22 June 2007
Comrade Speaker and Deputy Speaker;
The Honourable Premier;
Colleagues in the Executive Council;
Honourable Members of the House;
The Management of DED led by the HOD, Mr. Sibusiso Xaba;
Distinguished Guests;
Ladies and Gentlemen:
INTRODUCTION
When the youth of Soweto and many other townships of our country took to the streets 31 years ago, they did so in order to assert their humanity and determine their destiny. They were motivated by the basic human urge to be free and their acts of bravery propelled our struggle for liberation to a higher level.
As we table this budget today, during the youth development month, we are conscious of the enormous sacrifices of the 1976 generation of young people to bring about the freedom that we today enjoy. Our immediate task is to do everything necessary to help bring to fruition the objectives of the free society the youth of June 16, 1976 sought to achieve.
Comrade Speaker, today the 22nd of June is Africa public service day. This day is entrenched as a strategic event in the African Union calendar. It provides a unique platform for those who have dedicated their lives to serving their communities to promote the values of professionalism, accountability, responsiveness and ethical behaviour in the delivery of public services.
As we celebrate Africa Public service day, we recommit ourselves to these noble values, which we have enshrined in the principles of Batho Pele.
The 2007/08 budget of the Department of Economic Development seeks to consolidate the gains made by this department in contributing to the achievement of the GPG five year strategic priorities. It highlights progress made in facilitating faster and shared economic growth and job creation and shows once more that a better Gauteng is in the making. It further indicates that we are on course towards reaching the objectives we have set for ourselves.
THE ECONOMIC OUTLOOK
The National economy
We are tabling the 2007/08 budget for the Department of Economic Development against the background of a national economy that is experiencing an unprecedented period of growth.
Average GDP growth accelerated from 2.7% per annum between 1994 and 2000 to 5% in 2006. We have also seen the number of people employed in our economy grow by over a million between September 2004 to September 2006.
At the same time, the country has seen unprecedented investment in infrastructure. Gross Capital Formation as a percentage of GDP, grew from an average of 15% between 1999 to 2002 to 19% in 2006.
The growth of the national economy in the year 2006 has bucked the trend of a slight slow down in global economic growth. This was as a result of the resiliently high global commodities demand that favoured commodity exporting countries such as South Africa.
A deeper look into the structural foundations of our national economy indicates that commodities have a significant impact on our macro-economy. This exposes our country to fluctuations in commodities prices over which we have little control. The challenge going forward is to strive for a more diversified economy.
We are also conscious of the reality that the true growth potential of the national economy is hampered by capacity constraints on the supply side which if addressed effectively could unleash much higher and sustainable real economic growth.
In this regard our hopes lie with the successful implementation of the Accelerated and Shared Growth Initiative for South Africa (ASGISA).
The Provincial economy
The provincial economy continues to be the main driver of overall economic output in South Africa. A comparison of the growth of the GDP for Gauteng with that of the national economy reiterates the importance of the regional economy to overall national economic prosperity. From 1997 to 2005, the Gauteng economy has outperformed the national economy's growth rate.
Like the economies of many City Regions across the world, the Gauteng economy is poised to continue to be a major contributor to the national and regional economic product. We are encouraged that Gauteng has one of the most diversified regional economies in South Africa. This mitigates against the negative impacts of external shocks and imbalances.
The implementation of the provincial Growth and Development Strategy and the various sector strategies will also go a long way in further diversifying the Gauteng economy.
In line with the trend nationally, the tertiary sector comprising of various service industries particularly financial services, accounts for the largest share of the provincial output. This trend is expected to continue with the tertiary sector contributing an estimated average of 71% to the provincial output by 2010. The importance and concentration of the service sector, especially finance and business services, which could be harnessed to promote more industrial development and investment in other parts of our country, further highlights Gauteng's critical role in the development of the South African economy, and the economies of the southern African region and the African Continent.
Furthermore, the growth of the commerce, trade and finance sectors is a critical factor in ensuring faster economic growth and job creation.
