Economic Development and Tourism Budget Vote

Meeting report

The Chairperson welcomed the Members, delegation, and all other guests to the Committee meeting to discuss Vote 12 of the Western Cape Adjustments Budget.

Mr David Maynier, Western Cape MEC: Finance and Economic Opportunities, said Members will see from the Special Adjustments Budget and the presentation, the Department took a net reduction of about R57 million. This is a result of the baseline reduction of R72 million. Additional funding of about R15.5 million is given to support operational costs because of Covid-19. He said under the circumstances, the Department adapted well. It knocked up considerable achievements over the last couple of months as it responded to Covid-19. He specifically noted the Department’s support for businesses, the further opening of the economy, and workplace safety.

Western Cape Government: Economic Development and Tourism – First Adjusted Budget

Ms Jo-Ann Johnston, Acting Head of Department: Economic Development and Tourism, said our economy is in big trouble because of COVID. It will only reach breakeven point in 2024. The Department is trying to mitigate the impact of COVID on the economy.

As a Department it is reducing its baseline reductions. There are a number of slashed operational budgets which accumulate to a reduction of R4.6 million. Things such as travel, stationery, catering for meeting and entertainment are slashed significantly. While it is currently not required, going forward, and once people return to offices, these expenditures will be minimised radically.

The second way the Department manages to reduce its baseline is essentially through the reprioritisation of expenditure of programmes and projects. It either reschedules or terminates projects across programmes which results in savings over R 2 million.

Thirdly, the Department reprioritises budgets across earmarked allocations. This includes public entities. The reprioritisation across public entity allocations and earmarked allocations results in savings to the value of R 35 million.

Lastly, the Department reviewed the Compensation of Employees (COE) budget. This resulted in a total COE saving of R30 million.

Additional Funding Approved by Provincial Treasury includes:

• Increased operational costs due to COVID-19 to provide for unexpected incidental costs incurred as a result of the COVID-19 pandemic.
• COVID-19 Occupational Health and Safety Project: Workplace Safety Support, essentially a focused plan. The idea is to slow down the spread by assisting businesses to comply with regulations and trading responsibilities. This is to ensure the health and safety of workers and customers.
• Western Cape Small, Medium and Micro Enterprises (SMME) COVID-19 Relief and Recovery Fund to provide working capital in the form of a Grant to SMMEs operating or which will open after easing the economic lockdown on 1 June 2020.
• George Airport: Screening passengers to assist George Airport with screening passengers. This allows it to open and comply with COVID-19 protocols.

The Department of Economic Development and Tourism (DEDAT) First Adjusted Budget 2020/21 showed how the Department managed to lower its expenditure by R72 million. There are seven programmes which include:

• Programme One : Administration - Baseline Reduction: R3.6 million
• Programme Two : Integrated Economic Development Services - Baseline Reduction: R7.2 million
• Programme Three: Trade and Sector Development - Baseline Reduction: R22.9 million. The operational budget was reduced by R 167 000.
• There have also been reductions in Programme Four: Business Regulation and Governance, Programme Five: Economic Planning, Programme Six: Tourism, Arts and Entertainment, with a baseline reduction of R15 million, and a reduction in Programme Seven: Skills Development and Innovation.

Discussion

Ms N Makamba-Botya (EFF) wanted to know why programme six, which deals with the tourism, arts and entertainment, has a reduction of over R15 million. The sector suffered significantly because of the lockdown. Innovative ways to not only sustain the industry, but also to boost it is needed.

Secondly, with over R2 million spent on screening passengers at George International Airport, she wanted to know why so much money is set aside for screening.

Mr L Mvimbi (ANC) welcomed the presentation by the Acting Head of Department. Regarding the George International issue, he asked why the Airports Company South Africa (ACSA) is not responsible for the R2 million allocation for screening. He wanted to know why the R2 million allocated to the George International Airport is considered a donation to ACSA.

