Hansard: Appropriation Bill : Debate on Vote No 32 – Trade and Industry
House: National Assembly
Date of Meeting: 29 Jun 2009
Summary
No summary available.
Minutes
UNREVISED HANSARD
EPC – COMMITTEE ROOM: E249
Tuesday, 30 June 2009 Take: 341
TUESDAY, 30 JUNE 2009
PROCEEDINGS OF EXTENDED PUBLIC COMMITTEE – E249
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Members of the Extended Public Committee met in the Committee Room E249 at 10:00.
The House Chairperson took the Chair and requested members to observe a moment of silence for prayers or meditation.
APPROPRIATION BILL
Vote No 32 - Trade and Industry:
The MINISTER OF TRADE AND INDUSTRY (Mr R H Davies): Chairperson, ladies and gentlemen, CEOs of COTII institutions and senior officials, there won't be an opportunity in the time allocated to me to indicate the broad policy directions that we want to follow in detail.
We will therefore be circulating a longer document which contains the usual kind of departmental statement which takes place on these occasions. What I am going to do is merely to highlight a number of points.
We indicated at the beginning of the speech that there are two considerations that will shape our approach to the work of the Department of Trade and Industry in this new term: The first is the electorate mandate that is given to the ruling party. This enjoins us to create decent work and sustainable livelihoods on a scale that will enable us to halve unemployment by the year 2014. We indicate in this speech that this, in our estimation, enables us to bring about structural change in the economy.
While we have grown our economy and achieved some important goals in the last 15 years, we have not overcome a number of the structural impediments to our economic growth in a way that is enabling us to achieve those objectives. We therefore believe that the mandate requires us to overcome these structural shortcomings and to be bold, focused and decisive in our approach to tackle deep-seated challenges facing us.
The second matter which will shape our policy is the context of the global economic crisis. We point out in the paper that the crisis, which began as a financial crisis in the advanced industrialised countries, has now become a deep, real economy and jobs crisis that impacts across the entire globe, including South Africa.
We indicate that the industrial sector has been particularly hard hit by the crisis - 23 of 39 industrial subsectors are contracting - and that this is imposing some very real challenges to avoiding the possible threat of deindustrialisation which could emerge in this context.
We indicate that the way in which we are going to respond to the crisis is shaped by the framework agreement that was reached in dialogue with social partners and adopted in February 2009, and which was reiterated as the central pillar of our response by the President in his state of the nation address.
We indicate that there is a need for clear, co-ordinated economic policy to achieve our mandate objectives and to achieve the response to the crisis. And we therefore welcome the new structures of government, the Economic Planning Commission in the Presidency and the Economic Development Department, which we believe can make important contributions to achieving the kind of coherence we need.
As the Department of Trade and Industry, we have identified industrial policy as a central plank of our response to the crisis and our efforts to place the economy on a new growth path. The completion and publication of a comprehensive National Industrial Policy Framework, NIPF, and the first Industrial Policy Action Plan, Ipap, in 2007-08, marked a significant achievement in our evolving efforts to advance industrial development in South Africa.
The NIPF was widely consulted on with stakeholders and within government, and it outlines our vision approach and the guiding principles to industrial policy. It emphasises the strategic objective of altering the trajectory of industrialisation and economic growth to ensure more sustained employment creation; to defend, diversify and upgrade the industrial base; and to shift to high-value-added and knowledge-based industries, among other objectives.
It calls attention to the need for synergies and linkages between various policies and programmes in different arms and agencies of government. And it also emphasises a self-discovery among stakeholders to identify measures that we must take in our common effort to implement identified programmes.
When we launched the first Ipap, flowing from the framework in 2008, we identified a number of lead sectors and also some cross-cutting actions that were necessary. We began logically by choosing a number of the easier-to-do things at both the sectoral and cross-cutting level.
In the capital goods and transport equipment sector we launched the foundry and tooling initiatives and began work on the wood furniture-making projects identified in the first Ipap. We also introduced important amendments to the Competition Act.
Key achievements of our first Ipap include the completion of work on a new programme for the automotive sector - the leading manufacturing sector with critical supply linkages to about a dozen other subsectors. The Automotive Production and Development Programme will replace the current Motor Industry Development Programme.
We have also developed a new programme for the leading labour-intensive sector in the form of the Clothing and Textile Competitiveness Programme.
We are now at the stage where we are preparing for the next Ipap. This will be a three-year, rolling programme aligned to the MTEF. The next Ipap will be ready in January. In preparing the next Ipap, we have concluded that we can no longer simply choose the easier-to-do things that are identified in sector strategies. The reason for this is that if you choose the easier-to-do things you may miss some of the things that need to be done. We are accordingly preparing for a higher impact Ipap.
Preparing for this has required that we address a number of critical capacity issues. I have been saying that delivering a higher impact industrial policy requires acting on three Cs and an R - cadre development, co-ordination, on-going consultation with stakeholders and appropriate resourcing.
We have recently appointed the Deputy Director-General for Industrial Development and we are busy filling a number of critical posts in industrial sector units. We will also be approaching higher education institutions to develop courses and training opportunities that can contribute to industrial policy cadre building.
In the meantime, we will be undertaking a number of important initiatives. We will be working to broaden the Automotive Production and Development Programme to cover catalytic converters as well as heavy and commercial vehicles. We will also be redoubling our efforts to ensure that we must have an optimum industrial policy response to the infrastructure investment programmes that are underway, in order to ensure that we maximise the opportunities they create for local industrial development.
We will be developing a new model for industrial financing and continuing to work on all of the lead sectors as well as developing in conjunction with the Department of Agriculture, Forestry and Fisheries a comprehensive strategy for agri-industries. This is all work which is ongoing and will be taking place between now and January.
While scaling up the impact of industrial policy requires programmes to be within affordability limits and properly resourced, it also requires us to be more strategic and smart as regards aligning the general programmes and activities of government and public entities to the overarching objectives and priorities of industrial policy.
We need to use more actively the instruments of public procurement to advance industrial policy objectives, this includes procurement by state organs governed by the Preferential Procurement Policy Framework Act. We will be exploring together with our colleagues in government how we can build in stronger mechanisms to support local industrial development while also promoting BBEE.
We need to ensure that we maximise the opportunities presented by procurement arising from the R787 billion infrastructure programme, and ensure that we meet the target of reducing the imported content of the programme from 40% to 30%. This will also help us to reduce the high current account deficit and ensure the sustainability of the infrastructure build programme.
We identify in the speech the need for a more strategic role for development financial institutions and for public entities, and to align them more closely with industrial policy. This includes institutions that are involved in standards quality assurance and metrology. We want them to be playing a more strategic role in advancing industrial policy objectives. They can do so by locking in our exports to markets, which require high standards, and locking out low-quality and unsafe imports into the domestic market. We want to see the competition authorities acting more energetically and we record that despite recent successes, anticompetitive conduct in the economy remains disturbingly pervasive.
We hope that the Competition Amendment Bill passed last year, which we are hoping will soon be enacted, will allow the authorities to proceed against individual directors or managers taking decisions leading to anticompetitive conduct. We believe this will be a strong signal that we intend to enforce real compliance with competition law.
We want to achieve an alignment between trade policy and industrial policy. In this regard, we need to make it clear that we need industrial policy to inform trade policy, including tariff policy.
We have already taken a number of decisions on the basis of evidence presented to us to lower and, indeed, eliminate tariffs on upstream, capital-intensive, now mature industries, which produce inputs that are important cost items for the downstream industries.
We've taken some decisions and there are some more decisions of this nature in the pipeline. But if on an evidence-based approach we conclude that it is necessary to reduce or even remove duties, we will continue to do so.
At the same time, where processes of self-discovery and the development of the sector strategies lead to the conclusion that some particular industry or sector requires some increase in tariffs, and we have the space to do so under WTO rules, we must have the courage to provide such support. We will also be taking steps to crack down on underinvoicing and illegal imports.
We are taking measures and consulting on how we can actually significantly upscale our efforts in this regard. There is growing evidence that underinvoicing and illegal imports are becoming widespread and pervasive.
We are working with Sars and stakeholders to crack down on such practices. Make no mistake, we are looking to crack down on the big fish and we will prosecute anyone we discover with the full force of the law.
Turning to trade negotiations, we continue to be actively engaged in the Doha Round and have became aware recently of efforts to relaunch the Doha Round negotiations after the period of hibernation.
Our focus in the Doha Round negotiations will be to continue working with like-minded countries to ensure the Round is concluded on the basis of the developmental mandate on which it was launched. For us, the content of an agreement is as important as the fact of its conclusion, and we insist that a successful conclusion can only be one in which the outcome is proportionate and significantly addresses the imbalances and inequities in the global trading system that disadvantages developing countries.
In particular, we insist that South Africa cannot be expected to undertake disproportionate industrial tariff cuts that will undermine our industrial policy and employment-creation objectives. We are making every effort to ensure that this issue and concern is placed in the foreground in the current discussions.
The global crisis has also highlighted the importance of strengthening intraregional co-operation and South Africa remains committed to deepening regional integration in Southern Africa in order to strengthen mutually beneficial intraregional trade and development.
This, in our view, requires an agenda that does not exclusively focus on unrealistic timetables for formal trade integration arrangements, but on co-operative programmes to build regional productive capacities and promote regional infrastructure development. These are, in fact, we believe, the vital prerequisites for further steps in trade integration in developing regions.
We remain concerned that the interim Economic Partnership Agreements, Epas, now signed between some members of the SADC-EPA configuration and the EU, could undermine regional integration. I am happy to say that we recently had a discussion with the European Commissioner, Baroness Ashton, who has agreed to work with us on one of the possible impediments, which is the question of rules of origin.
However, we still have to confront the possible impact of some of the provisions in the interim Epas that could have a negative impact on Sacu. Our request is to try to minimise the damage that this could do to Sacu. We are going to focus on South-South trade with some of the major partners. We have a section on regulatory support industrial policy.
On broadening the economic participation, on BEE, we are pushing for the establishment of the BBBEE Advisory Council and for Khula to be moving on its direct programme of establishing a retail presence. We are also looking forward to the Small Enterprise Development Agency, Seda, now having a period of stability and enhancing its services to small business.
Finally, we are saying that the scale and depth of the work requires that we have the necessary strategic and technical capabilities within the Department of Trade and Industry. Ours is not a quest to set up the organograms or major structures, but the motto that we have adopted is that of continuous improvement.
We need to continue to strengthen co-ordination mechanisms within government. Therefore, we are very strongly supporting the work of the Ministry of Economic Development. We will continue to work at fostering strong partnerships within the Nedlac framework with the social actors.
In conclusion, let me thank the Deputy Ministers for their support, the Department of Trade and Industry and the team for their support and serving with me in the short time that I've been in office. As I've said, anything else I would want to say is in the longer version, which we distributed to the hon members. Thank you very much. [Applause.]
Ms J L FUBBS
END OF TAKE
THE MINISTER OF TRADE AND INDUSTRY
Ms J L FUBBS: Chairperson, hon members of this House, fellow South Africans, men and women, comrades and compatriots.
Every morning in Africa an impala wakes up knowing that she must run faster than the lion, or die; every morning a lion wakes up knowing he must run faster than the impala, or starve. In fact, no matter what, when the sun rises in Africa, you'd better start running!
Having said that, it is quite clear that in this fourth term of a people's democracy, of a nonsexist, nonracial, participatory democracy, all elected politicians in this House are called upon by all South Africans, especially the most vulnerable, to hit the ground running. We've been in training for 15 years; we are actually ready for the Olympics.
As Chairperson of the Portfolio Committee on Trade and Industry, it is, indeed, an honour to present this Committee's report to the House and to all South Africans. May I add that it fully supports the Framework Agreement that outlines South Africa's response to the global crisis as we shift our focus to stop deindustrialisation now and create employment opportunities. We can no longer allow employment to be a second-class beneficiary. We will ensure that employment will, actually, become a priority in our country and will be targeted not only by the Portfolio Committee on Trade and Industry, and other related ministries, but by South African business as well.