As was indicated by the Premier in the State of the Province Address, we are beginning to make a dent on unemployment. A total of 426 000 new employment opportunities were created in Gauteng between March 2002 and March 2006.
The longer term performance of the Gauteng economy depends on the ability to transform the current growth path to include a larger contribution from the higher value added manufacturing and services sectors. To this end, the implementation of the provincial Growth and Development Strategy which identifies value added manufacturing and the services sector as some of the strategic levers for higher economic growth, remains paramount. We note with appreciation that the outlook for Gauteng's economy is slightly more positive than that of the national economy, with provincial growth rates expected to exceed that of the national economy.
We expect the secondary and tertiary production sectors, construction, manufacturing and retail sectors to record healthy expansions in the short to medium term.
The absorption of greater numbers of people that were previously excluded from the mainstream economy continues to create conditions for further demand and expansion in the economy. Comrade Speaker, collectively these developments in the provincial economy convince us even further that we are indeed on course towards achieving a provincial growth rate of 8% by 2014.
REVIEW OF THE 2006/07 FINANCIAL YEAR
I will now highlight some of the programmes we have undertaken in the past financial year as part of our overall commitment to the achievement of GPG's strategic priorities.
One of our ongoing tasks is to facilitate the implementation of the provincial Growth and Development Strategy.
Thus far more than R 330 million from the GDS Fund has been allocated to various departments for projects that will contribute to faster economic growth and job creation.
The involvement, participation and contribution of the private sector in the implementation of the provincial GDS remains critical. In this regard, last year we launched the GDS Forum which brings together the leadership of government, the private sector, labour and civil society.
The Forum will coordinate the role of all sectors of society in the implementation of the GDS.
We have begun a process of consolidating the Provincial GDS and the GDS's of the metropolitan and district municipalities. This will form the basis for the development of a more coherent economic development plan for the Gauteng City Region.
As part of efforts to strengthen intergovernmental coordination and planning, we initiated the Provincial Development Planning Forum, which is a body of officials dealing with development planning across the spheres of government. This Forum is aimed at improving integration and information sharing among the various spheres of government.
Furthermore, the Department of Economic Development, through its agencies, has project specific co-ordination structures with municipalities. An example of this is the project team on the information and communication technologies (ICT) strategy for the Province.
We have developed an ICT strategy and programme for the province in collaboration with municipalities, and are in the process of finalizing the Gauteng tourism development strategy.
The Gauteng Film Office is being restructured and will operate as a Film Commission, thus allowing it to play a greater role in promoting the film industry in the Gauteng. We developed and launched the provincial Broad Based Black Economic Empowerment Strategy. This Strategy contains targets and measures that will ensure that we expand participation in the provincial economy, using government expenditure and services as instruments.
We continue to monitor the implementation of the Gauteng BBBEE Strategy. To this end our BBBEE unit is working with the Gauteng Gambling Board to monitor compliance with BBEE in the casino industry.
Gambling and betting taxes collected by the Gauteng Gambling Board are the second highest contributor to provincial own revenue. Taxes collected for the 2006/07 financial year amounted to R452.5 million, well above the set target of R 400 million.
The licensing of gambling activities has created 10 000 direct new job opportunities with a further 25 000 indirect job opportunities.
Our Small, Medium and Micro Enterprise development agency, GEP registered a number of significant gains in the past financial year. These include a partnership agreement with ABSA wherein GEP contributed R10 million and ABSA R40 million to establish a Gauteng Joint Fund for SMME's.
In the previous financial year, GEP began rolling out financial support services to SMMEs. The agency also provided training to 4 409 existing and aspiring SMMEs in various disciplines. The Innovation Hub is currently experiencing full occupancy at its Enterprise Building and there is an increase in demand for accommodation. Plans are in progress to further expand this Science Park to accommodate increasing demand from some global industry players.
The Automotive Supplier Park continues to experience a positive response from the market. Negotiations are under way with, vehicle manufacturer Fiat and other manufactures regarding the possible setting up of a production plant, container and vehicle distribution centre facility at the Park.
Since its inception, the Gauteng Economic Development Agency facilitated investments worth R 5.3 billion. These investments are expected to create in excess of 10 000 jobs.
