Chairperson, Minister, Deputy Ministers, members, since he took over the department, the Minister of Trade and Industry, together with his team, has refocused the DTI and has started to improve internal efficiency in what was a very bloated administration, and has undertaken a wide-ranging and ambitious legislative and regulatory agenda.
Some of this has started to pay off. The recent admission of South Africa to the Brics group of countries is a welcome development that shows that this Minister and others with trade and foreign policy responsibilities have, in at least one respect, moved to a more pragmatic approach, different to the lip service paid to economic diplomacy by the previous administration.
The DA also welcomes the eventual launch of the consumer commission this week, and the long overdue alignment of the preferential procurement Act regulations with the broad-based black economic empowerment codes. The sooner the commission can be 100% operational and the new regulations promulgated, the better.
While these are important highlights amongst a wide range of proposed interventions, there are serious concerns that the department's ambitious agenda exceeds their capacity to deliver. Nobody doubts the work ethic of the deputy director-general Zodwa Ntuli, but the members of the portfolio committee can barely keep up with the wide range of new interventions she brings before us, sometimes several in a week.
This is alarming because if members of the committee, whose main responsibility is to write economic law and oversee the department, find it difficult to keep up with the regulatory agenda, then it must be truly overwhelming to a small business owner.
It is time to scale back the legislative ambitions of the department and focus on improving the institutions of the DTI, to make it as simple as possible to grow and start a business in South Africa. This is because an ambitious regulatory agenda is all very well, unless you lack the capacity to implement it; then it tends to trip you up and get in the way of doing business.
It is clear that the department does lack capacity. Almost one out of every five posts is vacant. Too many of the posts that are filled are held by bureaucrats whose positions may be duplicated elsewhere in the department. Trying to locate the right person to speak to at the DTI's campus in Pretoria is an almost insurmountable challenge for a citizen of this country looking to interact with the department.
While the department has cut bloat in some areas, it continues to rise in other areas. In the office of the director-general, expenditure is up 45% on last year. The compensation of employees in general is up 22%, and the average salary paid to the average employee in the companies commission is up 40%.
The DA remains unconvinced that the strategy of splitting the enterprise and industrial development programme into two new programmes was the correct approach. Instead, these programmes should have remained integrated, and the department should also consider integrating the two programmes that exist with trade. Let's streamline the way the department operates.
The recent debacles around the implementation of the Companies Act and the Consumer Protection Act show that this lack of capacity regularly trips up the department, despite their very good intentions. The former, the Companies Act, missed the implementation date, despite the ANC having argued passionately in Parliament against a temporary delay proposed by the opposition. The Consumer Protection Act regulations were published late, leaving businesses and consumers confused about how to comply with the law.
In addition, the fact that all low - and medium-capacity municipalities, the vast majority of which are ANC run, have been given exemption from complying with the Consumer Protection Act for an unspecified period is a cynical move. It does a serious disservice to any voters living in any of these municipalities by removing their consumer rights relative to other voters. The DA calls on the Minister to urgently remedy this by imposing a time limit on the exemption.
The biggest problem with this budget is best shown by the following example. If I was to present a critique of the approach to small business support, decisions made in competition policy, international trade administration, the management of the Industrial Development Corporation, the policy framework for black economic empowerment and interventions to drive innovation and entrepreneurship, members on that side of the House would probably disagree with me, but assume that I was talking about the policies of the DTI. If I criticised the broad thrust of the interdepartmental plan to drive employment and economic growth across the economy, those members would assume I was talking about the Revised Industrial Policy Action Plan, Ipap 2.
On both counts, these members would be wrong. What's more, you would be able to rule me out of order because we are here today to debate the budget of the DTI, and all of the policy interventions I have just listed are actually contained in the budget of the Economic Development department. That department even has its own interdepartmental plan to drive employment and economic growth across the economy, the New Growth Path.
The main problem with this budget is that only half of it was presented today. The other half was presented last week by the Minister of Economic Development. The DA remains of the view that his department was an unnecessary and confusing addition to government's economics cluster. In many ways, it has simply colonised several important functions and roles fulfilled by the DTI.
The role of the Department of Trade and Industry has clearly and historically been the microeconomic management of the economy. Yet the New Growth Path lays out a 10-step package of microeconomic reforms and seems to limit the DTI to one of these: industrial policy. The Ipap 2, the strategy to deal with industrial policy, is repeatedly referred to in that document as an intervention simply into manufacturing, doing it a serious disservice because the Ipap 2 goes far further than manufacturing, and rightly it should.
The DA has expressed our frustration that the Ipap 2, as it was revised last week, misses an opportunity to report properly on the brave milestone dates included in the original version. We have also gone on record to call for time-limited interventions that target activities rather than sectors. But even after all of that, we welcome the DTI's efforts to co-ordinate industrial policy between numerous government departments and fail to see how this approach can cohere properly with another superior interdepartmental approach designed and implemented by the Economic Development department, EDD.
The lack of co-ordination between these departments is often plain to see. Last month the senior management of the Department of Trade and Industry presented their one hour - 60 minutes - medium-term strategic plan to the committee. They didn't mention the New Growth Path once.
While there are extensive overlaps between the microeconomic programmes proposed in the two documents, there is a distinct lack of coherence between the Department of Economic Development's plans and the strategic plans of the Department of Trade and Industry.
At the end of their strategic plan - and the chairperson referred to this - the DTI says that interdepartmental co-ordination is their number one strategic risk. It is clear to the DA that this is the case.
One place where the DTI and the EDD do appear to be working together is in their opposition to inward investment. It is deeply regrettable that the two departments have chosen to use representations to our competition authorities to oppose two respective investments by Walmart and Kansai.
This sets a dangerous precedent. The government's stance on these two deals puts these two companies at a distinct disadvantage to other retailers who will still be free to behave as they like. It is not clear how such a discriminatory approach could be resolved without extensive intervention into the affairs of other retailers.
The DA is not opposed to measures to incentivise local procurement, but such interventions must not discriminate against individual companies or sectors and must not operate through the competition authorities, unless there are clear competition concerns. Any interventions must aim to tilt the playing field instead of intervening directly in the affairs of individual companies.
The DTI needs to be sending the signal that South Africa is open for business. Instead, the current perception, best described by the Business Day, is of "a fundamental hostility to business embedded in both the DTI and the Ministry of Economic Development". Even if the department disputes that this is the case, the very fact that there is such a perception means the damage is done; that is the nature of investment today.
Instead of blocking investment, we should be scaling up incentives to attract it. This budget shows that so far we have spent R5 billion on our three industrial development zones: Coega, East London and Richards Bay. Over the next three years we will spend R1,6 billion more.
The department says that this expenditure has attracted 38 investors whose investments outweigh the amount spent by the state. But we have to ask the tough questions, like: How much of this investment would have arrived anyway? Would more investment be forthcoming if we linked these investments to geographically limited regulatory reform? We believe we should urgently upgrade these IDZs to incorporate labour law and other regulatory breaks.
Only by matching the bold interventions of the export processing zones established in our rival emerging markets will we come close to matching their job creation records.
Lastly, the DA welcomes the scaled-up role for the Industrial Development Corporation in the economy, and particularly in industrial financing. But, although the institution has supposedly shifted from the DTI to the EDD, numerous transfers to the IDC remain on the DTI's budget.
This is a big risk for the management of the IDC, an excellent organisation, which deserves, at the very least, clear reporting lines. We must resolve this and other apparent contradictions as soon as possible. If interdepartmental co-ordination is the number one strategic risk facing the DTI, as the department themselves claim, then this budget needs to resolve this risk, not make it worse. Thank you. [Applause.]