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INTRODUCTION

Honourable Speaker, Mr SW Lubisi
The Premier, Mr NJ Mahlangu
Executive Council Members
Honourable Members of the Legislature
Distinguished Guests
Ladies and Gentlemen

Kegley, et al, (1995), contend that " Gross National Product is the common measure of economic well-being throughout the world and is closely bound up with human welfare". They went on to say "that the stronger the economy the greater the contribution to human welfare."

They further maintain "A rise in a state's economic output has different consequences for people currently living in poor societies compared to those in rich societies. For the inhabitants of most Third World countries, growth in GNP may mean more food, better housing, better education, and an increased standard of living."

Honourable Speaker, what Kegley and his colleagues point out, particularly in the latter part of their statement, as government, we cannot agree with more.

The challenges of poverty alleviation and the stimulation of economic growth and development have preoccupied this government since its inception.

The government took difficult but essential policy choices over the past seven years to ensure that the socio-economic transformation process moves forward.

Looking back at the road traversed by the democratic government so far, one can without any equivocation say that much ground has been covered. Undoubtedly, the sound macroeconomic fundamentals that we ultimately managed to put in place have enabled us to score some gains around the areas of, inter alia, housing, health services, social services, education and infrastructure development.

Although there are visible signs of progress in certain areas of work, one must quickly indicate that the challenges still lying ahead are enormous. Therefore, given the limited resources at our disposal, we must ensure that we utilise such resources as efficiently and effectively as possible.

Guided by these objectives alluded to above, this budget that we table here today, re-affirms our unwavering commitment towards building a better life for all South Africans, particularly the poor. It is a budget that is about government and the people of Mpumalanga Province working together, since building a better life for all is basically a challenge the government shares with business, unions, communities and ordinary people.

It is a budget that, as President Thabo Mbeki puts it in his State of the Nation address when opening parliament early this year, in a very practical way demonstrates the determination of our government to push back the frontiers of poverty and unemployment and expand access to a better life.

Like the national budget delivered by the Minister of Finance, Trevor Manuel, on the 20th of February 2002, this budget also gives priority to, among other things,
* improving services to all communities;
* providing a free basic level of services like water and electricity to every household;
* creating jobs where we live;
* strengthening safety and security in our communities; and
* combating the proliferation of HIV/AIDS and other diseases in our society.

ECONOMIC OUTLOOK

Similar to the national budget, this budget is also making intervention in support of development and the alleviation of poverty, including growing the economy in a sustainable manner.

According to many analysts, economic growth in South Africa has slowed down to 2,2% in 2001 from 3,4% in 2000, well short of the 3,5% average forecast for the next three years. This decline, as many commentators have pointed out, is mainly attributed to the looming global recession. Advanced economies are expected to grow by 0,6 % this year in a comprehensive slowdown in global economy.

Since South Africa is an open economy, our province is also affected by these global economic activities, especially being a major exporter of quite a number of products. The decline of the Province's Gross Geographical Product (GGP) from the expected 3,4% to 1,7% in 2001, as DRI WEFA figures indicate, reflects our vulnerability to global economic activities.

This sharp decline, as the Reserve Bank's Quarterly Bulletin issued in December 2001 contends, is as a result of the slow down of output throughout the main production sectors of the economy, but was particularly severe in agriculture, mining and manufacturing. However, despite this slowdown, the mining and the manufacturing sectors in our Province were not adversely affected.

Economic growth in South Africa is expected to reach 2,3% this year, showing an increase of 0,1% to the 2,2% in 2001. With the expansionary budget that the Minister has crafted, one is optimistic that we will see signs of improvement in our economic growth rate.

The Reserve Bank's Quarterly Bulletin indicated above also reports " although inflation moved lower in the third quarter of 2001, there are signs of potentially faster future increase in the aggregate price level. In particular, there are concerns about the potential second-round price effects of the depreciation in the exchange value of the rand "

Economists expect inflation to be at an average 6,9% in 2002 before coming back in line with the Reserve Bank's target range of 3% to 6% by 2003 - a function that will be performed by the budget of course.

Following the depreciation of the rand both exports and inward investment are expected to strengthen in 2002 and the years ahead. South Africa's balance of payments and public finances look healthy, providing a firm foundation for sustainable growth and development.

Honourable Speaker, looking at the few different indicators alluded to above, there is no doubt that our economy is heading in the right direction. This is an overall product of government and the people of South Africa working together to create a better life for all. Therefore, this Budget seeks to strengthen that partnership in socio-economic development.

BUDGET FRAMEWORK

2001 Budget outcome

In its 2001/02 budget, the province received an amount of R7,2 billion from equitable share and R1,124 billion as conditional grants, giving us a total of R8,330 billion to stimulate economic growth and development, including the alleviation of poverty facing our people, particularly the most vulnerable sectors of our communities.