There is a big difference between a reprioritisation plan and a recovery plan. Since the Department is one which deals with the economics of the province, he said he expected it to be able to distinguish between the two. A recovery plan is a plan stating what the province faced or is exposed to. It includes the social and economic situation, challenges it encountered, and challenges it is not aware of.  The conclusion is what it comes up with to not only to deal with those challenges but to overcome it. None of this is indicated in the presentation. The Department must start working on some kind of forecast regarding how the province can economically recover out of the situation it is currently in.

He wanted clarity regarding the confusion between the amounts mentioned in the presentation and the amounts mentioned in a previous presentation with Provincial Treasury. Economic planning sees a cut of around two thirds. He asked if it can really afford this, as the economic sector is a fundamental component of economics. Economic planning is the most important one it is at a disjuncture with. A two thirds reduction is not a good thing.

Mr A van der Westhuizen (DA) asked if the R9 million set aside for support to Small, Medium and Micro Enterprises (SMME) is the same fund for what is known as the SMME Booster Fund. If so, he wanted to know if the R9 million is nearly enough.

He asked if the budget will allow the Department to monitor, highlight, and intervene in cases where service delivery of national, provincial, and local government hampers economic recovery.

He referred to reports regarding the Deeds Office in Cape Town and backlogs in the approval of plans. It seemed to him, in many cases, Departments use COVID-19 as an excuse for poor service delivery. He suggested the Department plays a facilitation role to not only assist the economy in its recovery, but to also ensure government departments are not the problem.

He asked if the Department can assist people who are still experiencing delays related to the Red Tape Department.

Lastly he asked if the Department, under the budget, will still have the ability to lobby central government to open up the Western Cape’s economy. He referred particularly to sectors such as tourism, agriculture, and such. As the Chairperson of the Standing Committee on Agriculture, he believes agriculture will play a massive role in pulling the Province out of the hole it is in.

Responses

Ms Johnston said the George International Airport is the third biggest airport for business travel. If it is left unopened it will result in consequences for the Garden Route District, and also hinder services for other districts in the area, including Overberg. ACSA is one of the organisations severely affected by the lockdown. Since there is no international travel, its income completely dried up. It has insufficient contingencies to allow for the costs of screening which is mainly around medical staff. The R2 million is for this. It essentially paid for two medical doctors as well as two nurses. Those costs are supported by the Department of Health and municipality. If the Department did not give George Airport the R2 million, there would have been severe knock on effects for the districts serviced by the airport.

She acknowledged the difference between a recovery plan and a reprioritisation plan. The Department is currently in reaction mode to COVID-19. Recovery is something which must be planned. In its planning it looks at what was done in the last five years. It must prioritise the additional things needed to help stimulate the economy. It must also support those sectors and businesses affected worst by COVID-19. The plan must be finalised in time for the November adjustments.

Lastly, the two thirds reduction to economic planning is a main result of operational budget cuts. The operational expenditures are essentially around travel, international travel, stationery, and such. It is cut by two thirds, with the same things happening across departments.

Mr Rashid Toefy, DDG: Economic Operations, DEDAT, replied saying Wesgro, within the last year served a crucial part in its delivery of the market to the economy. The Wesgro budget is just over R100 million, with R8 million spent on its presence at international shows and for travelling. There were no direct cuts to any of its marketing initiatives. The cuts are predominately a result of its operational expenses which were curtailed by COVID-19. Wesgro received a substantial budget increase in the last year in an effort to boost the economy. The net effect is, the current and next financial year will not see a hard reduction on money spent on the economy.

It has the ability to lobby national government with the help of Ministers and Ministers’ support staff. It proved in the last three to four months it has an incredible success rate of lobbying with national government. Its influence extends far beyond just tourism. It influences the economy in general. Mr Toefy said he is confident about the relationships it established and the team it put together.

Mr John Peters, Chief Director: Economic Enablement, DEDAT, said the SMMEs Fund is very much different to the Booster Fund. The Booster Fund closed last year. It is continuing with this project which it scheduled to run over two years. The following projects are given in addition to the R9 million. R2 million was allocated for what it called the Enterprise Development Programme (EDP) Project. It is essentially a project to support community kitchens. All support is for the instruments or spaza shops which would supply those community kitchens. A project to the value of R11 million is trying to get organized. It will allocate an additional R11 million to this project. It must also allocate R7 million to the Working Capital Fund. 

