MEDIUM TERM BUDGET POLICY STATEMENT MTBPS PRESENTATION TO THE JOINT BUDGET COMMITTEE

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NATIONAL DEPARTMENT OF PUBLIC WORKS

• MEDIUM TERM BUDGET POLICY STATEMENT (MTBPS)
  PRESENTATION TO THE JOINT BUDGET COMMITTEE

18 NOVEMBER 2003
Z Ntsaluba Chief Financial Officer
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THEME 4

• EMPLOYMENT
• AND
• ECONOMIC

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KEY ACHIEVEMENTS BY NDPW
Thousands of rural infrastructure projects
completed to speed up development for the poorest
of the poor Growth and stimulation of broader
participation of citizens in the construction and
property industry. To date 79 construction
related projects worth R180 million had been
awarded to women. More than 3250 emerging
contractors have been registered on our database.
Since 1996/97 about 50000 projects valued around
R400 million have been awarded to this group In
2002/03 about R400 million worth of jobs have
been awarded to the targeted business as part of
the Departments BEE policy This trend is
expected to increase over the medium term
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REPRIORITISATION OF BASELINE

• The Departments priorities are analyzed and
  grouped as follows
• Main Commitments Capital Works, Maintenance,
  Leasing, Rates and Taxes, Municipal Services
• Transfer Payments
• Minor Commitments Agrement Board, Interstate
  Boundary Fences, CIDP projects, Investigation of
  Sites, Land Division Committee
• Administrative Budget Personnel,
  Administration, Inventory, Equipment,
  Professional Services

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REPRIORITISATION OF BASELINE

• 81 of our Baseline figures represents committed
  funds
• 19 represents our Personnel Costs,
  Administrative Expenditure, Inventory, Equipment
  Professional Services mainly for construction
  related projects

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REPRIORITISATION OF BASELINE

• Our reprioritization over the next three
  financial years has been analyzed as follows

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PROPERTY MANAGEMENT

• Property Management constitutes, inter alia,
  Rates and Taxes, Municipal Services and Leasing.
• These are commitments that NDPW must honour so
  that services offered by client departments are
  not disrupted.
• Failure to honour such commitments could result
  in -
• Eviction of client departments by landlords
• Essential services being disrupted
• Law suits against the department
• Negative audit report resulting from unauthorised
  expenditure
• Poor service delivery by organs of state affected

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CONSTRUCTION PROJECTS

• In the past 3 years, serious damages have
  occurred to buildings and infrastructures due to
  ground movement as a result of sinkholes.
• An additional funding of R82 million is urgently
  needed for the execution of engineering services
  in dolomite areas.
• Such problems not being attended could result in
  serious consequences for the State with regard to
  loss of Sate assets, loss of life and legal
  claims instituted against the State

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INCREASED SPENDING ON CONSTRUCTION

• Since 1994 the construction component of GFCF
  (gross Fixed Capital Formation) has steadily
  grown. Most of this growth has however resulted
  from increased private sector investment with a
  real decline in public sector spending.
• The construction component of GFCF is currently
  at 5.6 of GDP with general government
  contributing approximately 1.7 to GDP and public
  co-operations contribute a further 0.8 to GDP

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INCREASED SPENDING ON CONSTRUCTION

• Increased investment in infrastructure delivery
  will thus have to be accompanied by extensive
  skills and enterprise development in both public
  and private sector.
• This skills development programme will provide
  direct support to the EPWP, the contractor
  incubation programme and other programmes that
  support the beneficiation of communities in South
  Africa.

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THE EXPANDED PUBLIC WORKS PROGRAMME
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ESSENCE OF THE PROGRAMME

• Focus on using government expenditure to provide
  employment opportunities and training to
  unemployed people
• Main areas of expenditure with potential are in
  infrastructure, environmental, social and
  economic sectors
• Programme is cross-cutting and decentralised,
  like BEE all government bodies must attempt to
  achieve the EPWP goals where possible

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INFRASTRUCTURE AND ENVIRONMENTAL SECTORS

• In infrastructure sector, focus is on creating
  jobs through labour-intensive construction
• Most potential for increasing jobs through
  increasing labour intensity is in civil
  infrastructure roads and municipal
  infrastructure such as stormwater and trenches
  for pipelines

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• DPW has carried out detailed research into
  government expenditure on infrastructure
• Total infrastructure spend over next five years gt
  R150 bn
• Total conditional infrastructure grants to
  provinces and municipalities over next five years
  R45 billion
• R15 billion of the conditional grants will be
  earmarked for labour-intensive construction under
  the EPWP

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• Aim to create 900 000 work opportunities from
  labour-intensive infrastructure projects over the
  next five years (five-year budget
• R15 billion from conditional infrastructure
  grants
• Additional allocations to be determined from
  other infrastructure departments)
• Range of environmental programmes are up and
  running, will create 200 000 jobs with training
  over the next five years (five-year budget R4
  billion )

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SOCIAL SECTOR

• Social sector to focus on community-based care
  and early childhood development
• Highly labour-intensive, low overheads, cheapest
  jobs
• Common delivery models through NGOs and CBOs
  need to be refined
• Five-year budget R600 million, to create at
  least 20 000 jobs with training
• Large potential for expansion when delivery
  models are in place

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ECONOMIC SECTOR

• Economic sector to include income generating
  projects and micro-enterprise development
  programmes
• Select unemployed people to go on enterprise
  learnerships
• Include access to micro-finance
• Target of 3000 learnerships with 15 000 employees
  over five years
• Use general government expenditure on goods and
  services to provide practical work experience to
  learners
• Training to be funded by SETAs

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TRAINING AND EXIT STRATEGIES

• Department of Labour to coordinate
• Department of Labour and SETAs to fund
• Exit strategies to inform training

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Examples of possible exit strategies
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INSTITUTIONAL ARRANGEMENTS

• Institutional arrangements
• Overall coordination by EPWP unit in DPW
• Environmental and cultural, social and economic
  sectors to be coordinated by DEAT, DSD and DTI
  respectively
• DGs Steering Committee to drive the programme

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CONCLUSIONS

• Cabinet approved framework in November 2003
• Sectoral plans to be in place by end February
  2004
• Environmental programmes already underway
• Infrastructure programmes to start in April 2004
• Social and economic programmes will start after
  more detailed planning
• END