SPEECH NOTES BY BOBBY STEVENSON, DA MPL AND SPOKESPERSON ON FINANCE SPEAKING ON THE ADJUSTMENT BUDGET IN THE PROVINCIAL LEGISLATURE 2 DECEMBER 2010

The adjustment budget consists of R1.46 billion of which only R694 million is an additional allocation from National Treasury. The rest is from rollovers and allocations from within the Province.

I make mention of this as the small allocation from National is a reflection of the tightening up of the fiscal space in which we are now operating in. One cannot expect bail outs for any over expenditure at the end of this financial year.

This means that we need to tightly manage our affairs otherwise what we misspend today will jeopardise service delivery tomorrow as it will be lost to top slicing from future budgets. To understand the seriousness of the situation one needs to appreciate that the equitable share for this Province will only increase by a little over R2 billion over the next two financial years. If we overspend by R2 billion and this is top sliced there will be no increase in the equitable share. In fact, it will decline by 5 or 6% depending on the salary increases for personnel.

It should be noted that this Province is facing huge cost pressures when it comes to personnel costs and they are currently running at 79% of equitable share. Unless our human resources are better managed, this Province will end up largely as an employment agency as the amount left over for goods and services continues to decline. This is a very worrying trend and norms need to be adopted so that it is stabilised and reversed.

The priorities in the adjustments budgets correctly reflect the bulk of funds going to Health and Education. This is largely for additional expenditure and not directed at simply offsetting current expenditure.

It should be noted that the integrity of this adjustment budget depends on our ability to recover irregular payments otherwise we will not be able to deliver the services we should to our communities. If we fail to do this the volcano that I was referring to in an earlier speech, will erupt.

We cannot afford to waste one cent as we need to ensure that our Province is an attractive place to live in and invest. Having a good administration and infrastructure is critical to attracting investors which create jobs.

In the Eastern Cape medium term budget policy statement, there are some important figures that have been highlighted which are very sobering to read.

From the first quarter of 2000 to the first quarter of 2010, the number of economically active people in the province decreased from 2.2 million to 1.8 million. This is 400 000 less people employed.

These figures are very disturbing as unemployment is arguably the most significant factor behind poverty and human under development. As the report correctly states an individual’s investment in his or her human capital are the major determinants of his or her labour market outcomes.

It should be noted for the last ten years the provincial labour market has increasingly placed a premium on a well educated workforce.

What sort of environment are we creating when it comes to education in this Province? One only needs to look at the infrastructure in schools.

There are numerous problems with infra structure in schools. Of our 5588 existing public schools, 21% are without electricity, fencing and security and 20% without water supply. 90% of schools are without libraries and of the 550 schools with libraries, only 168 are stocked with books. 91% of the schools have no laboratories.

This is a tragic tale which dooms people to a perpetual cycle of poverty.

One can clearly see the link in this Province between the education system and the employment rate. Bad education system equals poor employment prospects.

The Democratic Alliance believes that education is the foundation of opportunity and if we want our learners to get ahead in life and reach for their dreams, then the system of education in this Province needs to be turned around.

The Democratic Alliance believes that the Department of Transport needs to relook at its subsidy for the Apple Express. This is a major tourist attraction in Port Elizabeth and it cannot afford to fold. For every 7 tourists we attract to a city on a regular basis, it creates one job.

We are also concerned with the ongoing underfunding of Bayworld and this matter needs to be cleared up once and for all. This is also one of Port Elizabeth’s premier tourist attractions which is being highly neglected.

Given the high rate of unemployment in this Province and the job losses over the last ten years, we need to prioritise job creation projects.

This Province also needs to be innovative in it’s ideas when it comes to job creation. My colleague Dacre Haddon outlined in the Local Government debate, the DA’s policy on the creation of job zones in disadvantaged areas to provide jobs. He also outlined the Legislation which makes this possible.

It should be noted – for a long time the Democratic Alliance has been warning that the present incentives for our Industrial Development Zones are inadequate to attract investors and create jobs. Hence our alternative policy on job zones. In a report that was tabled in the National Parliament, the Coega Development Corporation said “However, internationally, similar zones offer tax incentives to investors and often relax local laws as well.”

It is clear that the Coega Development Corporation realises that the existing model is not good enough. The Democratic Alliance said this years ago.

It cannot be ideology as usual when it is unemployment unusual in this Province.

The Democratic Alliance is a progressive party with a far reaching agenda to put this country on a real growth path and is at the forefront of innovative ideas to create real opportunity for all South Africans. Our job zones policy is just one of them.

The Democratic Alliance supports the adjustments budget.