Economic Development: Minister's Budget Vote Speech Speech & Responses by ANC, DA and IFP
Briefing
07 May 2013
Minister of Economic Development , Mr Ebrahim Patel, gave his Budget Vote Speech on the 07 May 2013
__________________________________________________________________________
Speaker of the National Assembly
Deputy President
Honourable Members
Invited guests
I have the honour to present the 4th budget of the Economic Development Department, known as EDD.
Given our responsibility to integrate efforts on economic development across government, the Department’s success lies in its collaboration with other Ministries and spheres of government.
In these opening remarks to the debate, I will draw attention to the substantial progress made in the economy over 19 years of ANC governance.
I will point to the success of this administration in recovering from the recession we inherited in 2009 due to the global economic crisis.
I will share our progress to develop policy coherence in the past year, to improve infrastructure construction and use it to promote skills and local manufacturing, to expand industrial funding, to refocus competition and trade policy on jobs, to facilitate new investment in the economy and steps we are taking to improve small business and youth employment.
In short, I will make the point that we have solid achievements, whilst acknowledging the many challenges we still face.
I will welcome a number of people in the public gallery who represent the human faces behind the economic achievements.
Honourable Members,
In 50 week’s time we celebrate 20 years of democracy.
The economy we inherited in 1994 was broken, characterised by low growth and weak job creation. More fundamentally, it was structured to serve the needs of some rather than all; it focused on the needs of corporations rather than people.
In contrast, we have created a more inclusive economy, seeking to address the needs of all South Africans, 51 million people, not merely 4 million.
GDP growth is up: in the 19 years before 1994, annual growth was 1,6% compared to 3,2% annually in the 19 years since. This despite, a global economic recession.
The value of our GDP today is R3,2 trillion, 83% larger than in 1993.
This is stewardship under four ANC administrations.
This is how democracy has outperformed apartheid on the metric of growth.
But growth must create jobs and equitable development.
Prior to 1994, there were between 8 and 9 million employed South Africans.
Today, we have more than 13,6 million employed people. More than four million new jobs were created under democracy.
Under this administration, we developed stronger planning and policy cohesion.
The National Development Plan provides the country vision for overall economic and social development, integrating policies, demographic shifts, governance and state-capacity issues into a coherent framework.
It is complemented by government’s economic strategy of the New Growth Path and the detailed plans set out in IPAP and the National Infrastructure Plan.
We are now in action-mode, as President Zuma remarked in January:
"Some of the key programmes of the National Development Plan are already being implemented. These include the New Growth Path framework with its major infrastructure development programme, as well as the state-led industrial policy."
Yesterday, Statistics SA released the latest employment data.
It shows that employment has begun to grow again, with the gain of 44 000 new jobs in the first quarter of 2013. Over the 12 months up to end of March this year, nearly 200 000 new jobs were created, in difficult domestic and global circumstances. The biggest job gains were in agriculture, followed by manufacturing and community services.
These figures show that our transformation policies are having some success despite the headwinds from the global slowdown. But unemployment levels are still stubbornly high. Our task is to consolidate these gains and accelerate job growth, for unemployment constitutes the biggest economic challenge for the country. We must begin to see a decline in the levels of joblessness. That is the task that we have taken on through the New Growth Path.
From October 2010 when the NGP was adopted, 646 000 new jobs were created. Of these, 366 000 new jobs were created for women, 57% of the new jobs.
As South Africans we need to bank these positive trends and commit to do more.
Our GDP recovered from the 2009 recession and is now R750bn higher in current rands, or 9,4% in real terms than at the low-point of the recession. The economic output of no less than 38 other countries - including the UK, Holland, Spain, Italy and Portugal are still lower than before their recession.
I wish to welcome one of our visitors today, Richard Matsomela, a worker at the BMW factory in Rosslyn. He was placed on special training financed through the Training Layoff Fund, one of the new tools created by government in 2009 to respond to the recession. Production recovered, the company expanded and Richard now works again on the assembly line for the new 3-series BMW made in SA.
This is active partnership with the private sector.
The New Growth Path mapped out a labour-absorbing economic trajectory.
Under the infrastructure jobs driver and through the leadership of the President, we developed a National Infrastructure Plan, coordinated by the PICC to which EDD provides technical support.
We made real progress to lay the physical platform for growth and development over the past year, working with Minister Nkwinti and other members of the Management Committee.
Construction levels are up.
Visitors in the public gallery illustrate what our programme is doing.
Ms Elakanyani Ndlovu, a 30-year old female electrical engineer, is part of a team building one of the world’s largest coal-fired power-stations, Kusile, near Witbank in Mpumalanga.
Ms Kedisaletse Maseko is a welder employed on the new locomotive build programme in Koedoespoort.
Mr Thomas Solomon is a contractor who lays tar on roads in the Western Cape.
They are part of more than 150 000 workers currently on PICC monitored construction sites across the country, building roads, power stations and dams, deepening our ports, building schools, laying broadband cable, manufacturing components, changing the spatial patterns of the past.
The project-pipeline for new infrastructure projects has been developed into the 20-year R4 trillion plan, a blueprint for our generation.
Spending levels are up too.
Indeed, during this administration, we would have spent roughly R1 trillion on infrastructure, compared to half that sum in the previous five years, and substantially more than in the last five years of apartheid.
Even when adjusted for inflation, this is a remarkable achievement.
We now monitor every quarter how much is spent, what construction has actually taken place and how many people are employed in construction projects worth nearly R900 billion rands.
Working closely with Minister Gordhan through the PICC, R19bn of new money or reprioritised resources were identified for infrastructure projects over the next three years.
State capacity challenges identified in the NDP articulated by Minister Manuel, are being addressed, including improved environmental processes led by Minister Molewa and the new Infrastructure Development Bill, recently released for public comment.
Honourable Members
We need to bring the cost of the infrastructure build down.