I must add that the Committee was united in its commitment to ensuring that the objectives in DTI could be achieved in targeted outputs and outcomes in order to build local industries for sustainable job creation.
Hence, our focus during the very limited time we've had, was to see how the new industrial framework, the negotiations and the position on international trade and consequent agreements, both nationally and regionally, as well as the plethora of agencies that exist in DTI, ranging from the regulatory to the agreement side and the Trade and Industrial Policy are sufficiently synergised to achieve this.
President Zuma has made it clear that it is synergy and collegiality and no longer working in silos that is going to govern the running of this country. There will be no more prima donnas at this point in our government; no longer. You can take to the stage for that notwithstanding all that we have said, so far. May I say that the members of this Committee from all parties will, quite understandably, address these issues from their politically nuanced positions.
Notwithstanding this, we have agreed that the implementation of special sector programmes embracing industrial trade and other measures should be sufficiently backed by resources. In this way, manufacturing, mining and other vulnerable sectors can be strengthened with the ultimate aim of retaining, retraining and increasing jobs in sectors such as clothing and textiles, automobile and components and the food industry. We need to move away from the constant refrain and mantra of retrenchment. We have to exercise creativity in the industrial and commercial sector. Let's try to sing another tune.
South Africa needs to go beyond the production of goods at any cost purely for export and focus instead on adding value. In this way, the downstream markets can be developed and beneficiation will organically broaden participation in the economy. We recognise, more than ever, the need for organic, dynamic solution rather than a mechanical approach to the global crisis.
I see, Chairperson, that my time is expiring and I don't want to leave out the committee's recommendations. But may I add that during that rugby game Morné really must have revitalised South Africa with fresh hope, again, when he gave that ball such a skop [kick] and, actually told the Lions, "Listen here, this is not a country to be beaten." And we going to say the same as we now chart this new course forward.
We will not be beaten by any global crisis that the West has seen fit to burden us with. We can, together, work through this as South Africans and in the end we shall overcome, in the same way that we overcame apartheid and every other negative that the colonialists and imperialists thrusted upon us.
But let me first recall that I'm the Chairperson of this Committee and try to point out some of the very interesting conclusions we reached. As you know that DTI came to us – the Ministers of Economic Development and Trade and Industry – and these are some of the conclusions we reached. We would like them to brief their respective committees to provide clarity on the roles of their departments. And we were given this assurance that, indeed, this will be done within four months of the tabling of this report.
We will also like the DTI to brief the Committee on the review and implementation of Ipap because even the DTI has acknowledged that Ipap needs a radical review before we can implement a very sound industrial policy framework. We don't want to put through action plans that don't achieve what the policy intended.
The DTI presented a Draft of Trade Policy Review to the Committee after engaging with the Cabinet. And we have heard quite a lot on the Khula issues, Lotteries Board, the several COTTIs, the National Small Business Advisory Council and the gambling board.
Let us at this point remember that none of us will ever gamble our way into billionaire status - one or two will - so let's stop being inspired by these gambling boards that come before us. I told them the other day - and the Committee agreed – we are not here simply to make legislation; we will repeal it.
As Chairperson of the Committee I want to thank the members for working so cohesively together, for their dedication, and the support staff as well. I would also like to thank the Minister and the administration of DTI, Khula and the IDC, for not bringing us boxes of irrelevant papers, but engaging constructively with us.
But, nevertheless, Chairperson, we want to recommend that this House requests the department to undertake the following: The DTI submits a detailed report on incentive payments and schemes to the Committee within three months of the adoption of the report; submits a review of trade policy; tables a progress report on the development of Sacu/EU interim EPA and the implications thereof for South Africa within six months of the adoption of this report; it further submits a report on the status, funding and development of the nanotechnology and biotechnology research and/or product industry in South Africa; submits to the Committee a report on its plan to alleviate the plight of companies in distress and its involvement in large projects, of which one of them is IDC, one of the agencies; that Khula Enterprise Finance Ltd provides the Committee with feedback regarding the implementation plan of Khula Direct and that it tables a report to the Committee on the profile of the retail finance intermediaries; and further, how it did indeed improve access to finance in the Western Cape, Gauteng and KwaZulu Natal.
We don't want Khula to say it has achieved all that and that is why it's now running to the other six to see what it can do there. But we were impressed with this retail platform because it seems that at last it has become a teenager – you know, its 13 years old - that has found its wings and is starting to do its job. So we really commend Khula for this and we hope that it will, in fact, serve South Africa.
On this note Chairperson, may I say that, as a member of the ANC, I certainly support this Budget Vote before us. But I also stand by the report that the full Committee unanimously adopts it. I thank you. [Applause.]
The HOUSE CHAIRPERSON (Mr M B Skosana): Before I call the next speaker, I think its incumbent on me to keep reminding the hon members not to cross the line between the hon member speaking and the Chair. You are not allowed to do that so I will keep reminding you not to do that. If the speaker is on this side, you may as well go to this side. Hon Professor, you are allowed to cross the floor - particularly, you.
Mr S J F MARAIS
END OF TAKE
Ms J L FUBBS
Mr S J F MARAIS: Chairperson, I want to start off by congratulating Minister Davies on his appointment. My congratulations also go to his deputies and the hon Fubbs as chairperson of the portfolio committee.
The Department of Trade and Industry must be the engine room for economic growth and development, real transformation and empowerment, sustainable job creation and future economic prosperity in South Africa. Minister, you have a very important but challenging task ahead of you and you should not expect the path to be strewn with rose petals.
Rest assured that, where appropriate, the DA will co-operate constructively with you, your department and the portfolio committee in the best interests of South Africa's macroeconomic growth requirements, but be very critical where it is justified. It is not only expected of us to be the watchdogs, but we have the expertise, knowledge and political will to add value to improved service delivery.
We have already experienced constructive co-operation in the portfolio committee and we hope you and your department will offer us the same opportunities.
Afrikaans:
Graag wil ek ook my voorganger, die agb dr Pierre Rabie, bedank vir die goeie nalatenskap waarmee hy ons in die portefeulje gelaat het.
Die DA onderskryf die visie, missie en mikpunte van die departement. Dit gee die algemene doelwitte waarna almal streef en dit kan selfs positiewe verwagtings by beleggers laat. Die toets is egter of dit in die praktyk haalbaar is en of hierdie begroting dit steun.
Die DA het kommer in hierdie verband. Die Uitgebreide Openbare- Werke-program gaan nie permanente werk skep nie en gaan waarskynlik ook nie die werkgeleenthede skep wat die President voorsien het nie. Dit kan ook nie die ruggraat vorm van volhoubare ekonomiese groeiherlewing nie. Met die huidige resessie het ons bepaalde beleid- en aksieplanne nodig wat 'n nywerheidsrevolusie kan ontketen, nie net om broodnodige buitelandse vastekapitaal-investering te lok nie, maar ook om volhoubare werk- en uitvoergeleenthede te skep.
Steun die Nywerheidsontwikkelingskorporasie se strategiese aksieplanne dit of word die NOK net gebruik om voorkeurbedrywe en –ondernemings te steun waarby die ANC en sy maatskaplike vennote 'n belang het? Het die NOK die gedaante van 'n eksklusiewe finansieringsbank aangeneem of is dit steeds daar om strategiese en arbeidsintensiewe nywerheidsektore se vestiging en ontwikkeling te finansier?
Waar is die maksi-arbeidsintensiewe nywerhede soos die Yskors en Sasols van ouds, en die noodsaaklike steun aan die landbousektor? Die relevansie van die huidige aksieplanne en strategieë - die sogenaamde Industrial Policy Action Plan oftewel Ipap - tot die nasionale nywerheidsbeleidsraamwerk moet dringend heroorweeg word om die vereiste holistiese en geïntegreerde steun te verseker.
English:
Another DTI strategic objective in question is the success and effectiveness of the current BBBEE Policy. Most will agree that there's a vast difference between the noble objective of broad-based black empowerment and the reality that it is always the same few who benefit over and over again, mostly on the back of, ironically, the same black communities who are supposed to benefit from this.
It also seems that ownership, which is not easily realisable in the current economic climate, is the only priority, and that education, transfer of skills and sustained improved social welfare of the broader community is not high on the BEE agenda.
We urgently need to review the current BBBEE Policy and objectives if we are serious about transforming our communities to be economically independent with the social and occupational skills needed to support sustainable macroeconomic growth development.
The effectiveness of the National Lottery Board and its distribution trust fund is a matter of huge public concern. In reaction to a question by the DA, the Minister confirmed that the National Lottery Distribution Trust Fund has over the past three years only paid out 28% of the available R8,5 billion to beneficiaries. Accordingly, billions of rands are now available for distribution, excluding the expected millions of rands of interest earned on these retained funds.
We urge the Minister to take responsibility for this embarrassment and poor performance, especially in these tough economic times when charities and the arts and sports federations need the funds to assist the needy, deprived, disabled and marginalised.
Sir, we recommend that you call on credible agents to manage the distribution more effectively, for example, Sascoc, who should and can manage distributions to the sports sector.
We, however, have entities in the Department of Trade and Industry that support economic growth effectively, which we should cherish. Increased support initiatives and incentives must be considered in support of, amongst other things, Itac, inward fixed investment promotions and renewed export development promotions.
Our economy urgently requires to be transformed to again be a net exporter of goods and services to exponentially and sustainably earn much-needed foreign currency to finance the deficit in the balance of payments and all imports in future, and to create sustainable jobs.
Afrikaans:
Die DA het empatie met die oogmerke van hierdie begrotingspos en weet dat indien dit met die regte motiewe en politieke wil aangepak word, dit stukrag aan die noodsaaklike ekonomiese stimulering kan verleen. Minister Davies, jou objektiewe leierskap is egter 'n voorvereiste, ook om die Sadu-dilemma die hoof te bied. Ons wil jou aanmoedig om nie hiervan weg te skram nie. Ek dank u.
Ms C M P KOTSI
END OF TAKE
Mr S J F MARAIS
Ms C M P KOTSI: Chairperson, hon Ministers and Deputy Ministers, let me take this opportunity to congratulate you, Minister, and your two deputies. You have actually grown in this department from being the chairperson of the portfolio committee to the deputy, and now the Minister. Therefore it means you will just hit the ground running, because you are familiar with this department. I would also want to congratulate Comrade Thandi Tobias, with whom I've worked very well in Public Works. I know she's a hard worker.
Nearly R3,5 billion is going to be spent by the department on enterprise organisation and R1,3 billion on empowerment and enterprise development. What has our economy achieved over the years of government intervention through supply-side measures such as cash payments, cost-sharing grants and tax allowances supported by the enterprise organisation programme? What sort of long-lasting investment have we achieved, year on year? How many sustainable enterprises were developed in the past decade? What kind of competitiveness was realised? What kind of new, lasting export opportunities were developed in the past few years, Minister?
I ask these questions because we need to see cumulative growth in manufactured outputs as a result of these massive investments government is making year after year. As Tseko Nell points out in the Cape Times of a few days ago, and I quote:
Our balance of trade and current accounts tell a story of a nation of consumers of imported high-value-added goods, rather than producers of goods and services to supply our own demands as well as those of our neighbours. The recent economic growth trend of about 5% a year was on the back of growth in consumption expenditure of households, rather than increased productive capacity.
Indeed our economy has become a mechanised service sector economy depending on distribution of the heavy imports made from the East. Year after year our manufacturing output has continued to decline. South Africa, which was once an industrial giant on the continent, has now become a shadow of its former self. In another fifteen years we may have very little industrial capacity left. That's a very frightening thought. Unfortunately, that's the direction in which we are going.
This is ironic. At that very moment when we became an integral part of Africa in 1994, we started to slide as a centre of industrial output, whereas Russia, China and India are massively increasing South-South trade among themselves. Did we manage with our newfound solidarity with Africa to increase our vertical South-North trade so as to link Cape to Cairo in a highly developed and fully integrated Africa-wide market?
Brazil, Russia, India and China formally agreed to co-operate closely and position themselves strategically on the global economic scene. This bloc, known as BRIC, is even now extremely active in Africa. Where is South Africa in Africa? How did we position ourselves strategically on the African economic scene?
