Annexure to COSATU CEC statement, 23-25 February 2009

 Policy positions of the ANC and Government:

Audit of the ANC Elections Manifesto, State of the Nation speech, and Budget against the Polokwane Conference Resolutions

Introduction

This document attempts the ambitious undertaking of auditing the key elements of the ANC Polokwane Conference Resolutions, of particular relevance to COSATU, against: the ANC 2009 Elections Manifesto[1]; 2009 February State of the Nation (SON) speech, and the 2009/10 National Budget.[2]

This analysis is laid out as follows:

On each area under discussion, we recap what we said in COSATU's analysis for the February 2008 CEC- this summary is contained in boxes to make for easier reference. It should be noted that these summaries only concentrate on those elements of the resolutions which the CEC analysis had felt it important to take forward.

The summaries in the box, are then followed by an analysis of corresponding elements of:

• the ANC 2009 Elections Manifesto
• 2009 February State of the Nation (SON) speech, and
• 2009/10 National Budget.

In that order.

As further reference, the summary of resolutions of the October 2008 Alliance Economics Summit, is attached as Appendix II.

It is important to note that, while in theory, government and the ANC receive their mandate from the same source, in reality the mandating process resulting in these documents is very different. The ANC Elections Manifesto was the result of extensive discussion and consultation in the ANC and within the Alliance. This was not the case however with the two government documents under review, ie the February state of the nation speech, and 2009/10 national budget. Therefore, one can only determine their relationship to ANC policy positions, by comparing them to the positions taken in the Polokwane Resolutions, and the Manifesto.

One of the concerns sharply raised at Polokwane was that government has ignored a number of previous ANC conference resolutions, and policy positions, and this has also been repeatedly raised in the Alliance: the message from the ANC Conference was that this would no longer be tolerated, and clear positions were taken asserting that there is only one centre of power, and that government would be expected to advance ANC policies.

However, the overall impression in the audit below of these 3 documents, is that a wide gulf remains between the ANC and government, massively so with the budget speech, but less so with the State of the Nation speech. It is clear that there has been no systematic process of integrating the policies and priorities agreed at Polokwane, let alone the elections manifesto, into government programmes.

This audit therefore strongly underlines the need for the ANC, and Alliance as a whole, to elaborate a detailed 5 year programme for government, if the Resolutions of Polokwane and the Manifesto are to become a reality. The alternative is to allow government to continue charting its own course. The experience of the Alliance transition team clearly demonstrates that government will not of its own accord implement the ANC's mandate.

Note on February's State of the Nation speech given by Comrade Kgalema Motlanthe- the clear mandate from the ANC was that this speech should focus on assessing the past term, and that the new President would look at the programme for the next five years, in the SON after the April elections. Therefore auditing this speech against Polokwane is a quite limited exercise because of its retrospective nature. Nevertheless, it does give some sense of current thinking in the Presidency.

Note on the 2009/10 budget - we have only had an initial opportunity to scan the voluminous budget documents, which run into many hundreds of pages. More detailed analysis of the budget is therefore still required- it would be important for the Peoples Budget Coalition and COSATU's Panel of Economists to look at key questions raised in this audit. More detailed tables of the figures analysed in this audit are available in the Budget Review, and the tables on tax- pp 152 and expenditure- pp166 -167 of budget review will be distributed at the CEC.

It is important to note 2 important things about the budget upfront:

Firstly, given the fact that a new government will be in power in May 2009 (and not next year as stated by the Finance Minister!), this budget should have been treated as a transitional budget, and discussions held about how it would be realigned post-May. As the report on the transitional team indicates, however, this has not been done. The ANC and Alliance leadership were told that a huge contingency reserve budget was being included, to allow for new priorities to be accommodated. However, a contingency reserve of only R6 billion- less that 0,75% of the budget has been included- and this doubles in 2010, and triples in 2011, neither of which are transition years! Therefore there needs to be careful interrogation of the budget process going forward, and COSATU has flagged certain options in this regard.

Secondly, it is important to note that the budget figures are all based on an estimated 5% inflation figure and a 1,2% growth rate- both may be optimistic. If these predictions don't materialise, this has a range of implications which throw out the budget projections in various respects.

Audit of ANC and Government Positions

The key Polokwane Resolutions which we focus on for the purpose of this Audit are:

A. Economic Transformation (broken down into 6 separate sections)

B. Social Transformation

C. Rural Development, Land Reform and Agrarian Change

Note:

A summary of our analysis of the following resolutions is contained in Appendix 1: International Relations; Transformation of State and Governance; and Organisational Renewal[3].

A. Economic Transformation Resolution

Key aspects of the Economic Transformation resolution adopted at Polokwane (with the exception of the response to the economic crisis*- which was post Polokwane), are dealt with in the following order:

1. Macro-economic policy

2. Decent work

3. Industrial policy

4. State intervention and the Economic Growth Path

5. Measures to respond to the economic crisis*.

6. Democratisation of economic policy making

1. Macro-economic policy

Our analysis of the Polokwane economic policy resolution stated inter alia the following:

"What does Polokwane call for ? ‘Macro-economic policies that support and sustain growth, job creation and poverty eradication on a sustainable basis' (2.14). Although brief, this formulation, if unpacked, clearly supports our critique of government monetary and fiscal policies. Do contractionary monetary policies, high interest rates, inflation targeting etc, support growth, employment creation and poverty eradication? Similarly for a relatively conservative budget, fiscal surpluses etc? The argument by the spin doctors of the right has been that the use of the word ‘sustainable' shows that the intention of the Polokwane delegates was to retain existing ‘prudent' macro economic policy. However there is nothing in the Resolution which lends support to this view- the opposite is true. Again the question can be asked, whether current conservative fiscal and monetary policies are sustainable, if they are- choking off growth in the economy; retarding employment; increasing peoples cost of living; deepening inequalities etc? ... there are strong arguments on our side that these policies increase the vulnerability of our economy, deepen the trade deficit and balance of payments imbalances, increase financial speculation, undermine investment in infrastructure and service delivery, and therefore are unsustainable.

The formulation remains broadly progressive, and lays the basis for a more detailed Alliance consensus as to what type of policies would be in line with the spirit of the Resolution." 

Macro-economic policy: ANC Elections Manifesto

The draft Manifesto had no reference to macro economic policy. However the final version, following detailed discussions in the Alliance, contained a progressive formulation on macro-economic policy, which is more elaborate, and takes forward the Polokwane resolution.

The 2009 Elections Manifesto states that "The ANC government will (e)nsure that macro-economic policy is informed by the priorities that have been set out in this Manifesto. Fiscal and monetary policy mandates including management of interest rates and exchange rates, need to actively promote creation of decent employment, economic growth, broad-based industrialisation, reduced income inequality and other developmental imperatives. Economic policy will include measures to decisively address obstacles that limit the pace of employment creation and poverty eradication, and will intervene in favour of more sustainable and inclusive growth for all South Africans."

This lays the basis for a radical departure from current fiscal and especially monetary policy. However a detailed elaboration of what this would entail still remains to be done. The Alliance Economic Summit decided that an Alliance task team would be set up to resolve outstanding debates on economic policy, as well as look at responses to the economic crisis. This has not yet been done, therefore an elaboration of these economic mandates remains outstanding. This is particularly important given that some differences remain on economic policy, within the Alliance.

Macro-economic policy: State of the Nation address

Cde Kgalema Motlanthe's State of the Nation address sends out slightly contradictory signals on fiscal policy, although it introduces a refreshing perspective. A progressive statement is made that:

"Of critical importance is the question: what in fact should economic growth be about? Wealth is created in order to improve people's quality of life. Thus, the question whether growth is equitably shared should form a central pillar of all economic considerations... Sharing the benefits of growth also means an efficient and equitable role for the state in using the fiscus as an instrument of redistribution and sharing the burden of providing public goods."

On the other, a message which may be interpreted to support a conservative fiscal policy "These immediate measures will be informed by the principle of a counter-cyclical fiscal policy. However, we will ensure that the levels of borrowing by government are prudent and sustainable. This also implies a rapid reduction in government debt levels whenever conditions turn for the better."[4]

Nothing of substance is said in the speech about monetary policy.