Private sector collusion and price-fixing cost the state many billions of rands in previous infrastructure projects, including the 2010 World Cup stadia . The competition authorities identified 300 cases of irregular and illegal behaviour by the private sector in the construction industry, on projects valued at about R47 billion.
Eighteen construction companies, including the top six firms, have now confessed and are in discussions on settlements with the competition authorities.
We are determined to ensure that we develop an affordable infrastructure build programme and that our tax rands do not improperly find their way into private pockets.
The competition probes extend wider than infrastructure and include input costs across the economy, to improve competitiveness and reduce costs for consumers.
Following discussions with Minister Motsoaledi, I am pleased to announce that the Competition Commission will conduct a market enquiry into the private health-care sector. As ordinary working South Africans will know, private medical care is becoming unaffordable. The enquiry will use new powers under section 6 of the Competition Amendment Act of 2009 and will examine the pricing, costs and the state of competition in the sector. It is expected that the Enquiry will commence before the end of September this year.
The authorities are ensuring that public interest tests in our law are met when companies acquire existing operations.
I welcome Mr Emmanuel Motumi, one of a few hundred workers reinstated by the Competition Appeal Court at Walmart following its purchase of a local retailer. Government’s efforts led to the Competition Appeal Court ordering the creation of a fund of up to R240 million for local supplier support by Walmart.
The judgement expanded competition jurisprudence and ensured that the central economic imperative of our time, namely jobs and local industrial capacity, is pivotal to competition policy.
It demonstrates our commitment to policy integration and coherence.
Trade policy is being harnessed to support infrastructure roll-out and to support agro-processing industries who are infrastructure users, ranging from poultry to tomatoes. More will however need to be done to support farming jobs and agro-processing as part of food security strategies.
The Port Regulator introduced a differentiated port tariff that encourages export of manufactured goods rather than raw minerals.
We are using the infrastructure programme to address skills and industrialisation challenges.
We now have a skills model for all major infrastructure projects over the next twenty years, developed through working closely with Ministers Nzimande and Nxesi, the engineering industry, the construction regulator and the private sector.
Honourable Members will be pleased to know that say for the Mzimvubu Dam in the Eastern Cape, we can quantify the number of bricklayers, carpenters and engineers we need per quarter over the five years of construction, to help universities and FET colleges plan their student intake and graduate output.
On industrialisation, EDD has worked with Ministers Davies and Gigaba on measures to provide a major boost to local manufacturers through the infrastructure rollout programme. State owned companies deepened their supplier development plans.
Complementing these efforts, the IDC set up a localisation unit and increased its 5-year plan for industrial funding available to R102 billion.
Over the past two years, the IDC increased actual funding approvals substantially to about R27 billion, 48% higher than the previous two years.
We have success stories out of these interventions.
In the past, we imported buses for the infrastructure rollout of inner city public transport.
Last year, to implement one of the Accords, new policies were introduced that led the cities of Johannesburg and Cape Town to order 240 locally-assembled buses. I welcome Ricardo Truby, a production line worker for the Cape Town buses where the IDC provided bridging finance.
The first locally-assembled bus for Johannesburg will come off the production line in June 2013 from a Germiston factory.
This is real progress with industrialisation.
When this administration came into office, all our minibus taxis were being imported. Today, two taxi assembly plants have been set up, by Toyota and BAW. I wish to recognise Ms Brenda Smith, a supervisor on Toyota's new taxi line who is here in the audience today. Honourable Members, by 2015, two out of every three new minibus taxis will come from local factories.
This is real progress with industrialisation.
The country will expand rail transport very significantly in the next twenty years. The IDC is working with companies in the sector to use the R198 billion procurement to build coaches, locomotives and wagons and create jobs locally. We have already landed one export contract for trains, from Mozambique.
These success stories in transport are replicated in other parts of the build programme, such as the new condenser unit commissioned from a local company for the Kusile power station.
Working with Minister Peters, we plan to improve the localisation impact of wind and solar energy, so that green energy creates local jobs.
The industrialisation drive is at the centre of our work.
Last year the IDC concluded a R3,4bn deal to take majority ownership of Scaw Metals, a large diversified manufacturer of steel products for the infrastructure sector and industry, that employs about 7 000 people.
It is the only producer of locomotive frames in southern Africa. When Anglo American Corporation decided to divest from the asset, we ensured that this critical national asset was placed in local hands rather than asset stripped and closed down.
I am pleased to have Ms Patricia Mashigo, an artisan and production team-leader at a Scaw Metals factory present today, with a Group manager, Mr Paul Zinn.
Scaw Metals operations in South Africa have a crude steel production capacity of about 600 000 tons per year. It has manufacturing operations in Canada, Australia, Italy, Namibia, Zimbabwe and Zambia, which also serve as important distribution channels for its products.
A sophisticated industrial strategy as outlined in the IPAP requires the injection of foreign and local capital, know-how and innovation. I offer a few examples of success.
Asia's largest commodities trading company, Noble Resources, is the main investor in one of two advanced soya crushing plants under construction. In the past 12 months, the company invested about R2,2 bn in the local economy. I acknowledge the presence of Mr Ronald Jettin, the local CEO. Later this week I will host the senior management of the company to consider additional investment in South Africa.
We attracted Turkish investment in manufacturing of stoves in East London, and to restart the Cape Town based steel mill CISCO, by August this year, with a R250m investment which points to a growing appetite by investors to manufacture goods in South Africa. I welcome Mr Turanli, the President of the new shareholding company of CISCO and Turkish Ambassador Kaan Esener who is with us today.
Honourable Members
These efforts are supported by greater beneficiation of our natural resources.
By July this year, the largest Manganese sinter plant in the world, backed by the IDC, will open in the town with the quaint name of Hotazel in the Northern Cape. I welcome the major shareholder, Ms Daphne Nkosi, whose company will produce 2,4m tons of manganese sinter for ferro-manganese smelters.
