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3 March 2005

Comrade Speaker and Comrade Premier,
Esteemed colleagues in the Executive Council,
Honourable Members of the House,
Distinguished guests,
Comrades and Compatriots,
Ladies and Gentlemen

Hearty greetings and a warm welcome to this first ever Budget Speech in the second decade of our freedom and democracy.

Fifty years ago, on 26 June 1955, 2844 South Africans gathered at the Congress of the People, in Kliptown, Johannesburg, adopted with great acclaim a document called the Freedom Charter.

These South Africans reflected the racial composition of the population of our country, and the many social strata and cultural diversities united in the democratic movement for freedom and democracy, justice and peace, human brotherhood and sisterhood, the working class, peasants, trades people, teachers and students, taxi drivers and clerks, Christians, Muslims and Hindus, Communists, men and women, young and old assembled at this historic Congress of the People to ponder and consider, and chart the way forward to freedom and democracy.

This Congress of the People of South Africa boldly declared that:

We, the People of South Africa, declare for all our country and the world to know:

* That South Africa belongs to all who live in it, black and white, and that no government can justly claim authority unless it is based on the will of all the people;
* That our people have been robbed of their birthright to land, liberty and peace by a form of government founded on injustice and inequality;
* That our country will never be prosperous or free until all our people live in brotherhood enjoying equal rights and opportunities;
* That only a democratic state, based on the will of all the people, can secure to all their birthright without the distinction of colour, race, sex or beliefs;
* And therefore, we, the people of South Africa, black and white together as equals, country men and brothers adopt this Freedom Charter;
* And we pledge ourselves to strive together sparing neither strength nor courage, until the democratic changes here set out have been won!

Than, Comrade Speaker and the House, the Freedom Charter goes on to spell out these freedoms thus:

The People Shall Govern!
All National Groups Shall have Equal Rights!
The People Shall Share in the Country’s Wealth.
The Land shall be shared among those who work it!
All shall be equal before the Law.
All shall enjoy Equal Human Rights!
There shall be Work and Security!
The Doors of Learning and Culture shall be open.
There shall be Houses, Security and Comfort
There shall be Peace and Friendship.

And in conclusion, the Freedom Charter reads:

Let all the people who love their people and their country now say; as we say here today: These freedoms we will fight for, side by side, throughout our lives, until we have won our liberty!

And, indeed, Comrade Speaker and Honourable Members, JB Marles, Ida Mntwana, Bram Fishscher, Chief Luthuli, Yusuf Dadoo, Jack Simons, Yettah Barenblatt, Ray Alexander, Simons Manyembe, OR Tambo, Harry Gwala, Helen Joseph, Walter Sisulu, now Raymond Mhlaba and many other dedicated patriots have honoured their pledge to strive together throughout their lives for the democratic rights and freedoms set out in the Freedom Charter. In fact, the Freedom Charter has remained the founding mandate of our freedom and of the new democratic South Africa.

In 1994 the great cloud of freedom burst open and the political rain of liberation fell. Big changes took place. First the Freedom Charter was unpacked into the Reconstruction and Development Programme by the ruling party, and then this programme was adapted and adopted by the new government of National Unity. A new democratic Constitution embodying the ideals of the Freedom Charter was also adopted. As the saying goes, “in the seed there is a potential tree trunk, branches, leaves, flowers and fruit”, whether this potential will be realised depends on many contingencies.

One such contingency in our case has been the era in which we have achieved our freedom, the era of globalization; and another contingency has been the challenge of creating unity in our diversity as we reconstruct and develop our country. Regarding the challenges of globalization, the national macro-economic strategy, generally known as GEAR, has in spite of the controversies that surrounded its adoption, succeeded in bringing economic stability and laying a solid foundation for economic growth.

However, the dynamics of national integration in both the public and private sectors of our society and economy have been more challenging. Hence, one might say, our failure, after ten years of our democracy, to successfully respond to the needs of our economy and our society, even where the material financial resources are available. Witness, for example, the yearly roll-overs and under-spending while our people’s needs largely remain unmet.

