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					ANC Today ------------------------------------------------------------------------------Volume 5, No. 43, 28 October - 3 November 2005 ------------------------------------------------------------------------------THIS WEEK: * Letter from the President: A country at work for a better life for all * Public health facilities: Responding better to the health care needs of communities ------------------------------------------------------------------------------LETTER FROM THE PRESIDENT A country at work for a better life for all On 25 October, the Minister of Finance, Trevor Manuel, addressed the National Assembly to present the 2005 Medium Term Budget Policy Statement (MTBPS). Popularly described as a "mini-budget", the MTBPS provides the government with an opportunity to place additional financial requests to parliament to meet "unforeseen and unavoidable" expenditures not provided for in the Annual Budget tabled at the beginning of the calendar year. The MTBPS also gives the National Treasury an opportunity to make an assessment of the state of the economy and the management and utilisation of the public finances. It also indicates the medium term government expenditure forecasts, containing the projected baseline allocations for the different departments and spheres of government. It therefore helps to indicate the directions of government economic policies for the next three years. For all these reasons, it is clear that the MTBPS constitutes an important document which as many of our people as possible should understand. We are therefore dedicating this Letter to the 2005 MTBPS. To help us explain what it says, we will rely extensively on the Address of the Minister of Finance, which

constitutes an excellent summary of the major issues covered to the MTBPS. Among others, the Minister of Finance spoke on issues of growth and investment, economic participation and the second economy, social security, health care and human development, and improving the capacity of the state. All these stand at the centre of our efforts to ensure the reconstruction and development of our country, all focussed on achieving the objective of a better life for all. Below follow edited extracts of the Address of the Minister of Finance. He said: "Under the leadership of the Deputy President, work is in progress on an accelerated and shared growth initiative - an in-depth review of the dynamics of economic progress and the constraints that hold back our development. Our search is for a vision that brings South Africans together, investing in our shared future, jointly confronting challenges and celebrating opportunities, constructing a strategy that will confidently be embraced by business leaders and workers, provinces and cities, civic organisations and community activists. "Economic growth as measured in the national accounts has increased steadily, from 2,8 per cent in 2003 to 3,7 per cent last year and an estimated 4,4 per cent this year. These are preliminary figures - once the full-year survey data has been incorporated into the accounts I expect the growth estimates to be revised upwards, as in past years. Several supplementary indicators signal that a notable acceleration in growth is underway.(and include) continued expansion in employment and improvements in productivity. "More important for the sustainability of the growth acceleration: gross fixed capital formation increased by nine per cent in 2003 and 9,4 per cent last year, and will continue to increase steadily as a share of expenditure and GDP over the years ahead. This is a key foundation of our growth strategy. "Our estimates indicate capital expenditure plans of the public sector amounting

to R111 billion next year, rising to R136 billion in 2008/09. Private sector investment also remains healthy, including residential construction growth of over 20 per cent and manufacturing sector investment growth of 6,5 per cent in the first half of 2005. Subdued inflation and the low interest rate environment have contributed to particularly buoyant conditions in the property market and demand for mortgage advances. "On the growth and investment front, Madam Speaker, our plantation is well and truly flourishing. But there is more to be done. Our growth initiative recognises that capacity and systems must be upgraded in our freight logistics sector, that we need to see lower prices and greater competition in telecommunications, we need to strengthen our research and technology capabilities and there are aspects of pricing and market conduct that need attention in several sectors. "These are under review, and financial sector development, trade promotion and labour market policies will also come under scrutiny for their contribution to maintaining and enhancing a favourable investment environment. "If economic growth is our first joint project, Madam Speaker, then bringing the second economy into the mainstream of economic life must be our second. These are closely related challenges. "Improved economic growth means that we are now seeing measurable advances in employment, and the official unemployment rate has declined from nearly 30 per cent in 2001 to 26,5 per cent in March this year. The increase in employment is partly reflected in formal sector job opportunities, but it also arises from strengthened linkages between formal businesses and emerging entrepreneurs, and an improving environment for informal and small-scale trade. However, we don't yet know enough about the dynamics of employment. "The policies and programmes that contribute to building bridges between the First and Second Economies are many and varied. They include procurement policies of both the public sector and large private businesses, focused on

