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Speaker and Deputy Speaker,
Members of our Provincial Legislature,
Honourable Premier,
Representatives of Local Government,
Distinguished guests,
Ladies and Gentlemen:

"The best thing I can do for the poor is to try hard not to be like them."
Anonymous.

It is an honour for me to rise today to talk to the leaders and citizens of Mpumalanga Province about our plans for the budget year 2000/2001.

The budgeting process is more than just numbers. It is about the ability of Government to help all our people through the delivery of effective programs and services at reasonable and fair fees and recoveries.

It is about building a stronger province and a more secure future for individual citizens of our Province. Meeting these objectives requires the setting of priorities and at times demands the ability to make tough decisions.

The Government has over the past six years invested heavily in social and economic priorities while consistently following prudent and careful management of expenditures. I am pleased this afternoon to present a Budget that continues to respond to the needs of the people of our Province. A budget that establishes an agenda of opportunity for the future.

Budgets, by their very nature, must be forward thinking and forward looking documents.

This Budget is about opportunity and optimism. It is about providing a better standard of living for all the people of our Province. It is about responsible Government and charting a strategic course to guide our people into the new millennium. It is about setting a vision for Mpumalanga to prosper within the challenging global economy.

However, before we continue with this presentation, a picture needs to be painted, depicting the environment in which we plan and operate.

Since 1994 the social transformation reshaping our country has placed us in a unique position in the Global Village. We are seen by the world as a country that can play a critical role in resolving new and long standing conflicts.

We have earned this reputation because of the way we have resolved our political impasse. This has convinced the world to invite us to make contributions in finding solutions to some of the long standing political disputes around the world. Examples of these are:

* our contribution to resolving the Irish conflict,
* the mediating role our former President is playing in the Burundi conflict,
* the mediating role in bringing the Lockerbie bombing suspects to court,
* the military and political intervention in the Lesotho conflict,
* the conflict resolution role in the DRC,
* the involvement in helping resolve Zimbabwe's economic crisis,
* the assistance being rendered in transforming the political and economic climate in SADC countries.

Why are we called upon to help others resolve their differences? How did we achieve the successful transition to a democracy in South Africa? What is our secret?

Our secret is our ability to accept that despite our past differences, we are now able to accept the reality that we are one nation and firmly on the path to nation building. The ability to reconcile our historical political conflicts and our ability to embrace democratic principles as demonstrated by the way we crafted our celebrated constitution is our secret for success.

The calls for assistance has made South Africa a role model of transformation that is used by the first world in resolving many of the socio-political and socio-economic issues confronting the emerging world. A world that the first world exploit for their own benefit, without any understanding of the real issues underlying the differences of opinion.

We as South Africans need to be proud of our many achievements since we walked the first significant step to democracy in 1994. We have come a long way and have moved from the backwaters and shadows of being nondescript into the mainstream of the global village. This in its own right demands a new level of responsibility and conformity on most aspects of politics, economics and culture as shared by the developed world.

This then brings us to the issue of analysing what in fact is happening on the international front that will shape our economy and political horizon in the future.

Mr. Speaker, the Global Scenario in which we operate presents our main challenge.

THE INTERNATIONAL SCENARIO

We need to sit up and take note. The world has changed and the traditional national state has lost its sovereignty. With the advent of Globalisation, the nations of the world are expected to act in unison.

Those with the power play the tune, and the rest of us are obliged to dance. In this regard it is important that we understand the expectations and demands of the first world and their agencies, including bodies such as the IMF, the World Bank and the G8.

Simultaneously, there is a need for us to ensure that our democratic principles are not eroded and that the rule of law becomes paramount if we are to become an active participant in this global mould. It is important to realise that the economies of the world are now driving the political order and in many respects these economies are in term driven by multi-national corporations.

When world corporations speak, the political world is obliged to listen and understand the implications of the various messages. This is imperative if we are to attract foreign investors to our shore.

Let us therefore examine some of the phenomena that drive this global world.

A 24-hour World

We are faced with the reality of a 24-hour world, which has now become virtually borderless. This 'borderless' phenomenon implies that there are very few restrictions on national and economic boundaries and the larger order of global intrusion and co-operation supersedes anything that might have been the status quo of earlier times.

To quote an example, it is now a fundamental reality that the economic clock operates 24 hours a day and prior to our financial markets opening, the Far East has already been trading between 6 and 10 hours and when business closes in South Africa, the United States and South America are only beginning their day. We are therefore part of the decision-making that goes ahead of us while we are still asleep, and follows us once we retire for the evening.

With the demise of distance, there is no such thing as a 'local market' any longer. The players, wherever they may be in the world, cross borders at any time of our day or night and impact on everything from the political decision-making to the fundamental economics affecting us.

The Reality of Turbulence

One of the hallmarks of this 'borderlessness' is the intrusion of the Turbulence that confront different parts of the world and are now woven into the very fabric of political and economic decision-making in our continent, country and province. Issues such as competitiveness, mobility of capital, trading blocks, multi-national intrusion, national self-interests, environmental concerns, improved IT, health issues, market intrusions and so forth are part of the Turbulence which will not disappear but instead continue to affect our strategic decision-making at every level.

