Minister in The Presidency: National Planning Commission on Diagnostic Report

Energy

22 August 2011
Chairperson: Mr S Njikelana (ANC)
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Meeting Summary

The National Planning Commission (NPC) presented its Diagnostic Report to the Portfolio Committee on Energy. The briefing included the background to the establishment of the Commission on 11 May 2010.  The aim of the NPC was to take a broad, cross-cutting, independent and critical view of South Africa and formulate a long-term national plan for the country.

The key challenges faced by South Africa included the high rate of unemployment; the high disease burden; divided communities; uneven public service performance; spatial patterns that marginalised the poor; poor educational outcomes; increased corruption; crumbling infrastructure and a resource-intensive economy.

The growth in the labour force had outstripped employment creation and many workers lacked the skills demanded by a modernising economy.  The Commission had considered recommendations to address the demand for energy.  The ailing health system was confronted by a massive disease burden and the HIV/AIDS rate was significantly higher in South Africa than in most other countries.  The country’s performance on a number of health indicators had actually deteriorated and the public health system was in danger of collapse.  The major concern was the massive shortage of skilled staff.  Private healthcare was inefficient and costly.  The standard of education remained poor.

Corruption undermined State legitimacy and service provision. After declining post-1994, corruption was once again on the rise. Efforts to combat corruption were sporadic and ineffective.  Despite the significant changes since 1994, South Africa remained a divided society.  Divisions between the different race groups, the rich and poor, men and women, the unemployed and workers, different languages, urban and rural areas, workers and bosses, skilled and unskilled workers, importers and exporters remained.

 A national dialogue involving all South African was required to arrive at solutions that were credible and practical.  All sectors of society had to be involved in the process. The country needed bold leadership from leaders throughout society, a sense of collective responsibility and a long term perspective.

The Commission would release detailed plans for specific sectors or areas of policy on an annual basis.

Members welcomed the report and suggested that age was included in the list of differences that divided the country.  Members commented on the impact on the economy caused by differences between workers and employers.  The high unemployment rate continued to have the most impact on black South Africans.  Despite the introduction of legislation to combat corruption, incidents of corrupt activity continued to escalate.  Members asked the Commission to assist with developing a strategy to shift the transportation of freight from roads to rail.

Meeting report

Briefing by the National Planning Commission (NPC) on its Diagnostic Report
Mr Kuben Naidoo, Head of the Secretariat of the National Planning Commission presented the briefing to the Committee (see attached document).

The President appointed the Commission on 11 May 2010. The aim of the NPC was to take a broad, cross-cutting, independent and critical view of South Africa and help to define the South Africa we seek to achieve in 20 years time. The Commission had to map out a path to achieve those objectives by putting forward well researched evidence and clear recommendations for government. It had to work with the broader society to draw on the best expertise and consult with relevant stakeholders. The President’s reason for appointing the NPC was that many successful countries had long term national plans in place.  The South African Government had often taken a sectoral and short-term view that had hampered development. A long-term and independent view would add impetus, focus and coherence to what needed to be achieved in South Africa. The establishment of the NPC fulfilled the promise to the people of South Africa that the Government was building a state that would grow the economy, reduce poverty and improve the quality of life of all South African citizens.

The purpose of the NPC was to develop the country’s long-term vision and national strategic plan. The Commission had to draft a vision statement for 2030 and produce a development plan for how that vision would be achieved. The Commission had to present reports on issues affecting long-term development. The entity had to be objective and critical where necessary. Given its advisory role, the Commission needed to convince the country and Cabinet of its arguments through evidence, well-considered proposals and ideas that were tested with the public and experts.

The key challenges faced by South Africa in the elimination of poverty and reducing inequality were that too few South African were employed; the high disease burden; divided communities; uneven public service performance; spatial patterns that marginalised the poor; poor educational outcomes; corruption; crumbling infrastructure and a resource-intensive economy.

The high rate of unemployment was driven by various factors. The growth in the labour force had outstripped employment creation and many of the workers lacked the necessary skills demanded by a modern economy. Poverty and inequality were largely driven by unemployment.  The proportion of people below the poverty line had declined from 53% in 1995 to 48% in 2008, but was still unacceptably high. Education had undergone several broad reforms but access to education and female participation in the economy had not improved significantly. There were huge variations in education outcomes, depending on school type. Apart from a small minority of schools, the quality of public education remained poor. Only 1% of African schools were top performers in high school certificate results, versus 31% of formerly privileged schools. The quality of education for poor black South Africans continued to be substandard.

The country had under-invested in its infrastructure for over a generation. Development was hampered by too little investment in new infrastructure and a failure to maintain existing infrastructure. The poorly located and inadequate infrastructure limited social inclusion and faster economic growth.  The settlement pattern was problematic and the poorest communities lived either in the former homelands or in areas that were far from where the jobs were. There was a failure to coordinate the delivery of household infrastructure between provinces, municipalities and national Government authorities. People could either be moved to where the jobs were or jobs could be moved to where the people were.  The reversal of the effects of spatial apartheid would continue to be a central challenge for decades to come.

The Commission considered making various recommendations regarding the energy issues, such as balancing the domestic and export interests in coal. The ailing health system confronted a massive disease burden and the HIV/AIDS rate was significantly higher in South Africa than in most other countries. South Africa’s performance had actually deteriorated in a number of health indicators. Given the severe public health challenges, the South African health system was in trouble and the public health system was in danger of collapse, partly due to policy mistakes. The major concern was the massive shortage of skilled staff.  Private healthcare was not a solution as it had proved to be inefficient and costly.

