Speech by Michael Cardo MP, DA Shadow Minister of Economic Development, Budget Vote 25: Economic Development, National Assembly, 10 May 2018
“Only a DA government can herald a new dawn for the economy”
President Ramaphosa has assured the South African nation that a “new dawn” is upon us.
We are embarking, he announced in his State of the Nation Address, on “a new path of growth, employment and transformation”.
But with growth forecast at just 1.5% this year, over 9 million South Africans unemployed, and declining business confidence levels, this new dawn looks set to be a false dawn.
It is, in fact, only the brief blinding flash of Ramaphoria. And soon it will be eclipsed by the persistent, malignant forces of darkness – namely, corruption, cronyism and capture – that are part and parcel of the ANC’s political culture.
The prince of darkness, Jacob Zuma, has been banished to Nkandla. There he tends the R1.5 million-worth of cattle gifted to him at taxpayers’ expense by the is-he-or-isn’t-he Premier of the North West.
But Zuma’s legacy – state plunder, mismanagement of public finances and economic decline – still casts a gloomy shadow over the country.
And it will continue to do so until the sun sets on an ANC government, and we see the dawning of hope and change under the DA.
It is the role of the Economic Development Department (EDD) to bring coherence to economic policy-making and implementation across state departments.
EDD must promote inclusive infrastructure-led growth, and tackle unemployment by accelerating job creation.
In other words, it must duplicate the functions of countless other departments in the economics cluster.
President Rampahosa has promised to review the number of national government departments in order to “ensure the most efficient allocation of public resources”.
He should commence this process of fiscal fat-busting by applying his liposuction vacuum to the Economic Development Department. Its billion Rand budget offers some easy pickings.
EDD was one of a number of new departments fathered during the Zuma administration, in a fit of fiscal incontinence and without much thought to family planning.
To be fair, Minister Patel has been a devoted and conscientious guardian. But even though EDD has yet to reach old age, it is time – new dawn or false dawn – for the department to “go gentle into that good night”.
Its economic planning and co-ordination functions should go to Treasury. Its support services to the Presidential Infrastructure Coordinating Commission (PICC) should be delegated to the Presidency. And its oversight of the Industrial Development Corporation (IDC), International Trade Administration Commission (ITAC) and competition authorities should be restored to the Department of Trade and Industry (DTI).
Investment, competition and trade
Of the Department’s R1.073 billion budget, nearly 90% (or R952 million) is channelled to Programme 3: Investment, Competition and Trade.
That is an almost 20% increase from last year’s allocation.
The bulk of it is for subsidies and grants to the IDC, ITAC, the Competition Commission and the Competition Tribunal.
President Rampahosa says we are going to “re-industrialise on a scale and at a pace that draws millions of job seekers into the economy”.
It will never happen without root-and-branch labour law reform.
He claims that, through the R23 billion IDC-sponsored black industrialists programme, we are going to develop “a new generation of black producers…able to build enterprises of significant scale and capability”.
But if the ANC’s black economic empowerment policy is anything to go by, the programme will produce a new elite of politically-connected billionaires at the expense of the poor.
That is why we need to ensure the IDC isn’t abused, as it was in the case of the R250 million loan to the Guptas, to enrich cronies in the guise of transforming the economy.
During his State of the Nation Address, President Ramaphosa said that the ANC was going to use “competition policy to open markets up to new black entrants”.
The Minister has reiterated that commitment with reference to the Competition Amendment Bill gazetted in December 2017.
While the DA supports the bill’s objective of greater economic inclusion, the Competition Act is not the right tool for tackling those structural features of the economy that exclude black South Africans from participation.
Making the economy more inclusive isn’t about using a regulator to create a new market structure. Economic inclusion is about radically transforming our labour laws to create jobs. It is about improving access to capital and credit for unbanked entrepreneurs, cutting red tape for small businesspeople, and growing the economy.
None of this can be achieved by the competition regulators.
The Competition Amendment Bill is too ambitious. It puts too great a burden on the competition authorities to solve South Africa’s economic problems. It gives them too much scope to encroach on the domain of other institutions.
In particular, the proposed market inquiry provisions – including recourse to “forced divestiture” as a remedy – will, in the words of one competition law expert, give the Competition Commission the power “to move parts of the economy around like pieces on a chess board”.
As it is, the Commission’s human and budgetary resources are stretched to breaking point. We should not strain them further.
DA proposals on jobs for youth
When President Ramaphosa finally unveils his reconfigured economics cluster, it must prioritise youth employment.
This will require far more than the innumerable working groups, summits and accords convened in terms of EDD’s Growth Path and Social Dialogue programme.
A DA government would assist young disadvantaged South Africans in finding work by:
- Introducing a Jobseekers’ Allowance for all unemployed young people aged between 18 and 34;
- Rolling out a national Job Centres project where unemployed people can access job opportunities; and
- Introducing a National Civilian Service year to provide work experience for matriculants to enter into work-based training in the fields of community healthcare, basic education or policing.
The DA will empower entrepreneurs with access to capital, infrastructure and skilled labour. And we will exempt small businesses from certain labour- and BEE laws to help them compete and create jobs.
That is the best way to promote economic inclusion.
This administration offers us the false promise of a new dawn. Let us work to ensure that the black, green and gold cock does not crow again in 2019!