Speaker, a rescue plan in response to the international economic crisis implies the need for an immediate response to an immediate threat. Government did not respond immediately, neither was its response aimed at the immediate concerns arising from the economic downturn.
There is a fundamental difference between structural determinants and cyclical changes - a conceptual divide that government would do well to understand. Structural problems require long-term policy solutions, while cyclical issues require action in the short term. This difference should inform the approach that we need to take in determining the response to our crisis.
The global economic downturn is a cyclical phenomenon, where financial markets stopped functioning as they should, due to a shortage of liquidity. It was a monetary crisis requiring an immediate monetary solution. That is why governments intervened to act as the bank of last resort, and thereafter introduced stimulus packages in an attempt, in the short run, to smooth the worst of this severe downward phase of the economic cycle.
What is our government doing? The Minister mentions a very long list of activities that government plans to implement to address the impact of the crisis. In particular, these include strengthening the capacity of the economy to grow, public sector spending, corporate social interventions and cushioning the impact on the vulnerable.
He mentions training initiatives, addressing competition, expanding public sector employment, and training for retrenched workers - a very broad sweep of activities, required for the functioning of an economy. Clearly, our government is focusing on structural problems, which it should have tackled a long time ago, rather than addressing the immediate cyclical issues.
A year ago, the International Panel on Growth presented its findings on the structural problems in our economy. Its key findings were that very few South Africans were working, the less skilled needed to be absorbed into the economy, and the binding constraints on the speed limit of our economy needed to be relaxed.
These problems require our attention, but it is not the place of a temporary rescue plan to try and address deep-seated problems in the economy. These problems can be resolved through systemic structural changes, such as a liberalised labour market that will encourage job creation, scrapping the ineffective Seta system in favour of an effective apprenticeship system, and trade policy that accommodates small and large exporters.
If these structural problems are not addressed by means of adequate structural changes, then our economy will not be able to take full advantage of the next upward phase of the business cycle. Resolving these structural problems will take time even if government commits itself to action, but this will not resolve the cyclical problem that we have now.
South Africa is no exception; many businesses cannot draw credit to invest or pay their own suppliers, and are thus forced to close down and retrench workers. Keeping economic activity alive through this cycle will retain jobs and this is where government should focus its efforts. Business enterprises need access to appropriate credit facilities that they cannot obtain from conventional sources. If the government had responded quickly, South Africa would not have seen the number of job losses experienced thus far.
Across the world, unions and business are making agreements on how best to keep people in jobs. We need to have these conversations in South Africa, and government needs to make the environment easier to do this. Government needs to respond now by taking resolute action on the immediate threats to our economy and, in this way, demonstrating that it is willing and able to perform its role as facilitator, not controller, of economic activity. Thank you. [Applause.]