bay. The IDZ is playing a catalytic role to unlock the industrialisation potential of the West Coast, and Saldanha Bay in particular.

The port of Saldanha Bay is largely a greenfield, opening up the area for potential development. The region has the capabilities to service a range of vessels and equipment in offshore and maritime sectors, with a strong value chain supporting the water-based activities. Offshore and maritime sectors hold much more potential for transformative and sustainable impacts on the local economy through leveraging extensive value chains. However, a limitation in Saldanha Bay exists, namely the skills and services that are necessary for these sectors which are not readily available in the local region.

The Saldanha Bay Integrated Development Plan Support Group and Ministerial Mandating Committee coordinates development initiatives in the region, which includes Enterprise Development, Education and Skills Development, enabling infrastructure and other social services. Through the Ease of Doing Business model, the IDZ aims to address the causes hindering investment, business growth and economic growth. A world class proactive way of operating in the zone and the port that makes doing business easier for stakeholders will be addressed by facilitating:

Easy to operate: Freeport mode;

Easy to invest: simplified investor procedures;

Easy to plan and cost: serviced land;

Easy to deliver to customers: skilled labour and quality suppliers;

Easy to new entrants: incentives; and

Easy to grow business: land and quayside infrastructure.

The IDZ will expand on socio-economic responsibilities within the region, through the Whole of Society approach and Integrated Management approach within the provincial and local government spheres.


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Atlantis Special Economic Zone

The Atlantis Special Economic Zone (SEZ) has been designated for the manufacturing of green technologies and related services to the Zone. The Atlantis SEZ has a green technology focus and received its designation in 2018. The Atlantis SEZ will be the initial focus of the Special Economic Development Infrastructure Company (SEDIC). The SEDIC is being established to drive multiple infrastructure programmes.

The focus over the 2019 MTEF will be finalising the institutional arrangements for the establishment of the Atlantis SEZ and SEDIC itself; completion of a 5-year strategy and business plan; and the completion of the SEDIC legislation process. The SEDIC will develop and hold critical large-scale infrastructure for economic development. The primary purpose will be to drive economic returns in line with the broader Provincial economic strategy and sectoral objectives; and to ensure that key economic infrastructure platforms are developed to enhance competiveness, support private sector investment, and expand and create jobs. Over the medium term, SEDIC identified the following objectives:

Developing and managing the Atlantis SEZ;

Facilitating and conceptualising future catalytic infrastructure projects, e.g. Cape Health Technology Park and Aerotropolis (expansion of the Cape Town International industry economic hub led by the Airports Company of South Africa);

Creating an infrastructure-based investment climate;

Supporting sustainable communities;

Engaging stakeholders and partners;

Keeping abreast of market and investor needs;

Creating an effective and accountable organisation; and

Strengthening economic growth and job creation.

Digital Government Strategy

As introduced in Chapter 3, citizens are increasingly demanding that government transform its services and improve access to and quality of services and information. These rising expectations are fuelled by the 4th Industrial Revolution that is posing significant threats to the service delivery domain of the Western Cape Government. More importantly though, it also presents the Province with limitless opportunities to improve service delivery to the citizens,


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enhance decision-making and planning and to optimise and consolidate existing initiatives and projects.

In response to the citizens’ demands and the 4th Industrial Revolution, the Western Cape Government has developed a Digital Government Strategy that aims to digitally empower citizens, improve the citizen experiences when engaging government, improving governments business processes, digitally empowering employees and strengthening capabilities to optimally utilise and manage data.

As the appetite for digital transformation is high, digitalisation of business processes will continue to grow at an accelerated rate. However, delivery of digital government at scale requires resilient, stable and sustainable capabilities at the infrastructure (inclusive of Broadband), Information and Communication Technologies (ICT) Operations, security and systems levels. In the context of a constraint fiscal environment, careful balance between transformation and optimisation is required.

The Western Cape Government Digital Transformation Plan, which is the implementation plan for the Western Cape Government Digital Government Strategy, is therefore geared to deliver on the capabilities or building blocks required by the Province to mitigate the threats and to exploit the opportunities of the 4th Industrial Revolution. This plan is currently in consultation phase, which will bring together all provincial and departmental initiatives and guide the prioritisation, consolidation and optimal use of ICTs towards creating impactful citizen value and experiences. Total investment over the 2019 MTEF amounts to R1.4 billion.

█ Conclusion

The Western Cape Government remains committed to unlocking economic opportunities. It is recognised that infrastructure development and maintenance are pivotal to promote economic development, underpinned by the principle of Infrastructure-led development. The central aim is to ensure maximum citizen impact through government spend, by addressing existing backlogs and capacity constraints and encouraging private sector fixed investment to expand productivity, create jobs and grow the economy. Infrastructure is recognised as the catalytic enabler which has the potential to shape society, improve access to opportunity, enhance safety and increases mobility. It is acknowledged that the challenges posed by the state of the construction industry, climate change and associated risks will have to be managed very carefully to limit the possible negative impact on service delivery, economic growth and job creation.

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Glossary Brexit The United Kingdom’s prospective withdrawal from the

European Union is widely known as Brexit, a portmanteau of “Britain” and “Exit”.

Child (Under 5) mortality The probability of a child born in a specific year dying before reaching the age of five, expressed per 1 000 live births.

Division of revenue The allocation of funds between the spheres of government as required by the Constitution.

Fiscal policy Policy on taxation, spending and borrowing by government.

Framework/envelope A framework for integrating fiscal policy and budgeting over the medium term by linking a system of aggregate fiscal forecasting to a disciplined process of maintaining detailed medium term budget estimates by ministries reflecting existing government policies.

Gross domestic product (GDP) The total market value of all goods and services produced within the borders of a nation during the specified period.

Indirect grant A grant allowing a national department to perform a function on behalf of a province or municipality. No funds are transferred, but the end-product of the grant, such as infrastructure built, is generally transferred to provincial or municipal ownership.

Infant (Under 1) mortality The probability of a child born in a specific year dying before reaching the age of 1 year, expand per 1 000 live births.

Maternal mortality The death of a woman while pregnant or within 42 days of termination of pregnancy, irrespective of the duration and site of the pregnancy, from any cause related to or aggravated by the pregnancy or its management but not from accidental or incidental causes. Measured per 100 000 live births.

Medium term Expenditure Framework (MTEF)

The three-year spending plans of national and provincial governments published at the time of the Budget.

Provincial Equitable Share The allocation of nationally raised revenue to provincial government as required by the Constitution.

Provincial own receipts Refers to taxes/fees and/or user charges, which a provincial department receives.

medium term budget policy statement 2018 - western cape€¦ · foreword the western cape 2018...

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