It is critical, therefore, that the various stakeholders understand the nature of this turbulence. More importantly, they must be equipped to manage it on a pro-active basis in order to reduce its negative impact on the local economy.

A very good example of poor management and unpreparedness for Turbulence was the recent Asian economic meltdown. It took South East Asian countries by total surprise and required more than two and a half years of corrective action to re-establish some kind of equilibrium. To top this, Japan is still 'in the woods' with the latest Moodys and Standards & Poor's indexes still down-rating Japan's financial standing in the world.

Trading Blocks - The Notion of Elephants and Ants

One of the critical issues of Turbulence is the nature and ever-changing coalition of trading blocks. Presently, the major blocks are NAFTA, EU, APEC, MECCA SOEUR, ANDEAN PACT, CHINA and in a smaller way, SADC. India remains outside the fold of recognised formal trading blocks.

What is of paramount importance regarding these trading blocks is that they nurture and advance the interests of their particular members, irrespective of what the World Trade Organisation and GATT may prescribe as ground rules for fair trading.

It is important to recognise that there are both Elephants - sometimes more commonly referred to as 'big Gorillas' - and Ants in this arena. What is patently obvious is that the Elephants call the shots with very little tolerance for interference by the Ants.

When the Elephants dance the Ants get out of the way. The only sensible strategy for the Ants is to act less like Ants and more like little Elephants. In the world context, South Africa is an Ant, while in the African context, it can be regarded as a very dominant Elephant - often much to the discomfort of the rest of the Continent.

Sometimes, one feels that there is a degree of Xenophobia from our neighbouring countries about South Africa and its dominance. It may be said, incidentally, that many feel our Government has an excessive sense of loyalty towards the rest of the sub-Continent, which often is detrimental to our economy. A living example is the Zimbabwean economic crisis and Sasol's intervention in supplying fuel to the Mugabe Government. The flood of economically deprived refugees who continuously cross our borders in order to seek a better life in South Africa further illustrates the point.

The Phenomenon of Hyper-Competition

Hyper-competition has become the order of the day with very few restrictions being placed on the big Elephants. This has placed many of Africa's, and especially South Africa's in particular, traditional industries and activities under threat.

South Africa's gold, steel, textiles, agriculture, wine and spirits, diamonds and mining activities are less attractive as investments since the bench-marks for price and quality are now being set by countries in other trading blocks. It has become critical for the South African economic community to compete in this very efficient marketplace. Countries such as Australia, Chile and Ghana are setting the benchmark for gold production costs and beneficiation.

Germany, France, Spain, Greece, Chile and the USA set the benchmark for the wine and liquor industry. Note the recent controversy surrounding the use of the terms Port, Ěraca, Ouzo and Champagne in South Africa's bid to negotiate an EU bilateral trade agreement. The benchmark for fruit and vegetables is being dictated to a large degree, by the new entrants, Columbia, Argentina and Mexico.

The textile benchmarks are largely being set by China, Taiwan, Indonesia and Malaysia.

A Winning Mindset

South African business has learnt that to survive in this hyper-competitive market, the only solution is to move to greater degrees of efficiency, quality control and consumer awareness.

Naturally this implies that we as an economy will need to concentrate on increasing, developing and nurturing whatever skills are necessary for new levels of efficiency. In this regard there is no place for complacency in our market place.

The increasing phenomenon of cross-national investments and the concurrent mobility of capital that accompanies this in a 24-hour world, requires a major Mindset shift on the part of Government and business in South Africa.

From this cross-national pollination, with the accompanying role of the multi-nationals, it is becoming apparent that the various economies are becoming more driven by business and less by governments. This is a clear signal that the role of government across the world is starting to change and that governments should take cognisance of the significance of business in shaping wealth creation.

The World Trade Organisation in its recent meeting at Davos, Switzerland, emphasised the critical responsibility of business as a key role-player in growing economies and alleviating poverty around the world.

The Impact of the Information Age

The advent of the information age has created a Mindset that enhances the arguments for a 24-hour world, and in particular, the role of the Internet in E-commerce. The impact of this phenomenon is just beginning to be felt and certainly South Africa cannot escape the further intrusion and turbulence that this new medium will have on the economy and business in this country.

Not only is capital moved around electronically, but goods and services are now being traded on South African screens - in businesses and homes - from as far afield as Alaska, Indonesia and Saudi Arabia, thereby presenting direct competition for local producers and the economy at large. Again, South African businesses will have to be ready to meet this new form of hyper-competition.

Government in its own right needs to develop a Mindset of 'Can Do' or else the economy could be under siege within a very short time. The Zimbabwean example is particularly relevant having come from a 7.2% GDP growth in 1996 - almost double that of South Africa's 4.2% recorded in the same period, to a negative 1.7% in 1999.

There are many other examples of Governments and economies in South East Asia, Latin America and Eastern Europe that have been unprepared for the competitive onslaught. On the other hand, Uganda has developed a counter-cyclical approach and has shown a consistent growth-rate of over 6% per annum in recent years.