Macro-economic policy: 2009 Budget

It is clear that the fiscal stance of the 2009/10 Budget is relatively expansionary. It increases overall spending substantially above the projected inflation levels, but goes into deficit because of the shrinking tax base resulting from our economic crisis[5]. However a number of questions need to be asked:

• Is this a shift in fiscal policy, or a temporary ‘counter-cyclical' response to the looming recession, to be replaced by more contractionary budgets once we move into an economic upswing? The comments of the Minister in the Budget speech suggest the latter.
• What is the quality of the spending? Is it a continuation, and expansion of spending on existing policy priorities, such as the infrastructure roll out programme, or does it represent a shift to new priorities, as laid out in the ANC manifesto, and is therefore transformational in character. The comments of the Minister suggest the former[6].
• Is the budget being used as an instrument of redistribution? The continuation of a relative reliance on income tax from middle and low income earners above the tax threshold, and on VAT, for nearly 50% of the tax burden, and the continued leniency to the rich, super-rich and large corporations, despite the massive levels of income inequality, suggests that fiscal policy is leaving current patterns of wealth concentration undisturbed. Significant also is that social spending as a share of the budget declines.
• Is the budget being used as an instrument by the state to embark on a major fiscal stimulus on a scale, and in the content of its spending, which can make a dent in the current economic crisis, or is it a merely moderately expansionary budget, which will have limited impact on the crisis of the real economy and jobs? Discussion of the fiscal response below, suggests that the intervention is far too modest in character, and cannot qualify as a serious fiscal stimulus and rescue package in any real sense.

We suggest that a serious analysis of the budget, in relation to our current social and economic imperatives, needs to be assessed in relation to these four questions, and not merely by whether the budget manages to expand at a level greater than that of inflation.

COSATU's Panel of Economists and the Peoples Budget Coalition need to do a detailed analysis of the budget, and what fiscal stance would be required to meet these objectives. But preliminary analysis suggests that the budget fails on all four criteria set out above, and that it falls short of the major interventions in the economy, jobs, rural development etc set out in Polokwane and the Manifesto. So while bold in Treasury's conservative terms, it is not a budget which does justice to the ANC mandate.

There is also no sense in the budget that monetary policy needs to be adjusted to deal with the current international crisis, or the developmental mandate given by Polokwane, and contained in the elections manifesto. Despite the international financial meltdown, structural problems with our finance sector, our dependence on speculative inflows, and our huge current account deficit, the message is that current policies remain appropriate, we are protected from the storms! The denialism which treasury has expressed since the crisis, supported by the SA Reserve Bank, continues to cloud their judgement, despite the general acceptance that it was only our limited capital and exchange controls which have stopped our financial sector from being more dragged down by the meltdown.

There is only one reference to monetary policy in the speech, which conveys a strong message of business as usual:

"Our development expenditure over the period ahead will require both improved

domestic saving and continued capital inflows. And so a sound banking system, healthy

fiscal position, credible monetary policy and appropriate foreign exchange regulations

will continue to limit our exposure to the international downturn, while serving as key

building blocks in financing future growth and development. The soundness of South Africa's financial system was subjected to an international assessment last year, which concluded that our banking system is diversified and is supported by an appropriate financial infrastructure and a generally effective regulatory framework. Although South African banks were not significantly exposed to sub-prime related products, they are nonetheless affected by deteriorating credit conditions."

This conservatism and denialism of Treasury is only exceeded by that of the SA Reserve Bank, which insisted on maintaining excessively high interest rates, in the face of mounting evidence that our real economy was being hammered, that an international depression was looming, and that we were facing massive job losses. While our Bank continued to take smug postures about the prudence and correctness of monetary policy, other Banks throughout the world, recognising the extent of the crisis, were taking radical measures to try and stimulate their economy. However our Reserve Bank only now seems to be gradually waking up from their slumber, after the horse has bolted. The damage they have inflicted on our economy and jobs, may well be irreversible, unless a well co-ordinated, decisive stimulus and rescue package is implemented.

Macro-economic policy Issues needing discussion

1. How does the Alliance take forward the commitments made at Polokwane and in the Manifesto to realign macro-economic policy?

2. How do we ensure that the budget is realigned post elections to take these agreements forward? Or do we live with the current budget until next year?

3. How do we begin to develop a new strategy, including the use of different instruments, to make monetary policy more developmental, and to co-ordinate our fiscal and monetary policy responses to the current crisis?

2. Decent Work

Polokwane put the emphasis on creation of decent work as a central pillar of economic policy, or as the resolution puts it "the primary focus of economic policies', and made a commitment to tailor all government policies and institutions, including macro-economic policies, to achieve this objective.

Even in relation to SMME's, which are often used as an excuse to promote deregulation of the labour market, the Resolution states: ‘we should ensure that fundamental worker rights are protected in small enterprise'.

Decent Work: Elections Manifesto

The Elections Manifesto takes forward the commitment of Polokwane to align all economic policies to the promotion of decent work, and elaborates further on what is meant by this, including the commitment to act against casualisation:

"Decent work is the foundation of the fight against poverty and inequality and its promotion should be the cornerstone of all our efforts. Decent work embraces both the need for more jobs and for better quality jobs. The creation of decent work and sustainable livelihoods will be central to the ANC government's agenda..."

And "The ANC government will":

•·         "Make the creation of decent work opportunities and sustainable livelihoods, the primary focus of our economic policies. We will make maximum use of all the means at the disposal of the ANC government, to achieve this. This objective should be reflected in the orientation and programme of development finance institutions and regulatory bodies, through government procurement and public incentive rules, in industrial, trade, competition, labour market and other policies...

•·         In order to avoid exploitation of workers and ensure decent work for all workers as well as to protect the employment relationship, introduce laws to regulate contract work, subcontracting and out- sourcing, address the problem of labour broking and prohibit certain abusive practices. Provisions will be introduced to facilitate unionisation of workers and conclusion of sectoral collective agreements to cover vulnerable workers in these different legal relationships and ensure the right to permanent employment for affected workers. Procurement policies and public incentives will include requirements to promote decent work."

The key issue which wasn't finalized in the manifesto discussion was the demand to ban labour brokers. However the manifesto opens the way for this, in its commitment to ‘prohibit certain abusive practices'.

Decent Work: State of the Nation

The SON address says very little on this issue, but does endorse the goal of decent work: "The question whether growth is equitably shared should form a central pillar of all economic considerations. Importantly, sharing the benefits of growth should entail labour-absorption, ensuring that there is decent work."

Decent Work: 2009 Budget

The issue of decent work is not mentioned once in the budget speech, despite the commitment of Polokwane and the Manifesto that this will be central to all government economic policies, and despite the budget listing ‘employment growth' as one of its five principles. This is remarkable, given that the Budget speech is the main economic policy statement of government. The impression that Treasury remains sympathetic to labour market deregulation, is not contradicted by the speech[7]. Under the issue of employment growth, the speech only focuses of PWP's. Nothing is said in this section about industrial strategy, strengthening the historical perception that Treasury's view is that the state's role in employment creation is marginal.

Issues needing discussion

1. How does the Alliance begin to elaborate a decent work agenda, including through engagement with government, which can begin to be concretely implemented by the new administration within the first 100 days?

2. What needs to be done to take forward a programme against casualisation, and to expedite discussions on measures which need to be taken against labour broking?

3. Industrial policy

It is worth quoting the Polokwane Resolution on industrial policy in full, given its importance: "[Transforming the structures of production and ownership, including through] Active and well-resourced industrial and trade policy aimed at creating decent work through expansion of labour absorbing sectors, diversifying our industrial and services base, pursuing an active beneficiation strategy, building sustainable export industries, and expanding production for domestic and regional consumption. In general, industrial policy should lead our overall approach to sector development, whilst trade policy should play a supporting role and be sensitive to employment outcomes."

This above formulation on industrial policy leading trade policy, is complemented by the formulation on trade, although it is slightly weaker: "Participating in world trade, pursuing strategic partnerships with countries of the south and agitating for a fairer world trade system. In particular, this means ensuring policy space to find new opportunities for employment should not be compromised. The position adopted by South Africa in global trade reform talks must continue to emphasise the need to retain policy space on tariffs and industry protection for developing countries and avoid obligations to significantly liberalise our manufacturing or services sector."

In addition, formulations on a number of areas which, in part, advance or consolidate existing ANC policies, including: broad based BEE; anti monopoly and anti-concentration policy; state regulation of natural resources, controlling of input prices and promotion of beneficiation; overcoming spatial patterns of economic marginalization; policies to absorb the unemployed; expansion of the social wage; and investment in priority skills and education; ensuring a sustainable energy mix.