Tourism remains one of the fastest growing sectors in Gauteng. It has indeed become our "new gold" as its contribution to economic growth now surpasses that of the gold mining industry.
Figures from SA Tourism indicate that for the previous financial year, 8.4 million people visited the country of which 46.4 % came to Gauteng.
We are encouraged that visitor numbers to Maropeng at the Cradle of Humankind continue to increase as this world heritage site becomes a premier tourist attraction in the province.
In the previous financial year, we also began the process of erecting the perimeter fence for the Dinokeng Game Reserve. The internal fences at the Game Reserve have come down, thus making the creation of this Game Reserve a reality. The construction of supporting infrastructure such as roads is continuing in Dinokeng.
These interventions, together with the marketing initiatives led by the Gauteng Tourism Authority will ensure that Gauteng grows its tourism market share.
Comrade Speaker, what we have indicated thus far is evidence that we are indeed on course towards meeting the objectives we have set for ourselves.
Our immediate task is to strengthen our capacity to monitor and evaluate the impact of our interventions on the provincial economy. In this regard, we have established a dedicated Monitoring and Evaluation unit in the Office of the Head of Department.
The establishment of this unit is in line with a commitment made by the Premier in the State of the Province Address that there is a need for GPG to increase capacity for monitoring and evaluation.
ALLOCATIONS PER PROGRAMME
Comrade Speaker; the Department of Economic Development previously had six programmes. However according to the new programme structure approved by National Treasury; the department now has only four programmes.
The Department's programmes are currently being restructured in order to ensure that we are aligned to the new programme structure as per the Treasury Reporting Requirements. Such restructuring will be complete before the end of this financial year.
The total budget for the Department of Economic Development for the 2007/08 financial year is R627 308 000. Allow me now to indicate how this budget will be allocated to specific programmes.
Administration
This programme is comprised of the Office of the MEC, Office of the HOD, financial management and corporate support services. The programme is responsible for the overall strategic management and direction of the Department. In addition it provides administrative and financial support to the Department.
We are this year allocating R50.5 million to this programme. Integrated economic development services
The Integrated economic development services programme is comprised of enterprise development, local economic development and economic empowerment .This programme is tasked with the responsibility to sustain economic development through partnerships.
Enterprise development
This unit is responsible for creating the necessary conditions and providing support for enterprises development.
For the 2007/08 financial year, GEP will roll out financial support to SMMEs totaling R50 million. This will also include the creation of a range of financial service offerings addressing the needs of various types and requirements of SMMEs in the province.
GEP will also provide business development support to more than 1 400 SMMEs and 5 000 SMMEs will be trained. We will this year expand the accessibility of GEP's services by establishing more satellite offices in previously disadvantaged areas. Attention will also be paid to the development of more funding products focusing specifically on those SMMEs operating in the second economy.
As part of efforts to accelerate the implementation of the BBBEE Strategy, GEP will also focus on venture capital and make equity investments in strategic projects that contribute towards improving infrastructure, skills development and job creation.
We are this year allocating R123.6 million to GEP.
Local economic development (LED)
Work is currently underway to consolidate the provincial GDS and the GDSs of the metropolitan and district municipalities. This will lead to formulation of a long-term GCR Economic Strategy that includes alignment of the Local GDSs with the provincial GDS.
A review of seven local municipal LED strategies will be undertaken this year.
The unit will also ensure that the provincial LED Strategy and the cooperatives development policy and implementation plan are approved by the Executive Council during this financial year.
Working with GEDA, the unit will continue to support LED initiatives of various municipalities.
Economic empowerment This unit is tasked with the responsibility of facilitating empowerment and the creation of an enabling environment for previously disadvantaged individuals to be part of the economic mainstream.
This the unit does by providing economic and development planning services as well as by facilitating the implementation of the provincial GDS.
Economic Planning
This unit will continue to facilitate the implementation of the provincial GDS. Emphasis will this year be placed on the finalization of sector strategies. Growth sectors which were not part of the GDS but hold enormous potential for job creation will also receive attention.
