Chairperson of the EPC, Minister Patel and other Ministers present, comrades and compatriots, Members of Parliament and distinguished guests in the gallery, each year, when dealing with Budget Vote No 28: Economic Development, we are constantly reminded of the magnitude of the responsibility that has been given to this committee to oversee the development of the financing of government that will result in growth, decent work and greater equity. There can be few Budget Votes that are charged with the responsibility and scope that we have.
When dealing with this Budget Vote, we are faced with the core challenges of mass joblessness, poverty and inequality. We have to deal with this in the context of a difficult global economic crisis, which has consciously been brought out. However, we must deal with this in our national context and produce an outcome, at the end of this debate, that will make a difference in the lives of our people.
Equally, this global and national context brings with it important opportunities, which we should seize upon in this debate. This is a debate about economic development policy and the financing of it through this Vote. The debate is about the alignment of policy to the political and economic objectives and mandate that the executive set out to government when it established the Department of Economic Development in 2009.
Our collective and common point of departure in this debate must therefore be that the vote of funds must result in the creation of decent work through inclusive growth and development. We are responsible for the oversight of the implementation of the New Growth Path, not only by the department but by other departments as well. Our focus as a committee must be to ensure that the legacy we leave in 2014, at the end of our term of office, is one in which we can be said to have been focused on the priorities that confront us as public representatives.
These priorities can be broadly defined in terms of these categories: Firstly, overseeing the implementation of the New Growth Path; secondly, overseeing government's response to the global economic crisis; thirdly, oversight over the three development finance institutions we are responsible for; and fourthly, being engaged with impact assessment of the macro- and micro-economic policies of government.
This Budget Vote must be used as a tool of evaluation of a political and financial instrument that the ANC-led government uses to ensure that its policy programmes are operational through the allocation of financial resources the Budget Vote of the Department of Economic Development for its programmes and projects.
It reflects an outcomes-centred public spending approach. The challenge is to evaluate whether the macro-economic perspectives of economic development in this Budget Vote meet the requirements of ANC-led government policies and to give substance to the ANC-led government's five-year plan.
In order to do this we have to ask key questions of this Budget Vote: Firstly, does the Budget Vote reflect the funding of policy priorities of the ANC-led government, and can this be traced to government programmes and projects in the Votes? Secondly, can we trace a progression of funding of policy priorities from the 2011-12 Economic Development Budget Vote to this 2012-13 Economic Development Budget Vote? Thirdly, does the Vote address issues of adequacy, given the mandate of the Department of Economic Development? Fourthly, does the vote reinforce issues of equity and does it deal with unemployment and poverty, and can this be traced in the Vote? Finally, are the directives of the Medium-Term Budget Policy Statement of 2011 met in this Budget Vote? These are the key questions that we need to ask in this debate, instead of becoming sidetracked by political expediency. I shall return to these questions in my concluding remarks.
Looking at the global outlook, the 2011 World Economic Forum in Davos, Switzerland was seized by a global economic crisis. Established economic theories were put to this sort of debate. Historical notions of the underpinning principles of capitalism as a global economic system were seriously questioned and seeking alternatives were the order of the day. The delegation from South Africa was at the cutting edge of this debate as the implications of global recession had already caused the loss of millions of jobs worldwide. In South Africa, in the space of 12 months, we had lost 1,3 million jobs in 2010, following the sub-prime crisis in the US, which triggered a collapse and financial crisis one year after the other.
Certain economic analysts have tried to explain the problem as being one of sovereign debt in the European Union. It is far more complex than that. Sovereign debt is a manifestation of a bigger problem. So, what is the essence of the problem? We believe that the global economic environment is characterised by a global economic crisis that began late in 2007 and matured in 2008. Essentially, it is a crisis of ideology and of the systems of global capitalism.
Until then, globalisation had provided the locomotives for the global dominance of capitalism through the proliferation of technologies and new sciences; the growth in global trade and investment; and the integration of the processes of production and consumption. At the same time, though, globalisation reproduced and cemented socioeconomic inequality; perpetuated global poverty; promoted class materialism and excessive consumption; prompted greed and exploitative economic processes; and promoted underdevelopment in many parts of the world, especially in Africa.
The crisis, with its epicentre the advanced capitalist economies of North America and Europe, so shocked the dominant world that there were great prospects for new thinking and approaches to global economic governance. For a time in 2008, world powers seemed open to alternative economic responses, including huge social investment to boost social justice and solidarity. Affirming the critical role of government in the economy, there was a widespread push for the stronger regulation of economies, the nationalisation of essential parts of economies and other examples of post- Washington consensus.
As the ANC strategy and tactics of 2007 states and we think this remains correct:
South Africa's interests in a complex and unpredictable global environment necessitates the building of capacity for strategic as well as rapid responses to change in our region, in Africa and in the world.
Such responses should be anchored in the development of Africa and the developing world. Out of this era of many contradictions and fluidity in the international environment, both Africa and the global South have greater opportunities to see progress and extricate themselves from the shackles of global apartheid. The essence of the global financial crisis has its roots in three interrelated dysfunctions of global economies - if I had more time I would have explained them in greater detail. Firstly, we think we have a cyclical problem globally; secondly, we have a structural problem; and lastly, we have an unstable trajectory.
We know the role that is played by Brics, and we know the role that we play in Southern Africa. As South Africa, we want to also indicate that our capitalism developed on the basis of migrant labour drawn from the regional economy. We also want to stress that what drives migration in the region is mostly the levels of poverty and economic underdevelopment that exist in our neighbouring countries. We want to congratulate and commend government's Presidential Infrastructure Co-ordinating Commission's plan, which looks at not only the developing socioeconomic infrastructure of our country but also at investing a lot of resources in the region and continent of Africa. We appreciate this move mainly because it will help in fostering closer economic integration on issues such as water, energy, roads, ports and airlinks, etc, on the continent, especially in the neighbouring Southern region.
The committee had the opportunity to interact with the department on its strategic plans and its entities on their budget allocation proposals. As I indicated earlier on, I will be returning to the main issues. In replying to the questions that were asked, the conceptual outlook of what the mandate of economic development was set up to achieve is of critical importance. It needs to inform the mandate, which is the mandate derived from the ANC, and it informs its structures and functions. These are critical when considering any Budget Vote and they are applicable to this year's Vote as well.
We certainly believe that with progress there are new challenges and with challenges arise the opportunities for growth and development. The Budget Vote clearly reflects the funding of policy priorities. These priorities are largely but not exclusively reflected in the New Growth Path policy document and can be traced in the line items of the vote of funds. Over last year's Budget Vote, there is an increase of approximately 6,42% in real terms. Notwithstanding that, there is progression.
The central question remains whether the Vote is adequate, given the huge mandate that this department has been given within the finite resources. The answer to this can only arise from the needs, mandate, structure and function analysis that I have referred to. Simplistically calling for increased funding without doing this analysis is unscientific and anything that is unscientific is ill informed. The thrust of the Budget Vote speaks to dealing with matters of unemployment and poverty eradication. Certainly, as the portfolio committee, we think the link between the 2011 Medium-Term Budget Policy Statement and this Budget Vote can be made.
Having answered this question, let me say in conclusion that the ANC supports Budget Vote No 28 on Economic Development and we want to thank all who participated. [Applause.]