Industrial policy: Elections Manifesto

The Manifesto takes forward the Polokwane approach and is fairly elaborate. It also takes on board many of the issues agreed at the Alliance Economics Summit. The Manifesto commits the ANC government to a number or issues relating to industrial policy, including (there are some related issues which are covered elsewhere in this document, including on issues of state intervention below):

• "Ensure that state-led industrial policy leads to the transformation of the economy. Adequate resources will be provided to strengthen the state-led industrial policy programme, which directs public and private investment to support decent work outcomes, including employment creation and broad economic transformation. The programme will target labour-intensive production sectors and encourage activities that have high employment effects. It will include systematic support for co-operatives by way of a dedicated support institution and small business development; supporting investment in productive sectors; and working together with our partners in Southern Africa to invest in our regional economy.
• Implement special sector programmes embracing industrial, trade and other measures backed by adequate resources This will include the strengthening of the manufacturing mining and other vulnerable sectors, and tide them through the period of the global economic crisis, saving and growing jobs in the clothing and textile sector, strengthening the automobile and components sector, expanding the food industry and other sectors.
• Ensure that a comprehensive package of measures is introduced to promote beneficiation programmes, to ensure that the natural wealth of the country is shared, and developed locally, and accelerates the creation of decent work opportunities in manufacturing and services.
• Engage the private financial sector in order to facilitate its transformation and diversification including the development of the co-operative financial institutions as well as ensuring that the sector contributes to investment and developmental priorities of the country.
• Develop programmes to promote the important role of mining and agriculture in employment, meeting basic needs and community development, and commit to continued transformation of these sectors to achieve national goals. Furthermore, government will ensure meaningful benefits for communities who gave up their land for mining activities.
• Tourism and other services will be supported to expand work for our people.
• Develop and invest in a programme to create large numbers of 'green jobs', namely employment in industries and facilities that are designed to mitigate the effects of climate change...
• Lead a massive public investment programme for growth and employment creation. In the period ahead, government will accelerate and expand its investment in public infrastructure. This will include expanding and improving the rail networks, public transport, and port operations, dams, housing construction, information and communications technology and energy generation capacity as well as education and health infrastructure, and in the process create additional decent work opportunities whilst meeting the basic needs of the society. ..
• Create an environment for more labour-intensive production methods, procurement policies that support local jobs and building public-private partnerships.
• Vigorously implement broad-based economic empowerment and affirmative action policies and adjust them to ensure that they benefit more broad sections of our people, especially the workers, youth, women and people with disabilities. Policies will, in addition, actively promote skills development and equity at the workplace."

Industrial policy: State of the Nation

There is no detailed focus on industrial policy in the SON speech. There are general references in relation to Asgisa implementation, which identify important weaknesses in current macro-economic and industrial strategy. The speech identifies some of the underlying structural problems facing the economy:

"...(AsgiSA) is being implemented, ensuring that all the critical blockages such as infrastructure bottlenecks, integrated industrial policy and programmes, the skills challenge, regulatory gridlocks and efficiency of government services are addressed in a focussed and systematic manner. ...Our economy has become more open, and since 1994 it has steadily become integrated into the global system. Our financial institutions are a force of good example which has somewhat sheltered us from the global economic storms. Yet, the extent of their reach within our society remains far below expectations. Our economy remains largely reliant on mining and agriculture for exports. Except for the services sector, we have not seen a large enough expansion in critical sectors, especially manufacturing. As such, the rate of growth in exports has not been as high as in comparable countries. It is precisely this weakness which accounts for the large Current Account deficit particularly when we entered higher ranges of growth. And because we have a low savings rate, we have had to rely on short-term capital flows to finance the deficit as well as our investment programmes. These are challenges that our country will certainly have to address going forward."

Industrial Policy: Budget

The 2009 Budget Speech makes no reference to government's new industrial strategy. The underlying philosophy of the speech is that state intervention, including in this current period of crisis, runs the risk of propping up uncompetitive industries, and that we therefore need to minimise such state involvement, since it will delay necessary industrial restructuring. The speech also opposes ‘high tariffs' and ‘protectionism', for the same reasons, (something echoed by a top treasury official in a recent speech, who also voiced his scepticism about industrial policy interventions).[8]

"...a time of restructuring is an opportunity to address regulatory and microeconomic barriers to our competitiveness. This involves detailed sectoral analysis, and ongoing consultation with affected industries and interest groups - it is the key to sustained, faster, long-term growth. In this budget, R1.6 billion is added to industrial development and small enterprise support programmes... A further R1 billion is added for electricity demand management, together with tax incentives for investment in energy efficient technologies. The new automotive production and development programme includes a production subsidy, which receives R870 million over the next three years."

"...the public sector borrowing requirement for next year is expected to be 7.5 per cent of GDP, or some R186 billion to be raised from domestic institutions, investors, multilateral institutions

and portfolio inflows from abroad. This is a substantial fiscal boost, against the background of the budget surplus recorded over the three years to 2007/08. But Members of the House, and fellow South Africans, we are borrowing not to rescue failed banks or to artificially delay the restructuring of our industry and trade, but to construct the roads and the power stations, the

classrooms and hospital wards, to modernise technology and transform public service delivery, as the foundations of growth and broad-based development in the decades ahead."

"The Industrial Development Corporation is currently assessing its possible role as a partner in supporting investment and employment in sectors or industries affected by the cyclical slowdown. Differentiating the effects of short term cyclical difficulty with the need for longer term industrial restructuring is difficult and sometimes involves policy considerations, and so risk sharing with the private sector has its place in preparing for future growth. At the same time, government is mindful of the need to avoid passing on risks to taxpayers that would be better managed in the business sector. Though there may be a role for public funds in support of businesses in difficulty, we need to ensure that an undue capitalisation of private wealth does not result in a financial burden of debt on future generations." (emphasis ours)

While there is a significant increase this year in the allocation to ‘economic affairs' as a share of the total budget (from 17.5% to 21.7%- most of the increase coming from fuel and energy, and transport), it is not clear how much is being allocated to industrial strategy interventions. Further, the allocation to this category is due to drop to 20% of the budget in 2010, and 17.2% in 2011.

Issues needing discussion

1. Detailed commitments are made on industrial policy arising out of Polokwane and the Manifesto. There is also a new industrial strategy. How do we ensure that this industrial strategy is fully aligned with these commitments, and that there is a detailed programme of implementation, in the short term, so that we can begin to see progress in the first 100 days?

2. How do we ensure that the necessary resources are leveraged to make this strategy a success?

4. State Intervention and the Economic Growth Path

The February 2008 CEC analysis of the Polokwane resolutions stated that they had the following cross-cutting features:

•·         "clearer elaboration of the notion of a progressive developmental state, which has a bias towards the working class, and a less neutral relationship to capital..- and a more democratic and less top-down character;

•·         a shift from the notion of growth as the solution to everything ..., to an acceptance that the current growth path as a whole has to be fundamentally shifted, to be redistributive, employment creating etc- the resolution calls for "an effective strategy of redistribution that builds a new and more equitable growth path"

•·         an important emphasis on inequality has been introduced, where previous (ANC) documents only focused on poverty and unemployment...;

•·          ...a partial move away from the emphasis on the market and competitiveness, and greater emphasis on the role of the state in driving the economy, a state led industrial strategy, an expanded role for state ownership, and a more interventionist approach to use of mineral resources"[9]

A range of proposals in the Resolution were seen to be consistent with these overarching themes. A number of these have been outlined above. Additional areas which were identified as relevant to these themes were aspects of the Resolutions which:

• recognise that "decisive action has to be taken to act against current patterns of ownership and production. The Resolution calls for action to address the ‘monopoly domination of our economy';
• assert the need for co-ordinated government wide economic planning to align policies and achieve the objectives set out in the resolution;
• commit to building the human capacity of the state, including by ‘ensuring adequate numbers of personnel to ensure delivery...';
• call for intervention by the state in key sectors of the economy, to transform the structure of the economy, and ensuring that national resources, including land minerals, and water are exploited to maximize growth, development and employment, and ‘not purely for profit maximisation';
• demand strengthening the role of SOE's, and ensuring that state entities respond to ‘a clearly defined public mandate and act in terms of our overarching industrial policy and economic transformation objectives'"

State and growth path: Elections Manifesto

The above analysis identified 2 related issues: interventions to shift the structure and direction of the economic growth path; and proposals to promote a central economic role for the state in shaping that desired economic trajectory, both through the state's economic activity, and interventions to direct the private sector.

