Chairperson, hon Minister, hon Deputy Minister, hon members, comrades and distinguished guests, today's debate on the Budget Vote for Public Enterprises must be conducted within the political and theoretical context of how we position state-owned enterprises within the context of the developmental state.
This theory of a developmental state must inform what we recommend and how we assess this Budget Vote. The central task of the ANC is to build a developmental state with strategic, political, economic, administrative and technical capacity in pursuit of the objectives of the national democratic revolution - that of building a national democratic society.
It is this task against which we must asses this budget and locate the state-owned enterprises, by recommendations that will qualitatively improve the governance and functioning of state-owned enterprises. The theory of national democratic revolution and its impact on the transformation of the state and government, and in particular the assets of the state, must inform the ongoing reorganisation of both the powers and functions of these state assets.
The ANC defines four key characteristics of a developmental state. The first attribute is its strategic orientation, an approach premised on people-centred and people-driven change, and sustained development based on high growth rates, restructuring of the economy and socioeconomic inclusion.
The second attribute is its capacity to lead in the definition of the common national agenda and in mobilising all of society to take part in its implementation and exercise leadership.
The third attribute is a state's organisational capacity in ensuring that its structure and systems facilitate the realisation of a set agenda. These include the macro-organisation of the state, policy, implementation organs, the allocation of responsibilities, effective intergovernmental relations, and the stability of the management system.
The fourth attribute is its technical capacity, the ability to translate broad objectives into programmes and projects and to ensure their implementation. This depends, among others, on proper training, orientation, and on acquiring and retaining skilled personnel.
It is within this context that we place the strategic objective of what state-owned enterprises should be doing in building the national democratic society. Further, we must assess this Budget Vote, conscious of the fact that we have ANC policy that informs economic transformation and that Cabinet has adopted a New Economic Growth Path.
I quote from the ANC 52nd National Conference in 2007, as follows:
The central and most pressing challenges we face are unemployment, poverty and inequality.
This means that ...
... we must simultaneously accelerate economic growth and transform the quality of that growth. Our most effective weapon in the campaign against poverty is the creation of decent work, and creating work requires faster economic growth. Moreover, the challenges of poverty and inequality require that accelerated growth take place in the context of an effective strategy of redistribution that builds a new and more equitable growth path.
Therefore, decisive action is required to thoroughly and urgently transform the economic patterns of the present in order to realise our vision for the future. I quote from the ANC 2009 Election Manifesto, as follows:
Decent work is a foundation of the fight against poverty and inequality, and its promotion should be the cornerstone of all our efforts. Decent work embraces both the need for more jobs and for better quality jobs. The creation of decent work and sustainable livelihoods will be central to the ANC government's agenda.
The creation of decent work opportunities and sustainable livelihoods must be the primary focus of our economic policies in building a more equitable and inclusive economy.
I quote from the January 8th 2011 national executive committee Statement, as follows:
The ANC is therefore committed to addressing the problem of unemployment through practical measures in this year. Therefore, 2011 will be the year of job creation through meaningful economic transformation. It is not enough to say that more and equitable sharing of economic growth will lead to the creation of jobs. We know that South Africa experience relatively strong economic growth during the 2000s, but we also know that this growth did not address the structural challenges in the economy.
Economic development is at the heart of driving the national project of job creation and our nation-building project of job creation. For state-owned enterprises, job creation and skills development are strategic objectives, and it is their performance against these critical indicators that we should measure to determine whether they are contributing.
Practically, this Budget Vote should therefore be able to reflect allocation of funds to state-owned enterprises that are aligned with the five key job drivers that are contained in the New Growth Path. State-owned enterprises must use the substantial public investment in them to create decent work and job opportunities, target more labour-absorbing activities, take advantage of new opportunities in the knowledge and green economies, leverage social capital in the social economy and public services, and foster rural development and regional economic integration.
The New Growth Path indicates that our goal of growing employment by five million new jobs over the coming decade is achievable. It cannot, however, be achieved with only a single policy instrument. It needs a package of interventions that addresses a range of challenges in the economy and that balances competing policy concerns while mitigating unintended consequences.
The primary resolution of the ANC's 52nd National Conference states that the function of Public Enterprises is:
... strengthening the role of stated-owned enterprises and ensuring that, whilst remaining financially viable, SOEs, agencies and utilities, as well as companies in which the state has significant shareholding, respond to a clearly defined public mandate and act in terms of our overarching industrial policy and economic transformation objectives.
Turning to the Vote of Public Enterprises, any analysis of this Vote - and whether it is able to enhance the objectives of what SOEs are meant to do - is informed by the fact that it is a political and financial instrument for ANC policy objectives. Government's activities have been grouped into 12 functional areas or outcomes. Outcome 4, that is decent employment through inclusive economic growth, speaks to job creation and is the primary focus for 2011.
While the DPE has a definite role to play with regard to Outcome 4, it particularly contributes to Outcome 6: an efficient, competitive and responsive economic infrastructure network. This outcome relates to the roll-out, maintenance and refurbishment of economic infrastructure within an appropriate regulatory framework, ensuring that it is operationally effective and efficient.
The allocation of these resources has to be done in a manner that advances strategic policy objectives, which include gender equity, and poverty eradication. The ANC continues to not only fight for gender equity but also to exemplify it through its internal processes. Section 9 of the South African Constitution entrenches equality, and unfair discrimination on the basis of gender is among the prohibitions it provides for. As a UN member state, we are signatories to the Millennium Development Goals, MDGs, of which MDG 3 enjoins all to promote gender equality and women empowerment.
The DPE exceeds its human resources gender equity targets. As of March 2010, DPE has a staff establishment consisting of 56 males and 84 female staff members. However, the percentage budget allocation for procurement from women-owned enterprises is not clear.
Other than a commitment to conclude the Richtersveld deed of settlement, there is very little in the DPE programme that is explicitly pro-poor. The DPE indirectly seeks to contribute to poverty reduction and job creation by ensuring that its SOEs operate efficiently and effectively. An element that could be linked to a pro-poor agenda is the department's commitment to increase the number of access points to broadband in major cities and underserviced areas, and to facilitate a reduction in wholesale broadband prices. This, however, is unlikely to be significantly realised, given the very low budget allocation for broadband enterprises.
A note of caution is the DPE's position that infrastructure tariffs must be structured in a manner that allows for cost recovery and investment attraction. This could be positive but the issue of cross-subsidisation is not raised, which poses a danger of the poor being excluded from access to key infrastructure such as electricity and broadband.
This may also skew infrastructure roll-out in a manner that benefits big capital only, and critical public responsibilities linked to the SOE mandate may be neglected. Such responsibilities may include the closure of key secondary rail networks due to unprofitability, therefore retarding rural economic development, or closing unprofitable air routes to smaller cities, which adversely affects their local economies. This Budget Vote and what is contained in the Medium-Term Expenditure Framework will be evaluated against whether it can address the economic framework that the 52nd National Conference of the ANC outlined in December 2007, which includes, the need to foster a thriving and integrated economy that draws on the creativity and skills that South Africans can offer and build on South Africa's endowments to create decent work for all, as well as eliminate poverty. It furthermore includes increase social equality, and a growing economy, which reinforce each other and constitute a positive cycle of development improving the quality of life of all our people.
Advancing to national prosperity through a mixed economy path ...