Hon Chairperson, indeed, this colloquium builds on the findings of the previous colloquium. At the outset I want to thank all members of the committee for actively participating, and in some cases even chairing part of the proceedings. So, we thank you for that active participation. South Africa is committed to the radical transformation of our country. In a new political and economic era, indeed, we are - the people voted for the ANC, which holds the majority of seats here - informed by the challenges in our country. [Interjections.]
Manufacturing is important for inclusive economic growth and we know why it is important. It has huge multiplier effects, adding value to primary products in all sectors, but especially in the mining, agroforestry and plastics industries, where it is essential for downstream industries, and especially for labour absorption.
Now, there is something interesting. An economist, Ha-Joon Chang, made it very clear that developed countries are where they are today precisely because they industrialised. Of course, before the carbon footprint became a reality, they had the good fortune to be able to actually use fossil fuels. We don't have the same luxury to use them to the same extent. Nevertheless, the ANC developed the Industrial Policy Action Plan 2. This is an overarching instrument, bringing in all the sectors. It is shifting the country away from having an historically consumption-driven economy to having a productivity-driven economy. It is informed directly, especially in the sixth iteration, by bringing about structural changes in the economy.
Another point that most economists have made is that you won't achieve industrialisation unless the state intervenes. We have seen that in all the countries that have been successful in this regard, whether they have been the capitalist countries, the socialist countries, or those in between. [Interjections.]
Let me tell you that we as the ANC recognise that, to achieve this dream, all of our very sound legislation also needs to be harmonised. We recognise that the Broad-Based Black Economic Empowerment Act, the Special Economic Zones Act and the related labour legislation underpin our objective to grow an inclusive economy, to create jobs, and to shift away from monopoly capital.
It's not working.
No, it's not surprising that some of it is not working, because we still have a commitment by some of the monopolists to actually ignore legislation - ignore it! - and to tell the government, "Let's see what you're going to do, because we will sack 300 of your workers." [Interjections.] Threats, threats and more threats. That is not the approach we want. [Interjections.]
Let us just move on to the whole issue of what Mandela put down here. [Interjections.] Mandela himself - whom the DA almost claimed as its own son - made it clear in 2010 that a racist minority monopoly had to stop monopolising economic wealth in South Africa. [Interjections.] Yes! Now that was Mandela. [Interjections.]
Let us just look at some of the issues around transfer pricing. Of course, there is legal transfer pricing. There's also illegal transfer pricing. One thing we do know, however, is that it has compromised compliance with the Mining Charter.
We also know that there have been little mistakes in legislation, such as when we wanted to transform it and bring about black ownership and broaden the base. We simply said we needed to have ownership and ownership had to be transformed. It had to be given over to, if you like, the broad-based black economic community. However, there was something we didn't say. We left out one word, and that word was "encumbered".
So, what we allowed is for ownership to be passed along to black people in an encumbered manner. This would be in the same way as if you owned a house and said, "This is my house," and you invited your friends to your house. [Interjections.] However, it's not your house. It belongs to the bank. Why does it belong to the bank? It's because you haven't yet paid off your mortgage. You haven't yet paid off the loan. [Interjections.]
So, what we're saying is that the Broad-Based Black Economic Empowerment Act, with all of its codes, must be implemented, Minister. It must be implemented vigorously, to ensure this transformation takes place. [Interjections.]
The other issue that we want to point out about the purpose of the colloquium, etc, is that we were aware that value addition was important not only to minerals, but also to agriculture and to forestry, which one of my colleagues will talk about.
With respect to agriculture, there are many innovative ways in which we can take jobs to the rural areas. We received a very interesting presentation on essential oils. One is able to take these essential oils into a very rural area at very low cost. It doesn't cost very much to transport the value-added product out, because a very small amount of that product costs a great deal.
I know that some of you have taken the trouble to study the committee report. In it you will see examples in connection with titanium value- addition. You will see examples of how we can add value in the mining sector and in forestry. What we must add is this. One of the main recommendations here, which the committee passed and which the DA refused to agree to, is reviewing, in consultation with other Ministries, the legislation and regulatory environment that reinforces Ipap's objective in pursuit of a developmental price. They objected to that. They didn't want the House to consider that in support of downstream industries. They don't want a development price.
The ANC supports the recommendations in this report. [Time expired.]
Chair, I think it's important to say, very briefly, at the beginning, what this report actually proposes. It proposes to allow the government to control the prices of steel, platinum, iron ore, coal, polymers, scrap metal, leather and a raft of other raw materials that Minister Davies and his colleagues deem "strategic". [Interjections.]
Now, hon Fubbs, you're not the only one who has read Ha-Joong Chang. He devotes an entire paragraph in his book to the effect of industrial policy implemented badly, and he shows, with lots of examples from various countries, how it can be a complete disaster if it is not based on evidence and sound research. [Interjections.] He rejects this policy, Minister. He rejects this policy outright.
Hon member, ignore other members. [Interjections.]
Let's invite him to Parliament and ask him!
Please talk through me.
Chair, this debate is very timely. It goes to the core of the economic heartbreak we are currently experiencing. I say "heartbreak" deliberately, because no one finds any joy in seeing the ANC slowly but steadily destroying South Africa's economy. And "destroy" is exactly the right word. [Interjections.]
The ANC's policy agenda, typified by this report, is actively destroying jobs in South Africa. Furthermore, it is actively discouraging investment. When a government takes decisions that discourage investment and place obstacles in the way of growth, then that government is effectively boycotting its basic mandate. It is boycotting growth and job creation.
There is only one possible outcome of the ANC's current economic policy agenda: more unemployment, more poverty and more economic decline. That, in turn, means that the ANC will never be able to satisfy the expectations of its voters, and so, inevitably, it will lose a democratic election.
HON MEMBERS: Hear, hear!