Honourable Members, following public consultation, I have decided to issue a trade policy directive in terms of section 5 of the International Trade Administration Act to limit the export of scrap metal so that this resource is used in South African foundries and steel factories, saving energy, creating local jobs and promoting infrastructure development.
To strengthen regional integration, manufactured exports to the rest of Africa rose by about R20 billion or 21% in this past year, now accounting for more than 90 000 jobs in South Africa.
Tomorrow, South Africa hosts the World Economic Forum Africa Summit here in Cape Town.
BRICS countries are now the fast-growing part of the global economy. Our membership is the result of successful economic diplomacy and opens up many opportunities if we work at it.
The BRICS Summit hosted by President Zuma six weeks ago announced the establishment of a BRICS-led development bank and we signed a number of partnership agreements with BRICS members and investors, including to set up a new television and fridge factory in South Africa.
Honourable Members, the New Growth Path calls for greater economic inclusion, through small business development and youth employment. Policies before 1994 largely excluded young black people and small businesses from the economic mainstream.
Today 1,6 million more young people under 35 are working than in 1995, and school and university enrolment is dramatically higher, as even critics of government concede. As University of Stellenbosch research released a few weeks ago show, in less than a generation we more than doubled the number of graduates in the labour market.
Three weeks ago we signed a Youth Employment Accord at Hector Pieterson Memorial in Soweto, in front of a 2000-strong crowd of young people, bringing together the efforts of the public and private sectors.
The Accord provides for a comprehensive approach, which include incentives, commitments and action to address the problem from its starting point: inadequate skills formation. It provides for work experience through internships and, most importantly, new jobs for young people.
I welcome the delegation of youth leaders - led by Thulani Tshefuta and Yershin Pillay – in Cape Town to attend a workshop on youth entrepreneurship and the Accord.
To support the Accord, the IDC announced a R1 billion Youth Fund to provide concessional lending to youth-owned enterprises that create jobs.
I am pleased to announce today that the new small enterprise funding agency, sefa will make R1,7 billion available over the next five years for youth enterprises, with a target of R220 million in this financial year.
This combined 'fighting fund' of R2,7 billion is mobilised so that young people are mainstreamed in economy.
My Small Business Advisory Panel has noted the substantial resources available to small businesses through various Budget Votes, but delivery is fragmented, costly, with little integration of funding and business support. We are beginning to address this, though our work is by no means done.
In April last year we launched sefa combining three small business programmes, bedded down the institution and expanded the lending rate.
Sefa approved loans worth R435m, up by 106% on what its predecessors did the previous year.
Through sefa we created the machinery to vastly increase access, impact and the level of small business support. By next year, sefa plans to approve annual funding of more than R1 billion to more than 20 000 SMMES.
I welcome Ms Magdalena Paledi, a female entrepreneur contracted by Anglo Platinum to build a school in Serafa Village in Sekhukhune. Her company is a beneficiary of sefa funding.
Over the next five years, sefa plans to provide R2,3bn for women-owned enterprises, with R295 million this year, so that women are more actively represented in the economy but also so that the economy can benefit from the energy and enterprise of women.
We financed a training programme for 100 young people, in partnership with the SA Institute of Chartered Accountants. One of the graduates with us today, Ms Thandeka Nyani, is now working in the sefa Business Hub as an Accounting Clerk supporting small business clients.
I am pleased to announce that a further 170 young people will be enrolled in the programme, to which we are committing R9m.
We will take the small business programmes to our people through 18 large community road-shows over the next ten months, with a special focus on youth and women.
To meet the numerical targets in the Youth Employment Accord, government entities will adjust regulations and tender conditions to bring more young people into infrastructure programmes, the green economy, call centres and other business process services.
Social dialogue has been stepped up.
Last year EDD provided support to the Presidency to conclude the October Social Accord that brought the strike wave in the mining sector to an end. Ministers Chabane, Shabangu and Oliphant are now driving the follow-up.
I have released a report today on progress with the Accords on skills, the green economy, local procurement and basic education.
I welcome learners from Litha Primary School – they are benefitting from one of the Social Accords through the adopt-a-school pledge.
Looking ahead, we need an Accord or social agreement to address industrial relations in infrastructure programmes.
Honourable Members
The budget allocation for this financial year amounts to R772 million, of which R231m goes for small business funding, R193,8m for the competition authorities, R79,8m for trade administration and R108m to the IDC for the agro-processing fund.
The Department’s budget for operations and capital spending is R159 million.
The Budget Vote of EDD is a window across programmes in many different departments. I thank my colleagues in the Economic Cluster and the PICC, Deputy Minister Mkhize, the Director General Ms Jenny Schreiner and her predecessor, Saleem Mowzer, the agencies and DFIs and staff of EDD. Our work benefitted from the engagement with social partners: thanks to the shop stewards, managers and workers. Finally I thank my family for their support.
I now table the Economic Development Department Budget for consideration by this august House.
Speech by Hon Elsie Mathulare Coleman during the Debate on Budget Vote 28: Economic Development
Debate on budget vote 28: Economic Development by Ms Elsie Mathulare Coleman (ANC MP-Chairperson of the P/C on Economic Development).
HONOURABLE SPEAKER - MR SISULU
HONOURABLE DEPUTY SPEAKER
THE DEPUTY PRESIDENT - HIS EXCELLENCY MR MOTLANTHE
HONOURABLE MINISTERS AND DEPUTY MINISTERS
HONOURABLE MEMBERS
DISTINGUISHED GUESTS
LADIES AND GENTLEMEN
Honourable Speaker, let us from the onset congratulate the department for its positive audit outcome once again. They have since their inception received unqualified audit outcomes, which represents an institution with good corporate governance practices.
There is a saying Honourable speaker, that "the future can be defined by where we come from". Thus defining the historical background, will clearly define the Economic Development Department (EDD), its mandate and objectives. Added to that Honourable Speaker and members, it will be important to give the highlights on the department`s evolution.