In respect of enterprise organisation, this honourable House needs a 10-year quantification of, one, new enterprises developed; two, the number of new and sustainable jobs created; three, the extent of regional and continental economic development achieved; four, new export markets developed for South African-manufactured goods; five, the number of raw material beneficiation enterprises set up; six, new long-term investments procured, and lastly, the number of formal trade agreements signed with African countries.
From what I can make out, the department is running on the spot. It seems to be spending much of the resources meant for new enterprise development on supporting individual exhibitions, primary market research and what it calls "inward missions". These are all a type of soft, teddy bear endeavours. There is nothing that is hard and robust. It is sprinkling sugar for the bees to gather rather than planting flowers to attract them naturally so that they can make honey.
Cope suggests that enterprise organisation be subjected to intense scrutiny. A balance sheet needs to be produced to show whether there have been any big "bang for our bucks," as the Minister of Finance is requiring. In all likelihood it would have been more advantageous for our economy if government had spent much more money on starting new enterprises and then sold them off to private enterprises at an early stage for them to develop them further. Development of facilities, for example, for the production of alternative, environmentally friendly energy and the beneficiation of our ores and minerals would have been better investments for us and our children. The money spent would have yielded assets, growth and sustainable jobs.
Incentive programmes, such as those run by the department, are generally self-serving. They rarely exist much beyond the period of the grants. Reports of government over the past decade speak of incentives for take-up by so-called "targeted enterprise". How have these targeted enterprises flourished; what percentage of growth have these enterprises shown; what has been their export contribution; and how many sustainable jobs did they create?
Let me turn to the empowerment of enterprise development. This is another very fine-sounding phrase. This departmental programme has been employing strategies, firstly, to create an enabling environment for small, micro and medium enterprises; secondly, to enhance the competitiveness of local and provincial economies; and lastly, to achieve inclusive shared equity, growth and job creation.
The language employed is still that of wishes rather than results, outputs and achievement.
Chairperson, I would like the Minister to take seriously the issue of provincial development agencies, where many of them such as Wesgro, the ECDC and others have funds that are sitting idle and perhaps are supposed to be creating more jobs.
The other issue to take serious is that the President mentioned in his state of the nation address that we need to look into procurement locally. If we as government, as it is happening in the Free State, are not paying the suppliers in time, how many jobs have we lost in that situation? Because it is us, as government, who are supposed to be the first to see to it that jobs are actually created and kept.
A bold step is needed in that sphere to make sure that when the President speaks action is taken if that is not already in position.
It is of grave concern that there is no clear line of differentiation between the three Ministries of Trade and Industry, Economic Development and the National Planning Commission. We need to be clear on the lines between those three departments in order for us to be prepared to face the challenges in all these departments. I thank you.
Ms S P LEBENYA-NTANZI
END OF TAKE
Ms C M P KOTSI
Ms S P LEBENYA-NTANZI: Chairperson, the global economic crisis which is currently causing so much hardship and suffering has highlighted areas of concern and exposed us to the harsh realities of the global economy. It has also emphasised just how connected the world's economies are; this must be borne in mind when developing an economic policy.
This crisis has caused many businesses to fail and many more are now struggling for survival. Sectors that are so critical to our economy such as the motor, mining and manufacturing sectors have been plunged into crisis.
The saddest result of the recession is the devastating effect that it has had on ordinary South Africans. Thousands of people have already lost their jobs, some of whom are sole breadwinners in their families. Many are not secure in their employment. It has been reported that nearly 180 000 jobs were lost to the economy between January and March 2009. Once again, it will be the poorest members of our country who will suffer the most and be thrown even deeper into the depths of poverty and despair.
The Department of Trade and Industry aims to lead and facilitate access to sustainable economic activity and employment for all South Africans. So, in line with this aim, the department must play a leading role in guiding South Africa through this crisis and in trying to lessen its harsh impact on the masses. It must also be the main player leading us into a positive growth trajectory, once again, by developing and properly implementing policies that will maximise our advantages during times of prosperity and minimise the negative impacts.
It could be argued that during the times when the commodity prices were so high, South Africa did not take full advantage of the situation; and in times of the relevant economic prosperity not enough jobs were created to meet the demands of our growing population. In this regard, the Department of Trade and Industry must look at its various policies and the impact that they have had, as well as identifying areas where they can be strengthened or even changed.
In the long-term, our economy needs to be growing at a higher rate than it has been in the past if we are to make real inroads into the high employment levels and compete with other emerging economies.
Economic reform is needed in order to address the past economic injustices and empower those who were previously disadvantaged. However, government's affirmative action and BEE policies, and manner in which they have been implemented, must be reviewed. They have succeeded in selecting very few of the wealthy while the majority, who were economically ostracised under apartheid, continue to be excluded and have generally not benefited from these programmes.
Programmes of this type need to be more broad-based and benefit as many people as possible if they are to have the intended effect and even attempt to address some of the economic inequalities created under the apartheid regime.
The promotion of small businesses and co-operatives is an area that also needs to be addressed very urgently. It is still very difficult, for example, for the average person on the street to access finance and other support. The support and services offered by the institutions set up to deal with these issues and assist small, medium and micro enterprises, SMME, and co-operatives are not always efficient.
The effectiveness of these institutions and the impact they have on promoting and supporting SMMEs and the growing economy must be evaluated and the areas of weakness must be strengthened. There is much room for improvement in this area.
Hon Minister, this department is crucial to the successful economic development of a poor country, and while the current recession will hamper efforts at economic development and growth it does present an opportunity for the department to step up its efforts to promote SMMEs and co-oporatives, which have the ability to create employment during these tough times. The IFP supports this Budget Vote. I thank you.
Prof B TUROK
END OF TAKE
Ms S P LEBENYA-NTANZI
Prof B TUROK: Chairperson, I'm sure that the House has noted that there's a high degree of consensus in this House on where we are going and what we are doing. The exception, however, which surprises me is the hon member for COPE who wants to start selling of enterprises. I think the DA is a bit embarrassed because somebody has stolen their thunder!
Chair, I had intended to speak about the impact of the global economic crisis on industry, worldwide and in South Africa. But yesterday I caught up with the London Financial Times and that changed my mind about how I should handle this matter. There was an article by Martin Woolf in the London Financial Times about the question of green shoots in the international financial crisis. What he has to say is very instructive because it impacts directly on what our ministers and the departments are proposing and talking about.
Firstly, he says – and this is based on research in the United States that –
The recession that we are going through matches the Great Depression of 1929. Japan's industrial collapse is worse than in the 1930s. There is the question of today's unprecedented stimulus to counter the effect of the collapse. The accumulation of private sector debt is huge in the US and elsewhere; and, therefore, what is required are aggressive monetary and fiscal policies throughout the world.
Now, the question, of course, relates directly to how we handle this budget in South Africa. Do we have enough of a stimulus? Is the infrastructure spend adequate to do what these international economists are saying?
Let me just briefly try and capture what the debate is about internationally. The London Financial Times has been leading a debate on what is called "the future of capitalism" in which the top brains of economic thinking, internationally, have participated: people like Krugman, Martin Woolf himself, and others.
The argument is, if you increase liquidity internationally by way of a stimulus - the way Obama has done - are you able to claw back the unintended consequences of such liquidity when you stabilise the International Financial System? The conclusion the Martin Woolf and others have come to is that you can do so provided that your regime is credible and systems are sound. Now nobody will argue against the case being made, here, that our systems are sound; our financial systems are performing well. And therefore, perhaps – and I say perhaps – we fall into the category of those who can afford a greater stimulus because we will be able to control the unintended consequences. This is the nature of the debate internationally. I recommend that you read the Financial Times because they go into this in detail and I wonder whether we are performing adequately in line of those arguments.
This case is important for us and for this debatebecause, in my view, as Parliament we have to give adequate and, indeed, a great deal of policy space to the DTI and the Minister of Economic Development so that they are able to develop new thinking on how we handle the economy, how we restructure the economy and not be so timid, or intimidated, by the talk about the need for responsibility, caution and prudence at the macroeconomic level.
That is a debate that has to take place in South Africa. I'm going to quote a few very short extracts from international economists to show what they say about how to respond to this global crisis that everybody is talking about.
Kenneth Rogoff, the former chief economist of the IMF, said: "We need aggressive macroeconomic stimulus." Paul Krugman, the Nobel prizewinner, says we need an orthodox remedies and we may run temporary deficits if the economy is depressed. Again, he talks about the need for economic stimulus.
The Conservative Party of the United Kingdom, Margaret Thatcher's party, has issued a statement saying that by rejecting the bankrupt ideology of free-market fundamentalism – I hope COPE is listening –Martin Woolf has made the point that neither fiscal deficits nor monetary expansion is a problem provided. This is the point he made: The system is credible and the unintended consequences can be reversed in time.
An HON MEMBER: [Inaudible.]
Prof B TUROK: Yes, of course, that is the point, provided you can claw it back by virtue of growth, etcetera, etcetera.
The global crisis has operated on three dimensions, not one. It's not merely a financial crisis; it's a crisis of the financial sector, which impacts on the real economy - that is, the manufacturing industry - which in turn impacts on society. That is the point we have to understand.
In the US, Germany and even in the UK, labour is watching the situation as unemployment grows. The argument, now, internationally – and it must also take place here, we mustn't be scared of discussing this – is that there is a financial crisis in the financial sector. This crisis impacts on industry and jobs, as the last speaker so eloquently set out, and that impacts on society.
In South Africa with the huge unemployment we have, we cannot afford to look at the financial crisis purely as a financial crisis. It is also a social problem that we have to take account of. I don't want to go into the details, but one of the interesting things about the social crisis is that Obama's savings package is not only to save business and enterprise. It also feeds into unemployment – they are paying money to unemployed people. They are mopping up the subprime crisis as best they can and so there are interventions also at the social level.
Fortunately, we have a good social welfare system and we are doing quite a lot in that with respect, but we also have to pay attention to what happens to unemployed people and whether we can prevent it. Part of the programmes that the Minister is talking about is certainly to try and limit redundancies as much as possible and put in place solutions or remedial effects. All of this is done in the name of what is now popularly talked about in economic circles, namely counter-cyclical measures, which means that as the economy goes down, government intervenes in order to put humps on the road so that the slow-down is less than it might be; and as the economy recovers, you take a counter-cyclical measure to make sure that the boom doesn't lead to a bust. That's what new economics is all about.
Let me say to the DA, and especially to COPE, that In South Africa government spending is crucial.
The HOUSE CHAIRPERSON (Mr M B Skhosana): Hon member, you have two minutes left.
The CHIEF WHIP OF THE OPPOSITION: You want extra.
Prof B TUROK: Yes, I wish I had more time. [Interjections.]
The HOUSE CHAIRPERSON (Mr M B Skhosana): Order, order, Please!
Prof B TUROK: The point I want to make is that when you attack government and say it's too big, as the DA and COPE tends to do, then you must remember that internationally governments are saving economies. Obama, as government, is saving the USA economy.
The German economy, which is in serious trouble and is a highly industrial economy, with large industries, government is saving that economy.
I have some data, here, on the size of the UK government sector, but I don't have time to go into it. So what I'm saying is this, as our Minister of Economics talk about the needs of government intervention, we don't want to hear cries from the other side that this is some kind of state intervention which is undesirable. It's, now international practice and we are going to do it.
If you look at the latest Reserve Bank's report... [Interjections.]
The HOUSE CHAIRPERSON (Mr M B Skhosana): Order!
Prof B TUROK: Chair, they are taking my time and they are also irritating me. But I do not speak in irritation; I speak in a sense of goodwill, especially as Mr Trollip is here and I want him to hear what I'm saying.
Let me make a last point for you, Mr Trollip, look at the latest Reserve Bank Quarterly Report and you'll find a table on real gross fixed capital formation, GFCF. The rate growth of that in 2008 is: the private sector real fixed capital formation contributed a rate of 6, 5%; the public corporations - that's the state, the developmental state we are talking about - contributed 30,5%. General government contributed 9,7%.
