Madam Deputy Speaker, Mr Deputy President and hon members, today we are tabling and also making public the 2010-11 to 2012-13 Industrial Policy Action Plan, Ipap. In fact, from 16:00 onwards, the full Industrial Policy Action Plan narrative document can be downloaded from the DTI website at www.thedti.gov.za, as well as the government website, www.gov.za.
Ipap 2, as it has become known, builds on the National Industrial Policy Framework, NIPF, and the 2007-08 Ipap. It represents, in our view, a significant step forward in scaling up our efforts to promote long-term industrialisation and diversification beyond our current reliance on traditional commodities and nontradable services.
The purpose of Ipap 2 is to expand production in value-added sectors with high employment and growth multipliers capable of competing in export markets, as well as against imports in our domestic market. In so doing, Ipap also places emphasis on more labour-absorbing production and services sectors, increasing the participation of historically disadvantaged people and regions in our economy. We believe it will facilitate, in the medium term, South Africa's contribution to industrial development on the African continent.
Manufacturing and other productive sectors of the economy need to be engines of long-term sustainable growth and job creation in developing countries such as our own. However, South Africa's recent growth has been driven to too great an extent by unsustainable growth in consumption, fuelled by credit extension.
Between 1994 and 2008, consumption-driven sectors grew by 7,7% per annum, as compared to productive sectors which grew by only 2,9% per annum. This has been a significant factor behind the reality that, even at the peak of our growth where it touched 5,1% per annum between 2005 and 2007, unemployment never fell below 22,8% of the economically active population.
Manufacturing, which constitutes a sizeable chunk of our value-added production, has not enjoyed sufficient dynamism. Our analysis, which is the product of significant engagement and self-discovery with key stakeholders, tells us that this is due to a combination of factors. These include a volatile and, at times, insufficiently competitive exchange rate for our currency; the high cost of capital relative to our main trading partners, particularly that capital directed towards value-added sectors such as manufacturing; the monopolistic provision and pricing of key inputs into manufacturing; an aged, unreliable and expensive infrastructure system; a skills system too weak to sustain the skills necessary for production; and the failure to adequately leverage public capital and other large and repetitive areas of public expenditure.
These weaknesses have been exacerbated by the global recession. Taken together, they pose enormous challenges that make it imperative that we upscale our industrial policy efforts, building on the achievements of the 2007-08 Ipap.
The 2010-11 to 2012-13 Ipap rests on four cornerstones, which are spelt out in detail in the document which is being tabled today.
Firstly, government intends to develop proposals to enhance access to concessional industrial finance on terms comparable to those of our major trading partners. Our analysis shows that, at the moment, industries in competitor countries have greater access or more favourable terms than do industries in South Africa.
Through addressing this weakness, we believe that we can promote increased investment in Ipap priority and other productive sectors to generate a mix of import replacement and value-added exports production which will help reduce the current account deficit and the balance of payments risks. Increased supply by productive sectors will also help lower price pressures, and hence assist in moderating inflation. This will also contribute to the medium- to long-term objective of diversifying the structure of our economy. Secondly, government will revise procurement legislation, regulations and practices to enable the designation of large, strategic and repeat or fleet procurements of a range of key inputs into infrastructure development programmes.
This will aim sequentially to increase the proportion of competitive local procurement in successive phases of major tenders, which will, in turn, enhance supplier development opportunities and support meaningful broad- based black economic empowerment, BBBEE.
Thirdly, government will deploy its trade policies more strategically. This includes intensifying our campaign led by the SA Revenue Service, Sars, against practices such as customs fraud, underinvoicing, smuggling and illegal imports, all of which profoundly undermine productive capacity and employment in the economy. Trade policy instruments such as tariffs will be deployed on a strategic basis informed by the imperatives of our sector strategies.
Standards, Quality Assurance and Metrology, SQAM, institutions and practices, otherwise known as technical infrastructure, will be strengthened more effectively to lock in South African products in export markets while locking out substandard import products that undermine local production.
Fourthly, anticompetitive practices will be targeted, particularly where these increase the cost of intermediate inputs into downstream labour- absorbing industries, as well as where they impose unfair price rises on consumer goods for low-income households.
Amongst products which will be focused on are products such as carbon and stainless steel, chemical polymers, fertilisers and aluminium. We will build on the very positive achievements of the competition authorities in the recent past.
These cross-cutting interventions will apply across the board. They will also be customised to underpin focused and significant interventions in three clusters of sectors.
New focus areas will include, firstly, metals fabrication; capital and transport equipment, which we see as major new opportunities for growth; and the creation of decent work arising from the infrastructure investment programme.