Comrade Speaker and Honourable Members, there is no doubt in our Province as in all other provinces throughout the country, that we have made great progress in meeting the needs of our people. In our Province the economic growth which is at an average of 4%, the infrastructure provisioning, social grant distribution, housing provision, the tremendous qualitative improvement in our matriculation results, progress made in agriculture, peace and stability that prevails, all indicate that we have really progressed.

However, we still have problems of unemployment and poverty, problems of illiteracy that reveal themselves in cases of witchcraft based violence, child and women abuse and general poor service delivery in some instances. And all this in the context of endemic roll-overs and under-spending, year after year.

Comrade Speaker and Honourable Members, it is in the context of all these developments that the President has called on all of us to participate in the Peoples Contract, to create a government that cares for it’s people, to provide service delivery in the spirit of Batho Pele, and to ensure that the culture of roll-overs and under-spending in our departments be a timing of the past as we enter the second decade of our democracy.

Having said that, we must acknowledge and be appreciative of the fact that the majority of civil servants in our province are dedicated, honest and hardworking, determined to improve the lives of our people. We must applaud and encourage them to continue with the excellent service and to try hard to do better every day.

Our budget this year is, therefore, underpinned by a commitment to build on the foundations laid down in the first decade of our freedom, and to participate, side by side with other South Africans, sparing neither strength nor courage, in the reconstruction and development of our country until the democratic changes enshrined in the Freedom Charter have been attained.

We appeal to all the people of Limpopo, in both public and private sectors as well as community based formations, to enter into this partnership for rebuilding our country. Regarding the public sector, it might be necessary to promulgate legislation to complement the PFMA and MFMA regarding the question of under-expenditure which seems not to be adequately covered in the Acts.

But, that aside, let us all put our shoulders to the wheel and make our second decade of democracy a decade of hope and prosperity. Let us work hard to create a better life for all our people so that no one be justified to stand up and mock us by asking: what democracy exists for the homeless child on the street, what democracy exists for the starving, the illiterate and the unemployed, for those who have nothing, whom no one seems to think of, whom no one respects, whom anyone with money treats like a dog? What democracy exists where alongside the poor, the hungry and the beggars, live the millionaires and billionaires? What kind of equality exists, what kind of fraternity and fellowship, where no one helps anyone and one person is an enemy to another person?

Yes, let us create a caring society; let us improve our government departments and civil service with the spirit of Batho Pele, of Ubuntu, of human solidarity. Let us embrace the spiritual building blocks of the moral regeneration programme so that the spirit of Masakhane, of voluntarism may come to prevail in both our public and private lives.

To that end, we wish to present to you, Comrade Speaker and Honourable Members, the 2005 People’s Budget as a modest contribution to the People’s Contract, to create jobs and fight poverty in Limpopo, hoping that everyone in our province will come to the party and make the one time poorest province a success story in our lifetime. Remember, to say that something SHALL happen, as the Freedom Charter says, is to stress that it is definitely going to happen, What a challenge!!!

Mr Speaker, as we move to present the 2005/2006 Budget, it should be understood that the general framework has been laid down by Comrade Trevor Manuel, particularly where he indicated that our “social intent embodies our commitment to build a more just, more equal society, in which steady progress is made in reducing the gulfs that divide rich and poor, black and white, men and women, rural and urban”. This People’s Budget will encapsulate the elements that seek to address these pronouncements.

Linkages with National and Provincial Priorities

As a point of departure, Mr Speaker, and Honourable Premier, this People’s Budget seeks to deliver on the vision of the Freedom Charter. Guided by the Charter’s assertion that “all people shall be entitled to take part in the administration of the country”, we took the time to consult various stakeholders across the province. The inputs and advice gained during the said consultations is, to say the least, inspirational. We thank them all for their participation and invaluable contributions.

Among others, the Thomo Farmers Association, represented by Mr AE Hlungwani, requested that government should provide more resources to enable the emerging farmers to stand on their own. They indicated that they don’t want to perpetually remain dependant on the support from government. They want to become self-sustaining.

It was also heart-warming to hear from the Sekhukhune Farmers Association that their priority is that our government should assist them with the establishment of viable markets in the province where they can dispose of their commodities.