The manifesto takes these issues on board to a large extent. The final Manifesto framework, which contains the more detailed proposals on which the Manifesto is based, puts the matter clearly on the need to construct a different growth path:

"The ANC is committed to building a more equitable, sustainable and inclusive economic growth path, centred on the creation of decent work opportunities and sustainable livelihoods. We need to ensure that the majority of our people benefit meaningfully from economic growth."

This is reinforced by the Manifesto itself which states that:

"Economic policy will include measures to decisively address obstacles that limit the pace of employment creation and poverty eradication, and will intervene in favour of more sustainable and inclusive growth for all South Africans."

On the question of the state's economic role, and co-ordination of that role, the Manifesto is clear:

"The developmental state will play a central and strategic role in the economy. We will ensure a more effective government; improve the coordination and planning efforts of the developmental state by means of a planning entity to ensure faster change. A review of the structure of government will be undertaken, to ensure effective service delivery."

And the Manifesto framework states : "The developmental state will play a central and strategic role in the economy, by directly investing in under-developed areas, directing and promoting public and private sector investment to support a sustainable and labour-intensive growth path."

This vision of an interventionist state is reinforced by a range of proposals including the need for: a comprehensive state-led industrial strategy; intervention to ensure large-scale beneficiation; intervention to direct the financial sector, and channel private and public investment; the expansion of a large scale public infrastructure investment programme; massive public works; use of procurement and budgets to leverage desired economic objectives; focusing of the mandates of DFI's to ensure developmental goals etc. A serious omission from the manifesto, however is a failure to focus on the role of state owned enterprises, which was dealt with in the Polokwane Resolution. This is, however, not deliberate, when viewed in the context of the entire Manifesto, and should be viewed as an oversight. Nevertheless, Polokwane is clearer in some regards on the need for state intervention in certain areas of the economy.

Further while Polokwane is clear in calling ‘adequate numbers of (public service) personnel to ensure delivery...', the manifesto framework only calls for an ‘expansion of public sector employment, targeting the youth' in the context of public investment and public works, and is silent on the general levels of employment in the public service (although as we see below the sections in the Manifesto on health, education, and safety, call for increased employment in these key areas of delivery). The manifesto itself has a double edged formulation on public service employment which can be read in contradictory ways:

"An important aspect of a successful developmental state is investment in public sector workers and in turn our people expect that they execute the tasks with which they have been entrusted. This means that the right and adequate numbers of personnel should be placed in the correct positions, and where this is not the case, government should have the capacity to implement corrective measures, either through training or redeployment where warranted."

This potentially confusing formulation, however, is balanced in other sections of the Manifesto by commitments in relation to frontline public service workers: to ‘employ adequate numbers' of teachers, and improve their remuneration; include ‘specific targets for the provision of adequate numbers of workers at all levels of the health care system', and ensure ‘improvements in the working conditions and provision of decent wages for (health care) workers'; and commits to increased recruitment for the SAPS.

State and growth path: State of the Nation

On the growth path, the State of the Nation speech makes the important statement quoted above: "Of critical importance is the question: what in fact should economic growth be about? Wealth is created in order to improve people's quality of life. Thus, the question whether growth is equitably shared should form a central pillar of all economic considerations."

Given the constraints however, the speech does not unpack what policies are needed to make this ‘equitable sharing of economic growth' a reality. It only reflects on recent job creation, while acknowledging that the issue of the quality of these jobs needs to be interrogated; proposes the accelerated implementation of affirmative action and BB BEE; and says that the state has a role in using the fiscus as an instrument of redistribution. While the speech was constrained by the fact that the ANC had determined that it should mainly be backward-looking, one still gets the sense that the Presidency hasn't fully internalized the demand by the ANC for a radical shift in the growth path.

The same is true for the ANC call for a far more decisive, interventionist, and co-ordinated role for the state in the economy. The SON address limits itself to discussing the Asgisa programme, and the agreements reached at the GDS. The important new element introduced in the speech, is the proposal emerging from the Presidential Working Group on the economic crisis- see below.

State and growth path: Budget

The Budget speech focuses on the impact of current economic conditions, in slowing down growth, and what we can do to increase growth, but says little or nothing about how we can change the current growth path, which disproportionately benefits the few, and reproduces the poverty and marginalization of the majority. It claims ‘a sound banking system, healthy fiscal position, credible monetary policy and appropriate foreign exchange regulations' have shielded us from the financial crisis, but doesn't say how the current structures of the economy prevent us from achieving the goals outlined in the speech, namely ‘accelerating growth and job creation,

broadening economic participation and reducing poverty.'

Although in the context of the current economic crisis, and failures of the market, attention is inevitably given to the need for some state intervention and regulation, this is largely couched in term of the state facilitating a more dynamic private sector, rather than direct involvement in the economy. The role of the state in the economy is largely limited to infrastructure investment and PWP's, and emphasis is put on issues of competitiveness in the private sector, with state intervention in the productive economy seen as tending to interfere with the development of this competitiveness.

This is completely out of line with developments internationally.

Issues needing discussion

1. How does the issue of government wide economic planning by a developmental state find expression in the proposed new arrangements for configuration of government? Is there a need for an economic planning ministry, or will this role be adequately performed by the proposed Planning Commission?

2. How do we take forward discussion in the Alliance on what is meant by developing a new growth path, and the implications of this for economic policy, and the role of the state and capital?

3. How do we ensure that the state is properly capacitated to drive development, including an approach to adequate staffing of the public sector to meet the state's obligations?

4. How do we use the space which has been opened by recent international developments to carve out a new economic role for the state?

5. Economic Crisis

Because of its timing Polokwane didn't take any resolutions on the economic crisis which erupted in 2008. However, because of its importance, we briefly reflect on the views taken in the 3 policy documents of the ANC and government on this matter.

Economic crisis: Elections Manifesto

The Manifesto undertakes to implement an economic stimulus package in response to the threat posed by the current international economic crisis:

"... practical steps of the ANC government will enable us to decisively defend our economy in the present global and domestic economic climate and take measures to advance our own developmental agenda. This will include an economic stimulus package, which will assemble various policy instruments to stimulate the economy to avert massive slowdown in the economy. In addition, government will take active measures through an appropriate social package to avert or minimise job losses, protect vulnerable sectors and cushion the poor from the economic down turn."

As we indicated above, the manifesto also promises to introduce programmes to protect vulnerable sectors from the crisis:

"(The ANC will ) implement special sector programmes embracing industrial, trade and other measures backed by adequate resources. This will include the strengthening of the manufacturing mining and other vulnerable sectors, and tide them through the period of the global economic crisis, saving and growing jobs in the clothing and textile sector, strengthening the automobile and components sector, expanding the food industry and other sectors."

Economic crisis: State of the Nation

The SON address gave central prominence to the draft agreement reached in the Presidential Working Group in January 2009 (involving the Nedlac constituencies) on the economic crisis. It is worth quoting from the speech at length:

"...in the interactions between The Presidency and leaders of various social partners, we agreed jointly to devise interventions that would minimise the impact of this crisis on our society. The task team dealing with these matters is still hard at work; and the following broad categories of responses are under discussion:

Firstly, government will continue with its public investment projects, the value of which has increased to R690-billion for the next three years. In this regard, where necessary, we will find creative ways to raise funds. This will include support by our development finance institutions and loan finance from international agencies, as well as partnership with the private sector and utilisation of resources controlled by workers such as pension funds.

Secondly, we will intensify public sector employment programmes. On the one hand, plans to expand employment in sectors such as health, social work, education and law-enforcement agencies will continue. On the other, we will speed up the introduction of the next phase of the Expanded Public Works Programme.

Thirdly, mitigating actions can be undertaken within the private sector to counteract an excessive investment slowdown and unnecessary closures of production lines or plants. On its part, government will adapt industrial financing and incentive instruments to help deal with challenges in various sectors, and also encourage development finance institutions to assist firms in distress because of the crisis. Alternatives to layoffs will be explored, including longer holidays, extended training, short time and job-sharing. This will be combined with promotion of the Proudly South Africa campaign and stronger action on illegal imports.