SOUTH AFRICA WITHIN AFRICA

In terms of the global order we are required to create stability, democracy and upliftment of the poor. We have to find African solutions for Africa's problems.

It is imperative to achieve regional stability, if South Africa is to prosper and continue to serve as a 'locomoter' for sub-Saharan Africa. President Mbeki's continuous emphasis on the African Renaissance can only become a reality if the region is living in relative peace and adopts a Mindset of co-operation and economic integration. South Africa is able to and should be encouraged to expand its bi-lateral trade programmes with the rest of Africa.

We are reminded in this regard of the call by President Mbeki in his year 2000 State of Nation Address to assist in uplifting Africa, and I quote:

"we should devote the Year 2000 that is upon us, to do everything that needs to be done to ensure that by its end, we see our entire Continent at the ready to join in a powerful movement of the peoples of Africa for the realisation of Africa's century."

The Government is committed to this goal and will do everything it can to ensure that it is realised. In this regard, we also call on all our people in their various formations to respond to our call.

The current instability in Angola, DRC and Burundi are not conducive to prosperity and wealth creation for the future. In Zimbabwe, the current economic and political unrest further jeopardises the future for economic growth and stability.

South Africa, therefore, has to take a leading role in attempting to stabilise these positions without necessarily becoming militarily involved. The constant stream of economic and political refugees is becoming an increasing problem for our country.

This will be reversed if stability can be achieved in the countries from which these refugees flee.

SOUTH AFRICA AND THE WORLD

South Africa is the dominant emerging market in Africa. With a population of 42 million and a GDP of R 708,4 billion the scene is set for South Africa to continue to act as the "locomoter" for the continent well into the future.

There are some fundamental issues that have to be addressed in order to achieve the dream of becoming first and foremost a continental player and secondly, becoming significant on the world stage. These are;

* Re-payments on the national debt, which currently drains our budget at a rate of more than 5% of GDP per annum, have to be eradicated.
* The civil service needs a major rightsizing.
* The advent of Private Public Partnership has arrived and needs to be accelerated.
* GEAR must be implemented to its fullest extent.
* The issue of job creation is critical if we are to avert the unemployment time bomb.
* The ethos of work ethic needs to become part and parcel of the fabric of our society.
* Attention to the development of human resources is critical to the future.
* The brain drain needs not only be stopped, but also permanently reversed.
* There must be a strong partnership between government and communities in order to kick-start a vibrant economy.
* A policy of zero tolerance for crime needs to be implemented.
* Upliftment of the poorest of the poor is fundamental to future stability and growth.
* The principle of upholding the rule of law needs to be enhanced, with corruption and fraud becoming our main enemy in the administration and business alike.

Our recent past has proved to us that it is possible to create a level of social transformation that is driven by economics. We are made to believe that the economic cake is fixed in size and that we can't demand more than our fair share of this proverbial cake. The answer to our demands therefore lies in us mixing and baking a bigger cake, thereby causing new levels of wealth creation for all our people to share.

The Nkomazi District sugar cane project in the Underberg, developed with participation by government, communities and the private sector is a good example of what can be achieved over a relatively short term. This is but one of many examples of how the size of the cake can be enlarged.

Apart from the economic drivers addressed in the above, there are a number of other critical issues that also need to be understood and addressed.

Economic Growth

An international economic growth factor of 4.5% in the USA and in excess of 3% in Europe does not automatically mean that South Africa will be a beneficiary. We have to work very hard at earning our stripes.

Although we are projecting a 3.5% - 4.5% growth in the year 2000 it is very important that we understand the rules of competition and urgency. The focus has to be on value adding and creating strategies that will establish the perception of South Africa as the real 'locomoter' of sub-Saharan Africa and SADC. In this regard it is important to note the following:

Slowdown in exports and consumption

Weak growth and an unrelenting drive to reduce the budget deficit before borrowings since 1997, reflects a marked slowdown in private consumption expenditure and consumption expenditure by the government. Export performance has been depressed since mid-1997, while imports have continued to grow, although more slowly than in previous years.

Strong public sector spending

Gross domestic fixed investment expanded strongly in 1998. Investment by public corporations has increased sharply, mainly as a consequence of Telkom's infrastructure investment programme.

Private investment spending declined in the second half of 1998 and is expected to remain depressed. Public sector investment spending will continue to grow this year, as the infrastructure and service delivery programmes of public corporations and government departments gain momentum.

Prospects for improved growth

Against this background and taking into account continued international uncertainty, growth projections for the next three years are subject to considerable risk. However, there are strong signs of improving prospects in the world economy.

South Africa is well placed to take advantage of stronger international growth. A recovery of inventory investment, increased private consumption spending and improved export performance are expected to be the leading propellants of economic growth in 2000 and beyond.

The depreciation of the Rand has contributed to improved competitiveness for South African exports. A reduction in the interest rate to a prime of 14.5% has now improved the position of this economy to grow in a robust fashion - an anticipated 3.5 - 4.5% this year, with some economists arguing that even 8% may not be an unreasonable target in the medium term.