The Giyani Chamber of Commerce and the Ndzhelele Farmers Association are requesting government to put more resources and emphasis on the resuscitation of irrigation schemes. They have argued very strongly that this will have a major impact on revenue and jobs creation in the province.

Support in the tourism sector has also featured very prominently in the various districts. Mr Kekana of the Greater Sekhukhune District was particularly passionate about tourism and had very valuable suggestions to make.

Mr. Speaker, the youth of all our districts indicated that the government should step up the establishment of youth empowerment programmes. At the centre of their dissatisfaction is the flow of information. Their request is that more information centres should be established and special attention must be given to make these centres and the information accessible to young people who are physically challenged. Included in the information packages must be information on bursary schemes and how they can be accessed.

The most heart-warming issue is that our people across all sectors have indicated that they appreciate the work that government is doing. They are fully aware of the fact that government has limited resources and they also have a role to play in their own development. They did, however, emphasise that we must do more to eliminate corruption and all forms of malpractice where it still exists.

We have heard all the inputs and suggestions and we are committed to respond decisively to bring about visible change.

This People’s Budget aims at responding to the issues raised and to further strengthen social service delivery, including:

* Scaling up of HIV and AIDS treatment programmes through the roll out of the necessary drugs alongside prevention measures.
* The reduction of morbidity and mortality in women and children, and reduction of malaria and cholera incidences.
* A renewed focus on employment creation through an Expanded Public Works Programmes and a series of intervention to strengthen the skills base and empower communities.
* Support for provincial economic development programmes with high potential for creating employment opportunities with specific focus on the development of industrial clusters and the provision of infra-structure that supports economic growth.
* Enhanced spending on education programmes, specifically relating to the roll-out of the Early Childhood Development Programme, and other inputs needed to further strengthen the quality of school education – focusing on mathematics, science and management sciences – particularly in poor communities.
* Consolidate local government, financial management, and budget reforms as envisaged in the Municipal Finance Management Act (Act 56 of 2003)
* Poverty alleviation including social security and support for municipalities in providing basic services.
* The reduction of crime
* Taking core administrative services to citizens, particularly in rural areas where access is limited.

This budget, therefore, bears a direct linkage with the national priorities as well as the provincial imperatives.

Mr Speaker, Honourable Premier, allow me to now present the 2005/2006 Budget for Limpopo. I shall present the Budget according to the Cabinet Clusters. The largest slice of the Budget is allocated to the Social Development Cluster followed by the Economic Cluster, which is 81% (R22,6 billion) and 13% (R3,7 billion) respectively. The Governance and Administration Clusters’ share of the budget is 6% (R1,7 billion).

The 2005/06 Budget Framework

The total estimated receipts for the province consist of the following:

Equitable share: R18,376 billion
Conditional grants: R 9,205 billion
Own Receipts: R 0,377 billion
Total: R27,958 billion

The provincial budget is R27,958 billion, R30,317 billion and R32,730 billion for the 2005/06 to 2007/08 MTEF period respectively.

The provincial Own Revenue budget increased from an adjusted Revenue budget of R361 million to R378 million, which represents an increase of 4,7% or R17 million. The province received an additional amount of R63,310 million, R196,920 million and R326,588 million for the equitable share over the MTEF period.

The baseline figures include the new social security grants amounting to R7,385 billion for 2005/06, R7,966 billion for 2006/07 and R8,595 billion for 2007/08. These amounts are now conditional grants that are administered by the province on behalf of the South African Social Security Agency.

Our equitable share is R27,958 billion and is projected to increase to R30,317 billion in 2006/07 and R32,730 billion in 2007/08.

The bulk of the increase in the R9,205 billion conditional grants relates to the increase in the Social Development budget of R7,385 billion, transfer of Social Security grant to the South African Social Security Agency and the increase of R213 million for Hospital Rehabilitation.

The equitable share constitutes the bulk of the provincial allocation at 65,7% whilst the conditional grants are 32,9% with own revenue accounting for 1,4%. Provincial receipts are mainly from motor vehicle licenses, interest on investments, dividends and pension fees.

