Hon Chairperson, hon Minister and other Ministers present, the Deputy Minister and other Deputy Ministers present, hon members, distinguished guests and the media fraternity present today, I hope that I don't finish my 13 minutes, Minister, so that I can give you the remaining minutes for your response.
Creating decent work, fighting poverty and eradicating income inequalities have been and will continue to be at the centre of the agenda of the ANC. The Department of Economic Development, therefore, is on course. Hence the presentation of the Budget Vote today to share with the country what exactly is meant by the government when it says that 2011 is the year of job creation through meaningful economic transformation and inclusive growth.
The department has introduced a very powerful tool or framework known as the New Growth Path, NGP, which is aimed at changing the lives of the people for the better. It is promising to grow the economy by an average of 7%, helping to create five million jobs in that process. This will be done through interventions that the department has already alluded to in the Minister's policy and budget speech.
We would like to commend the Minister, his department and his colleagues in the Cabinet cluster for their hard work. I want to say to them that there is light at the end of the tunnel. That light brings hope to millions of our electorates - nearly two thirds - who endorsed this government as the government of choice, entrusting it with the responsibility of transforming their socioeconomic conditions.
The electorates understood then, and still understand now, that transforming an economy that had an average growth rate of 1,2% up until 1994 to one of 3,6% is not as easy as some people would want us to believe. They also understand that jobless growth can be as disastrous for the plight of ordinary people than its success. Hence they are appreciative of the efforts made thus far and the will to reduce unemployment further to 15% by 2020.
The electorates understand that we have made a commitment to the international community to halve poverty levels by 2014. So far, the measures put in place are convincing enough that the government is at work to eradicate poverty, eradicate income inequalities and create decent jobs. We are convinced, Minister, that the ideals of the revised Industrial Policy Action Plan, Ipap2, the New Growth Path and the integrated Resource Plan 2, among other things, are going to be realised.
The resources distributed so far to support these interventions or programmes are encouraging and highly commendable. However, we would urge the people entrusted with the responsibility to implement this on behalf of our government to do so with the speed and urgency required. They must do so with honesty and with the utmost dedication and zeal. We would encourage those in these departments and institutions to leave the comfort of their offices and boardrooms in order to reach out to the people so as to have a first-hand understanding of the people's plight. This will help them to respond appropriately and appreciate those people's conditions.
The year 2011 has been declared the year of job creation through meaningful economic transformation and inclusive growth, as I indicated earlier. We want to thank the department for setting aside the budget internally and in the entities to help unleash the programme of action for the realisation of the ideals of the national democratic revolution. However, we would like to encourage you to intensify your oversight work of other departments and public entities to ensure that the ideals of your interventions in the economy come to fruition.
In the same breath, we would also like to urge all stakeholders and partners in economic transformation and development to forge cohesion for the purpose of achieving greater growth and development. The committee considered the department's strategic plan and the budget of 22 March 2011. We are satisfied with the content and intent for the Medium-Term Expenditure Framework, MTEF, period. However, we would like to urge the department to urgently fill all vacant funded posts for the financial year in order to speed up the implementation and oversight of the New Growth Path and other related policies and programmes.
The department must play a leading role in fast-tracking changes related to the spatial economic landscape of our country, lest economic emancipation of the previously disadvantaged - who are still not enjoying the fruits of liberation - will be compromised forever. The economic cluster must foster progress in this regard and ensure that every line-function department responsible plays its part in fostering development in these areas. There must be commitment towards alignment, co-ordination, co-operation and integration of plans and programmes within the three spheres of government.
South Africa is a unitary state. Therefore, we cannot afford to continue seeing disparities in the implementation of programmes and projects, and also in terms of outputs and outcomes in development issues. We need to see standardised implementation protocols and outcome procedures throughout the country that will be translated into standardised training with intended outputs and outcomes. What I mean here is that everybody must aim for the same target. We shouldn't have people aiming at different targets while we have meagre resources. We must focus those resources on one thing, so that we can achieve our goals in a speedier manner.
In conclusion, allow me to extend my gratitude to the following: members of the portfolio committee for their unwavering support, active participation, encouragement and, above all, their co-operative spirit; the Minister hon Ebrahim Patel, the director-general and the department, including the Deputy Minister, for their co-operation and readiness to lend a hand at all times to all the boards of entities under the Department of Economic Development.
The committee recommends that the Budget Vote be supported with its recommendations. I thank you. [Applause.]
Chairperson, this is the first real Budget Vote debate for this newly established department. In many aspects, this department still struggles to find its identity, competitive advantage and strategic position within the new configuration of government departments.
The DA, like many others, still questions the rationale and extra cost to establish this department as an extra bureaucracy primarily to manage entities and responsibilities, previously under the Department of Trade and Industry, and to plan, monitor and co-ordinate functions which can resort under the National Planning Commission. In this Budget Vote we need to analyse the justification of allocated funds to the entities under the jurisdiction of the Department of Economic Development, as well as the objectives and targets of the department, as expressed in its strategic plan. The objectives focus on inclusive economic development to ensure increased, sustainable, domestic economic development and sustainable growth in the share of global trade opportunities. This implies not only sustainable economic growth, but job creation and poverty alleviation.
In striving to achieve this, the investment environment in South Africa needs to be conducive to domestic and foreign investors. More debt is not the answer to increase fixed capital investment, job creation and economic growth. We need more sustainable and long-term equity capital, which will safeguard more long-term job opportunities. We also need a labour regime that will open up opportunities to the millions of unemployed and youth, which should support increased productivity and global competitiveness.
The entities under the Department of Economic Development are divided into two categories. Firstly, there are the three regulatory bodies. The International Trade Administration Commission, Itac, plays an important role to ensure that our domestic economy is not overly protected from fair foreign competition, to use tariffs and trade remedies like antidumping and countervailing duties to ensure that our domestic economy is also not unfairly exposed to dubious global trade transactions, and to administer import and export permits. One can surely question whether enough funds were allocated to Itac, taking into account the impact of creative incentives and trade instruments on future economic growth and job creation.
The Competition Commission has been very successful in combating anticompetitive behaviour and collusive transactions and in investigating mergers and acquisitions that might impact on the economic benefits for especially vulnerable consumers. This is one of the few government entities that has generated considerably more revenue than allocated budgets. More funds should be allocated to it to expand its scope to cover not only the few, very big, doubtful transactions, but also to further increase its efficiency. Its recommendation of unconditional approval of the Walmart- Massmart transaction is proof of its efficiency without fear of the different view of their bosses in the Department of Economic Development.
The Competition Tribunal has been very effective, efficient and credible in handling the legal cases before it. It is clear that its spending will be a product of the number and difficulty of cases appearing on its agenda. It requires the best human capital and support services possible, and should enjoy unconditional support from the Department of Economic Development for its judgments and outcomes. It is clear that more funds are needed to ensure the best human capital available and support facilities to enhance speedy and effective outcomes in the best interests of the South African economy.
Whilst we compliment the efficiency of the Competition Tribunal, it is a concern when the Department of Economic Development uses its own funds, as the parent department, in becoming a contesting party to a case before the tribunal, like the Walmart-Massmart case.
This might leave the impression of a subtle influence on both the Competition Commission and the tribunal, in that the department is supporting mainly the interests of its social partner Cosatu in trying to influence this foreign direct investment transaction.
We are in desperate need of foreign direct investment, FDI, to create jobs, and if the department is not seen as neutral, objective and in support of its own entities, this can jeopardise the work being done by the DTI and even the President to attract FDI in South Africa.
The three development finance institutions are the Industrial Development Corporation, IDC, Khula, and the SA Micro-Finance Apex Fund, Samaf.
There can be no doubt that economic development and sustainable job creation will depend on development finance support to all levels of business, especially to the SMMEs - small, medium and micro enterprises - in the formal and informal sectors. Whilst big business is imperative in gaining a big share of the global trade, it is known that most jobs can be created by SMMEs.
The IDC has the reputation of effectively managing investment and loan opportunities. The shift of both Khula and Samaf under the wings of the IDC is a positive decision and this will, it is hoped, lead to more productive finance agreements that can enhance the success rates of especially the SMMEs.
A concern, however, is that this new development role of the IDC might mean higher risk and lower-return transactions. This pressure on its profitability might mean that the IDC will require capital appropriations by the National Treasury in the future.
The Department of Economic Development's strategic plan outcome indicators confirm that the New Growth Path must be the catalyst to ensure progress in supporting competitiveness, employment creation and equity in the public and private sectors - and to assist in defining more effective economic strategies to achieve those ends. The indicators include, among other things, the number of jobs created, GDP growth, the employment ratio and distribution of earned income.
It is obvious that this is the department that must ensure job creation and economic growth to improve domestic income, which should positively affect domestic savings and spending. It implies that this department cannot only promote dialogue and discussions, as expressed in its strategic ENE - estimates of national expenditure - targets, but must also be able to ensure that government departments comply with requirements to reposition themselves towards these objectives, and to create the supporting environment in which the private sector can grow the economy and create the required sustainable jobs.