The case is made and I'm sure I've won the debate! Thank you. [Applause.] [Interjections.]
The HOUSE CHAIRPERSON (Mr M B Skhosana): Order, order! You know, hon members, I was hoping that I wasn't going to be calling "Order! Order! Order!" during Minister Davies' debate. Because if members followed the discussions at the economic forum at the Waterfront recently, I happened to hear Minister Davies quoting Einstein and saying that there are people who keep saying the same thing over and over again, hoping that they are going to get different results.
He said that Einstein said that if you do that, it means that is the beginning of insanity! [Laughter.] Now I'm wondering if I am going to be calling "Order! Order! Order!" the whole time if that will not be detrimental to my health? [Laughter.]
I now call the ID, but I don't see any names for them on the schedule. So there's nobody?
Mr R COETZEE
END OF TAKE
Prof B TUROK
Mr R COETZEE: Thank you, Chairperson. Since we have taken back the ID's votes, perhaps we can also take their time! It will give us an extra two minutes.
I wish I had enough time in this debate to respond properly to the hon Prof Ben Turok, but I will simply remind him of that old economic adage that there is no such thing as a free lunch. Lunch has to be paid for, so if the state enjoys a long, boozy, expensive and delicious lunch today, the waiter eventually will come round with the bill and you are going to have to pay the bill. The only way to pay that bill is to have an economy that grows sufficiently and generates enough revenue to pay off the debt and keep investments alive. To do that, you have to put people at the centre of economic policy and not the state.
Let me add that our country has three challenges, and I want to mention this because it is my last debate in this Parliament, if not in Parliament forever. The first thing is to protect the integrity of the Constitution and live its values. That means accepting the foundational idea that the state's power over its citizens must be limited by a Bill of Rights and that key institutions and, most critically the judiciary, must remain independent of the executive and the ruling party.
Secondly, we need to find it within ourselves to overcome the racial nationalism and the bigotry to which it gives rise, because those nationalisms are the taproot of the resentment, suspicion and division that colour our politics to this day.
And more relevant to this debate, we must build a state that facilitates the opportunity of every person to develop themselves and pursue their own ends in life, and not one that controls and directs the lives of South African people in accordance with the ruling party's vision of who they should be and what they should do.
One problem with the ANC's developmental state is that it is not actually premised on Amartya Sen's insight that development should be measured by the extent to which people develop the capabilities to direct their own lives, and not simply by the outcomes - like per capita GDP - that economists conventionally prefer. This puts the state, not the people, at the centre of every policy and, more essentially, of economic policy and, in so doing, retards the very development that it seeks to advance.
The other problem with the ANC's developmental state is that it won't even generate the conventional outcomes it seeks to achieve. Indeed – and somebody needs to say this and it might as well be me – making decent work the objective of economic policy is an unusually striking example of a government setting itself up for failure, for it fails to take into account the economic and fiscal circumstances we face over the course of the next five years.
When this recession finally ends, we are going to experience a number of years of very sluggish growth, both domestically and abroad. Under those circumstances, any work will be a godsend for millions of our people, even if we pursued the most aggressive growth-orientated policies possible.
And so the more adjectives we place before the word "work", the more certain we are to disappoint the millions and millions of unskilled, unemployed people who so desperately need to find a way into employment. And that is not to say that decent work isn't what every human being should have; rather it's a matter of understanding our circumstances and doing what it takes to lift people out of poverty and unemployment and to give them a job - something we have failed to do adequately over the past 15 years.
There are only three things that the state should do with the money it takes from its citizens. The first is to provide them with security of person and property, for that remains the heart of the compact between the state and its citizens.
The second is to provide or, preferably, to facilitate the provision of goods and services which the market cannot. For those with too little income, this includes access to health care, education and shelter, among other things, many of which are outlined in our Constitution.
The third is to provide a welfare safety net for those unable to provide for themselves. This is a moral imperative in a society that values human solidarity grounded in a capacity for empathy. What it should not do is own, and mismanage, on behalf of the people it claims to serve, a long list of failing public enterprises like SAA and Denel, among other thingss. And it should not try to turn itself into a kind of Warren Buffet, deploying taxpayers' capital in industries of its choice in the hope that they will generate a superior return. We will create more jobs, including more decent jobs, if we let people invest their own money.
The aim of industrial policy should be to create the conditions in which enterprise can turn a profit, not to decide for the taxpayer which enterprise he or she should invest in. Only the opportunity state can achieve the developmental outcomes the ANC desires, because its motive force – to use a term those on the other side of the House will appreciate – and its objective is human freedom, the kind of substantive freedom that can be lived and enjoyed daily until our time on Earth is up. And that is a fine objective to be in politics for!
Let me just say that having made that speech, I'm now off to try to help make the state work in the Western Cape. I would like to say that in my very short and good association with the Minister of Economic Development, I would like to wish him well. We might disagree with regard to some of our economic policies and aspect of our economic vision, but I think the approach he has taken to a relationship with Parliament and the portfolio committee is exemplary. And, if anything, at the end of the day, whichever policy or path South Africa pursues, it will be better if it's the product of a proper debate in which everybody does listen and engages
properly and is open-minded enough to take a point from the other side – whatever the Polokwane resolutions or the manifesto of the ANC might say. So, on that note, thank you very much, Chairperson, and thank you to the Minister of Economic Development. [Applause.]
THE MINISTER OF ECONOMIC DEVELOPMENT
END OF TAKE
Mr R COETZEE
The MINISTER OF ECONOMIC DEVELOPMENT: Hon Chairperson, and hon members, on 10 May this year President Zuma announced his new Cabinet and established the Ministry of Economic Development. I am honoured to take up the position as Minister.
I wish to address briefly the context and rationale that gave rise to the need for the new Ministry and its mandate before turning to some immediate challenges and the work plan to get it and the department fully established.
Hon members will recall that the electorate resoundingly endorsed the ANC's election manifesto, giving this government a clear mandate for the next five years. Central to this mandate is a programme of economic development, aimed at putting our economy onto an employment-led growth trajectory. This mandate was developed in the context of the global economic crisis and the need to address deep structural problems that preceded the crisis.
The global economic crisis started in the financial sector but has rapidly become a real economic crisis. The loss of jobs is now the biggest cost that societies are paying for serious policy and design flaws in the global economy.
The crisis has resulted in a global and local recession and it now threatens South Africa's industrial base. We have experienced the worst quarterly economic performance in 25 years, with a 21,6% drop in manufacturing production in April and a 12,8% drop in mining production in March. Company insolvencies have increased and employment has been severely affected. Unemployment Insurance Fund claims are up by 21% and unemployment is growing.
About 179 000 jobs were lost in the formal sector during the first quarter of 2009. Employment is a lagging indicator; the recession will cause further damage to job numbers and we have not seen the bottom of the employment losses. To counter these serious economic challenges, we have negotiated an important framework agreement on responses to this crisis.
Despite a record period of economic growth preceding the economic downturn, we continue to face long-term employment and social deficits. Our challenges thus go beyond the immediate effects of the global economic crisis.
There are a number of structural problems we need to address. The economy has grown in recent years, but its employment performance is well below the levels required, and remains excessively dependent on imports of capital goods and finished products, and the export of commodities. Our unemployment rate is one of the highest in the industrial world and much of the employment we do have is precarious and low-paid, or what we might call "sub-prime jobs". These are closely linked to high levels of inequality and weak industrial performance with evidence of deindustrialisation in the local economy.
The composition of trade has contributed to a persistent problem with the current account deficit of our balance of payments, which has remained unsustainably high. These, as many hon members have indicated, are indeed formidable economic and employment challenges. The structure and composition of Cabinet is designed to address these. To clarify the Ministry's focus and mandate, I shall draw on three policy statements made by the President. In motivating the new Cabinet structure, President Zuma stated on 10 May that -
Cabinet has been reorganised to achieve better alignment between the structure, our electoral mandate and the developmental challenges that need to receive immediate attention from government.
In line with this, the President announced that a new Department of Economic Development had been established to focus on economic policy-making. In his state of the nation address on 3 June, President Zuma stated, and I quote:
The creation of decent work will be at the centre of our economic policies and will influence our investment attraction and job-creation initiatives. In line with our undertakings, we have to forge ahead to promote a more inclusive economy.
During the Presidency Vote on 24 June, the President stated:
Some people are wondering why we have both the Department of Trade and Industry and that of Economic Development. Trade matters will require a strong focus to have a direct impact on industrial organisation and output. The economic development portfolio will have a strong domestic focus and will address, amongst others, matters of macro- and microeconomic development planning.
The new department is thus part of a new configuration of government that centres on the four interconnected areas of policy development, planning, effective implementation and continuous monitoring and evaluation. The mandate is clear: The department will be responsible for developing economic policy with a broad, cross-cutting focus so that macro- and microeconomic policy will reinforce each other and will both be aligned to the election mandate.
The department will also be responsible for economic development planning and will work collegially within Cabinet to ensure co-ordination around a programme that places decent work at the centre of our economic policies in order to secure better employment outcomes. Decent work, of course, embraces both the number of jobs as well as the quality of the jobs.
The fundamental departure point of this mandate is that employment should not be the residual outcome of other policies, but the overarching goal of economic policies. Rising employment and living standards also have positive economic outcomes and are a vital source of growth in domestic demand. To achieve government's decent work outcomes, the labour absorption rate, the composition of economic activities and the sustainability of the growth path are as important as the quantum of growth. In other words, we are talking about an employment-led and developmental growth path.
This growth path will be promoted through carefully considered policy initiatives as well as better implementation of economic programmes. It requires a strong, effective, responsive and democratic developmental state that works closely with both business and organised labour, drawing the resources and talents of our people into a national consensus. The entrepreneurial energy of the business community is a vital component of our vision and a key source of jobs in our economy.
Government too has a critical role to play. Government will make maximum use of all the means at its disposal and will ensure that the decent-work objective is reflected in the orientation and programme of development finance institutions and regulatory bodies; through government procurement and public incentive rules; and in industrial, trade, competition, labour market, macroeconomic and other policies.
This commitment derives from our electoral mandate and is a common goal of the executive. We will work closely with Ministers Gordhan and Davies in their departments in giving effect to this mandate.
What then is the role of the Department of Economic Development? The activities of this department will promote economic policy development, co-ordination and coherence.
Firstly, regarding national policy challenges and programmes, we will work together with relevant departments and clusters to achieve this. We will also begin a policy engagement process to elaborate a national framework on economic development and decent work.
These aims will be achieved, secondly, through spatial economic development that embraces local, provincial, rural and national economic development dimensions; thirdly, through the mandates and work of public entities responsible for economic regulation and financing of economic development; fourthly, in interactions with business and organised labour to develop social consensus on economic and development challenges, including strengthening Nedlac's work on economic development; and fifthly, in the interface of the domestic economy with the global economy.
The power of this approach to economic development can be illustrated with two examples, one domestic and one international. The building of a 21st century infrastructure as the backbone of growth and social delivery gives us an opportunity to stimulate both manufacturing and service jobs, to secure technology transfers and to take economic development to the rural hinterlands of the nation. But these outcomes do not flow automatically from the mere spending of R787 billion. They result from careful policy design that reflects government priorities, proper implementation and thorough monitoring.
The same approach applies to international trade. As we engage with the powerful economies of China, India, Brazil, the EU and the US, we need to leverage more jobs from these economic relationships and ensure trade and investment is structured to maximise the local jobs dividend. These again do not automatically flow from the normal market transactions that make up our trade relations, but require the same careful thought and execution.
Our African agenda, some details of which I spoke to during the debate on the Presidency Vote last week, provides opportunities to grow the South African and regional economies and their employment.
There are many valuable sources of policy ideas and information that we can draw on. We are going to work in close co-operation across government and with the private sector and organised labour; we will tap into the rich sources of information in the development finance institutions, government departments, the provinces and local government and they will be key internal partners, and we will also draw on local and international expertise outside government.
We will work with Cabinet colleagues to promote integration, and so give effect to the common commitment in government to avoid a silo-based approach. The department will have economic development planning functions, whose outcomes will be fed into the long-range and overall planning that will be co-ordinated by the National Planning Commission.
