House Chairperson, hon members and invited guests, I have the honour to present the fourth budget of the Economic Development Department. Given our responsibility to integrate efforts across different departments on economic development, our success lies in its collaboration with other Ministries and spheres of government.
In these opening remarks to the debate, I will draw attention to the substantial progress made in the economy over 19 years of ANC governance. I will point at the successes of this administration in recovering from the recession we inherited in 2009 due to the global economic crisis. I will share our progress to develop policy coherence in the past year to improve infrastructure construction and use it to promote skills and industrialisation; to expand funding; to refocus competition and trade policy on jobs; to facilitate new investment in the economy; and of course the steps we are taking to improve small business and youth employment.
In short, I will make the point that we have solid achievements, whilst acknowledging the many challenges that we face. I welcome members of the public in the gallery who represent the human faces behind the economic achievements. [Applause.]
Hon members, in 50 weeks' time, we will be celebrating 20 years of democracy. The economy we inherited in 1994 was broken, characterised by low growth and weak job creation. More fundamentally, it was structured to serve the needs of some rather than all. It focused on the needs of corporations rather than people. In contrast, we have created an inclusive economy seeking to address the needs of all South Africans, 51 million people, not merely 4 million.
What is our record? Gross domestic product, GDP, growth is up. In the 19 years before 1994, annual growth was 1,6% compared to 3,2% annually in the 19 years since. This is despite the global economic recession. The value of our gross domestic product today, the value of our economy, is R3,2 trillion, 83% larger than in 1993. This is stewardship under four ANC administrations. This is how democracy has outperformed apartheid on the metric of growth. But, growth must create jobs and equitable development. Prior to 1994, hon members, there were between 8 and 9 million employed South Africans. Today, we have more than 13,6 million employed people. More than 4 million new jobs were created under the democracy. Under this administration, we developed stronger planning and policy cohesion. The National Development Plan provides the country's vision for overall economic and social development; integrating policies; demographic shifts; governance and state capacity issues into a coherent framework. It is complemented by government's economic strategy, the New Growth Path, NGP, and the detailed plan set out in the Industrial Policy Action Plan, Ipap, and the National Infrastructure Plan.
We are now in action mode, as President Zuma remarked in January:
Some of the key programmes of the National Development Plan are already being implemented. These include the New Growth Path Framework with its major infrastructure development programme as well as the state-led industrial policy.
Yesterday, hon members, Statistics SA released its latest employment data. It shows that employment has begun to grow again with the gain of 44 000 new jobs in the first quarter of 2013. Over the 12 months up to the end of March this year, nearly 200 000 new jobs were created in difficult domestic and global circumstances. The biggest job gains were in agriculture, followed by manufacturing and community services. These figures show that our transformation policies are having some success despite the headwinds from the global slowdown. But, unemployment levels are still stubbornly high. Our task is to consolidate these gains and accelerate job growth for unemployment constitutes the biggest economic challenge for the country. We must begin to see a decline in the levels of joblessness. That is the task that we have taken on through the New Growth Path.
Consider, hon members, that from October 2010, when the NGP was adopted, to date 646 000 new jobs were created - additional jobs. Of these, 366 000 new jobs were created for women, 57% of all the jobs that were created. [Applause.] As South Africans, we need to bank these positive trends and commit to do more. Our GDP has recovered from the 2009 recession and is now R750 billion higher in current rands, or 9,4% in real terms, than at the low point of the recession. The economic output of no less than 38 other countries, including the UK, Holland, Spain, Italy and Portugal, are still lower than what they were before their recessions.
I wish to welcome and acknowledge one of our visitors today, Richard Matsomela. [Applause.] He is a worker at the BMW factory in Rosslyn. He was placed on special training financed through the Training Lay-off Fund, one of the new tools created by government in 2009 to respond to the recession. Production recovered at BMW, the company expanded and Richard now again works on the assembly line for the new three series BMW made in South Africa and exported to the rest of the world. [Applause.] This is active partnership with the private sector and organised labour.
The New Growth Path mapped out a labour-absorbing economic trajectory. Under the infrastructure jobs driver and through the leadership of the President, we developed a National Infrastructure Plan, co-ordinated by the Presidential Infrastructure Co-ordinating Commission, PICC, to which the Economic Development Department provides technical support. We made real progress in laying the physical platform for growth and development over the past year, working with Minister Nkwinti and other members of the management committee. What is the outcome? Construction levels are up. Visitors in the public gallery illustrate what our programme is doing.