With more emphasis put on prudent management by the Provincial Government, coupled with financial boost from the National Treasury to clear our backlog, we could safely say that the financial situation of the Province has, to a large extent, stabilised. In essence, the financial situation of the Province has improved remarkably.

The fact that the 2001 budget shows a possible surplus for the Province - a result of, inter alia, the implementation of the Public Finance Management Act which represent a fundamental break from the past regime of opaqueness, hierarchical systems of management, poor information and weak accountability.

Departments and other statutory bodies tread with extra caution as they put the Act into action. As you will understand, there is no one who wants to go behind bars. I am telling you, people are very careful nowadays to append their signatures on documents that they have not gone through with a fine comb first.

But we hope that this situation will improve as the months go by because government has also identified capacity building on financial matters as one of its key priorities - a process which is already underway.

Despite all the difficult challenges that faced this government during the year under review, we have managed to raise own revenue to the tune of R220 million, which is R27 million above the set target of R193 million.

Honourable Speaker, there is a cause to celebrate this achievement. Allow me to take this opportunity to express my sincere gratitude and applaud all those men and women for working so tirelessly, individually and collectively, not only to reach the set target but also to surpass it with a telling margin. As government, we are grateful indeed for the extra mile that you have taken when the gauntlet was thrown down at you. Dr John M. Tibane, in his book, 'Do it.... Because You Can' puts it even better when he says, " If a man does only what is required of him, he is a slave! The moment he does more, he is a free man ". I hope that this is not the end of the beginning but the beginning of the end.

There is still room for improvement, especially around areas such as car registration and hospital levies. If we could jerk up our capacity to collect those levies at hospitals and intensify the car registration programme, our own revenue margins could expand.

With the help of institutions such as the GTZ, which is currently working on a better revenue collection system for the Province, one is convinced that there will be improvements recorded in this area of work.

What one must quickly indicate is that there are already beneficiaries of the money collected so far. The big chunk of this money was apportioned to seven of the eight parastatals within the province, with Mpumalanga Economic Empowerment Corporation getting the lion's share - a clear demonstration on the part of government of its unwavering commitment to the development of emerging enterprises, particularly aspiring entrepreneurs from the previously disadvantaged communities.

2002 Budget priorities

Honourable Speaker, the 2002 budget builds on the foundation created by the 2001 budget. It seeks to consolidate the strides made so far and also advance both the national and provincial priorities.

The equitable share of R8,428 billion received from national plus the R687,508 million of conditional grants, including the forecast R195 million own revenue, which all in all gives us a total revenue of R9,311 billion, which represents a 6% increase to the previous budget.

Evidently, this increase will add impetus to the implementation programmes of the priorities put forward by the Premier in his state of the Province address in this Legislature on the 15th of February 2002.

Fundamentally, the 2002 budget gives priority to:

* economic growth that will lead to development and job creation
* effective and efficient financial management and control
* efficient and effective administration, and
* integrated rural development

Expenditure proposals

Following the principle of the 85:15 ratios in the appropriation of the equitable share to the different areas of government work - a target that we have not reached as yet but working towards it, we have directed a big chunk of our resources to social services departments. By the way, the 85:15 ratio principles simply mean that 85% of the budget must go to social services and the other services sharing the remaining 15%.

Taking into account the low skills base faced by our province and the poor matric results of last year, the need for investing resources in human capital development becomes more pressing than ever before.

Undoubtedly, to grow a competitive economy in the new economic world order you need, inter alia, a skilled labour force that will be equal to the challenges of globalisation.

It is extremely imperative that we develop proficiency in Information and Communication Technology (ITC) among our people, especially the youth and students. The fact that most of our schools, particularly public schools in townships and rural areas have no access to computers, even those that do, are not connected to Internet, must be a concern to all of us, both individually and collectively. The initiative taken by Microsoft in this regard, as indicated by the President in his State of the Nation address, will without doubt assist a great deal in exposing our children to the world of information technology.

It is in this context that the education department receives a lion's share of this budget. It is allocated an amount of R3,7 billion in 2002/03, which represents 41% of the total budget, R4 billion in 2003/04 and R4,3 billion in 2004/05.

Between 1996 to 2000, DRI WEFA's income distribution forecasting model shows that the percentage of people of the Mpumalanga Province living in poverty has escalated from 6% to 10% - an increase caused largely by the high rate of job losses in the formal sector of the economy, so it is argued.

As part of addressing this challenge, the Minister of Finance, Trevor Manuel, has increased spending on welfare services and social security grants. From the first of April this year, pensioners and helpless children would be receiving an extra R50 and R20 to their monthly social grants respectively.