Coherence will thus be promoted, not only through the policy work of the department, but through the vital and complementary work of both the Planning Ministry and the Ministry responsible for monitoring and evaluation. I thus look forward to close co-operation with Ministers Manuel and Chabane.
Coherence will be enhanced through linking macro and microeconomic policies within a coherent, pro-employment framework. The department will assume both new policy and co-ordination functions, as well as receive certain existing functions from other departments as part of the reorganisation of the state. This is achieved in the context of an evolving model of co-operative and effective governance, which ensures both horizontal co-operation and integration of policy across the national institutions of government and the state, as well as vertical co-operation between different spheres of government at national, provincial and local levels.
We look to build a lean, effective department with a high-level policy and technical capacity, with a critical mass of analytical skills and the capacity to synthesise the data, the ideas and experiences locally and internationally into effective policies and programmes that go into the policy-making machinery of the state. In addition, we will secure the necessary co-ordination and economic development planning skills in the department to implement programmes derived from the mandate.
The agreements in the framework for South Africa's response to the global economic crisis will guide some immediate actions. In this context, we call for a national jobs pact that places employment at the centre of the actions by business, labour and government. Such a national jobs pact would use the key agreements in the framework and translate it into sector agreements, workplace pacts and further national consensus on ways of saving jobs during the recession. This will lay the basis for further social pacts on our country's major challenges.
One of South Africa's comparative advantages is our tradition of social dialogue. We will strengthen it on matters of economic development to achieve national cohesion and bring together the resources of key economic players, and mobilise the energies of society.
As a new Ministry in a reconfigured Cabinet, the Department of Economic Development has not inherited an existing infrastructure. Many of its core functions are new and not previously performed within the state. Nevertheless, with the support of our Cabinet colleagues and the President, we are striving to shorten the normal timeframes required to set up such a department, so we can get down to work with the urgency these tasks require.
The steps to bring Economic Development to full strength require the formal and legal establishment of the Department of Economic Development by way of Presidential proclamation due shortly. It is agreed that the deadlines that apply to established departments must be applied more flexibly in the case of a new department like Economic Development. To facilitate this, interim arrangements have been put in place with the assistance of the Department of Trade and Industry and Treasury.
The establishment team for the department is now working on an organisational organogram and a budget in three parts: one, an interim budget from 10 May until 30 September this year which provides for establishment costs and some capacity to commence policy work. This will be accommodated via a ring-fenced item in the Department of Trade and Industry's budget until the Appropriation Adjustment in October.
Two, there will be a six-month transition budget from 1 October this year to 31 March 2010, which will provide for a more substantial work programme, for which a Budget Vote will be created in October's Appropriation Adjustment Bill; three, a strategic plan and budget from 1 April 2010 that will provide the full work plan for the Department and incorporate same into the Medium-Term Expenditure Framework.
This will be finalised and presented to the portfolio committee in September. The fulfilment of these legal and organisational requirements lay the basis for the effective implementation of the department's mandate.
In conclusion, I am looking forward to working with Deputy Minister Gwen Mahlangu-Nkabinde to give effect to this, and I am certainly looking forward to a rich and very deep relationship with Parliament in giving effect to our mandate. I thank you. [Applause.]
Mr S NJIKELANA
END OF TAKE
THE MINISTER OF ECONOMIC DEVELOPMENT
IsiXhosa:
Nmz S J NJIKELANA: Sihlalo obekekileyo, amalungu, neendwendwe ezibekekileyo, mandikhe ndithi gqaba gqaba nje ngendlela endibona ngayo kwezorhwebo kwihlabathi lilonke kuba ke iyinxalenye yenguqu kwezoqoqosho. Ngenxa yexesha ke ndizakuba mfutshane.
English:
However, as a precursor, I need to briefly share my views on the political economy of the international trade because trade is not merely characterised by administrative interaction, governance systems in the World Trade Organisation, series of negotiations, regulatory frameworks and the likes.
The underlying factors such as domestic policies in international as well as group interests, diplomatic relations, similarities and dissimilarities of foreign policies as well as relations between rich and poor countries have a profound influence on trade. Hence, our expectation that the forthcoming trade policy from the government must resonate with the country's foreign policy.
The exploitation of poor countries by richer countries, which has long assumed a global character through so-called globalisation, has, amongst a lot of global complications, resulted in endless impasses, delays and consternations in the Doha Round.
Africa First, as a priority step in international relations, has to serve as a strong framework that guides us in global trade as well. This extends, as the ANC government commits itself, to the inclusion of organised labour and business in SADC, definitely, and hopefully in the Pan African Parliament in the near future.
The current interim Economic Partnership Agreement has a potential to fragment and weaken not only Sactu, but also SADC and Africa. The absence of a developmental dimension in the EPAs can only exacerbate the already existing skewed trade relations. The only remedy for this quagmire is a moratorium on EPA negotiations until Southern and eastern African countries have put in place adequate institutional mechanisms to deal with trade liberalisation as recommended by the AU and the various agencies of the UN, amongst other things.
The Southern and eastern African countries should now focus on developing its regional markets - steps that have already been taken, as you have seen, by consolidating the gains of the Common Market for Eastern and Southern Africa Free Trade Area that will include East African Community and SADC. I trust our country will do its best to address this matter at the current AU summit in Libya right now.
Since the collapse of the WTO Doha round last year one can lament of a lost opportunity to remedy the endless consternations in this noble effort. South Africa's position in Doha round has been built on extensive and intensive national consultations within government, Parliament as well as stakeholders, particularly in the National Economic Development and Labour Council.
It is also encouraging that New Delhi is ready to assume Doha round of trade talks. However, we need to be extra vigilant about the re-emergence of protectionism, which may compel solidarity and a coherent approach by developing countries.
South Africa is undoubtedly obliged to campaign for a fair global trade system by ensuring that, together with the likeminded, a transformed WTO and a Doha Round with progressive outcomes is guided by the current ANC's Manifesto, which agitates for a fairer and humane international trade and financial systems, as well as a just world order.
The DTI must be lauded for their plans to convene a South-South conference on trade. The rationale and motive behind such a conference is noble enough. I trust such a conference will provide alternative global economic thought to that of the Washington Consensus and its failed neoliberal agenda, and give rise to new centres of economic power for the benefit of the majority in the world. I trust legislators will be invited to participate in the deliberations of such a noble effort.
As to the finalisation of the trade policy, which is imminent without any doubt, there must be firm and sound resonance of the forthcoming trade policy with the Ipap as the bottom line. I repeat: as the bottom line.
But let me express my concern about the apparent obscurity of Trade and Investment SA, Tisa, in the country - a vital institution of trade and investment - in spite of its commendable initiatives such as the One Stop Investment Centre, which by now I trust is providing investment-friendly services. The decrease in budget allocation by 1,3% for International Trade and Economic Development does not augur well, although the increase by 7,4% for Tisa, albeit miniscule, is encouraging.
The DTI has to transform Tisa into a dynamic and formidable institution that will effectively drive the implementation of trade policy; and Tisa must refine its interweave of promoting trade and attracting investment to the extent of visible reduction of unemployment as well as looking east to China, India and Russia, and Latin America, over and above the African Agenda.
The same goes for the International Trade and Administration Commission, Itac, whose thankless job should not go unnotice this time, given their noble efforts to empower our neighbours in SADC.
Unfortunately Tisa and Itac have been rather unduly economic in presenting their work progress to this Parliament, despite such successes. I am sure all members will be keen on knowing the reasons for this.
The lack of or Distorted global leadership or a lack thereof, which failed when expected to deliver solutions to address the economic crisis, must be viewed as a challenge to provide alternatives and not as a moment of despair.
The establishment of the SA Development Partnership Agency as well as the African Renaissance and International Co-operation Fund are another undisputed display of leadership by South Africa. I trust that not only will the economic cluster support this, but that it will ensure that our President maintains them as part of our key arsenal in advancing intracontinental trade.
The ANC, once again, in its manifesto is unequivocal about saying that working together with our partners in Southern Africa results in investing in our regional economy.
Investing and trading in Africa may sound good, however, this Parliament needs to ensure that there is a code of ethical conduct and good practice for South African companies that trade and invest in Africa.
However, I will be quick to say that in the context of the 12 agreements that have been signed there is a great need for intensification of economic diplomacy in conjunction with the Department of International Relations and Co-operation so that working together, more can be achieved in concluding more trade agreements.
I cannot overlook the expectation of a briefing from DTI as to the extent of integrating BBBEE in such initiatives. That is in any case contained in the export agreement.
furthermore, a mandate framework for trade negotiations has to be formalised by this Parliament quite soon. This is to ensure formidable policy guidelines and well-structured working relations between Parliament and the government as well as the fulfilment our parliamentary objectives of exercising oversight and engaging in international work with regard to trade negotiations in this regard.
South Africa's leadership will need to be skilfully at rebutting any new scramble for Africa. The market diversification strategy that is currently promoted by DTI is therefore highly commended.
The SA Council for the Non-Proliferation of Weapons of Mass Destruction and the ProTechnik Laboratories owes us a little bit. We need them here at some stage.
Let me conclude by saying that as long as the concluded trade agreements enhance the ANC's campaign for decent work and sustainable livelihoods we are on track. The ANC supports Budget Vote 32.
Mr P J RABIE
END OF TAKE
Mr S J NJIKELANA
Mr P J RABIE: Mr Chairman, allow me the opportunity to congratulate Minister Patel and Minister Davies and their deputies on their appointments. I wish them well for this coming year. Both of their portfolios are key portfolios for the future development of our country.
This particular budget must be seen in the light of the fact that our tax revenue is R10 billion below what was expected, coupled with a future 31% escalation in the price of electricity, a domestic recession, falling exports, a high current account deficit and the ratio of personal household debt to disposable income has reached alarmingly high levels.
The present prevailing conditions will force the private and the public sector to prioritise spending and to cut costs. Our present unemployment rate of 21,5% is also a further reason for concern.
Millions of South Africans are tightening their belts and thousands have been retrenched. In the first quarter, 179 000 South Africans lost their jobs and it is estimated that up to 400 000 companies cut jobs. Allow me to refer to the following sectors and the job lossesin them: The wholesale and retail sector lost 66 000 jobs; the financial sector lost 43 000 jobs; the manufacturing sector lost 29 000 jobs; the construction sector lost 19 000 jobs; and the mining sector lost 18 000 jobs.
The DA says that the economic recession requires a holistic response with a realistic growth strategy, which accentuates an equal, open society where merit, and not race, gender, etc, is the norm.
Afrikaans:
'n Sleutelveranderlike rakende moontlike potensiële ekonomiese groei en meer werkskepping, is om 'n openbare sektor daar te stel wat doelmatig en koste-effektief dienste lewer. Of dit wel in die praktyk gebeur, is 'n ope vraag.
English:
The DA has already achieved service delivery where it is in power. We rooted out corruption, we stopped inappropriate appointments and we removed nonperformers irrespective of their political persuasion.
Afrikaans:
Suid-Afrikaanse nywerhede bevind hulle in 'n oorleweringstryd. Die hulppakkette wat die agb Minister van Handel en Nywerheid aangekondig het, word verwelkom. 'n Spesiale pleidooi word ook vandag gemaak vir landelike gebiede se sosio-ekonomiese ontwikkeling. 'n Derde van die Suid-Afrikaanse bevolking bevind hulle in landelike gebiede.
'n Navorser van die Ontwikkelingsbank berig in die Business Day van
24 Junie 2009, dat indien daar slegs na die voormalige tuislande gekyk word, word gevind dat slegs 35% van werkende volwassenes 'n vaste inkomste het, teenoor 45% in stedelike sentra. Daar is ook gevind dat 45% van huishoudings in die gebiede geheel en al afhanklik van sosiale toelaes is, versus 20% in die res van Suid-Afrika.