Our concern is that this department has no teeth to enforce any targets and that it sees its task as being to promote dialogue, which can be perceived as the promotion of more talk shops. We don't need more talk shops. We need realistic action plans in support of the private sector for increased productivity and competitiveness towards sustainable economic growth and job creation.
The New Growth Path confirms the job creation target of five million new jobs by 2020. Some economists claim that we require an average GDP of 7% per year to achieve this, while the National Treasury projects a GDP of only 4,4% in 2013. The Department of Economic Development claims that its focus will be on sectors where higher job creation absorption can be achieved with a lower GDP, but fails to give any details of these sectors, measurable objectives and quantifiable action plans to try to achieve this.
The budget provides for a social partner fund, which again creates the perception that the allegiance of the Department of Economic Development to trade unions, as its social partners, might be more important than encouragement and support to the private sector as the preferred drivers of economic growth.
While strategic sectors have been identified in the New Growth Path to grow the economy, we have not seen proper incentive plans to stimulate investment in, for example, the green economy. The New Growth Path also focuses too much on the central role of government in procurement, employment, infrastructure, etc, and not nearly enough on how the private sector will be encouraged to drive the economic growth and employment targets.
In the 2011 budget an amount of R1,22 billion, over the next three years, was allocated to the National Youth Development Agency to facilitate job creation among the youth. However, neither the Minister of Finance, nor the Minister of Economic Development, nor his Deputy, nor the director-general could give any information to indicate how the agency will facilitate this, what its job creation targets will be, and how this will be monitored and sanctioned by the Department of Economic Development. Despite the announcements of the intended youth subsidy, we have also not seen any further details in this regard.
The Department of Economic Development has a long way to go and it is hoped that we will see more clarity in the year ahead and with regard to the measurable targets to determine its efficiency in the utilisation of this budget. I thank you. [Applause.]
Hon Chairperson, Minister, Deputy Minister, members of the House, Cope supports this Budget Vote and commends the Minister and his department for their immense amount of labour in developing the New Growth Path. However, the NGP is a top-down model which needs to be supplemented with a bottom-up component. Growth must be fuelled from the top as well as from the bottom.
Also, any growth path must, of necessity, interrogate the global economy. Through such analysis, the country must determine which niche market it can fully exploit because of the competitive edge it possesses. In our view, such an analysis is missing and, as a result, no niche has been identified. To us this is regrettable.
The NGP aims to create five million jobs over the next 10 years. This will require growth to double from 3,5% at present to 7%. At that future stage, all things being equal, unemployment should have come down by 10%. Will this happen exactly as envisaged? And if it doesn't happen, what's next?
In the past three years, 1,5 million jobs have been lost. As we speak, 4,4 million people are unemployed. Of this, two million people are so-called discouraged workseekers. Meanwhile, government is spending R979,3 billion whilst the revenue is R666,6 billion. This means that we are overspending by about a third, and this is mainly on the consumption side. "Where does this lead to?", is a question that needs to be asked.
At present, our country spends an estimated R134,2 billion on social grants and there are approximately 13,8 million recipients. How sustainable is this and how advisable is it to hand out benefits rather than create jobs? Some of these grants must go with certain conditions of skilling. This will have the effect of liberating people from a dependency syndrome and achieve reinstatement of dignity, as envisaged in the Constitution.
The New Growth Path will see heavy government expenditure directed towards energy, transport, communications, water and housing. This prioritising is correct, except that it omits one fundamental area pivotal to stability, and that is food security. I plead with government to recognise the gravity of leaving out major investment in food security.
Whilst we agree with the mantra of "jobs, jobs, jobs", we, however, are concerned about the silence on who will be the main creator of these jobs: the state or the private sector? That is the question. The Minister must pronounce clearly as to who will be the prime creator of jobs. Everything else should hang on this. What needs to be done is, in the main, clear, with a few exceptions. But how each of the identified new growth objectives is going to be realised must still be fleshed out.
The New Growth Path is premised on skills development, smart government and better co-ordination. That is the new growth path on the dream side. On the nightmare side, we have a mere 7 000 matriculants with passes in mathematics, and tens of thousands of educators who are unqualified or underqualified.
How will the massive skills development take place necessary to support the NGP? Firstly, the basics have to be addressed. The issue of mathematics has to be given centrality. While our budget for education is one of the highest on the continent, by contrast our educational performance is one of the poorest. Minister, there can be no NGP without correcting the mathematics deficiency.
Bangalore in India is dubbed the "Silicon Valley of the East". There 80% of all engineering graduates come from privately funded engineering colleges. Today, these graduates, working mainly in IT, account for 6% of India's GDP. Engineering colleges, both public and private, need to be pursued vigorously. These newly trained engineers will be able to assist in establishing our own niche as a country.
Minister, here is a fresh proposal from Cope: Cope believes that city-based investment corporations should be encouraged. These will be listed on the JSE to enable a large number of citizens of a city to invest in the corporation, which will fund projects in the city related to energy, transport, communications, water, housing, education, food security and tourism. Investors will earn dividends and the city will experience economic growth by making idle money work. This will fuel economic growth in a sustainable manner at the council level. This can be one of the staircases for ordinary people to participate in the main economy.
The SA Micro-Finance Apex Fund indeed has a very important role to play in the development of this country. It is disconcerting to note the qualified audit opinion given to Samaf by the Auditor-General for the 2009-10 financial year. The lax attitude displayed by officials of Samaf towards irregular expenditure and credibility of information provided is a grave concern.
The SA Micro-Finance Apex Fund has the potential to become the Grameen Bank of South Africa. It needs to be professionally managed by people who are head-hunted for their expertise, passion for the cause, and their understanding of the needs of the people they are serving. Although the process of merging is under way, the issues I listed nevertheless remain pertinent.
Another major impediment to the NGP is the cancer of corruption. It is a hammer blow to the poor. This cancer has a heavy cost for the economy. It impedes the NGP. Wisdom holds that what the eye doesn't see, the heart doesn't grieve over. It must not be the case with regard to poverty, which is deepening and worsening because of rampant corruption.
Cope believes that a master organogram should be developed into which the pieces of the economic jigsaw puzzle can be fitted so that a clear, big and coherent picture emerges. Economic knowledge and crucial information remain scattered, and the synergy which should have been created does not exist at present. Resource poverty is therefore made worse with information paucity.
Cope commends the Economic Development department for the dashboard model, which needs to be a flagship for all the departments and needs to be emulated by all the departments.
People are demanding solutions. I have provided some practical alternatives to some of the key challenges. I trust that government will welcome solutions from wherever they may come. I also hope my presentation will be received constructively. I thank you.
Chairperson, we as the IFP believe that whilst the New Growth Path provides a credible growth path for up to 2020 - medium to long-term vision - there is certainly a need, hon Minister and Deputy Minister, for urgent ad hoc interventions in the meanwhile to ensure that the unemployment figures are reduced long before 2020.
Having said that, Mr Minister, the aftershocks of the recent recession that we have had in the world by necessity have caused governments, including that of South Africa, to prioritise economic development so that it is at the forefront of their policies, and hence we welcome the formation of this new department.
I did say last year that I hoped the turf wars would be eradicated, and looking at the number of Ministers that are here from the different clusters we can see a move towards the eradication of turf wars between different departments. That is a good sign.
South Africa, arguably the economic powerhouse of the continent, experienced an unprecedented fifteen and a half years or 62 quarters of uninterrupted economic growth before the recession. We are the most infrastructurally sound country on the continent of Africa. We have an abundance of mineral wealth, a highly developed financial sector and a world-class legal framework. In addition, we have just become a member of Bric - Brazil, Russia, India and China - and, as such, are perfectly poised for rapid economic growth.
In South Africa we also have a substantial amount of small and medium-sized enterprises, which the IFP believes are potentially the largest generators of sustainable economic growth. Small, medium and micro enterprises - their establishment and - growth must be encouraged and assisted by government through favourable policy and finance measures, some of which have been referred to by the hon Minister.
But, Minister, continuing education for small business owners in the areas of business and accounting management must be offered at all major centres. And when I say "all", I mean that even in the outlying rural areas we must have opportunities for businesses to thrive, so that we don't only focus on the urban areas.
Academies such as the one recently sponsored by Samsung Electronics, called the Samsung Electronics Engineering Academy, which seek to tackle the shortage of technical and engineering skills in this country, are also to be encouraged. Multinational businesses have both an ethical and moral responsibility to their host nations to fund skills development programmes for the youth, the unemployed and the underprivileged. Samsung's goal of reaching out and impacting on five million lives by 2015 through its programme is highly commended.
Turning to the Industrial Development Corporation and the R10 billion stimulus package, we are pleased that this finance will be available to business start-ups as a culture of entrepreneurship needs to be encouraged by government.
We agree with the Minister that the IDC must play a central role, but the challenge is that the IDC must get closer to the people. The IDC must not only interact with CEOs of large corporations and boards of directors, but with people on the ground who need to know what the IDC can offer.