The policy origins of the Department of Economic Development are to be found in the Economic Transformation resolution of the 52nd National Conference of the ANC held in Polokwane in December 2007. That conference resolved that:
1. In order to achieve necessary economic growth and development the building of the strategic, organisational and technical capacities of government in the context of a democratic developmental state was essential.
2. A strengthened role for the central organs of state, including through the creation of an institutional centre for government-wide economic planning with the necessary resources and authority to prepare and implement long and medium term economic and development planning had to be established and
3. The integration, harmonisation and alignment of planning and implementation across all three spheres of government, and with the development finance institutions and state-owned enterprises, including through the development of coherent inter-sectoral at national level and the alignment of local implementation in terms of the IDPs of metro, district and local municipalities had to be realised.
It was in the above light that the EDD was established in July 2009 which makes it only four (4) years old. The Department was created with the sole aim of creating decent work through meaningful economic transformation and inclusive growth. The ANC led government, through the EDD for the past four (4) years, despite its young age has: Managed to coordinate a response plan to global economic crisis; Processed its mandate on the alignment of jobs; Completed the development of the New Growth Path (2010); Aligned work in government to NGP; Started implementing Outcomes 4 on Jobs and Growth and launched work on infrastructure jobs driver (2011-2012); Refocused the Industrial Development Corporation (IDC), Competition authorities and International Trade Administration Commission (ITAC) on jobs (2011-2013); Initiated dialogues to develop Social Accords on key NGP areas (2011-2013) - (THE SIGNING OF THE YOUTH EMPLOYMENT ACCORD RECENTLY HAS BEEN ONE KEY ACHIEVEMENT, IN ITS RECOMMENDATIONS, THE COMMITTEE HAS EMPHASISED THE NEED TO EXPIDITE IMPLEMENTATION OF THE YOUTH EMPLOYMENT ACCORD); Consolidated small business entities that is THE MERGER OF SAMAF AND KHULA INTO ONE ENTITY NOW CALLED SEFA AND HAS BEEN FULLY INTEGRATED UNDER THE IDC (2012-13); Launched and implemented infrastructure plan And strengthened NGP focus on industrial policy (2012-12).
Honourable Speaker, The President in his State Of the Nation Address, reemphasised the importance of infrastructure as a vehicle for job creation. A number of infrastructure projects were identified for implementation. The Department should be commended for its active role in the Presidential Infrastructure Co-ordinating Commission (PICC). The Minister is head of the PICC Secretariat and the Department`s key role is that of co-ordination, integrating the work of various departments and providing secretariat services to the PICC with regards to the implementation of the National Infrastructure Plan.
Having said the above honourable speaker, it is worth mentioning also that this could not be achieved without challenges. In the Committees engagement with the Department, the following challenges have been notable, amongst others:
The mandate of the Department - the policy mandate of the Department is quite clear, it was established to ensure integration of existing functions and mandates of government departments, coordination of the work of finance institutions and regulatory agencies and implementation of the plans and decisions of the executive structures of government and with the main focus being to ensure achievement of better jobs and industrialisation. The scope therefore tends to be wide, cross-cuts over other government departments thus requires extensive coordination and cooperation of other departments and this the department is working hard on.
Lack of an Impact assessment and monitoring tool which would enable easy reporting of the department, entities and other stakeholders on the impact of development issues such as jobs, poverty, inequality, SMME development etc. Moreover, the existence of such a tool would have enabled easy monitoring of NGP targets.
The role of the Regulatory Bodies in ensuring industry competitiveness, fair trade, addressing anti competitive behaviour will need to be enhanced. It is clear that going forward, we need to ensure that we also assess the outcomes of the decisions taken by the regulatory bodies. So that we can be able to determine the impact of those decisions on the poor, on the development of SMMEs and Co-ops etc.
For an example, we would want to be able to answer questions such as what happens after price collusion has been detected, confirmed and a penalty charged on food prices, does the baseline price change or remains high to the detriment of poor households? As a consideration, do we need to enforce certain conditions that would favour poorer households or reciprocity commitments towards attainment of Government goals?
Enhanced coordination of the work of National and Provincial economic development departments - elements of silos were detected in some instances.
Human Resource capacity that would have ensured speedy processing and implementation of priority initiatives and projects was still a major challenge.
Withstanding the above challenges we would still want to welcome and commend the department for having taken a positive approach towards addressing most of the above challenges. For an example: an impact assessment and monitoring tool is in the process of being developed to monitor and assess the impact on the work of the entities with regards to job creation and other development indicators. Going forward the entities that report through the department will be held accountable for direct impact on jobs and development. In future the Department would therefore be able to give detailed reports with regards to impact and progress made on jobs.
I think honourable Speaker, while we look at internal challenges, we should not fall short of mentioning other external challenges that serve as a hindrance to the advancement of the work of the Department. These external challenges include the worsening global environment (PROJECTIONS FOR GLOBAL ECONOMIC GROWTH IN 2013 HAVE BEEN LOWERED, DESPITE EMERGING OPTIMISM AMONG BUSINESS AND POLITICAL LEADERS. WORLD GDP IS EXPECTED TO GROW BY BETWEEN 2.4% AND 2.7% IN THE CURRENT YEAR, WITH SIGNIFICANT RISKS STILL EVIDENT - SO WE MIGHT NOT BE ABLE TO ACHIEVE IMMEDIATE GROWTH RESULTS), the rising electricity and other user costs and the workplace and community conflicts remain a major challenge.
It is also important to indicate that despite the Department having made much progress within its four years of existence, there is consensus that more is still to be done. The unemployment levels are still high and youth unemployment still a particular challenge (STATISTICS SHOW THAT THE UNEMPLOYMENT RATE REMAINS HIGH AMONG THE YOUTH AGED 15 - 24 YEARS (50.9%) AND THIS GROUP IS LIKELY TO PUT MORE PRESSURE ON THE LABOUR MARKET BECAUSE APPROXIMATELY 3,3 MILLION (36.6%) OF THE 10,4 MILLION IN THIS AGE GROUP ARE NOT IN EMPLOYMENT, EDUCATION OR TRAINING); the need to improve performance of productive sectors of the economy e.g. manufacturing, mining and beneficiation, agriculture and agro-processing. More still needs to be done with regards to the development and financing of SMMEs and Co-operatives, especially with more focus on Women, Youth, Disabled and Rural Population. Together with the Department, we are prioritizing our interventions in this regard. For instance a round table forum is being organised to look at the challenges facing the Survivalists, SMMEs and Co-operatives, including Women, People living with disabilities and those in the rural areas with the whole aim of finding appropriate and effective solutions.
