R1bn budget cut for tourism department

SA Tourism takes the biggest blow, with R886m slashed.
Tourism Minister Mmamoloko Kubayi-Ngubane has taken flak for not fighting more fiercely for the reopening of the embattled sector, but says it is resilient and will recover. Image: Supplied

Even the Tourism Department is taking a massive hit from the economic fallout of the Covid-19 pandemic.

Tourism Minister Mmamoloko Kubayi-Ngubane confirmed during her department’s adjustment budget vote on Wednesday that its allocation for the 2020/21 financial year has been slashed by just over 40%* or R1 billion.

“Before the Covid-19 crisis, our 2020/21 budget allocation was R2.48 billion, of which R1.304 billion was for transfers and subsidies. The department’s revised budget allocation for 2020/21 is R1.48 billion, of which R505 million is for transfers and subsidies,” she said.

“The department has had a total budget reduction of R1 billion, with South African Tourism sustaining the largest budget cut amounting to R886 million, due to suspension of most of the marketing activities.”

Read: Domestic leisure travel ban raises ire of tourism industry

Kubayi-Ngubane has taken flak from tourism and hospitality businesses as well as opposition parties, for not fighting more fiercely for the reopening of the embattled tourism industry – at least for domestic leisure travel.

More criticism

In the debate on her department’s budget, she came in for further criticism from the main opposition parties, with both the Democratic Alliance (DA) and Economic Freedom Fighters (EFF) rejecting the budget vote. The DA’s Manuel de Freitas effectively called for the minister to resign, saying she had failed in addressing the industry’s concerns.

But Kubayi-Ngubane said: “This is hardly the time for bickering and apportioning blame, rather the situation demands that we work together to ensure that we weather the storm going forward.”

She said the tourism industry has proven over years that it is a resilient sector and expressed confidence that it would recover post the pandemic.

Read: Covid-19 recovery will take years – Tsogo Sun Hotels CEO

“So much has already been lost, and admittedly, much of it will take time to recover. However, we should not lose this opportunity to work in partnership, government together with all tourism stakeholders, to prepare for the reopening and growth of the sector,” she noted.

Working together with various stakeholders we have put together the Tourism Recovery Plan and we are in the final stages of consultation and we will within the month [of] August submit the plan to cabinet for approval.”

No timeframes as yet

While Kubayi-Ngubane highlighted various phases in the plan that will initially focus on “hyper-local” and domestic (inter-provincial) tourism, before “opening up” to regional and international travel, she did not give any indication of the timeframes.

“Just as we worked together to ensure that the sector activities opened [such as essential business travel and small-scale business events] at Level 3, we must continue to work together to get more tourism activities open going forward,” she said.

Read: Embattled tourism industry wants to start ‘opening up’ in Level 3

“As per the [national government’s Covid-19] risk-adjusted strategy, economic activities have been curtailed in accordance with the level of risk of increased infections and deaths identified in our country. Unfortunately, we still have a limited understanding of the pandemic thus it remains uncertain as to what will happen in the coming days, weeks or months,” she said.

“I am mindful that this does not bring any comfort to businesses that are in distress and to jobs that have been lost or on the verge of being lost.”

Noting that tourism has been one of the worst affected sectors in the country, she cited a recent United Nations Conference on Trade and Development (Unctad) report that highlighted the impact on the industry.

Read: SA sees just over $5bn in FDI in 2019 – Unctad report

“Unctad has listed South Africa as one of the top 15 countries that are being the most negatively impacted by the near-closure of the international travel industry during the pandemic. [It] predicts that tourism in South Africa is going to lose 3% in GDP contribution,” she said.

Sombre figures

“It is estimated that R54.2 billion in output may already have been lost between mid-March and the end of May this year.… The sector now faces a potential 75% revenue reduction in 2020, putting a further R149.7 billion in output, 438 000 jobs and R80.2 billion in foreign receipts at risk.”

The minister noted that distressed businesses in the tourism industry have been getting financial support from government, including through the UIF Covid-19 Ters scheme and the department’s R200 million Tourism Relief Fund.

“Working together with the Tourism Business Council of South Africa [TBCSA] we were able to arrange for a special dispensation such that tourism businesses could apply for UIF Ters through the TBCSA,” she said.

She added that the tourism department had also played a role requesting the extension of UIF Ters to August 15.