As far as challenges to economic growth are concerned, the IFP is particularly concerned about the reliable supply of energy to our growing economy, particularly in light of recent predictions of demand starting to outstrip supply. Incompetence is still rife at Eskom. Examples of this, such as the recent breakdown of a R3 billion 600 megawatt turbine with the taxpayer, as always, footing the bill, continue to prevail.
Unemployment, the highest it has ever been, is another key challenge to economic growth and this, together with other debilitating social conditions such as HIV and poverty, needs to be addressed urgently and in a sustainable manner. We as the IFP believe that not enough is being done in this regard. Service delivery protests in different parts of the country and the continual cry by small and medium-size enterprises that they are not being sufficiently assisted by government are cases in point.
To this end, the challenge faced by employers and employees within the clothing and textile industries needs to be addressed expeditiously. And I want to thank the hon Minister for his response to my question on the clothing and textile industries. In the area where I come from there are a number of what are called CMTs - cut, make and trim - clothing factories. The concern is that now, for some reason or another, they are now considered to be in urban areas and the salary determinations weigh heavily against these industries that have established themselves in semirural areas. I trust that the Minister will intervene.
But, Minister, what is a sad indictment of this government - you spoke about the government department job impact - is the fact that R2,47 billion in infrastructure grants this financial year had to be withheld by the Minister of Finance because provinces did not spend this money. This is a sad indictment of this government that this had to happen while you are trying to create jobs.
In conclusion, Minister, the IFP wants to see a year of quantifiable action, a year in which real economic growth takes place. And we have faith in you and wish your department all the best. We will support this Budget Vote. Thank you. [Applause.]
Chairperson and all protocol observed, the Budget Vote debate on the Department of Economic Development comes at a crucial time when all political parties are in a race to win votes.
Ke semphete ke o fete, masiyasiyane mahloka-lebelo. Ha re di tlohele di fule mmoho. Re tla di bona mohla kotulo. [It's every man for himself. Let's leave it at that. We'll cross that bridge when we get to it.]
To sum this up, let me quote Thomas Jefferson: "Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can help the man with the wrong mental attitude."
The green economy is one of the contributory factors to job creation. The basis of the green economy is an environment that includes the nucleus of our life: water. A clean environment is critical to South Africa's development. The drive of development is labour. Therefore, we need to create jobs. We need a healthy workforce, and this can only be sustained if we nurture our environment. An unhealthy environment has the potential to increase the risk of contracting infectious diseases and reduce workers' life expectancy. HIV and Aids have already robbed us of a valuable workforce, as research has shown the high prevalence of HIV and Aids in the educational environment. May their souls rest in peace.
An unhealthy environment also increases the infant mortality rate. It goes without saying that good management of the environment will enhance the quality of life, thus enabling the country to sustain its workforce and development.
Air pollution emanates from coal emissions, industries, littering, vehicles and illegal dumping, to name but a few causes. We must applaud the ANC-led government for practising what it preaches. Many households are now electrified, including those in urban informal settlements and, to some extent, rural areas. The use of coal stoves and fire braziers has been reduced.
The findings of the Industrial Development Corporation, IDC, are aligned with the New Growth Path. Industries which comply with environmental impact assessments are prioritised. The IDC believes that charity begins at home. In its focus area under green industries, it commits to itself to nonfuel- based renewable energy, and to emission and pollution mitigation. Polluting industries must be brought to book. Industrial emissions are the most drastic as they kill indigenous plants and the whole ecosystem. They kill agricultural produce - the livelihood of rural communities. Medicinal plants are also affected.
Dingaka tsa setso, emang ka maoto le lwane mmoho le mmuso. Difeme tse silafatsang moya ka sena sebaka di bolaya meriana ya rona eo e leng hore re e sietswe. Le ba dumelang setsong sa Bophirimela ... [Traditional healers, stand up and fight together with the government. Industries that cause pollution destroy our indigenous plants. And those that believe in the western traditions ...]
... use the same traditional medicine. Water is also contaminated owing to illegal dumping into dams and rivers. For example, the Vaal River is experiencing not only illegal dumping but sewage spillage as well. The major cause of the spillage is the old infrastructure, which is about 50 years old, too old to be repaired and which should rather be removed.
The government has poured in large amounts of money for rehabilitation, but progress has been at a snail's pace, owing to corruption by both black and white officials stripping the municipality clean, with some politicians also involved. However, let us not be held to ransom by a handful of people.
The New Growth Path is targeting 300 000 additional direct jobs by 2020. About 80 000 jobs are to be created in the manufacturing sector, whilst other jobs will be created in the construction and maintenance sectors. The realisation of these jobs depends on the infrastructure which is conducive to the environment.
Quoting from the 2011 state of the nation address, infrastructure will be at the centre of agrarian reform. This development will entail the rehabilitation of water reservoirs, windmill and irrigation schemes, the protection of livestock and grazing through the installation of irrigation schemes, and also the fencing of agricultural fields. Government believes that these projects will enhance food security and create jobs for many, especially for women in rural areas.
Recycling is another form of greening the environment whilst simultaneously creating jobs, although often on a small scale only. If all individuals who recycle could come together and form a co-operation, they could write their own cheques.
We need to mobilise local authorities, nongovernmental organisations, schools and households and the private sector to take care of the environment in order to reap the fruits of the green economy. International stakeholders must also come on board as environmental hazards are a global challenge. The New Energy Book for Urban Development in South Africa by Sarah Ward states that "Economic investment in energy efficiency repays itself many times over". For example, the installation of a ceiling in a house can save about 50% in the costs of heating the house.
It is further stated that international experience has shown again and again that changes to greater energy efficiency are strongly rooted in education and information, resulting in changed behaviour. You will also get six times the reduction in carbon dioxide by investing in energy saving rather than nuclear power.
Mmuso wa setjhaba ka setjhaba o leka kahohle ho etsa mesebetsi. A re kgaotseng ho silafatsa dibaka tseo re dulang ho tsona, re mpe re tswele pele ka ho thotha dikgwerekgwere, ditshepe, mabotlolo jwalojwalo ho eketsa mesebetsi. (Translation of Sesotho paragraph follows.) [The government of the people by the people is trying hard to do this job. Let us stop polluting areas that we live in, and rather continue collecting garbage, steel, bottles and so on in order to create more jobs.]
That is recycling.
A re ikopanyeng re etse koporasi hore mmuso wa lona o tle o tsebe ho le thusa ka ditjhelete mme re tsebe ho ikemela, re tlohele ho ruisa ba bang. Re na le diofisi tse thusang ka thupello le tjhelete ho qala kgwebo kaha dibanka di sa re sebeletse ka toka. Diofisi tseo ke IDC, Khula, SA Micro- Finance Apex Fund, Samaf, le tse ding. Hohle ka hare ho naha re na le Diofisi tsa Setjhaba tsa Palamente, ka mantswe a mang, Palamente e atameditswe pele ha lona ho sa kgathalatsehe hore o mokgatlong ofe wa dipolotiki. (Translation of Sesotho paragraph follows.)
[Let us work together to build a co-operative in order for your government to be able to assist you financially so that you can be independent. We should stop enriching others. We have offices that assist with finance and training for starting a business, because banks are not very helpful. The names of those offices are IDC, Khula, SA Micro-Finance Apex Fund, Samaf, and others. Everywhere in the country we have public parliamentary offices. In other words, Parliament has been brought closer to you, regardless of your political affiliation.] The parliamentary constituency offices are there for you. Come for any information, as you have voted for this government, and it will never abandon you. You have the right to protest if you are wronged, but please let us insist on peaceful marches. We acknowledge that there are people in government who serve themselves at your expense.
By government, we mean all parties in Parliament, the legislatures and municipalities, not only the ANC. We took a long time fighting apartheid. Let us not take the same long amount of time fighting corruption. The time is now. It is only a few individuals who are corrupt, but the impact of their theft is immeasurable.
A re se ke ra etsa tlwaelo molao empa molao e be tlwaelo. [Let us not make a habit of being the law; instead the law should be a habit.]
Let us not make a habit of being the law, especially bad habits, but instead make the law a habit and a way of life. Thank you. [Applause.]
Madam House Chairperson, I would just like to draw your attention to the fact that there is translation into English only, and none of the other languages is in operation.
We cannot have simultaneous interpretation into English only. We have 11 languages, but the only translation we currently have is in English.
Madam Chair, the President has declared 2011 as the year of job creation. Achieving this goal requires unprecedented co-operation and co-ordination between government, private industry and the citizenry of this country, with government taking the lead.
This department's aim is to promote economic development through participatory, coherent and co-ordinated economic policy and planning for the benefit of all South Africans. Therefore government has an understanding that it will take systems thinking to solve our economic problems and create jobs. The department also states that transforming the economy requires a pro-employment growth path that addresses the structural constraints to absorbing large numbers of people into the economy and creating decent work.
