The V&A Waterfront in Cape Town. Picture: 123RF/HONG QI ZHANG
The V&A Waterfront in Cape Town. Picture: 123RF/HONG QI ZHANG

On Tuesday, I tabled the Western Cape government’s 2020 budget in the Western Cape provincial parliament. This outlined how our spending over the medium term will deliver against the new Western Cape provincial strategic plan for 2019-2024, and its vision-inspired priorities, and, most importantly, how it would deliver for all who live in the Western Cape.

Two weeks ago in his state of the province address, Western Cape premier Alan Winde set out the DA’s vision for the province, which is captured in this plan, and commits us to putting the needs, choices and dreams of all those living in the Western Cape at the heart of everything we do, to build “a safe Western Cape where everyone prospers”.

However, we cannot ignore the fact that SA is in deep economic trouble, and that we have an economy in recession, staggering levels of unemployment, unstable public finances, zombie state-owned enterprises (SOEs), and huge fiscal risks.

We also have significant downside risks in the form of planned load-shedding, trade wars, oil wars, and the coronavirus, which will have a negative impact on the national economy.

What most people do not seem to realise is that even if the proposed structural reforms, outlined in the document “Towards an economic strategy for SA” are implemented by the national government, which seems unlikely, economic growth still does not exceed 2% over the medium term, which is insufficient to sustain our public finances.

And even if the public-sector wage bill is cut by R160bn by the national government, which also seems unlikely, the national debt still explodes over the medium term to a staggering R4.38-trillion, or 70% of GDP, which is regarded by international financial institutions as a “high-risk threshold”.

We may have to revise our economic outlook, but we currently expect the provincial economy to recover and to grow at an average rate of about 1.6%

And, worse, the National Treasury has conceded that it will not be able to stabilise national debt and that the risk of a sovereign credit rating downgrade to “junk status” is now more pronounced in SA. What this means is that the national government is in danger of losing control of our public finances.

In contrast, the DA in the Western Cape has worked hard to create an enabling environment for the private sector, and for the markets, to drive economic growth and to create jobs in the province. Which is why we have a growing economy, expanding employment and improving human development in the Western Cape.

We may have to revise our economic outlook, but we currently expect the provincial economy to recover and to grow at an average rate of about 1.6% over the next five years. 

We think there are significant risks ahead and so we have also implemented a decisive and robust provincial fiscal strategy and will continue to focus on proper expenditure management, proper revenue management and maintaining a balanced budget; and continue to apply the principles of allocative efficiency, fiscal sustainability, fiscal consolidation and fiscal discipline in the Western Cape.

However, despite this, we were put on notice by the finance minister last year that “difficult decisions” would have to be made and that we would have to pencil in “large reductions” to provincial budgets. We made some tough decisions and planned for a worst-case scenario, which required us to cut our provincial budget by 5% or R2.6bn in 2020/2021, 6% or R3.4bn in 2021/2022, and 7% or R4.1bn in 2022/2023 in the Western Cape.

We hoped for the best and planned for the worst, and warned, at the time, that the proposed budget cuts risked compromising service delivery, especially in education, health, and social development in the province. However, after what has been a very difficult budget process we are pleased that the worst-case scenario has not materialised, which is very good news for the Western Cape.

And so, in our 2020 budget we will be spending an estimated R224bn over the medium term on five key objectives:

  1. Supporting the vision-inspired priorities set out in our new provincial strategic plan.
  2. Protecting our frontline services, including education, health, and social development.
  3. Holding the line on investment in new and existing infrastructure assets.
  4. Preparing for a cleaner, greener energy future.
  5. Being ready to respond to future risks that may negatively impact the Western Cape.

The largest percentage of the budget will go to frontline services — R83.2bn to health, R79.4bn to education, and R8.4bn to social development. We have also allocated R1.1bn over the medium term to deploy more law enforcement officers to fight crime, especially violent crime, so that people feel safe in the Western Cape.

We will work hard to land our vision of a A safe Western Cape where everyone prospers, and we trust our 2020 budget will give all who live in the Western Cape hope for the future.

• Maynier is Western Cape finance and economic opportunities MEC.