Chairperson, hon Ministers, hon Deputy Ministers, hon members, distinguished guests, ladies and gentlemen, the Department of Economic Development is four years old this year, after having been established in 2009. Amongst other things, it was meant to promote economic development through participatory, coherent and co-ordinated economic policy and planning for the benefit of all South Africans.
The DA believes that the department is an unnecessary addition to an already bloated and large executive team. [Interjections.] It is our view that this department was created as a payback or reward by President Zuma to some elements that supported his ascendency to the highest political office in the land. The department is unnecessary and much of what it does and performs is done by other departments. For example, some of the functions and oversight responsibilities have been cannibalised or cloned from other departments, such as the Department of Trade and Industry, DTI, and the Treasury, in order to give it credence, relevance and legitimacy. In fact, the only thing the department does is co-ordinate, co-ordinate, and co-ordinate. It should be noted that the department's target of creating five million jobs by 2020 is a distant dream, given the fact that the country is facing slow economic growth, which has been revised down to 2,8% by the International Monetary Fund, IMF, for this year. The unemployment figures that were released yesterday by Statistics SA show that we are far from achieving work opportunities for the 4,6 million people who are currently out of work.
The New Growth Path, which the department sees as a way to eliminate unnecessary red tape, to improve competition, and to enhance development skills should be abandoned in favour of the National Development Plan, NDP, which is South Africa's only hope of achieving economic growth and creating jobs. The NDP has been embraced by business and other sectors as the answer to addressing South Africa's many socioeconomic ills, except, of course, for Cosatu and some of its affiliates who characterise it as lacking concrete proposals for tackling the problems of poverty, inequality and unemployment.
The DA sees the NDP as having set some laudable goals for addressing some of the challenges. Our leader, Helen Zille, had stated that the DA's 8% growth plan "dovetails in large measure with the NDP". She said:
We believe it is the plan behind which South Africans can unite to achieve a sustained economic growth rate of 8%. We know that no country has ever overcome poverty and unemployment without substantial sustained economic growth. This must be our central focus.
I agree with the Minister in the Presidency, Trevor Manuel, who once said:
But if we do not at least double the size of our economy, there won't be labour absorption and then the big risk that afflicts our country is that tens of millions of unemployed and frustrated young people will burn the country down.
The recently signed Youth Employment Accord will fail to provide any workable solutions to the youth unemployment crisis facing this country. This is because the Youth Employment Accord does not include a youth employment tax incentive. It is contradictory to the NDP and will not be effective in creating the 4,7 million jobs we need to provide for South Africans under the age of 34. In short, it is economically unsound, unrealistic, and will have distortionary effects on the economy. The DA has always advocated the implementation of a youth wage subsidy, which the President announced in 2010 in his state of the nation address. Of course, the pressure from Cosatu has resulted in a watered-down version of the original idea of a youth wage subsidy.
The DA had proposed the rolling out of a national wage subsidy programme to reduce barriers and encourage job creation. The plan had envisaged the introduction of a comprehensive vocational training and apprenticeship programme as a tool to address critical skills shortages and enhance the interface between planning and employment and reforming Nedlac so that it is not dominated by economic insiders but rather works to promote economic growth, job creation and poverty reduction.
The DA had proposed the expansion of the National Student Financial Aid Scheme to help more people to access higher education and to gain marketable skills. As we all know, the department plays an oversight role over three regulatory bodies and two development finance institutions, namely the Competition Commission, the Competition Tribunal, the International Trade Administration Commission, the Industrial Development Corporation, and the Small Enterprise Finance Agency, Sefa.
An economist was once asked whether markets were good or bad for economic development. In reply, the economist said that markets are as good as the economy they keep. Competition policy means making markets work, by ensuring that companies keep good company. That means that they do not collude against consumers and that they compete to win customers.
The Competition Commission needs to be commended for its crackdown on the cartel of six competing companies in the glass manufacturing industry who came together to avoid competition, by agreeing to fix the price of their product at a higher level than the price that would have been determined in a competitive market. This is not only bad for customers, but it is also bad for the economy. The commission also needs to be commended for its recent exposure of the major construction companies in their bid collusion in the building of Fifa Soccer World Cup infrastructure prior to 2010. As we all know, this commission was set up to investigate such complaints of collusion, cartels and price-fixing, whilst the Competition Tribunal and Competition Appeal Court act as adjudicating bodies.
As of 1 April 2013, the Competition Amendment Act came into effect, thereby providing the commission with teeth to undertake market inquiries into the various sectors of our economy. I understand that the first such market inquiry involved the health care sector where, according to the Minister of Health, Dr Aaron Motsoaledi, prices are artificial and distorted.
