“Time to Push Forward”

1. Introduction

We have been hit hard by the pandemic, and although there are a number of significant downside risks, we do expect a gradual economic recovery in the Western Cape.

We welcome the recent announcement by President Cyril Ramaphosa to relax restrictions, especially those restrictions that relate to the tourism and hospitality sector in the Western Cape.

We regard relaxing restrictions as a step in the right direction that will support economic growth and job creation in the Western Cape.

We are already, in fact, seeing the green shoots of economic recovery in our province with traveller confidence returning, with more than 125 000 international passengers, and more than 462 000 domestic passengers, arriving last month at Cape Town International Airport.

Which is very good news for the tourism and hospitality sector, which has been so hard hit by the pandemic in the Western Cape.

We now need national government, itself, to push forward and to allow the national state of disaster to expire in South Africa.

2. “A Budget to Push Forward”

We tabled “A Budget to Push Forward” last week in the provincial parliament in the Western Cape.

We did so:

• to sustain the fight against the Covid-19 pandemic;
• to support our strategic priorities, including “Jobs”, “Safety” and “Wellbeing”;
• to protect frontline services, including education, health and social development;
• to improve the composition of expenditure by boosting spending on infrastructure;
• to support vulnerable municipalities;
• to improve the efficiency of expenditure by improving value for money in procurement;
• to mitigate existing risks such as drought, fire and flooding, and also to mitigate new risks; and
• to ensure the long-term fiscal sustainability of the Western Cape.

To push forward:  

• we will spend R19.6 billion over the medium term on “Jobs”; 
• we will spend R4.4 billion over the medium term on “Safety”;
• we will spend R111.3 billion over the medium term on “Wellbeing”; and
• we will spend R30.3 billion over the medium term on infrastructure in the Western Cape.

Because we have been prudent in the past, and because we have taken the hard decisions necessary to balance our budget, we are now in a position to allocate R10.1 billion more over the medium term in the Western Cape.

So, to push forward:

• we will spend an additional R6.2 billion over the medium term on education;
• we will spend an additional R2.4 billion over the medium term on healthcare;
• we will spend an additional R136 million over the medium term on social development; and
• we will spend an additional R2.6 billion over the medium term on infrastructure in the Western Cape.

We will spend this budget across five districts and thirty municipalities in our province including:

• spending R8.7 billion in the Cape Winelands District;
• spending R3.8 billion in the West Coast District;
• spending R6.4 billion in the Garden Route District;
• spending R2.8 billion in the Overberg District;
• spending R989 million in the Central Karoo District; and
• spending R54.2 billion in the City of Cape Town.

We, finally, also hold about R1.3 billion in the provincial reserves to mitigate future risks such as flooding, fire and drought in the Western Cape.

3. Conclusion

To push forward, we will have to respond to the massive spending pressure building up across all provinces in South Africa.

However, there are significant downside risks to the economic outlook including:

• stagnant economic growth, with the national economy forecast to grow over the medium term at an average of about 1.8%;
• huge fiscal deficits of R386.6 billion in 2022/23, R323.6 billion in 2023/24 and R304.2 billion in 2024/25;
• staggering national debt of R4.5 trillion in 2022/23, R4.8 trillion in 2023/24 and R5.2 trillion in 2024/25; and
• massive debt service costs of R301.8 billion in 2022/23, R334.9 billion in 2023/24 and R363.5 billion in 2024/25.

To be honest, the most worrying figure was a figure dropped into the budget speech by the Minister of Finance, Enoch Godongwana, himself, who revealed, for the first time, that a staggering R308 billion had been wasted on bailing out failing state-owned enterprises in South Africa.

Think about it, we have wasted R308 billion on bailing out failing state-owned enterprises in South Africa.

To put that number in perspective, R308 billion, which has been wasted on bailouts, is:

• 11 times more than the provincial education budget; 
• 10 times more than the provincial health budget; and
• 134 times more than the provincial social development budget for the next financial year in the Western Cape.

So, we are in deep economic trouble and to make matters worse, the war in Ukraine will increase the downside risk and push up prices of petrol, wheat, and fertilizer in the South Africa.

What this means, in the end, is that provincial budgets are not likely to increase in real terms and that spending pressures building up in education, health and social development are going to put huge pressure on provinces across South Africa.

Which is precisely why we will be investing in a project to better understand future fiscal trends so that we ensure the fiscal sustainability of the Western Cape.

In the end, we tabled “A Budget to Push Forward”:  

• so that we give hope to people who do not have jobs, and so that we give hope to people who feel unsafe;
• so that we give hope to people who struggle to reach their full potential, and so that we give hope to people who do not have access to good schools, clinics, and roads; and
• so that, in the end, we can get up, so that we can get out, so that we can push forward, and so that we can do even better in the Western Cape.