Slowdown in inflation

The restrictive monetary stance has also contributed to dampening the impact of the depreciation of the rand in 1998 and 1999 and the effect thereof on domestic inflation. The rates of increase of both consumer prices and the production price index were only moderate after April 1998. The real stability came from both price trends that responded only mildly to increases in import prices.

Consumer price inflation averaged 2,2% in 1999 while production prices increased by just 7,2% over their average 1998 level. These are the lowest annual increases in prices since 1973 and 1970 respectively.

The prices of consumer goods and services are expected to increase by an average of 6.8% in 2000 and are anticipated to fall to 4.3% in 2001. For the 2000/2001 fiscal year, Minister Trevor Manuel has targeted the consumer price index at 3 to 6% in his budget speech to Parliament on 23 February.

Employment and labour market developments

Unemployment remains South Africa's most formidable economic challenge. The most recent official estimate puts unemployment in 1999 at 22.9% of the work force. If discouraged work-seekers are added to the total, the "expanded" unemployment rate is now 37.6%.

The official non-agricultural formal sector employment series indicates that employment has consistently fallen since 1994, despite a 10% expansion in real output of the economy.

Increasing productivity and real wage trends

Economic growth has been achieved through productivity improvement, but not increased employment. Increased labour productivity has in turn contributed to average annual increases in real wages of about 3.2% since 1993. A significant redistribution of income in favour of the working poor has been achieved in the labour market over the past five years.

The depreciation of the rand has contributed to improved competitiveness for South African exports. A reduction in the prime overdraft rate from its highs of 25,5% at the height of the Asian Crisis to a current level of 14.5% has now improved the position of this economy to grow in a robust fashion - an anticipated 3.5 - 4.5% this year.

The Core Issues

There are a number of core issues that need to be enshrined in the national Mindset if we are to achieve stability and sustainable growth into the future.

Democracy

The hard-won democracy must be safeguarded at all costs while at the same time working hard at maintaining rigorous discipline in our country.

Economic Growth

It is important that we have very strong fiscal policy objectives and a balanced approach to spending on public services. Furthermore, we need an efficient tax structure and a moderate level of borrowing. This is already in some way being achieved by the latest economic policy objectives that have been set by the Minister of Finance in his Budget Address to Parliament. Sound public finances play a key role in sustainable social and economic development in the country.

Inflation Targeting

As mentioned earlier, inflation targeting has become a reality with the Budget 2000 projecting a 3 - 6% figure.

Taxation

An important issue is to encourage wealth creation while simultaneously ensuring social and economic development for all. The taxation net needs to be spread wider with sufficient incentives for the investor and professional community.

The present Budget 2000 has started this process by reducing the tax at the upper bracket from 45 to 43% and increasing the threshold at which the marginal rate kicks in from R 120,000 to R 200,000. Furthermore, the taxation on small business has been reduced considerably. For example, for businesses of R100,000 or less, this has been reduced to 15%.

Ideally, the high income group should be incentivised to re-invest for further economic growth and development instead of looking for loopholes in the system, or working less in order to avoid excessive taxation. The Chilean model of 15% flat tax is worth investigating.

GEAR

It is important to further accelerate the GEAR policy in order to ensure that it assists in propelling the economy to new heights.

Civil Service

The importance of lean light government can never be underestimated.

It is vital that the Civil Service be output driven and that the rewards-base is linked to value-added performance from officials. Every country turnaround has been hallmark by the attention to reducing the size of the civil service bureaucracy and downsizing the role of government in the mainstream of the economy.

In countries like Argentina, government is essentially responsible for creating the framework in which the free-market can function and the rest is left to business and entrepreneurs. The results are very clear to see. The starting point for a renaissance in the Civil Service must surely lie in the structure being moved from a vertical type organisation to a horizontal value-chain, output driven and result orientated design.

Labour

Labour needs to remain flexible and reasonable in its wage demands and availability. Market forces should essentially determine expectations and training.

The migration of jobs from the developed economies, e.g. textile jobs from USA to Malaysia, serves as a warning that capital will only invest in territories where it can find a reasonable return on its investment. The recent turbulence at Volkswagen in the Eastern Cape and the subsequent negative impact on the parent company and other potential investors serves as a stern warning to Government and labour in South Africa as to the effects of unnecessary labour unrest.

Education and skills

The world is moving towards vocationally relevant education and skills training in order to equip the learners for the reality of the marketplace. It is critical that we follow this model and move away from educational systems that are anchored in the past.

There is a world-wide groundswell building up, focused on de-emphasising investment in brick-and-mortar, for example school buildings, government office buildings and other fixed assets and to rather concentrate on spending those resources on the acquisition of intellectual capital.

Crime

Much has been said about this very disturbing phenomenon. It is essential that the law-abiding citizens unite to enable the authorities to break the vicious cycle, which is destroying much of the economic potential in our country. A very vigorous and tough approach is needed to break this ferocious cycle.

There is enough significant international research indicating the highly negative impact of violence, physical and verbal, that is constantly projected on TV and other media.

Audiences, children in particular, are influenced to such a degree as to warrant a serious re-think about the responsibility of the public broadcaster and other media outlets regarding crime, violence and an erosion of traditional and family values.

