Hansard: EPC: Debate on Vote No 34 — Trade and Industry
House: National Assembly
Date of Meeting: 21 May 2015
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Minutes
UNREVISED HANSARD
EPC – NATIONAL ASSEMBLY CHAMBER
Thursday, 21 May 2015 Take: 65
THURSDAY, 21 MAY 2015
PROCEEDINGS OF EXTENDED PUBLIC COMMITTEE – NATIONAL ASSEMBLY CHAMBER
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Members of the Extended Public Committee met in the National Assembly Chamber at 16:40.
House Chairperson Ms A T Didiza, as Chairperson, took the Chair and requested members to observe a moment of silence for prayers or meditation.
The HOUSE CHAIRPERSON (Ms A T Didiza): Order, hon members! I would like to welcome the guests of the Minister seated in the gallery who are here for the budget debate on Trade and Industry. Since you are now in the National Assembly, you are our guests. I would like to advise you that, in terms of the Rules of Parliament, you are not allowed to participate in what happens in the debate, such as clapping your hands or making interjections if there is anything that irritates or excites you. Just sit humbly, even if you are being recognised for your good work. If the Minister asks you to stand, you can do so but you don’t have to applaud yourselves. I’m sure that would assist me in managing the House.
The members are allowed to engage one another, but in a much more honourable way so that there are no interjections or unruly behaviour that would make us keep on saying, “Order, order, order!” Alright?
The MINISTER OF TRADE AND INDUSTRY
The HOUSE CHAIRPERSON (Ms A T Didiza)
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APPROPRIATION BILL
Debate on Vote No 34 — Trade and Industry:
The MINISTER OF TRADE AND INDUSTRY: House Chairperson, one of the fundamental goals of this administration is to radically transform the South African economy in such a way that it promotes a higher level of more inclusive economic growth. This is the only sustainable way we will be able to achieve the reductions in poverty, unemployment and inequality that we all agree are urgently required.
In identifying the path towards higher levels of inclusive growth, it is important that we reflect on past experience. In the 84 quarters between 1993 and the end of 2014, the South African economy grew at 5% or more in only 16. The growth in those periods was overwhelmingly driven by import-intensive consumption and the now-ended commodity supercycle. Neither of these factors will drive growth into the future. More importantly, higher levels of inclusive and sustainable economic growth and radical economic transformation require that we bring about structural change that will do two main things: firstly, place our productive sectors firmly at the heart of a new growth path that will move us further up the value chain; and secondly, significantly broaden the base of economic participation in the real productive economy. These two components together are what we understand as radical economic transformation.
The seventh iteration of the Industrial Policy Action Plan, Ipap, which we launched earlier this month, seeks progressively to raise the impact of our interventions to support industrial development and the reindustrialisation of our country. This is an exciting but challenging task. Since its inception, Ipap has had to contend with the global recession, its lingering aftermath and a number of strong domestic constraints. In these tough circumstances, its impact has been on a scale that has been less than optimal in relation to the demands of the reindustrialisation of South Africa.
That is why upscaling, as signalled in the President’s state of the nation address and in the Nine-Point Plan, has been identified as a key priority. For now though, it is important to note that in the challenges we have faced in the global and domestic headwinds, some very significant achievements have been made. The overall diversity of the economy and many of its critical industrial capabilities have been retained and a range of strong and viable policy platforms and programmes have either been built or strengthened.
The fact that South Africa continues to be seen internationally as an environment conducive to supporting inward investment is reflected in the fact that the stock of foreign direct investment, FDI, in South Africa is equivalent to around 45% of our growth domestic product, GDP. Inward flows have continued to grow. Over the last five years, South Africa has accounted for the bulk of new investment projects in Africa, with major new investments arriving from our traditional investment partners, the USA and the Eurozone, and also, increasingly, from new investment partners like China, India, and other emerging economies.
In 2013 alone, over 130 foreign firms either entered South Africa or expanded their investments here. In October 2014, the UN Conference on Trade and Development recognised Trade and Investment South Africa, Tisa, one of the divisions of the Department of Trade and Industry, DTI, as the global winner for attracting investment in a sustainable development project.
The current pipeline of potential investment projects that we are monitoring and facilitating includes R25,3 billion from foreign and R18,5 billion from domestic sources. Aggregating funding from both sources, it is expected that upcoming investments will likely be distributed as follows. A total of R28,8 billion for the green economy; R7,9 billion for advanced manufacturing; and R5,7 billion for mainstream manufacturing.
The report on our successes is based on hard evidence. In the automotive sector, 2014 saw a rise in the volume of vehicles produced in this country. Total production amounted to 545 666 vehicles, of which 276 000 were exported. In February this year, BMW South Africa celebrated the production of its millionth 3 Series sedan at the Rosslyn plant in Pretoria.
To use just one other specific example, last year, Mercedes-Benz South Africa made the largest single investment in the motor sector in the history of this country, expanding the production capacity of its East London plant by investing R5,4 billion in plant and equipment, creating 550 direct and 400 indirect jobs. In support of this expansion, component manufacturers in East London invested approximately R1,3 billion in plant, equipment and building infrastructure to support the production of the new C-Class vehicle, creating 800 new jobs in the process.
Let me emphasise it, again. These investments would not have happened without focused government support, its commitment to partner with the private sector and the increasing impact of our industrial policy. To reinforce this point, allow me to dwell for a moment on a particularly illustrative study — that of the clothing, textiles, leather and footwear sector, one of our most vulnerable subsectors.
As hon members will recall, at the start of the last administration, we launched the Clothing and Textiles Competitiveness Programme, CTCP, a new programme aimed at supporting investment and raising competitiveness in the clothing, textiles, leather and footwear sector. The programme was recently reviewed by the Industrial Development Corporation, IDC, and let me give you a sense of some of the most important numbers from that review.
As of March 2015, a total of R3,7 billion had been approved under the programme, of which R2,6 billion had been disbursed. The share of employment in the sector by companies drawing on the CTCP had increased from 29% of the workforce to over 38% of the workforce, in 2014. The manufacturing value-addition increase attributable to the programme was R3,9 billion. I can confirm that that is in contrast to the overall performance of non–Clothing and Textiles Competitiveness Programme-drawing firms in this sector that experienced declines in output and value added over the period.
I can also confirm that we have made good on the promise we made in this House, last year, that we would be launching a significant programme to increase value addition in the exotic leather and animal-hide industries through the National Footwear Leather Cluster. This cluster has now been established at the Vaal University of Technology and is up and running. Its work will be directly responsible for the creation of 2 000 sustainable jobs and a reduction of R1,4 billion in imports.
The full benefits of the CTCP interventions will only be realised in the medium to long term, but even in the short term, the data is conclusive, and here’s the clincher. At a cost of R2,6 billion disbursed, the CTCP has facilitated the creation of R3,9 billion of additional manufacturing value added, as well as saving over 68 000 jobs and creating an additional 6 900 jobs. The clothing, textiles, leather and footwear sector is just one of the areas where the DTI is working. As you know, the spread of our work is much wider.
In this regard, I’m pleased to report that one of our continuing flagship incentive offerings, the Manufacturing Competitiveness Enhancement Programme, MCEP, has continued to perform very robustly. Since its inception just three years ago, it has provided support to a total of 236 projects across a wide range of sectors, with an investment value, to date, of R3,8 billion and the maintenance of an estimated 28 O00 jobs.
At the same time, it is worth noting that our central emphasis on manufacturing does not, by any means, exclude interventions in key employment-creating service sectors, most notably the Business Process Services, BPS, incentive and the film industry. To date, the DTI’s contribution to the BPS sector has produced some outstanding results. To use but one example, in the first three months after being revised and relaunched last year, the BPS incentive was a critical catalyst for new investments by the MTN Group Management Services (Pty) Ltd and Full Circle Contact Centre Services (Pty) Ltd, totalling R16,3 billion and creating an estimated 6 300 jobs over the three-year period.
Our film and video sector, to borrow a phrase from social media, is trending. In the past financial year alone, the industry contributed R3,5 billion to the economy, supporting 25 O00 jobs. We are now truly on the global film production map with an impressive recent record of international films, TV series, documentaries and commercials. Building on this momentum to support local film-makers, the DTI recently launched a R1 million-threshold Emerging Black Film-Makers Incentive Programme. This will tap into an exciting pool of young talent that, up to now, has encountered many obstacles in realising its full creativity.
Time constraints do not allow for a fuller report on the comprehensive range of DTI activities. However, I wish to report, in summary, that besides what I’ve already mentioned, this department has been involved in a R3 billion new investment by Unilever South Africa and a new Atlantis-based manufacturing facility for components in the wind and solar industries by the Spanish company, Gestamp. Other green energy production facilities established were JinkoSolar; SMA Solar Technology; and Agni Steels SA (Pty) Ltd, in Coega.
In September, we launched a R100 million gold-loan scheme to support jewellery manufacturers. In the same month, a R1,2 billion glass furnace bottling facility was unveiled by Nampak, supported by the government’s 12i Tax Allowance Incentive programme.
On the agro-processing front, to take just one example, in December 2014, Abagold Limited, a local Hermanus-based company that farms abalone, announced a significant expansion, with support from the DTI’s Aquaculture Development and Enhancement Programme. As the company’s chief executive officer reported at the time:
The investment in the project is budgeted to a total sum of R112 million and we have already received R5,6 million on our first claim from the DTI. Our maximum production per annum used to be 275 tons and with the new project, it will grow to 500 tons.
Kwanele Tom, 20, who is employed on Abagold’s farm, added:
Since I joined the company, I have learned how to work with abalone and would like to attend the aquaculture training course and other skills training. I want to grow with the company.
[Applause.]
I have provided examples of some, though far from all, of the successes that can be attributed to the work of the DTI, along with the invaluable support of the IDC and our partner departments in the Economics Cluster. I have done so to make the point that the current iteration of Ipap not only seeks to build on and enhance these successes, but to provide clear evidence in support of our confidence that these successes can and will continue to deepen.