This size of the increase despite the limited resources at our disposal demonstrates how sensitive the democratic government is to the needs of the poor.

Taking cue from the national government, we also give priority to poverty alleviation programmes.

The Department of Social Services is allocated an amount of R1,970 billion, which represents a 23% of the total budget, R2 billion in 2003/04 and R2,2 billion in 2004/05 financial years.

Honourable Speaker, the challenge of providing and improving access to health care for all our people is still with us. The seriousness of the HIV/AIDS pandemic, tuberculosis and other opportunistic infections in the Province cannot be overemphasised. The figures are quite alarming.

Being rated high on the poverty scale compared to some provinces in the country render us even more vulnerable to all sorts of diseases. Therefore, in our quest for a better life for all, we need to provide resources for improving the capacity of government to deal with health issues holistically, particularly diseases such as HIV/AIDS.

It is for this reason that part of the total conditional grants allocated to health, education and social services in 2002/03, R15,6 million; R10,3 million and R6,9 million respectively is earmarked for HIV/AIDS. These figures will increase over the MTEF period.

In support of programmes aimed at health care improvement, the Department of Health is allocated an amount of R1,7 billion for the upcoming financial year, increasing to R1,9 billion in 2003/04 and R2,0 billion in 2004/05. We believe that these resources will go a long way in accelerating service delivery to our people, particularly in the identified poverty-pocket areas.

Honourable Speaker, it goes without saying that the enhancement of social service delivery hinges on sustainable economic growth. Despite the looming world recession and the decline of the South African economic growth, certain economic sectors in the province have shown signs of growth.

According to DRI WEFA figures, the period between 1996 to 2000 has seen the GGP of the manufacturing sector increasing by 6% and it is expected to increase by an average of 10% from 2000 to 2006. Mining and construction were stable at 20% and 2% growth respectively. An increase of 12% in mining and 9% in construction is also projected. Although the agricultural sector was on a downward slope as 2001 was drawing to a close, projections for 2000 - 2006 show a recovery route.

Undoubtedly, this favourable situation presents us, as a province, with more opportunities to expand the economy to the benefit of all our people, especially the unemployed.

In the upcoming financial year, we plan to see a lot of economic activities in sectors that have the potential for job creation. A total of R1 802 billion has been allocated to departments constituting the economy, investment and employment cabinet cluster to promote and facilitate sustainable economic growth that would lead to development and job creation, putting more emphasis on integrated sustainable rural development and urban renewal programmes.

The total capital spending provided on the Estimate of Expenditure for this province for 2002/03 is R894 million. This money will assist government to finance public-private partnership projects, particularly infrastructural development projects.

Like other provinces, Mpumalanga is also one of the beneficiaries of the increased funding towards physical infrastructure. This increase in funding has been brought about by the fact that budget deficit is expected to 2,1 per cent of the GDP in 2002/03 falling to 1,7 per cent in 2004/05.

A total amount of R118 million has been allocated to our province for infrastructure and rural development.

Of this amount the Department of Public Works, Roads and Transport and Department of Education are allocated R47,5 million each. R16,5 million goes to Health and R7,1 million is allocated to the Department of Finance and Economic Affairs.

This allocation represents almost double the R61 million that was allocated to our province this financial year and is expected to increase to R178,168 in 2003/04 and R220,569 in 2004/05. To this end, our Executive Council has also taken a decision recently to allocate R96 million from Own Revenue over the MTEF period towards roads, that is, R16 million in 2002/03 financial year, R40 million in 2003/04 and 2004/05 respectively.

The resources that our government put towards maintenance and reconstruction of our provincial roads, no matter how limited, is a clear indication that our commitment to deal with infrastructural problems is unwavering.

Honourable Speaker, making Mpumalanga a safe, secure and crime-free province is also one of the priorities of government. The people of Pienaar, Vosman, Lekazi and other identified 'hot-spot' areas must be able to walk free at any given time without fear of being mugged, hi-jacked and even raped.

To encourage the intensification of programmes aimed at promoting public safety and security, and the strengthening of the different fora dealing with safety and security related issues, the Department of Safety and Security is allocated R31 million in the 2002/03 financial year, increasing to R35 million and R38 million in 2003/04 and 2004/05 financial years respectively.

The promotion and development of sports, recreation, arts and culture is also another important area of work.

We want to see many more Ray Phiris, Josiah Thugwanes, Miriam Makebas, Rebecca Malopes from the province occupying the world centre stage. Our strength as South Africans lie in our cultural diversity - a rare commodity in the world I must say.

Therefore, we have to protect, promote and develop this commodity, use it to build bridges that draw us together to face the future as a united country. To this end, the Department of Sports, Recreation, Arts and Culture is allocated R63 million in the 2002/03 financial year to advance the concept of a rainbow nation.