However, government is currently embarking on various activities that have a negating effect on job creation and serve to introduce structural constraints into the economy. These activities serve to expedite the entropy of South African society as a whole, and are evidenced in four factors, amongst other things, underlying our economy: fuel, fuel transport costs, electricity and tax. Added to this mix is a type of privatised tax called the Gauteng Open Road System toll tariff. It is quite significant, as this tariff is built into a position of strangulation of the arteries of the economic hub of the country, namely the Gauteng freeway system.
Looking at the four factors, we need to be concerned about the lack of co- ordination and the imposition of structural inhibitors by government into a system that must create jobs.
Eerstens, die styging in die brandstofprys plaas die hele ekonomie onder druk. Tog het die regering beheer oor die plaaslike komponent van die brandstofprys. Belastingheffings kan verminder word, byvoorbeeld, en prysmededinging kan toegelaat word ten einde die brandstofprys te verlaag.
Tweedens, brandstofvervoerkoste is besig om te styg as gevolg van die koste verbonde aan die konstruksie van die brandstofpypleiding. Dit het gelei tot die heffing van 'n verdere belasting van 6,4 sent per liter op brandstof. Deskundiges is steeds oorbluf oor die styging in die konstruksiekoste van die brandstofpypleiding, en volle openbaarmaking daaroor is nodig. Intussen het die Nasionale Energiereguleerder van Suid-Afrika, Nersa, behalwe die nuwe brandstofheffing 'n styging van 59,9% in die pyplyntarief goedgekeur. BP het aangedui dat die verhoging tot 40 000 werksverliese lei en die ekonomie R1 miljard per jaar sal kos - dt terwyl ons eintlik werk wil skep. Dit maak glad nie sin nie. (Translation of Afrikaans paragraphs follows.)
[Firstly, the rise in the fuel price is putting pressure on the entire economy. Yet the government controls the local component of the fuel price. Tax levies could be reduced, for example, and price competition could be allowed in order to reduce the fuel price.
Secondly, fuel transport costs are rising as a result of the costs involved in the construction of the fuel pipeline. This has resulted in the levying of an additional tax on fuel of 6,4 cent per litre. Experts are still dumbfounded about the increase in the costs of construction of the fuel pipeline, and full disclosure in this regard is required. Meanwhile, besides the new fuel levy, the National Energy Regulator of South Africa, Nersa, agreed to an increase of 59,9% in the pipeline tariff. BP has indicated that the increase would result in 40 000 job losses and would cost the economy R1 billion per annum - this while we actually want to create jobs. It doesn't make any sense.]
Thirdly, electricity is also a major driver of our economy. Any rise in electricity costs has a holistic inflationary effect on the economy. The National Energy Regulator of SA, Nersa, granted Eskom an increase of 24,8% in this financial year, 25,8% next year, and 25,9% in 2012-13. Last year a 35% increase was granted. The socioeconomic impact of this multiyear increase will be dramatic. The above-mentioned increases are directly related to Eskom's building programme for the Kusile and Medupi power plants, and we need to address this as well. Laastens, belastingfaktore is baie hoog in Suid-Afrika. Suid-Afrikaners betaal tans omtrent 60% van hulle besteebare inkomste aan belasting, volgens mnr Matthew Lester van Rhodes-universiteit.
Die uiteinde van hierdie analise is dat die Departement van Ekonomiese Ontwikkeling nog baie werk het om 'n holistiese en gekordineerde plan op te stel om die ekonomie volhoubaar te stimuleer vir werkskepping. Daar is te veel strukturele defekte wat van die regering se kant af in die sisteem ingevoer word, soos ho belastings, brandstofpryse en elektrisiteitspryse. Dit lyk nie of die regering die werklike leiding wil gee om werk te skep nie, en dalk kan die Minister vir ons duidelikheid daaroor gee. Dankie, mev die Speaker. Dankie. (Translation of Afrikaans paragraphs follows.)
[Finally, tax factors are very high in South Africa. According to Mr Matthew Lester of Rhodes University, South Africans are currently paying approximately 60% of their disposable income on tax.
This analysis finally concludes that the Department of Economic Development still has a lot of work to do to develop a holistic and co-ordinated plan to stimulate sustained growth in the economy to bring about job creation. There are too many structural defects that are being introduced into the system from the government's side, such as high taxes, fuel prices and electricity prices. It doesn't seem as if the government really wants to provide leadership with regard to job creation, and maybe the Minister can provide us with more clarity on this. Thank you, Madam Speaker. Thank you.]
Hon Chair, I think the fundamental issue in order to enter into this debate effectively is an understanding of the structural features of this economy. That would be particularly helpful. Let us examine what happened in this economy from 1970 to 1995. Although employment grew by almost 17,6% over the 25-year period, the African population showed zero growth in terms of employment. Why is that so?
Two industries were particularly affected. Almost 2,2 million African people were employed in agriculture in 1970. In 1995, this number had dropped to 930 000. In the mining industry, it went down from 610 000 to 353 000 - a significant shift. But you saw employment growth in manufacturing and other sectors where skills were important.
What does that tell us in terms of approach and strategy? What that tells us, Xhamela, is that these sectors are labour absorbing. Skills are also a critical factor. We cannot take skills out of the equation as we grow this economy. That is the first point I want to make as we move forward. I will come back to this issue when we refer to the New Growth Path.
That is the structure of this economy which we have inherited. From 2001 to 2008, however, we saw some growth, including in the employment of Africans, for a variety of reasons. This was accompanied by rising incomes, which is important. We showed growth in employment from 2001 to 2008 and saw a reverse trend in 2008 because of the global economic crisis.
I am not going to bore you with the details of that crisis. All of us are familiar with its impact. Three things stand out, however. The first one is that the neo-liberal theory has died. [Interjections.] Clearly, the neo- liberal theory has died.
The second is that everybody agrees that there is a critical role for the state to play. There is no doubt about that. That has serious implications, not only for the role of the state, but also for economic theory in general, and the understanding of it.
The third issue is the shift in global balances. If you look at the International Monetary Fund World Economic Outlook for the next few years, you will see that major growth is going to be in the emerging economies, particularly in Brazil, Russia, India, China and South Africa, the Brics countries. Our Brics partners basically support our strategic outlook and our participation in the bloc. After this meeting, the Minister is going to attend a Brics meeting.
So, what has been our response? Our response to this economic situation is precisely informed by these structural issues, and therefore the New Growth Path must be seen as an integrated response.
I know there are quite a couple of myths which I need to dispel about the growth path. The first one is that people tend to view the growth path in isolation from a range of other interventions by the state. For example, people ask about industrial policy. The Industrial Policy Action Plan, Ipap, is part and parcel of what we are talking about.
The hon Marais says the sectors are not spelled out, whereas the sectors are spelled out in Ipap. And what are the key features of those sectors? It is that they must be labour absorbing. That is one critical outcome we want to achieve - labour intensity. So, we should not see the New Growth Path in isolation from those other government interventions.
The second myth about the New Growth Path is the assumption that the five million jobs will all be created by the state. Fundamental to the growth path is that government itself, through its various programmes, will, indeed, create jobs. In addition to that, however, it will facilitate the creation of jobs. I will come back to that point in a moment.
We have got to dispel those myths. We must be proud that, as we speak, this economy is beginning to turn around, albeit in a modest way. In the last quarter of 2010, we created 157 000 jobs; 127 000 of those were in the community and social services. This is a critical sector, with a labour absorption intensity of 67%.
What is disturbing, though, is that we have seen some savings from the private sector growing from 14,7% to about 17%. This may mean that investment is slowing down a bit. We need to interact with the private sector on that and include it in our discussions with them. In a sense, we have to see government's effort as part of a broader intervention, not only for government alone but for the private sector. So, we should not use that myth.
We proceed from the basis that South Africa is a resource-based economy. The question is how to ensure that we can use our national resources effectively. A key feature of that may be infrastructure and logistics. We are privileged to have infrastructure; it also ensures that we can unlock the economy.
With regard to transport - and I am sure the Minister of Transport is probably going to talk about this - we need to unlock this economy. Let me give you some statistics which I have seen. Assuming a 4,4% growth in the economy, we are likely to have a problem with logistics. We have to invest about R900 billion over the next 15 years on roads, rail and ports. So, it is not only that you will be creating jobs as you build that infrastructure, but on the back of it, you are opening up the economy for growth.
A key aspect, as we put in this infrastructure, is where it is located. The Minister has alluded to the green economy. However, there are practical issues. For instance, Transnet will be rolling out about 304 locomotives and 7 000 wagons. As part of that, we have got to ensure that the Industrial Development Corporation, IDC, works with Transnet in the placement of those wagons.
We are talking about an integrated response, which is intended to have a major impact, not only on government, but on the private sector. If we need to get the coal out of the Waterberg, we have got to put down a railway line leading out of the Waterberg. There is the existing infrastructure we have got, too, but by putting down more infrastructure we are unlocking the mining industry. That is an integrated response that we are beginning to talk about.
I conclude, then, by repeating my opening shot: What we need is a better understanding of the structural features of this economy. Only then will we be able to design the appropriate instruments and policies. I thank you. [Applause.]
Chairperson, I am glad that the debate has not been too heated today, so we can still be quite cool amongst ourselves.