small enterprise support and black economic empowerment. They include our expanded public works programme and associated training and skills development activities, our land restitution and land reform initiatives, agricultural support programmes, consolidation of small enterprise support in the new Small Enterprise Development Agency, and new directions in housing policy, community investment and local economic development. "Developments in the financial sector also play their part. Over 1,98 million people have gained access to bank accounts through the Mzansi initiative. Better consumer protection is incorporated in the new Credit Control legislation. A framework has been developed for extending R42 billion in housing finance on affordable terms to households largely excluded from the mortgage market until now. "New institutions have been proposed to support community savings and loan facilities and to provide credit services to emerging farmers. Within the framework of the Financial Sector Charter, greater impetus will be given to mobilising private sector resources in support of housing, small businesses, emerging farmers, community development and public infrastructure development. "In bridging the divide between the First and Second Economies, I believe a central challenge ahead is to strengthen co-operation between the state, the business sector and community organisations. Co-operation means trust and a shared vision, and it also means tough negotiations, firm agreements, cofinancing arrangements and careful attention to risks, rewards, targets and performance measures. We have an excellent policy framework. We now need to construct the developmental partnerships that will translate policy into practice. "The third platform of our shared vision is the social solidarity on which health, human development and welfare services rest. In this cluster, budget allocations and how effectively they are used feature most strongly. The recently published Provincial Budgets and Expenditure Review for 2001/02 to

2007/08 provides a valuable guide to our progress and the challenges ahead in meeting education, health and social development needs, which together account for nearly 60 per cent of consolidated non-interest expenditure. "Over the past five years, the fastest growing component of social expenditure has been income support to vulnerable people. Social assistance grants to the elderly, the disabled and to support vulnerable children now reach more than 10 million beneficiaries. "Welfare services will remain a provincial function, and will see considerable reform over the years ahead as part of Government's progressive extension of improved protection and care to older persons, families affected by HIV and AIDS and children in conflict with the law. "Expansion of income support for the vulnerable has been the priority of the past five years. These programmes will continue to be responsibly financed and managed. But for the decade ahead, we need to give particular priority to strengthening and improving public health care and education. "Improved public administration is part of the challenge we face in health and education, and it is also an aspect of growth and development in its own right. Governance and administration is a fourth cluster around which targets must be set, performance monitored and accountability strengthened. We are surely all in agreement that in our classrooms, hospital wards, courts, police stations and municipal offices, public service must be characterised by diligence, honesty, care, compassion and personal responsibility. "Key initiatives include management training and improved reporting systems, investment over the next three years in a new Integrated Financial Management System to replace outmoded information processing systems, and targeted support for municipalities under stress and for critical infrastructure development capacity in identified provincial departments and local authorities.

"Measurement of service delivery progress against published targets is central to the public administration reform challenge. This has been an important part of the success of the South African Revenue Service in building an effective organisational culture, and it is also evident in the progress of the Police Service in responding to priority crimes and implementing 'sector policing' initiatives. "Measurement and monitoring are at the centre of formal contractual publicprivate partnerships, where the detailed specification of service obligations is tied to explicit penalties for non-delivery. Measurement and monitoring are central to the quality improvement plans for education and health that have been agreed between national departments and their provincial counterparts for the 2006 Budget and beyond." With regard to the 2005/06 Budget Adjustments Estimates, the Minister of Finance said that, "savings and under-spending of R2,5 billion are anticipated and state debt costs will be R1,3 billion less than the February projection. The revised expenditure level is R416 billion, or R2 billion less than the main budget estimate. "We are fortunate in giving consideration to options for stepped up infrastructure funding, to have a healthy fiscal position as point of departure. For the 2005/06 financial year we expect revenue to exceed the main budget estimate by R30 billion, and the budget deficit will be 1,0 per cent of GDP, compared with the February projection of 3,1 per cent. "The revised growth outlook, robust revenue performance and a steadily declining burden of debt service costs as a percentage of GDP allow once again for a substantial upward adjustment in public expenditure plans over the MTEF period. "Over the MTEF period ahead, additional allocations of R31,5 billion are proposed for infrastructure projects, including significant increases in spending on national and provincial roads and refurbishment of passenger rail

