Chairperson, Minister Davies, Deputy Minister Masina and hon members, South Africa is in the eye of an economic storm. We will stave off another recession - only just - and we all feel relieved by that. However, no-one can deny that it has been a tumultuous year, although one would never say so, listening to Minister Davies' speech. Perhaps the part dealing with reality was in the pages he couldn't get to. [Laughter.]
The fact is we have had our sovereign rating downgraded this year, with the threat of another. We are in the middle of a second crippling strike, with another starting next week. Employment and output are down in key labour- absorptive sectors. Investor confidence is exceedingly low. We had an unsustainably large trade deficit at nearly R7 billion in May despite the weaker currency. Government revenue will not meet its targets, which means the budget deficit cannot realistically be reduced, and we are now in the triple bind of high inflation, low growth and rising interest rates. An economic storm, indeed.
It is, of course, true that there has been a great recession from which the world's economies are only now starting to emerge. We ourselves were not immune to that difficult time. It has, I hope, been a valuable lesson for the ANC. By promising voters 5 million jobs, even while the economic warning lights were flashing bright red in 2009, the party set itself up for failure. In May this year, we saw the consequences, hon Fubbs - the worst ANC election results since 1994. [Interjections.]
However, the recession alone is not a sufficient explanation for our current turmoil. We are in this position because our national government, from the President down, and including this Minister, has proven unable, and even unwilling, to speak with one voice on the economy, and because they have failed to remove the impediments to a higher rate of growth.
The fact is that the storm we now face is also of our own making. Our competitor economies are all growing again, and much faster than us. Chile is growing at 5,9%; Nigeria at 7,2%; Russia, Costa Rica and Poland, all at over 4%; and Turkey at 8,2%. The recovery is well under way among our competitors. We are performing far below potential. So, how do we turn this around?
This government must urgently address the following problems if we are to reverse our current decline and build a solid foundation for creating growth. Firstly, all government departments must speak with one voice on a plan for economic growth. However, it is not enough to just speak with one voice. Government must also act in unison. Policy uncertainty is the surest inhibitor of investor confidence, and it is the reason that private sector investment is presently so low. This government has got to stop contradicting itself on key economic policy questions.
The Minister referred to foreign direct investment numbers. He says that we are now ranked 13th and that this is something to celebrate. What he doesn't tell you is that two years ago we were ranked 11th. [Interjections.] It is a decline, not an improvement, Minister - and we are attracting one-sixth of the foreign direct investment that Brazil is attracting; only one-sixth! [Interjections.]
A member of the public sent me a copy of the China Daily, the biggest English newspaper in China, with a special focus article last week on South African investment. The editorial says:
The downside in South Africa is that labour issues, including strikes, are a big headache, and the power supply can be unreliable.
That is a summary of some of the problems we have. Just one month ago, nearly 30 days ago, the President committed himself to the National Development Plan in his state of the nation address. However, since then, this commitment has been subverted by damaging visa regulations, a disastrous land reform proposal and several other growth- undermining proposals. You, Minister, also contributed to policy uncertainty by releasing a poorly drafted Promotion and Protection of Investment Bill and by bungling the cancellation of investment treaties. [Interjections.] Most recently, you dropped hints about introducing export taxes on minerals.
Of course, the DA supports the drive for local manufacture and beneficiation. We also believe South Africa must move up the value chain. However, the way to do it is not with price controls and trade-distorting taxes. We should be looking to attract manufacturers to locate here, use our local raw materials, and pass on skills and technology. That is how you build an industry.
In the context of our trade deficit, export taxes are simply impossible, and talk of them just adds greater uncertainty. Are we pursuing export-led growth or the import substitution policies of the 1980s? Confusing, contradictory policy messages are the enemy of growth and they have got to stop.
HON MEMBERS: Hear, hear!