Secondly, there will be a focus on green and energy-saving industries. This will involve quick wins like the manufacture of solar water heaters which regulations will require to be in new houses in the near future.
Thirdly, there will be a greater focus on agro-processing industries. In addition, Ipap 2 will build on and broaden interventions in sectors which were identified in the first Ipap. These include the automotive and components sectors where there will be a new focus on medium and heavy industries, as well as public transport vehicles through inclusion in the automotive production and development programme. These sectors will include the plastics, pharmaceuticals and chemicals industry; and the clothing, textiles, footwear and leather industry where a new incentive scheme has been developed. They will include biofuels; forestry; paper, pulp and furniture; cultural industries and tourism; and business process outsourcing, BPO, services or so-called call centres.
The third cluster will focus on sectors in which we have the potential to develop long-term advanced capabilities in areas such as the nuclear industry, advanced materials and aerospace.
In each of these sectors, a careful and strategic combination of policy instruments is set out in detail in Ipap 2. Ipap 2 is a product of extensive collaborative work by the economic sectors and employment cluster of Ministers. Its adoption by the national Cabinet follows extensive engagement throughout government departments, SOEs and various other public institutions. It was also widely canvassed with labour and business organisations and, indeed, its conceptualisation was formed through exercises of self-discovery with organised labour and business.
Ipap 2 is but one component of our broader efforts, as government, to integrate interrelated policies to place us on a new growth path, as mentioned by the Minister of Finance yesterday. That work is being led by the Minister of Economic Development, Minister Ebrahim Patel.
Ipap 2 is, from 16:00 onwards, a public document. The Portfolio Committee on Trade and Industry has scheduled public hearings to allow for further consultation. It will also be formally presented to the National Economic Development and Labour Council, Nedlac, Trade and Industry Chamber in the near future. The DTI remains open to further concrete proposals and suggestions to strengthen the action plan, bearing in mind, in particular, that this is a three-year rolling action plan.
Ipap 2 is a living document which outlines a range and combination of industrial policy interventions and instruments to address the critical challenges of our economy. It will, from now on, take the form of a three- year rolling action plan, which will be strengthened and refined on an annual basis.
Ipap will identify the leading and partner departments and institutions responsible for its implementation. It underlines the necessity for the integration and alignment of the work of government departments and institutions. It identifies the constraints and risks, economic rationale, economic outcomes expected, and key action plans, KAPs, for each one of these areas.
It attaches ambitious but realisable timelines for this work. Its implementation will be reviewed and monitored against these measurable actions, and it will be the subject of annual amendments and strengthening.
It is estimated that the Ipap will result in the creation of 2 477 000 direct and indirect jobs over the next 10 years. It will diversify and grow exports, improve the trade balance, build long-term industrial capacity, grow our domestic technology, and catalyse skills development.
It is neither a wish list nor a set of unattainable objectives. It is an action plan which, like any other, will require sustained and focused work and perseverance if it is to succeed - which it must. Above all, it is a call to our workers, industry, business leaders, public servants, and citizens at large to join hands with government in building our economy and a better life for all. By working together, we can do more. [Applause.]
In conclusion, I want to thank the staff of the Department of Trade and Industry and, in particular, the director-general, Tshediso Matona and the Deputy Director-General of the Industrial Development Division, IDD, Nimrod Zalk, who've worked on the policy and action plan.
I also want to thank officials from other government departments who participated in the regular industrial policy meetings which we held to produce the current Ipap. My gratitude also goes to my fellow Ministers and Deputy Ministers in the economic sectors and employment cluster for their contributions and support.
Finally, I am indebted to Deputy Ministers Thandi Tobias-Pokolo and Maria Ntuli for their indispensable support. We place the Ipap 2 on the table, and we look forward to the engagement by Parliament. Thank you very much. [Applause.]
Deputy Speaker, the South African industrial policy has fundamental flaws in both its implementation and ultimate goal. Economic activity will suffer as a result of this. The Ipap of 2007 has not delivered the promised results. The problem is not that there is not enough money involved, far from it; neither is the range of industries available a challenge. South Africa has a remarkably diversified range of manufacturers.
The problem is rather the goal of the ANC-driven industrial policy to ingrain the bureaucracy of the state into otherwise health business activity.
The shotgun approach to industrial policy - giving small bits of help to everyone - is not the solution. We do not need bigger budgets for industrial policy, but we need smarter and more targeted policy to help those industries which would be able to sustain themselves. Only then will South Africa be able to create more sustainable jobs by building competitive and lasting industries. The jobs that are created must be able to include those unskilled workers outside of the economic activity. Transferring skills is real empowerment.
