by Andrew Louw – DA Northern Cape Premier Candidate
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Date: 04 March 2019
Note to editors: The following was presented today by the DA Premier Candidate for the Northern Cape, Andrew Louw, ahead of the formal tabling of the Northern Cape’s budget on Wednesday, 6 March 2019. He was accompanied by DA Northern Cape Provincial Chair, Harold McGluwa.
You can download the pictures here and here.
When we tabled our alternative budget last year, we highlighted that the Northern Cape finds itself in dire financial straits. My colleague adv. Boitumelo Babuseng made the comparison that, if the province was a person, not even the Bank of Baroda would extend a loan. Unfortunately, the cumulative irregular expenditure has increased to R10.5 billion and unauthorized expenditure has increased to R903 million since then.
The DA’s alternative budget for the Northern Cape can be downloaded here.
Today, we must emphasise that the Northern Cape is not isolated from the rest of the country.
When president Cyril Ramaphosa says on a Thursday night that “Eskom is in great crisis” and South Africa experiences rolling blackouts that following weekend, businesses in the Northern Cape also have to count the cost of unreliable electricity supply.
When countries, including our trading partners, ban our meat and our wool due to foot-and-mouth disease fears, our farmers and our abattoirs also suffer from a loss of income.
But with the abundant opportunities offered by the Northern Cape, we do not have to accept either the high unemployment rate or the subsequent poverty levels as givens. With every asset that the Northern Cape has to offer, the DA can speedily harness our provincial potential and turn the province’s balance sheet from being deep in the red to strong in the black.
It is not just an economic duty to do this.
It is also a moral one.
With the expanded unemployment rate at 38% and the youth unemployment rate of 43%, households are experiencing very real and very deep levels of poverty. As Statistics South Africa informs us, this is the province where households are the most likely to run out of money to buy food before the end of the month – even if up to a third of households reports resorting to such desperate tactics as skipping meals simply because families cannot afford food. This long-term malnutrition permanently damages the health of our children’s minds and bodies, with serious consequences for the future.
While the ANC’s broken bus is determined to steer us off the fiscal cliff, the Democratic Alliance can bring us back on the track needed for development, growth and prosperity.
How to mitigate the main risks for the province’s fiscal sustainability
To restore the province to a strong financial footing, the DA will mitigate three major risks in the following way:
Risk: The high percentage of unpaid invoices, which stood at of R1.4 billion as of 31 March 2018, places immense pressure on the delivery of goods and services. This is not a new phenomenon; rather, it illustrates what we cautioned against in our alternative budget of 2018. When we settle 2017’s debts using 2018’s money, we automatically create a budget deficit and force ourselves to settle 2018’s debts using 2019’s money. This, in turn, creates an immediate difficulty for the efficient, smooth delivery of goods and services to communities. We see this not just as an abstract exercise in some accountant’s files, but in private companies who cannot risk providing emergency medical care to minor children as they know they cannot trust the department will repay them.
Solution: The risk of unpaid invoices can be mitigated by implementing and following the measures already provided for by the national government, but which are often abused by the provincial government for personal or political gain. So we will do the following:
Tighten controls over the supply chain management process;
Prioritise the payment of unpaid invoices to SMMEs, which may be forced to close their doors and retrench their workers if government fails to honour its commitments;
Enter into negotiations for the repayments of large debts to service providers;
Free up funds for the immediate settlement of outstanding debts by following in the fiscal footsteps of our colleagues in Tshwane, who eradicated the budget deficit their administration inherited from the ANC and turned it into a surplus in just one year. Just as the DA-led administration in Tshwane did, the steps we take will include a ban on the purchase of luxury vehicles for politicians and officials, a ban on lavish inaugural parties and a ban on blue-light brigades.
Risk: Contingent liabilities amounted to R1.5 billion at the end of 2017/18, with constantly increasing medico-legal claims especially in the Northern Cape Department of Health.
Solution: To reduce the cost and amount of medico-legal claims in the short term, the Democratic Alliance will explore the possibility of settlements and avoid the outsourcing of this work insofar as competent, capable state lawyers are available. In the medium to long term, a DA-led government will also ensure that hospitals and clinics are adequately staffed and equipped with sufficient medicine, medical supplies and resources, so that circumstances giving rise to medico-legal claims do not re-occur. We will work with our counterparts in national government on fiscal spending rules, which will stabilise the debt-to-GDP ratio, and implement debt ceilings which may not be breached by either departments or provincial public entities.
Risk: Instability in senior management positions, especially amongst heads of departments and chief financial officers, make it difficult to implement corrective actions. One can see a clear example in the Northern Cape Department of Health, where service delivery has come to a complete standstill and staff have to fight for their salaries as hard as they do for their patients’ lives. We also see this in the Northern Cape Department of Economic Development & Tourism and the Northern Cape Provincial Treasury, which has played a game of Russian roulette in the appointment of acting heads who all lack the political backing to ensure the implementation of a cohesive policy for the economic growth of the province.
Solution: Ensure that senior management positions are filled with people appointed on merit and who have a passion to serve the public, not to enrich themselves.
2. Stimulating economic growth for fair access to real jobs
With an expanded unemployment rate of 38% and, at 43%, the second highest youth unemployment rate in the country, more needs to be done to stimulate the level of economic growth needed for the sustained creation of sustainable jobs. Realistically speaking, we need to start with growth rates of at least 3% and escalate to levels between 5% and 8%.