The unit will continue monitoring and evaluating the implementation of the GDS.
Furthermore the economic planning unit will play a key role in strengthening efforts to position Gauteng as an economically active and sustainable city region.
This entails:
As part of our response to the challenges of the second economy, we will this year strengthen the monitoring and evaluation of the provincial Broad Based Black Economic Empowerment Strategy.
In addition we will continue to make targeted interventions in the second economy with a view to create that vital linkage between the first and the second economies.
These interventions include the implementation of the economic cluster projects of the Expanded Public Works Programme and skills development.
Development planning
Comrade Speaker, last week we launched the Gauteng Spatial Development Perspective (GSDP). This Perspective provides the most coherent guide to the spatial ramifications of investment decisions yet. It will assist ongoing efforts to direct both public and private sector investment in infrastructure to areas where they will have maximum development impact.
The GSDP will guide the development of a provincial Spatial Development Framework which we will complete this year.
We will also amend the Gauteng Planning and Development Act and its regulations. This we will do in order to ensure that our planning and land use management systems are aligned to the key GPG objectives and are responsive to challenges of a fast growing competitive city region.
Amending the Act will further contribute towards lowering the costs of doing business in Gauteng.
Specific attention will, this year, be paid to the development of an appropriate policy position in respect of zoning schemes. The transformation of statutory bodies in line with the Gauteng Planning and Development Act will be accelerated. We will also fast track the processing of land development applications.
The total allocation for integrated economic development services for 2007/08 is R229.1 million
Trade and industry development.
This programme comprises of trade and investment promotion, sector development and industry services.
Trade and investment promotion
This unit's task is to facilitate trade, export promotion and attract investment. It comprises of the Gauteng Economic Development Agency (GEDA).
In the current financial year GEDA will continue to facilitate foreign and local investment into Gauteng. In line with its expanded mandate, GEDA will also assist municipalities in the implementation of local economic development programmes.
Viability assessments of LED projects of municipalities within Gauteng have been conducted and their implementation will commence during the current financial year.
GEDA will also focus on the development of economic hubs in the 20 priority townships. These hubs will go a long way in addressing the challenges of the second economy as well as create economic opportunities where these are most needed in the province.
Since May 2006 GEDA has been developing an electronic platform which will host "export ready" SMME's. The platform is an online catalogue which allows overseas buyers to view goods and services offered by Gauteng companies. It will open up new market opportunities for Gauteng businesses that would otherwise find it difficult to access the export markets.
Thus far 50 SMME's have been loaded onto the site. We will this year substantially increase this number. We have already made contact with about 2 500 "export ready" SMME's which should be loaded onto the site.
Working with other government departments, agencies, municipalities and the private sector, GEDA will strengthen efforts to position Gauteng as the hub of the Call Center industry and business process outsourcing.
We will continue with efforts aimed at sourcing additional funding for the training of Call Center agents. This we believe is critical in attracting Call Centers into Gauteng.
Furthermore this intervention is in line with the commitment made by the Premier in the State of the Province Address that GPG will facilitate the creation of 4 900 jobs from the Call Center industry and business process outsourcing.
As part of building the institutional base of the Gauteng City Region, work is currently underway to explore the establishment of a consolidated economic development agency that will serve the needs of the Gauteng City Region.
Once these plans are finalized more resources will be allocated to GEDA. This will include funding for the hosting of the Johannesburg Open golf tournament. For this financial year, we are allocating R50 million to GEDA.
Sector development
This unit comprises of the Gauteng Tourism Agency, the Gauteng Film Office, Cradle of Humankind, Dinokeng and the GPG Precinct. Its task is to implement strategies for the positioning of the industrial sectors as key contributors to economic growth and development.
The Gauteng Tourism Authority (GTA)
GTA will continue promoting Gauteng as a premier African tourist destination for business, entertainment, shopping, dinning, arts and culture, history and heritage as well as sports and events.
The agency's target is to achieve 53% total international arrivals, 34% of the national bed nights sold and maintaining an average length of stay of 5 days.