If we had a bold leader, able to take the party in hand and deliver substantial economic reform, we might be able to save the situation, but no such leader exists. President Zuma has checked out. He doesn't care about the economy. [Interjections.] The Deputy President has a lot of capital, but none of it is political. [Interjections.] He can't change a thing. [Applause.] The hon Fubbs talks about monopolising wealth. She quotes Nelson Mandela. I don't know if she has seen the hon Deputy President's Member's Interest Form - it reads like the balance sheet of a small country! [Interjections.]
So, it is inevitable. The ANC today, with this policy, is continuing its deliberate march towards political oblivion. This is not because of corruption or scandal, as many of us may have thought, but because it is destroying jobs.
Now, that South Africa's economy must diversify, that it must be restructured, is common cause in this House and in the DA. That is beyond debate. It's an established empirical fact, as has been said, that countries must have a large and diverse industrial base in order to grow and bring down unemployment.
The question is the form that this takes, and I would like to distinguish between "positive industrial policy" and "punitive industrial policy".
Chair, "punitive industrial policy" sees the economy as a zero-sum game. In order to gain something new on the one hand, someone else must lose on the other. It is an approach premised on control and on the belief that there is no economic problem that cannot be solved with an oversimplified, stylised government dictum.
It makes the rules for others to follow, but often does not follow them itself. It seeks to ban exports here or control prices there. And just this week, we've even heard talk of controlling the exchange rate. Perhaps the Minister would like to clarify whether he is going to peg the rand.
It sees the government as the arbiter of who wins. Most often, those who win are big business, big labour and entrenched interests - certainly not the unemployed; certainly not the poor. It crowds out and crushes entrepreneurs and competition and chases away investment. This, hon members, is the ANC's punitive industrial policy, and it is in this context that we see today's report.
In stark contrast to this is the DA's positive industrial policy, which sees a strong and capable state as the most important role-player in attracting investment, building a culture in which entrepreneurialism is valued and fostered, and investing in research, skills and infrastructure. Beyond that, positive industrial policy sees a critical role for the government in providing positive incentives for manufacturing: significantly increased tax benefits for research and development; incentives for investing in improving competitiveness and new technology; certainty of intellectual property rights; and addressing the market failure of access to finance for new ventures.
Positive industrial policy makes it easier to start a business by cutting red tape. It ensures that businesses that do business with the government are paid on time. Positive industrial policy makes sure there is a reliable and reasonably priced supply of electricity. It is not afraid of leading in the economy, but it leads efforts to reform and to stay competitive - like democratic reforms of the labour market. It gives entrepreneurs free office space in underutilised government buildings, and it understands that economic transformation cannot even pass "Begin!" without a skilled workforce. That is why the DA would create 1 million work internships, funded in the current Budget, to give first-time workers the chance to gain the skills that are required in the manufacturing sector.
That is the positive industrial policy that the DA advocates, and that is why we cannot support this report and the policy it advocates.
Forcing mining companies to sell minerals at a discount price will have a cascading, negative impact on the economy. There will be less investment in mining and fewer workers in marginal mines. Minister, you do not grow South Africa's economy by hurting mining. All you will do is hurt South Africa. It is entirely possible to attract new investment in mining, grow mining employment and secure better conditions for manufacturing at the same time. It is not either/or; it is both, together.
Hon members should mark this day on their calendars - because it will go down in infamy as the day the ANC actively destroyed thousands of jobs in the mining sector in South Africa, and took one, additional, major step towards its own political oblivion. Thank you.
HON MEMBERS: Hear, hear! [Applause.]
House Chair, the colloquium was a necessary platform to reflect on the need for beneficiation. There are two revelations that came out of the colloquium.
One was a correct diagnosis of the problem that the country is facing with regard to the question of beneficiation and industrial expansion. I think all of us agreed that South Africa continues to be an exporter of raw materials and an importer of finished goods and services, and that that should change. We agreed that the manufacturing sector is insignificant, as compared to the primary natural resources production sector and the services sector. That is not sustainable if you want to absorb your entire workforce, or the majority of it.
So the diagnosis is correct, but the remedies that are being applied by the ANC government are inadequate and are not going to take the country forward.
Industrialists who came to make presentations there pointed out the fact that we have a spineless government with spineless legislation and inappropriate policy interventions to deal with this phenomenon of South Africa's being an exporter of natural resources and an importer of finished goods and services.
Even in instances where you have legislation that provides for local beneficiation, no one seems to be doing anything about that. Let's look at section 26 of the Mineral and Petroleum Resources Development Act. Section 26(1) says that the Minister may initiate or prescribe incentives to promote beneficiation of mineral resources in the Republic. Is that happening? The answer is obviously, no.
Section 26(3) provides:
Any person who intends to beneficiate any mineral mined in the Republic outside the Republic may only do so after written notice and in consultation with the Minister. Are these mining corporations getting permission to export our mineral resources? No. Virtually all the mineral resources that are extracted from beneath South Africa's soil are taken to other parts of the world for beneficiation and industrialisation.
We must emphasise that it must not just be beneficiation, because beneficiation can be costly, with the smelters, for example, but it must pass the beneficiation stage and go on to industrialisation, so that we are able to absorb the entire workforce.
Another very painful revelation that came out of the colloquium is the fact that you have basic commodities and products that do not have tariffs. That is neoliberalism, hon Majola, where the state can't impose tariffs on basic consumption goods like plastics, and timber for furniture purposes. We compete with the rest of the world on a basis of no tariffs at all. Even the World Trade Organisation is on the left of the ANC when it comes to tariff imposition and proposals with regard to some of the strategic sectors. Why is the state not doing so? It's one of the things that you must look into. [Interjections.]
Also, you have a crisis. Yes, the hon chair of the committee is correct with regard to import parity pricing, particularly by former state-owned enterprises, Sasol and Mittal Steel. They are stifling industrial expansion because metals and steel are vital industrial inputs that should be available here in South Africa at an affordable, accessible price. However, it's not the case because they are owned by greedy private monopolies which are dealing with those issues in a different way.
The only solution ultimately is to nationalise the key strategic industrial inputs so that we are able to drive a sustainable industrial expansion programme. These are some of the issues you must deal with. Thank you very much. [Time expired.] [Applause.]
