Deputy Minister of Economic Development on Framework of New Growth Path with special reference Department of Water Affairs & Environmental Affairs; Department's response to New Growth Path Plan

Meeting report

Chairperson’s opening remarks
The Chairperson welcomed the Deputy Minister for Economic Development, the Hon. Enoch Godongwana, who would deliver the presentation. He announced that the Department had been engaged already to appear before the Committee in the coming week to brief the Committee on the Green Paper on Climate Change. Scientists from the University of Cape Town and the South African Biodiversity Institute (SANBI) had also been involved to bring scientific facts that underpinned climate change to the discussion. He mentioned that there would be a conference on 01 and 02 March 2011 which would help the Committee with the green paper and that a fact finding mission had been arranged for the Kuyasa Clean Development Mechanism (CDM) project in Khayelitsha. He invited the Members to submit their names if they were interested in attending.

The Chairperson also welcomed a delegation from the Indian Parliament which was visiting Cape Town.

The Chairperson remarked that the New Growth Path prioritised job creation which was emphasised in the Presidential Speech. He challenged the two Departments falling under the Committee to put forth plans on how to make the new plan a reality. He referred to the Department of Water Affairs infrastructure budget that had doubled from the previous year to the current year and asked how that could be translated into job creation.

Department of Economic Development (EDD): Briefing
The Deputy Minister for Economic Development remarked that 2011 had been declared the year of job creation and that it was important for all Government Departments to be in line with the priority in order to respond to the problems of unemployment and distribution of income. South Africa generally had a positive economic outlook. The rise of the BRIC group of countries, namely, Brazil, Russia, India, and China, had changed the global picture. He spoke of climate change and the new massive green industrialisation wave, asking how South Africa should move forward with innovation in such areas. He referred to the example of China taking the raw materials to produce steel and then exporting steel back to South Africa. That picture needed to change. The rail lines in Africa indicated the presence of economic activity hence rail lines needed to be expanded.

He said that the New Growth Path was trying to turn the challenges around into opportunities as they were part of the same thing. The approach was to identify the key job drivers and what would be needed to create jobs and investment, facilitating broader growth in the private sector as well. He referred to the wide misconception that Government needed to create all the jobs saying that Government’s role was to facilitate all sectors to create jobs. The job drivers identified in the New Growth Plan included: Infrastructure, Main Economic Sectors – Agriculture, Agro-processing, Mining and Beneficiation; Manufacturing, and Tourism. There were also opportunities in the New Economies namely the Green Economy, Knowledge Economy and Social Capital. He compared South Africa to China in the sense that South Africa had far more minerals than China but lacked the capacity to exploit them. In order to move the job drivers forth, an enabling environment needed to be created through policies. Therefore, the Government needed to look at the existing policies to see if they were going to help it move forward and if not, to make changes. He emphasised that training was at the centre of the New Growth Path. He pointed out that in 1975 there were 33 000 registered apprentices, all white people. In the year 2000, there were only 3 000 apprentices of all races. Such statistics were sending a message to ensure every facility would be used to acquire skills. He gave the example of a young person in Soweto who had graduated from a Further Education and Training (FET) college but could not get a job because he had no experience. Part of the plan was to link the FET training with the practical side in order to make better artisans and ensure they became employed. He explained that the reasons of the sharp decline of apprentices from 1975 to 2000 was due to privatisation and cost cutting measures which affected training as it was one of the first items cut on the budget.  It would be important to avoid inflation pressure and therefore macro management needed to be in line with the growth objectives. In terms of resources, the Government was making available resources to ensure the realisation of the plan to mobilise all forces to deal with poverty. The electricity supply would then need to be increased, likewise the water supply. He spoke of lowering the regulatory burden that sometimes hindered action. An example was the Environment Impact Assessment (EIA) which was brought to his attention by an investor in France who informed him that it was taking up to two years.

The Deputy Minister concluded that South Africa needed to find consensus on job challenges and agree on how it would be done and to have a sense of responsibility as a nation towards such a commitment.

Discussion
The Chairperson related an encounter he had with a business man trying to open a fish bone meal factory in the West Coast whose efforts were hindered by the EIA which he said was taking up to one and a half years. He urged the Departments under the supervision of the Committee that they needed to look at the presentation slide by slide and see how they would fit in with their plans especially in the area of job creation. He pointed out that one of the problems in the work of Government on cross cutting issues was that there were no protocols on how the different Departments could work together and suggested that perhaps one needed to be developed, to be approved by Cabinet. He asked the Departments to look at the New Growth Plan in three major areas:  regulatory framework – developing the protocol to work on cross cutting issues; address the backlogs, for example, to count the cost of not having water, for example, in a certain area or roads; and actual jobs in that if the infrastructure budget was doubled, how would that affect job creation in the next three years. He urged the Departments to work closely and keep in touch with the Department of Economic Development in order to open up the bottleneck that existed.

