Mr Chairman, before I proceed to sharply disagree with the alluring but inebriating optimism, I must, nonetheless, acknowledge the great leadership given by the hon Fubbs to our committee. It is a real privilege serving on the committee and an enormously stimulating experience. Let me say, preliminarily, that I agree with everything that the hon shadow Minister of Trade and Industry has said and I will not repeat it in what I have to say.
I want to focus on the Industrial Policy Action Plan, Ipap 2, reloaded, because it is at the core of what we are doing. From an economic viewpoint, there is always an economic cost to an industrial policy based on intervention, a policy which goes beyond merely creating an enabling environment. That is because it shifts economic resources and opportunities away from the well-known Paretian optimum.
For an industrial policy to be viable and justified, there must be an identified profit and an identified benefit to the cost paid in economic terms. In a situation like ours, we need to look at benefits beyond social benefits, because if we do not make the money, there will not be any money to finance all the social programmes which are so desperately needed to address the social issues.
I have taken this document, given it to an economist at the University of Southern California, Los Angeles, USCLA, and received a very lengthy report that my five minutes do not enable me to present to this House. What is significant is that, in the covering letter, there was a statement that, in the short and medium term, this document is pie in the sky with a free door for everyone and that, in the long-term, everything is possible.
What are the costs imposed by this document? When we talk about preferential procurement - and this is just an example which could be replicated - we are talking about our government paying more for goods produced in South Africa, in the hope that that becomes an incubator for the manufacturing of the same goods in South Africa at a later stage, and in the hope that, once those goods are finally manufactured in South Africa, they are economically viable in global terms and can be exported at a profit for the country as a whole.
There are two bridges of hope which, in respect of this document, are not actually verified. The comparison of South Africa with the Bric countries - Brazil, Russia, India and China - is a fallacious one. The difference from all the other Brics countries is that they have an established internal market which justifies the production of widgets on a commercial basis. We do not have that established market. So we can only hope that at a later time - and that is the other bridge - we may develop that market on a continental basis.
What matters is not the money which is transferred, but the retained earnings for the country as a whole. When the hon Fubbs speaks of 435 export programmes, what she is really talking about is taking money from the aggregate of family, from consumers - from all of us - to subsidise exports, which would otherwise not be competitive in the global market.
When we talk about the automotive programme - and this is a move we have already seen in many countries - we are talking about forcing all of us to pay twice for the price of our cars through subsidies, the budget, import duties, the ban of used vehicles, in the hope that at a certain time and place all this will become economically viable. In the meantime, the money that is taken from us is transferred to the industrialists on the assumption that by doing so they will maintain employment benefits.
In Italy, the same thing happened for 50 years. Fiat blackmailed the government on account of employment, selling substandard cars at an enormous price on account of trade barriers. When the European Union forced them to do away with them, nothing happened. The employment levels remained the same and Fiat finally began to produce economically viable cars for the global market. So it is a constant transfer of wealth from the middle class to the industrialists to sustain employment levels which would otherwise very likely be there. Thank you, Mr Chairman. [Time expired.]