In what I have already outlined today, it is clear that the substantive issues of promoting higher inclusive growth in this economy are the following. Firstly, we need a higher impact, scaled-up industrial policy across a range of sectors, including stronger incentive packages and tighter conditions for recipients of our funding, with a particular focus on support for key champions or winning firms in sectors where South Africa enjoys a competitive advantage, or where we can create one.
Secondly, there is a need for government, state-owned companies, SOCs, and the private sector to build a stronger set of working relations to unlock the opportunities and overcome the constraints that continue to inhibit the growth of the manufacturing sector.
Thirdly, we need increasingly “joined-up” government for more policy coherence and programme alignment to support our national industrial effort.
In Ipap, we identify five key pillars of industrial development. The first pillar is infrastructure industrialisation - ensuring that the very substantial infrastructure build programme supports local industrial development.
The second pillar is resource-driven industrialisation. Allow me to present just one example of this work. Significant industrial development opportunities are emerging in the form of clean energy and mineral beneficiation-linked solutions using South African mineral resources. Fuel cells are one example, representing an exciting window of opportunity for South Africa to enter into, and potentially lead, this new high–tech, resource-dependent industry, leveraging on our platinum group metals endowment, existing fabricators and research and development initiatives. Major platinum-mining companies see fuel cells as a possibility to offer growth opportunities for the industry where the continued development of the platinum market is required to ensure its long-term sustainability.
These exciting developments, which I don’t have time to go into at this moment, are evidenced by the fact that we need to fast-track this potential industry. This requires co-ordinated government effort and strong partnerships between the public and private sectors to grow the markets and supply chains in South Africa and the region.
The third pillar is advanced manufacturing-driven industrialisation. This means a continued focus on key sectors of our manufacturing economy which will upgrade our capabilities in the economy, as a whole. We need to engage particularly intensively with global original equipment manufacturers and develop robust conditionalities for public–sector support programmes, so that the growth of the sector achieves its industrial development objectives.
The fourth pillar is procurement. This focuses on strengthening the localisation of public procurement, building on lessons we have learnt through the implementation of various policy instruments over the last few years. It includes securing more compliance with procurement prescripts in the public sector, and training and capacitating public sector institutions for strategic sourcing and supplier development.
The DTI has designated 16 sectors, subsectors and products for local procurement. When I launched Ipap 2015, I announced further designations for local procurement in the following product areas: transformers, power-line hardware and structures, steel conveyance pipes, mining and construction vehicles, building and construction. In the case of the last sector, the first round of construction material designations includes cement, fabricated structural steel pipes and fittings, sanitary ware, glass, frames and roofing materials.
This means that in the 645 infrastructure projects across the country valued at R3,6 trillion, the state must procure the types of products listed above, and other products previously designated, from local manufacturers. This is the strongest signal, to date, that government intends deploying industrial policy instruments where it believes it can achieve leverage to support industrial development and job creation.
The fifth and final pillar is regional economic integration. As we have done in the past, we will continue to work actively to position South Africa as a competitive and attractive destination for FDI, particularly in value-added activities. In line with these positive outcomes and my previous reports to the House, we will consistently seek to improve service delivery, even where we are doing well.
I am glad to announce today that we will soon be opening a dedicated investment promotion unit and interdepartmental clearing house, as was announced in the President’s state of the nation address. Specific details of this enhanced investor-support facility will be provided in the near future. However, we intend to provide greater resources to establish a one-stop shop for investor support, regulatory matters, investment financing and immigration matters. In future, investors can expect more and better services with regard to aftercare, expansion and retention.
South Africa has been playing a prominent role in championing developmental integration in the regional economic communities we are members of and in the African Union, AU. The Tripartite Free Trade Area that will be launched at the summit in Sharm el–Sheikh, next month, will signal that we are on track to create a market of over 600 million people with a combined GDP of over R1 trillion. Later in the same month, in South Africa, negotiations will be launched for the establishment of a continental free-trade area that will embrace the entire continent – a market of 1,3 billion people and a combined GDP of US$2 trillion.
These developments follow the Extraordinary Summit of the Heads of State and Government of the Southern African Development Community, SADC, held last month, which approved a regional SADC Industrialisation Strategy and Roadmap. South Africa strongly supports regional and continental efforts to build more industrialised and diversified economies and to reduce the overdependence of member states on primary products.
Members may well be aware that the US Senate has now passed a Bill that provides for the African Growth and Opportunity Act to be extended for a period of 10 years and for South Africa to be included. However, new provisions in the Bill strengthen the conditionalities that will apply and clearly seek to chart a course to transform the relationship between the USA and Africa from nonreciprocal concessions to reciprocal agreements. In addition, the Bill provides for regular reviews of African countries’ trade and investment policies with an emphasis on the openness to US products. In the case of South Africa, such a review is scheduled to be held within 30 days of the enactment of the Bill.
Notably absent, although indicated at an earlier stage as a possibility, is any improvement in the level of access of products from eligible countries, in terms of the African Growth and Opportunity Act, to the US market. The Act’s commitments remain important to sectors, like automotive and chemical, and some agriculture and agro-processing. Government is working hard to remain a beneficiary of the African Growth and Opportunity Act, mindful of the 30-day out-of-cycle review to which we will be subjected. However, the reality is that with the many new conditions and changing dynamics of US trade policy, the value of the African Growth and Opportunity Act is diminishing, while its costs are rising. [Interjections.] I will raise the matter for discussion in Cabinet, in the near future.
The limited time I have today precludes any substantive reporting on our very important legislative programme. In the coming year, we will depend on your wisdom to assist us in the passage of key pieces of legislation. These include the Promotion and Protection of Investment Bill, the Copyright Amendment Bill, the National Gambling Amendment Bill and the Liquor Amendment Bill.
All the work I have been discussing is underpinned by the efforts of related development finance and regulatory bodies, such as the IDC, the National Empowerment Fund, NEF, the Council for Scientific and Industrial Research and the DTI’s technical infrastructure institutions, as well as the co-operation of state-owned companies. The work of the DTI is also supported by the oversight of the parliamentary portfolio committee and the select committee in the National Council of Provinces.
To the chairpersons, the hon Joan Fubbs and the hon Eddie Makue, as well as hon members of the committee, I express my sincere appreciation for your support. All the work of the DTI is supported by all the Ministers and departments in Ipap’s Economic Sectors, Employment and Infrastructure Development Cluster. Allow me also to express my sincere appreciation to these Ministers. We reaffirm our common goal of taking the inclusive industrialisation of South Africa to a newer and higher level. Thank you very much. [Applause.]
Ms J L FUBBS
The MINISTER OF TRADE AND INDUSTRY
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Ms J L FUBBS: Hon Chairperson, hon colleagues, cadres and all South Africans, let us welcome the R9,6 billion budget that underpins the core mandate of the DTI driving industrialisation and playing a complementary role in regional industrialisation.
The promotion of trade and investment supports the acceleration of industrialisation to create decent work. Indeed, South Africa is determined to expand its trading footprint beyond its traditional partners which include the European Union and the United States, to include countries in the south, our Brazil, Russia, India, China and South Africa, Brics, bloc partners, and fresh partners. This is critical in our volatile global environment. South Africa has played a significant role in strengthening trade on the continent, as well as facilitating industrialisation. Indeed, internationally, South Africa is respected as a negotiator and supporter of multilateralism.
On this 60th anniversary of the Freedom Charter, we are reminded that a critical document which all members of the House and parties supported, developed an inclusive socioeconomic and political charter. We want to acknowledge the work that is being done in the Department of Trade and Industry, led by the two Ministers, Minister Davies and Deputy Minister Masina, and the Director–General, Lionel October. They, too, are strengthening and deepening the commitment to broad-based black economic empowerment, BBBEE.
We are happy to say that, for the first time, funding has been ring-fenced for the advancement of black industrialists. I have no doubt that this will leverage much more investment than the R1 billion. [Applause.] That was simply a seed.
The development of a productive economy for the purpose of job creation ... [Interjections.]
The HOUSE CHAIRPERSON (Ms A T Didiza): Order, hon members! Hon Fubbs, could you just take your seat? Hon members, please, when you interject, try not to drown one another out, particularly the person at the podium. I can see, hon Ollis and Maynier, you are competing. At some stage, I don’t know who is interjecting between the two of you. Continue, hon Joan Fubbs.
Ms J L FUBBS: Thank you, hon House Chair. I do know that they get terribly excited because the DTI is the most dynamic department in our country. [Applause.]
What we have in the Medium-Term Strategic Plan confirms Ipap as the strategic driver for this radical shift from a commodity-driven economy to a productive and job-creating one. Let us not forget that the development of a productive economy for the purpose of job creation is the country’s objective, as set out in the National Development Plan, NDP.
The ANC-led government is determined to shift the focus of South African exports from the domination of raw resources and import of processed goods to the export of beneficiated products, especially mineral resources. [Interjections.] We are currently importing some of our processed raw products at a much higher price. Who does that benefit? No one, not even the private sector! Therefore, it is these twin practices that have led to unsustainable economic growth and contributed to the current account deficit.
We believe that neither a consumption-driven economy nor the current trading patterns will achieve a future growth of 5%. This is why there has been a really strong approach by the leadership and DTI to obtain further trading partners to sell our goods more widely. They are busy tramping the globe, in this direction. [Interjections.]
We support the Mineral Beneficiation Action Plan because one of its key priorities will support the establishment of production plants closer to mineral deposits. The special economic zones, SEZs, expanded on later by the hon Mantashe will be the vehicle for the promotion of productive investment and more competitive exports. Certainly, we also know the hon Kalako will be expanding on the incentives. Let me emphasise, however, that more than 60% of the department’s budget is earmarked for incentives in this financial year. The initiatives include Manufacturing Competitiveness Enhancement Programme, the Enterprise Investment Programme, the Automotive Investment Scheme and as the Minister underlined, the Clothing and Textiles Competitiveness Improvement Programme. I know that the hon Kalako will be expanding on this, at great length.