The DA certainly supports the focus on labour-intensive industry, but the question remains: Why does a certain company or sector need support in the first place? It is not to say that an industry must be labour-intensive; crime is also labour-intensive.
The companies that receive taxpayers' funds must add value to South Africa's economic development, and must be able to exist on their own after an initial period of government assistance. If this is not the rule and not followed, then the so-called industrial policy is nothing other than a protectionist scheme for businesses kept alive unnaturally at the expense of taxpayers.
The true test of whether an industrial plan is working is not the number of firms that rely on government assistance to survive, but the number of firms that progress to be strong enough to do without further government help. The South African industrial plan has failed in this regard so far. The revised Ipap seems to be little more than a continuation of the previous regime. Dr Davies said that Ipap 2 builds on the policy framework of 2007, but there seems to be little more than a few minor alterations.
Minister Davies further argues that the exchange rate is to blame for South Africa's lack of competition. That is certainly not the whole truth. We are now just another competitor in the global environment. It is, amongst other things, the stringent labour market regulations and failing infrastructure that are problems in this country. And that certainly requires government's intervention.
Finally, Minister Davies seems to think that government can lift the competitiveness of South African companies by enforcing import tariffs more stringently. Our interaction with business has shown that what is needed is to ensure equal opportunities for South African enterprises to compete equally with the rest of the world.
A blanket enforcement of import tariffs is not the solution. What is needed is active participation by the department in trade negotiations, amongst other things, at the World Trade Organisation, WTO, and beefing up the South African adjudicators, International Trade Administration Commission, Itac, together with Sars, to guard against dumping and unfair business practices of trade competitors.
Die DA het die wil en die insig om konstruktief by te dra. Ek kan u verseker dat ons alles in ons vermo sal doen om aan die debat deel te neem, sodat ons uiteindelik beter aksieplanne op die tafel kan sit. Ek dank u. [Applous.] (Translation of Afrikaans paragraph follows.)
[The DA has the will and insight to make a constructive contribution. I can assure you that we will do everything in our power to participate in the debate, in order for us to table better plans of action at the end of the day. I thank you. [Applause.]]
Chairperson, the Minister, like Lady Macbeth, is protesting. Firstly, he tells us that what he announced today is an action plan, but what does the language say? It says the government intends to secure concessional industrial financing, will revise procurement in legislation, will deploy its trade policy more strategically, will target anticompetitive practices and will build on and broaden interventions in identified sectors.
Once again, too many intentions and too few deals done. We are being subjected to too much form and too little substance. Today we assumed that the government had finished planning the new industrial policy and the Minister was going to announce when its implementation would be.
Why is such urgency important? The Minister himself acknowledges that manufacturing, which constitutes a sizeable chunk of value-added production, has not enjoyed sufficient dynamism. In fact, he is actually agreeing that, even though South Africa has had economic growth, that growth has being jobless and this has taken place over a decade.
Figures show that manufacturing has actually gone down by 12,5% as compared to previous years. Additionally, our economy utilised only 80% of its production capacity. No wonder that we lost nearly a million jobs in South Africa recently. We need this government to put a tiger in its tank and to start driving the changes that are needed now. We need a road map.
Like the Minister of Finance who is meeting with the banks, Minister Davies should be meeting with whoever it is that will be contributing to the concessional industrial financing to announce the deal and with those who have the mettle to end the anticompetitive practices.
Likewise, you should have already tabled the procurement legislation. Each day that those loopholes remain, more of our country's assets are looted. Yesterday already, we should have put the legislation on how we are going to improve procurement.
Cope supports the green and energy-saving initiatives. That is welcome and we will abide by that. Thank you very much. [Time expired.] [Applause.]
Chairperson, last year the Minister announced to business that a new industrial policy action plan would be released early in 2010. Its release today is a good sign that things are moving within the expected timeframe. However, the question is whether this new plan will ensure that actual job creation and job retention are achievable within an adequate timeframe to meet the needs of our people, or whether this will be just another policy that is slow in getting off the ground and ineffective in its implementation.
The IFP has repeatedly raised the issue of a lack of a clear, crisp and coherent industrial policy. The Minister's statement today, that the new policy will lead to the creation of 2,4 million direct and indirect jobs over the next 10 years; that it will diversify and grow exports; improve the trade balance; build long-term industrial capability; grow our domestic technology; and catalyse our skills development, must be welcomed and the Inkatha Freedom Party supports these initiatives.