The triple challenges facing the country are multitude and have manifested themselves over a long period since the apartheid regime. The challenges require effective and honest dialogue, coordination and strong partnerships involving both the private sector and the public sector.
Honourable Speaker, it is important to note that the Budget vote today is well timed - it is happening in the backdrop of the World Economic Forum on Africa 2013, starting tomorrow just at the backdoor of this venue. Thus bringing hope to finding solutions to the economic growth challenges facing not only South Africa but also the Continent. We would like to join the leadership of the country in welcoming the Distinguished guests and members participating in the WEF and wish them successful deliberations and outcomes.
In conclusion Honourable Speaker, we would like to thank the department for their cooperation and wish them well in their 2013 work. We recommend that the House supports the EDD Budget Vote 28 of R771.466 million.
Thank you.
Speech by Hon Christopher Ntuli during the Debate on Budget Vote 28: Economic Development
Debate in the National Assembly on budget vote 28: Economic Development by Mr Chris Ntuli ( ANC MP-Whip of the P/C on Economic Development).
Sihlalo, Ngqongqoshe Ohloniphekile, Ongqongqoshe abakhona kule Ndlu, Amasekela, Amalunga ahloniphekile kanye neZivakashi zethu.
Inkulumo yami izogxila entuthukweni yezimbonei kanye nezindaba ezithinta ukuqhudelana, nokuthi lokhu kube nomthelela ongakanani entuthukweni yomnotho.
Intuthuko yomnotho incike kakhulu ekusebenzeni kahle kwezimboni. Lo Hulumeni oholwa Ukhongolose wethule Inqubomgomo Yokuthuthukiswa Komnotho Wezwe (New Growth Path) njengohlelo oluzokwazi ukuthi Lufeze amaphupho esizwe entuthukweni yomnotho ngokunjalo nesizwe ngokubanzi.
At the ANC 52nd National Conference in 2007 we resolved that we need to develop an active and well resourced industrial and trade strategy aimed at creating decent work. We now have an Industrial Policy Action Plan 2 and a developmental Trade Policy Strategy Framework. These two policy documents are at the centre of the New Growth and Development Path. Whilst the Industrial Policy Action Plan identifies sectors that should be supported, a major challenge that it confronts is to prioritize catalytic sectors, to build and broaden industrial linkages between these sectors.
The Administration has placed jobs at the centre of both the Industrial Development Co-operation (IDC) and Competition Commission mandate. This is consistent with the call in the Manifesto of the ruling party that was endorsed by the electorate in 2009.
This is what democracy is about, giving effect to the will of the people.
We have served in the Portfolio Committee since its establishment in 2009 and we have seen a dramatic shift in the level of industrial funding and projects that the Department has announced on its own or through the Agencies it is accountable for.
As the ANC, we welcome the expansion of investment approvals by the IDC under the leadership of Minister Patel. This is a more active IDC than what we saw in 2009.
In particular, it is helpful that government is not only focussing on the level of funding but also the cost of funding.
Many companies have raised this as a serious challenge, because their competitors in Brazil and China are sometimes able to access cheaper loans.
The introduction of a new, low-interest facility to support companies, who create jobs, is consistent with our electoral mandate. This is what the ANC undertook to do and so we are pleased that the Department and the IDC has introduced a facility priced at the prime interest rate less three percent.
The IDC spent some R27bn over the past two years alone and we now expect it to deepen its developmental impact.
We want to draw attention to the move by the IDC to encourage youth entrepreneurship and jobs for youth. This is what we mean by development. The R1 billion Fund announced in Soweto must now be implemented with great energy so that young people can be drawn into new decent jobs and we can offer hope to the young generation.
While the IDC has done well, there is more that our people expect in the year ahead. We need to focus on poorer Provinces. The products of the IDC should be made more accessible at local level. I welcome that the IDC will also be part of the planned Small Enterprise Financial Agency (SEFA) road-shows. The IDC should also have a facility to assist local entrepreneurs with the technical side of producing business plans.
The refocus of the Competition Commission is greatly welcomed. There is sometimes a view in the public debate that competition is an end in itself, as if jobs do not matter or that jobs will simply come automatically from competition.
We think competition policy is part of the tools that is available to Government to help drive the broader economic goals. Sometimes, greater competition on its own will be helpful in bringing new energy and innovation to a sector. At other times, we need to place employment conditions in Mergers and Acquisitions, as our laws clearly provide for.
The Economy must also provide opportunities for new entrants. For this reason, it is right that we tackle Monopolies and Cartels. We are pleased at the Minister`s announcement on the investigation of the private health-care industry. Some of its practices border on callously exploiting people`s illnesses for profit.
The Pioneer Food settlement had set the trend of competition settlements with companies that can benefit all South Africans. That settlement, Honourable Members, led to the reduction in the price of bread and flour. It also led to a fine on the company that allowed the Ministry to set up an agro-processing Fund now administered by the IDC.
In this Budget, we will approve a further transfer of monies to the IDC from the fines paid by Pioneer Foods. This Fund is now creating new jobs in agriculture and the food industry.
Last year, the Wal-Mart matter was finalized by the Competition Appeal Court.
The Wal-Mart settlement showed that government is determined to ensure that any foreign company entering SA must support local industrial capacity. It has led to many workers being reinstated by Wal-Mart after they were retrenched just before the merger. It has led to a R240 million Fund to support local industry.