The ACDP is fully supportive of government's emphasis on job creation. The economy we know has not created enough jobs for those South Africans able and willing to work, even during the boom times. This has been compounded by the global economic crisis, with the result that millions of people are poverty stricken. Clearly, urgent steps need to be taken to alleviate the plight of so many South Africans, and that the ACDP supports.
As we know, this department was created to address the perceived gap in government's economic policy-making, planning and co-ordination machinery. The idea was that working together with other government departments, state entities and social partners, South Africa would achieve better economic and employment outcomes. Clearly, we as the ACDP support this.
However, we do share concerns expressed by other members about the possible duplication of the work that is being done by National Treasury, the Department of Trade and Industry, the Planning Commission and this department. Clearly, this must be addressed.
In order to achieve the economic targets that have been pointed out by many speakers today, the country will have to double its rate of economic growth. We agree that we'll have to move out of that cycle of 3% to 4%, getting to the 7% sustainable growth.
Whilst we appreciate, as the Minister has previously said, that there is no textbook available to achieve that 7% growth and to create the five million plus jobs aimed for, we can learn from other emerging markets such as Brazil, India and China. We trust that our membership of the Brics group - Brazil, Russia, India, China and South Africa - will assist us in this learning curve.
Minister, we as the ACDP support the departure from a consumption- to a production-driven economy in which growth is not only an aim in itself, but a means of job creation. We will, however, as a nation have to improve our productivity to be more globally competitive to achieve economic growth targets.
It is undoubtedly so that productivity, innovation and entrepreneurs are key to economic growth and job creation. Therefore, Minister, your subprogramme that focuses on these areas must be supported and encouraged. It is the entrepreneurs that hold the key to unlocking the potential for increased economic growth and job creation. They must be supported in every way possible by government. Obstacles to doing business must be identified and dealt with, including those structural constraints in our economy which you referred to, Minister.
Whilst the ACDP, in principle, supports the New Growth Path and the Industrial Policy Action Plan, Ipap 2, we differ with regard to the degree to which the state can create jobs by itself. However, we should emphasise that we do understand the role that the state needs to play in the economy itself, but, clearly, as we all agree, there is a partnership that is necessary between the social partners.
Indeed, Minister, you yourself have said that the growth path recognises the crucial role of the private sector in creating jobs and also that partnerships are critical to the success of our economy. Therefore, we support your emphasis on social dialogue with social partners, including labour and business, whilst appreciating that this dialogue cannot substitute the National Economic Development and Labour Council, Nedlac, but should complement it and hopefully reach down to a lower level. Thank you. [Time expired.]
Mutshamaxitulu, Holobyenkulu Patel, Xandla xa Holobye Godongwana na Swirho swa Palamende, ndza mi xeweta. Mbulavulo wa mina wu ta kongomisa eka leswi swi landzelaka: Mabindzu lamatsongo; mabindzu ya le xikarhi; "broad-based black economic empowerment", ngopfungopfu 'B' leyo sungula; endlelo ro ringananisa na ntshunxeko lowu nga ta hi ku durha, kambe ku nga ri hi ndyelo hikwalaho ka vanhu lava nga lova va dlayeriwa ntshunxeko lowu hi nga na wona namuntlha.
Nakambe ndzi ta vulavula hi nhlanganelo wa mabindzu tanihi xikombiso xa bindzu, Khomixini ya Mphikizano na ntirho wo vulavula hi nxiximeko. Laha hi vulavula hi leswaku ntirho wu fanele wu va na ntikelo. Namuntlha ndzi vulavula endzhaku ka masiku mambirhi ya ku tsundzuka ku dlawa ka nhenha ya hina, Comrade Chris Hani. A rhandziwa swinene hi vanhu hinkwavo va Afrika Dzonga na van'wana lava rhandzaka nhluvuko.
N'hweti leyi ya Dzivamisoko, yi hi tsundzuxa Solomon Mahlangu, Sam Tambani, Dan Mohapi, Tatana Oliver Tambo, Tatana Mark Shope na Tatana Hendry Makgothi. Vunyingi bya vona va love hi n'hweti ya Dzivamisoko. Lava nga va na xiphemu xa ku lunghisela xikan'we ni ku dlawa ka Comrade Chris Hani a va nga etleli vurhongo. Va ta kotisa Macbeth loko a ku: "Macbeth u dlayile vurhongo".
Loko hi xixima tinhenha leti nga hundza a hi susumeteni pfhumba ra HHH leri nga ra tindlu, ndlala na rihanyu. Ri ndzi tsundzuxa yena Comrade Chris Hani. Pfhumba leri ri nge humeleli loko kuri hava mitirho. Loko hi vulavula hi mitirho, Freedom Charter yi ri: "Ku ta va na mitirho na ku hlayiseka; vanhu va ta fuma."
Loko hi vulavula hi mitirho hi ri Afrika Dzonga lerintshwa hi nga rivali leswaku hi salele endzhaku hi mhaka ya nkulukumba Verwoerd. Loko a ku nga ri yena ingi hi ri ekule na hina. A hi ta famba laha ku fambaka matiko man'wana. Hi yena loyi a nge te: "Munhu wa ntima u ya endla yini hi Matematiki hikuva ntirho wa yena ku ta va ku rhwalela masaka." Namuntlha tilaboretari na swibedhlele hinkwaswo swi lava vanhu va Matematiki. Loko hi nga ri na vona ku nga rhuketeriwi ANC, kambe a ku rhuketeriwi kokwani wa valavo, yena Verwoerd.
Ku ya emahlweni ndzi ri Holobye, loko mi karhi mi thola valawuri xiyisisani swinene. Tholani mulawuri loyi a nga ta ya eka vanhu. A ku vi loyi a nga ta ka a nga nyenyi vanhu, loyi a nga ta va na rirhandzu, naswona a kota ku tirhisana na vanhu - 'Batho Pele'. A nga vuli leswaku loyi wa nuha. I ntiyiso wa nuha hikuva a nga fumanga. A nga n'wi chavi ku n'wi qhavula, a n'wi khome hi voko a n'wi pfuna leswaku a tlakuka hi tlhelo ra ikhonomi. Munhu loyi siku rin'wana u ta va na vhengele na yena a thola vanhu.
Holobye, endlelo ro ringananisa ri fanele ri va kona. Loko ri ri kona na rona ri ta pfuna ku herisa vusiwana. Lava va ka hina va ka ntimeni va ta va kona ehenhla laha a ku tshama lava ntlhohe, valungu. Va ka ntimeni ndzi vula Maafrika, Maindiya, Makhaladi na Machayina. Eka xiyimo xa le tifemeni hi kombela leswaku vatirhi na vona va kota ku va na vun'winyi bya xiphemu xa feme. (Translation of Xitsonga paragraphs follows.)
[Chairperson, Minister Patel, Deputy Minister Godongwana and Members of Parliament, I greet you. My speech will focus on the following: small, medium and micro enterprises, SMMEs; broad-based black economic empowerment, BBBEE, especially the first 'B'; affirmative action; and the hard-won freedom which we did not get on a silver platter but because of the people who sacrificed their lives for the freedom we have today.
I will again talk about co-operatives as a form of business ownership, the Competition Commission and decent jobs. Here we mean that work must be sustainable. Today I debate two days after the commemoration of the assassination of our hero, Comrade Chris Hani. He was adored by all the people of South Africa and those who loved development.
This month of April reminds us of Solomon Mahlangu, Dan Mohapi, Oliver Tambo, Mark Shope and Henry Makgothi. Most of them passed away in April. Those who had a hand in the conspiring and killing of Comrade Chris Hani will have sleepless nights. They will be like Macbeth in Shakespeare when he said: "Macbeth shall sleep no more".
In honour of these fallen heroes, let us pursue the initiative of HHH, which stands for houses, hunger and health. It reminds me of Comrade Chris Hani. This initiative will not succeed without job opportunities. When talking about jobs, the Freedom Charter says: "There shall be work and security" and "The people shall govern".
When talking about jobs in the new South Africa, let us not forget that we are lagging behind because of Mr Verwoerd. If it were not for him, we should be further afield. We would be on the same footing with other countries. He is the one who said: "What is the use of teaching the Bantu child mathematics when it cannot use it in practice?" Today all laboratories and hospitals require people with mathematics. If we do not have them, blame it not on the ANC, but on their ancestor Verwoerd.
Furthermore, I am saying to you, Minister, you should be very careful when employing managers. You should employ a manager who will go to the people. It should be someone who will not abhor them, but love them and be able to work with them - 'Batho Pele'. He should not say this one stinks. It is true that he stinks, because he is not rich. He should not be afraid to shake his hand and give him assistance to be uplifted economically. One day this person will own a shop and employ other people.
Minister, affirmative action should prevail. When it prevails, it will help to eradicate poverty. Our own black people will be up there where whites used to be. By blacks I mean Africans, Indians, coloureds and Chinese. In the context of factories, we request that the workers should be shareholders in the factory.]
