Hon Minister, you asked a very pertinent question when you addressed our standing committee last week. The question was, "How do we break the confidence barrier to get investors with cash to invest in our economy?" I'm going to try to answer this question by giving you my wish list.
Firstly, acknowledge policy mistakes and correct them. Let me explain. Although the economic recession is almost two years behind us, South Africa is in a fully fledged labour recession. According to Statistics South Africa's latest labour survey, there were 251 000 fewer workers in employment than in the last quarter of the recession. There were 1,2 million more people unemployed than in the last quarter of the recession. I accept that there is a dragging effect between economic recovery and jobs growth, but we can no longer ignore the negative effect of unwise labour legislation on jobs growth. Admit it and do something about it. It is clear that the private sector is in no hurry to rehire workers they have retrenched during the recession.
Secondly, we cannot allow the public sector to be the driver of employment and pay exorbitant salaries on top of that. The quarterly labour law survey shows that the community and social services sector, which is mostly government, created the most jobs. So the year-on-year improvement is entirely driven by government.
For government and state utilities to provide jobs is expensive to the taxpayers. Get the public wage bill under control, stop paying above- inflation wage hikes and do not allow the pressure on jobs growth to be loaded onto the public sector's shoulders alone.
Thirdly, break the perception that investors perceive government to be on the side of the trade unions. Not less than three government departments joined forces with the Congress of South African Trade Unions, Cosatu, in an effort to make it as difficult as possible for Walmart to invest in South Africa. Our President and Deputy President travel the world to invite new investors, but we act differently when they do arrive. At least, that is the perception.
Fourthly, recognise the importance of the role of agriculture. This sector can be a huge driver of jobs, but we need clarity on land claims and not conflicting messages. We have seen no real investment in this sector for the last 10 years and this does not augur well for business confidence.
Fifthly, make sure that we have a stable currency and try to avoid a volatile crash at all times. I was fortunate to listen to Professor Giorgio Romano Schute from Brazil speak on the topic "How to manage the exchange rate". It was a debate about Brazil. We all know that Brazil suffered and is still suffering from a capital inflow that is too high. That caused Brazil's currency to appreciate, inflation went up and private debt increased. Capital inflows can suddenly reverse and hit your economy hard - exactly what happened to them in 2008.
What did Brazil do? They increased international reserves at a huge cost to taxpayers in an effort to curb the appreciation of their currency. That led to public debt increasing to 7% of gross domestic product, GDP, in Brazil, inflation went up, interest rates went up to 12% and, once again, capital started to flow into Brazil.
In reacting to that, they took certain steps. They inter alia levied a 6% tax on all foreign financial transactions. It worked for one month, but in January to May this year inflows were back up again. Hon Minister, learn a lesson and stay away from trying to manipulate our currency. Do not get involved in any currency war. We cannot afford it.
Sixthly, keep inflation down. Inflation, whether you like it or not, is a tax on the poor. High inflation will have a huge impact on our capital investment programme. We need to see more savings coming from government. We must try - I know it's difficult; this is my wish list - to run a current account surplus. We need to save a portion of our resources earnings when the prices are good. And they are good now.
Seventhly, we must be committed to continued infrastructure investment. We must fix our roads and run efficient municipalities. We need to embrace a meritorious society balanced with empowerment, otherwise service delivery will not create a good level of confidence.
My eighth point is: Never, never compromise on the rule of law. I don't have time to debate that.
Ninthly, be champions for reconciliation at all levels - at the ruling party level, government level and opposition party level. Let us all actively fight racism in this country.
Before I make my final point, I want to quote from Tim Cohen's comment in yesterday's - Monday's - Business Day:
At the root of the world's current economic woes lies a terrible dilemma. Can democracy work as well during times of economic decline as it does during growth? And the answer to that lies in an imponderable: are our voters sensible, far-sighted and broad-minded enough to vote for fewer services or higher taxes in order to bring the national accounts into loose balance?
My final point is: Put pressure on the hon President to appoint more Pravin Gordhans to the Cabinet. Cope supports the Budget Vote. [Time expired.] [Applause.]