Hon House Chair, the IFP is in support of the finding of this report, as we believe that the push for beneficiation is long overdue. The lack of beneficiation policies and practices is one of the reasons that towns such as Kimberley remain as towns, instead of evolving into the cities they deserve to be, because the diamonds originating from the area should have added value to the place. It is unfortunate that implementation of beneficiation practices comes at a time when South Africa can't be sufficiently competitive. The massive shortage of the necessary skills undercuts attempts at development, specifically in the manufacturing sector.
The short-term importation of foreign skills can be a temporary measure, so as to help develop the necessary skills within the country. This can be done through aligning the school syllabus with what is needed in the marketplace. Some graduates could take part in reskilling programmes to equip them with what they need to succeed in this sector.
The ever-rising cost of electricity discourages foreign investment in the country. High port tariffs and the e-tolling of our roads are also working against the development of the manufacturing sector, thus undercutting beneficiation.
If beneficiation is to take place, local finished products should be protected. Charters such as the Mining Charter, for example, should be reinforced in order to promote the destiny of black people in this country. Blacks find themselves competing with Brics countries in a manufacturing market where they already start off at a disadvantage. Manufacturing in China, for instance, is heavily subsidised and their products end up being dumped in our country and continent because we make it hard for local producers to thrive. France, for instance, does not allow anyone else to sell Champagne. Instead we have to refer to our products as sparkling wine.
Too many people remain unemployed because we have not taken the steps necessary to protect our markets and ensure that beneficiation happens in the country. In order to thrive we need to look after our own businesses. I thank you. [Time expired.]
Madam House Chair and hon members, good evening. The NFP wishes to place on record its disappointment at the slow pace of beneficiation of the products of our previously disadvantaged people, despite the government's Industrial Policy Action Plan, which was launched with much fanfare.
We are mindful of the fact that in the 2014-15 financial year, the Department of Trade and Industry intended to focus on the iron ore, steel, polymers and titanium value chains, in regard to beneficiation. Yet, when we look at the reports on beneficiation in the plastics industry and in the field of titanium resources, it becomes evident that Ipap is not working. The reasons vary and are complex, and they will require extensive research and consultation to come up with workable solutions.
As the NFP, we are of the view that the people of South Africa in general, and the historically disadvantaged in particular, should share in the wealth of the country, as well as in its mineral resources. We will continue to campaign for our mineral wealth to be retained in South Africa rather than be exported as raw materials and then imported as refined manufacturing products at astronomical prices. We will campaign for our people to be mandatory shareholders in the wealth that is generated in our country by calling for our people to be preferential shareholders in new business ventures where multinationals have an interest in our resources.
We firmly believe that government, with all the resources available to it, is in a good position to address the slow pace of beneficiation for our previously disadvantaged people. Yet, is seems that the political will to do so is lacking. As the NFP, we advise the hon Minister of Trade and Industry to rise to the challenge and find ways to accelerate the benefits of our mineral wealth and resources for our people; to consult closely with the role-players; and to listen to their concerns and proposals.
In conclusion, we urge the hon Minister to co-ordinate with other government departments, such as Science and Technology, Mineral Resources and others, in order to pioneer a multidepartmental approach to finding solutions to overcoming the obstacles in the way of beneficiation and to developing sustainable ways to add value to our mineral resources. I thank you. [Time expired.]
Hon House Chair, hon members of this House, fellow South Africans, colleagues and compatriots ...
... asothukanga ke thina kuba siyazi ukuba aba basekunxele kwam baya kuphatha igqudu besilwa nemigaqo nkqubo enenkqubela phambili yombutho i- ANC. Siyazi ukuba igunya abaliphetheyo kukukhusela iimfuno zabo bazisuswana zibomvana. (Translation of isiXhosa paragraph follows.)
[... we are not surprised because we know that hon members on my left will strive to fight against the successful policies of the ANC. We know that their authority is to protect the needs of those who are rich.]
It is our view that adding value to our minerals and natural resources can overcome unemployment and create decent work. And, yes, it can also lead to responsible profits. Beyond using our right to vote to put a government in power, what can we do? Recently you, the people of South Africa, voted in the ANC. Thank you. However, how can we ensure that productivity in the public and private sectors is at the optimum level? The answer to this question, we know, is not as straightforward as it should be ideally.
Government creates the enabling environment for economic growth and service value for various deliverables. However, both the public sector and the private sector must improve in order to improve productivity. This does not include only the workers, but also efficient and effective management, which knows that better working conditions, team spirit and decent pay lead to increased productivity. Productive management that pursues beneficiation, and a productive workforce can together promote economic growth. This in turn contributes to revenue, which enables government to deliver more quality service to the people.
South Africa is committed to reindustrialisation and an inclusive economy. The ANC government is using the Industrial Policy Action Plan within the framework of the National Development Plan to implement this.
A consistent message from the Minister of Trade and Industry to all South Africans, and particularly to business, is that "South Africa and Africa need to move up the global value chain". One of the findings in the colloquium on beneficiation concluded exactly this.
Further, we believe that this can be achieved through increasing beneficiation for the benefit of economic growth and job creation, particularly downstream value addition. What do we mean by value addition? It means simply adding value to a raw material by taking it to at least the next stage of production. Of course, we know there can be many stages of production. For example, in titanium there are at least five stages, and at every stage the value of the product increases and the number of workers grows.
Downstream value addition refers to the activities of further processing of raw materials from their natural forms to finished products. Both increasing manufacturing and exporting manufactured goods will increase employment, because, as we know, the manufacturing sector is more labour- intensive than other sectors. The ANC government in Mangaung resolved to focus on labour-intensive sectors. [Interjections.] Unfortunately, the people of South Africa have given the ANC a mandate to rule this country and those who aspire to rule must wait for their turn. [Interjections.]