Health

It goes without saying that this must be a priority. With issues such as the aids crisis, a concerted effort should be undertaken to deal with conditions of critical proportions both in the rural and urban areas of our province.

Upliftment of the poor

We should investigate ways of utilising the multiplier effect on enhancing the impact that cash resources allocated to the upliftment of the poor could have by using it for creating sustainable self-sufficiency rather than the traditional handout approach, which tends to perpetuate dependency on the state. There are many examples in developing countries such as India, Peru, Brazil and China where the State must provide the wherewithal to help people help themselves.

This is the old story of teaching someone to fish rather than handing them a fish. The Kibbutz and co-operative movements are good examples of what has been done elsewhere to create self-sufficiency and upliftment among the poorer section of the community.

Freedom of movement of capital

The hallmark of strong economies throughout the world has been the free movement of capital in and out of those economies. Where investors, both local and foreign have felt the comfort of being able to invest and disinvest as opportunity arises, they are more likely to make significant investments in those economies than situations where capital and dividends get locked in. South Africa needs to adopt a foreign exchange control policy that is able to align itself with those of the most successful emerging economies in the global village.

THE STRATEGIC FOCUS FOR MPUMALANGA

Within the context of the greater South Africa, Mpumalanga Province has the potential for becoming a dominant economic player in the sub-region, given the reality of its vast human capital and diversified resource base. We have up to now established a good track record in developing clinics, schools, hospitals and road in the rural areas, thereby bringing the benefits of economic success to the poorest of the poor.

In general, Mpumalanga Province has a number of vital economic assets in the form of manufacturing, mining, agriculture, forestry, tourism and services. With a GGP contribution of approximately R 55 billion in 1999, contributing 8,4% to the total GGP for South Africa, the sectoral contributions were as follows:

* Manufacturing: 24,9% of nominal GGP and 16% of formal employment;
* Energy: 20,3% of nominal GGP and 2.8% of formal employment;
* Mining: 20,2% of nominal GGP and 20% of formal employment;
* Agriculture and Forestry: 14,2% of nominal GGP and 17,7% of formal employment; and
* Services: 19,8% of nominal GGP and 22,9% of formal employment. The balance of GGP and formal employment was generated by general activities.

In order to harness these assets it is imperative that we follow a number of fundamental strategies all of which have been tried and tested in a diversity of successful economies around the world. Although we understand that Mpumalanga Province is an integral part of the greater Southern Africa, its unique geographical position gives it a decided advantage on the path to the future - the Maputo Development Corridor project being a very good case in point.

Major forward movement can only be achieved by constantly questioning the present paradigms and, where they are less than efficient, replacing them with leading edge processes.

The strategies that need to be applied in order to make Mpumalanga a foremost economic player within the context of South Africa and its neighbours will now be discussed.

The Importance of a Vision for the Province:

A critical starting point in re-focusing Mpumalanga Province for maximum performance is to create a vision which is not only relevant for current performance in the province but more especially meets critical needs for the future. A mechanism that has proved to be very successful in both companies and countries alike has been to involve all stakeholders in the creation of this vision.

The use of mini-think-tanks in which participants from business, local and central government, the communities, investors, the faith community, educationists, health workers and any other stakeholders in formulating and propagating this vision, under the guidance of an experienced facilitator, has proved to be highly successful.

The raising of a consciousness about the direction-finding among all members of Mpumalanga community will not only ensure involvement and buy-in, but more importantly, can act as an energiser for achieving this vision. The media should be harnessed in full force to assist in this crucial nation-building initiative. The power of national and regional radio is particularly relevant in this regard.

Once the vision has been established, the next move is to disseminate not only the essence but also to ensure an action-based programme for achieving ownership by all the stakeholders. The various stakeholders will each bring their particular value-added contribution to the Vision that collectively should be extremely powerful in moving Mpumalanga into a role of economic leadership in the region.

The various stakeholders will specify what assistance they need from the government to achieve their contribution towards the Vision.

Light and value-added Government:

The scene is set at a National level for a substantial reduction in the size of the Civil Service. Commensurate with this will be a movement towards output-based Performance from officials.

In addition, the Public Finance Management Act comes into operation in April this year, setting a strict financial management and control framework. Aspects regarding this important piece of Constitutional Legislation will be highlighted later in my presentation.

For the government of Mpumalanga, the implications are that lean, light and effective government will now be a primary requirement. In addition, the focus must be on value-adding and maximum return on investment for the resources deployed.

Structure of the Civil Service:

Fundamental to the re-positioning of the Civil Service is the development of an organisational structure that will be more relevant for performance and adding value. The present vertical format needs to move towards a value-chain design. Corporate silos need to be replaced by a highly integrated process in which various departments and functions add value to each other in order to achieve the vision for the Province.

The focus must be on minimising the internal politics and sweating the given assets and resources as hard as possible. Furthermore, Government must get out of the way of business and preferably concentrate on providing the climate and environment in which established business, SMMEs and various community players can get on with the process of moving the economy forward. This must be done without abdicating government's responsibility to protect the poor and vulnerable.

