Hon Deputy Speaker, the Division of Revenue Amendment Bill provides for the division of revenue between the three spheres of government. The emphasis of this Bill is to create jobs. The DA agrees that dramatic measures are required to create five million jobs by 2020, given that 75% of the presently unemployed, unskilled are between 18 and 35 years of age.
The current budget deficit is 5,3%, which is manageable by international standards. Allow me to congratulate the hon Minister of Finance in that, despite criticism from the left wing in his own party, he maintained countercyclical fiscal policy in the 2011 Budget.
The following measures are welcomed, and should encourage employment: a R5 million youth subsidy, tax incentives for manufacturing investment of R20 billion and R10 billion on an industrial investment promotion.
As a member of the Appropriations Committee, it is evident to me that a budget allocates funds, but sadly, cannot guarantee that the money will be spent in an acceptable and efficient manner. My colleague, hon Marius Swart, mentioned specific examples, but what this country needs is an environment with the political will to attract investment and encourage business to employ more people. The fact that 16 million people depend on social grants places a severe financial constraint upon government.
At present government signs performance measures and outcomes agreements in departments. Whether this will have the desired effect is uncertain, especially if the generous, well-above-inflation salary increases of public servants are taken into account. Education, for example, will rise to R190 billion in 2011-12, or 21% of noninterest allocations. However, our standards in Mathematics and Science are well below acceptable international standards, and there is no evidence that they will improve in the foreseeable future.
South Africa lost more than a million jobs during the past recession. This led to a decline in our tax base and a decline in our economic growth rate. One of the reasons is that our labour laws are restrictive and contribute to low absorption of labour. Treasury's 2011 Labour Review says that the unit cost of labour in the formal sector has risen by 14% over the past two years. Our productivity growth is far below that of our trade partners in the Brazil, Russia, India and China, Bric, bloc.
The DA has a solution. We believe in an open society with equal opportunities. A free labour market will mean more jobs, faster economic growth, higher standards of living and less crime. The country with the highest economic growth rate, namely China, has a flexible labour market that absorbs millions of workers. The sooner we review our current labour legislation, the better.
The bottom line is that it is easier and less burdensome to do business in developing countries, such as Brazil, than in South Africa, because there is less red tape and less of an administrative burden of compliance on issues of labour. We will only attain an economic growth rate of 5% or more if the ANC finds the political will to implement a modern, free labour regime. South Africa is a commodity-driven economy with vast mineral resources, which, if properly managed, can provide thousands of people with jobs.
A survey conducted by the Fraser Institute, which was released in the last week of February, showed that South Africa slipped further down the rankings. South Africa ranks 61st out of 72 countries in the 2009-10 survey, according to page 37 of the Financial Mail on 25 February. What it means, in essence, is that South Africa is not investor friendly, and that the scary talk of nationalisation of the mines has had a profound effect on growth and jobs.
Allow me to conclude. I think the controversial demographic quota which was discussed by Cabinet has also done immeasurable damage to our future labour prospects. I thank you. [Applause.]