According to Statistics SA, this year 12% of the people employed in the country were employed in the manufacturing sector. This is more than 1,7 million people employed in this value-adding sector. The benefits of value addition are that it can create long-term solutions, rather than short-term fixes. It can solve the problems of unemployment, low economic growth and high levels of imports.
Let us use the forestry sector, as it illustrates at least five major stages of value addition. Planting seedlings, nurturing them and later harvesting the trees is labour-intensive. Then, the manufacturing sectors use the timber inputs and transform these primary inputs into high-value products. The downstream beneficiation process creates employment along the value chain. Isn't it that we are committed to creating jobs in this term?
The many opportunities presented in various sectors, as set out in the Industrial Policy Action Plan, call for vigorous implementation. Thank you, Chair. [Time expired.] [Applause.]
Madam Chair, it is common ground that South Africa has struggled to get its beneficiation industry off the ground during the last decades. To many it is hard to believe that a country with so much mineral wealth is still a small player in the world in regard to beneficiation. But there is no silver bullet, hon Hill-Lewis, to bring about this success - there isn't one. It is a process with steep challenges.
The government has developed a strategy for the new mineral beneficiation drive. With our economy currently built on the extraction of mineral resources, beneficiation stands out as the next economic frontier. However, we have first to overcome steep challenges. A major one is our eminent energy shortages. I am not going to dwell on that today, but hopefully this will stabilise in the next two years. Another one is our skills shortages, mentioned already. This requires immediate attention and substantial investment to develop and fast-track the process. If we are not successful, the required talent pipeline will have to come from the developed world. Therefore, an approach of partnership with them to kick-start this industry is not a bad idea.
Another key challenge is whether there will be a market ...
Order, hon members! Your voices are now drowning out the speaker.
Another key challenge is whether there will be a market for our beneficiated products. Most of this industry is located in the developed world, where an established market consumes their manufactured products. We need to negotiate, where possible, long-term supply agreements to access some of these markets.
Moeletsi Mbeki predicts that South Africa will have its own "Arab Spring" in 2020. We shall then fall off the fiscal cliff, because China's industrialisation programme will cease buying our minerals, draining our fiscal resources more. But he is wrong! Our new extended domestic market, a vital ingredient to growing our beneficiation industry, is on our doorstep. That is Africa. Let me explain why, and the figures are astonishing. [Interjections.] Africa, for example, holds 60% of the world's future farming potential. Just as the Chinese took off in 1990 and India in 2000, it is now the time for Africa.
We in South Africa must be in the engine room. If the growth in smartphone users tells you anything about Africa's potential, then this is a good story to tell. [Interjections.] Listen. In the next five years the number of smartphones will grow from 120 million to more than 620 million - 500 million in five years. Mobile data traffic will double every year. Currently, there are 15 million mobile Internet users in South Africa, and that will grow to 35 million in 2018. [Interjections.] I am coming to the point.
Economists refer to this as the iGDP. The McKinsey report says that Africa will grow from US$18 billion to US$300 billion. Mozambique's iGDP is larger than that of Brazil. By 2018, 84% of Africa will be on line - this will happen in the next four years.
Now, what a market opportunity awaits us - a lifetime experience on our doorstep! This is a massive wave breaking for Africa. We can either be drowned in it or we can surf it. Data does not dominate - character does.
We need to learn lessons from previous failed initiatives. All stakeholders should work together. We need strategic partnerships. We need a proudly South African private sector. We need a streamlined legal framework. Finally, we need a predictable, supportive regulatory environment. So, we need a mixed bag.
Yes, to have the minerals is an advantage ...
Chairperson, will the hon Koornhof take a question about all of this? [Interjections.]
Unfortunately, I do not have time.
The answer has been given. Continue.
So, we need a mixed bag. Yes, to have the minerals is an advantage, but it is a potential that can only be realised when domestic producers sell raw material to those doing the processing at advantageous prices.
So, partnerships and trust are needed, not just legislation. Let's demonstrate the will to make this work - it's a worthwhile frontier to open and negativism will get you nowhere. I thank you. [Applause.]
Chairperson, the colloquium agreed with the ANC 53rd National Conference in Mangaung in 2012, when the ANC declared to South Africa and the world that as we entered the second phase of transition, we had to move with speed to realise radical economic transformation.
In my opinion, this radical economic transformation means, in essence, that we must break ranks with the past and break ranks with the policies that sustain ignorance, underdevelopment and slander. It calls for a decisive break with the consumption-driven economy. It further calls for a decisive break with the commodity-driven economy. It means breaking ranks with structural imbalances in our economy.
We must move with speed, as the ANC says, to transform the structure of the economy through reindustrialisation, consolidating broad-based black economic empowerment and creating black industrialists, as well as strengthening the hand of the state in the economy and expanding its influence, and driving the state-owned enterprises to come to the party, including the private sector. [Interjections.]
These resolutions and policy proposals call for accelerated beneficiation through value addition, especially in the productive sectors of our economy.
We are implementing these proposals because we know that the shortcomings in the South African economy reflect the fact that the constraints to our growth are deep and structural. These structural problems require structural solutions that transform the trajectory of economic growth and the architecture of our economy.
As agreed by the colloquium, hon Shivambu, we are not acting in movies here; we are running a country. [Interjections.] The ANC is not going to implement populist and reckless policies. We are running a country here. [Interjections.]
So, this debate today is very important because it deals directly with industrialisation in South Africa wherein matters of value addition, ... [Interjections.] ...
... as well as the introduction of the development price system to grow our manufacturing industry, are finding expression, and we will go a long way toward radically transforming our economy to create work and fight poverty. [Applause.]
Chairperson, others who have come before me to politically grandstand on this podium are at pains to retain the economic status quo of South Africa and Africa. They have become the machinery for the maintenance of the old economic order and relations. They have arrogated to themselves the custodianship of the narrow interest of white monopoly capital. [Interjections.] They have outsourced themselves into trusteeship of foreign capital and they are parading themselves as the guardians of the poor. [Interjections.] Indeed, it is true that a marriage made in heaven is the white man's burden.
Masiqhubeni. [Let us proceed.][Applause.]
