More than a lick of paint in Gauteng's R50bn spending plan

BDFM Online

Thursday, November 23, 2006

GAUTENG is to spend more than R50bn on infrastructure over the next five years to stimulate economic growth, reduce unemployment and improve the lives of residents, according to finance MEC Paul Mashatile.

Mashatile introduced the medium-term budget for the 2006-07 financial year in the Gauteng legislature on Tuesday.

The most controversial announcements in the budget were the introduction of tolls on new and existing roads and a study into the possibility of a fuel levy for Gauteng.

The proposals are intended to bring in new revenue for the province, which is seeing its resources stretched to the limit by continued in-migration.

Half the money for infrastructure development in the next financial year is to come from provincial government and the other half from municipalities.

According to provincial finance spokesman Percy Mthimkhulu, the money will be used to build roads, contribute to the "20 priority townships" renewal plan, upgrade clinics and hospitals and infrastructure related to the 2010 Fifa World Cup.

Mashatile says capital expenditure over the medium-term framework will rise to more than R35bn. "We believe this massive investment in infrastructure will further stimulate economic growth, reduce unemployment, create new nodes of economic activity and contribute to our overall objective of changing the lives of our people for the better."

He says the province is also prioritising the funding of social services. "Social services such as health, education, community safety and social development will remain adequately funded over the medium-term budget."

The province has projected revenue of R33,9bn, up from R33,8bn and expenditure of R35,2bn, up from R34,4bn.

Mashatile says the increased expenditure takes into account additional conditional grants from national government that amount to R110,7m.

About R17bn of the budget for next year has been allocated for special projects.

"These projects, which include the Gautrain and the growth and development strategy, are aimed at stimulating the growth of the provincial economy in order to ensure that we reach our target of 8% growth, " he says.

The major beneficiaries of the budget will be the health, education, social development, housing and public transport departments.

The health department is to receive an additional R255m, raising its allocation to R10,6bn.

According to Mashatile the extra funds will be used for much-needed hospital revitalisation and to improve forensic pathology services.

About R2m has been set aside for salary increases, and R21m has been set aside to replace old computers in hospitals.

The HIV/AIDS programme is to receive an additional R17,5m, and R106,8m will be distributed to various departments involved in the programme.

A programme to prevent and treat drug-resistant tuberculosis (TB) will receive R20m. It is estimated that one TB case infects 20 people on average, of whom two will develop active TB.

Gauteng has about 1,4-million HIV-infected people whose weakened immune systems make them susceptible to TB infection.

The education department's allocation is R12,4bn. According to Mashatile, an additional R129,4m will be given to the department to fund incentive schemes for staff.

The social affairs department will receive R1bn, and a rollover of R4,7m from last year has been approved to allow it to complete social service programmes that were still on the go at the end of the financial year. More than R21m of its budget is to be used to upgrade, maintain and rehabilitate buildings under its care.

The allocation to the housing department increases from R2bn to R2,1bn, with R81,8m allocated to the Alexandra Renewal Project.

The much-needed project has been criticised for its slow delivery on houses and because it is behind on its deadline to provide 21000 houses by next year.

The public transport, roads and works department will receive R6,25bn this year, of which R163m is to be used to improve infrastructure.

It was revealed last year that only 57% of the province's roads could be considered to be in a good condition.

The community safety department, with its R222,3bn budget, was allocated R31m to its road safety projects to reduce the high number of fatalities on the province's roads - particularly since it is estimated to have half of the country's minibus taxis.

The province allocated R263m to the sports, arts, culture and recreation department, of which R21m will be used to fund the hosting of soccer's major international exhibition, Soccerex.

The exhibition, which has been held in Dubai for the past three years, is expected to attract about 5000 visitors a year from around the world, and bring the equivalent of $100m a year to Johannesburg, as well as provide media coverage estimated to be worth billions of rands.

More than R14m has also been set aside to upgrade the Rand Stadium ahead of the 2010 World Cup.

North West will receive a R10,5m refund from the Gauteng Gambling Board following the completion of the demarcation process which sees Morula becoming part of Gauteng.

Mashatile says the province is on its way to meeting its strategic objectives of faster growth and job creation.

Job creation averaged about 13% between September 2004 and September last year.

The province is also experiencing increased business confidence, with business activity last year increasing 10,7% compared to 2004. Net capital investments grew 17,2%, between 2000 and last year.

"Our immediate task is to ensure that these funds are spent and that we accelerate the implementation of our programmes," Mashatile says. "We must continue to be intolerant to both over- and under-expenditure."

Political parties are critical of the province's plan to introduce a new fuel tax, arguing that residents are already paying more for fuel than residents of any other province.

It is also felt that the province is not doing enough to collect outstanding taxes.

Brian Goodall, chief of the Democratic Alliance in the Gauteng legislature, says, however, that he is encouraged by evidence that the departments, on the whole, are managing to spend their budgets