In the current budget, the department aims to increase manufactured goods to R3,5 billion from R2,5 billion. For South African exporters accessing new markets in Africa, and abroad, and to diversify South African exports, R150 million has been reprioritised over the medium term from incentives to the interest make-up scheme of the Export Credit Insurance Corporation of South Africa in the Trade and Investment Programme. We too, wish to congratulate the DTI investment division for the award, the recognition that was given to them internationally, as the Minister mentioned here again, today. [Applause.]
Trade promotion incentives include Export Marketing and Investment Assistance, EMIA. I know people like the hon Wilmot will be very keen to hear this as he often raised it when he was in the committee. A total of 970 enterprises have been approved to participate in the EMIA. The Enterprise Investment Programme receives R72,9 million.
I know many of you read the Financial Mail and many other financial media. What is interesting is that the commentary and analysis from leading economists - not ANC economists, leading economists in and outside the DTI - confirm that South Africa’s investment performance in the current global environment is impressive. [Applause.]
So, let us examine the facts. Foreign direct investment doubled between 2012 and 2013. It was $8 billion, in 2013. We know that between 2013 and 2014, the performance, although somewhat moderate, was great. Indeed, South Africa, today, is ranked the 13th most attractive country for investment across 25 economies. By the way, we overtook Switzerland, Japan and Italy. [Interjections.]
In addition, International Investment Initiative Director at the World Trade Institute ... [Interjections.]
The HOUSE CHAIRPERSON: (Ms A T Didiza): Order! Hon Hill-Lewis, you are next in line. So, when you want to differ with the Chairperson, you can do so appropriately. Really, I think it is something that I’ve asked of all of you. While you converse and make interjections, they must not drown out the speaker or prevent us all from hearing. Order! Hon chairperson of the committee, you can proceed.
Ms J L FUBBS: In addition, International Investment Initiative Director at the World Trade Institute, Dr Stephen Gelb, says if one looks at the number of firms investing in South Africa, it shows that more than 130 foreign firms either entered South Africa or expanded their investment. This is not an ANC piece of research. Another way of looking at it is that, every single week of the year, there are more than two foreign firms investing or expanding in South Africa. We need to reflect on this good news. [Applause.]
Apart from that kind of good news, Deputy Minister Masina recently led a delegation to India to engage on the coal there. Judging from the information, it certainly seems that this will actually grow the coal brownfield projects, and other joint ventures. We wish to thank you for that, Deputy Minister. [Applause.]
I think we have heard a lot with respect to trade policy, but what is important is that, a few years back, it was very small. It is still small; it is 16,3%. However, two thirds of intra-African trade is manufactured goods and that is a very good sign.
With respect to the Brics Development Bank, we know that the Treasury, the Ministers of Finance in all these four countries are looking at that. The agreements have been tabled in the Standing Committee on Finance and ratification by South Africa is expected any minute. We have heard, of course, about the African Growth and Opportunity Act and all members of the committee want it, but no, we don’t want to be held to ransom over it. We need to engage on it so that we reach a mutually beneficial agreement.
We may have forgotten that, in reaching this agreement, there is criticism within our own country. The poultry industry stands to lose 1 000 jobs. So, we cannot ignore this as we move forward. We need to balance these issues.
I want to mention the Companies and Intellectual Property Commission, CIPC. We recognise more than ever, when we examined this and did our oversight that the importance of governance is top of our list because we know that when governance and leadership move down the line, one can expect other problems.
Minister Davies, we are happy to say that you took prompt action. You didn’t fudge the matter. You said we have got a problem here in the working environment, let us deal with it. You dealt with it successfully. [Applause.] I want to thank the Minister for his transparency in dealing with this and really, we expect this to succeed. We learned that there are many fresh outlooks. The outlooks range from Saldanha, in the Western Cape, to the Carlton Centre, in Johannesburg, from De Aar in the Northern Cape to Buffalo City and Limpopo - all this, in a bid to ensure that we are able to be accessible to everyone.
Before I finish, I also want to congratulate Shalton Mothwa. He invented a charger simply by applying his mind and realising that he could capture radio waves. Congratulations to him and SA Breweries, SAB, who supported it. [Applause.]
I want to say the ANC can only support such an equitable and efficient budget. Thank you. [Applause.]
Mr G G HILL-LEWIS
Ms J L FUBBS
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Mr G G HILL-LEWIS: Chairperson, I think after those two speeches, it’s time for a spoonful of reality, this afternoon. Most informed observers now agree that our economy will not grow at the Treasury’s projected 2%, this year. In fact, we’ll be lucky to achieve 1,5%. Considering the population growth rate, it’s clear our economy is barely growing at all. Indeed, I think many in this House will share the general feeling that most South Africans now share. Our country is stagnant, drifting sometimes forwards, sometimes backwards, but without any clear course.
This is in a period of historically low interest rates, which must, at some point, rise in response to the American economy - and many say that that point is now imminent. This foretells of a very bleak winter ahead for South Africa. In fact, some business people are saying that this period feels very much like the very dark economic days of the mid-1980s when the apartheid siege economy was finally failing.
I also think that many South Africans can now see, despite the many voluble claims to the contrary from the government, that the trouble we are now in is largely of our own making. This government has failed singularly to provide those basic prerequisites for economic growth that fall explicitly within their constitutional responsibility to provide. These are a secure and competitive supply of energy, a predictable policy environment, a stable and productive labour environment and vital economic infrastructure that is competitively priced.
It would have been more honourable if the hon Minister and his colleagues had admitted this failure and come to this House with a fresh urgency and a renewed vigour to deal with it. In a time of crisis, every South African needs to know that their government is behind them, is singularly focused with laser intensity on only those things that are needed to solve the current crisis and help them keep their jobs and keep their businesses open. However, urgency, vigour, focus and intensity are words that I don’t think any South African would use to describe this government’s approach to the economy.
For a very long time now, members on this side of the House and South Africans outside of this House have been trying to rouse this government from its foggy sleep. The policy confusion in BEE over the last three weeks demonstrates the extent of the rot. Businesses had 18 months to prepare themselves for the implementation of the new codes, and all indications were that they were diligently aiming to meet that deadline.
Then, on 2 May, the day after the codes came into effect, the Minister issued a notice which threw into complete disarray the preparations that businesses had been making. Then, a few days later, after an entirely justified uproar from business and labour alike, a series of clarifications was issued which helped a bit, but not much. Finally, on 14 May, on Friday last week, after three weeks of complete pandemonium, a further clarification was issued to cancel the whole thing and revert to the status quo. [Interjections.]
Minister, if one needed an example of how policy uncertainty and contradiction inhibits the investment climate in this country, this is it. Just as you gave business 18 months, so, you had much longer to figure out what you really meant by the new codes. However, you waited until after the implementation date to cause a great deal of unnecessary damage to the relationship between business, organised labour and government. I wonder what will happen to those responsible for such a serious, unavoidable blunder - including you.
Allow me also to caution the Minister. If sources in the DTI, as I’m sure they are, then his officials are acting in favour of a powerful lobby of well-connected black businessmen who had every interest in reinterpreting the codes to ensure that they remained at the centre of every empowerment deal. What other explanation can there possibly be for so blatantly removing broad-based schemes from the codes and setting up the re-empowerment of a tiny, wealthy, well-connected ANC elite?
The department’s handling of the African Growth and Opportunity Act is another example of its incredible dithering. South Africa’s position is now desperate. Given this government’s policies on intellectual property, investment protection and property rights, our exclusion from the African Growth and Opportunity Act after the so-called out-of-cycle review is ever more likely. In fact, I know that the DTI is already preparing for that eventuality because I hear that it has sent questionnaires to businesses around the country asking for their feedback on projected job losses in the event of exclusion from the African Growth and Opportunity Act.
No one needs a questionnaire to know what the consequences will be and they will be terrible - and I tell you, all of those job losses will fall on the Minister. It is frankly inexplicable that the department allowed this issue to run right to the brink of disaster before showing it the attention and urgency it deserved.
It is more inexplicable to me that the department allowed a private industry association to negotiate the trade policy of this country, as if the government had no say in the matter. I think we must have a separate debate in this House on how the African Growth and Opportunity Act came to this and I will write to the Speaker to ask for a debate of public importance on the matter. What is already clear is that if we are excluded, only the ANC is to blame.
Let me end by making a suggestion which I hope the Minister will agree with. The current electricity crisis threatens to deliver a final and fatal hammer blow to South African manufacturing. We must do whatever is possible to try and see our manufacturers through this very trying time. I therefore propose that, as an interim measure - as an emergency measure - industrial-sized generators should be made free of VAT to make their purchase cheaper for manufacturing businesses.
Further, the DTI should, as a matter of urgency in this budget, redirect a significant portion of its incentives budget to help manufacturing businesses finance the purchase of generators. This will not solve the problem but it would be an important show of faith by you, as the government, that you are prepared to sacrifice, along with the rest of the country, to keep the machines running, to keep the factories open and to keep the workers in their jobs. Thank you.
Mr M Q NDLOZI
Mr G G HILL-LEWIS
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Mr M Q NDLOZI: Hon Chairperson, the EFF’s contribution is well known in the work of this portfolio committee, through its deputy president, the hon Shivambu. Today, he is at the Pan-African Parliament, participating in discussions on illicit financial flows affecting the continent.
As the EFF, we must state, from the beginning, that we do not support this Budget Vote essentially because we do not think this government takes the revolutionary duty of developing productive forces seriously. In addition, we oppose the budget in the interests of the working class, as a whole.
We also think this government suffers from cognitive dissonance, the pathological condition of going about doing the wrong thing even when evidence that what you are doing is wrong is presented to you, repeatedly. There is ample evidence that unless you take control of the strategic industries in the economy, you are unable to lead industrialisation. This evidence is part of what your government has experienced in the past 21 years.
For instance, the work of Alice Amsden, a well known expert on what she calls “the rise of ‘The Rest’” -which includes how post-colonial countries industrialised - demonstrates that no country, particularly those who were deliberately underdeveloped, managed to industrialise thorough the anarchy of the market, or depending only on the private sector. State leadership, control and ownership were necessary for all postcolonial industrialisation.
What are you doing? You have no plan to take control of strategic industries. Instead, government continues to amputate parts of the Department of Trade and Industry by chopping and shifting functions to other ill-conceived departments, for instance, the Department of Small Business Development. I mean, what is next, the department of township business?