One of the world's respected economists, Prof Ha-Joon Chang, warned us that all developed economies of this age began their journeys with industrialisation. They promoted their national industries through tariffs, subsidies and other measures. Those economies, like those of the United States of America and the United Kingdom, have today reached the top of the world's economic hierarchy through interventionist industrial policies, protectionism and beneficiation.
But today they are preaching to the developing economies that it is not good for the developing world to follow the same route if they want economic prosperity. What naked hypocrisy, lies and grandstanding! Their representatives in this country, through the DA, are preaching to us from the same Bible. [Interjections.]
The question remains, though: What is wrong if South Africa follows suit? Why are you kicking the ladder away? You climbed up the ladder to economic prosperity and now that you are at top of that ladder, you look back and see others climbing it the way you did to prosperity. Now you are kicking the ladder away. [Applause.] This is the route the DA and their cronies want South Africa to follow when they speak about the open opportunity society. [Interjections.]
The ANC will continue with the radical redistribution of our economy to create jobs and an inclusive economy. [Interjections.]
Order, hon members! I can't hear the speaker.
Chairperson, Nelson Mandela had this to say about the ANC and the struggle:
The ideological creed of the ANC is, and always has been, the creed of African Nationalism. ... The African Nationalism for which the ANC stands is the concept of freedom and fulfilment for the African people in their own land.
The realisation of the Freedom Charter would open up fresh fields for a prosperous African population of all classes, including the middle class. It calls for redistribution, including of monopoly industry, because big monopolies are owned by one race only, and without redistribution of the economy, racial domination will be perpetuated, despite the struggle for political power. [Interjections.]
Political power will be hollow, and there will be no way open to African people for them to succeed in their struggle against the principle of white supremacy. [Interjections.]
Order, hon members!
Hon members, history has proved that if you want to understand the values of a white supremacist, you must, among other things, take into consideration three important features: The first is lies, lies, lies, which in essence is deceit. The second one is grandstanding, which in essence is hypocrisy. The third one is utter defence of white narrow interests at all costs. [Interjections.] [Applause.]
Our historic responsibility, as this generation of young people in South Africa, is to educate all South Africans, black and white, about the dangers and limitations of becoming a supremacist. [Interjections.] Those who were white supremacists we defeated in 1994. Those who are involved in this at present we discourage. Those who aspire to be white supremacists we advise not to start it. [Applause.]
In the words of the Chief Whip of the Majority Party:
"Abayiqhelileyo siyabayekisa, abafikayo mabangayiqalisi." [Those who already are, we stop them; those who aspire to it, we encourage not to start.] [Applause.]
I am raising this important matter because today we are discussing ways in which we can best assist our country to move forward, through the acceleration of economic growth in order to fight poverty, unemployment and income inequality. We are here today to assist our nation to come closer to the realisation of the dream of Nelson Mandela, as articulated in his famous Rivonia Trial speech.
In doing so, the ANC is of the firm view that redistribution of economic assets and the growth of job-creating industries have not yet met the expectations we had in 1994. Instead of assisting South Africa to move forward, some amongst us continue to tell lies, grandstand and defend the narrow interests of the minority at the expense of the majority needs. [Interjections.]
Mandela emphasised that political power would then be hollow and open opportunities were not the way for the poor working majority.
Are you applying for a job? [Interjections.]
If I want to apply for a job, I will write an application. [Interjections.]
I must tell you that the only "crime" of the ANC is to say that "The Industrial Policy Action Plan's overarching vision of growth with inclusivity is grounded in the imperative of 'smart re-industrialisation ...'" Thank you very much. [Time expired.] [Applause.]
House Chairperson, the report on beneficiation that is before this House today ...
Chairperson, will the hon member be prepared to take a question? [Interjections.]
No, I haven't even started. I'm just getting going.
No time. [Interjections.] Order!
The report on beneficiation that is before this House today comes at a time when the economy has slumped to 1,4%, narrowly avoiding a recession earlier this year; when there is rising unemployment; when there is also discontent among the electorate with the inability of this administration to deliver economic reform; and when the ANC and EFF are locked in an ideological battle over who can be more radical.
The colloquium was established by the Portfolio Committee on Trade and Industry to better understand beneficiation and how South Africa can achieve maximisation of the value chain, thus creating jobs along the way. [Interjections.]
It was, however, a concern before the colloquium even began that members of the committee and the Minister had already made pronouncements on beneficiation and were, in short, only interested in securing discounts on raw minerals. In the eyes of the ANC, securing such discounts would lead to massive industrialisation, jobs would be created overnight, and South Africa would be led into the land of utopia, reaching nirvana without much effort.
This skewed notion was best captured by Minister Davies when he said, "If we secure a 20% discount on platinum, we will capture the world's market of catalytic converters." Translated, the Minister believes that simply with their securing a discount, industry will just follow suit. This is about as believable as the ANC's "good story", and we know that that is now in tatters, especially when it comes to the economy and job creation.
The truth is that this sort of outmoded 1960s Marxist thinking still holds the ANC captive with the misguided hope that it will one day release South Africa's poor from the shackles of poverty. The reality is that it will only make poor people poorer. Such thinking is born out of a warped logic which believes that the battle lines are drawn between industry and the state, and that it is industry that must act to create jobs under such circumstances.
When one reads through the NDP, the blueprint for economic growth championed by the ANC government, one sees it is explicit that the creation of the enabling environment is vital to industrialisation, growth and jobs. One must then ask the immediate question: Why is Minister Davies so hellbent on going down a road that is so at odds with the NDP? Surely if the ANC and Minister Davies subscribed to the NDP, they would realise that the enabling environment to boost beneficiation is created through reliable electricity generation, a stable labour force and infrastructure development. Distorting the market price on minerals creates instability in the market and will lead to disinvestment and job losses.