Fourthly, government will sustain and expand social expenditure, including progressively extending access to the child support grant to children of 18 years of age and reducing the age of eligibility for old age pension to 60 years for men. In addition, we will more widely utilise the Social Distress Relief Grant and food security measures specifically also to target those either unprotected by the Unemployment Insurance Fund or who have exhausted their benefits.

We shall also continue to pay special attention to the challenge of anti-competitive behaviour on the part of some of our corporations. ...

 We believe that the time has come to strengthen domestic regulation and supervision of the financial system; but beyond this, that stronger surveillance and action on a global scale have become unavoidable and necessary. ...The abiding lesson from this experience is that we need stronger partnerships among economic role players on a domestic and global scale, not only to stem the impact of the crisis; but also to put in place measures that would obviate a recurrence."

This creates a useful basis for moving forward. However, the SON summary of the issues doesn't mention some important elements of the draft agreement including, appropriate fiscal and monetary policy responses to the crisis (including measures to lower interest rates, and linking industrial policy to a ‘more competitive exchange rate'), the use of government procurement programmes, trade measures, direction of investment and credit, the setting up of a national jobs fund, defense of decent work, and action against labour broking, improvement of UIF benefits, implementation of the Manifesto's Food for All programme etc. Once negotiations have been completed, we need to ensure that government also incorporates these other elements into its programme.

Economic crisis: Budget

When compared to the centrality given to the stimulus and rescue package in the SON address, the Budget speech is disappointing, and mentions the agreement virtually in passing. Revealing here is not only the low prominence accorded to this response, but also the packaging of the issue, which suggests that Treasury itself has not seriously considered a response which goes beyond the public investment programme, despite the undertakings of the Manifesto. This is in line with the denialist approach of Treasury over the last number of months, suggesting that SA will not be badly affected by the global crisis, because of the ‘soundness of our financial sector', and our ‘macro economic stability'. The reference therefore in the budget speech is almost forced, because the President had already foregrounded it in the SON, and in the main body of the budget speech, nothing is said about what government is proposing, nor what has been incorporated in the budget to address this crisis:

"Policy adjustments need to reinforce macroeconomic stability in the context of a deteriorating international environment and provide a temporary cushion to the domestic economy. Lower inflation in the months ahead should contribute to moderating interest rates. Under the leadership of President Motlanthe, a task team comprising of business, organised labour, community organisations and government has been convened to agree on an appropriate South African response to the current crisis."

In the conclusion to the speech, almost as an afterthought, there is another reference to the package :

"Last week, President Motlanthe summarised our response to this financial crisis.

• Over the next three years, we will invest R787 billion in the infrastructure needed for future growth and development.
• We will accelerate the Expanded Public Works Programme, and work with business to mitigate job losses and accelerate skills development
• We will strengthen our development finance institutions, and support industrial restructuring and agricultural development
• Our social assistance programmes will reach over 13 million people and public expenditure on education and health care will increase strongly."

This summary is prefaced by a general comment (made in the international context, but also clearly reflecting the attitude to the SA situation), which suggests Treasury is sceptical of such interventions:

"It is not just that the adjustments to the economic crisis may be difficult or expensive, there is also the uncertainty about the burden that will be visited on future generations by the interventions being contemplated today."

It is also revealing that this summary of the SON announcement selectively quotes from the SON address, and excludes certain elements announced by the President, which presumably Treasury doesn't like, including: channelling of resources from DFI's (not ‘strengthening' them) and retirement funds to support employment creation; expanding public sector employment; expanding use of the Social Distress Relief Grant and extending the CSG to 18; food security measures etc. (see more on this below). It is noteworthy that Treasury opposed some of these and related proposals in the Manifesto process.

Therefore the budget speech does not suggest a vigorous or energetic response to the economic crisis, but rather an extremely cautious and conservative approach. The concern, as always is that Treasury will not only drag its feet in marshalling the necessary resources required for an appropriate response, but will use its power to actively oppose and undermine those proposals it doesn't like.

Issues needing discussion

1. How do we ensure that the agreements which have been reached are effectively implemented, and that we do not repeat the experience of the Jobs Summit and GDS?

2. How do we begin to elaborate a fully fledged stimulus package, which can make a serious impact in the face of the developing crisis, and which goes beyond the infrastructural programme contained in the budget?

3. How do we leverage resources to finance this package?

6. Democratisation of economic policy making

Polokwane delegates recognized that economic policy has been the preserve of technocrats, and that the movement needs to reclaim its right to oversee this area, and empower members to debate the policy options. Therefore the resolution proposes mechanisms to take this objective forward, by resolving: "To enhance the capacity of the African National Congress to monitor and evaluate the implementation of economic policy, including through:

* Establishing dedicated capacity, with the requisite resources, to monitor policy implementation and conduct ongoing assessment and engagement around economic policy issues, at national, provincial and regional level.

*A national programme of economic literacy for ANC members."

This is supplemented by the Resolution to expedite the setting up of an ANC Policy Institute, and Resolutions to ensure proper oversight over the Executive, and that the ANC should give ‘strategic leadership' to government.

 This matter is not dealt with in the Elections Manifesto, State of the Nation address, or the Budget.

B. Social Transformation

Our analysis of the Polokwane Resolutions on Social Transformation, was that although there were a number of weaknesses and inconsistencies, there were some important features which consolidate or advance progressive perspectives, including:

• the emphasis on attacking poverty and inequality;
• Commitment to extend the CSG to 18 years, and equalize the pensionable age at 60;
• Commitment to expand no fees schools to 60% by 2009;
• Commitment to progressively introduce free education ‘for the poor' until undergraduate level;
• The commitment to make education and health ‘two key priorities' of the ANC;
• Strengthening the public health care system, hospital revitalisation, and ensuring adequate provision of funding;
• Roll out of comprehensive health care, including the provision of ARVs
• Explore the possibility of creating a state-owned pharmaceutical co. to provide affordable medicines;
• Provide alternative housing stock, including rental; curb the cost of construction; coordinated planning of human settlement, acceleration of land acquisition etc

Social Transformation: Elections Manifesto

The Manifesto deals with these issues of Social Transformation under 3 headings:

• Education
• Health care for all
• Building Sustainable Communities

Education

Key commitments of the Manifesto on Education include:

"...the ANC government will aim to ensure progressive realisation of universal schooling, improving quality education and eliminating disparities. The ANC government will:

• Work towards a free and compulsory education for all children. As the immediate step it will ensure that at least 60% of schools are no-fee schools.
• Ensuring that South Africa is completely liberated from illiteracy by 2014 ...
• Introduce a sustainable Early Childhood Education system ...(and) train and employ 15,000 trainers per annum and strengthen support for creches and pre-schools...
• Improve the quality of schooling, particularly performance in mathematics, science, technology and language development...
• Promote the status of teachers, ensuring the employment of adequate numbers, and improving their remuneration and training...
• Increase graduate output in areas of skills shortages...
• Embarking on the re-opening of teacher training colleges where appropriate...
• improving the National Student Financial Aid Scheme.
• Extending school feeding schemes..."

These commitments in the Manifesto take forward, and in some respects go further than the Polokwane Resolution. Areas which need more elaboration, however, include strategies and targets to achieve the goal of free, universal education; and targets for the employment of ‘adequate numbers' of teachers.

Health Care for All

The Manifesto commits the ANC to a comprehensive overhaul of the health system:

"... Much more still needs to be done in terms of quality of care, making services available to all... and ensuring better health outcomes... to reduce inequalities in our health system, improve quality of care and public facilities, boost our human resources and step up the fight against HIV and AIDS and other diseases ... the ANC government will:

• Introduce the National Health Insurance System, which will be phased in over the next five years. NHI will be publicly funded and publicly administered and will provide the right of all to access quality health care, which will be free at the point of service...
• Improve quality standards for both public and private sectors, which will include specific targets for...adequate numbers of workers at all levels of the health care system, including recruitment, training and filling of vacant posts[10]... (and) increasing health worker training...including through re-opening nursing training colleges. There will also be improvements in the working conditions and provision of decent wages for workers.
• Improve management and leadership skills at all levels of the health system...
• Upgrade and improve public hospitals and clinics, as well as the administrative systems ...so that ... waiting times are reduced and improved quality care is available.
•  ...expand access to appropriate treatment, care and support to at least 80% of all HIV positive people and their families. More resources will be devoted to strengthening the implementation of the national plan on HIV and AIDS and STI...address the challenge of TB and reduce child HIV infection rates through upscaling the Prevention for Mother-To-Child Transmission of HIV to 95% in all districts...
• ... addressing sexual and reproductive health rights of women and strengthen the enforcement of these rights...
• Review existing drug policy... to support effective implementation of the NHI and strengthen the managerial ... capacity of government. Government will also conduct a feasibility study for the establishment of a state-owned pharmaceutical company.
• Invest in research and development in the health sector, including infant mortality research, HIV prevention technologies, health status surveys, development of new medicines, and indigenous knowledge systems."