How can your department consider itself to be leading industrialisation when the IDC, for instance, is sitting with a wrong and unnecessary department? This demonstrates that there is no proper alignment and co-ordination of industrial policy - and also that you are not students of history. What you must tell us about the much-published Black Industrialists Programme is this. What are these industries, specifically? What products are they producing? Where is their manufacturing located, and how many people do they employ? If these industries are not 100% locally owned then I can tell you now, you are reinventing the wheel.
On the other hand, the idea that you will produce black industrialists is actually pie in the sky because how can you produce industrialists in an economy you do not own or control? Perhaps you are talking about tenderpreneurs. If so, you will be very successful. How do you build transformed industries that require precious metals when you have no access to your own minerals? How do you build transformed agro-processing industries when our people cannot access farms or land to farm?
You have a lot of political power but you do not use it. Nowhere in your pronouncement do you state that 75% of state procurement will be locally secured - as you committed yourselves to in the elections manifesto - because you have no commitment to increase it to 75%. This is the truth that you must accept.
Part of the reality of your mismanagement and misconceptions is that you don’t want to accept that white monopoly capital has no commitment to the industrialisation of this country. Besides subjecting black workers to suffering, even physically killing them, they corroborate in tax avoidance and transfer mispricing that drains the fiscus of trillions of rand. Why is there no commission of enquiry into this - an Operation Fiela that stops white monopoly capital corporate crimes and the crimes that have been committed for centuries?
Your policies have not envisaged a different path for the past 21 years. They are recycling the old and will meet with the same failures as an economy that only benefits white monopoly capital and continues to subject the majority of black people to suffering. Thank you.
Prof C T MSIMANG
Mr M Q NDLOZI
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Prof C T MSIMANG: Hon Chairperson, the main objective of the DTI is the development of a productive and vibrant economy for the purpose of creating new jobs and sustaining existing ones. This can be achieved through a radical transformation from a consumption-driven to a production-driven economy - but with an emphasis on beneficiation.
Key to all of the above, though, is through the provision of a reliable and sustained supply of energy. If Minister Davies is serious about transformation, he should influence the energy war room and be more encouraging over private sector solutions to the energy crisis. Radical transformation should not only be confined to urban areas but should also take place in our rural areas, where about 40% of the South African population still resides.
It is often disappointing to observe that many economic programmes are intended for towns and cities, even though the DTI has selected agriculture and agro-processing as one of the key drivers of the production economy. The rural areas, which provide the ideal space for agriculture, have been sidelined. Even in the DTI budget, nothing is earmarked for the rural areas.
The argument might be that Minister Nkwinti’s Department of Rural Development and Land Affairs is dedicated to developing the rural areas. I would still take issue with this. The department seems focused on land affairs and the establishment of agri-villages. It has done pretty little, if anything, about building infrastructure. Rural farmers cannot even access local markets, let alone export markets.
The National Credit Regulator is doing sterling work in communicating to consumers the perils of overindebtedness and its consequences, as well as ably protecting them against exploitation from unscrupulous market creditors. However, it is still not represented in our rural areas. Why is this? Our rural areas are where abuse and exploitation arise, owing to the fact that rural people are, generally, poor and semiliterate.
The IFP welcomes the decision of the DTI to set aside R100 billion and ring-fence it for the production assistance of 100 black industrialists. One can only hope that the candidates will be selected on merit. I state this in view of the strong perception by non-ANC applicants who claim that the beneficiaries of the Umsobomvu Youth Fund and also of the National Youth Development Agency, NYDA, are also card-carrying members of the ruling party. [Interjections.]
Greater regional and continental integration is paramount, and efforts to achieve this must be sustained and supported. In this regard, the recent initiative to bring together three regional blocs - SADC, the Common Market for Eastern and Southern Africa, Comesa and the East African Community - to establish a trading bloc is very welcome.
The IFP will support this Budget Vote. I thank you. [Time expired.] [Applause.]
The DEPUTY MINISTER OF TRADE AND INDUSTRY
Prof C T MSIMANG
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The DEPUTY MINISTER OF TRADE AND INDUSTRY: Chairperson, Members of the National Assembly, Minister Davies, other Ministers in the Economics Cluster that are here, director-general of the department and other senior officials of the DTI, Leader of Government Business, black industrialists, guests in the gallery, on the occasion of delivering the budget last year, in July, I had mentioned that our central task in the coming year would be to give life to the injunction made by President Zuma that we need to foster the radical socioeconomic transformation agenda for the benefit of the majority of our people. From the vantage point of industry and trade policy, this requires the provision of support from the new entrepreneurial groups who will serve as the drivers of change in a manner that reconstructs the racial and gender composite of industrial ownership.
In April this year, we launched an integrated system through our CIPC, where one now can register a company at the cost of R125 and get a free BEE certificate, as well as one’s tax document, as long as all is in order. [Applause.] We will continue with the second phase of this project, where we will be looking at qualifying small enterprises. These are enterprises with a turnover of R10 million to R50 million. We will make sure that we do this work through the self-service terminals that we are going to deploy throughout the country.
This we have done, working together with the Department of Home Affairs and the SA Revenue Service, Sars, using a biometric system so that we are able to do this particular work, which has been a barrier for many of our people. Through this initiative, we are certain now that we are going to stop and root out the fraud and corruption that has been taking place within the verification agency sector.
During our budget speech last year, we also announced reforms in the film sector and the Minister has elaborated on this quite extensively. What we have been able to do is to bring as many people as possible into participating in this particular sector. I’m proud to announce that for 2015-16, we have budgeted about R290 million for this particular sector. Since the review of the sector, we have been able to support about 105 companies to participate in about 19 international markets, as a result of our work. The additional investment that has been attracted to South Africa is just over R1 billion.
Last year, we undertook to reform the practices of constituting delegations to international trips. We have decided to open the space to new players in the investment and trade delegations. I can confirm that, to date, more than 200 new companies have been exposed and have participated in foreign markets. The stories coming out of that have been exiting.
I led delegations to various parts of the world, including to Brics partners, China and India, as well as to other countries, such as Iran, France, Algeria, Zimbabwe and Botswana. Many companies that went with us are excited about the new opportunity and the prospects have been positive. These trade and investment engagements underscore our R412 million allocations to Tisa within the department.
Last year, we revealed that the DTI would embark on a systematic and deliberate effort to increase the presence of black industrialists in our economy. We said these efforts would be consolidated under the umbrella of the Black Industrialists Development Programme. In this regard, we said the concept of black industrialists referred to people directly involved in the origination, creation of a minimum of about 51% ownership, management and operation of industrial enterprises that derive value from the production of goods and services on a large scale, acting to unlock the productive potential of our country’s manufacturing assets for massive employment, locally. This is premised on the observation that black entrepreneurs and industrialists cannot emerge and play a more meaningful role in the economy without special support measures dedicated exclusively to them.
Feedback from some of our development finance institutions, DFIs, suggests that black manufacturing entities have substantially less equity investment. They also have access to fewer loans for start-up capital and growth, compared to their counterparts. They have limited capacity to finance their own industrial ambitions and have difficulty accessing private credit without productive assets to use as collateral. They are likely to pay higher interest rates on loans than their peers. This adds to the likelihood of them being denied loans by funding institutions. It is in this context that we intend using the Black Industrialists Scheme to provide various support mechanisms to transcend these barriers to entry and growth.
In response to this industrial limitation, we appointed a Black Industrialists Advisory Panel comprising experts from different sectors to help us conceive a policy and implementation framework. This work has led to the development of a policy framework for black industrialists.
Amongst other things, this draft policy proposes a combination of financial and nonfinancial support mechanisms intended to boost the industrial asset share of black industrialists. These broadly include working capital support in the form of concessional loans; investment grants that may cover up to 80%, capped annually, on the capital equipment for entities with at least 51% black ownership; joint venture support with investment packages and grants where black industrialists have equity and management control in strategic sectors; export support through our export insurance concessional funding; and market support. Our funding of enterprises will cater for various stages of development, from pre-feasibility and feasibility support to acquisition and expansion.
Deriving from the definition of black industrialists I gave earlier, we have generated the criteria for qualifying enterprises. The central property to this is 51% black ownership, majority black management and control of the enterprise, and the production of products with wide use in specific sectors of the economy. We have prepared and will present a consolidated policy and implementation plan and submit it to Cabinet, soon. We will also be releasing it for public engagement so that we are able to craft final policy.
As a prime ethical principle, we will actively apply transparency in the application and admissions process for benefiting in the Black Industrialists Programme. Our considerations will include publishing in newspapers and on our website for all the qualifying companies who might wish to apply. To date, we have had no fewer than 40 applications who volunteered as soon as we announced the idea of the Black Industrialists Programme. We have not undergone any adjudication process, but will process them alongside all other applications as soon as we are ready to implement this particular programme.
As part of our implementation plan, we want to have processed and accredited 50 beneficiaries under the scheme by the end of 2015. This will increase to 100 at the end of the second year. This is in view of the three-year medium-term objective to assist black industrialists. The third year will be used to assess preliminarily the implementation and reinforcement mechanisms that are required to ensure that these enterprises are able to leap into the future.
The DTI has set aside R1,5 billion in investment to ensure that we can provide cheaper loans to these industrialists. Our sister company, the Small Enterprise Finance Agency, Sefa, has set aside R100 million to support this particular programme. Last week, our colleague Minister, Minister Patel, announced the R23 billon which will be used for this programme to support black industrialists. Our Development Bank of Southern Africa, DBSA, has set aside R2 billion to further support this particular programme. A large chunk of the money will come from the Public Investment Corporation, PIC, which is regulated differently.
Various private sector institutions have also expressed willingness to partner with government on this particular programme. These include Standard Bank and First National Bank. To a certain extent, Bidvest has also shown interest in working with us. We invite other private-sector institutions to join us in this transformative initiative.
Amongst the funding instruments that will assist in this initiative are various existing programmes within the DTI. Hon members know that we have about R7,1 billion set aside in this budget for the incentives within the DTI.
