Last week, a political journalist from a well-known national publication approached me outside the National Assembly and asked me what I thought of the economic debate in Parliament called for by DA leader Mmusi Maimane, which took place that Tuesday, 18 August 2015. I responded by telling the journalist I thought it was much needed and really exposed the weaknesses of the ANC when it comes to economic policy, and most importantly job creation. The journalist retorted by expressing that she thought the DA speeches in the debate were “too political”.
We proceeded to debate the issue for a short while where I stated that the problem with our economy and its inability to grow and create jobs is because of the political decisions that the ANC has taken and continue to take. So in reality, the debate can only be one which is framed through a political prism. In the end, we agreed to disagree.
The conversation was an important one because it revealed how that particular journalist and perhaps the publication views the current debate on the economy, that is, couched purely in economics and completely separate and devoid of politics. One would be foolish to believe it is an “either or” situation, but rather a blend of both.
Let me be frank, in my opinion, the reason South Africa finds itself in an economic crisis is because of the political decisions the Zuma administration has taken, including those that he has entrusted to implement economic policies. The business crushing policies which seek to inhibit, rather than allow business to grow are solely political in their nature and are in stark contradiction to the National Development Plan.
The much delayed and now published Promotion and Protection of Investment Bill is a perfect case study in this regard. The Bill in its current format should rather be named the “Destruction of Investment Bill”. In essence, Minister Davies has allowed the Bilateral International Treaties (BITS) to lapse with many European countries and wants to replace it with a one size fits all bill. To think that trade is homogeneous and singular in approach is ridiculous. It is not.
Investment flows into South Africa dropped by 31.2% to $5.8-billion in 2014, down from $8.3-billion in 2013 that is according to the 2015 World Investment Report by the United Nations Conference on Trade and Development (UNCTAD). South Africa should be rolling out a tailored red carpet to each country that wants to invest in our country.
Instead, we have arrogantly said that foreign investors must play to our terms and the Minister will be the arbitrator when disputes arise. I am certainly not suggesting that we should let foreign companies run amok but we should be sensitive to the very vocal and expressive concerns that many countries have expressed with the bill in its current format.
Instead, we have ignored them and the reduction in Foreign Direct Investment (FDI) is proof that this strategy is not going to work due to a lack of political and policy certainty for investors. The question is then, if debates like the economy are purely economical, how does any sane person begin to have an economic debate about something that is so obviously bad for our country?
Surely the issue is one of policy and therefore intrinsically political. Too often, we are in debates where numbers, percentages and world rankings are trotted out before the country, falling on deaf ears with the economic communist clique of Minister Patel and Minister Davies. The only language left is one of political rhetoric.
Britain is a marvellous example of how political decisions can make economic sense. When David Cameron’s Conservative Party won power from the Labour Party in 2010, the British economy was on its knees. Saddled with enormous debt, in the midst of devastating recession, record unemployment and ballooning social welfare, Mr. Cameron knew some very tough and unpopular political decisions lay before him.
His first task was to reduce the national deficit, going through the budget with a fine tooth comb, ensuring the Chancellor of the Exchequer, George Osbourne, trimmed the fat and cut out none essentials. Politically, it was suicide after 10 years of taxing the rich to spend on a bloated government and massive social welfare system.
The government took aim at social benefit cheats, oversized government departments, even the police and military were told to do more with less. They even started selling off police stations which did not make economic sense, drastic measures indeed. However, the Prime Minister continued to tell the nation “We are all in this together” and that savings would be ploughed back into kicking starting the economy through tax breaks for small businesses, access to capital and reduction of red tape. At the time, the governments ratings dropped through the floor and discontent grew among the British public.
But something dramatic happened, the economy turned around, record numbers of people found employment, meaning less people on social benefits and more businesses were able to open and stay open than ever before. The British public rewarded Mr. Cameron by giving his party a majority in 2015 elections. The electorate rewarded the tough political decisions the government took because they produced economic results.
As South Africa faces the harsh reality of souring unemployment and increasing inequality, we have to look at the political economics of the ANC government and if indeed they do make financial sense. If one flips through the recently published National General Council documents, it is glaringly obvious that the ANC again fails to recognize it is not the economy that is the problem, but rather its policies and politics.
Dean Macpherson MP is the DA’s Shadow Deputy Minister of Trade and Industry