Within the province and within the country, however, the ANC remains more invested in corruption than in investment and more interested in self-enrichment than in economic development.
As a result, levels of growth and investment remains far too subdued to enable an environment conducive for job creation. This is not only bad news for existing businesses who find barriers to future expansion, but also for new entrants to the labour market who find themselves searching for jobs forever.
With a failing ANC in charge of the province, the people of the Northern Cape are being oppressed by a lack of opportunity, a lack of employment and a lack of empowerment. We cannot continue with this society where the majority of our people are doomed to remain economic outsiders, but must create an inclusive and stable economy.
So, by comparison, the Democratic Alliance works so that our people can work. It is our goal to place a job in every home and our track record shows how well we can, and do, achieve this goal. In the past ten years, the Democratic Alliance has single-handedly delivered 640 000 new jobs where we govern. This includes jobs in the agricultural sector, despite severe drought conditions. Not only does the DA-run Western Cape have the lowest unemployment rate, which is 13.9% lower than the national average, but this province also expanded its employment by 25% since the DA took over.
With a provincial government dedicated to stimulating economic growth, we can bring this change to the Northern Cape too.
Policy certainty, especially for mining and agriculture
Part of how we will get the job of job creation done is to establish greater policy certainty, especially for mining and agriculture. This will be done through guaranteeing private property rights and securing the rights of individuals to own their businesses, homes and farms. It will also be done through the unequivocal rejection of expropriation without compensation and the pursuit of land reform which grows jobs, expands ownership and enables economic justice.
We do not need the type of reform championed by entities like the Kalahari Kid Corporation, which starved more than 260 goats during transport to Namibia. Instead, we must allocate resources to the type of shared equity schemes and other initiatives which makes land reform projects in the Western Cape a shining example to the rest of the country. Unlike the Kalahari Kid Corporation, which uses its resources to give emerging farmers toothless goats which cannot breed, the Western Cape has supported 357 land reform farms since 2014 and managed so successfully that it can now attract more than R80 million in private sector backing for land reform projects.
Considering the increased decimation of the insect population, especially bees which play a crucial role in the pollination of crops, it is fundamental that we implement land reform in a manner which does not threaten our food security – which is precarious and tenuous enough as it is.
Support of small business for great change
It is an open secret that funding allocated for SMMEs in the Northern Cape is not done on the basis of merit or economic criteria, but using political considerations instead. The Economic Growth and Development Fund has operated as nothing more than a political piggy bank for the right cadres for years. And while it originally seemed as though Mac Jack as MEC for Finance, Economic Development & Tourism had an interest in sweeping up the mess left behind by fraudster John Block, it is now apparent that he is only interested in ensuring that the right people in the right faction get the right share of the loot.
By comparison, the Democratic Alliance believes in supporting small business so we can see great change in our provincial employment statistics. We will:
Work with our national counterparts to implement a pro-small business policy outlook, including a temporary tax amnesty and enforcement of government payments to SMMEs within 21 days;
Ease the cost and administrative burden of doing business, such as the Red Tape Reduction and Ease of Business Strategies which already generated R600 million in economic savings in the Western Cape;
Provide funding and targeted supported to entrepreneurs, including micro-entrepreneurs in the informal economy. Especially in the rural parts of the province, micro-entrepreneurs in the informal sector keeps the regional economy going. It is our goal to elevate this economic activity through the creation of safe trading spaces, taking hands with local government to implement simplified application processes for trading permits and developing a Code of Good Practice.
Our funding environment will not be implemented behind a thinly veiled smokescreen of political patronage nor will we sift through the applicants to find our political buddies; instead, we will use economic criteria and encourage the development of entrepreneurship to drive fair access to real jobs. In one year, the City of Cape Town Business Support Project facilitated enterprise and supplier development for more than 580 SMMEs. There is no reason why businesses in the Western Cape should go forward and businesses in the Northern Cape be left behind.
Building the infrastructure needed for growth and development
We need to revitalise rural and peri-urban economies in the province, starting by enhanced market access for agricultural products and encouraging agri-processing close to primary agriculture production areas along important trade corridors. Unfortunately, the road network of the Northern Cape is non-existent and therefore hampers market access and denies future opportunities for growth in agro-processing. It also discourages tourists or visitors here on business from returning again – who would willingly want to expose their car to these conditions if they could avoid it?
The ongoing challenge that at least six municipalities currently experience in ensuring the reliable provision of water is another deterrent to job creation and growth, especially for the hospitality industry with restaurants, guesthouses and hotels reliant on a steady stream of hot water for their guests and for industries such as agro-processing which require water to uphold certain hygiene regulations.
The Democratic Alliance will prioritise the maintenance and expansion of key basic infrastructure such as roads, railways and air-freight facilities which can ease the cost of getting agricultural products to a broader variety and diversity of markets. We will also ensure continuous maintenance and upgrades to bulk infrastructure to ensure that basic services are reliably delivered.
The Northern Cape’s finances are in a precarious position, but the Democratic Alliance can enter into an agreement with communities to deliver the type of change needed for our province to grow and to experience prosperity. We do not have to stand back for any other province in the country. With what we have to offer, we can be one of the economic stronghouses of South Africa. It just requires the right political will.
DA Northern Cape Premier Candidate
082 383 6914
071 251 5558