As with Education, the commitments on Health in the Manifesto take forward, and in some respects go further than the Polokwane Resolution. Particularly important is the categorical and detailed commitment to the NHI, sorting out confusion over the last number of years as to whether the problematic proposals for Social Health Insurance were being supported by the ANC. As with all other areas in the Manifesto, however, much more detail is required for the 5 year programme of governance. The Manifesto framework does begin to provide a bit more detail on the Health issues, than is contained in the Manifesto itself.

Building Cohesive and Sustainable Communities

This section of the Manifesto deals with issues relating to social security, housing, and community development:

"Through our programmes for housing, social security, sport and recreation, we aim to continue to build a better life for all. Housing is not just about building houses. It is also about transforming our cities and towns and building cohesive, sustainable and caring communities with closer access to work, social amenities, including sports and recreation facilities. Our social security system, such as the provision of social grants, is aimed at empowering our people to take active part in the social and economic life of our country...In the next five years, the ANC plans to:

• Expand the provision of the child support grant to children aged 15 to 18.
• Work towards bolder expansion of unemployment insurance.
• Introduce a contributory social security system to provide for guaranteed retirement, disability and survivors' benefit, while streamlining the road accident, occupational injuries and the unemployment benefits...
• Establish a consensus on our future social security system to make it comprehensive and inclusive.
• Increase access to...decent housing for all through government's newly adopted housing programme, ...conversion of hostels into family housing units, strengthening partnerships ...to increase access to decent housing...acceleration of public rental and social housing ... support for community-self building efforts and housing co-operatives, and ensuring that land close to urban centres is made available for low cost and public housing...
• Ensure that the 2010 FIFA World Cup ... contributes to the long-term development of the country...(and) that this world event contributes to create decent work opportunities, particularly for the youth, women and street traders; promotes procurement of local goods, services and products; and that housing units and sports facilities developed for the event are made available to local communities after the event is over."

While taking forward the Polokwane Resolution, the Manifesto defers a decision on the key issue of the character of our social security system. In particular, on how to make the system ‘comprehensive and inclusive': the question here is if children, the aged etc are covered, what do we do about the huge number of unemployed adults who have no access to social security? The Manifesto does make a commitment to ‘bolder expansion of UIF', but even if longer benefit periods are introduced, this doesn't address the plight of those who do not benefit from UIF, because they haven't been employed in the first place. Therefore it is important that the Manifesto recognizes that this policy matter still has to be concluded, including the debate around the Basic Income Grant, or other alternatives[11].

Social Transformation: State of the Nation

Because the SON address largely limits itself to taking stock of the last term, it says very little about forthcoming plans. On issues relating to the social transformation resolution, it does however propose the following:

• A commitment to increase the number of teachers and health workers;
• A commitment to continued ‘research and consultation' on National Helath Insurance;
• A commitment to continued ‘research and consultation' on the comprehensive social security system, to extend the CSG to 18, and reduce the eligibility age for men for the old aged pension to 60. Also to ‘more widely utilise the Social Distress Relief Grant and food security measures... to target those either unprotected by the Unemployment Insurance Fund or who have exhausted their benefits.'

Nothing is said on the matter of housing, or about commitments made in the Manifesto to ensure that expenditure on Fifa 2010 is developmental.

Social Transformation: Budget

Budget programmes for issues related to social transformation, as with other issues, are ongoing items, and provide for enormous detail and complexity, which can only be properly unpacked by scrutinising the hundreds of pages of documentation in documents such as the Budget Review, and comparing these details with previous budgets. The Budget speech itself only gives the Minister's brief political packaging of the budget, and often hides as much as it reveals. Therefore it is difficult in some instances to assess the extent to which the commitments made by the ANC at Polokwane, and in the Manifesto, have been incorporated into the budget; although in other cases, such as social security below, the budget takes clear positions inconsistent with the Manifesto commitments. Therefore in some instances, the comments below should be regarded as preliminary, requiring further work.

Education

Based on the Minister's speech, it would appear that some of the Manifesto's commitments on Education are incorporated, while some are not mentioned, or are absent. He commits government to extending no fees schools to 60%, and expanding school feeding schemes, although he doesn't mention amounts allocated. He refers to the improvement in pay of teachers, and indicates that a new evaluation unit is being set up to monitor school and teacher performance in relation to this dispensation[12]. There is also an increased allocation to the National Student Financial Aid Scheme.

However nothing is said about a number of manifesto commitments, including the following:

•·         to increase teacher numbers,

•·         to intensify the literacy campaign

•·         to introduce a new early childhood education system & train 15000 trainers per annum

•·         re-opening teacher training colleges

This is what the budget speech says about education:

"Education spending has grown by 14 per cent a year for the past three years and accounts for R140.4 billion in the spending plans of provinces and national government for 2008/09....Key priorities in education include extending the no-fee schools policy to 60 per cent of schools, from 40 per cent at present, expanding the school nutrition programme, reducing average class sizes in schools serving lower income communities, increasing expenditure on school buildings, strengthening teacher training programmes and recapitalising technical high schools over the next three years. An additional R700 million is allocated for higher education subsidies and to accommodate the anticipated growth in student enrolment from 783 900 last year to 836 800 in 2011. The National Student Financial Aid Scheme receives an additional R330 million. Funding is provided for a new National Education Evaluation Unit....a new salary dispensation for teachers was introduced last year, linked to school and teacher performance, hence the urgency of establishing this new Evaluation Unit."

The total education budget increases from R127,3 billion to R140,4 billion, a substantial increase, but not as much as the budget as a whole- education expenditure has declined from 17.7% of the budget last year, to 17% this year.

Health services

As with education, based on the Minister's speech, it would appear that some of the Manifesto's commitments on Health are incorporated, while some are not mentioned, or are absent. Warning bells are flashing on the key health issue settled at Polokwane, and placed at the centre of the ANC Manifesto, namely the establishment of a National Health Insurance System. It is well known that Treasury has opposed the introduction of an NHI, including during the deliberations of the Taylor Committee of Inquiry. As we indicate below, it has also dragged its feet on the finalisation of proposals for social security, and opposed proposals of Social Development and other Departments on these issues. Therefore it is worrying that the Minister is proposing to put the issue of NHI back into the task team which has been so problematic: "The development of a national health insurance system is aimed at improving the equity of health care financing and enhancing the quality of care for all South Africans. These are complex reforms and the task team on social security has been mandated to conduct research and advise on the way forward." It is therefore proposed that this matter needs to be dealt with politically by the ANC leadership.

Other issues suggest a mixed picture: the speech deals with ‘improved renumeration' for health workers; promises to upgrade 18 hospitals over the next 3 years; states that additional resources have been allocated to tackling HIV and TB, and to prevent mother-to-child HIV transmission.

The adequacy of all these allocations needs to be carefully interrogated. We know eg that the current situation with ARV's is dire, with at least two provinces having ceased provision of ARVs because of the lack of funds. Has this situation been corrected by this year's budget, which undertakes to extend provision of ARV's to 1.4 million people by 2011/12?

Further, the speech says nothing about the following Manifesto commitments:

• the upgrading of clinics;
• increasing the number of health workers;
• the re-opening of nursing colleges;
• meeting the target of treatment and care for at least 80% of HIV positive people and their families;
• action to intervene in making drugs more affordable; and
• the undertaking for large scale investment in health care research and development.

