(AsgiSA) Annual Report 2008 - South African Government Information

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Accelerated and Shared Growth Initiative for South Africa ANNUAL REPORT 2008 While progress has been recorded, further improving the competitiveness, efficiency and capacity of the national logistics system is a key national infrastructure objective. In this regard, the pricing of infrastructure services has emerged as an important issue to address. Price regulation, based on the principle of institutionalised independent regulators, is the policy choice adopted by government. The principle of independent regulation is well entrenched and while good progress has been made in developing the institutional capacity to implement this policy choice in some areas (energy infrastructure and telecommunications), rapid improvement will be needed to further develop independent regulation of port, rail and airport services. The Presidency-led initiative to develop a framework for regulators should be accelerated during 2009. 5.3.3 Timeous completion of infrastructure capital projects Because of the visibility, delays and cost overruns of many of the larger infrastructure projects like stadiums, pipelines, power stations and railway lines, they receive public and policy-maker attention. However, this is not the case with many of the smaller and mediumsized infrastructure projects across government. Financial data at the national, provincial and local government levels – what was budgeted and whether it was spent or not – is drawn from the national budgeting and reporting system, managed by National Treasury. In previous AsgiSA reports, more detail on infrastructure expenditure at project level was gleaned from National Treasury’s National Project Register. Since the beginning of 2008, National Treasury has ceased to maintain the register (although its IGR Unit does maintain a smaller register of projects), but is able to track infrastructure expenditure at a macro level using the reporting mechanisms built into the MTEF process. In 2009, it will be important to weigh up the costs and benefits of resourcing and maintaining a national project registry and tracking system, which provides regular information on the status of each of the estimated 24 000 government capital projects. The 2010 project experience shows how massive cost escalation can result from poor project planning, and contracting and management procedures, particularly when working against non-negotiable FIFA deadlines. The global downturn has shifted attention away from similarly critical economic infrastructure projects such as power generation, distribution and the 60
Accelerated and Shared Growth Initiative for South Africa ANNUAL REPORT 2008 NMPP. This false respite should be used to ensure that such projects do not slip from their original timelines so that economic infrastructure is not a constraint in future periods of rapid growth. 5.3.4 Maximise infrastructure project backward economic linkages and employment potential In a useful review of infrastructure progress, the DBSA’s Infrastructure Barometer, in applying a macroeconomic model to infrastructure expenditure, concludes that the quantum of finance applied to infrastructure does impact on growth but that the way in which the finance is spent can have an even greater impact on poverty. Consequently, much closer attention should be paid to infrastructure initiatives that maximise direct and indirect labour-intensive potential. This includes ensuring that Phase Two of the EPWP is more integrated into infrastructure project practice than in the past across all spheres of government. Also, efforts around industrial-sector development programmes and those already underway to encourage greater backward economic linkages associated with infrastructure projects (such as the Competitive Supplier Development Programme) should be redoubled. 61
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(AsgiSA) Annual Report 2008 - South African Government Information

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