Chairperson, hon Minister and Deputy Minister, hon members, distinguished guests, ladies and gentlemen, I remember at the first PCED study group, when I congratulated the Minister, I told him this is the best time to become the Minister of Economic Development due to the current recession. The President appointed him to bring his experience into full play in this new department.
President Zuma said in his Presidency Budget Vote, and I quote:
Our new government has identified ten priority areas which form part of our Medium-Term Strategic Framework for 2009 to 2014, and the programme is being introduced under these difficult economic conditions. The past year has seen the global economy enter a period of crisis unprecedented in the recent decades.
The President announced that the Department of Economic Development that had been established would focus on economic policy-making. The call for policy coherence requires one location where economic policies are developed, co-ordinated and aligned with the electoral mandate of the government.
Hon Minister, in your presentation to the PCED, the focus of the economic policies as well as their outcomes is therefore directed at equity, the reduction of inequalities, decent work, and the achievement of balanced and broad-based industrialisation.
In the framework for the response to the crisis, government and its social partners in Nedlac agreed on a framework for South Africa's response to the international economic crisis on 19 February 2009. The framework includes bold, immediate and urgent interventions to ensure that the South African economy and society are not directly influenced by the full impact of the international economic crisis.
These interventions include maintaining high levels of public investment in infrastructure to support private as well as public job preservation and creation through deploying macroeconomic policies, in combination and aggressively where required, to tackle the economic crisis.
The PCED will hold public hearings on the role of the different institutions on the economic development in South Africa from 11 to 13 August 2009. The new department has a six-month budget covering the period from October 2009 to March 2010 which will be incorporated into the October adjustment and strategic plan. The 2010-11 budget will be finalised by the end of December 2009, just as the Minister highlighted in his speech.
We are already facing a real economic and employment crisis in South Africa. For example, company liquidations in the first quarter of 2009 increased from 687 to 1 008; that represents a 46% increase. In terms of job losses, a total of 208 000 South Africans lost their jobs between 2008 and 2009. Unemployment Insurance Fund payments increased by R800 million, from R2 billion to R2,8 billion; an increase of 40%. The current account deficit remained unsustainably high at R170 billion; 7,4% of GDP in 2008 compared to 1,8% in 1998.
The new Department of Economic Development must promote economic policy development co-ordination and alignment in government nationally. The Department of Economic Development is also tasked with finding solutions to President Zuma's assertion that-
Workers who would ordinarily be facing retrenchment due to economic difficulty would be kept in employment for a period of time and reskilled.
We should remain market-friendly to attract investment flows. Without foreign investment to compensate for the lack of local saving, the country will be unable to grow at a productive capacity and provide jobs. Without foreign savings the country could not achieve economic growth of 5% a year.
We need a strong supply-and-demand economy based on innovation, skills, science and technology, and fair labour standards. The programme of the infrastructure development needs to be linked to a continental infrastructure plan and industrial policy.
South Africa is the key investor in Africa. According to the UN Conference on Trade and Development, South Africa contributes up to a quarter of Africa's GDP, and thus South Africa is the biggest source of foreign investment. It is critical for President Barack Obama's administration to resist the pressure to support the legislation that extends the duty-free access to the US market, which is enjoyed by African nations under the African Growth and Opportunity Act, Agoa, to all least developed countries, LDCs. Last year sub-Saharan Africa represented only 1,2% of the US$95 billion US apparel import market, while for Bangladesh it was 3,8% and Cambodia 2,5%.
Africa continues to be the only region of the world that is getting poorer and not converging with developed economics. Already Africa's clothing exporters face the global recession as well as the tremendously competitive and low-wage producers of Asia. We hope President Obama does not extend the African Growth and Opportunity Act to all least developed countries. The Ministry should be charged with co-ordinating macro and microeconomic policy. So, economic policy must include industrial strategy.
The recession has bitten deeply into tax revenues which the Treasury tentatively has forecast would be as much as R8 billion lower than the gross R650 billion targeted in this year's Budget in February. The lower revenue projection is the latest in a string of dismal economic figures, including the record 21,6% year-on-year fall in manufacturing production in April, and the 6,4% contraction of the economy in the first quarter.
In conclusion, hon Minister, just as you stated recently, the key task is to make sure that the promise made by President Zuma of creating 500 000 job opportunities by Christmas does not become pie in the sky. I fully support this view. Therefore working together we can and we will do more to build a great South Africa. The ANC supports the Budget Vote. [Applause.]