As we have said before, we are finalizing the Gauteng Tourism Development Strategy, which will serve as a tool to guide our interventions to deal with the challenges of tourism development particularly with regard to transformation, investments and SMME support in the tourism sector.
GTA is currently facilitating the bidding to host the international hockey conference as part of efforts to promote sports tourism in the build up to the 2010 FIFA world Cup.
GTA will also continue implementing the tourism institutional frame work, thus ensuring that efforts of the various tourism entities in the province are coherent and geared towards the comprehensive growth of the provincial share of the tourism market.
GTA receives R34.5 million for the 2007/08 financial year. More resources will be allocated to GTA once the Tourism Development Strategy is finalized.
The Gauteng Film Commission (GFC)
The film and creative industries continue to play a significant role in the provincial economy. Local demand for entertainment content is on the increase. Our national cinema market is rated as one of the 20 most lucrative markets in the world. During this year GFC will pay attention, among others, to addressing the challenge of critical skills shortage and identifying opportunities for investment in production studios and other infrastructure in the film and creative industries.
We are making good progress in our negotiations with the State of New Mexico in the US with regard to the development of skills in Gauteng's animation sector.
We will this year host the second Gauteng Film Indaba to focus on the development of content platforms in time for the 2010 FIFA World Cup.
Work will continue to develop further the "Film City" Concept.
GFC receives R9.6 million.
Cradle of Humankind and Dinokeng
Land has been donated for the construction of 4 new visitor orientation centres in the Cradle of Humankind World Heritage Site and the request for qualification for the PPP development of these centres will commence as soon as approval is given by National Treasury.
We are in the final phase of road construction in the Cradle of Humankind. We will this year be introducing gateways, traffic calming circles, cycle tracks and hiking trails to further enhance the aesthetic appeal of the destination and grow tourism to the area.
In Dinokeng the Road P2-5 between Roodeplaat and Cullinan will be completed in this financial year greatly enhancing mobility in the destination.
A decision is pending from the Minister of Public Works on the transfer of certain state land to the Gauteng Provincial Government for further expansion of the Dinokeng Game Reserve and for the development of tourism hubs at the Roodeplaat Dam and in the mining town of Cullinan.
The Provincial Government is also in discussion with the Department of Minerals and Energy and will be engaging with De Beers in order to develop the full potential of the historic mining town of Cullinan, including expanding jewellery beneficiation.
In the current financial year we have allocated resources to marketing Dinokeng and the Cradle of Humankind destinations. We expect this allocation to lead to an increase in visitations and spend in the project areas which is the key to unlock local economic development.
We are pleased to announce that the first major marketing event is the "Live Earth" concert for climate change which will be taking place at Maropeng on the 7th of July this year.
This is one of the nine concerts taking place across all seven continents and broadcast to 2 billion viewers worldwide, promoted by former Deputy President of the US, Al Gore.
The Cradle of Humankind World Heritage Site has been chosen as the symbolic venue which gave birth to the journey of human endeavor and the start of the human footprint on our planet.
The lead artists for the Maropeng concert are Zola, Mafikizolo, Angelique Kidjo, Babaa Mal, Vusi Mahlasela, Joss Stone, UB 40. This event will place the Cradle of Humankind on the world map and demonstrate the commitment of South Africa to combating climate change.
Comrade Speaker, we are allocating R32 million to the Cradle of Humankind and R40 million to Dinokeng.
The Gauteng Provincial Government Precinct
The GPG Precinct will centralize government services and make them more accessible to the people of Gauteng. It will also provide a rewarding working environment for GPG employees thus contributing to improved productivity and better delivery of services.
Furthermore the Precinct will contribute to the regeneration of the Johannesburg inner city, attract investment and will further boost the property market in the inner city.
The GPG Precinct has been restructured to ensure that the project is implemented in the most cost effective and speedy fashion. Refurbishment and occupation of GPG owned buildings is progressing. It is planned that by the end of this financial year, GPG departments will be occupying GPG owned buildings. We are this year allocating R44.4 million for the GPG Precinct We wish to indicate however that the GPG precinct project will be transferred to the Department of Public Transport, Roads and Works.