'n Pleidooi word gelewer dat die nuwe Departemente van Ekomoniese Ontwikkeling en Handel en Nywerheid, dringend aandag skenk rakende die verbetering van die ekonomiese infrastruktuur. Daar moet spesifiek aandag geskenk word aan paaie, bestaande spoorlyne, die skepping van indiensopleiding en sleutelinstellings wat die agterstand in vaardighede van inwoners in die gebiede sal verminder.
Dit is ook gebiedend noodsaaklik dat grondhervorming en ekonomiese ontwikkeling in die landelike gebiede geïntegreer word. Toekomstige landlike ontwikkeling is van sleutelbelang vir alle Suid-Afrikaners
en die rol van landbou kan nie gering geskat word nie. Tewens, dit moet as vertrekpunt geneem word. Nywerhede wat landelike produkte verwerk sowel as toerisme en dienste, moet uitgebrei word, sodat meer inwoners van permanente werk voorsien word.
English:
Before I conclude, I would like to differ with the hon Prof Ben Turok. It seems to me that quite a number of the senior members of the ANC have also been converted to privatisation. It is my considered opinion that the sooner we privatise the better. I thank you. [Applause.]
THE DEPUTY MINISTER OF TRADE AND INDUSTRY
END OF TAKE
Mr P J RABIE
THE DEPUTY MINISTER OF TRADE AND INDUSTRY: Chairperson, hon members, ladies and gentlemen, good morning. I first need to indicate to the hon Ben Turok that thebig guys in the IMF whom he has mentioned are actually the cause of the recession. I therefore don't think we have anything to learn from them; they need to learn from developing countries to get fresh ideas. So I don't think they have contributed to any positive input for now. That is my considered opinion.
This budget debate takes place two months after the fourth democratic election, when President Jacob Zuma was affirmed by over 11 million South Africans as a choice to give confidence to the ruling party to continue its mandate given by South Africans to build a nonracial, nonsexist and a prosperous society.
As part of participatory democracy, our government will continue to pursue a contract with the South African masses to attain a better life for all; and one of the fundamental tools of change is to build equity and to ensure that each and every citizen becomes a beneficiary and will have a share in the country's wealth. Furthermore, there should be work and security for all.
There is always a temptation by public representatives to give a technical account of the work they do without looking at the political mandates received from electorates. We fail to answer their questions and leave them wondering what we were trying to say in simple terms in our speeches. We are also swallowed by figures that are used to justify our successes and fail to provide answers on how to tackle challenges facing society in general.
I think in all discussions that are ensuing in all sectors of the society - both in South Africa and the world over - be it in social, economic and political spheres of influence, there is only one question that dominates all other questions. That question is: How do we tackle the global economic crisis and its impact on us, and how do we tighten policy on the latter?
The ANC manifesto states that the strategic partnership with major countries of the South like China, India and Brazil, were strengthened. It further elaborates that the ANC will intervene to ensure that government, together with labour, business and other sectors, will work together to develop practical solutions. These solutions will ensure that in the short-, medium- and long-term, South Africa's economic prospects will continue to improve and that job losses will be avoided or at least minimised. That is why in the President's state of the nation address, he mentioned the need to create at least 400 000 jobs. We will either create more jobs or minimise job losses, based on the challenges we face as a country.
Part of the five key priorities in the next five years, is to create decent jobs and sustainable livelihoods through our macroeconomic policy. Therefore, there is a need to invest in the public sector and the fiscal monitory policy, including a need to lower interest rates and exchange rates to ensure labour intensive projects on the ground.
The President, in his inaugural address, said:
For as long as there are people who are unable to find work, we shall not rest, and we dare not falter.
In his state of the nation address, he further mentioned that government will buy more goods and services from local manufacturers without undermining international competitiveness. So we need to strike a balance between what we do locally and internationally.
An analogy was drawn between the history of the South African economy prior to 1990 and beyond the 1994 breakthrough. It was indicated that prior to 1994, South Africa did not have access to international markets due to the apartheid system's isolation by the international community. Therefore, GDP started to grow after the outward orientation by the democratic state. We need to consider this fact. The outward–looking position of the ANC-led government has improved investment in our country.
But the state had its own challenges that remained, and one of them was to address the Information and Communication Technology, ICT shortages, human capital development, small, medium and micro enterprises, SMMEs, development and competitiveness of the domestic industries. Therefore, we need to re-evaluate our policies and our institutions as this is seen as a solution to our challenges.
We also need to evaluate our government's skills programme to see how successful we were in imparting skills through the Setas, and whether we have the relevant skills needed in the job market. We need to indicate the role of Jipsa in imparting those skills.
As the Minister has already indicated, of the sectors that are in distress and those that need prioritisation, the department will identify which of those industries will receive preference. Such sectors must have the capacity to be competitive. A clear strategy is needed in these sectors to ensure that government does not lose its investment. The productivity levels of the leadership of such institutions should be evaluated on a quarterly basis. For us to compete for space in the global market, we need both qualitative and quantitative capacities. But the government also needs to leverage business. This is what we are going to do.
We will review our agrarian reform. We acknowledge that the key issues in our country are land and the economy. Therefore, there is a clear manufacturing strategy, the finalisation of the industrial policy, the role of local government in economic growth, the synergy of the work of government departments and ICT through innovation ... [Interjections.]
In conclusion, the answer to all these difficult questions lies here with South Africans. We should be able to reflect on lessons learned from the global economic crisis and on how the big players were affected by this and how to proceed with Sacu, after failure to adhere to article 31 by other member states. Over and above interventions, government needs a balancing act between raising tariffs and creating competition.
I also need to acknowledge the presence of the hon Thabethe - I can't see her. She is the former Deputy Minister of DTI. I also appreciate the support of Comrade Job, Comrade EP, all other Ministers and the director-general. I also appreciate the presence of my two children, who surprised me by being here today.
I also want say to the hon Kotsi that we cannot sell the state-owned enterprises because they are the only tool we have to intervene in the market to create decent jobs for all as they only look at competition. I also want to say to the hon Riaan Coetzee that we wish him well in his new endeavors. Thank you. [Applause.]
Mr S N SWART
END OF TAKE
THE DEPUTY MINISTER OF TRADE AND INDUSTRY
Mr S N SWART: Chairperson, hon Ministers, the global economic crisis has hit a number of our productive sectors very hard, slowing growth and affecting jobs dramatically. Clearly government intervention is necessary, Prof Turok. In this regard, the ACDP supports the Nedlac framework response of government adopting industrial financing and incentive instruments, with the development finance institutions assisting firms in distress. The mining industry was assisted to a degree by the deferment of mining royalties; let us not forget that. But, clearly, much more needs to be done.
As far as the automotive industry is concerned, to what degree will the R870 million Automotive Production Development Programme be further adapted to assist this beleaguered industry?
The Minister of Economic Development spoke about a national consensus. Surely, we also need to go a step further whereby organised labour agrees to restrain strikes and wage demands in line with productivity and production; business commits to continued investment and to retaining and retraining workers; and where government supports and intervenes with economic and welfare policies to deal with thE social and economic fallout pointed to by Prof Turok. We trust that such a national consensus can be achieved in this time of emergency. Let us remember that prior to the negotiations of our Constitution we entered into a solemn pact; maybe it is time to look at something along those lines.
Clearly, the R787 billion infrastructure expenditure remains a key fiscal stimulus to the economy. The ACDP agrees that we need to maximise industrial development by minimising imports and capacitating local engineering industries during this period. This is massive and it will enable us to claw back the increasing deficit to the benefit of long term growth.
The ACDP also shares the concerns expressed relating to the economic partnership agreements with certain SADC countries breaking ranks
The CHAIRPERSON: Hon member, you have just a second to conclude.
Mr S N SWART: Ok, just to conclude then. We clearly need to promote stricter standards of international finance governance and world trade. The IMF and World Bank can definitely learn from us and we need to be part of that. To conclude, we would like to congratulate the Ministers as well as the Deputy Ministers on their appointments; We clearly benefited from the economic classes. Former Speaker Gwen, thank you for that aspect and congratulations to you. Thank you. [Applause.]
Mr S HUANG
END OF TAKE
Mr S N SWART
Mr S HUANG: Chairperson, hon Minister and Deputy Minister, hon Members, distinguished guests, ladies and gentlemen, I remember at the first PCED study group, when I congratulated the Minister, I told him this is the best time to become the Minister of Economic Development due to the current recession. The President appointed him to bring his experience into full play in this new department.
President Zuma said in his Presidency Budget Vote, I quote:
Our new government has identified ten priority areas which form part of our Medium Term Strategic Framework for 2009 to 2014, and the programme is being introduced under these difficult economic conditions. The past year has seen the global economy enter a period of crisis unprecedented in the recent decades.
The President announced that the Department of Economic development that had been established would focus on economic policy-making. The call for policy coherence requires one location where economic policies are developed, co-ordinated and aligned with the electoral mandate of the government.
Hon Minister, in your presentation of the PCED, the focus of the economic policies as well as their outcomes, is therefore directed at equity, the reduction of inequalities, decent work, and the achievement of balanced and broad-based industrialisation.
In the framework for the response to the crisis, government and its social partners in Nedlac agreed on a framework for South Africa's response to the international economic crisis on 19 February 2009. The framework includes bold, immediate and urgent interventions to ensure that the South African economy and society are not directly influenced by the full impact of the international economic crisis.
These interventions include maintaining high levels of public investment in infrastructure to support private as well as public job preservation and creation through deploying macroeconomic policies, in combination and aggressively where required, to tackle the economic crisis.
The PCED will hold public hearings on the role of the different institutions on the economic development in South Africa from 11 to 13 August 2009. The new department has a six months' budget covering the period from October 2009 to March 2010 which will be incorporated into the October adjustment and strategic plan. The 2010-11 budget will be finalised by the end of December 2009, just as the Minister highlighted in his speech.
We are already facing a real economic and employment crisis in South Africa. For example, company liquidations in the first quarter of 2009 increased from 687 to 1 008; that represents a 46% increase. In terms of job losses, a total of 208 000 South Africans lost their jobs between 2008 and 2009. Unemployment Insurance Fund payments increased by R800 million, from R2 billion to R2,8 billion; an increase of 40%. The current account deficit remained unsustainably high at R170 billion; 7,4% of GDP in 2008 compared to 1,8% in 1998.
The new Department of Economic Development must promote economic policy development co-ordination and alignment in government nationally. The Department of Economic Development is also tasked with finding solutions to President Zuma's assertion that:
Workers who would ordinarily be facing retrenchment owing to the economic difficulty will be kept in employment for a period of time and reskilled.
We should remain market friendly to attract investment flows. Without foreign investment to compensate for the lack of local saving, the country will be unable to grow at a productive capacity and provide jobs. Without foreign savings the country could not achieve economic growth of 5% a year.
We need a strong supply-and-demand economy based on innovation, skills, science and technology, and fair labour standards. The programme of the infrastructure development needs to be linked to a continental infrastructure plan and industrial policy.
South Africa is the key investor in Africa. According to the UN Conference on Trade and Development, South Africa contributes up to a quarter of Africa's GDP, and thus South Africa is the biggest source of foreign investment. It is critical for President Barack Obama's administration to resist the pressure to support the legislation that extends the duty-free access to the US market, which is enjoyed by African nations under the African Growth and Opportunity Act, Agoa, to all Least Developed Countries, LDCs.
Last year Sub-Saharan Africa represented only 1,2% of the US$95 billion US apparel import market, while for Bangladesh it was 3,8% and Cambodia 2,5%.
Africa continues to be the only region of the world that is getting poorer and not converging with developed economics. Already Africa's clothing exporters face the global recession as well as the tremendously competitive and low-wage producers of Asia. We hope President Obama does not discontinue the African Growth and Opportunity Act to all Least Developed Countries. The Ministry should be charged with co-ordinating macro- and microeconomic policy. So, economic policy must include industrial strategy.
The recession has bitten deeply into tax revenues which the Treasury tentatively has forecast would be as much as R8 billion lower than the gross R650 billion targeted in this year's Budget in February. The lower revenue projection is the latest in a string of dismal economic figures, including the record 21,6% year-on-year fall in manufacturing production in April, and the 6,4% contraction of the economy in the first quarter.
