Infrastructure was again emphasised in the Medium-Term Budget Policy Statement (MTBPS) as government seeks to shift its expenditure over the medium term in the direction of growth-supporting capital expenditure and away from consumption.

Public infrastructure spending in the current year was estimated at R223-billion, or 7.8% of gross domestic product (GDP). Over the three-year medium-term expenditure framework, the infrastructure plan amounted to R802-billion in energy, transport and logistics, municipal and housing infrastructure.

Speaking to lawmakers, Finance Minister Pravin Gordhan said South Africa needed to invest more in infrastructure that “will help to stimulate our economy and increase job creation”.

Government said it remained focused on reducing bottlenecks in infrastructure, crowding in private investment and improving access to export markets. Hence, it believed that complementary reforms to improve the quality of regulation and encourage increased private-sector participation would improve efficiency and lower costs.

Public-sector infrastructure investment has increased as a share of GDP from 4.3% in 2005, to 7.5% in the first half of 2011, while capital investment by government and State-owned enterprises has grown rapidly in real terms over the last six years, rising from R67.5-billion in 2005 to more than R140-billion today.

The aim for the fiscal framework is to narrow the gap between spending and revenue, while providing support to the economy and strengthening infrastructure investment for sustainable long-term growth.

Key features of the capital investment programme include continued investment in the road network, such as the rehabilitation and maintenance of provincial roads and national highways, and expanding investment of bulk freight rail to support mining production.

Large-scale investments in transport are being implemented over the medium to long term, as increased delays in train services were largely the result of South Africa’s ageing rolling stock and inefficiencies in maintenance.

The Treasury acknowledged that the deterioration in the rail network has put greater pressure on the country’s roads, but also saw the benefits of investments in the national road network, which have significantly improved road quality.

Notwithstanding, there still remained large maintenance backlogs in provincial and municipal road networks.

Treasury called for cities to take greater responsibility for operational costs of integrated public transport networks, which consist of both roads and rail routes.

As such, investment in commuter rail infrastructure and rolling stock, as part of an 18-year, R80-billion replacement and modernisation programme, and completion of State-owned Transnet’s R23-billion Durban-to-Johannesburg multiproduct pipeline in 2014/15 also remained a key part of the capital investment programme.

Fundamental to the South African economy remained tackling the country’s power woes, with Eskom’s capital expenditure programme intended to double its electricity generation capacity from 40 000 MW to 80 000 MW by 2025, and ensure the economy benefits from a reliable supply of electricity.

The Ingula, Medupi and Kusile power stations are projected to be completed by 2014, 2015 and 2018 at a cost of R21-billion, R99-billion and R121-billion respectively. In addition, Eskom is investing R24-billion in returning old power stations to service and R28.8-billion on building transmission infrastructure.

In addition to Eskom’s large power plant projects, the focus in energy will be on electrification in informal settlements and capacity for the renewable energy sector. The national electrification programme aims to provide electricity connections to all households by 2014.

The MTBPS also alluded to the fact that there is a need for an integrated approach to water provision in the medium term, with reticulation supported by sufficient resources, and acknowledged the need for improved planning, construction and maintenance at local level, where there is a lack of capacity.

Treasury pointed out that the regulatory function of the Water Affairs Department had to be strengthened to enhance management of the resource and minimise pollution of river systems. In fact, over the longer term, government said it would develop new waste management infrastructure that incorporates recycling as a core function.

A key project for South Africa remained the second phase of the Lesotho Highlands Water Project, which has been allocated a R15-billion investment in the Pohali reservoir, and associated water transfer and hydroelectric projects.

Further, over the medium term, the Trans Caledon Tunnel Authority will invest R5-billion in various projects, including the Mooi-Mgeni transfer scheme, the Mokolo-Crocodile and Komati water supply projects, and the Olifants river water resource development project.

Private investment in telecommunications infrastructure would boost broadband speed and volumes, and reduce costs, the Treasury said.

By 2013, five submarine cables will connect South Africa to global telecommunications networks. In partnership with the private sector, government indicated its intention to roll out land-based fibre-optic infrastructure in the large metros and build networks in underserviced areas to expand Internet access.