Workers must be involved in the shareholding schemes and community trusts and there must be active worker control of the retirement fund. Workers must also know what the retirement fund is used for.
Hi fanele hi ringeta ku hunguta vangwa ra muholo exikarhi ka 'chief executive officers', CEO, na vatirhi lava kukulaka. Swi hoxekile ku tlakusa muholo wa lava nga ehenhla loko lava nga ehansi va nga tlakuseriwi. Masiku lawa swa nyanya hikuva va thoriwa va tirhisiwa swa xinkarhana.
Eka pholisi ya mphikizano ndzi mi bela mavoko n'wina lava mi yi rhangeleke emahlweni. Mi kotile ku khoma swigevenga leswi kunguhateke vuxisi swi koxa ku durha ka xinkwa. Hi kombela leswaku nkarhi lowu taka mi va rihisa swi twakala leswaku va nga ha engeti.
Loko Reserve Bank yi tlakusa ntswalo swa hlamarisa leswaku swi ta njhani leswaku tibangi hinkwato ku nga si hela na siku na tona ti tlakusa ntswalo. Lowu i nkunguhato wa vuxisi. Hi swi vonile swi endleka na le ka va tinqingho. Khomixini ya Mphikizano yi kote ku chavisa MTN na Vodacom leswaku mundzuku va ehleketa hikambirhi na kanharhu loko va lava ku endla swin'wana.
Xo hetelela ... (Translation of Xitsonga paragraphs follows.)
[We should strive to narrow the wage gap between the chief executive officers, CEOs, and cleaners. It is wrong to increase the salaries of high earners and do nothing for the low earners. It is a common practice these days because employees are temporarily employed.
With regard to the competition policy, I wish to applaud you who are in the forefront. You were able to arrest criminals who colluded to fix the price of bread. We request that in future you should impose heavy fines on them so that they should not repeat what they have done.
It is very strange that when the Reserve Bank increases its repo rate, all the banks increase their prime lending rate within a day. This is collusion to cheat. We saw it happening with the cellular networks. The Competition Commission was able to caution MTN and Vodacom such that they will think twice in future before they collude.
In conclusion ...]
Comrade Minister, in the long term, your officials - the cadres and the right officials of the moment - must be those who will look all over for the poor people that you must uplift. Who are those poor people? It is those people who are repairing tyres on the road, those people who are selling mealies on the side of the road. He must have a thought that says: Yes, you are selling second-hand tyres; let me help you to also get machines to do wheel alignment and wheel balancing.
Eka muxavisi wa swifaki u fanele a n'wi byela leswaku u ta n'wi pfuna a pfula vhengele leswaku bindzu ra yena ri kula ri ya emahlweni. Ndza khensa Mutshamaxitulu. [Va phokotela.] (Translation of Xitsonga paragraph follows.)
[To the seller of mealies, he should tell him that he will help him open a shop so that his business can thrive. I thank you, Chairperson. [Applause.]]
Hon Chairperson, the Department of Economic Development must involve improvements in a variety of indicators such as literacy rates, life expectancy and poverty rates. A country's economic development is related to its human development, which encompasses, among other things, health and education. These factors are closely related to economic growth so that development and growth often go together.
Our economy has been growing, so we hear, but human development of our people has been on a steady decline. Health and education standards have also steadily declined. I submit that there has been no economic development, if it cannot be seen, in improved quality of life of ordinary citizens.
Unemployment remains a terrible scourge in our country, with an economy that continues to lose jobs without creating new ones. The department has pointed out that the New Growth Path seeks to correct and address our economy's jobless growth. I am sure that we all want to see what will be done differently, because one of the biggest failures of whatever growth we've boasted about is its lack of absorbing labour and creating sustainable employment.
We appreciate that funds have been put aside for job creation, but that gives little hope that the joblessness of this economy will be resolved.
To me, resources do not play a big role, as we are made to think, but what has been lacking is political will and decisive thinking from key decision- makers. We hope to see a new thinking as this new Ministry gathers strength and establishes itself.
Thus far, the department has not done very well if we consider that R2,9 billion worth of funds were set aside to save jobs hit by the recession, but that a mere 7 000 jobs were saved while 900 000 were lost, and this was not due to a lack of resources.
We are seen by the world as the leading economy on the continent, yet our economy's labour absorption rate fares far below that of other African countries like Uganda and Tanzania. This, therefore, means that the conclusion is drawn that this is a problem owing to a lack of political will. It is embarrassing to note that our labour absorption rate is below 50% while other African countries have gone up to as much as 75% in labour absorption.
Unemployment remains a terrible scourge, as I have already said, but we say there is a need for the department to communicate its New Growth Path effectively with stakeholders and generally with the public. We have been hearing that the New growth Path is aimed at creating more jobs, but details have been scarce and there are fears that the department will seek to lower the minimum wage. Needless to say, this will result in outrage. The UCDP supports the Budget Vote. I thank you.
Hon Chairperson, hon Minister, hon Deputy Minister and hon members, I rise to inform this House that the ANC supports Budget Vote No 28: Economic Development. [Applause.]
Hon Minister, the ANC gave you a child to raise named the Department of Economic Development. You did not have the luxury of time to nurse it to crawl. You had to put it on its feet and make it run; run very fast and very far. Not only must it run the length and breadth of South Africa, but it must also run in the Southern African region and on the whole continent. No one in this House dares to contest the assertion that within a very short space of time this child has been running.
The 52nd conference of the ANC in Polokwane, in 2007, recognised that South Africa must develop an economy which is connected to the world, in particular an economy which is increasingly integrated into the Southern African region and the continent as a whole.
Through the New Growth Path, the ANC seeks to create five million decent jobs by 2020, reduce income and social inequalities and eradicate poverty and hunger. However, our country has also taken on the responsibility of looking beyond its borders in order to achieve economic growth and economic development. Shared economic growth across the Southern African Development Community region and the whole continent are preconditions for sustainable development in our own country.
His Excellency the President of the Republic, President Jacob Zuma, observed at the ANC's national general council last September that there is evidence of growing and robust growth in large parts on the African continent. Many economists agree with the President's observation. They point out that African countries are among those developing economies that are making rapid economic progress, in contrast with continuing elements of economic depression in developed countries. It is estimated, for instance, that the economy of sub-Saharan Africa is likely to register a growth of between 4,5% and 5% in 2011.
There is therefore a growing conversation about the need to enhance intra- African trade in order to develop the continent's economies. There is a strong belief in our own country that greater continental trade and economic activity have to be at the centre of any plan to transform South Africa and the rest of the continent from a developing region to a developed one by 2040.
It is certainly in our interests to broaden the 49 million-people market through trade with and economic development in the SADC and on the continent. For example, broadening the market comprising the Southern African Development Community, SADC, the Common Market for Eastern and Southern Africa, Comesa, and the East African Community, EAC, with a combined population of 700 million and a combined GDP of $624 billion is the key target for sustainable development.
Most African countries are resource rich, yet they also offer great opportunities in other sectors of economic activity with tourism, agriculture, manufacturing and construction having the greatest potential.
Regional integration and co-operation offer an opportunity for the development of national markets, achieve economies of scale and enhance competitiveness for our country and the continent to participate in the global economy. These considerations inform South Africa's commitment to the Southern African Customs Union, to the establishment of the SADC Customs Union and the Tripartite Free Trade Area agreement processes in the context of the SADC, Comesa and EAC arrangement.
Therefore, our country views the strategic challenge as that of developing and strengthening "real economy", developing road, rail and telecommunications infrastructure and deepening co-operation in the African region.
It is estimated that for this entire infrastructure to exist, Africa has to spend about $90 billion per year, and the ANC government is ready to play its part and make its contribution to this African effort. I am certain that governments and people on the rest of the continent are prepared to do the same. I thank you. [Applause.]
Mr Chairman, this department was established in 2009 and received wide coverage regarding the announced New Growth Path, which aims to create five million new jobs by 2020. The DA welcomes any attempt by the private or the public sector to create new sustainable jobs, given that a million South Africans became unemployed during the past year and that 42% of the age group between 18 and 29 is currently unemployed and lack basic skills to effectively participate in a growing emerging economy.
Our present economic growth rate is 2,8% - and I'm quoting the hon Minister of Finance - and a characteristic is that, since 2000, we have experienced jobless growth, a phenomenon which is not confined to our economy, which in essence means that the primary, secondary and tertiary sectors shed jobs with severe social consequences for our society.
Currently, only eight million South Africans pay taxes, which in relative terms can be defined as a very narrow tax base. In contrast, 15 million South Africans depend upon some form of social grant. Our economy by world standards is carbon intensive. The price of energy and, in particular, electricity has gone up by 27% in the past year, and the continual rise in the price of crude oil is bound to influence food inflation, personal debt to disposable income, etc.
This department has an important role to play regarding the reduction of unemployment and the alleviation of poverty. However, we'll have to address the following issues. Our parastatals are not well run by international standards if productivity is taken as the norm.