Honourable Members
The success with creating a manufacturing capacity for the taxi industry is very exciting. I used to work at Toyota Motors in Durban many years ago.
I want to tell this August House that the factory is now expanding and taking on more workers. Sifiso Mhlongo, is a 39 year old worker from KwaZulu Natal. His hometown is that of Mphendle in the KZN hinterlands, near Pietermaritzburg.
U Mhlongo, ushadile with 8 children, the eldest being 17 years old in Matric. He is currently employed at Toyota`s manufacturing plant in Ethekwini, KwaZulu Natal.
Mr Mhlongo was unemployed for 5 years, relying on piece jobs to make ends meet for his family. This proved very difficult as he is the sole bread winner, causing much upheaval in his home as sometimes he could not provide for his family.
On the 19 July 2012, Mr Mhlongo, was taken on by Toyota for the production of the Quantum minibus taxi when Toyota brought the production of the Quantum bus back to South Africa. This brought much relief as he once more had a stable source of income. He is employed in the Assembly line: key to his work includes `mounting` of the vehicle body on the assembly line prior to its full assembly. He is also used in the `fitting` of parts in the assembly line (parts such as lights, pipes, and the radiator) as he is multi-skilled.
U baba uMhlongo uqashe e hostel yase Wema e Thekwini ukuze kube lula ukuthi abe seduzane nomsebenzi, kodwa uyanjalo ekhaya ngempelasonto. He walks to work every day and uses the very same taxis he helps produce to travel back home to see his family. U baba uMhlongo uyabonga kakhulu ngethuba lomsebenzi. Our industrial policy is about creating opportunities for people like Mr Mhlongo.
SiwuKhongolose sithi Sihlalo, sizoshintsha ukwenza ukususa lezo zithiyo ezikhona ezibambezela intuthuko yezwe. Esesikwenzile kuyinkomba yokuthi lokho esikuthunywe isizwe, namaphupho obuhloli obudal kuka Khongolose oLangalibale Dube - uMafukuzela, Lilian Ngoyi, Walter Sisulu, Albertina Sisulu, Oliver Tambo, Chief Albert Luthuli, Braam Fischer, nabanye abaningi siyawafeza. Sizimisele ukufeza umbono wesizwe ka-2030 (We are determined to achieve our vision 2030). UKhongolose uyasesekela lesi sabiwomali.
Ngiyabonga.
Speech by Hon Seiso Mohai during the Debate on Budget Vote 28: Economic Development
Debate on Budget Vote 28: Economic Development by Mr Seiso Mohai, ANC MP.
Honourable Speaker, President of the Republic of South Africa, President Jacob Zuma, Deputy President, Kgalema Motlanthe, Honourable Members of the house
We welcome the Budget Speech by the Minister which is very comprehensive in assessing the progress made this far, and also points at the way forward. Speaking today in the budget vote, it is pleasing to note progress we are making with regard to transformation of South Africa`s economy. This is indicative of bold plans and actions that have characterised by systematic implementation of our transformation agenda.
Before I go any further let me state that we are in a critical moment in our unfolding social transformation wherein the need to alter economic relations is looming large as a main terrain and pillar of our overall social transformation. It seems the consolidation of our democracy going forward largely depends on economic transformation. There can be no meaningful social progress without economic transformation.
Infrastructure development has long been identified as major catalyst for economic growth and development in the policy positions and perspectives of the ANC. It is the hub for driving economic restructuring, transformation and development for meeting the economic and social needs of our people, and for driving industrialisation. Such an industrialisation must put jobs creation and competitiveness of our economy at the centre of its outcomes. That`s where the ripple effect of infrastructure comes handy.
Infrastructure development must create jobs in the construction of facilities, in the construction of materials and machinery. Infrastructure development must create jobs and build the competitiveness of our exporting industries by developing and expanding local technologies and machinery industries. Infrastructure development must therefore strengthen and develop the entire value chain of our local industries. Production industries must benefit on a sustainable basis from our infrastructure rollout. That`s the only way we can be competitive in international markets. Government therefore has to effectively use its procurement which is relatively large to develop the local production industries. The New Growth Path whose main industrialisation programmatic base is IPAP2 advances these goals to a large extent. The National Development Plan also takes forward, far into the future, this goal of infrastructure development by seeking to build local production industries.
The capitalist economy, which is the main terrain on which we operate, is mainly organised on a world-wide scale. South Africa is a relatively small economy that can succeed better when it has sound trade links with other large emerging economies such as China, India, Brazil and Russia as organised in Brics. Africa should not only be our growing trading partner, but our starting point. Today trade among developing economies is much more possible because machinery and technologies for production are no longer an exclusive monopoly of the main global centres of Europe, US and Japan like it was, say, 30 years ago. And this can have the desired effect of progressively changing the skewed global economic structures, and also really change for better developing local economies in the South.
We should therefore welcome the R827 billion being spent State Own Enterprises in the current MTEF, as well as the R430 billion that is being spent by Government Departments in social infrastructure in the areas such as education, health, electricity and roads. Alongside these allocations, we should also welcome the reforms on the procurement of infrastructure that the Finance Minister has been announcing recently. These reforms are aimed strengthening the efficient delivery of infrastructure within allocated budgets. The construction industry is historically an industry of few large players who dominate the entire value chain of the industry. Government procurement must be continually improved to change this sad reality that persists. The recent cases of collusion reported in the media that are now being investigated by the Competition Commission are also sad reminder of the monopoly tendencies that are widespread in the construction industry.
Our competition authorities must therefore strengthen their mechanisms not just to minimise monopoly but to root it out in its historical and contemporary manifestation. Monopoly blocks new entrants and thus denies the industry the necessary and growth. Monopoly escalates prices because it is by nature rent seeking and rent securing. Big projects such as the rolling stock for freight and passenger rail have to lead by example in the procurement of locally manufactured locomotives and wagons. It is therefore encouraging to note that the recent Rolling Stock project by Prasa does encourage and stimulate the development of local manufacturing industries for locomotives by transferring technologies the development of machinery industries in the locomotives sector. The significance of Local Procurement Accord is that it brings together the private sector, public sector and labour to drive local procurement for the creation of jobs and will also help improve competitiveness of our economy. These NGP Accords are not just paper agreements, their success should therefore be measured by the impact they make in achieving their development goals. The consistent commitment and reliability of all partners in driving the implementation of these accords is therefore very key.