Government has committed its public procurement as one of the instruments to be used to advance this inclusive objective of transformation. This is implemented through the set-asides for targeted procurement from small, medium and micro enterprises, SMMEs, and black-owned companies. Currently, the government threshold on set-asides is 30%. The objective is to institutionalise up to 75% procurement for emerging businesses, Mr Ndlozi.
In this regard, we also signed a memorandum of understanding with South African Airways on 18 May to set aside R10 billion from their public procurement for black industrialists within the airline. We have been engaging Eskom, Transnet, the Passenger Rail Agency of South Africa, Prasa, and Denel in pursuit of a similar arrangement. We are satisfied with the progress so far and the rest of the state-owned enterprises, SOEs, will be engaged in similar terms.
A living example of these potential partnerships with other SOEs is of that between Prasa and the Gibela Rail Transport Consortium, with a project worth about R51 billion. This project provides us with an opportunity to create industrial supplier parks to support this huge investment activity in the area of Nigel, in Ekurhuleni.
We are engaging the Department of Water and Sanitation and the Minister, when he was presenting earlier here, on a possible opportunity for alternative sources of sanitation to create new industries. Through the Black Industrialists Programme, we intend rolling out the manufacturing of pipes in Richards Bay, in KwaZulu-Natal, and Kagiso, in Gauteng. International investors are also being engaged to partner with us, working together with the Department of Water and Sanitation, to pursue a range of opportunities.
A stable growth path requires a capable labour force sufficient to drive the skills competition for the economy. This reality is informed by our close co-operation with the Department of Higher Education and Training through Deputy Minister Manana. We are working together to ensure the training of 15 000 artisans throughout South Africa, starting here in the Western Cape, in Saldanha Bay. We have invested R20 million in this pilot project. An equal amount has been invested in a skills academy in the Northern Cape that deals with the energy sector. Similarly, the social composition of our skills base, broadly, and the leadership of the institution of the economy ...
Our programme, Taking the DTI to the people, has taken us to all the provinces in South Africa and this will continue, this year. The objective of this programme is to engage our people in their spaces, both to study their conditions and also avail ourselves of information on existing government initiatives.
In conclusion, we have an abiding responsibility to actively make this economy work for all our people. The DTI takes the role of government in fostering transformation in economic relations, very seriously. We view this in line with the national objectives of building an inclusive society.
It is in this context that the DTI progressively evolves a policy regime that is a midwife to transformed relations of asset ownership and high economic growth. Our policy objectives are designed to help the economy overcome the volatility of the market in resolving structural and social inequalities historically embedded by apartheid policy. This includes overcoming spatial inequalities amongst the provinces, in terms of industrialisation.
In this context, the aim is to substitute the DTI for private sector capital. The objective of the DTI is to induce the emergence of new entrepreneurial groups in critical sectors, consistent with the national transformation agenda.
I also want to take this opportunity to congratulate many businessmen and women who have been working with us in the DTI to make sure that we get our economy to where it is. Thank you very much. [Applause.]
Adv A DE W ALBERTS
The DEPUTY MINISTER OF TRADE AND INDUSTRY
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Adv A DE W ALBERTS: Voorsitter, Minister, voorsitter Fubbs, dit is my plig om te sê dat ons uiters bekommerd is oor die land se toekoms. Maatskaplike binding is op ’n historiese laagtepunt en die ekonomie onderpresteer geweldig. Daarom sal die Minister aan die volgende aspekte moet aandag gee ten einde die ekonomie aan die gang te kry. (Translation of Afrikaans paragraph follows.)
[Adv A DE W ALBERTS: Chairperson, Minister, chairperson Fubbs, it is my duty to state that we are extremely worried about the future of the country. Social cohesion is at an historic low and the economy is underperforming severely. That is why the Minister will have to pay attention to the following aspects in order to kick-start the economy.]
The first point relates to the splitting of this department’s functions into new departments. Small business development cannot be separated from the trade and industry, at large, and requires a plan that acknowledges the economic interaction between small and big business. Competition oversight does not fit into a separate domain under the rubric of economic development. To be true, economic development, in itself, sits with trade and industry, as a whole. Therefore, having separate Departments of Economic Development and Small Business Development adds to the confusion of policy implementation.
Secondly, the ANC’s economic policy incoherence adds to the confusion, as the Minister indicated. The ANC likes to refer to different policy documents as it pleases them, like the National Development Plan and the New Growth Path. They even refer to the Freedom Charter as if it has any legal status, which it does not. [Interjections.]
Wat die Wet op Groei en Geleenthede in Afrika betref, soos die Minister weet, is die Amerikaanse Kongres nie net bekommerd oor die hoenderinvoerkwessie nie, maar ook oor die beoogde beperking op buitelandse eienaarskap in sekuriteitsmaatskappye en grond. Daarby word informeel verneem dat die nuwe, verskerpte swart ekonomiese bemagtigingswetgewing en kodes ook negatiewe sentiment skep. Minister, ek vermoed dat Suid-Afrika uiteindelik uit die Wet op Groei en Geleenthede in Afrika-verdrag geskop sal word indien die regering nie beleggersvriendelike beleid skep nie.
’n Verdere kommer is die Minister en departement se gedrag waar absurde wetsontwerpe, regulasies, riglyne of praktyksnotas uigereik word wat so uit pas is met die werklikheid dat die Minister na ’n stortvloed van besware dit noodgedwonge weer moet terugtrek. Hier is die Besigheidslisensiëringswetsontwerp en die onlangse riglyne rondom swart ekonomiese bemagtigingseienaarskap goeie voorbeelde. Dit skep net meer verwarring in die besigheidsektor en kalwer vertroue tussen besigheid en die regering weg.
Minister, u moet verstaan dat besigheid, veral klein besigheid, ’n entrepreneursvernuf verg waar iemand sy geld en sy toekoms - en dus sy familie se brood en botter - op risiko plaas. Hoe meer mense ’n aptyt vir risiko ontwikkel en ’n kans met ’n nuwe besigheid waag, hoe meer suksesverhale sal daar statisties wees. Hoe minder dit doen, hoe minder nuwe werksgeleenthede uiteindelik geskep sal word. Pogings tot sentralisering en die gevolglike oorregulering vernietig enige aptyt vir risiko. Dit moet gestop word! (Translation of Afrikaans paragraphs follows.)
[As regards the African Growth and Opportunity Act, as the Minister knows, the US Congress is worried not only about the chicken importation issue, but also about the envisaged restriction on foreign ownership of security companies and land. In addition, it has been learnt informally that the new, more defined economic empowerment legislation and codes are also creating negative sentiment. Minister, I suspect that South Africa is eventually going to be kicked out of the African Growth and Opportunities Act accord if the government does not create investor-friendly policy.
A further concern is the behaviour of the Minister and the department, where absurd Bills, regulations, guidelines and practice notes are issued which are so out of touch with reality that the Minister has to withdraw them again, out of necessity, following a flood of objections. Here, the Licensing of Businesses Bill and the recent guidelines concerning black economic empowerment are good examples. They only create more confusion in the business sector and erode trust between business and government.
Minister, you need to understand that business, in particular, small business, requires entrepreneurial skill where someone places his money and his future– and therefore his family’s bread and butter - at risk. The more people who develop an appetite for risk and take a chance with a new business, the more stories of success there will be, statistically. The fewer people who do this, the fewer the number of job opportunities that will eventually be created. Efforts towards centralisation and the consequent over-regulation destroy any appetite for risk. This must be stopped!]
Lastly, the ANC needs to review its BBBEE BBBEE philosophy. The ANC is quoted to have stated in their 1994 policy document:
... if well handled, affirmative action will help bind the nation together and produce benefits for everyone. If badly managed, we will simply redistribute resentment, damage the economy and destroy social peace.
Those are the words of the ANC.
It is unfortunate that we have now reached the reality of the latter position. Resentment has been well distributed among the minorities, and the economy is faltering. Social peace is fraying.
It is sometimes said that BBBEE is modelled after the Afrikaner’s own economic empowerment path. The truth is, however, that Afrikaners started creating their own institutions and empowerment in the 1920s, long before they were in control of any government. [Interjections.] By 1948 and against all odds, Afrikaners were already empowered by virtue of self-help and without government intervention.
It is also important to note that there were no instant millionaires or industrialists among them. It took 30 to 40 years before they emerged via the proven road of experience. Today, people are empowered without experience, creating unsustainable businesses that are destined to fail. We need more economic freedom, Minister, and eventually, it will lead to emancipation for all. Economic freedom will lead to that. [Time expired.]
Ms P T MANTASHE
Adv A DE W ALBERTS
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Ms P T MANTASHE: Hon Chairperson, Ministers and Deputy Ministers here present, all hon members of this House, guests in the gallery and fellow South Africans, allow me to declare upfront that the ANC supports this Budget Vote No 34. [Applause.] I want to thank Minister Davies and Deputy Minister Masina for their sterling leadership in the Department of Trade and Industry and also the equitable, efficient and effective budget before this House.
This budget underlines the key role of trade and industry, which is to drive industrialisation and promote trade and investment. The Freedom Charter, which all South Africans support, emphasised that the people shall share in the country’s wealth. The 53rd ANC national conference in Mangaung further emphasised this when it called upon us all to radically transform our economy so that all the people of South Africa could benefit from their contributions over decades and, even, centuries.
One of the tactics to realise this goal is the acceleration of industrialisation. This calls for South Africans, the public and the private sector to shift from consumption to value addition. We must beneficiate all our primary products. Fellow South Africans, the ANC supports this Budget Vote because they realise that the major share goes towards the Incentive Development and Administration Programme. This targets the distribution of incentives to accelerate industrialisation and to ensure that South Africa has competitive prices.
The establishment of industrial development zones, IDZs, namely, Coega and East London, in the Eastern Cape; Richards Bay and Dube TradePort, in KwaZulu-Natal; and more recently, Saldanha Bay, in the Western Cape, enables South Africa to compete more effectively in the international markets. [Applause.] The recent oversight visits by the Trade and Industry Committee to the Coega IDZ revealed a practical example of value addition in an IDZ. The establishment of the Coega Dairy changed the lives of the farmers in Port Elizabeth and surrounding areas who, previously, could not add value to the milk they produce. The IDZ has made a change by collecting the milk at one point, and cheese is produced, creating jobs for a sizeable number of citizens.