The DA has stated in the past, and I will say it again, that the sooner we privatise these parastatals and allow ordinary South Africans, irrespective of race or creed, to become shareholders in these entities, the better. One of the main reasons why black economic empowerment, BEE, has not attained the necessary results is that a small minority with close political connections monopolise the majority of the so-called empowerment deals.
The DA says that the income gap at present is not acceptable. It is in the general interest that we create an open and equal society that provides access and opportunity to all.
The New Growth Path mentions specifically that communication and co- ordination with local and provincial spheres of government will have to improve in future. The sooner this happens, the better. In the Government Gazette of 4 April 2011, the hon Minister of Finance announced that R2,4 billion budgeted for eight provinces will be withdrawn from them owing to underspending. The only province which has spent its entire budget is the Western Cape, which incidentally is run by the DA.
This is a sad state of affairs. Our predominately rural provinces such as the Eastern Cape, KwaZulu-Natal, Limpopo, the Northern Cape and North West, had funds withdrawn because of improper planning. The money withdrawn was budgeted for community libraries, the renovation of hospitals and other much-needed infrastructure projects.
The Department of Economic Development and the following entities briefed the portfolio committee, namely the Competition Tribunal, the Industrial Development Corporation, Khula Enterprise Finance, the SA Micro-Finance Apex Fund, the International Trade Administration Commission and the Competition Commission. Allow me to congratulate all the entities. Their submissions were empirical and listed their strengths and weaknesses.
Members of the portfolio committee, however, raised a number of relevant issues during our hearings. The following concerns were expressed. One, how will the R1,2 billion allocated to the National Youth Development Agency create jobs? Two, at present there is an absence of quantifiable targets or outcomes to measure performance against. Three, are there adequate incentives in place to incentivise the R9 billion Jobs Fund over the next three years and the R10 billion administered by the Industrial Development Corporation? Four, are there necessary proactive steps planned to address the spatial dimensions of the economy with reference to the former Bantustans?
Also, an issue which I am not sure we have clarity about was raised by the DA in 2009 and 2010, namely that the activities of the Economic Development department may lead to duplication in relation to the National Treasury, the Department of Trade and Industry and the National Planning Commission. And I am perfectly aware that this is a young department, but members from all parties in the portfolio committee agreed that there is little evidence of what this department has achieved in the growth of GDP, job creation and the reduction of poverty.
The DA believes that it is essential to create an environment where there is rule of law, an independent judiciary, zero tolerance of crime, a functional educational system based upon merit, transparent acceptable business practices, no price fixing, no collusion or market manipulation or corruption. We can only achieve this if we implement the core principles of the equal-opportunity society, which are bound to cause sustained economic growth.
I represent a predominately rural constituency, but if the retail sector is taken as an example, we find that it is dominated by four large companies listed on the Johannesburg Stock Exchange. Small entrepreneurs in the second economy lack critical volumes, access to credit and an economy of scale.
What is not generally known is that the small business sector is particularly vulnerable, and I take the health sector as an example. Retail pharmacies in my constituencies provide credit, deliver after hours - things which are not done by South African pharmacies or listed conglomerates.
My appeal to the hon Minister is to level the playing fields in these spheres of government and to allow the small private entrepreneurs to fill a very vital market niche in their respective communities. I thank you, Mr Chairman. [Applause.]
Ngiyabonga Sihlalo, ngibingelela uNgqongqoshe, oNgqongqoshe abakhona, iPhini likaNgqongqoshe, amaPhini oNgqongqoshe abakhona, uSihlalo wekomidi lethu umama uColeman kanye nawo wonke amalungu ahloniphekile. (Translation of isiZulu paragraph follows.)
[Mr Z C NTULI: Thank you, Chairperson. I greet the Minister, the Ministers present, the Deputy Minister, the Deputy Ministers present, the chairperson of our committee, Mrs Coleman, and all the hon members.] As we debate this Budget Vote, we evaluate the input of our government in areas such as infrastructure investment, job creation and the expansion of industrial financing, which is the key component to job creation. In line with the New Growth Path, the government has launched the Industrial Policy Action Plan to open up the path to job creation.
Ipap, the Industrial Policy Action Plan, is the key component project of the New Growth Path through which we will measure progress and output on the five million jobs expected to be created by 2020. In the Ipap document, our government has put it clearly that, in order to create more jobs, diversification will focus on expanding opportunities in oil and gas, green energy-saving industries, agro-processing linked to food security, and some interventions to boost local manufacturing.
Foreign direct investment continues to boost the industrial sector. More money is needed to expand development zones to make our economy rely on job creation rather than on commodities. We also need to see more integration between state-owned enterprises, SOEs, and development finance institutions, DFIs, in implementing the systems and the monitoring and measuring of their direct and indirect impact on employment.
In the state of the nation address, President Jacob Zuma made a clear call when he said: We urge state-owned enterprises to play a key role in skills development and help us provide the technical skills needed by the economy. Denel, Eskom, SAA and Transnet have supported the training of more than 6 000 learners in technical and engineering-related scarce and critical skills.
We will need to attract more DFIs in the area of revitalisation of training facilities and skills investment. The DFIs should be seen driving the developmental agenda. As we revitalise training facilities, we will need to draw skills training programme models from existing institutions like the Michael House school for senior boys which is situated in the Natal Midlands, KwaZulu-Natal.
Lesi sikole Sihlalo, sifundisa ngawo wonke amakhono ukuze abafundi uma bephuma beyofuna umsebenzi noma beyozakhela bona imisebenzi, akudingeki nokuthi baze baye eNyuvesi uma bephuma kulesi sikole. Ngakho-ke kudingeka ukuthi sibheke izindlela zokuheha ama-DFI ukuthi asize uhulumeni ekuvuleni izikhungo ezifana nalesi sikole. Lokhu kungasiza kakhulu ngoba ukuyisa umntwana kulesi sikole esifana nalesi okuthiwa yi-Michael House kubiza imali eyizi-R158 240 ngonyaka ingane ngayinye. Okusho ukuthi nathi njengoba siwuhulumeni nje, ake sibenazo izingane eziphuma kule mizi ehlwempu eziyayo kulesi sikole sibone ukuthi yini le ethengwa yile mali engaka. (Translation of isiZulu paragraph follows.)
[This school, Chairperson, teaches all the skills necessary so that after matriculating learners can go look for jobs or start their own businesses; they don't even need to go to university after matriculating. So we need to look at the ways to attract the DFIs to assist the government in opening schools like this one. That would help a lot, because sending a child to a school like Michael House costs R158 240 per child annually. As government we must therefore ensure that kids from poor homes are sent to this school so that we can see what it is that makes it so expensive.]
Dr Rabie, I think Rome could never have been built in a day. I heard you about ...
Siye sithi thina ngesiZulu akuvelwa kanye kanye kungemadlebe embongolo. Sihlalo izinguquko zomthetho kumele zenziwe ngokushesha ukuze kuchitshiyelwe uMthetho Wokuqhudelana ukwenzela ukuthi izimakhethe zivuleleke nakosomabhizinisi abancane. Sisishayela ihlombe isiphakamiso sokuthi ama-ejenti amancane afana noKhula, Samaf no-IDC ahlanganiswe ndawonye ukwakha uphiko olulodwa lokusiza osomabhizinisi abancane ngemalimboleko. (Translation of isiZulu paragraph follows.)
[In isiZulu we say that success does not come to everyone at once. Chairperson, legislative changes should be made quickly to amend the Competition Act so that markets should also be accessible to small business people. We applaud the suggestion that smaller agencies like Khula, Samaf and the IDC should be merged to form one agency in order to help small business people with loans.]
The current economic development strategies will need the Industrial Development Corporation, IDC, to enable municipalities to expand infrastructure to rural areas in order to make it possible to extend development zones to rural areas, particularly the manufacturing sector. This will also create opportunities for expanding market zones to expose more communities to business activities.
There should be a strong mechanism to drive the alignment of the strategic objectives of the economic development agencies in order to achieve the national development goals. There must be an alignment of purpose between the DFIs and local economic development strategies, LEDs. This alignment could best be mirrored through the integrated development plans at every implementation drive. The programme of the DFIs must be more aligned to the job creation agenda. The R10 billion investment by the IDC over the next five years must also be aligned to this development agenda.
In his article titled "What I would do if I were Prime Minister", dated 2 December 1961, the then president of the ANC, Inkosi Albert Luthuli, said that the many problems facing emergent states on this continent were, among other things, "state subsidies for backward areas and service" and "ownership and control of industry and other branches of the country's wealth". He said: These problems are common to nearly all emergent independent states ... I look forward to the day when my own people will face these problems of an emergent free state ... To meet this man-made inequality will demand what will appear to whites in South Africa to be revolutionary changes ... The solution to the South African problem will call for radical reforms.
I look forward to the IDC expanding manufacturing to the rural areas. We need to see infrastructure development investment increasing in size in the rural areas where the majority of South Africans live. These reforms will emancipate our people economically from poverty and economic isolation by creating local markets, which will become common sites to meet and share business ideas among poor and emerging entrepreneurs.