Mr G Morgan (DA) was concerned about the separation of the environment from the economy instead of integrating it into all areas of society. He pushed for the integration of all things to do with the environment as the link was crucial that what was good for the environment was good for the economy. The environment could also be a barrier in economic growth as in the case of South Africa whose carbon footprint was in deficit because resource usage was at a rate faster than that of renewal and where there was a dire need to go back into positive. He pointed out that resourcing EIA practitioners was an important consideration in resolving the delay in EIAs. He spoke of 105 vacancies that needed to be filled. If some of the procedures that were too bureaucratic did not have enough people to serve them, then it created further problems. It would be important to have a balance in terms of EIAs so that they do not end up being processed too fast and risk negative environmental consequences down the line. He asked the Department if there was any possibility that some areas could be declared mine free and therefore not open to applications. He also spoke of the importance of considering the carrying capacity of each area as an area such as Gauteng had endured 140 years of mining and the consequences were severe as could be seen in the present. He advised the Department that the aim should be to strive for the whole economy to be green and not delineate the green economy as a component of the economy. He asked the Department to also consider the carbon economy which could be a barrier to growth. An example was the aviation tax for carbon in the European Union which affected the SA economy as it affected tourists and export to the EU countries. He asked the Department to look at indicators like how many jobs per carbon emissions and per gallon used of water, and to look at the quality of water.

Mr P Mathebe (ANC) asked if there was a unit that would enforce compliance by all Government Departments. He also referred to the example of China and asked if assistance could be rendered in terms of skills development in this area. He spoke of the Competition Commission which rendered partnerships for a company with locals in acquiring forests. This was unfair.

Mr L Greyling (ID) agreed with Mr Morgan and said that a mindset change was needed in order for the economy to be seen as a subset of the environment and not the other way round and that in order to have sustainable growth, it was also important to look at the resources above the ground. He urged the Department to look at energy efficiency and how to maximise energy savings. The plan also needed to take into account peak oil as a trip switch which seemed to be repeating pushing up the prices of food and the cost of living.

Mr J Skosana (ANC) asked to unpack the relationship with China, India and Brazil and see if there was a mechanism to make relations with such countries to assist with skills development. He also asked about the area of land reform and how far it had been considered in job creation.

Ms H Ndude (COPE) remarked that South Africa was seventeen years into its democracy and that the Government should stop pointing fingers back at apartheid for the problems but to take responsibility for things not going right. Job creation needed some bold steps from the Government side so that job creation would not just go into another plan without being implemented. She asked for the consideration of the mass migration into urban areas from rural areas and that the Government needed to prioritise rural infrastructure. South Africa also needed to reclaim the status it had in terms of exporting food as it was now importing food from other countries. She blamed the low number of artisans on the Government closing down the Technical Vocational Schools that were teaching the skills people needed. She said the Government alone could not create jobs but the mixed messages coming through was also not good for the private sector and the investors as the Government seemed to be ducking and diving on their position on nationalization affecting investor confidence. She urged the Government to assure investors that what happened in Zimbabwe would not happen in South Africa. She also suggested that the Government should launch a five year migration commitment to the green economy.

The Deputy Minister admitted that he was a sceptical environmentalist as he felt that what confused the debate on the green economy was a matter of definition and they were really not apart. He said most of the issues raised would contribute towards improving the plan. He agreed to suggestions to strengthen and enforce management and coordination of the plan. He assured the Members that the strategy for processing minerals was something the Department treated as a priority. He thanked the Members for all the useful comments that would be used to improve the plan.

The Chairperson said that the worst thing that happened in Government was not making decisions and those who shied away from making decisions caused progress to stagnate. He said sometimes the environment was blamed for being an obstacle but it was really the systems and mechanisms that were not in place that created the problems. He emphasised again to the Minister that the challenge for the plan was coordination of the different sectors that needed to work together on the plan. He indicated that perhaps by August, the Department would make another presentation on the progress of implementation.

The Chairperson informed the Members that the Director-General, Department of Environmental Affairs, had spoken to him giving an update of the presentation and given her apologies as she had to go to another engagement.

