Hon Chairperson, hon Minister Patel, hon Deputy Minister Godongwana, hon provincial Ministers, hon members, comrades, ladies and gentlemen, a Budget Vote is both a political and financial instrument used to ensure that the ANC's policy programmes are brought into effect through the allocation of financial resources.
The prosperity of the Department of Economic Development Budget Vote lies in its addressing the following fundamentals: the need to foster a thriving and integrated economy which draws on the creativity and skills that South Africans can offer and building on South Africa's economic endowments to create decent work for all, as well as eliminate poverty; increasing social equality and a growing economy, which reinforce each other and constitute a positive cycle of development that improves the quality of life of all people; advancing to national prosperity through a mixed economy path, where the state, private capital, co-operatives and other forms of social ownership complement each other in an integrated way to eliminate poverty and foster shared economic growth; and ensuring national prosperity through rising productivity, brought about by innovation and cutting-edge technology, labour-absorbing industrial growth, competitive markets and a thriving small business and co-operatives sector.
The strategic goal of economic transformation is the material response to the call of the Freedom Charter that the people shall share in the country's wealth. Whilst recognising our successes since 1994 and responding to this call, we are deeply mindful of three fundamental contradictions and challenges that remain on the road to substantive economic transformation. These are unemployment, poverty and inequality.
Economic transformation in our country must ensure that a national democratic society, characterised by a thriving and integrated economy, increasing social equality, national prosperity, socioeconomic rights and a mixed and sustainable economy, is achieved.
For this to happen the state must play a central role by directly investing in underdeveloped areas and directing private-sector investment. The ANC has committed itself to halving unemployment and poverty and to substantially reducing social and economic inequality. Binding constraints to meaningful economic transformation, inter alia, skewed patterns of ownership and production, and dualism and marginalisation, have been identified as needing decisive action for their elimination.
Monopoly capital domination of the economy is an obstacle to the goal of economic transformation, growth and development. The South African model of a developmental state locates it at the centre of a mixed economy, and projects the state as the one that guides the economy, intervening in the interests of the people as a whole, particularly in the interests of the poor.
In his inaugural state of the nation address in June 2009, President Jacob Zuma declared:
It is my pleasure and honour to highlight the key elements of our programme of action. The creation of decent work will be at the centre of our economic policies and will influence our investment attraction and job-creation initiatives. In line with our undertakings, we have to forge ahead to promote a more inclusive economy.
This statement gave impetus to the growing consensus that creating decent work, reducing inequality and defeating poverty can only happen through a New Growth Path, founded on a restructuring of the South African economy, to improve its performance in terms of labour absorption as well as the composition and rate of growth.
A policy package to facilitate employment creation was developed in the shape of the New Growth Path to ensure a comprehensive drive to enhance both social and economic equity; to bring about systemic changes to mobilise domestic investment around activities that create sustainable employment; and to encourage growth in employment-creating activities.
The New Growth Path is a broad framework that sets out a vision and identifies key areas in which jobs can be created. It is intended to address unemployment, inequality and poverty in a strategy that is principally reliant on creating a significant increase in the number of new jobs in the economy, mainly in the private sector.
It sets a target of creating five million jobs in the next 10 years - a target which is projected to reduce unemployment from 25% to 15%. Critically, this employment target can only be achieved if the social partners and government work together to address key structural challenges in the economy.
The aim of the New Growth Path is to target and focus capital and capacity on activities that maximise the creation of decent work opportunities. To that end, both macro-and microeconomic policies that create a favourable overall environment and support more labour-absorbing activities represent the direction in which the New Growth Path steers the economy.
To achieve profound changes in the structure of investment and changes in the nature and ownership of production, key policies and programmes must steadily and consistently be pursued over at least a decade. Moreover, efforts must be co-ordinated around core priorities rather than dispersing them across numerous efforts that do not contribute to a sustained expansion in economic opportunities.
This means that government must both strengthen its own capacity for engagement and leadership, and redesign delivery systems to include stakeholders meaningfully. Long-term structural change will be carried out in phases, assessing progress and evaluating at given points in time.
The component parts of the New Growth Path taken together constitute a key means to address the income inequalities in society. They place decent work at the centre of the battle against inequality, but also include measures such as skills enhancement, small-enterprise development, progressive taxation and support for the social wage.
South Africa was left with an extraordinary spatial divergence between the economic centres of the country linked to the metro areas and the densely settled rural areas of the erstwhile homelands, which have very limited economic resources and investments. Within metros there are vast disparities and spatial challenges with townships located far from most employment opportunities.
A core task for the New Growth Path is to break with this legacy through a coherent approach to spatial development, backed by strong investment in infrastructure and the identification of viable and sustainable opportunities for historically disadvantaged regions. Rural development will necessarily depend largely on links to the main urban areas.
Given the extraordinary differences in natural, economic and social conditions across our country, provinces and localities must adapt the broad drivers in the growth path to their circumstances. A spatial economic strategy will indicate how the job drivers affect different provinces, municipalities and rural areas, linking in to the rural development strategy and industrial policies.
An important step will be to enhance communication between the spheres of government on their development strategies and to improve their alignment. As a start, we need to recognise the importance of local governments in the metros in maintaining the centres of economic growth, as the Minister has alluded to. National government will develop a realistic spatial perspective on long-term settlement patterns and opportunities for employment creation and economic development.
The Department of Economic Development was created out of ANC policy. It therefore would be expected that the Budget Vote be structured to address critical principles, such as building greater equity within the economy and society, reflected in a greater equitable sharing of resources; advancing a gender approach in the allocation of resources for programmes; being pro- poor; and tackling poverty.
When looking at the programmes of the department and the performance indicators, the bulk of the funds for the department, namely R499 million, go to the economic planning and co-ordination programme, which is what would be expected. However, R464 million of that is for transfers to development finance institutions and economic regulatory bodies for which the department has oversight and responsibility. Only R35 million is left for economic planning and co-ordination across government sectors and social partners. This is not much, considering the scope that the department needs to cover.
The economic policy programme grows substantially in the next two financial years from R23 million to R29 million, but then flattens out in the outer years. This is worrying since this particular programme is responsible for the implementation of the growth path, and for the development and implementation of sector plans. In addition, the small business sector, new growth path sectors and companies in distress are all meant to benefit from this programme.
In conclusion, transforming the economy requires an employment growth path that addresses the structural constraints of absorbing large numbers of people into the economy and creating decent work. The Department of Economic Development has assumed responsibility for key outputs relating to this outcome. The ANC believes that the Minister, Deputy Minister and the department will honour and deliver on that mandate. The ANC supports the Economic Development Budget Vote. I thank you. [Applause.]