This is what the budget speech says about health:

"A new unit to address the quality of service provision is also included in our health spending proposals. This will be named the National Office for Standards Compliance, and it will set and audit norms and standards for hospitals and primary care centres. We are profoundly conscious of the complexity of the challenges facing our health services, and the strain on resources associated with a rising disease burden. Policy interventions supported in this budget focus both on health facilities and services and on more aggressively combating the causes of ill-health. An additional R1.8 billion is budgeted to introduce three new child vaccines, which have proved effective in

preventing infant and child deaths. The tuberculosis and HIV and Aids programmes both receive additional resources. We are budgeting to extend screening of pregnant mothers coming into the public health system and to phase in an improved drug regimen to prevent mother-to-child HIV transmission. Our anti-retroviral programme now covers 630 000 people, and the medium term expenditure framework provides for an increase to 1.4 million by 2011/12. The 2009 Budget makes provision for further improvements in the remuneration of health professionals, and for continued expansion of the hospital revitalisation programme. A total of 31 hospitals are under construction, 18 of which will be completed over the next three years."

The total health budget increases from R80,8 billion to 86,9 billion, a slightly above inflation increase, but not as much as the budget as a whole- education expenditure has declined from 11.2% of the budget last year, to 10.5% this year.

Social security

Of all the areas relating to social transformation, the commitments in the budget around social security fall furthest away from the public commitments made by the ANC, and a range of civil society organisations have already accused the Minister of reneging on commitments made not only by the movement, but also by the President in the SON address[13]:

• The undertaking to extend the Child Support Grant (CSG) to 18 (from the current 15) has been made by the President, the ANC at Polokwane and in the Manifesto, and the Department of Social Development supported the need for a 3 year rollout to 18 year olds, starting in April this year with 16 year olds[14]. The Grant was already extended to 15 year olds from January this year, and this was provided for in last year's budget. The expectation was that it would be extended to 16 year olds as from April, and the NGO's are saying that the ANC has committed itself to this, both in meetings and on its website. Despite these undertakings, and the Presidents announcement in the SON address, the Finance Minister has refused to extend the grant and announced in the speech that "consideration is being given, subject to affordability, to the extension of the child support grant to the age of 18." Organisations quote the fact that the Minister in a current court case has opposed the extension of the CSG to 18, on the basis that the CSG is not necessary for older children! Treasury again vetoing government policy?
• At the same time the budget gives a below inflation increase for both the CSG, and the Old aged pension- SOAP- (assuming that the level of inflation for the poor is higher than the official inflation rate, particularly with high food prices), and way below the current levels of inflation (10.3% in December). The CSG increase is 4.5%, and the SOAP 5.5%.
• The budget says nothing about the ANC's undertaking to expand unemployment insurance.
• It says nothing about the commitment made by the President in the SON to roll out increased levels of the Social Relief of Distress Grant, to assist unemployed workers who don't qualify for the UIF.
• It is completely silent on the key question of the proposed contributory social system, including the national retirement fund, announced in the 2008/9 budget, on which Treasury had promised to finalise the policy process last year. However it and DSD had put forward contradictory proposals, and it has failed to table a document for discussion in the Nedlac process.

This apparent intransigence by Treasury requires a political response by the ANC leadership.

The budget speech limits itself to the following announcements on social security:

"The budget adds R13.2 billion to our social grants programme. The extension of the child support grant to 15 takes effect this year and the reduction in the eligible age for men to 60 is in progress. Strengthening our social security safety net is critical during this period when many more poor families are vulnerable (sic!). With effect from April this year, the maximum values of the old age, disability and care dependency grants will rise by R50 to R1010 a month, the foster care grant will increase to R680 and child support will rise to R240 a month. Compelling evidence that the phasing-in of the child support grant has contributed significantly to reducing child poverty has emerged in recent research, and so consideration is being given, subject to affordability, to the extension of the child support grant to the age of 18."

The total ‘social protection' budget (it is assumed that this is mainly the budget for social grants) increases from R105,4 billion to 118,1 billion, an above inflation increase, but not as much as the budget as a whole- expenditure has declined from 14.6% of the budget last year, to 14.3% this year.

Housing and municipal infrastructure

As stated above, the Manifesto undertakes to increase access to decent housing for all through government's newly adopted housing programme, conversion of hostels into family housing units, strengthening partnerships to increase access to decent housing, acceleration of public rental and social housing, support for community-self building efforts and housing co-operatives, and ensuring that land close to urban centres is made available for low cost and public housing. On the basis of what is said in the budget speech, most of these approaches do not seem to be catered for in the budget, unless these issues are dealt with elsewhere.

The budget speech deals with the issues of housing and municipal infrastructure as follows:

"Housing and the eradication of informal settlements remain at the forefront of our infrastructure investment plans, and impact significantly on both employment creation and poverty reduction. In the past three years, the municipal infrastructure grant programme has spent about R32 billion. Over the next three years, infrastructure grants to municipalities total R67 billion, and a further R45 billion will be spent on the Breaking New Ground housing programme. Together with investment in roads and public transport, these constitute one of the largest areas of expansion of public sector spending, and are rightly prioritised as part of our response to the current deterioration in employment and economic activity."

Nothing is said about commitments made in the Manifesto to ensure that expenditure on Fifa 2010 is developmental.

The total allocation to ‘housing and community amenities' increases from R65,3 billion last year to R73,2 billion this year, an above inflation increase, but not as much as the budget as a whole- expenditure has declined from 9.1% of the budget last year, to 8.8% this year.

A note on the Comprehensive Expenditure Review

There seems to be a particular concentration in this budget on reviewing expenditure on social services and the social wage. As seen above, audit offices are proposed for at least 2 major expenditure items- education and health. In addition, this budget proposes the introduction of a ‘Comprehensive Expenditure Review'. The Minister's explanation of this proposal in the budget makes it clear that the intention of this review is to cut spending (this followed the push for Departments to cut their budget proposals shortly before this budget, leading to cuts of R19 billion):

"If we are to afford continued expansion of social services and our social wage, then, in addition to the need for greater efficiency, we have to conduct a thorough assessment of all of

government's programmes to see how we can improve value for money and to identify areas where we can eliminate or reduce wastage. The Ministers' Committee on the Budget intends, in its handover report to the new administration, to propose that the incoming President announce a Comprehensive Expenditure Review. Its aim would be to ensure that as we spend more, we also spend better. In addition, should confront the awkward truth that there are programmes of government that do not work, and on which we should spend less."

This is not necessarily a bad thing, if it genuinely aims to cut wasteful spending. However, it can also be a device used to squeeze much needed spending (see the egs of ARV's, social grants, and the bus subsidies).

It is therefore proposed that if the new government adopts the idea of a Comprehensive Expenditure Review, it should be on the basis that it is a systematic needs-based review which also identifies critical shortages and areas where more resources need to be allocated, as well as areas of wasteful expenditure.

Issues needing discussion

1. In relation to the Manifesto, and Polokwane commitments on social transformation, ensuring a proper costing and allocation of resources for these commitments; development of the necessary policy, legislative and institutional changes; and a detailed implementation strategy.

2. In relation to education: elaboration of a medium term strategy to achieve universal and free education; monitoring of the immediate implementation of achieving the target of 60% no fee-schools; an effective literacy campaign; and a human resources strategy to properly staff our schools, including the issue of training colleges etc.

3. In relation to health: development of a detailed proposal for design and implementation of the NHI; an urgent human resources plan to staff the health sector and to deal with issues of management; opening of the nurses training colleges; a strategy to improve clinics as well as hospitals; a strategy to deal with the challenges around ARV provision ; the further development of strategies to make drugs affordable, including the issue of the state pharmaceutical company etc

3. In relation to social security: an urgent intervention to resolve the dispute around the roll-out of the CSG; urgent measures to ameliorate the economic crisis facing our people, including the roll-out of the social distress and relief grant on a larger scale; discussion on outstanding unresolved matters, including extension of the UIF, finalization of the contributory social security system, and an engagement on what is needed to make our social security system truly comprehensive etc

4. In relation to sustainable communities: to accelerate roll out of the Manifesto commitments, including public low cost housing in the urban centres, and accessible well-located land; hostel conversion etc

5. Finalisation of an agreed strategy to ensure that the developmental impact of FIFa 2010 is maximized.

6. Development of appropriate guidelines for the proposed Comprehesnive Expenditure Review to ensure that it results in appropriate allocation and leverageing of resources, and is not simply a cost-cutting exercise.