In conclusion, hon Minister, just as you stated recently, the key task is to make sure that the promise made by President Zuma of creating 500 000 jobs opportunities by Christmas does not become pie in the sky. I fully support this view. Therefore working together we can and we will do more to build a great South Africa. The ANC supports the Budget Vote. [Applause.]
Mr R B BHOOLA
END OF TAKE
Mr S HUANG
MR R B BHOOLA
MR S B HUANG
Mr R B BHOOLA: Chairperson, the international sporting events have come at a crucial time for development in our country. The MF is proud of Bafana Bafana and of South Africa for its wonderful organisational ability.
During times of recession, countries that have promoted small, medium and micro enterprises, SMMEs, and the informal sector have turned around the economy. In this respect, I would like the hon Minister to focus his attention on what is happening in eThekwini, where informal traders - about 6 800 stallholders - are to be deprived of their livelihood by the eThekwini Municipality.
The municipality wants to demolish a 99-year-old wonderful heritage market and make place for the development of a mall.
It is important that our country re-examines the construction of malls and the lack of small-scale trade and industries. India is overcoming recession because they have a Ministry and a department for small-scale industries. I would very strongly urge the Minister to intervene in the terrible decision the eThekwini Municipality wants to take in the face of an avalanche of concerns.
In the development of our economy, industrial expansion is very important. It is SMMEs, the agricultural revolution and manufacturing that are going to create sustainable jobs.
I really want to request the hon Minister to look at areas where industrial development can take place in every part of South Africa and not overcrowd the built-up cities.
India was the first country to start a planning commission, which has done wonders for the country. I suggest that we look at individual talent and the ability to take part in industrial activity. The manufacturing and small-scale industries is the answer. We also want to look at small industrial entrepreneurs.
Hon Minister, the MEC for Economic Development in KwaZulu-Natal has intervened through the intervention of the hon Premier with regard to the eThekweni Municipality matter.
Too many shopping malls are being developed instead of promoting small trading outlets and industrial outlets. I suggest ... [Interjections.] The MF will support the Budget Vote. [Time expired.] [Applause.]
Mr X MABASO
END OF TAKE
Mr R B BHOOLA
Xitsonga:
Mr X MABASO: Ndza nkhensa mutshami wa Xitulu, ndza mi rungula hinkwenu n'wina xirho swa Huvu leyi. Ndzi lava ku mi tshundzuxa leswaku loko hi vulavula hi xihlawuhlawu a swi vuli leswaku ho rhandza ku vulavula hi yona. Hi vulavula hi yona hikuva leswaku u tiva lomu u ya ka kona u fanela ku tiva lomu u humaka kona.
Hi huma eka Afrika-Dzonga leyi a hlawula munhu wa ntima yi veka valungu emahlweni. Namuntlha loko se xihlawuhlawu xi hi kombile leswaku a yi tirhi laha emisaveni, yi vonakala ongeti; hi Xipedi va ri ...
Sepedi:
... go na le sepa la bošego. Ga le na mong.
Xitsonga:
Loko se ri ri kona lahaya, un'wana na un'wana u ri ...
Sepedi:
... phuu! Ga re tsebe gore ke mang.
Xitsonga:
Na xihlawuhlawu xi tano, leswi se yi xanisaka ku hava loyi a nge hi mina ndzi nga yi endla. Naswona sweswi hi tshovela na ku kuma mihandzu na mbuyelo wa xihlawuhlawu. Hi kombela leswaku lava ku nga vona va nga vuyeriwa hi nawu wa xihlawuhlawu na vatulu na switulunduwe va nga hi yimi emahlweni loko hi lunghisa thyaka leri ri nga endliwa hi kokwana wa vona Verwoerd, loko a ku munhu wa ntima u ta endla yini hi dyondzo ya tinhlayo, hikuva a nga ka a nga yo tirhisi evuton'wini bya yena. Sweswi matiko yan'wana ya famba enhlweni ya aka swihaha-mpfhuka yaya hinkwako kambe hina hi salele endzhaku, hi mhaka ya xihlawuhlawu.
English:
But what we do appreciate, and I think we all agree, is that as we go forward, we must not forget that issues like affirmative action and BBBEE are critical. They are critical because it is these issues that seek to correct what was done the segregation laws over a number of years. [Applause.] We appreciate this because when we look at the constitutions of the organisations that are seated on the opposite side, none of them says, "Viva apartheid!". For that we applaud you. [[Applause.]
This then takes us to an area where we say that one of the things we must do to correct this is to implement co-operatives. But in implementing co-operatives, we must be careful because immediately when the law of co-operatives was enacted, some opportunistic business people immediately converted their firms into co-operative firms and defeated the purpose of co-operatives.
Because those are people who only understand the language of legislation, Minister, we appreciate that you are going to make amendments to the law so that that loophole does not exist for established firms, which want to continue getting rich at the expense of the poor and frustrate the very tool that was aimed at correcting inequalities.
South Africa is one of countries that sometimes take the first position. We are the only country that has Tatana Comrade Nelson Mandela. We are the only country that has just scooped accolades in terms of performance. Although we did not win the Confederations Cup, we went beyond expectations. [Applause.]
We are one of those countries that are going to make sure that the poor do not beg on the streets and that we, as government, help sustain the dignity of every person. Job creation must be the key. It is not everybody who is going to get into conventional jobs. Some of the people who have fallen through the cracks have to be assisted by things like co-operatives.
What is a co-operative? The word "co-operative" comes from the word "co-operate", which means "working together". In this working together, you tend to win more than if you had worked individually. That is why even our grandparents ...
Xitsonga:
… a va ri na leswi a swi vitaniwa "tsema" –ilima.
English:
Through that they would plough one person's farm as a group and move to the next. In that way we would find all the farms were green. Of course, when I speak of farms I am speaking of the 13% farms we had.
It has to be noted why we have to support co-operatives. Co-operatives sometimes fail. What makes them to fail is a situation where we, as government, do not render enough support - where we don't protect them. When it comes to procurement, they must be given preferential treatment. Why so? This is because they did not have the same start as other businesses. When it comes to taxing, they must also be given preferential treatment. We must also equip them in terms of training so that the enterprise skills will make them grow.
When speaking of co-operatives we must not picture a small, diminutive enterprise. This can be a big enterprise. It can farm and own farms, and it can own buildings. There are countries that have proved this. Countries like Italy have proved that co-operatives can be a successful route to take.
We must then make sure that even when we come to auditing requirements we should not put stringent measures on co-operatives. This is where we need an accounting officer instead of an auditing firm. How do we expect a small co-operative to afford the payments to an auditing firm?
Other areas that co-operatives are faced with are areas of marketing. It is important that co-operatives are marketed widely. But as we market them, we must note that we are helping ourselves. This is because if you remove poverty from your neighbour, that guarantees you a good life. But if you want to have all the wealth around you and your children only, that guarantees others things we usually discuss called crime. No child was born a criminal. We make them criminals and complain the following day.
Let me conclude by saying the ANC does not believe that any problem that exists must be privatised. That can never be the solution. We have realised from the DA that whenever there is a problem they struggle to solve, they quickly say they can't solve the problem and therefore need to bring in privatisation. This cannot be the route to take. Thanks, Chairperson. [Applause.]
Mr A P VAN DER WESTHUIZEN
END OF TAKE
Mr X MABASO
Afrikaans:
Mr A P VAN DER WESTHUIZEN: Voorsitter, Ministers en agb lede, vandag 10 jaar gelede het die eerste uitruilbesoek van Franschhoekers met Dilbeek, hul Belgiese sustersdorp, plaasgevind. Dit was vir baie van ons 'n verrassing om daar, in die vreemde, mede-Franschhoekers te ontmoet wat besig was om 'n jaar lank opleiding in die bekende Belgiese sjokoladefabrieke te ontvang.
Terug in Suid-Afrika wou Danver Windvogel en Denver Adonis se jong onderneming aanvanklik net nie vlot nie. Dit was ten spyte van die wêreldklas opleiding wat hulle ontvang het. Gelukkig vir hulle het 'n ervare plaaslike entrepreneur later ingestem om hul vennoot te word en so tot hul redding gekom.
Vandag, 10 jaar later, het Huguenot Fine Chocolates 16 mense in voltydse diens en voorsien hulle sjokolade aan, onder meer, die Suid-Afrikaanse Lugdiens, Spier, KWV en verskeie kleinhandelaars wat dit onder hulle eie handelsnaam verkoop. Met 'n 15% styging in omset oor die laaste boekjaar, versterk Huguenot Fine Chocolates die algemene denke dat sjokolade juis beter verkoop in tye van resessie. Mentorskappe en vennootskappe van jong entrepreneurs met ervare sakelui toon baie van die kenmerke wat die DA in sy beleid van 'n oop samelewing voorstaan.
Klein ondernemings dra reeds 40% tot Suid-Afrika se bruto binnelandse produk, BBP, by, en die departement wil hierdie syfer graag laat styg tot 45%. Meer nog, bykans 70% van alle werksgeleenthede in Suid-Afrika kom in mikro- en klein ondernemings voor. Ongelukkig is die oorlewingskoers van klein besighede in Suid-Afrika aansienlik laer as die in vergelykbare ontwikkelende lande.
'n Onlangse vergelykende studie van Unisa kon na 'n jaar bykans net die helfte van alle klein ondernemings in Soweto weer opspoor.
Die belangrikste regeringsagentskap vir hulp aan klein besighede is die Ontwikkelingsagentskap vir Klein Ondernemings, oftewel Seda. Dit is daarom baie jammer dat die begroting vir hierdie agentskap besig is om af te neem. Dit is verder kommerwekkend dat die ouditeur-generaal sy 2007-08 verslag oor Seda moes kwalifiseer. Dit nadat 'n ongunstige ouditverslag die vorige jaar ook gelei het tot 'n forensiese oudit waarin, onder meer, bevind is dat R15 miljoen se aankope deur Seda onreëlmatig was. In die proses word baie voornemende entrepreneurs frustreer.
Tydens 'n ekonomiese afswaai het klein en nuwe ondernemings juis meer hulp en ondersteuning nodig. Die DA doen 'n beroep op die Ministers en die Departement van Handel en Nywerheid om te verseker dat die tendens van 'n afname in befondsing vir hulp aan klein besighede omgekeer sal word. Ons versoek ook die departement om te verseker dat 'n beter gehalte diens en meer hulp aan opkomende sakelui beskikbaar gestel sal word. Dankie. [Applous.]
Ms E M COLEMAN
END OF TAKE
Mr A P VAN DER WESTHUIZEN
Ms E M COLEMAN: Chairperson, hon Ministers and Deputy Ministers, colleagues and parliamentary compatriots, and ladies and gentlemen, let me start by commending the two Ministers for their sterling speeches and the clear manner in which they were able to put forward the mandates of their departments. I want to say to you, Ministers, that you really give hope to us as a country. Let me, in the same breath, congratulate you and your deputies on the appointments.
Chairperson, two of the five-year strategic focus areas for the African National Congress include accelerated growth and investment, improving the productive capacity of government, integrating the economy and redistributing resources more equitably. This obviously calls for a stricter, more coherent and organised way of doing things, hence the idea of setting up the Department of Economic Development, whose responsibility will mainly be to deal with that, over and above other things.
I would like to agree with Minister Davies on his endeavours to strengthen the industrial policy action plan, with the intention to focus more on harder economic interventions, as against the previously very soft intervention. Our country, looking at its macroeconomic environment, needs strengthening in the areas of research and development, improvement in skills development capacity and a monitoring and evaluation system.
I want to thank the President for ensuring that he sets up the two departments, especially that of monitoring and evaluation, as well as planning. They are quite critical, especially in these areas or in these times of hardship.
This, I feel, will help the country in strengthening industries that have the potential to retain jobs en masse. Of course, here I would like to emphasise that more jobs doesn't just mean jobs, but jobs that are qualitative in nature whilst, at the same time, improving the production base which will, in turn, turn around the economic performance of our country and the region at large.