services. Hospitals, schools, water resources, industrial development zones, scientific research capacity, courts and police stations and public administration will also benefit from further growth in capital spending and allocations. "The 2006 Budget will provide greater impetus to infrastructure investment, improved public services and an overall fiscal environment required for accelerated economic growth over the decade ahead. "But faster growth and broader participation also requires focused reforms in our industrial policy, in small business development and the labour market regulatory framework, better local administration and urban planning and stronger partnerships between government, the business sector and civil society. "The Medium Term Budget Policy Statement sets out Government's budget plans for the period ahead, and invites this House and all South Africans to embrace the journey ahead - to contribute to our action agenda for accelerated growth, for all." Among other things, that accelerated growth requires that we attend to the important challenge contained in the Address of the Minister of Finance when he reported that "The revised expenditure level is R416 billion, or R2 billion less than the main budget estimate.The budget deficit will be 1,0 per cent of GDP, compared with the February projection of 3,1 per cent." We had set the budget deficit at 3,1 per cent to increase the volume of resources available for development. The fact that it will come out at 1,0 per cent is partly a result of the larger than projected revenue - an additional R30 billion - and under-expenditure by government as a whole. This underexpenditure, even after the additional supplementary estimates, will result in expenditures that are R2 billion less than was provided for in the main 2005/6 budget announced in February. This unplanned saving reflects weaknesses in the capacity of government to spend all the available resources. In practical terms this means that we have been

unable to meet some of our country's development challenges despite the availability of funds to do so. This shortfall in the capacity to spend confirms that we must do everything possible and necessary further to improve the planning, project preparation and implementation capacities of our developmental state. Accordingly we have to ensure that Project Consolidate and the Municipal Izimbizo succeed in their objective to assist our system of local government to operate effectively as a critical part of our developmental state. Similarly, we must expedite the work led by the Ministry and Department for the Public Service and Administration, which is focussed on improving the effectiveness and efficiency of our national departments. In this context, it is critically important that the current process of selecting our candidates for the forthcoming local government elections ensures that we choose people who are truly committed to the central objective of our movement to serve the people of South Africa. The ANC municipal councillors must stand out as the true Cadres for Development that we need to ensure that we achieve our goal of providing a better life for all. Thabo Mbeki ------------------------------------------------------------------------------PUBLIC HEALTH FACILITIES Responding better to the health care needs of communities The ANC-led government, and particularly the Department of Health, has been concerned about complaints raised by members of the public on challenges facing public health facilities, and has been working to address these issues through a number of interventions. It is unfortunate that these genuine concerns have been hijacked and turned into a subject of political point-scoring and publicity campaigns, which has included the labelling of certain facilities as being the worst hospitals in the country.

The task of transforming a fragmented health system originally built to benefit only the white minority is enormous. These challenges are being experienced mainly because of decades of poor health planning, under-funding of public hospitals and the exclusion of the majority of South Africans from accessing health care. Only those who benefited from apartheid, and were therefore unaware of the true state of the country's health system, can claim that the health services were better before 1994 than they are now. Today we can confidently claim that we have achieved one part of our mission increased access to health care for the majority. However, an enormous task still remains around the transformation of the health system in general and improving the quality of care delivered. To address the challenges experienced by our people, we need to have a firm grasp of the factors that undermine our endeavour to provide quality of care at hospital level. There are challenges that relate to the following general areas: transformation of the previously fragmented health system, management capacity at facility level, interaction between health professionals and communities. The health system issues cover challenges of health financing, human resources and effective implementation of the many good policies we have formulated over the past 11 years. There are about seven million people covered by medical schemes and they mostly use the private health sector, which consumes about 60% (R43 billion) of health resources. The public health sector on the other hand uses about 39% (R33,2 billion) of resources to service 38 million people. Our free health care policies cover most of those who have no income at all, people with disabilities, pregnant women and children under six. This scenario leaves millions of low-income earners (workers, informal traders, etc.) in a difficult situation. These households have to stretch little disposable income to pay for various essentials. They struggle to cope with out-