I would like to recognise Ms Elakanyani Ndlovu, a 30-year-old African female electrical engineer ... [Applause.] ... who is part of a team building one of the world's largest coal-fired power stations, Kusile, near Witbank in Mpumalanga. [Applause.] Ms Kedisaletse Maseko, another member of the gallery, is a welder employed on the new locomotive build programme in Koedoespoort. [Applause.] I would also like to welcome Mr Thomas Solomon, who is a contractor who lays tar on roads in the Western Cape. [Applause.] They are part of more than 150 000 workers currently on PICC-monitored construction sites across the country building roads, power stations and dams; deepening our ports; building schools; laying broadband cable; manufacturing components; and changing the spatial patterns of the past.
The project pipeline for the new infrastructure projects has been developed into the 20-year R4 trillion plan, a blueprint for our generation. Spending levels are up too. Indeed, during this administration, when we complete our mandate, we would have spent roughly R1 trillion on infrastructure - not budgeted for, not on our books, money that would actually have been spent - compared to half that sum in the previous five years, and substantially more than in the last five years of apartheid. Even when adjusted for inflation, this is a remarkable achievement.
We now monitor every quarter how much has been spent; what construction has actually taken place; and how many people are employed in construction projects. That portfolio of projects is worth R900 billion. Working closely with Minister Gordhan through the PICC, R19 billion in new money or reprioritised resources were identified for infrastructure projects over the next three years, integrated governance. State capacity challenges, including those identified in the National Development Plan, as articulated by Minister Manuel, are being addressed; including improved environmental processes, the work of my colleague Minister Molewa and the new Infrastructure Development Bill recently released for public comment.
Hon members, we need to bring the cost of infrastructure build down. Private sector collusion and price-fixing cost the state many billions of rands in previous infrastructure projects, including the 2010 World Cup stadiums' build. The competition authorities have identified 300 cases of irregular and illegal behaviour by the private sector in the construction industry on projects valued at about R47 billion. Eighteen construction companies, including the top six firms, have now confessed and are in discussions on settlement with the competition authorities. We are determined to ensure that we develop an affordable infrastructure build programme and that our tax rands do not improperly find their way into private pockets. The competition probes extend wider than infrastructure and include input costs across the economy to improve competitiveness and reduce costs for consumers.
Following discussions with Minister Motsoaledi, I am pleased to announce that the Competition Commission will conduct a market enquiry into the private health care sector. As ordinary South Africans will know, private medical care is becoming unaffordable. The enquiry will use the new powers under section 6 of the Competition Amendment Act of 2009 and will examine the pricing, costs and the state of competition in the sector. It is expected that the enquiry will commence before the end of September this year. The authorities are ensuring that public interest tests in our law are met when companies acquire existing operations.
I would like to welcome Mr Emmanuel Motumi. [Applause.] He is one of a few hundred workers reinstated by the Competition Appeal Court at Walmart following its purchase of a local retailer. Government's efforts led to the Competition Appeal Court ordering the creation of a fund of up to R240 million for local supplier support by Walmart. The judgement expanded competition jurisprudence and ensured that the central economic imperative of our time, namely jobs and local industrial capacity, is pivotal to competition policy. It demonstrates our commitment to policy integration and coherence. Trade policy is being harnessed to support infrastructure roll-out and to support agroprocessing industries that are infrastructure users. They range from poultry to tomatoes. More will, however, need to be done to support farming jobs and agroprocessing as part of our food security strategies.
The Ports Regulator has introduced a differentiated port tariff that encourages the export of manufactured goods rather than raw materials. We earlier heard the President of Nigeria talking about an Africa that no longer exports raw materials to others. These are the steps we are taking to begin to turn that around in our own country, South Africa. We are using the infrastructure programme to address skills and industrialisation challenges. We now have a skills model for all major infrastructure projects over the next 20 years, developed through working closely with Minister Nzimande and Minister Nxesi; the engineering industry; the construction regulator; and the private sector. Hon members will be pleased to know that, for example, with the Umzimvubu Dam in the Eastern Cape, we can now quantify the number of bricklayers, carpenters, engineers, plumbers and so on, that we need for every quarter of the five-year build programme. This will help universities and further education and training, FET, colleges to plan their student intake and the graduate output. On industrialisation, EDD has worked with Minister Davies and Minister Gigaba on measures to provide a major boost to local manufacturers through the infrastructure roll-out programme. It is about the Proudly South African programme and Buy Local programme. State-owned companies deepened their supplier development plans.
