Madam Deputy Speaker, hon Ministers and hon Members of Parliament, South Africa, like a number of other emerging economies, finds itself in a recession. Our tax revenue declined form R740,4 billion to R657,5 billion, while expenditure decreased from R843,3 billion to R841 billion. Budget deficit increased from an estimated 3,8% to 7,6% of Gross Domestic Product, GDP.
The DA agrees with the hon Minister of Finance that the increase in the Public Sector Wage Bill, which is higher than the official inflation rate, may lead to higher inflation pressure. Another inhibiting factor is the possible escalation in the price of electricity of 45%, which will adversely affect the entire economy. In a nutshell, further job losses are inevitable.
We compete in a global market where a competitive advantage of manufactured goods is influenced by the cost of energy. For instance, it's estimated that the cost of producing one ounce of gold will increase by 30% if the price of electricity increases by 45% in three years. At the current gold price production it will no longer be viable, leading to mine closures and job losses.
The greatest threat to the present South African economy, however, is unemployment. Estimates of job losses vary from 20% to 40%. Chronic unemployment has become a fact of life to millions of South Africans. It was estimated that in June 2004, 4,1 million workers were without jobs. What we need is an economic policy that makes South Africa independent from, and not dependent upon social grants.
More than ever before, we need a broad, holistic and strategic economic policy and leadership, and not irresponsible populist verbal attacks on our current fiscal and monetary policies. It appears that the Congress of South African Trade Unions, Cosatu, and the African National Congress Youth League, ANCYL, are determined to question the credibility of a senior member of Cabinet whose portfolio relates to planning, rather than to provide solutions to alleviate poverty, improve service delivery, curb the breakdown in law and order, and retain the independence of the judiciary - key components for sustained future economic growth.
The DA is in a position to provide a viable alternative economic policy. We acknowledge that apartheid was wrong. It used race to discriminate, embitter and drive millions of South Africans apart. Let us not repeat the mistakes of the past. Let us create an open society with equal opportunities where choice and merit are used, and not race quotas and cronyism, to provide an economic environment with positive growth and employment.
Incessant government intervention inhibits economic growth. The core function of the government is to co-ordinate and regulate. We need an effective and efficient public sector, free of corruption, which endeavours to develop our human capital, not to enrich a small close - knit lite with political ties to the ruling party. I thank you. [Applause.]