of-pocket payments for hospital services because they are excluded from any form of health insurance. While government has recently reduced hospital fees significantly to improve affordability, unless a more sustainable means of health care financing is introduced in the country, the challenges around affordability of health care will not be eliminated. The broadening of medical aid cover and the establishment of a Social Health Insurance are key to solving the problems of health financing in this country. The Department of Health will soon be conducting a gap analysis of district hospital packages in the public health sector and will review technical efficiencies in district hospitals. These studies were initiated as a result of concerns raised with regard to the funding of public hospitals. Limited resources committed to public health hospitals undermine the performance and capacity of these facilities to meet the increasing health care needs of their respective communities. These studies should provide more sound and reliable information on the current performance of public hospitals. The results will also add much value in the department's efforts to mobilise more resources for financing public hospitals. However, our argument for more resources is weakened when budgets are not utilised or underspent at a facility level. Other hospitals are overspending on their budgets and then have to take drastic actions towards the end of the financial year to avoid over-expenditure. There is therefore a need to strengthen planning capacity to ensure financial stability - which is an integral part of management functions. A study conducted a few years ago indicated the public health sector requires between R8-10 billion to deal with the apartheid backlog in hospitals infrastructure development. To address this challenge, government launched the Hospital Revitalisation Programme with an annual budget of more than R1 billion currently covering 42 hospitals. This programme is aimed at improving the hospital infrastructure, strengthen management capacity and provide necessary equipment.

Like most other developing countries, South Africa is faced with challenges of inadequate supply and inequitable distribution of health personnel. The department is finalising the Human Resource Plan for Health which should provide guidance in addressing these challenges. In the meantime, it has implemented a number of initiatives to improve both the working conditions of health workers and remuneration structures through the introduction of scarce skills and rural allowances. It has also introduced new management structures with the authority to implement health policies at facility level. The priority is to maintain and strengthen the many good interventions made in the sector and improve the services which may be inadequate or poor. In this regard, the department convened a meeting of hospital managers on 20-21 October to discuss openly and frankly the challenges affecting quality service delivery at a facility level. This was a critical interaction considering the role that hospital managers have in the delivery of health services. The functions of provincial health authorities in relation to hospitals have shifted from an executive or administrative management role to supporting hospital management and setting guidelines and provincial policy approaches. Provinces are developing innovative strategic plans to address the health needs of the people they serve within broad national guidelines. They now have written delegation of powers devolved to a hospital management allowing, among other things, flexibility to spend the allocated budget to achieve high standards of service delivery. The department has moved away from the concept of medical superintendents to appointing appropriately qualified and competent managers to run public hospitals. While decentralisation empowers hospital managers to utilise available resources to improve service delivery, it also requires clearer lines of accountability to communities and compliance with set quality standards. The National Health Act requires the establishment of representative hospital boards and clinic

committees, which should ensure greater public participation and responsiveness to local health needs. Communities can use these structures as initial platforms to address the challenges of poor service delivery. The meeting with hospital managers discussed particularly the conduct of staff in certain health facilities. The managers resolved that they should be decisive in instilling discipline as provided for in the relevant labour legislation. It was agreed to hold a meeting that should focus exclusively on performance and discipline, which should involve representatives of organised labour and professional councils to ensure there is a common approach in improving performance and service delivery. There is a need to monitor performance and ensure that every employee performs their duties effectively. The provincial departments should also ensure that hospital managers deliver on their key performance areas. In discussing the challenge of long queues, particularly in admission and pharmacy sections, the meeting noted that non-adherence to the referral system is putting pressure on hospitals. Community members should be encouraged to use their local clinics as a first point of contact with the health system. Better utilisation of primary health care facilities will allow hospitals to focus on referred cases. Improving the delivery of services requires a collective efforts of all three spheres of government, facility management, organised labour and professional associations. Most critical is the participation of community members in ensuring that hospitals and clinics respond to needs of public health care users. No amount of campaigning can convince our communities that freedom is worse than apartheid, or that access to a gradually improving health service is worse than virtual exclusion from health on the basis of race, gender and class. MORE INFORMATION: Department of Health

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