Establishing specific niches:

The reality of globalisation demands that Mpumalanga Province identify those particular economic niches for which it has the core competencies. It should seek areas where the market needs are of such a nature that the particular activities will be economically viable and add value to the provincial and national economy.

With the advent of the Maputo Corridor, it now becomes possible to add a number of other dimensions including beneficiation processes for converting raw products into value-added processed goods.

Tourism:

Of significant future potential is the tourism industry. Developing facilities for experiencing authentic African traditional life and culture as well as extending the facilities of the National Parks, Eco-tourism, trout farms, water-sports, hiking, caving, and a host of other possibilities, present great potential for an innovative tourism industry in Mpumalanga, particularly given the specific geographic and resource-based assets of this region.

According to a study conducted by the United Nations, the world's 613 million tourists now spend about US$440 billion a year. A compounded growth of 335% is expected for the next five years. Eco-tourism is the swiftest growing sector and Africa as a region is experiencing the highest growth of 7.5%.

It is generally reckoned that for every eight tourists visiting a particular destination, one permanent job is created. The inherent potential for extensive tourism in this region has hardly been explored.

It must, however, be noted that tourists are very selective regarding their destinations and the slightest insecurity arising from crime or political instability can very severely damage the flow of tourists to any destination. A good example is the downturn of tourists to the Western Cape as a result of the bomb-blasts that have occurred there in the past year.

It is interesting to note that Kenya has taken a very strong stance on the crime issue and anyone responsible for harming tourists receive the harshest penalties, including the death sentence. This keeps Kenya a relatively safe destination and the positive impact on the Kenyan economy is patently obvious.

Education:

Mpumalanga with its unique blend of capital and labour as well as a 38% unemployment rate needs to find specific answers to education and skills training. The focus is already squarely on vocationally oriented education with a greater part of the budget being allocated to training in commerce, science, technology, agriculture, wildlife husbandry and tourism.

The emphasis must be on preparing candidates for the world of work so that they can become immediately economically active and independent. In this regard, training in entrepreneurship would also be extremely useful, as it would start to feed the whole SMME market.

The emphasis must be on self-sufficiency and the ability to create jobs via innovative small business. The tourism industry lends itself perfectly to this purpose.

Agriculture:

There is currently a great emphasis on agri-business with a potential for Mpumalanga to play a major role as part of the "bread-basket" for Africa. It goes without saying that farming is a great creator of jobs, particularly for the semi and unskilled labour force.

To create labour stability in this economic sector, finding solutions to the problems between farm owners and farm labour, often leading to forceful evictions and brutal murders, needs to receive urgent attention. Joint ventures with the Mozambican agricultural industry also present enormous opportunities.

The environmental issues:

It is critical for Government in the Province to put a high degree of emphasis on pro-actively maintaining and enhancing the environment. Much of the future tourism potential will depend on the ability of government to ensure a high degree of integrity on this issue.

Environmental education is needed at all levels to ensure the success of such a strategy. Let us not forget that we are only the custodians of the environment and that we need to safeguard against its exploitation for the sake of future generations.

Entrepreneurship:

Much has already been said about the role of the entrepreneur and the SMMEs in stimulating economic growth and job creation. Government should search out every possibility for achieving the maximum impact of entrepreneurial leadership in the region.

It is not inconceivable that regional incentives could be created to encourage the migration and start-up of SMMEs to the Mpumalanga Province. In the USA, it is common practice for individual States to offer various incentives to draw entrepreneurial expertise to a particular region. Invariably, the results have been extremely satisfying.

Creating a "Can Do" Leadership

It is imperative that the total strategic initiative for Mpumalanga Province, be driven by a proactive leadership with a "can do" Mindset which focuses on ensuring the upliftment of the province through determining new forms of wealth creation. This can only happen if we pay detailed attention to the issues that were raised earlier:

* Creating a vision for the Province.
* A movement away from entitlement to value-adding.
* Harnessing intellectual capital.
* Encouraging the development of entrepreneurs and SMMEs.
* Creating lean and value-adding Government.
* Encouraging curiosity and lateral thinking.
* Engaging the market.
* Aggressively addressing crime and corruption.
* Providing a relevant future-oriented education and skills training.
* Tapping into specific niche markets.
* Soliciting new national and international investment.
* Beneficiating raw resources.

By paying urgent attention to these issues Mpumalanga Province will provide the basic Mindset for sweating the assets that are inherent to this province. The economic impact and the wealth creating capacity for all will become more than apparent once this has been actioned. This will prove to be a win-win for all the stakeholders involved.

MANAGEMENT OF THE BUDGET AND MTEF

Past budgetary performance has proven to us that we can only successfully implement our plans if we are realistic. We cannot survive on the priorities of the past, in addition to the priorities set by the government of the day. We can only implement our socio-economic plans if we are matching our resources to our plans.

As a result of the implementation of the Public Finance Management Act, continued focus will be given to key risk areas within the provincial government. Attention will be given to the following preventative measures already established and those to be implemented shortly:

Monthly Bi-lateral meetings with departments

Bi-lateral budget planning meetings was established between the Treasury and provincial spending agencies during 1998 and successfully continued with during the 1999/2000 financial year. The successes of these meetings will be measurable through the outcome of the 1999/2000 budget, which is currently on track. Early projections point towards efficient control and financial prudence in expenditure. We plan to continue with this management tool.