During the colloquium the committee bore witness to countless examples of how industry had been let down by government when they had wanted to climb up the value chain and create jobs. The worst example that comes to mind, Minister, is when the forestry industry described how 100 000 ha of land was supposed to be handed over to local communities for forestry activities, as envisaged in Ipap. This would allow for a greater feedstock, leading to jobs for rural communities. Ten years later only 9 000 ha, or 9% of the land, has been allocated for such activity. This is a shocking indictment of government's failure to deliver on its very own promises.
Further, the committee heard how government could do more to allow local industries to be more competitive by the lowering of administrative prices such as those for electricity and water. Government has the means to create an enabling environment, but just simply refuses to do so. This is where the creation of the enabling environment must start.
South Africa must industrialise on a massive scale, with government, industry and the unions working together. Goodwill must be shown by all sides if we are to achieve our goals. Destroying the mining sector, which employs half a million people, through forced discounts will only take South Africa backwards, causing more miners to join the ranks of the unemployed.
Confucius, the Chinese philosopher, said 2 500 years ago, "Harmony is the most valuable of all things." If we want to industrialise and build up the manufacturing sector, it is about time we create a harmonious, enabling environment to do so.
There is also a famous Chinese proverb that says that the less the king does, the more gets done. By being the calm centre around which the South African economy turns, the government must allow everything to function smoothly and they must avoid tampering with the individual parts of the whole.
This, however, seems impossible under this current administration, which has a desire to capture and cadre-ise every sector of government and the economy. This is clearly evident in the ANC's skewed quest, through its own version of beneficiation and industrialisation.
Now, let me get to a few comments that some of the previous speakers have made. The hon Fubbs spoke about the need for state intervention to successfully industrialise, but let's just look at what state intervention has done: Eskom - failed, SAA - failed, and the SABC - failed. So, what is going to happen when the state intervenes in industrialisation? It will fail! [Interjections.]
We've heard about Ipap - it has been spoken about. We're six versions down the road, but it is more like we've hit i-pap because we are so at odds with what the NDP says that we actually don't know what version we are on now.
The hon Mkongi suffers from two fatal problems. The first one is that he takes himself way too seriously. [Laughter.] The second problem is that nobody else takes him seriously. [Laughter.] [Applause.]
It is wonderful to have the Minister back in South Africa and visiting this House for a short time. Minister, I hope you enjoy your stay and grace us with your presence more often. [Laughter.] If we have to understand ... Thank you very much. [Time expired.] [Applause.]
House Chairperson, let me start off by commending the portfolio committee for holding this colloquium on beneficiation. Although much of the material that was presented by the various stakeholders was probably known to us before, I think it was a very useful occasion for us to exchange views. I commend the report, which I think is valuable, and I urge members to read the report in some detail.
I want to just come in on the apparent consensus and then on the differences which we have in that report.
One of the things is this. Perhaps I've been around the block long enough to remember that when some of us were talking about the works of people like Ha-Joon Chang, heterodox economists, the response we had from that side of the House was generally: "Hey! Hey! Hey! Anathema! These are weirdos. We shouldn't be going there." I think what has actually happened over this time is that now we are hearing that they are talking about Ha- Joon Chang, and everybody is quoting Ha-Joon Chang.
It appears to me that we have consensus on the fact that we do need to move up the value chain; that we do need to industrialise our country; and that we do need to diversify our economy. That is the way that we are going to have to go. We are going to have to make those structural changes. That appears to be the consensus.
Now, I think a charitable reading of this is that we've actually won the argument - the argument that we put forward in 2009, which was not accepted on this side of the House, has now won. [Interjections.]
I think that the less charitable reading of where we are at is actually that there is a fair amount of opportunism at play, and when the Industrial Policy Action Plan has begun to develop some traction and deliver some real results, then this side of the House does not know how much of it it wants to try to take over and own itself, and where it wants to differentiate itself from us and the Ipap. I think that is the dilemma they are in. [Interjections.]
So today we have had a big contrast between the two reports. The first report on industrial policy spoke about a number of constraints, and I think the hon Koornhof explained it. We don't disagree that the infrastructure issues - the availability of infrastructure and the pricing of the infrastructure, with electricity as the hard issue - are a fundamental challenge that we have got to overcome if we are going to create industrial development. Nobody disagrees with that. That is common cause. [Interjections.] That is common cause. We agree with that. That is why this government has a strong focus on energy and electricity generation, and the pricing policy of that has got to be supported ... [Interjections.] ...
... with industrial development. That has been something that we have been arguing for a very long time in the framework of Ipap.
Where the contradiction comes in is that it appears to be that the pricing policy of state-owned companies is an issue, but when it comes to the pricing policy of private companies, we are supposed to stand back and let them do whatever they like! That seems to be the issue.
The difference between us, and I believe they are going to take this to ... [Interjections.]
House Chairperson, I wish to raise a point of order with reference to Rule 69(1): The Minister is misrepresenting my argument.
I didn't hear you. Are you rising on a point of order?
I am rising on a point with reference to Rule 69(1), which allows me to make an explanation because the Minister is misrepresenting my argument. [Interjections.]
No, I am not going to allow you now. [Interjections.]
HON MEMBERS: Why not?
Chair, Rule 69(1) says: "... when a material part of a member's speech has been misquoted ..." [Interjections.]
Wait! Wait! Wait!
Oh, all right.
I don't know about this. I am not allowing you, but I am checking. I will come back to you.
You are saying you are rising on a point of order? [Interjections.]
Point of explanation.
Which Rule is that?
It is Rule 69(1).
Oh, Rule 69(1). What is your point of order under Rule 69(1)?
My point of order is that when a member's speech has been misquoted or misunderstood, the member may make a material explanation.
Is that what you feel has happened?
You are allowed to do so.
Minister, at no point have we ever argued that private companies should be allowed to price as they see fit. We have a competition law in South Africa, and if any private company is pricing illegally and anticompetitively, we have a mechanism to deal with that, as you have done with Sasol and won. We have no objection to that. [Interjections.] It is the price control that we have an objection to.
All right! All right! Listen, hon member. You said he misquoted you. I expected that you would rectify that, not that you would give another statement. Hon Minister, please continue.