However, we sincerely hope that these ambitious plans will not remain a mere wish list, but will be a significant step forward in scaling up our efforts to promote long-term industrialisation and industrial diversification.
The IFP has warned on numerous occasions that the failure to urgently address our employment crisis will come at the expense of our young people and the future of our nation. The urgency with which we need to move on this issue was highlighted by the IFP president when he spoke in the debate on Monday. Long before the economic recession hit South Africa, he warned government that it would affect us severely.
Now we are facing another hurdle in the struggle to create and retain jobs. The anticipated recessionary effects of infrastructure being completed and spending ending in respect of the 2010 World Cup will see thousands more jobs being shed by August this year. An action plan that fails to address this immediate crisis is a failed action plan.
The IFP therefore urges government to move quickly. I thank you. [Applause.]
Chair, the ID believes that a number of principles need to inform our industrial policy action plan.
Firstly, it must restructure our economy to build up sustainable industries in new growth areas and not simply support old dying ones. It needs to diversify our economy away from the minerals and energy complex that has characterised our industrial growth path.
In doing this, it must substantially reduce the energy intensity of our economy and position us as leaders in clean technologies, particularly those related to renewable energy and energy efficiency.
Finally, it must create jobs at the skills levels that will enable the majority of South Africans to take them up. In doing this, it must be sufficiently integrated with our new infrastructure build programmes and the kinds of technology choices that we make over it.
The ID therefore looks forward to engaging with this plan to ensure that it actually lives up to its promise. I thank you.
Voorsitter, die VF Plus is tevrede dat die Minister 'n ministerile beleidsaksieplan die lig laat sien het. Die regte plan wat effektief uitgevoer word, kan groot bydraes tot die land se ekonomiese groei lewer, veral ten aansien van werkskepping. Ekonomiese groei sonder werkskepping is betekenisloos vir die gewone persoon op die straat. (Translation of Afrikaans paragraphs follows.)
[Mr A D ALBERTS: Chairperson, the FF Plus is satisfied that the Minister ensured the development of a ministerial policy action plan.
When the right plan is executed effectively, it could contribute significantly to the country's economic growth, especially with regard to job creation. Economic growth without job creation does not mean anything to the man in the street.]
One of the ways we can create sustainable jobs, become globally more competitive and ensure internal service delivery, is to bring back the lost expertise forced out of the state service and the free market by interventions like affirmative action and black economic empowerment.
In fact, in contrast to the Director-General of Labour, Mr Jimmy Manyi's contentions, whites, coloureds and Indians are underrepresented in state departments and in the lower and lower-middle levels of corporate South Africa. These deficiencies must be addressed to create an equitable economic environment.
Furthermore, the FF Plus feels that the government must now be bold enough to start treating all young people born after 1994 truly equitably, as was the intention of the drafters of the Constitution.
As for the policy action plan itself, the Minister's efforts to support the green industries are noted and appreciated. The further investigation into high food and banking costs is also commended. This must be a key priority in raising the quality of life in South Africa.
With regard to the government's support in the development of the aerospace industry, special emphasis should be placed on our unique ability to manufacture satellites at a fraction of international industry costs. Thank you very much. [Time expired.]
Chairperson, yesterday the Minister of Finance indicated that as part of the new growth path, an industrial policy action plan is needed to transform our economy towards a more labour-absorbing and dynamic one. Minister Davies has, today, given details of the three-year Industrial Policy Action Plan, which, if successful, will see South Africa become a significant manufacturer of capital equipment for infrastructure projects, both domestically and in the rest of Africa.
The ACDP trusts that this development plan will be more successful than the previous ones. It will necessitate a significant overhaul of procurement legislation and practices to ensure that the R846 billion infrastructure programme stimulates local production and job creation.
High levels of unemployment and poverty, particularly amongst the youth of our nation, must be addressed urgently. Whilst this plan will not solve the unemployment problem, its labour-absorbing focus is a step in the right direction.
Brazil, India, China and other middle-income countries are actively taking steps to improve their global competitiveness. We cannot be left behind. I thank you.
Chairperson, the hon Minister of Trade and Industry is calling for structural change in the economy. This is not an easy thing to do and we need to be realistic about the Minister's goals. The task the Minister has set has a difficult path ahead. It is not going to happen overnight; it largely hinges upon the national Ipap, and resources must be made available in order for this to become a reality.
Minister, I would like to extend a word of caution that there are factors over which we don't have any control, especially the global economy. It is important that all the agencies that are called upon to function optimally need to be brought to the party.
