Chairperson, although the strategic plan presented by the Department of Economic Development claims to be focused on one over-riding outcome, "to increase the number of decent work opportunities in the economy", the central theme is completely different and exposes its real agenda: to control economic policy and centrally command our economy. The department should focus on how the economic activity can be increased. This will assist the people mentioned by the Minister in his speech and help our economy to become robust enough to withstand the effects of a competitive and uncertain global economy. Instead, the department aspires to a so-called developmental state economy which needs to be protected and controlled by the firm hand of government. This strategic plan positions the department at the centre of economic policy making, ignoring the fact that the National Treasury is responsible for public finance and budget management, economic policy and international financial relations and, crucially, managing public debt and government assets.
The fatal flaw in this plan is that it seeks to position government as the controller of the economy, with the department duplicating the activities of several others at its centre, and the private sector serving merely as a convenient source of funding. It is clearly evident from the plan to compel private sector pension funds to apply 5% of their assets to development finance instruments that this department needs to generate new income streams, and that it is not satisfied with the R1,8 billion that will be wrung from the exhausted pockets and patience of hardworking taxpayers over the next three years.
The plan ignores the fact that pension funds exist for a specific purpose: to provide their members with the most optimum returns on their contributions to finance their old age. Any suboptimum return will make pensioners even poorer than they are now. The plan means that private pension funds will be compelled to invest R35 billion in government development bonds earmarked to fund specific projects, or into the parastatal development finance institutions. Although government, that is, taxpayers, can underwrite the investment to ensure that a reasonable rate is returned, this is not assured.
Past performance of the parastatals does not inspire confidence, nor can it be assured that specific projects will yield any returns at all. Given acknowledged failures in the tender system, fund members cannot be certain that the money drained from their pension funds will translate into any actual project development. In the event that government does guarantee the capital invested and a particular rate of return, it simply means that government debt is increasing along with the liability of current and future generations of taxpayers to meet these obligations. If government underwrites the loans, members will be paying tax to fund returns on money that they lent to government.
Taxpayers who are not members of pension funds will be paying to provide returns to those who are - a regressive taxation from the poor to the less poor.
Government already guarantees the benefits of the Government Employees Pension Fund, therefore any suboptimal return on prescribed investments automatically translates into an additional expense for taxpayers to fund - R45 billion, if 5% of its assets is underwritten. The plan offers no benefit to those who must pay for it, other than the vague notion that our economy will benefit from planned projects over time that will benefit everyone and make everyone better off.
This is not so, as evidenced in failed centrally planned economies across the globe. Instead of raiding pension funds, investment from the private sector that does have money to invest under the right circumstances should be attracted. This would mean, however, that government would need to be more efficient and accountable to its funders, something it has no intention of doing.
Pension funds already have assets invested in bonds and guaranteed portfolios. The Minister cannot compel funds to switch investments and incur penalties on early withdrawals. This is not in the interest of members and it is irrational. We cannot return to apartheid-era prescribed assets. Although some adherents to failed ideologies do not support them, property rights are constitutionally protected and the DA will defend them.
We need clarity on the plan to intervene in a macro-economy and to facilitate transformation and diversification in the private financial sector. Instead of dubiously tinkering with economic policy, the Minister should rather focus on dismantling the barriers to job creation that condemn millions of our people to unemployment, starting with the bargaining process that excludes first-time jobseekers and rewards underproductive behaviour. This is where the social dialogue should begin.
On 2 March 2010, Parliament adopted the Fiscal Framework and Revenue Proposals for 2010-11. Although we supported the Fiscal Framework and Revenue Proposals, the DA raised its concern over rapidly rising levels of public debt, which will reach 45% of forecast Gross Domestic Products, GDP, by 2012-13. There is no fiscal space for the Department of Economic Development to indulge in activity that will increase the public debt burden.
The very existence of this department is the result of the deep divisions within the tripartite alliance which compelled government to appease its allies, whose ideological paradigm is not compatible with the realities of participation in the modern global economy. Taxpayers will pay R1,4 billion over the next three years for a department that promises to promote economic development through participatory, coherent and co-ordinated economic policy and planning, something that North Korea and Cuba are still trying to do.
The DA has serious concerns about the affordability of and necessity for this department. In his overview, the director-general points out that in May 2009, there was no infrastructure in place, no staff, no department and no resources. Perhaps it should have stayed that way.
Finally, we would like to respond to the FF Plus, but they seem to have left the debate. Perhaps this is a reflection of their relevance to this and any other debate in South Africa today. Thank you. [Applause.]