We also visited Agni Steels, which has a state-of-the-art steel manufacturing smelter facility using scrap metal. We want to make a call to business in that part of the country to establish their businesses in the IDZ to access the incentives.
The R600 million investment by a Chinese truck company has established an assembly plant called First Automotive Works, FAW, which was launched on Thursday, 19 July 2014. Already, it is benefiting the Nelson Mandela Bay Metropolitan Municipality and the greater Eastern Cape region, as it generates foreign direct investment. This is creating decent, sustainable jobs to provide opportunities for skills development and training. On enquiry, we learnt that certain components of these trucks are manufactured in South Africa. Moreover, the first phase of this operation is expected to produce up to 5 000 trucks and 400 jobs. The second phase is expected to manufacture about 30 000 passenger vehicles and create thousands of jobs, downstream. Siyaqhuba; asilelanga! [We are moving forward; we are not sleeping!]
These projects contribute towards the realisation of the commitments of the ANC’s manifesto from 2009 to 14 and the NDP, our guiding document. Le ANC ayithembisi nje, koko iyenza kuba kaloku ukulawula yakuceba kudala ngowe-1912, ayiqalanga ngowama-2007. [The ANC does not just make promises, it acts on them because it started making plans to rule in 1912 and not in 2007.]
This initiative is part of the ANC-led government’s intervention to make manufacturing an important pillar of the economy and to assist to further show foreign investor confidence in our country. Recent visits by both Ministers indicate that our country remains attractive. Yes, we are moving South Africa forward.
For the 2015-16 financial year, there are 10 planned SEZs allocated R1,7 billion, an increase from R600 million in the 2014-15 budget. This is targeted at developing new IDZs and improving the existing ones. Siyaqhuba, asidlali! [We are moving forward and we are not playing.] Under the ANC-led government, life is better than it was under the apartheid regime. Lo rhulumente uzimisele ukuxhasa amashishini mbombo zonke zelizwe. [This government aims to support businesses, countrywide.]
In September 2014, Minister Davies launched the newly developed R1 million-threshold, South African Emerging Black Film-makers Incentive Programme. Its objective is to support black film-makers with the intention of nurturing and growing them to take up big productions and thus contribute towards employment creation.
Masikhumbule ukuba phantsi korhulumente wengcinezelo, abantsundu babengenalungelo lokuxhamla kolu shishino, yaze yafika yone i-ANC yabakhulula abantu. Eli linge lelokudala imisebenzi. [We must remember that, under the apartheid government, black people could not benefit from this industry, and the ANC came along and liberated them. This is a job creation initiative.]
Recently, Deputy Minister Mzwandile Masina returned home from an overseas exploratory visit with great news. Our young film-makers are winning top awards. Furthermore, countries are scrambling to produce films in South Africa because not only do we have the climate and scenery, but also the skilled people. The Department of Trade and Industry lives through Ipap and facilitates access to sustainable economic activity.
In conclusion, this budget recognises that the structural, economic challenges faced by the country call for measures to decisively address joblessness and economic growth and to create an employment-generating economy characterised by inclusivity and poverty elimination. We are radically transforming the economy through interventions, such as the special economic zones. Through the SEZs, the manufacturing industry will grow, and so will the rest of the economy. Jobs will be created because SEZs will be situated in different areas of the country. This is in line with the ANC’s mandate of inclusive growth where our people also participate in economic growth.
The ANC supports the Budget Vote. Thank you. [Applause.]
Mr S N SWART
Ms P T MANTASHE
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Mr S N SWART: Chairperson, a key element for economic growth is to increase value-added exports. While new markets are continually opening up for South Africa, the ACDP believes that it is important not to neglect traditional markets, particularly those that grant preferential trade terms. Exports to the USA, as we know, are about 8% of the total, and this is not insignificant.
Therefore, it is key to ensure that the African Growth and Opportunity Act is extended in September this year. Of the 40 countries having benefited through the Act, South Africa tops the list. Through the African Growth and Opportunity Act, South Africa has created an estimated 62 000 jobs, with half of those in the automobile industry aided, in part, by the DTI’s Automotive Investment Scheme.
What is further significant is the quality of these motor vehicle exports. American market research firm, J D Power and Associates, has awarded the Mercedes-Benz East London plant five consecutive awards for top assembly plants in both Europe and Africa. In 2013, this plant was one point ahead of the German plant, a significant achievement. Minister, you have referred to the largest foreign direct investment made by Mercedes-Benz, which the ACDP supports and welcomes.
While the overwhelming support for the African Growth and Opportunity Act from the US Senate is good news for African and South African trade relations and the economic development of our continent, the renewal of the Act did not come without controversy. This was referred to by previous speakers, and we know the poultry issue is still outstanding. We need a balanced approach, Chairperson Fubbs, as you indicated.
The renewal of the African Growth and Opportunity Act includes a clause in terms of our inclusion in the trade agreement. This will be reviewed within 30 days of the Bill being signed. We are the only African state subject to this review clause, only because of the number of outstanding issues - possibly the poultry issue.
Hon Minister, the question is: What are we doing to ensure that we are not excluded from the African Growth and Opportunity Act in that review process - or does your comment that the value of the African Growth and Opportunity Act is diminishing whilst the cost is increasing not possibly indicate a lack of long-term commitment? Understandably, the reciprocity issue is something that needs to be taken into account. Perhaps, however, your department is already estimating the cost of an exit from the African Growth and Opportunity Act, as alluded to by earlier speakers.
The department’s radical changes to the rules on black ownership, which threw business and labour into disarray, were a cause of great concern. Thankfully, the department backtracked on this decision. We saw, Minister, where you correctly issued an apology. Perhaps you were right when you said that you tried to use “a large sledgehammer to hit a fly”. These schemes need to be encouraged and not penalised, as that notice did, which is also the message that was sent out.
Neither can you have the same group of individuals, mainly those with political connections, benefiting from every scheme. It also illustrates how government policy can be changed without much thought on the effects on the investment climate. This is a matter of great concern.
Policy certainty, as indicated earlier, is critical for investment and economic growth, which, if one has regard to this debacle, is not necessarily a given. I thank you.
Mr A J WILLIAMS
Mr S N SWART
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Mr A J WILLIAMS: Hon Chairperson, hon Ministers, hon Deputy Ministers, hon members, guests, friends and family in the gallery, and most importantly, the South African people - without you, South Africa, this House would be irrelevant and it would mean nothing.
Twenty-one years after the democratic breakthrough, our country is gripped with three serious challenges - unemployment, inequality and poverty. The World Bank stated in its South African overview:
South Africa’s economic transformation agenda remains incomplete. The limited progress since 1994 in lifting the living standards of the majority and reducing the income inequality has put the social contract under pressure and has grown into an open public debate.
In the statement of the ANC’s national executive committee on the occasion of the 103rd anniversary of the ANC, on 8 January 2015, in Cape Town, President Zuma said:
The triple challenges of unemployment, poverty and inequality persist, and the task of the ANC in the second phase of the democratic transition is that of radical socioeconomic transformation. This represents a fundamental break with the ownership patterns of the past and the putting in place of a South Africa that belongs to all who live in it.
[Interjections.]
Now, for those of you who think that radical economic transformation and a fundamental break with ownership patterns is a communist plot, let me enlighten you. At the conclusion of his visit to South Africa, on 6 March 2015, Mr David Lipton, First Deputy Managing Director of the International Monetary Fund, IMF, , said:
South Africa holds great promise and opportunity, but at the same time, it faces great challenges, in particular, to accelerate growth, create jobs for the millions of people out of work, and reduce inequality. ... Bold leadership is needed by all stakeholders to address these challenges. Business, labour and government each have a role to play. Working together is key to revitalising the South African economy and making it truly inclusive.
The International Monetary Fund believes that the only way forward for the South African economy is to become truly inclusive. Sadly, however, the South African private sector has failed to transform. They seem to be anti transformation, they don’t care about what the World Bank calls the “social compact”, and they are seriously avoiding any form of what the International Monetary Fund terms a “truly inclusive economy”.
White business - and yes, our private sector is vastly owned and controlled by whites - has a sense of entitlement. You can see this by the fact that the green economic sector is entirely owned and control by white men. The tobacco industry in South Africa is entirely owned and controlled by white men. The mining industry in South Africa is entirely controlled and owned by white men. [Applause.] [Interjections.] The manufacturing industry in South Africa is owned and controlled by white men. [Interjections.]
In fact, there is no economic sector within South Africa that is not owned and controlled by white men. I challenge the so-called media to do some real investigation into the extent of transformation within South Africa since 1994. I doubt whether they will do that - because the media in South Africa is owned and controlled by white men. [Applause.] [Interjections.]
The other serious challenge facing our nation is the creation of decent work. Now, some of you in this house blame President Zuma for our high rate of unemployment. [Interjections.]
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Hon Williams ... members, we have no problem with you interjecting. No, no, no, no! [Interjections.] No, no, no! Hon member Hill-Lewis, this is an hon member. [Interjections.] I don’t think that we will be proud of any use of language that says, “rubbish”. [Interjections.] We can’t be proud of that. {Interjections.] I think you also know that.
However, colleagues, the point that I was making on is this. When we are interjecting, can we make sure that we don’t drown out the speaker, please? [Interjections.]
Mr M Q NDLOZI: Chairperson, I wanted to ask the hon Williams if he is willing to ...
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Hon Ndlozi, you are not recognised!
Mr M Q NDLOZI: Oh!
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Thank you. You are now recognised.
Mr M Q NDLOZI: Eish, maar [but] Jackson! [Laughter.] I wanted to ask the hon presenter, hon Williams, if he is willing to take a question? [Interjections.]
HON MEMBERS: No!
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Hon members, you are not the hon Williams! [Interjections.] Hon Williams, are you prepared to take a question?