Expenses by Economic classification

The Bill before this House seeks to appropriate R27,958 billion for the 2005/06 financial year. The forward estimates for expenses reflect R27,958 billion; R30,317 billion and R32,730 billion for the outer years.

Current expenses account for the largest year on year allocation and account for R17,536 billion or 62,7% of the total expenses proposed for 2005/06.

Compensation of employees receives the highest allocation at R13,430 billion or 48% of the total provincial budget.

Transfers and subsidies are second with an allocation of R8,929 billion or 31,9%. Transfers to households of R7,361 billion or 26,3% is for social benefits in the form of pension grants for the aged, child support grants, disability grants and others. The other portion of transfer refers to households in the form of housing subsidies.

We have noted the contribution of our social grant system to the income security of the most vulnerable, and in particular to the support of children under the age of 14. The maximum old age, disability and care dependency grants will increase by R40 from R740 to R780, and the Child Support grant increases from R170 to R180. War veteran’s grants increase from R758 to R798 whilst Forster care increase by R30 from R530 to R560.

Capital expenses or payments for capital assets of R2,723 billion or 9,7% represent an increase of 55,6% from the baseline of 2004/05. The increase in infrastructure grant allocation has boosted our capital funding and is in line with our commitment to improve service delivery through investing in social and economic infrastructure.

Expense allocation per sector

The provincial budget includes full implication of personnel related costs of salary increases, overtime, medical aid contributions, home owner’s allowances and cost of pay-progression.

The total budget of R27,958 billion is equitably allocated to the provincial departments according to national and provincial priorities.

SOCIAL SECTOR

The total social sector budget grows by 15,8% from R19,522 billion in 2004/05 to R22,607 billion in 2005/06 and accounts for 80,8% of the total budget.

Education budget grows by 6,3% from R9,3 billion to R9,8 billion. Educators pay progression is budgeted for as follows:

R48,107 million in 2005/06, R132,569 million in 2006/07 and R216,634 million in 2007/08 and will benefit 58 331 educators.

The budget will also be used in the recapitalisation of the Further Education and Training (FET) Colleges estimated at R30 million for 2005/06, R35 million for 2006/07 and R40 million for 2007/08 as well as Adult Education and Training (ABET) whose allocation is R53 million in 2005/06, R159 million in 2006/07 and R16 million in 2007/08. The budget will also fund the norms and standards for public ordinary schools for R563 million in 2005/06, R596 million in 2006/07 and R612 million in 2007/08.

The Education budget is also to cater for a total number of 1449 classrooms, 3584 toilets and security fencing of 60 schools in 2005/06.

The capital budget for 2005/06 is R482 million and is earmarked to reduce classroom backlog. It also includes an amount of R115 million specifically allocated to fast track the project of children attending school under trees. The department has focused its strategic planning on the reduction of backlogs which was 14 284 at the end of 2003/04 and it is anticipated that 940 classrooms will be completed by the end of 2004/05 financial year, reducing the backlog to 13,344. The classroom/learner ratio of the province stood at 46 i.e. in 2004 learners were approximately 1,149,111 and available classrooms were 24,974 which gives an average of 46 learners per classroom. To reach the average target of 38 learners per classroom the province needs 15,814 classrooms. The projected number of learners who will be provided with stationery in 2005/06 is 1,892,131.

The Health budget grows by 26,9% from R3,9 billion to R5,0 billion. It caters for R2,9 billion for compensation of employees which includes R91 million for filling of critical vacant posts. It also caters for the purchase of machinery and equipment and goods and services, scarce skills and rural allowances. The budget also contains R111 million for the Public Private Partnership in laundry services at R31,6m and accommodation for staff at R79,9m.

The department is also required to take over Pathological Forensic Services from the South African Police Services as from the 1st of April 2005. An amount of R36 million has therefore been included in the budget to cater for the provision of mortuary facilities as a result of the takeover. In addition, an amount of R68 million over and above the baseline for 2005/06 has also been provided to raise stock levels of drugs to an acceptable norm.

The budget also provides for primary health care in rural municipalities to the tune of R11 million, R17 million and R23 million over the MTEF period. The budget of this department will also be utilised for the reduction of morbidity and mortality in women and children, widening accessibility of emergency services at hospitals and clinics.