Ms N Nkondlo (ANC) asked Mr Maynier what lobby to open up the economy means in essence.

Secondly, she asked what percentage is allocated to the Department’s spending. She asked what the percentage of money is which goes to economic activities in trying to open up the economy.

Regarding vacancies not filled, she wanted to know what the implications are of those vacancies on the current staff. This includes labour relations pressure, and employees taking up additional tasks because of some of the vacancies not being filled. She wanted to know some of the measures which are put in place, given COVID-19 put additional strain on people operating from home.

MEC Maynier said when it comes to economic recovery, the Department put a significant effort into lobbying with national government. It achieved success in particular with construction and e-commerce sectors.

Regarding George Airport the Department was able to do much of this with its existing capacity and resources. This is to the extent its efforts consumed resources like the R2 million which was allocated to the George Airport.

Ms Johnston said the Department will try to provide some of the information in writing particularly regarding the provincial government spending, and the percentage of what goes to local.

Regarding the vacancy rate, she said there was much consideration around realigning the Department and doing things more smartly going forward. The recovery plan is not just simply about doing more or doing new things. It is about doing things in a collaborative manner and delivering transversely. It is about making the most efficient use of the current resources it has, as much as possible. This means not just financially, but also regarding human capacity.

On labour relations, the Department will make sure unions are on board. The Department is always in conversations with Unions to try and determine ways to move forward.

Ms Helen Davies, Chief Director: Green Economy and Innovation, DEDAT, said regarding drought relief, the Department has a water resilience programme in which it works alongside a number of departments. This includes the national and local government, to try and support municipalities to find different decentralised options of water supplies. These supplies boost and build up the water sector.

The Deeds Office is a branch of the national government department. The Department works very closely with the Department of Labour to try and get it to support the Deeds Office. The direction is for the Deeds Office to close when it has positive cases of COVID-19. It is a direction given by the provincial committee of the national department.

The Department is working closely with the Department of Labour to help understand what is required for workplace safety, to ensure those offices are safe. Regarding lobbying, Ms Davies said through the crises, the Department worked collectively with Wesgro. Together with the national department, it looked at which restrictions the economy must unlock to ensure everyone is aligned regarding what must be opened during the lockdown.

The Chairperson thanked the Department for its attendance. Further responses will be provided in writing. If Members have any more questions it must be forwarded to the procedural officer to compile it and forward it to the relevant Department. The Department was dismissed.

Consideration and Adoption of the Draft Committee Report on Vote 12: Economic Development and Tourism in the Schedule to the Western Cape First Adjustments Appropriation Bill

The Chairperson asked if Members can please indicate its view on the particular Vote.

Mr van der Westhuizen said his party supports the Vote.

Mr D Mitchell (DA) seconded the proposal in support of the Vote.

Ms Nkondlo said the fact that she still has questions proves her party cannot just support the Vote without information to make a proper decision and be satisfied with it. The ANC registered its minority view according to Rule 90 not to support the Vote.

The Chairperson said she supports the view of Mr van der Westhuizen and Mr Mitchell to support the Vote.

For the record the Chairperson read the following resolution:

“The Draft Report of the Standing Committee on Finance, Economic Opportunities and Tourism on Vote 12: Economic Development and Tourism in the Schedule to the Western Cape Adjustments Appropriation Covid-19 Bill dated 27 July 2020. The Standing Committee on Finance, Economic Opportunities and Tourism reports that it has concluded its Vote 12: Economic Development and Tourism in the Schedule to the Western Cape Adjustments Appropriation COVID-19 Bill for 2020 referred to the Committee in terms of Standing Rule 188 and that it supports the vote referred to it. The minority view in terms of Standing Rule 90, the African National Congress do not support the vote.”

The Chairperson thanked all Members for the participation and wished everyone a pleasant day further. Members were reminded to stay safe and have a blessed day further.

The meeting was adjourned.