Kubayi-Ngubane pointed out that businesses can also access funds via the government’s R200 billion Covid-19 Loan Guarantee Scheme. It is unclear however whether tourism businesses have actually been able to access these funds.

*In error this article originally stated it was a 60% cut.

Listen to Nompu Siziba’s interview with TBCSA CEO Tshifhiwa Tshivhengwa:

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Will it be too much to wish for that the budget cut leads to a reduction of the grotesquely bloated staffing complement in the department, or am I busy with wishful thinking here?

I agree that the staff compliment can be dramatically cut down by 80% or more and salary cuts be taken by the 20% that survive firing.

Imagine if their salaries were cut…..

“The minister noted that distressed businesses in the tourism industry have been getting financial support from government”.

What hogwash…the government has no concept of “working together”. Look at the state of the hospitality industry.

The so called “financial support” is reserved exclusively to those businesses in the tourism industry that meet a “certain profile”.

The sum total of the government’s tourism relief fund is a paltry R200m, which represents less thank 0.15% of the R140b tourism industry. Consider that most tourism businesses have had ZERO income for almost 5 months now, with no end in sight… The summer peak season will mostly be missed, with another dreadful winter following. How many business can survive with zero income for so long???

Hotels and restaurants closed, owners bust, staff retrenched. Buildings and facilities falling into disrepair.

We have put together the Tourism Recovery Plan and we are in the final stages of consultation and we will within the month [of] August submit….

Occam’s razor says that the simplest explanation is most likely the correct one.

When it comes to our government, it means that the worst possible option is the one that will be chosen.

Rest assured that the plan will totally fail to reopen or revive the industry.

And to make it worse they are just about to lose more cash funding SAA who can bring overseas tourists to experience the wreckage – you really couldn’t make this up.

What do they spend billions on anyway?

Any cut in budget is welcomed. Should have closed the department down like the rest of the tourism industry?

You closed the industry but still want to spend R 1.48 Billion. On what????

Those who suffered from Ramaphoria must be feeling preety sheepish now. Now the circle is complete, virtually every leading figure in the ANC since 94 has been shown to to be on the take and fake.

That muppet Cyril Rama …takes the cake

The mission of the Free State Gambling, Liquor and Tourism Authority is to promote legally compliant, responsible, sustainable and transformed gaming and liquor industries through effective licensing, regulating and reporting on the activities of the industries, and to market and promote the Free State province as a tourist destination of choice.

9 Board members ; 5 Senior managers . In 2018 they had R71m irregular expenses , R16m in 2019.

They will get tourists to come and gamble and drink in the Free State . !! Whilst touring !

Jip even education must suffer cause we have to have a loss making airline !!!

The Gov killed tourism in SA so why do we need a Ministry of Tourism?

Same for industry and a host of other tax generating functions that are no more.

Oops sorry silly me, the cadres still need to have something to steal.

The Greek lyrical poet, Archilochus is credit as saying “We don’t rise to the level of our expectations, we fall to the level of our training”.

I think this quote could very easily be used to explain the outcomes of our current government’s actions and their gaping inadequacies affecting almost every aspect of South African life.

But Kubayi-Ngubane said: “This is hardly the time for bickering and apportioning blame, rather the situation demands that we work together to ensure that we weather the storm going forward.”

Sounds like a collectivist cop out to me. No one is to blame for the quagmire we now find ourselves in due to the implementation of “no-one in particular’s” ill conceived draconian lock-down rules that have decimated the South African economy.

The new total budged is now 1.48 Billion.From this 505 million will be paid to subsidies ( I wonder what criteria is applied / Bee ? ) This leaves 975 Million to achieve this distribution. Strange Proportions ?

Not one civil servant will lost their job to Covid-19, mark my words. What will be cut to the bone is any spending allocated to service providers, NGOs etc. A department may end up not delivering any services but the staff will continue to be paid while sitting at home and delivering nothing of value

The EFF are real hypocrites as usual. Why are they against the minister when they support the alcohol ban and the hard lockdown?

“Before the Covid-19 crisis, our 2020/21 budget allocation was R2.48 billion, of which R1.304 billion was for transfers and subsidies. The department’s revised budget allocation for 2020/21 is R1.48 billion, of which R505 million is for transfers and subsidies,” she said.”

So pre COVID there was R1 billion for them and R1.3 billion for everyone else. Now there is R1 billion for them, and R505 million for everyone else.

End of comments.

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