The budget also caters for the protection against malaria and cholera and awareness to the risk of these diseases reduce HIV and AIDS prevalence from the current 15,6% through improved access to antiretroviral treatment and increased TB cure rate. Increase 24 hours service in 250 clinics and management of Emergency medical services in line with national and provincial policies.

Social Development budget increased by 22,7% from R6,2 billion to R7,7 billion. However, R7,5 billion of the social grants is a conditional grant run by the South African Social Services Agency (SASSA) on behalf of the National Department of Social Development. The SASSA conditional grants cover the following:-

* HIV and AIDS;
* Social assistance grants;
* Social assistance administration; and
* Integrated social development services.

The balance of R351 million includes R128 million for personnel, catering also for pay progressions and salary increases for social workers.

Safety Security and Liaison – the budget increases by 67,2% from R14,1 million to R23,674 million. The budget will be used for the core functions of combating crime. It also caters for the maintenance and running of the Manyeleti Youth Academy.

ECONOMIC SECTOR

The total economic sector budget grows by 34,2% from R 2,7 billion to R3,7 billion and accounts for 13,1% of the total provincial spending.

Economic Development, Environment & Tourism – the allocation for the department is R571,337 million for 2005/06. The budget caters for 5,5% personnel adjustment in July 2005, 1% pay progression, housing allowances as well as filling of critical posts. The budget also caters for co-operatives, and other Public entities e.g.: Limpopo Economic Development Enterprise. An amount of R66,4 million has been provided for the promotion of Industrial, Mining and Agro Processing Development. R207,2 million is to cater for enterprise and co-operative development. An amount of R33,2 million is to cater for trade regulation viz: licensing and registration of business and consumer affairs. An amount of R35,4 million is provided to cater for regulatory and environmental impact management. An amount of R102,3 million is for the promotion of tourism in line with the Provincial Growth and Development Strategy.

Agriculture budget increases by 0,2% from R905,227 million to R906,719 million.

Budgetary support has been provided for the revitalisation of 36 irrigation schemes with a further 114 to be revitalized over a six year period.

The Comprehensive Agricultural Support Programme (CASP) has also been funded in order to support the communal farmers in our province. Focus areas for the programme have been livestock production as well as irrigation rehabilitation.

Roads and Transport budget grows by 241% from R495,372 million to R1,501,152 billion. This allocation includes the Roads function that was shifted from Public Works. The budget includes R264,359 million R291,786 million and R379,218 million over the MTEF period for infrastructure conditional grant. The allocation for the Transport function is mainly to cater for negotiated bus contracts. The department is targeting to tar 270 kilometres of roads. The department also intends to rollout the integrated transport system in line with the Provincial Growth and Development Strategy.

Public Works – the budget decreases by 55% to R600,804 million due to the shift of the Roads function to the Department of Transport. The department disposed 6 flats and sold 220 houses and are currently processing the sale of 70 houses. During the 2004/05 financial year they purchased 6 office buildings for provincial departments.

The budget for 2005/06 is earmarked for the completion of the new club house at the parliamentary village, refurbishment, upgrading and maintenance of equipment – air condition equipment at 3 government complexes and the legislature, refurbishment, upgrading and maintenance of government offices. Building 10 residential units for parliamentarians at a cost of R10 million.

Sports, Arts and Culture the budget for the department increased by 60,3% from R57,811 million to R92,670 million. The increase is mainly due to the once off payment of R20 million to assist the Polokwane Municipality to upgrade the Peter Mokaba stadium for the 2010 soccer World Cup and personnel related costs.

The increase also seeks to cater for the development of access channels to the main arts and culture institutions.

GOVERNANCE & ADMINISTRATION SECTOR

The Governance & Administration sector’s budget increases by 50,3%. From R1,116 billion in 2004/05 to R1,678 in 2005/06.

Office of the Premier - The Premier’s office budget grows by 84,4% from R202,216 million to R372,912 million. The budget of the Office of the Premier has been adjusted upwards mainly due to the functional shift of the Traditional Affairs function from the Department of Local Government and Housing which is R101,107m as well as Community Development Workers function which is R17m. The budget also caters for the marketing of the province, Learnership training as well as filling of critical posts.

