1. 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

2. THEME 4 EMPLOYMENT AND ECONOMIC

3. 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 Department’s BEE policy This trend is expected to increase over the medium term

4. REPRIORITISATION OF BASELINE • The Department’s priorities are analyzed and grouped as follows: • Main Commitments – Capital Works, Maintenance, Leasing, Rates and Taxes, Municipal Services • Transfer Payments • Minor Commitments – Agreme’nt Board, Interstate Boundary Fences, CIDP projects, Investigation of Sites, Land Division Committee • Administrative Budget – Personnel, Administration, Inventory, Equipment, Professional Services

5. 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

6. REPRIORITISATION OF BASELINE • Our reprioritization over the next three financial years has been analyzed as follows

7. 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

8. 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

9. 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

10. 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.

11. THE EXPANDED PUBLIC WORKS PROGRAMME

12. 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

13. 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

14. DPW has carried out detailed research into government expenditure on infrastructure: • Total infrastructure spend over next five years > 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

15. 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 )

16. 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 NGO’s and CBO’s 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

17. 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 SETA’s

18. TRAINING AND EXIT STRATEGIES • Department of Labour to coordinate • Department of Labour and SETA’s to fund • Exit strategies to inform training

19. Examples of possible exit strategies

20. 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 • DG’s Steering Committee to drive the programme

21. 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