Mr A J WILLIAMS: No, Chairperson, I am not prepared to take a question.
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Thank you. You may continue.
Mr A J WILLIAMS: Thank you, Chairperson. [Interjections.] Some people in this House believe that President Jacob Zuma is responsible for the high level of unemployment in South Africa ... [Interjections.] ... when the reality is, in fact, that white business that owns and controls our entire economy has failed to produce any jobs recently in this country! [Applause.]
The government is the biggest producer of jobs in South Africa and the DTI’s incentives have produced thousands and thousands of jobs. It is time for the private sector to join government and create decent jobs. The World Bank says that there is a need for economic transformation. The International Monetary Fund says there is a need for economic transformation. The ANC says there is a need for radical economic transformation in order to meet the challenges of unemployment, inequality and poverty.
So, in line with these calls by the World Bank, the International Monetary Fund and the ANC, I would like to caution the South African private sector, as follows. The ANC fought and beat the apartheid regime, liberating our people from oppression. The ANC has capacity to fight, beat and force the South African private sector to radically transform ownership relations and control of our economy through legislative reforms ... [Applause.] ... and the ANC is a liberation movement that is rooted in the collective good.
We would prefer to work together with the private sector to transform our economy into one that is truly inclusive. [Interjections.] Let our children’s children be grateful for what we will achieve together and not fearful for what we may achieve alone. It is only through working together that we can do more. I thank you. [Applause.]
Mr D W MACPHERSON
Mr A J WILLIAMS
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Mr D W MACPHERSON: Chairperson, since the last Trade and Industry Budget Vote on 22 July 2014, the ANC has assured us that things are slowly coming right, that our economy will improve and that the land of milk and honey is within sight. In fact, I could give you the exact same budget speech as I did last year, because absolutely nothing has changed. We are still in the midst of an economic crisis of the ANC’s own doing, while our neighbouring economies continue to grow at 5%, and more.
Sadly, we will barely make 2% this year, as load shedding continues without solutions from the ANC. In addition to this, our labour force is on perpetual strike, while Minister Davies and his lefty communist entourage continue to throttle the economy with policies that have destroyed every country they have been implemented in. In fact, the only people who believe the economy is working are employed by Luthuli House.
Minister, you can’t fool the man on the street ...
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Hon Macpherson, just hold your horses a bit. Can we hear you, hon member?
Ms T V TOBIAS: Chairperson, I want to know whether the hon Macpherson is prepared to take a question.
Mr D W MACPHERSON: No, thanks.
Minister, you can’t fool the man on the street, and you certainly can’t fool the opposition. There are, however, a few quick fixes for our economy. One such government entity which is hopelessly under-resourced and poorly supported is the NEF. Regrettably, this is still not happening due to budgetary constraints, depriving aspirant entrepreneurs from contributing to the economy and creating much-needed employment.
Should the NEF be fully funded, it is estimated that 80 000 jobs could be created. That is potentially uplifting for 400 000 people. Instead, the Minister and Deputy Minister keep telling us about 100 industrialists that they want to create. Since the programme was launched in 2014, the only thing that they have done is to have a very nice, expensive talk shop. Not a single industrialist has been created - at the expense of 400 000 South Africans who are forced to live without a job, income or any hope. It is only after the DA proposed that an NEF venture capital fund guaranteed by the state and supported by the private sector be instituted that hundreds of South Africans can now believe in tomorrow.
The NEF has a well-intended mandate. However, Minister Davies’s priorities are so skewed that he couldn’t back a winner in a one-horse race! It is now incumbent on Minister Davies and the Economics Cluster to ensure that this proposal is implemented, without fail.
Last Thursday, I travelled to the National Maize Producers’ Organisation, Nampo, show in the Free State. It is the largest agricultural show in the southern hemisphere. It is truly remarkable to see a trade and agricultural show as big as this - and thriving without the support of government. In fact, while I was there, I couldn’t find a DTI stand or a single person from the department. This is extremely odd, considering President Zuma, in his Nine-Point Plan and state of the nation address, said he would be revitalising agriculture and the agro-processing value chain.
Agro-processing is a R49 billion industry in South Africa. According to Statistics South Africa, the manufacturing and agricultural sectors together employ nearly 2,5 million people, which is 16% of the labour force.
Agro-processing has been the largest recipient of the MCEP, with R1,5 billion rand being spent on projects since 2012. So, then, why on earth has the Minister lost his voice in relation to Minister Nkwinti’s pronouncements on land capping, which, bizarrely, has now gone down from 12 000ha to 5 000ha for commercial farms?
The Minister, as far as I can tell, has not said a single word or spoken out against how devastating this would be for the 2,5 million people to? find employment in this sector. This is even more at odds with the statement that he made in 2014 - that agro-processing is important because, when one has an existing agricultural activity and one adds value to the crops produced through agro-processing, that’s where the real income and real jobs are.
This example goes to the core of what we are seeing in the DTI under Minister Davies. He can’t talk about the economy because it is failing. He can’t talk about jobs because they are being destroyed, and he can’t talk about Minister Nkwinti because the ANC have told him not to do so. He has no real, credible plans and that is why he doesn’t want to talk about the important issues. All we see today is a budget that funds the same old tried and tested programmes - but Minister, the problem is they have been tried and tested and the results are clear. They are sending our economy into a downward spiral.
The Minister and the hon Fubbs spoke, at length, about how wonderfully we are doing on FDI and how we are sitting at 13th in world rankings - and they are right, but that’s for 2014. Hon Fubbs, have you read the 2015 report? We haven’t even made the top 25, this year. Perhaps you should read it. I am happy to e-mail it to you, as well.
You have spoken about Agni Steels being a success. We keep hearing about it, time and again. What you haven’t told us, however, is that for the last three years, the owners have failed to get visas to stay in this country. They continually have to fly out - every three months - to come back on a tourist visa. There is no cross-department co-ordination, at all.
The hon Masina has told us how well the CIPC is doing. Currently, the Ease of Doing Business report says that it takes 19 days to start a business in South Africa. In Afghanistan, which is a war-ravaged country, it takes seven days. It’s easier to start a business in a war-torn country than it is to start in a democratic country like South Africa!
Deputy Minister, you’ve told us, at length, about the Black Industrialists Programme, but you are not telling us how you are going to help a million entrepreneurs. Hon Mantashe, I am sure your brother is proud of the speech that he sent you and which you read out on his behalf. [Laughter.]
Hon Williams, you know, the last time I checked ... Iqbal Survé was not white. The Guptas, who own The New Age, are not white.
Ms T V TOBIAS: Chairperson ...
Mr D W MACPHERSON: Hon Williams, as a white man, I think and would suggest that you lead the way in transformation. Fall on your sword and resign from this government in protest. I thank you. [Time expired.] [Applause.]
Ms T V TOBIAS: Chairperson ...
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Hon member, what would be the point? The fact of the matter is that the hon member’s time is up.
Ms T V TOBIAS: But how can we allow him to patronise a woman like that? [Interjections.]
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Sit down, hon member.
Mr M U KALAKO
The TEMPORARY CHAIRPERSON Mr J M Mthembu)
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Mr M U KALAKO: Hon Chairperson, Ministers and Deputy Ministers present, hon members, let me first join all those who paid tribute to Comrade Mma Ruth Mopati, one of our stalwarts of the golden generation of our liberation movement. This was a generation that changed the course of the struggle and led the national democratic revolution to its initial success of winning political power and laying the foundations for radical economic transformation. We hailed this generation as the tried, tested and trusted leadership of the national democratic revolution. We are, indeed, indebted to you, Mma Ruth and your generation, for the fruits of freedom we are enjoying today.
The ANC declared this year as, The Year of the Freedom Charter. Together with the people of South Africa, we are celebrating the 60th anniversary of the Freedom Charter. Let us remind those who forget their history that although the Freedom Charter’s ideas originated in the ANC, it was the masses of South Africa, black and white, who participated in its foundation. This culminated in the Congress of the People, in Kliptown. It was at this congress that the people of South Africa adopted the Freedom Charter. It became the vision guiding the people of South Africa in their struggle against the white minority regime, and the blueprint for a future South Africa. It is in this regard that we must begin to assess how far we have come in implementing it, after 21 years.
The strategic goals of the department include facilitating the transformation of the economy and promoting industrial development, investment, competitiveness and employment creation. My focus will be on these goals of our government. It is on the basis of the Freedom Charter that the work and the contribution of the DTI must be assessed.
At its 53rd national conference, the ANC confirmed the strategy and tactics adopted by its 52nd national conference as encapsulating the transition from apartheid colonialism to a national democratic society. It also reaffirmed the centrality of the Freedom Charter as our lodestar; accelerated growth and development in a mixed economy which includes state and private capital, as well as co-operative, worker-based, community, and other forms of social ownership of the means of production; and an active development and leadership role of the state in the economy.
We know that the ANC-led government has not chosen an easy and popular path to address the structural causes of economic exclusion and social development. These include spatial imbalances inherited from the apartheid era, as we said in our strategy and tactics document. We do know, however, that it is the correct one under the prevailing national and global economic conditions, including the balance of forces.
Legislation-wise, the department put in place the Preferential Procurement Policy Framework Act, in 2000, and the Preferential Procurement Regulations, in 2001. Paragraph 9(1) of the Regulations empowers the DTI to designate specific industries where tenders should prescribe that only locally-manufactured products with a prescribed minimum threshold for local production and content will be considered.
To give effect to government decisions on public procurement, sectors or products were and are being designated for local production. Sectors already designated are rail rolling stock, 65%; power pylons, 100%; bus bodies, 80%; canned and processed vegetables, 80%; the textile, clothing, leather and footwear sector, 100%; set-top boxes, 30%; furniture products, 85%; electrical Telkom cables, 90%; valve products and actuators, 70%; and residential electricity meters, 50%. We can count more.
Regulation 9(3) further prescribes that, where there is no designated sector, an organ of state may include, as a specific tendering condition, that only locally-produced services, works or goods, or locally-manufactured goods with a stipulated minimum threshold for local production and content will be considered, on condition that such prescript and thresholds are in accordance with the specific directives issued for this purpose by Treasury, in consultation with the DTI.