Sihlalo, ake ngibuyele kancane laphaya kubaba umhlonishwa u-Marais. [Chairperson, let me go back a bit and respond to hon Marais.]
I think, hon Marais, you spoke about the labour regime. You must know that as the ANC we will never lose our struggle for the workers. We cannot just say, now we will do away with all the struggles of the past. The workers did fight for these rights. I am also surprised, hon Marais, that you never said anything about Walmart. There is a record, not a good one, for Walmart when it comes to its labour force, but you didn't say anything about that. I want to tell you that what you call talk shops is, to the ANC, consultations.
Yebo, Xhamela, ngikuzwile ndoda ushaya laphaya uthi ... [Yes, Xhamela, I heard you making your relevant point, saying ...]
... government creates a conducive environment for businesses. [Laughter.]
Okunye-ke Xhamela khululeka nge-Samaf, ngizwile uthatha i-Samaf isizohlangana neKhula no-IDC. Ngakho-ke lokhu obusakusola sekuzolungiseka ngokushesha ngoba sebezohlangana. Ngiyabonga baba uSingh, uyindoda. Hhayi uyibambile Baba uSingh. [Uhleko.] (Translation of isiZulu paragraph follows.)
[Another thing, Xhamela, don't worry about Samaf. I heard that Samaf will be merged with Khula and the IDC. It means that what you were complaining about will be resolved as they will be merging. I thank you, Mr Singh; you are the man. Indeed you are doing a great job, Mr Singh. [Laughter.]]
To the hon Alberts I just want to say that you must know that the Ministers are from the ANC. They have the "Working together we can create more jobs" belief. Hon Swart, no, it's the same thing - I want to assure you that we've got a good team in the economic cluster. Those Ministers know exactly what are they supposed to do. This working together will create more jobs.
I would like to thank the chairperson and the committee on Economic Development, because this debate has been taking place today while we are in a constituency period. So, the members had to come back to prepare for this debate. I would also like to thank the members from the study group and the opposition. I would like to urge this House to pass this Budget Vote. Thank you. [Applause.]
Hon Chairperson, I would like to start by thanking all the hon members for a very detailed set of comments, some useful ideas and the very rich debate that we have had. Thank you.
The opportunity of a Budget Vote is an opportunity to set out our vision, to hear the thoughts and ideas that come from other parties, to hear the thoughts and ideas that come from the ruling party, and to take the pulse of whether or not we are in fact doing what we set out to do.
What has come out of this discussion is helpful. Across the different parties there is recognition of the centrality of the New Growth Path; that one can't just look at one department's budget in isolation from what government as a whole seeks to do. That is very helpful. In that context, for example, the hon Ntuli spoke about the role of development finance institutions and how they need to connect more actively with state-owned enterprises and the potential that that unlocks.
The hon Coleman called the New Growth Path a very powerful framework; something that brings together, that connects the different parts of government. The hon Marais said that the New Growth Path must be a catalyst to support competitiveness - and we've placed a competitiveness package on the table.
The hon Ngonyama said that the NGP aims to create five million jobs over the next 10 years, which really captures an essential part of it. The hon Singh said that it was a credible plan for those five million jobs. The hon Swart said that he supported the principle of the New Growth Path, but also the shift from consumption to a production-led growth path.
All of them were really speaking of rising to the national challenge in terms of how to enthuse all South Africans that we've got a plan - that we can, if we work together, achieve the five million new jobs by 2020. Thank you very much for that.
A number of specific areas came up, areas that, I think, by their nature require ongoing discussion, reflection and debate. As we get consensus on key areas within society, we lay the basis for the long-term consensus that you see in fast-growing economies. Let us take the issue that came up on the role of the private sector. The private sector is crucial to development. Consider that today, of the 13 million jobs in the economy, about 80% are in the private sector. If we even doubled the number of jobs in the public sector, we would not nearly achieve our five million jobs.
So, for very practical reasons the private sector is a crucial part of what we need to do. But is that the same as saying you need a weak state, that there is no role for the public sector, that the state can stand aside and simply leave market forces to determine the future of society? Indeed not. I think we have a broad consensus that we need both a smart state and a dynamic, competitive private sector.
The New Growth Path - what different government departments are doing and what different Cabinet Ministers will be announcing in the next 10 weeks - is about that smart state. It's about how to get the state working, recognise the challenges and say, "Let's do things differently." We are being led by the call by President Zuma: "Do things differently." [Applause.] To simply do what we have always done in the hope that the results will be different is not realistic.
How are we going about doing things differently? What we have laid before the Extended Public Committee today, before Parliament, is not only the detail of our own budget, but also how we are connecting the different parts of government.
Indeed, we use the analogy that effective Cabinet governance is less like a cricket team - and today we all don't want to be like a particular cricket team where one batsman is at the crease and it's him alone, and in this case it's only him at the level of international cricket - and more, if you want to use the sport analogy, like soccer. Cabinet governance is fluid, where the ball is passed among members to achieve the final goal.
In that context, let me make the point that the Industrial Development Corporation, and what we've said today about the IDC, is an example of smart government. The IDC was at the absolute heart of the setting up and financing of Sasol. Today, Sasol is South Africa's biggest industrial company. It has a global presence, it has world-class technology and it is funded by the public sector. I could also give the example of the V&A Waterfront, one of our very significant tourist attractions, which was originally bankrolled and funded by the Transnet pension funds. It shows the connection between what a smart state can do and what it can unlock in the private sector.
The lesson, to the extent that there's an overriding lesson regarding fast- growing economies, is that they are not stuck in the old debates about state versus market. They see a connection, a partnership, between these. What we have done with the new growth path is to capture the nature of that partnership.
The hon Marais asked the question, "Where are the labour-absorbing sectors?" Well, in the New Growth Path we set them out in detail. We supplement them in the Industrial Policy Action Plan, Ipap2, which is the manufacturing driver of the New Growth Path. Areas like agro-processing - what we can do in agriculture - can dramatically alter the employment landscape. Agriculture and agro-processing are very, very labour absorbing.
It's in what we say about downstream minerals. If we only mine our products, then the labour intensity of the capital investment is limited. But, if we can master what is required to get to what industrial economists call Stage 4 beneficiation - the production of consumer and capital goods - then you unlock large numbers of jobs for the energy you consume and the capital that you deploy.
That is where the details are. They are in parts of manufacturing. Take the auto sector, for example. Of course, the auto assemblers, the original equipment manufacturers, OEMs, are very capital intensive. They provide the market for the component manufacturing, and the real jobs are created in component manufacturing. So, when we set out in the New Growth Path that we want to strengthen auto components, that gives you an idea of where we are going. I can take you through sector by sector. But this is not simply about listing a set of sectors. We go one step further. We say that when the state deploys resources through the IDC, for example, let's measure the cost per job, and let's increasingly shift capital to more labour-absorbing activities. Look at the example that we gave today of the IDC jobs bond that was issued in partnership with the UIF fund: very, very useful employment generation has come out of it.
A number of colleagues have mentioned the question of dialogue. I want to assure the hon Marais that talking - dialogue - sitting down, is not inaction. It's really getting that consensus that you need in society to make things work. Skills are crucial to development, but the state cannot just publish its skills plan without getting the buy-in of business and labour. They are crucial; you need dialogue for that. In fact, dialogue for us is the way to get action, buy-in and consensus.
The hon Gcwabaza raised the issue of Africa. One of the things that the New Growth Path, our work in the department and across government is seeking to do is to reorient ourselves to the opportunities on this continent. They are enormous. I can give you their details, as the hon Gcwabaza has done.
I can point you to the fact that over the past 10 years, from 2000 to 2010, 6 of the 10 fastest growing economies in the world were on this continent, African economies. I can tell you that in terms of International Monetary Fund projections seven of the 10 fastest growing economies in the world, between now and 2015, will be on the African continent. I can tell you that between now and 2015 we will see an increase in African Gross Domestic Product of $500 billion, an enormous sum, which is equivalent to two full South African economies. This continent is finding its feet; there are opportunities here and we can go forward very, very effectively if we direct ourselves at these opportunities.
I want to conclude by saying that we must build on our strengths. President Zuma is leading a delegation of Ministers to the Brics summit, which takes place on the island of Hainan in China. We are a small economy and a small population in terms of the Brics group - 50 million people. The next biggest country is four times our size. But let us celebrate the strengths that we have and where we can go.
Recently, I looked at comparative data for the Brics economies. I think something that will delight hon members is that when we expressed GDP - all the goods and services produced in an economy - as a multiple of employment, in other words, what the output per employee is, some very interesting things emerged.
In 2007, using World Bank data, the average output per South African worker was equivalent to that of a Russian worker. The average output in South Africa was a quarter more than Brazil; four times as much as China per employee; seven times as much as India per employee. In 2008 Russia overtook us when the petroleum price went up and the Russian GDP increased, but this gives you an indication that we have some strengths that we can celebrate. We have to rise to the challenge of five million new jobs; work together in this; build the partnerships with the business community and with organised labour. Thank you very much for all the contributions that you have made today. [Applause.]
Debate concluded.