The introduction of the Public Finance Management Act

The Public Finance Management Act gives effect to various sections of the Constitution of the Republic of South Africa. These sections inter alia require national legislation to establish a National Treasury, to introduce generally recognised accounting practice (GRAP), to introduce uniform treasury norms and standards, to prescribe measures to ensure transparency and expenditure control in the national and provincial spheres of government, and to set the operational procedures for borrowing, guarantees, procurement and oversight over the various

National and Provincial Revenue Funds.

Mpumalanga Provincial Departments were previously governed by the Mpumalanga Provincial Exchequer Act (No 1 of 1994). Other provincial public entities are governed by legislation passed by the Provincial Legislature. Financial accountability was undermined by the fact that different legislation applied to different entities. Furthermore, previous legislation regulating financial affairs was narrowly focused on expenditure control rather than on sound financial management.

The Public Finance Management Act adopts an approach to financial management that focuses on outputs and responsibilities rather than the rule-driven approach of the Exchequer Acts.

This Act also assumes that the political head of a department is responsible for policy matters and outcomes. This includes seeking provincial Legislature approval and adoption of the line-function budget vote.

The head of a department is responsible for outputs and implementation, and is accountable to the Legislature for the financial management in the implementation of that budget. This approach is in line with the approach of the new Public Service regulations, which relies on a performance-driven system based on measurable outputs.

The Act is part of a broader strategy on improving financial management in the public sector. The Act itself assumes a phased approach towards improving the quality of financial management in the public sector.

This Act lays the foundation for the first phase, as it focuses on the basics of financial management, such as the introduction of proper financial management systems, appropriation control and the accountability arrangements for the management of budgets. Subsequent phases will focus on the efficiency and effectiveness of programmes and best-practice financial management. These can only be systematically introduced after the basics of financial management are in place.

This Act replaces or overrides the national and provincial Exchequer Acts, and supersedes any other financial management provisions in other Acts, although all current Legislation, Regulations and Instructions remains in force until repealed.

The Purpose of the Public Finance Management Act (PFMA) is:

* To regulate financial management in national and provincial governments, institutions, entities and enterprises.
* To ensure that all revenue, expenditure, assets and liabilities are managed efficiently and effectively.
* To stipulate the responsibilities of persons entrusted with financial management.
* To provide for any other matters connected with financial management in government.

The Penalties imposed by the Act

Mr. Speaker,

The Public Finance Management Act is not without teeth. It contains five sections dealing with very specific penalties if any official overstep his or her authority or responsibility.

Individuals will be held accountable for their actions.

To that extent I urge you to study section 86 of the Act very carefully. Its title is very aptly introduced as:

"Criminal Proceedings - Offences and Penalties".

To emphasise the importance of this section of the Act, I quote from section:

1. An accounting officer is guilty of an offence and liable on conviction to a fine, or to imprisonment for a period not exceeding five years, if that accounting officer wilfully or in a grossly negligent way fails to comply with a provision of section 38, 39 or 40.

2. An accounting authority is guilty of an offence and liable on conviction to a fine, or to imprisonment for a period not exceeding five years, if that accounting authority wilfully or in a grossly negligent way fails to comply with a provision of section 50, 51 or 55.

3. Any person, other than a person mentioned in section 66 (2) or (3), who purports to borrow money or to issue a guarantee, indemnity or security for or on behalf of a department, public entity or constitutional institution, or who enters into any other contract which purports to bind a department, public entity or constitutional institution to any future financial commitment, is guilty of an offence and liable on conviction to a fine or to imprisonment for a period not exceeding five years.

Budget composition and Capital based infrastructure spending

This year forms a reversal of the trend in recent years where spending on personnel cost were replacing capital expenditure in the budget of the Province. Expenditure on capital will amount to 8,6% in the 2000/2001 fiscal year, while personnel and other current expenditure will constitute 56,1% and 16,3% respectively. Transfer payments will amount to 18,95% of the provincial budget.

Skills enhancement in the administration

As much as it is true that no army can function without supplies, no administration can be efficient without highly skilled and well-equipped officials running the core function of financial management and control. We will shortly conduct a comprehensive analysis of the skills available in the administration. Upon completion of the exercise, we will plan a strategy to enhance the financial and other management skills required to maintain an efficient and decisive administration.

THE 2000/2001 BUDGET AND THE MTEF TO 2002/2003

The total budget for the 2000/2001 financial year amounts to R 6,93 billion. This amounts to an increase of 7,9% on the Adjusted Appropriation for the 1999/2000 financial year presented to the Legislature earlier this month.

Provincial Spending Plans

Since the introduction of the 1997/98 budget plan, the first on which the Provincial Legislature fully participated, the allocation of funding for social priorities increased significantly. This re-prioritisation of expenditure is putting extreme pressure on other functions, of which the lack of spending on roads is the most significant.