I feel that we need to focus on the areas that need special attention and that will have a high impact, especially those around the macroeconomic environment. We need to eliminate duplication and focus more on co-ordination and co-operation, as well as integration where possible, in order to achieve high impact and outcomes. I'm just emphasising what the two hon Ministers have indicated.
I'd like to emphasise the role, in this regard, of our provinces and municipalities, because for you to be able to do your work effectively, there has to be that kind of relationship and change of mind in as far as our provinces and municipalities are concerned.
I would like to commend the work of Deputy Minister Ntuli while dealing with this matter of embarking on consultative meetings with the provinces on economic matters in general. I believe that it is a step in the right direction in terms of trying to understand what each sphere of government is doing, so that the department could develop an informed response strategy.
Madam Deputy Minister, I take it that the intention of your consultative meetings is to have a hands-on response in the midst of all these microeconomic challenges confronting the country.
The areas affecting the microeconomic environment that I believe are in need of urgent attention are those around the target groups training, as well as coaching and mentorship programmes that are currently being attended to under Seda and I want to agree with Mr Van der Westhuizen that the budget needs really to be upped. And while you are upping the budget, of course, these Sedas need to be monitored and evaluated on a continuous basis so that their work can be strengthened from time to time.
I would also call upon IDC to really do their work. This I am saying this especially because of the establishment of the Youth Development Agency and the Women's Fund, because they will really need that critical assistance and support. This kind of support is necessary in nurturing and improving the existing businesses, with specific focus on the target groups.
I will then appeal to the department to consider through the IDC, as I indicated, the topping-up of the Sedas' budget if we want to see them making a meaningful impact, especially around our youth, women and people living with disabilities.
We, however, want to emphasise and stress the importance of monitoring the programme if we really want it to yield positive results. I hope the relevant Ministry will ensure that the monitoring mechanisms are put in place to ensure compliance with the set targets so that required outcomes are realised.
Let me borrow the words of one world leader who said, "Man holds in his mortal hands the power to abolish all forms of human poverty and all forms of human life". I believe that if each one of us holds together, we will be able to achieve greatly. That is why we support the implementation of the framework agreement which, in our belief, will put a bright spark into our macroeconomic situation.
The committee would like to thank both departments for putting their mandates so clearly and eloquently. We would also like to take into account the status of the Department of Economic Development and its plans to establish the department within the next three to four months and to have strategic planning documents by the end of September.
We will appreciate it if the department can brief both the committees on economic development and trade and industry on a continuous basis, especially on progress made so that we can be informed and able to assist where possible.
Chairperson, we support Vote No 32 and the committee's recommendations. You will be surprised at why I am saying this, but we have jointly looked at this Budget Vote. In the same light, I would like to wish the two Ministries well in their endeavours. I thank you. [Applause.]
THE MINISTER OF ECONOMIC DEVELOPMENT
END OF TAKE
Ms E M COLEMAN
The MINISTER OF ECONOMIC DEVELOPMENT: Chairperson, I certainly would like to extend my appreciation to hon members for the helpful and constructive comments that they've made. Some cross-cutting themes seemed to have emerged: One, the recession provides a serious challenge for us and for policy; two, the centrality of employment in dealing with the challenge; three, that the framework agreement concluded in February must become the basis for South Africa's response; and four, the need to work with urgency and focus.
I'd also like to thank all of you for your good wishes and in particular extend my appreciation for the work and comments of the hon Ms Coleman and hon Ms Fubbs, and the work that committee members of all parties do at portfolio committee level.
There were a number of comments that perhaps require a brief response. The hon Mr Marais said that the IDC should have strategic and labour-absorbing industries as its focus for investment. We agree. We started a conversation with the IDC on its mandate and its effectiveness in order to place employment as an explicit part of its mandate.
The hon Kotsi asked where South Africa was on the question of the African continent. I would refer the hon member to the speech I made last week in the NA, but would also just perhaps point to the fact that South Africa is now the fourth largest source of foreign direct investment on the continent, although the 6% our investments comprise is still very low compared to, say the 21% of the UK.
Intra-African trade is growing, but not fast enough. Between 1999 and 2006, for example, intra-African trade rose by 13,6% per annum, but trade with the United States rose by 27,5% and trade with China rose by 61% per annum, so we can do more and we wish to do so.
The hon Prof Turok has regaled us with a number of very apt and useful quotes by policymakers. What is very clear is that there is a new policy space for countries to develop policies that work. The old orthodoxies, the rigid here-are-all-the-answers approach is gone. Not only are commentators thinking in new and fresh ways, but when we talk to policy makers across the world, there is an appetite to find what works. I think that is helpful for South Africa.
I would make the point on hon Turok's comments about counter-cyclical policies; it is the position of government that we do support a counter-cyclical policy approach. In a recession the state pumps liquidity into the markets. The more severe the crisis, the more aggressive the fiscal and monetary policy measures required. Not only is this the position of the South African government; there is now a global consensus on this.
I appreciate the kind comments of hon Mr Coetzee and wish him very well in his new responsibilities. I agree with him that people should be the centre of economic policy. However, the evidence of the last few months alone shows that unregulated markets do not result in that goal.
The state steps in to address what economists may call a market failure. In doing so, we draw on rich international experience, straddling many decades of fast-growing economies with active developmental states. Placing people at the centre is the very reason for our emphasis on decent work.
I take the point and I certainly would want to make the point that decent work is the outcome of many efforts, and our people accept that it won't happen in one go. However, we need to see progress on a step-by-step basis, so that economic progress is not reduced simply to the rate of economic growth, but it goes fundamentally to the quality of the people who make that growth possible.
Hon Mr Rabie makes the point that the recession requires a holistic approach. I support his view and I point out that the framework agreement that was concluded with business, labour and community organisations and government in February this year, is an unusually coherent policy programme.
It deals with public investment, macroeconomic policies, industrial and trade policies, public employment and private sector initiatives as well as social interventions. That is what we want to do: We want to have holistic responses to the crisis that face us.
Hon Mr Huang's points about the importance of avoiding retrenchments and the role of an industrial strategy that is based on innovation, knowledge, productivity and fair labour standards, is very well made.
So, Chairperson, the debate has certainly been really worth taking note of and we would want to incorporate many of these ideas as we develop the mandate of the Ministry of Economic Development Ministry. Thank you.
THE MINISTER OF TRADE AND INDUSTRY
END OF TAKE
THE MINISTER OF ECONOMIC DEVELOPMENT
The MINISTER OF TRADE AND INDUSTRY: Chairperson, I would also like to thank all the hon members who participated in this debate for their mainly thoughtful contributions, albeit coming from different political perspectives as is to be expected.
I would also like to commend the Portfolio Committee on Trade and Industry for the consensus report that they presented. I give the assurance that we will do our best to respond to all the requests which have been posed to us.
There has also been a discussion between us and the chairperson about the committee undertaking a visit to our campus in Tshwane. I respectfully want to suggest that this is perhaps quite urgent to enable the hon Kotsi to understand that the Enterprise Organisation, Teo, is mainly an administrative division that deals with incentives. The questions that she was posing to Teo are actually properly addressed elsewhere, including the department as a whole.
Now I may have hit the ground running but I'm afraid I can't give her all the answers right now, although the information is there. Let me say that I think that the basic picture is one that the interventions that have been made by the department in the past, I would argue, have been quite critical in developing some of the industrial capacity that we have. I would cite the motor industry development programme as an example. I would also say that small business interventions have had successes.
However, the picture is one that shows that we have clearly and significantly not done enough. That, I think, is the reality.
I also think that the question that was posed by hon Mr Coetzee who has now left, was actually taking us into a very important debate, although I think he came at it from the wrong perspective. I want to recommend to Mr Coetzee – maybe one of his colleagues could tell him – that he would do well to look at a book by Eric Reinhardt, who is a Norwegian economic historian, called How Rich Countries Got Rich and Why Poor Countries Stay Poor. This book, through a very detailed analysis of economic history shows us that there is not a single example of any country at any time in the world, going back to the Principality of Venice in the 16th century, that has broken out of an economic regime characterised by diminishing returns and set itself on a growth path characterised by increasing returns. Not a single example exists of anyone who has done that without establishing a purposeful partnership between government and economic actors to carve out a new growth trajectory. There is no such example.
What is more, those countries that support the kind of policies that he is now enunciating on certainly did not do so when they themselves were industrialising. The other side of the coin is that bigger powers have always sought to prevent competition from what we now call "the developing world". That has always been the reality. So I think that that is what we should try to take on board and that is the quest that we are on.
I think that our emphasis on social dialogue, partnership and self-discovery should give enough comfort to anybody, who cares to look at it more carefully, that the developmental state which we seek to build in South Africa is not some authoritarian leviathan; it certainly is not.
I also think that hon Prof Turok was taking us into a very important debate. I want to share an article with him later on which, like Martin Wolfe, was showing that, thus far, the trajectory of the world economy in this particular economic crisis has very closely tracked the record of the Great Depression.
One of the things that observers are arguing actually led the Great Depression into a great depression, was that countries actually withdrew stimulus packages prematurely and that that sent the recession into a depression. I think that this is something that we need to be very clear about.
So, the entire speech centres on us upping our game so that we can actually make the kinds of interventions in the economy that we need to make not least in the light of the crisis.
I want to welcome the remarks of hon Marais, and we look forward to a useful engagement with him. I want to agree with a number of points hon Marais made that certainly the path of being a Minister of Trade and Industry is not strewn with rose petals; that the vision and mission and all those nice policy things are not going to be where we want to be judged. Our test is going to be on what discernable impact we make in practice; that is what we are focussed on. We are also aware that the IDC's role is no longer to support the capital-intensive industries that it supported in the past, but actually is to make its facilities available to support more labour-absorbing industries.
There are three broad policy issues I just want to briefly respond to: The first one is our BBBEE. I think I would agree with hon Mabaso that it is absolutely essential that we push this forward.
Those that say that there is a difference between the objective of BBBEE and the reality of narrow-based I think it is important that you actually say when that was the case. I think that the interventions that have been made in the past the development of the codes, the charters, have actually been to try to broaden. It came at a particular moment. So I think that that work is intended to do that.
Having said that, I think there is a number of things that need to be done. We need to align black economic empowerment and the Preferential Procurement Act. That is an important piece of work. We need to align that with efforts to promote local production.
Then we do need to confront the debate about whether our instruments are sufficient to achieve a broad base. Our approach has been to argue that one of the fundamental things that we need to put in place in order to lead debate and discussion on this is the advisory council on black economic empowerment. We have been interacting with the Presidency who ultimately will make the call on that.
I agree very much with hon Mabaso about the importance of co-operatives. If there is fronting, we must deal with it and crack down on it. That is one of our objectives in BEE in general.
We have not made sufficient progress with regard to co-operatives. They have all the promise that hon Mr Mabaso indicated and it will be one of our priorities to move in that direction.
Finally, let me address the question of the lotteries very briefly. With the information we provided you with and in the answer to a question we did not attempt to spin it or try to hide it - that's not a reality that I believe is defensible. When I took office I became aware of some work that had been done by my predecessor to identify a number of the issues that we need to address to improve the performance of this.
They include proposals about regulatory changes, changes in administrative practices and even changes in the Act itself if it comes to the need for legislation.
What I've done is I have circulated that and received written comments from key players within government and I now am merely looking to try and confirm diaries. We will have a round table and we will put out a number of regulatory changes for public comment and act on those immediately.
Simultaneously I should just draw members' attention to the fact that calls are out right now and close on 8 July for nominations for a new Lotteries Board. We are certainly not happy with the situation and are looking to improve dramatically on that. Just to show how little the matters of the relationship with economic development are matters of turf, I should perhaps conclude by saying that I am very happy to hand over the responsibility for the Lottos to my colleague, if he would like them! Thank you very much.
The HOUSE CHAIRPERSON (Mr K O Bapela): Hon members please note that the debate on Vote 13 – Education, will commence at 14:00 in the Old Assembly Chamber. The debate on Vote 26 – Housing, will also commence at 14:00 in this venue. The committee will now rise.
Debate concluded.
The Committee rose at 12:37.
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