Well, I think that what we have got to accept is that the question of the pricing of the inputs by the private companies is a fundamental issue. One part of it is the import parity pricing which is prevailing, by some of the upstream monopoly companies that are important suppliers of inputs into downstream and more labour- intensive manufacturing.
Now we have gone to the competition authorities. I want to make the simple point that it is not just we who that say the pricing is inappropriate. We have won a number of cases through the competition authorities, but the pricing practices continue, and fines and issues of that sort are not sufficient.
The other matter that we need to make sure of is that the price of minerals is also attractive in order to support beneficiation in this country. The real issue is that we have a supply of industrial minerals, and also, of course, the point was made that we have agricultural products. There are huge benefits that we can derive from ensuring that we add value to those mineral products.
There are many things that we need to do to make that happen, including providing incentive programmes, special economic zones and things like that. Moreover, we also have to make sure that the pricing policies are appropriate. So, I gave a few examples.
One of them was this - and I would be glad to have a bit more time, because I want to say that I was misquoted in what was said to me about what I said to the portfolio committee. [Interjections.] I made the point - and this is stuff coming from the industry itself - that if we had a 10% reduction in the price of catalytic converters, we would be able to grow the production of auto catalytic converters by five times in this country. I further said that actually since the platinum group metals account for 50% of the cost of a catalytic converter, the price of the raw material is a significant factor in that regard.
The steel price which comes out of ArcelorMittal SA has been on average 13% higher than the proposed benchmark price of the Department of Trade and Industry, which relates to world prices, excluding China. That is despite the fact that ArcelorMittal SA actually gets its iron ore at a 44% lower price than the spot price of iron ore.
Then there are polymers. They can be up to 60% of the cost of plastics. So, a discount price on polymers could make a bigger difference to the downstream plastics industries. That is the issue that is at stake.
What are we going to do about this? The hon Shivambu says we must resort to section 26 of the Mineral and Petroleum Resources Development Act. Well, the fact of the matter is that that Act has not been promulgated yet, so we can't resort to that.
What I can say is what we are doing. We have identified four particular industrial mineral value chains that we are developing a programme on. They are the platinum group metals; iron and steel; rare metals, including products like titanium; and capital goods into the mining industry. What I can further say is that we are preparing a Mineral Beneficiation Action Plan, which will be incorporated into the next iteration of the Industrial Policy Action Plan.
We will be deploying our preferences. Let us negotiate a price. If we can get a negotiated price that is satisfactory and provides an adequate discount, that will be one thing, but if we can't, we are not going to be able to flinch from actually ensuring that we create a competitive advantage based on the fact that we have mineral products in this country. That is what we need to do.
So, the difference between us appears to be that you want us to be tough when it comes to pricing by Eskom or by the Ports Authority. I've said already, and the hon Koornhof has said it too, that we are intervening in that regard to try to ensure that the pricing of electricity supports industrialisation.
Secondly, though, the difference appears to be that when it comes to the big mining monopolies, it's, "Hands off! Back off! Leave that alone!" [Interjections.] That's the contradiction. That's where they stand. [Interjections.] If that's the policy, the policy is to pander to the vested interests of monopoly capital. Well, we know. [Interjections.] That's the DA we know. That's the DA we have always known. Thank you very much. [Applause.]
Siyabonga, Ngqongqoshe. Mhlonishwa Soswebhu Omkhulu weNhlangano eNkulu, sekuyisikhathi sakho. [Thank you, Minister. Hon Chief Whip of the Majority Party, it is your turn.]
Hon Chair, I move:
That the report be adopted.
The motion is that the report be adopted. Are there any objections? In light of the objection, I now put the question. Those in favour will say, aye, and those against will say, no. I think the ayes have it.
Madam House Chair, the DA calls for our objection to be recorded.
Your objection will be recorded as such.
Hon House Chair, I want to check if we will be allowed to make a declaration with regard to this. [Interjections.]
You are allowed.
So can I go ahead and make a declaration? [Interjections.]
You have three minutes.
Declarations of vote:
Hon Chair, the EFF objects to the adoption of the report, because it is not going to take the industrial expansion programme forward in the spirit that we developed in the colloquium with ... [Inaudible.]
I would also like to clarify an issue. There is an existing law called the Mineral and Petroleum Resources Development Act, and then there is an amended version of the Act, which must still be signed by the President. This Act was referred to him by the fourth democratic Parliament, but he has not signed it yet.
The fact that he has not signed it yet does not make the current law illegal. [Interjections.] The Minister makes the recurring mistake that we cannot do certain things because there is an amended Bill on the desk of the President and because he is lazy and doesn't sign the Bill into law, we cannot implement the existing law. That section is there in the existing Act and in the amended Act, which is the Bill on the desk of the President.
So the issue that must be dealt with is that we have existing policy instruments to effect certain changes and give direction, particularly in the beneficiation and industrialisation of mineral resources. The fact that we do not have the law to deal with certain things now cannot be an excuse.
So really, the Minister is misleading himself. I do not know why he speaks confusion after confusion. I think it is one of the things that we have to deal with.
Thus, on the basis of the confusion of the Minister, and therefore of the Ministry of Trade and Industry, we reject this report. Thank you very much. [Applause.]
Hon Chair, I just want to repeat and underscore the point I made earlier. The Minister wilfully misrepresented the argument that we are making, because it suits his own political purpose and the purpose of his party.
We are not arguing, nor have we ever argued, that the private sector should be able to price uncompetitively and illegally. If the government has any evidence of that, or if any person has any evidence of that, we have a Competition Commission and a Competition Tribunal, and those companies should be made to face the full force of the law, just as the government has done with certain companies, and they have won. We have absolutely no objection to that. Interjections.]
Hon Chair! Hon Chair!
Hon Chair, I suppose that the member knows that the Rules forbid him from saying somebody is making a deliberate or wilful distortion of ... [Interjections.] The Rules ...
Hon member, did you say that?