The following key focus areas informed the allocation of funding in this budget:

Social Services

Both the Reconstruction and Development Plan and the Mpumalanga Growth and Development Strategy establish social service delivery as one of the key objectives in transforming society. It further focuses firmly on the development of human resources and the upliftment of the quality of life for all our people.

With this guiding principle, Mpumalanga Government is allocating R 5,226 billion of the proposed budget to spending on the three main social services, Health, Welfare and Education. This amount increases to R5,620 billion in 2001/2002 and R 5,900 billion in the 2002/2003 financial year.

Economic Services

Expenditure on economic services in Mpumalanga forms the backbone of development in the province. Continued expenditure in this sector was identified as a priority. Economic development is key in ensuring that the people of Mpumalanga are provided with jobs and long-term security. It is also essential to maintain spending in this sector to develop the tax base of the province further.

Expenditure on economic development functions amount to R 299,3 million or 4,3% of the total budget in year one, R 384,1 million in year two and R 410,7 million in year three.

Safety & Security

To ensure optimal safety and security both for the economy and the community of the province, the Department of Safety and Security, in close co-operation with the South African Police Services and traffic provide a framework of protection in the province.

Expenditure on this important function, amounts to R 79,4 million in year one, R 77,9 million in year two and R 95,8 million in year three of the multi-year budget framework.

Infrastructure Development

In as much as infrastructure is created for economic purposes, it also contains a strong social presence. The Province is implementing new road developments in rural areas, which were previously not serviced by a comprehensive road network.

Although considerable damage was caused in almost all areas of the province by the recent floods, the Province will continue to maintain and build new roads to service the rural communities.

The total expenditure incurred to upgrade existing and develop new infrastructure amounts to R 401,1 million in 2000/2001, or 5,8% of the provincial budget. This amount increases to R 454 million in 2001/2002 and R 521,4 million in 2002/2003.

Conscientious Governance

Bureaucratic red tape breeds inefficiency. We were elected to our positions to deliver to the electorate. The electorate needs value for money and the best service money can buy. Inefficiencies in bringing service to the people need to be eliminated and a sense of pride and effective governance needs to be ingrained.

An amount of R 416,6 million or almost 6% of the budget is allocated for good governance practices in the 2000/2001 budget. The amounts for 2001/2002 and 2002/2003 grows to R 460,7 million and R 741,7 million respectively.

It is important to note that an amount of R 200 million in the first year, R 302,1 million in year two and R 428,6 million in year three is included in this budget relating to conditional grants to other departments in the province.

Revenue

Budgeted revenue for the 2000/2001 financial year amounts to R 6,933 billion. Our equitable share of revenue collected nationally amounts to R 6,8 billion, or 97,3% of our total funding requirement to fund this budget.

Own revenue sources are budgeted to contribute an amount of R193 million, or 2,7% of our funding needs.

CONCLUSION

In his address at the opening of the legislature, the Honourable Premier stated his objectives clearly. In following the path that he prepared, the Treasury realises that it has an enormous challenge ahead.

Our objective with this budget is to create the framework for a vibrant and prosperous province where all the people of Mpumalanga can enjoy a superior quality of life and are confident about the future for themselves and their children.

Distributive economics increasingly channelling funding to the social service sector has become the focus of this administration. With almost 80% of our funding being channelled to enhancing the quality of life of our citizens, one cannot but call this a redistributive budget.

To strengthen the South African economy we decided to follow a path of tight fiscal management and reduced deficit spending. To meet the global deficit targets set by us, budgets at all levels of government have been curtailed during the past six years. The good news is that we are not only on our way towards meeting these targets, but that we are almost there.

To effectively discharge our responsibilities within the tight fiscal and monetary control measures that were introduced, we are faced with tough decisions. There is no room for luxuries. In our strive towards implementing the objectives of the RDP, only the most efficient choices can be accommodated.

Honourable Speaker, this budget is not the product of one individual. In arriving at this product, I am deeply indebted to the following people:

* The Premier for his decisive leadership and unfaltering support since his appointment in June of last year;
* Colleagues in the Executive Council that understand the necessity for and accepting stringent fiscal management;
* The Chairperson and Members of the Standing Committee on Public Accounts for the good working relationship with the Department to assist in strengthening public accountability;
* The Director General and the Heads of Department who implemented policies and programmes under extremely difficult circumstances;
* The Strategic Planning and Development Unit for their support in the Budget Task Team;
* The Office of the Auditor General for the pro-active manner in which he provides assistance to all Heads of Department and the Treasury to enhance financial controls;
* Our partners in the Provinces of North-Rhine Westphalia in Germany and Alberta in Canada, as well as GTZ and the IDRC for their continued support in enhancing the skills of our financial managers in government;
* Our private sector partners, the banking sector and other donor agencies for the valuable inputs in our capacity building programmes; and
* The management and staff of my department who often worked long hours to make this product a reality.

Honourable Speaker, Members of the House, I hereby table the 2000/2001 budget and Medium Term Expenditure Framework of the Mpumalanga Province to you for consideration.

I thank you.

Issued by Mpumalanga Provincial Government, 29 February 2000