Industry development
This unit comprises of the projects of Blue IQ Investment Holdings. Its purpose is to facilitate the implementation of strategic programmes that will stimulate competitiveness in priority sectors.
Blue IQ will this year focus on among others, the development of a viable business plan and economic model for the implementation of the Blue Umbrella project, in order to increase broad band capacity and connectivity in the Gauteng City Region.
Blue Umbrella is an intervention by the provincial government designed to integrate municipal and provincial government into a consolidated broadband strategy. It seeks to expand access to information and communication technologies to all the citizens of Gauteng.
Plans are underway to expand the Automotive Supplier Park and the Innovation Hub to accommodate the growing interest of the private sector in these projects.
Further strategic infrastructure investments will be made at the OR Tambo International Airport, Industrial Development Zone.
Comrade Speaker, we are pleased to report that most of the challenges that have delayed the implementation of this strategic project have been unlocked. Working with the Airports Company of South Africa we will this financial year proceed with the implementation of this project.
Blue IQ receives R93 million for the current financial year. Funding for other Blue IQ projects will be facilitated through the Gauteng Fund whose purpose is to leverage private sector funding for strategic infrastructure projects.
Comrade Speaker the total allocation for the trade and industry development programme is R303.8 million.
Business regulation and governance
This programme is comprised of corporate governance, consumer protection, liquor regulation, gambling and betting. Its responsibility is to ensure an equitable and socially responsible business environment that allows for predictability.
Corporate governance
The corporate governance unit is responsible for the monitoring and evaluation of GPG's agencies and strengthening their relationship with the Department of Economic Development with regard to policy implementation. This unit is also responsible for providing business support to provincial agencies. In addition it assists in coordinating the accountability of agencies.
During the 2007/08 financial year the unit will pay attention to among others:
Consumer protection
Comrade Speaker, we will this year reduce the time it takes for us to receive consumer related complaints from the public and to resolve them. Currently our turn around time is three months. Our intention is to reduce it to two months.
Gauteng is the only province in South Africa that has developed consumer resource material for learners. This has gone a long way in promoting a generation of consumers that are aware of their consumer rights and responsibilities. This year we will expand this programme by developing and supplying resource material for Grade 10 learners.
Liquor regulation
Amendments to the Gauteng Liqour Act are now at a final stage. A provincial liquor policy has been finalized and submitted to the Executive Council for consideration.
We will also conduct awareness campaigns on the Gauteng Liquor Act especially to areas that have been recently incorporated into Gauteng.
Over the past year we have succeeded in removing back logs and reducing turn around times in the processing of liquor license applications. It is our intention this year to sustain these achievements by reducing further the time it takes for license applications to be processed.
We will also introduce mechanisms to reduce the cost of license applications. This will include making the application process easier.
Gambling and betting
The Gambling Board continues to encourage responsible gambling and in the 2006/07 financial year spent more than R 2 million on various campaigns to promote responsible gambling.
Going forward, we will continue to rely on the Gambling Board to strengthen efforts to increase provincial own revenue and to promote responsible gambling.
We will also ensure that other forms of gambling which promote the entry of SMMEs in the gambling industry such as limited pay out machines are introduced within a proper regulatory framework.
The total budget for the business regulation and governance programme is R 43.8 million.
CONCLUSION
Comrade Speaker, our journey towards a better Gauteng is clearly on course. This budget reflects our commitment to ensure that GPG succeeds in the implementation of the five year strategic plan.
Inspired by the gains we have made in the previous financial year, we are determined, this year, to make new and decisive advances towards meeting the objectives we have set for ourselves.
Let me take this opportunity to thank the Premier for his firm and decisive leadership in ensuring that we deliver on our objectives, my colleagues in the Executive Council for their collective wisdom and support, the Honourable Members of the Economic Affairs Standing Committee led by Comrade Mondli Gungubele, Mr Sibusiso Xaba our HOD, Heads of our agencies and senior management within the department.
Let us work together to consolidate our gains and move them to a higher level.
Thank you