The performance of the public service was uneven.  There were three major factors driving uneven performance on service delivery, i.e. policy instability, organisational instability and capacity/skills deficit. The South African public service had to improve on consistent long term thinking and implementation. Corruption undermined State legitimacy and service provision. This was mainly due to weak legislation.  A lack of municipal oversight, low social mobility and high inequality had led to the disintegration of social ethics and values and efforts to fight corruption were fragmented and institutions were often weak.  After declining after 1994, corruption was once again on the increase.

Despite the significant changes made since 1994, South Africa remained a divided society. There were several fault lines that persisted, with the racial divide being the most ubiquitous. Other significant fault lines included the gaps between rich and poor, men and women, the unemployed and workers, the language divide, urban and rural, workers and bosses, skilled and unskilled workers, importers and exporters.

A national dialogue involving all South African was required to arrive at solutions that were credible and practical. Tackling the challenges would require the involvement of all sectors of society. The country needed bold leadership from leaders throughout society, a sense of collective responsibility and a long term perspective. The Commission would release detailed plans for specific sectors or areas of policy on an annual basis.

Discussion
Mr S Radebe (ANC) said that the NPC had highlighted most of the challenges faced by country and had come up with good solutions. It was good to note all the issues that kept South Africa a divided society but no mention was made of the differences between the various age groups.  The thinking of the younger generation was different from that of the older generation. He said that divisions between bosses and workers affected the economy and asked what could be done about it.

Ms B Blaai (COPE) said that black people accounted for the majority of the unemployed and it appeared that the situation in many townships had not changed. This issue was a huge concern and she asked if the NPC had any plans for changing the situation.

Mr J Schmidt (DA) said that it was clear that all forms of energy were needed by the country.  He applauded ESKOM for the damage control the utility had undertaken to mitigate the energy challenges. South Africa needed to focus more on renewable energy and the clean fuel strategy (such as bio-fuels) needed to be effectively regulated. He understood the debate of bio-fuels versus food security but mentioned that excess maize production could be used to enhance fuel security in the country. He highlighted struggling municipalities as a major concern.

Ms B Tinto (ANC) appreciated the approach to balance the export of energy and the domestic interest.  At times, the country exported too much energy and there was insufficient supply available to meet internal demand. The high unemployment rate did not necessarily indicate that Government was failing.  There were not enough jobs for all the people in the country. The issue concerning water needed to be addressed.  Many dams were overflowing but people living near the dams had no water whilst mines used a lot of water.

Mr P Dexter (COPE) said that most would agree with the diagnostic report but it did not include anything new.  He understood that the NPC mainly played an advisory role to Government.  He asked what the next step was and how the issue of delivery would be addressed.

Mr K Moloto (ANC) said that legislation had been passed to address the issue of corruption but it would appear that implementation remained a challenge. His major concerns were the corruption prevalent in infrastructure procurement and certain tendencies in society that encouraged corruption. There were certain perceptions that older people should be removed from positions to make space for the youth. He asked the NPC to assist in developing the strategy to move the transportation of freight from road to rail.  The over-utilisation of the road network to transport freight resulted in major damage to the road infrastructure.

Mr J Selau (ANC) thanked the Commission for the briefing and said that it gave hope for the future of the country.  He hoped that the meeting with the NCP was the beginning of a good working relationship with the Commitee.

Mr Trevor Manuel, Minister in The Presidency: National Planning Commission, commented that the presentation highlighted a leadership challenge in most of the areas of concern.  The issues that had been raised deserved serious attention.  The high unemployment rate was exacerbated by a lack of skills and education. Corruption was a serious issue, affecting the entire country.  All South Africans should account for the wealth that had been accumulated.

Mr A Eberhard, Commissioner, NPC advised that the energy issue was high on the agenda of the NPC. The country might experience electricity blackouts during spring because that coincided with ESKOM’s maintenance period. Bio-fuels contributed towards the countries energy supply but the sector was not as large as in countries such as Brazil. The electricity distribution networks were of critical importance and the focus was on the 12 largest municipalities. The focus would be on adequate ring fencing measures, maintenance and the other issues that enhanced delivery of services. The coal exports were mainly to China and India. Coal was viewed as a valuable commodity but the exported coal was of a lower quality.

Mr Naidoo said that there was a direct correlation between the level of education and the level of employment amongst the youth.  It was a fact that graduates got better jobs than non-graduates. The Commission would include age as one of the notions which divided South African society. The intention of the Diagnostic Report was not to include anything new but to highlight the challenges which currently existed and to provide advice on how problems could be overcome. The 2010 FIFA Soccer World Cup had proved that the country could do well regarding service delivery and the same attitude could be used to enhance the lives of locals in future.

The Chairperson said that the Diagnostic Report served a psychological purpose in the sense that it had forced the Committee to take a more holistic view. He appreciated the significance of the NPC.  He suggested that it would be helpful if future briefings included the planning models of other countries. There appear to be more focus on food security than on water consumption.  The briefing made little mention of the issue of energy. He asked why the focus was on adaptation to climate change. He asked what the relationship was between the NPC and the other spheres of Government, in particular if the NPC played an advisory role to the provincial and local government authorities.  He asked for clarity on the comment concerning policy instability.

Minister Manuel responded that the NPC had considered various planning models, in particular the models developed by emerging economies such as Brazil, China and India.  The models varied from country to country. Tough decisions had to be made regarding water and energy consumption and strong leadership was needed in that regard. The NPC did not write the script on climate change issues but had to follow what already existed. The NPC would like to have more influence over the advice given to provincial and local government authorities.  A national framework was currently not in place to guide the process at all levels of government. Certain policies changed from time to time and the country had to draw a distinction between matters of policy and implementation. The NPC had a strong focus on engaging young people because they would be the decision makers of the country by 2030.

Meeting was adjourned

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