Financial management

Running our finances effectively and efficiently is one of the priorities of government. The processes on prudent financial management and control that Provincial Treasury set in motion during the current financial year are definitely on course. The implementation of the PFMA is unfolding very well.

Although departments were struggling at the beginning of the implementation process, there are signs of major improvement currently.

However, as a province, we are still faced with the challenge of ensuring that not only the letter of the PFMA is implemented but also its spirit.

Therefore, we have to ensure that we deal with the capacity conundrum and the creation of a new interface between those who have needs and those who manage money.

But we hope that with the intense training of staff already underway, there will be improvement in this area of work.

CONCLUSION

Honourable Speaker, in conclusion, let me emphasise once again, that as government we remain firm to our vision of creating a united, non-racial, non-sexist and a democratic society. We are working tirelessly in pursuit of a better life for all, particularly the poor. To borrow the words of Dr John M. Tibane, we are using all what we have, including a broken sword, for our betterment and nothing is too little to put into good use.

As government, we are doing our utmost best to ensure that the little resources at our disposal are utilised on programmes geared towards the eradication of poverty and the stimulation of economic growth that would lead to development and job creation.

To recap on the budget allocation for the 2002/03 fiscal year:

Vote 1: The Premier's Office will be allocated R87,827 million to pursue its co-ordination role and also provide policy direction on a number of strategic issues.

Vote 2: Finance and Economic Affairs will get R210,584 million to render its economic services to the province, ensuring that economic growth and job creation are enhanced.

Vote 4: Local Government & Traffic Control is allocated R149,565 million to support and strengthen municipalities to deliver basic needs and promote free flow of traffic and road safety on public roads.

Vote 5: Agriculture, Conservation and Environment is appropriated an amount of R339,300 million to build an efficient and internationally competitive agricultural sector as well as conserve natural resources in Mpumalanga.

Vote 7: Education is allocated R3, 654 billion to render learner-centred quality education through capacity building and maximum utilisation of existing resources.

Vote 8: Public Works, Roads & Transport is allocated R712,006 million to facilitate the maintenance and development of infrastructure.

Vote 9: Safety and Security is allocated R31,295 million to continue with its mandate of making Mpumalanga a safe, secure and a crime-free province.

Vote 10: Social Services is allocated R1,971 billion to provide social welfare and social security services to the people of the province and also to deal with population development issues.

Vote 11: Health is allocated R1,657 billion to ensure that the people of Mpumalanga have access to affordable and good quality health services.

Vote 12: Housing and Land Administration is allocated R340,457 million to respond to the need for a better living environment for all people living in Mpumalanga and to manage land administration.

Vote 13: Provincial Legislature is allocated R44, 644 million to ensure that its oversight function is executed efficiently and effectively.

And last but not least,

Vote 14: Sports, Recreation, Arts and Culture is allocated R63,187 million to pursue its mandate of promoting and developing sports, arts and culture in an equitable manner in the province.

This brings us to the total revenue of R9,311 billion of which R50 million will be not be appropriated but set aside as a surplus.

As we will remember, this was one of the requirements of the section 100 agreement between the province and national government.

Finally, Honourable Speaker, allow me to table the following documents for consideration by the House:

* The Mpumalanga Appropriation Bill, 2002
* Interim Appropriation Bill, 2002
* Budget Statements II&I
* Budget made easy booklet and
* A copy of my speech.

Lastly, let me take this opportunity to express my profound appreciation to:

* The Premier for his support to the endeavours undertaken by the Provincial Treasury to improve the financial situation of the province
* My colleagues in the Executive Council for their guidance and support. Despite the different directions the wind swings, you ensure that you adjusted our sails towards our destination - to create a better life for all.
* Members of the Portfolio Committee on Finance and Economic Affairs for ensuring that the words of wisdom from great men such as John Leo when he writes that " You can't run a society or cope with its problems if people are not held accountable for what they do" continue to guide in our day to day activities.
* The National Treasury for its assistance and guidance.
* My treasury team under the stewardship of Zakes John Dube and other members of my staff for their hard work in producing all this work.
* Most importantly, I wish to thank my wonderful and lovely wife, Honourable Thoko Mabena - a member of this legislature and my family for their support, understanding, prayers and tolerance especially during the times when our ship was not yet on calm waters. When the going was getting tough, they always gave me courage, advising to persevere. They always reminded me that the road to success has many detours because it is always under construction. Once again, I want to say thank you very much. You have been wonderful to me.

Guided by the Reconstruction and Development Programme and other policies of government, we cannot fail our people. As they commonly say, the secret of success is constancy to purpose.

I thank you

Issued by Finance and Economic Affairs, Mpumalanga

5 March 2002