Provincial Treasury – The department is allocated R451,819 million which includes R196,529 million earmarked for infrastructure development. The budget also caters for 5,5% salary increases, 1% pay progression, housing allowance as well as filling of critical posts.

The department will use the budget for systems development, preparation of the Provincial Medium Term Expenditure framework, movement from cash to accrual accounting. Implementation of the Municipal Finance Management Act. Support the budgetary and reporting process of municipalities, planning and allocation of budget to provincial departments as well as support departments in their planning and reporting.

The department will also pilot all reforms introduced by the National Treasury and will also be implementing all Executive Resolutions which have financial implications.

Local Government & Housing – the budget decreases by 7,4% from R821,982 to R761,170 million. The decrease is as a result of the function shift of Traditional Affairs to the Office of the Premier. The department was allocated the amount of R34,700 million for demarcation of sites in the province. The department has the following conditional grants: Integrated Housing programme R397,650 million and Human Settlement and Redevelopment grant R1,418 million.

The budget for 2005/06 will be used to increase accommodation for personnel and rural housing development. The department will also demarcate 33 000 sites at a cost of R59,4 million. R2 million is budgeted for the 2005 municipal elections and to build 2 disaster management centres and their equipment at a cost of R11 million. 18 former -R293 towns [towns that were controlled from Pretoria] will be transferred to municipalities at a cost of R1,5 million.

Provincial Legislature - The Legislature’s budget decreases by 0,2% from R92,167 million to R92,023 million. The budget caters for policy changes/developments within the Legislature such as, strengthening of public participation, oversight functions and the implementation of Job Evaluation.

Honourable Speaker, the total capital infrastructure budget has increased from R1,75 billion to R2,723 billion which is a growth of 55,6 % from 2004/05 to 2005/06. One of the priorities of the Provincial Growth and Development Strategy is the provision of infrastructure with the aim of employment creation. The budget we are proposing for the 2005/06 therefore responds directly to this government policy. Overall the infrastructure budget shows a growing trend over this period, which is an indication of a policy shift by Government to direct more resources toward infrastructure development.

Mr. Speaker, Honourable Premier and Members, comrades and friends, this is the first Budget Speech of the second decade of our freedom, thus I extend my sincerest gratitude to the people of Limpopo, especially the valued stakeholders who are in attendance this morning for participating in the formulation of this Budget and the overwhelming support we enjoy.

I also wish to appreciate the confidence that our Honourable Premier, comrade Sello Moloto, and the Leadership of the African National Congress had in me by deploying me to head this all important Department of Provincial Treasury. I would also like to thank my predecessor and comrade, Honourable T. A. Mufamadi, for the sterling job that he has done towards the development of our province for the ten years that he was responsible for the Department of Finance and Economic Development. I shall do my utmost best to build on the foundation that you have laid, Honourable Mufamadi.

I shall not have completed my task if I fail to appreciate the hard and sterling work that the Head of the Department, Mr Ben Mphahlele and his management team, have so tirelessly performed. I also wish to acknowledge the contribution and support of all the employees of the Department of Finance, it is truly appreciated. Your commitment to the success of the Department is immeasurable. Please keep it up!

To all the people of the media who assist us to convey government’s messages to the people, we say thank you very much for acting as active partners in the struggle for development. You are our cornerstone in the promotion and deepening of our democracy through transparent governance. Accept our sincerest gratitude.

Our Traditional Leadership and other community leaders, you are the torch-bearers of our various communities. Continue to instil in our people the spirit of Vuk’uzenzele and Letsema so that we continue to stand united in a people’s contract to create jobs and fight poverty.

All the churches and their leaders, particularly the SACC and the ZCC present here today, continue to spread the gospel which will enable us all to build a winning nation, united in our diversity.

In the words of our President, comrade Mbeki: “At all times, by word and deeds, we must convey the message to all our people, black and white, united in their diversity, that they are correct to believe that their movement, the ANC, is their own harbinger of hope.”

I thank you all!

Issued by: Provincial Treasury, Limpopo Provincial Government
3 March 2005