In the case of the cluster of sectors you have identified, your structural policy for each of these sectors has to be very important. Hon Minister, you have a difficult task ahead. I thank you.
Chairperson, hon members of this House, colleagues, compatriots, indeed the people of South Africa, whom we believe all of us are addressing - not people in general but people in business, workers, women, youth, government and nongovernmental organisations - today we have heard the Minister of Trade and Industry outline Ipap 2, the Industrial Policy Action Plan.
We have heard various comments about it, some constructive, some somewhat confused, and yet others highly critical. However, it is my hope, and I believe the hope of everyone sitting in this House, that we can, at the very least, recognise measures that will realistically look at the real economy, realistically look at the challenges that we are facing, and acknowledge that some of the measures in the past did not deal effectively with these, and that in today's environment we have to carve out different strategies and measures. Indeed, this is what Ipap is doing.
The Portfolio Committee on Trade and Industry last year engaged with the department and other departments and said to the various Ministers that we see the policies here but can you review this so that we can have a real planned approach, more of a project management plan, and strategies that can be implemented.
Indeed, I believe that what we all hope we can do collectively is to construct a formidable industrial base. No one, absolutely no one, would disagree that we are facing a decline in the industrial base; but with a formidable industrial base we can create jobs, overcome poverty and generate sustainable growth. [Applause.]
We believe...
... dat ons almal vir jou, Suid-Afrika, sal werk, saam werk. [... that for you, South Africa, we will work, will work together.]
We can't do it alone. Government, business and, indeed, people and labour have to work together. We know that job creation is the only sustainable way to overcome poverty. We also know that rhetoric from this podium will not replace action, and that is what Ipap is all about. Today, when we look at Ipap, we can recognise that it is involved with increasing the value- adding strategies.
We've also recognised that, yes, there is a lack of skills and that this has been identified as a great impediment to growth.
Ipap itself, the President and the Minister of Finance all accept and recognise that the youth are the key population drivers in our employment challenge and that the socio-costs of employment cut across society. Skills development and the development of a new generation of skilled workers, engineers, biochemists, and those employed in knowledge-based trades will not simply contribute to the economy and the development of the industrial base, but will also develop social cohesion.
We fully support the government's industrial policy intervention through Ipap. Someone spoke about it being a broad, generalised approach. Has that member even listened to what the Minister was saying? [Interjections.] He spoke about a sectorally identified approach, not a generalised approach to the matter. [Interjections.] Well, there are none as deaf as those who will not hear.
Raising productivity will be the main focus but, again, Ipap recognises raising productivity as one issue. We also need to raise our competitiveness here. That is absolutely important. We heard one speaker saying that we are simply not competitive enough, and we need to do this, that and the next thing. In fact, when you look at it, part of the problem of the current account is not simply the simplistic statements we have heard here today but a real understanding that we need to link macroeconomic policies to microeconomic policies. We can't do one without the other.
With regard to this idea of concessions, I got the impression that someone thought we were playing Lotto here. We're not playing Lotto. What we are doing right here today is that we are saying and recognising what your own businesspeople who voted for you said: Give us concessions, on the high cost of finance, on capital expenditure. Today you want to tell us that this is Lotto. [Interjections.] It is not a Lotto ticket. [Laughter.]
What it is is a concession that recognises the strategic importance of certain industries, of certain sectors. Some of these sectors are not folding because of what they are doing, or what the workers are doing, but simply because of the high cost of finance and nothing more or less.
For the following reasons I think our sectoral policies will work this time. I believe they will work for three reasons. For the first time, I have seen clearly in Parliament, put before us and unveiled, sectoral policies with key action plans, key milestones and outcomes, and we have seen identified lead departments to champion and drive the achievement of this, in what can only be described as a project management approach at the operational level; and at the political level an approach that is informed by the people and a leadership that will not tolerate any form of recalcitrance.
Ipap, I fully agree, will not work unless every department in government recognises that it is not working in a silo. The whole configuration of Ipap 2 demands that departments across clusters work together to achieve the milestones that are set out here.
Our committee, and I genuinely believe the hon Marais will work in Trade and Industry towards this, will work with other portfolio committees, in exercising our oversight of these key milestones.
We will not be moved into a situation that says we are going to build an empire of one portfolio committee. We will not be able to exercise our oversight.
So, my request and appeal to Parliament today in this House is: Let us work together as committees to strengthen our government's intervention in the economy, to rebuild our industrial base, and let us set aside parochial party differences in this regard. [Time expired.] [Applause.]
Debate concluded.