He did, yes. He said, "wilfully". [Interjections.]
What did I say? [Interjections.] What am I alleged to have said?
He did and he should withdraw it.
"Wilful misleading"? [Interjections.]
He did say that. Yes. [Interjections.]
Oh! You said, "wilful misrepresentation"?
Of my speech, yes. I did say that.
Of your speech?
Yes. I did say that. I did not say he is misleading the House! [Interjections.]
Hon Chairperson, on a point of order: On the same point that the hon Hill-Lewis raised, he made a wilful misrepresentation of what I said, and I would like to give an explanation. [Laughter.]
Point of order! Point of order!
Hon member, wait! I have to finish with what is on the table first. Hon member, please sit down. They are all seated. Can you please sit down too?
The first point of order, raised by the Chief Whip of the Majority Party, is that you said that it was a "wilful misrepresentation". The understanding is that it was not referring to the Minister but to yourself. Hence, I agree that you continue on that note.
Hon Minister, what is your point of order?
The point of order is simply the following: There is paragraph 6.1 of the report, which states:
Reviewing, in consultation with other Ministries ...
Point of order! Point of order! [Interjections.]
Can we please ... [Interjections.] Can we please ... [Interjections.]
No, no! This is the DA, as opposed to ... [Inaudible.] [Interjections.]
Hon members! Hon member! [Interjections.]
That is the basis on which I made the remarks I am making! [Interjections.]
Hon Steenhuisen ... [Interjections.]
May I address you, Madam House Chair?
... please, please sit down!
May I address you, Madam House Chair? [Interjections.]
Please sit down! [Interjections.]
May I address you, House Chair? [Interjections.]
No, not now. I will call you. [Interjections.]
But, House Chair, you are allowing him to continue in violation of the Rules! [Interjections.]
No, no. Sit down please, hon Eerstehuisen. Please! [Interjections.]
Madam House Chair, it is my right to put a point of order and to be heard!
I know! That is also a point of order and I am weighing it up! [Interjections.]
It is not. He is continuing with the explanation! [Interjections.]
Do not do that. Hon Davies, what is your point of order?
My point of order is that he is misleading the House by misrepresenting ... [Inaudible.] ... in relation to what he said. [Interjections.]
Point of order! Point of order!
Okay. Can we say on the misleading of the House that we will not take that as a point of order, especially in this instance. As a result, that point of order falls away. [Interjections.]
What is your point of order, hon Steenhuisen?
My point of order is in regard to Rule 69(1), House Chair, and I hope you have it in front of you. Maybe the Minister would like to open his Rule book as well. [Interjections.]
That is for when a person wants to give an explanation.
It is what the Minister is trying to rise on. [Interjections.]
No, no, no. Hon member, you are out of order! The Minister is done!
I am not out of order, Madam House Chair, with respect.
The Minister is done.
With respect, I am not out of order, and I would like the opportunity to finish, like he was given. With respect.
Hon Eerstehuisen, please listen to me!
It is Steenhuisen, hon House Chair!
Please sit down, hon member. I want to explain something to you. [Interjections]
Madam House Chair, I am not going to sit down. I would like to put a point of order! You may make a ruling ... [Interjections.] ...
... and then I will sit down.
Hon Steenhuisen, before you put the point of order, please sit down.
I have ruled that what the hon Davies was standing on is not a point of order. Now what is the issue? What is your point of order? Let us take it from there.
My point of order is that Rule 69(1) only applies during a debate. The debate is concluded ... [Interjections.] ...
... we have voted, and it is a declaration. [Interjections.]
Then what is the difference between what I have said and what you are saying? [Interjections.]
Well, clearly he does not understand. Maybe he needs a crash course. [Interjections.]
Sit down. Thank you very much. Continue, hon member.
May I continue, Chair?
So, the point is we have never argued that about private sector pricing strategies.
The other point I wanted to make was that the members opposite accuse us of representing some sort of narrow interests. The question is: Whose narrow interests do they represent? The CEOs of major manufacturing companies in South Africa have made the exact same argument that the hon Minister has just made. [Interjections.]
Hon Chair! Hon Chair, he is not explaining his position or his party's position. [Interjections.]
Of course I am. [Interjections.]
He is explaining the ANC's position! [Interjections.]
Hon Chief Whip, can we allow the hon member to make his declaration and finish? Please, make your declaration!
The representatives of big business have made exactly the same argument that the Minister makes. So perhaps the hon Minister should declare whose interests he represents.
Chairperson, the fact is that this policy will destroy jobs in the mining sector, and it is those workers whom we are representing, and that is why we oppose this report. [Applause.]
Thank you, hon Chairperson. [Interjections.]
Order, hon members! You have been given your chance. [Interjections.] Hon member, there is no Joan in this House! Please refrain from doing that. Because you are not being picked up on any mic, I won't ask you to withdraw that, but refrain from doing that. Hon Fubbs, please proceed.
Hon Chairperson, the ANC's view is very simple and has been eloquently expressed in this House today by the hon Mkongi, the hon Mantashe and by the hon Koornhof, and underlined by the Minister of Trade and Industry.
However, just to refresh our memories, may I add that everyone agreed - and the ANC wishes to make it clear that it welcomes this - that value addition is important, and that it will create jobs and grow the economy. We all agreed. So the ANC welcomes that.
We also wish to say that the ANC wishes to use the concept, the principle of beneficiation, under the overarching Industrial Policy Action Plan to create more jobs. And there is absolutely no proof that I have seen or heard, not even in this House, indicating that that is not going to happen and that it hasn't happened.
Thirdly, the Western Cape itself recognises this by inviting plants and factories to come and add value to primary products. [Interjections.] So I'm not sure. The ANC wants to reassert that our policy is to create an inclusive economy and to bring about a radical transformation of the current skewed economy that we have. [Interjections.] I thank you. [Applause.]
Order! Thank you, hon member. That is the end of the declarations.
Motion agreed to.
Report accordingly adopted (Democratic Alliance and Economic Freedom Fighters dissenting).