Department of Water Affairs: briefing.
Mr Trevor Balzer, Director General, Department of Water Affairs (DWA) delivered the Department’s response to the New Growth Path Plan. She said that the Department had already started to analyze its role in the growth path but would not do detailed presentations and the Department had already given its report to the Director General, Department of Economic Development, who had added that the EDD would be looking at job creation in the areas of reticulation of infrastructure. He said that he has made note of the three key areas recommended by the Chairperson and would get the Department to work on them. He admitted that water use licenses were problematic for the Department but there was a team back in the office working on plans on dealing with waters license and backlogs.

Discussion
The Chairperson thanked the Director General for the report and said that the Department would be called in again for another presentation sometime in June. He urged the Department to hold regular meetings with the DED in moving the plan forward.

The Chairperson told the Director General that Dr Cornelius Ruiters of the Department of Water Affairs was given the task in the previous meeting to inform Members what money had been invested in infrastructure in the old Bantustans such as the Transkei. He asked the Department to go through a process to determine the criteria for selecting projects. He pointed out that the current allocation of infrastructure followed the need in areas that were already well provided, perpetuating the situation of building infrastructure in areas that did not really need them. The Department needed to have a look at the criteria of a developmental state and what it meant in order to build infrastructure in areas where it did not exist and was therefore needed. Sometimes a new structure such as dams or roads being built spawned economic activities and attracted more people into the area.  He also informed the Director-General that he had asked Dr Ruiters for a database for water projects. He asked if all the tasks could please be followed up and presented to the Committee. The Department needed to invest in a database in order to support decision making.

Mr Skosana asked about the working relationship between the National Department and the Provincial Department saying that the Provincial was currently implementing the will of the National Department and not necessarily attending to provincial challenges and needs.

Ms C Zikalala (IFP) remarked that she would be very happy to see results of building infrastructure in areas such as the Eastern Cape where they were much needed. She also urged the Department to cater to all in terms of job creation and not necessarily just a certain group of people. A better life for all meant everyone not just sections of the South African society.

Mr Morgan wanted to be convinced that there was enough water in South Africa to actually do justice to the new growth path and asked the Department to show how it was going to achieve that. He urged the Department to play a leading role in managing the water resources and in allocations and not just to follow what the other departments wanted. It was important to know how productive different sectors were. It was also important to look at the concept of virtual water – the water that went into the production of goods. Countries in the Middle East were net importers of virtual water and SA needed to look at the value of water such as looking at the crops in South Africa and find out if there were any that did not make sense in terms of water.

Mr Mathebe asked the Department to look at some of the projects in the Eastern Cape that did not have funds. .

Ms P Bhengu (ANC) asked the Department to include the role of municipalities around water issues in the reports.

The Chairperson announced that he had to leave at about 12h55 for an official meeting and apologized to the Departments for not giving them the platform they needed due to the lengthy discussions, but assured them that they would receive a much longer time with the Committee in June and, by then, there would have also been progress with their plans.

Department of Environmental Affairs (DEA): briefing
Ms Nora Nteo, Chief Director: Coordination and Information Management, DEA, said the Department coordinated the National Green Economy work and worked closely with the relevant departments on such issues. The DEA had identified the programmes needed and had also gone out to see how people were doing. The DEA had received 154 proposals for projects that needed funding and the Department had assessed and identified funding streams. The DEA also wanted to upscale existing initiatives in order to ensure the protection of the environment.


Discussion
The Chairperson remarked that the Department of Environmental Affairs had a very complicated policy structure and did a lot of implementation through provinces. He requested the Department to look into what mechanisms existed to harmonise the work with the provinces especially in the implementation of the EIAs. He said that there should be a central place where all the information was collected even if implementation happened in many different places.

Mr Morgan referred to his earlier point about the environment being treated separately and asked the Department to try to ensure that the green matters were integrated into everything so that people did not hold the notion that environment and green meant only the DEA but referred to everyone.

The Chairperson apologised to the Departments for the short time frame they were given to make their presentations and said that it was important for all to listen to the Department of Economic Development in order for all to see what it wanted to do. He said that if elections were in May, then there would be a chance that they would meet again in June, preferably for a whole day, to go over the Departmental plans. It was important for the DEA to look at how the Department operated so that it dealt with much more than creating jobs and it also needed to look at what obstacles the Department created affecting growth. If the DEA was carrying the burden of the regulatory framework and EIAs were taking too long, then it was not a fair race.  

The Chairperson urged the DWA to look at its leadership, budget and extra spending and that both Departments needed to rethink such issues. In June, when there will be further engagements, the Committee and the Departments would need to look at how to create a favourable environment in which to operate.  He reminded the Committee again that the green papers would be presented in the coming week and that Members would not be sitting on Friday.

The meeting was adjourned.