The PICC drives the National Infrastructure Plan so as to coordinate the activities of 18 Strategic Infrastructure Projects in a manner that will change structures of the economy in relation to production, employment and equity. This plan will therefore bring to fore the necessary strengthening of the coordination of infrastructure projects in both planning and delivery so as to get maximum economic gains. Part of these economic gains should be a big expansion of our skills base, particularly artisans and engineering skills.
To conclude, honourable speaker, the ANC as a leading force for unfolding fundamental social transformation Agenda, mandated by its 53rd National Conference in Mangaung, will ensure that these progressive policies, which will for the better change conditions of life for our people, will be implemented without fail. We will not be diverted for this for us is not just a mere debate of political grandstanding. Through this we seek to strengthen our resolve for better life for all our people. The reorganisation of government architecture (economic Departments) as spelled out by the Minister, will only help to bring about faster change and propel us to greater heights.
Let me once more emphasise that since we are nearly 20 years into our democracy the dominance of the economic transformation in our polity is proving decisive on a daily basis. In the current political and economic climate it seems we will fail or succeed based on the progress we make on the economic front. And I dare say that based on the resounding success we have made in the delivery of social services; the ANC, working with our people, will not fail!
The ANC supports the Economic Development Budget Vote.
I thank you.
Kenneth Mubu, Shadow Deputy Minister of Economic Development
Highlights:
The Department of Economic Development is unnecessary and much of what it is mandated to do can be performed by other departments;
The department’s New Growth Path is failing to meet its target of creating 5 million jobs by 2020 and should be abandoned in favour of the NDP which the DA supports;
The Youth Employment Accord will not succeed in addressing the youth unemployment crisis and is a disgraceful compromise between government and COSATU on the Youth Wage Subsidy initially proposed by National Treasury;
The Small Enterprise Finance Agency (SEFA) is failing SMMEs by allowing intermediaries to charge up to 40% interest on small loans.
The Economic Development Department is four years old this year, having been established in 2009 to, among others, promote economic development through participatory, coherent and coordinated economic policy and planning for the benefit of all South Africans.
Chairperson, the DA believes that the Department is an unnecessary addition to an already bloated and large executive team. It is our view that this Department was created as a payback or reward by President Zuma to elements that supported his ascendency to the highest political office in the land. The Department is unnecessary and much of what it is mandated to do can be performed by other departments. For example, some of its functions and oversight responsibilities have been cannibalized from other departments such as the DTI and the Treasury, in order to give it credibility, relevance and legitimacy.
It should also be noted that the Department’s target of creating 5 million jobs by 2020 is a distant dream, given the fact that the country is facing slow economic growth, which has been revised down to 2.8% for 2013 by the IMF.
The unemployment figures released yesterday by Stats SA show that we are far from achieving work opportunities for the 4.6 million people out of work currently
The New Growth Path, which the Department sees as a way to eliminate unnecessary red tape, improve competition and enhance skills development, should be abandoned in favour of the National Development Plan, which is South Africa’s only hope of achieving economic growth and creating jobs.
Chairperson, the NDP has been embraced by business and other sectors as the answer to addressing South Africa’s many socio-economic ills, except for COSATU and some of its affiliates who characterise it as lacking concrete proposals for tackling the problems of poverty, inequality and unemployment. The DA sees the NDP as having set laudable goals for addressing the above challenges.
Helen Zille, the Leader of the DA has stated that the DA’s 8% Growth Plan dovetails in large measure with the NDP. She said: “We believe it is the plan behind which South Africans can unite to achieve a sustained economic growth of 8%. We know that no country has ever overcome poverty and unemployment without substantial, sustained economic growth. This must be our national focus.”
Chairperson, I agree with Minister in the Presidency, Trevor Manuel who was quoted by Daily Maverick as having said and I quote: “If we do not at least double the size of our economy, there won’t be labour absorption and then the big risk is that tens of millions of unemployed and frustrated young people will burn the country down.”
The recently signed Youth Employment Accord will fail to provide any workable solutions to the youth unemployment crisis facing this country. This is because the YEA does not include a youth employment tax incentive. It is contradictory to the NDP and will not be effective in creating 4.7 million jobs we need to provide for
South Africans under the age of 34. In short it is economically unsound, unrealistic and will have distortionary effects on the economy.
The DA has always advocated for the implementation of a Youth Wage Subsidy which the President announced in his 2010 State of the Nation Address. But, of course, pressure from COSATU has resulted in a watered down version of the original idea of a Youth Wage Subsidy.
The DA had proposed the rolling out of a national Youth Wage Subsidy programme to reduce barriers and encourage job creation. Secondly, the plan had envisaged the introduction of a comprehensive Vocational Training and Apprenticeship Programme that would help address critical skills shortages and enhance the interface between training and employment and reforming NEDLAC so that it is not dominated by economic insiders, but rather works to promote economic growth, job creation and poverty reduction. Finally, the DA had proposed the expansion of the National Student Financial Aid Scheme to help more people to access higher education and gain marketable skills.
As we all know, the Economic Development Department plays an oversight role on three regulatory bodies and two development finance institutions, namely:
The Competition Commission
The Competition Tribunal
The International Trade Administration Commission of SA (ITAC)
The Industrial Development Corporation (IDC)
The Small Enterprise Finance Agency (SEFA)
Chairperson Amartya Sen is an economist who was once asked if markets were good or bad for economic development. In his reply he said: “Markets are as good as the company they keep.” Competition policy means making markets work by ensuring that companies “keep good company”, that is that they do not collude against the consumers but that they compete to win customers.