In my view, the other sectors that need investigation are the print media industries, the food retail, the food production, and the cellular industry. The cellular industry in this country has been accused of ripping off the consumers by charging one of the highest call rates in the world. In order for the Competition Commission to undertake the market inquiries, it is important that it is equipped with the necessary skills and personnel. I wish therefore to appeal to the hon Minister to provide the commission with adequate resources to undertake this important task of protecting the consumer.
The Competition Commission therefore plays a very critical role in the economy of this country, particularly given the fact that we have such high unemployment levels. Its role should be seen as managing the delicate balance between promoting efficiency whilst, at the same time, protecting jobs by way of the public interest provisions of the Competition Act. It is therefore with much concern that we note that the commission is beset with serious governance issues and reports of maladministration. It is also reported that the Public Protector has launched an investigation into the commission. Of course, the nature of this investigation is not yet known.
With regard to these reports, last year in August, I posed a parliamentary question to the hon Minister in which I wanted to know how he was addressing these challenges in the Competition Commission. His response was:
I have taken note of reports on internal challenges in the Competition Commission. The best interest of the commission and its staff require that internal processes be completed prior to any public statement being issued. The department is now addressing these matters.
Last year, in November, I also wrote to the Minister to request a report arising from that internal process that he referred to in my question to him. Up to now, I have not received any response to that letter. At the beginning of this year, I again sent a letter, in which I asked the Minister whether I could please have a copy of that report. Nothing has come forth. Needless to say, these reports are disturbing, and the Minister should show that he is fulfilling his responsibilities to the entity and the people of this country. We are still awaiting clarity on the steps to be taken by the Minister to ensure that the areas of concern are addressed as a matter of urgency.
According to the study done by the Global Entrepreneurship Monitor at the University of Cape Town, Graduate School of Business, early-stage entrepreneurial activity in South Africa last year dropped to 7,3% from a high of 9,1% in 2011. The report says this is below the average of countries with a similar development level. The picture painted by this report is rather bleak, Minister. It shows that only 14% of individuals intend to pursue a business opportunity within the next three years; well below the 27% average. South Africa's established business rate of 2,3% is the second lowest in the world, according to the report.
This is a disturbing picture in view of the fact that small, medium, and micro enterprises, SMMEs, are supposed to be the answer to creating job opportunities for the multitudes of unemployed people in this country. Another study found that SMMEs described the regulatory environment in this country as complex, burdensome and imposing unrealistic demands on business. South Africa has become less accommodating to SMMEs over the past year. The study found that 74% of SMMEs agreed that running a small business has become more difficult. The NDP also highlights the importance of SMMEs in contributing to alleviating unemployment in this country. It further highlights the need to reduce the cost of doing business for small businesses and emerging enterprises.
It is important to note here that the Small Enterprise Finance Agency is really failing SMMEs by allowing intermediaries to charge up to 40% interest on small loans. At the same time, it has created unnecessary red tape for entrants to the market, making it very difficult for small businesses to grow and to create jobs. The proposed Licensing of Business Bill by Minister Rob Davies of the Department of Trade and Industry is an affront to the NDP and will add an unnecessary regulatory burden to businesses, particularly small businesses. Business Unity SA and small business representatives have expressed concern that this Bill will be badly enforced, as existing laws already make it harder for people trying to run an honest business. We in the DA do not see how this Bill will improve efficiency in regulating and cutting red tape. In fact, this Bill intends to impose more red tape on the system.
Chairperson, infrastructure development has been identified as another way in which massive numbers of jobs can be created in this country. In his Budget Speech, the Minister of Finance, Pravin Gordhan, had indicated that over the next three years, R827 billion is planned to be spent by the fiscus and state-owned companies to build infrastructure. The Presidential Infrastructure Co-ordinating Commission, PICC, which is supported by the Department of Economic Development, has the responsibility of providing facilitation and co-ordination of infrastructure development in the country. In view of the crucial nature of the contribution to economic development of the infrastructure roll-out programme, the DA is of the view that this entity should be housed under the NDP and, by extension, the Presidency and not under this department.
Direct foreign investment, is important for the country's economic development. However, conditions that are required to attract foreign direct investment are sometimes threatened by hostile and violent labour unrest as we have seen in the recent past. The recent merger of Walmart and Massmart presented us with lessons on how to treat foreign investors in our country. While the Department of Economic Development and two other departments of government wasted taxpayers' money on unnecessary court action to oppose the merger, it is gratifying to hear that Minister Rob Davies was reported to have praised the merger as a major success. Well done. It is also reported that the R200 million Local Supplier Development Fund has resulted in the production of 500 tons of fresh produce, in Limpopo alone, to the value of R3 million within a period of six months.
Finally, the department has been allocated a budget of R772 million for the 2013-2014 financial year for its programmes, namely Administration, Economic Policy Development, Economic Planning and Co-ordination, and Economic Development and Dialogue. This is an increase of more than R75 million over the 2012-2013 period. I thank you. [Applause.]