In implementing the above, we must take into consideration the following: constitutional and legal compliance; economic and fiscal consideration; long-term public procurement plan and expenditure; alignment with policy objectives, in particular the creation and retention of jobs; promotion of SMMEs, geographic spread, technological capabilities; and local manufacturing capacity and security of supply.
Since the designation of sectors for the Preferential Procurement Policy Framework Act and its Regulations, there has been considerable progress made by government at all levels to implement the Act in order to boost our manufacturing sector and create jobs. There have been many success stories, but I will mention only a few. The Passenger Rail Agency of South Africa has awarded a tender to Alstom for the manufacturing of 7 224 coaches to be built between 2015 and 2025. The initial phase started in 2014 and will result in the direct creation of an estimated 8 088 jobs.
Transnet has awarded, in total, R50 billion worth of contracts to CSR Zhuzhou Electrical Locomotives, CNR Rolling Stock South Africa, Bombardier Transportation South Africa and General Electric SA Technologies for the building of 1 064 electric and diesel locomotives in South Africa. All but 70 of the locomotives will be built in Transnet plants, in Pretoria and Durban.
In the R14 billion HIV/Aids drug tender, local manufacturers were awarded 61,6% of the tender value and 64% of volume. The DTI is working closely with the Department of Health to identify opportunities for further designation of pharmaceutical products. Similar examples can be made in other areas, like textiles, leather and footwear, power cables and prepaid electricity meters, furniture products and set-top boxes for digital TV migration.
We are happy to note that the department has identified challenges in the implementation of local content. We commit ourselves, as Parliament, to work closely with the department in addressing challenges in the following areas: lack of legislative provision to ensure compliance – the DTI can only designate, but does not have legislative powers to stop or cancel noncompliant tenders - and the strategic sourcing and leverage of local procurement.
In conclusion, let me indicate that we know the DA is driven by white fears in its approach to dealing with the problems confronting the country. [Interjections.] [Applause.] They are antimajoritarian. Hence, they all always want the people of South Africa to believe that dominance of South African politics by the ANC is bad for the country and for democracy. In order to counter the ANC majority, just focus on racial groups ... [Interjections.]
Mr Z N MBHELE: Chairperson, on a point of order ...
Mr M U KALAKO: ... that feel ... [Interjections.]
Mr Z N MBHELE: Chairperson, on a point of order ...
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Yes?
Mr Z N MBHELE: Over here, Chairperson.
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Alright.
Mr Z N MBHELE: At the back, right here on your left, Chair. On your left, Chair.
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Oh! Alright.
Mr Z N MBHELE: On your left, Chair.
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Oh, baba? [sir?]
Mr Z N MBHELE: Yebo, baba. [Yes, Sir.] Chairperson, would the hon member be willing to receive a copy of the DA Values Charter ... [Interjections.]
Mr M U KALAKO: No! [Interjections.]
Mr Z N MBHELE: ... so that he can find out ... [Interjections.]
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Just there. [Interjections.]
Mr Z N MBHELE: ... so that he can find out ... so that he can find out ... [Interjections.]
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Uxolo. [I am sorry.] [Interjections.]
Mr Z N MBHELE: ... what drives the DA? [Interjections.]
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Hon member?
Mr Z N MBHELE: ... so that he can find out ... [Interjections.]
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): On what ... [Interjections.]
Mr Z N MBHELE: ... what our motivation is as the DA ... [Interjections.]
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Hon member, sit down. [Interjections.]
Mr Z N MBHELE: ... and not what he says it is. It’s ... [Interjections.]
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): We Lungu elihloniphekile, hlala phansi. We, ma! [Take your seat, hon member. Oh no!]
Mr M U KALAKO: In order to counter the ANC majority, they just focus on the racial groups that feel threatened by the majority dominance of Africans, but over time, try to penetrate African voters without whose support no party can win the elections. This must not be at the expense of the core constituency - the minorities. That is the DA.
Mr D W MACPHERSON: Chairperson ...
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Hold it there, hon Kalako.
Mr D W MACPHERSON: Would the hon member be prepared to take a question?
HON MEMBERS: No!
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Hon members, he is not asking you. He is asking the hon Kalako. Hon Kalako, are you prepared to take a question?
Mr M U KALAKO: No, Chair. [Interjections.]
This shows clearly that the DA is not concerned with strengthening democracy, but with finding ways to contain or fight the majority government. It does not see South Africa as a post-settler society with a persistent legacy of apartheid that must be addressed, but a country threatened by one party – the ANC dominance - and its black majority. That must be challenged. All of this exposes and reveals the DA as a political party to defend white privilege and monopoly capital. [Interjections.] [Applause.]
They should learn from the sector they think they are representing, that is, the private sector, which has actually adopted and accepted the plans in the NDP of the ANC. It accepted the programmes of government and is prepared to invest in and support them to develop our industries.
If you would, just listen to a quote from an address by Johan van Zyl, Chairperson of the Association for Savings and Investment South Africa, Asisa, in Sandton, in terms of the NDP being the blueprint to move the country forward: “The good news is that we have a solid blueprint in the NDP to steer the boat on course.” That is what the private sector is saying.
In conclusion, we must warn others, just as the ANC has been warning the hon Ndlozi. Revolutionary democrats shall not find social relations of the new order ripe and ready for harvesting at the point of power. A national democratic society is a conscious construct dependent on conscious action by politically advanced sections of society. This is what colleagues on the left must learn. Thank you very much. [Applause.]
Mr G G HILL-LEWIS
Mr M U KALAKO
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Mr G G HILL-LEWIS: Chairperson, would the Minister be prepared to take a very simple question? [Interjections.]
The MINISTER OF TRADE AND INDUSTRY: No, thank you.
Chairperson, at the expense of repeating myself, I don’t think any of us argued that the existing performance of the South African economy was optimum or that everything was going right in this economy. In fact, what I argued was that the growth path that we had been on, which had delivered moderate growth in only a few quarters - and was driven by consumption, highly import–intensive, and mineral commodity supercycle-dependent - had run its course and that we needed to embark on a course of structural change. This required moving up the value chain.
I then set out some of the successes that we had achieved with our industrial policy and said that this showed that we had policy platforms on which to build. I then outlined how we intended to build on those. I’ve heard nothing coming from the opposition to suggest an alternative to that, only a few platitudes and a few rather ignorant remarks.[Interjections.]
The hon Hill-Lewis, for example, says that the BEE issue shows the rot in the DTI.
An HON MEMBER: Yes!
The MINISTER OF TRADE AND INDUSTRY: Now, the first point I would want to make is that, really, you have got a lot to be modest about when it comes to talking about broad-based BEE. [Interjections.] Your party stood up here, last year, when the Bill came through and said, for the first time, you would vote for a Bill on BEE. [Interjections.] Then, because of the very codes which you now say people were working towards, you withdrew that support in the NCOP. One thing, one thing, flip-flop. On BEE you have got about as much credibility as the hon Alberts has, which is none. [Interjections.]
For the record, the thrust of the new codes is to strengthen those elements of the codes which support people becoming real players in the productive economy. These are things like supplier development, skills development, and ownership which allows people to exercise the real powers of ownership. Those are the things that are emphasised in the codes. [Interjections.]
We also said that we support collective schemes. I reject absolutely, with total and utter contempt, any suggestion that there is some kind of lobby sitting in the DTI that wants to narrow empowerment to a group of small, politically connected people. [Applause.] It’s not true! You have got no evidence. You come in here and you are telling us lies. You are misleading the House. [Interjections.]
On the question of the African Growth and Opportunity Act that you and a few other members spoke of ...
Prof B BOZZOLI: Chairperson, on a point of order ...
The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Hon Minister, let’s hear what the point of order is.
Prof B BOZZOLI: Chair, the Minister cannot say the member is telling lies. [Interjections.]
The MINISTER OF TRADE AND INDUSTRY: The hon member is extremely economic with the truth. [Laughter.] [Interjections.]
A number of members spoke about the African Growth and Opportunity Act. I don’t know whether hon members think that when there are demands for market accessing, whatever product it may be, we must just concede whatever is demanded of us, rather than negotiate it. I don’t know whether hon members are saying that when we negotiate we shouldn’t consult with the industry associations that are most affected. For the record, I intend to participate in a meeting with the United States trade representative on 4and 5 June, to try and finalise the matters between the associations. I would welcome a fuller debate on this matter in this Parliament. [Interjections.] However, if we have such a debate, I do hope that the hon Hill-Lewis and his friends will not come along here as the mouthpiece of an industry import association whose main door-opener happens to be a former leader of their party. [Interjections.] I sincerely hope that is not the case.
The hon Ndlozi, understudy for the hon Shivambu, today, has basically told us the same old story: Unless we have control of the commanding heights of the economy, we can’t do anything. State leadership is not necessarily, in all cases of industrial policy, state ownership. That is the mistake they make. State leadership is what we are trying to build. We are trying to build a platform of state leadership that supports industrialisation and to which the private sector, among others, can respond. [Applause.] That is what I think we are trying to do.
The energy question is, of course, a key constraint. It’s the number one issue raised by the President in the Nine-Point Plan. The Nine-Point Plan indicates that this government is committed to trying to address the structural constraints that we have in this economy to place us on a new growth path. That’s the course we are on.
Frankly, I have heard nothing that convinces me that anyone has got any alternatives. All there is, is a lot of empty rhetoric.
Let’s rather go and have a cocktail party. Let me just say to the hon members on this side that there is no champagne served. If they come along, we won’t call them “champagne Tories”! Thank you very much. [Applause.]
The TEMPORARY CHAIRPERSON (Mr J M Mthembu)
The MINISTER OF TRADE AND INDUSTRY
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The TEMPORARY CHAIRPERSON (Mr J M Mthembu): Colleagues, let’s join the House Chair in thanking our guests. They are still here, as late as it is. [Applause.] Let’s also thank our officials and each other. We went through five Budget Votes today, by the way. Let’s give ourselves a round of applause. Thank you very much. [Applause.]
Debate concluded.
The Committee rose at 18:35.
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