In complementing these efforts, because we've got to integrate the different things we do. The Industrial Development Corporation, IDC, has set up a localisation unit and increased its five-year plan for industrial funding that's available to R102 billion. Over the past two years, the IDC increased actual funding approvals substantially to about R27 billion. So, it's not plans on paper, the money is beginning to flow through the investment pipeline. This is 48% higher than the previous two years. We have success stories out of these interventions. In the past, for example, we imported buses for the infrastructure roll-out of inner city public transport. We drove in a recently acquired bus in Johannesburg, and chances are that it was made in Brazil.
Last year, to implement the Local Procurement Accord, new policies were introduced. They led the cities of Johannesburg and Cape Town to order 240 locally assembled buses. I would like to welcome Ricardo Truby, who is with us today. Welcome, Ricardo! [Applause.] He is a production line worker for the Cape Town buses, where the IDC provided bridging finance. The first locally assembled bus for Johannesburg will come off the production line in June 2013 from a Germiston factory. This is real progress with industrialisation. [Applause.]
Hon members, when this administration came into office, all our minibus taxis were being imported. Today, two taxi assembly plants have been set up by Toyota and Beijing Automobile Works, BAW. I wish to recognise Ms Brenda Smith, who is with us today. [Applause.] She is a supervisor on Toyota's new taxi line. [Applause.] Hon members, through the work that she and others are doing in the taxi industry, by 2015, two out of three new minibus taxis will have been assembled here in South Africa. [Applause.] This too is real progress with industrialisation.
The country will expand its rail transport very significantly in the next 20 years. The IDC is working with companies in the sector to use a R198 billion procurement to build coaches, locomotives and wagons, and create local jobs. We have already landed one export contract to supply trains to Mozambique. These success stories in transport - because I have taken a few transport ones - are replicated in other parts of the infrastructure programme, such as the new condenser unit commissioned from a local company for the Kusile Power Station. Working with Minister Peters, we plan to improve the localisation impact of wind and solar energy, so that green energy creates local jobs. The industrialisation drive is at the centre of our work.
Last year, the IDC concluded a R3,4 billion deal to take majority ownership of Scaw Metals Group, a large diversified manufacturer of steel products for the infrastructure sector and industry. It employs 7 000 workers. It is the only producer of locomotive frames in southern Africa. When Anglo American Corporation decided to divest from the asset, we ensured that this critical national asset was placed in local hands rather than asset stripped and closed down. I am pleased to have Ms Patricia Mashigo, an artisan and production team leader at Scaw Metals Group present today, together with Group Manager, Mr Paul Zinn. [Applause.]
Scaw Metals Group operations in South Africa have a crude steel production capacity of about 600 000 tons per year. It has manufacturing operations in Canada, Australia, Italy, Namibia, Zimbabwe and Zambia, which also serve as important distribution channels for its products. A sophisticated industrial strategy, as outlined in the Industrial Policy Action Plan, requires the injection of foreign and local capital, know-how and innovation. I would like to offer a few examples of progress we are making.
Asia's largest commodities trading company, Noble Resources, is the main investor in one of two advanced soya-crushing plants under construction. In the past twelve months, the company invested about R2,2 billion in the local economy. I acknowledge the presence of Mr Ronald Jettin, the local chief executive officer, CEO, of the company who is here with us. [Applause.] Later this week I will host the senior management of the company to consider additional investment in South Africa.
We attracted Turkish investment in the manufacturing of stoves in East London, the Defy plant, and to restart the Cape Town-based steel mill Cisco in August this year with a R250 million investment, which points to a growing appetite by investors to manufacture goods in South Africa. I would like to welcome Mr Turanli, the President of the new shareholding company of Cisco, who flew in from Turkey, and the Turkish Ambassador, Kaan Esener, who is with us today. [Applause.]
Hon members, these efforts are supported by greater beneficiation of our natural resources. In July this year, the largest manganese sinter plant in the world, backed by the IDC, will open in the town with the quaint name of Hotazel in the Northern Cape. I welcome the major shareholder, Ms Daphne Nkosi, whose company will be producing 2,4 million tons of manganese sinter for ferromanganese smelters. [Applause.]
Hon members, following public consultation, I have decided to issue a trade policy directive in terms of section 5 of the International Trade Administration Act to limit the export of scrap metal so that this resource ... [Interjections.]