The Competition Commission needs to be commended on its crackdown on a cartel by six competing companies in the glass manufacturing industry who came together to avoid competition by agreeing to fix the price of their product at a higher level than the price that would be determined in a competitive market. This is not only bad for consumers but also for the economy.
The Commission also needs to be commended on its recent exposure of the major construction companies in their bid collusion in the building of the FIFA Football World Cup infrastructure prior to 2010. As we all know, this Commission was set up to investigate such complaints of collusion, cartels and price fixing while the Competition Tribunal and the Competition Appeals Court act as adjudicating bodies.
Chairperson, as of April 1 this year, the Competition Amendment Act came into effect, thereby providing the Commission with teeth to undertake market inquiries into the various sectors of our economy.
I understand that the first such market inquiry will involve the health-care sector, where, according to Minister of Health, Aaaron Motsoaledi, "prices...are artificial and distorted."
Chairperson, in my view the other sectors that need investigation are the print media, food retail, food production, as well as the cellular industry. The cellular industry in this country been accused of ripping off the consumer by charging one of the highest call rates in the world.
In order for the Competition Commission to undertake these market inquiries, it is important that it is equipped with the necessary skills and personnel. I wish therefore to appeal to the Minister to provide the Commission with adequate resources to undertake this important task of protecting the consumer.
Chairperson, the Competition Commission therefore plays a very critical role in the economy of this country, particularly given the fact that we have such high unemployment levels. Its role should be seen as managing the delicate balance between promoting efficiency while at the same time protecting jobs by way of the public interest provisions of the Competition Act.
It is therefore with much concern that we note that the Commission is beset with serious governance issues and reports of maladministration. It is also reported that the Public Protector has launched an investigation into the Commission. The nature of this investigation is unknown.
Chairperson, with regard to these reports, I posed a Parliamentary question to the Minister in August 2012 in which I wanted to know what his Department was doing to address these issues. His response was: “I have taken note of the reports on internal challenges in the Competition Commission. The best interests of the Commission and its staff require that internal processes be completed prior to any public statement being issued. The department is now addressing the matters.”
On 22 November 2012, I wrote to the Minister to request a report arising from the “internal processes” that he referred to in his reply to my Parliamentary question. I have not received any response to that letter up to now. I again set about to send another letter early this year, requesting for the report. I still have not received any response to that letter either.
Needless to say, Chairperson that these reports are disturbing and that the Minister should show that he is fulfilling his responsibilities to the entity and to the South African public. We are still awaiting clarity on the steps to be taken by the Minister to ensure that the areas of concern are addressed as a matter of urgency.
Chairperson, according to a study done by the Global Entrepreneurship Monitor (GEM) of the UCT Graduate School of Business, early stage entrepreneurial activity in South Africa last year dropped to 7.3% from a high of 9.1% in 2011. The report says this is below the average of countries with a similar development level.
The picture painted by this report is rather bleak for South Africa. It shows that only 14% of individuals intend to pursue a business opportunity within the next three years, well below the 27% average. South Africa’s established business rate of 2.3% is the second-lowest in the world, according to the report.
This is a disturbing picture in view of the fact that SMME’s are supposed to be the answer to creating job opportunities for the multitudes of unemployed South Africans.
Another study found that SMME’s described the regulatory environment in South Africa as complex, burdensome and imposing unrealistic demands on business. South Africa has become less accommodating to SMME’s over the past year. The study found that 74% of SMME’s agreed that running a small business has become more difficult.
The NDP also highlights the importance of SMMEs in contributing to alleviating unemployment in this country. It further highlights the need to reduce the cost of doing business for SMMEs and emerging enterprises.
It is important to note here that the Small Enterprise Finance Agency (SEFA) is failing SMMEs by allowing intermediaries to charge up to 40% interest on small loans. At the same time, it has created unnecessary red tape for entrants to the market, making it difficult for small businesses to grow and to create jobs.
The proposed Licensing of Business Bill by Minister Rob Davies of the Department of Trade and Industry is an affront to the NDP and will add an unnecessary regulatory burden to businesses, particularly SMMEs. Business Unity SA and small-business representatives have expressed concern that this Bill will be badly enforced as existing laws already make it harder for people trying to run an honest business. We in the DA do not see how this Bill will improve efficiency in regulating and cutting red tape when, in fact, this Bill intends to impose more red tape in the system.
Chairperson, infrastructure development has been identified as another way in which massive numbers of jobs can be created in this country. In his budget speech, Minister of Finance, Pravin Gordhan indicated that over the next three years, R827 billion is planned to be spent by the fiscus and state-owned companies to build infrastructure.
The Presidential Infrastructure Coordinating Commission (PICC), which is coordinated from the EDD has the responsibility of providing facilitation and co-ordination of infrastructure development in the country. In view of the crucial nature of the contribution to economic development of the infrastructure roll-out programme, the DA is of the view that this entity should be housed under the NDP and by extension, the Presidency, and not under the Economic Development Department.
Chairperson, Direct Foreign Investment is important for the country’s economic development. However, conditions that are required to attract FDI are sometimes threatened by hostile and violent labour unrest as we have seen in the recent past.
The merger of Walmart and Massmart presented us with lessons in how to treat foreign investors to our country. While the EDD and two other departments of government wasted tax payers’ money on unnecessary court action to oppose the merger, it is gratifying to hear that Minister Rob Davies was reported to have praised the merger as a major success.
It is also reported that the R200 million Supplier Development Fund has resulted in the production of 500 tons of fresh produce in Limpopo alone, to the value of R3 million in a period of six months.
Finally, Chairperson, the Department has been allocated a budget of R771.5 million for the 2013/2014 financial year for its four programmes, namely; Administration; Economic Policy Development; Economic Planning and Coordination and Economic Development and Dialogue. This is an increase of R75 million over the 2012/2013 period.
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Budget Vote 28 - Economic Development |
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