C. Rural Development, Land Reform, and Agrarian Change

Our analysis of the Polokwane Resolution on Rural Development, Land Reform, and Agrarian Change stated: "(it)is generally progressive, although it has some areas of ambivalence, and some gaps. Taken as a whole, it constitutes a major intervention, and strategic shift from current government policy. In effect the Polokwane resolution, read together with the ANC's 2008 programme of action, rejects existing policies on rural development as woefully inadequate, and proposes the formulation of a new, comprehensive rural development plan, a White paper on rural development, land reform and agrarian change, and a legislative programme to implement these changes."

"It is worth quoting extracts from the resolution at some length to indicate some of its progressive dimensions. It resolves inter alia to: 

1. Embark on an integrated programme of rural development, land reform and agrarian change ;

2. Strengthen the voice of rural South Africans, empower poor communities and build the momentum behind agrarian change and land reform by supporting the self-organisation of rural people;

3. Build stronger state capacity and devote greater resources to the challenges of rural development, land reform and agrarian change;

4. Ensure that the state regulates the land market effectively with a view to promoting the goals of rural development and agrarian change, limiting the unsustainable use of land for elite purposes;

5. Review and change all institutional, legislative, regulatory and tax-related policies that create a bias in favour of large-scale, capital intensive, environmentally damaging agriculture and under-utilisation of land and which constrain the emergence of a vibrant, pro-poor rural economy;

6. Support the growth of rural market institutions including through the provision of infrastructure and by helping rural communities and small farmers to build organisations which help them to access markets, build links with formal sector value chains and coordinate their activities to realise economies of scale; Where necessary, expropriate property in the public interest or for public purpose in accordance with the Constitution to achieve equity, redress, social justice and sustainable development;

7. Work together with the progressive trade union movement, government agencies and civil society to realize the rights of farm workers and farm dwellers , combat human rights abuses and super-exploitation, and provision of support and advice to communities living on farms. To ensure the vigorous implementation of laws that protect farm workers and farm-dwellers by strengthening the capacity, resources and resolve of government to protect and advance their interest.;

8. Ensure that the allocation of customary land be democratised in a manner which empowers rural women and supports the building of democratic community structures at village level, capable of driving and coordinating local development processes;

9. Find ways to stabilise food prices in order to prevent inflationary surges, protect food security and combat hunger;

10. Accelerate the roll-out of rural infrastructure, particularly roads but also other services including potable water, electricity and irrigation and ensuring in particular that the former bantustan areas are properly provisioned with an infrastructural base for economic and social development."

An important gap, which we refer to in our analysis of the Manifesto, is that the Resolution mainly focuses on the question of land reform, agriculture and infrastructure development, but doesn't go beyond this to look at what would constitute an overall programme of economic development for the rural areas, and the role of the state in promoting this. But the development of such a strategy is not inconsistent with the perspectives advanced at Polokwane.

Rural Development: Elections Manifesto

The Manifesto deals with these issues under two headings:

• Rural and agricultural development and land reform; and
• Food Security- Ensuring no one goes hungry

On Rural and agricultural development and land reform, the Manifesto is in line with some aspects of the Polokwane Resolution, but is weaker on a number of the formulations, and leaves out some important elements. Part of this may be as a result of hurried drafting- as we see below, some elements which are included in the final Manifesto framework document have been somehow lost in the actual Manifesto. But other areas of omission may suggest a partial policy shift.

Areas of the Polokwane Resolution which are left out, or weakened in the Manifesto, and can be seen in the full extract from the Manifesto below, include: Bullet 2 above on strengthening the voice of rural South Africans; Bullet 3 on state capacity and resources; Bullet 4 on effective state regulation of the land market; Bullet 5 on changing all policies which constrain the emergence of a pro-poor rural economy; The element of Bullet 6 dealing with expropriation of property; Bullet 8 on democratization of allocation of customary land to empower women and builds democratic community structures; Bullet 9 on the rollout of a rural infrastructural base for economic and social development. The silence or weak formulations of the Manifesto on these issues, even thought the Manifesto remains broadly progressive, is definitely a step backwards, which needs to be corrected in government's 5 year programme. The Manifesto's commitments on rural development state:

"The ANC is committed to a comprehensive and clear rural development strategy linked to land and agrarian reform, improvement of the conditions of farm workers and farm-dwellers and builds the potential for rural sustainable livelihoods. The ANC government will:

• Intensify the land reform programme to ensure that more land is in the hands of the rural poor and will provide them with technical skills and financial resources to productively use the land to create sustainable livelihoods and decent work in rural areas.
• Review the appropriateness of the existing land redistribution programme, introduce measures aimed at speeding up the pace of land reform and redistribution and promote land ownership by South Africans.
• Expand agrarian reform programme, which will focus on the systematic promotion of agricultural co-operatives throughout the value chain, including agro-processing in the agricultural areas. Government will develop support measures to ensure more access to markets and finance by small farmers, including fencing and irrigation systems.
• Ensure a much stronger link between land and agrarian reform programmes and water resource allocation and ensure that the best quality of water resources reach all our people, especially the poor.
• Ensure that all schools and health facilities have access to basic infrastructure such as water and electricity by 2014.
• Introduce the provision of proper sanitation systems in the rural areas.
• Strengthen partnership between government and the institution of traditional leadership to focus on rural development and fighting poverty.
• Work together with the farming community to improve the living conditions of farm dwellers, including the provision of subsidized houses and other basic services.
• Provide support for organised labour to organise and unionise farm workers and increase the capacity of the Department of Labour to enforce labour legislation."

Finally, as indicated above, both the Polokwane Resolution and the Manifesto are weak or silent on the role of the state in a broader economic development strategy for the rural areas, which goes beyond basic social infrastructure and land. An important formulation in the final Manifesto framework, however, (which is the reference document for the Manifesto), does deal with this, as follows, and needs to be taken forward: "Economic development in the rural areas needs to go beyond land and agrarian reform. It must include affordable financing to promote economic development; support programmes and training in assisting co-operatives and small enterprises; public sector ventures; and strategies to develop appropriate industries including light manufacturing, handicrafts, services, tourism etc; This also requires the putting in place of the necessary economic infrastructure including IT services, roads and rail. Part of ANC government measures to support rural development includes infrastructure development to produce thriving rural economies and ensure sustainable development ..."

Food Security- Ensuring no one goes hungry

The Polokwane Resolution has a brief formulation on food security - see Bullet 9 above. The Manifesto however elaborates this commitment into a far more detailed set of proposals which, if implemented, will go a long way towards eliminating hunger in the country, in combination with the other Manifesto commitments. All the measures proposed are important. However the proposed introduction of a government ‘food for all programme' is particularly far-reaching and important, because it proposes to take control of the pricing of basic foods, as well as their distribution, out of the hands of the market. This would be a major intervention, which is likely to result in resistance, and requires both concerted political support and mobilization, as well as detailed elaboration of a programme to ensure that it becomes a practical reality. The Manifesto undertakes the following:

"The ANC government will take the following practical steps:

• Promote food security as a way to lessen our dependence on food imports.
• Introduce a food for all programme to procure and distribute basic foods at affordable prices to poor households and communities. Government will develop an appropriate institutional approach for the implementation of this programme.
• Introduce measures to improve the logistics of food distribution such as transportation, warehousing, procurement and outsourcing in order to reduce food prices in the long term. Continued enforcement of stronger competition measures will be used to act against food cartels and collusion, which inflate food prices.
• Expand access to food production schemes in rural and peri-urban areas to grow their own food with implements, tractors, fertilizers and pesticides. Other government measures will support existing community schemes, which utilise land for food production in schools, health facilities, churches and urban and traditional authority areas.
• Ensure an emergency food relief programme, on a mass-scale, in the form of food assistance projects to the poorest households and communities including through partnerships with religious and other community organisations."

Rural Development: State of the Nation

While a number of the commitments in the SON address (such as on social grants, public works etc) do impact on people in the rural areas, ANC proposals for a comprehensive rural development strategy do not find expression in the speech. The only reference to commitments on the rural areas is in the following statement: "integrating into the work of the relevant Clusters the findings of research on Second Economy interventions such as the community works programme, support for small and micro-enterprises and rural development initiatives". The speech says the following on food security: "we will more widely utilise the Social Distress Relief Grant and food security measures ...to target those either unprotected by the Unemployment Insurance Fund or who have exhausted their benefits."

Rural Development: Budget

Relatively small amounts are provided for the massive challenge of rural development, land reform, and food security, and there is no real reference to, or processing of the decisions of Polokwane, or the emphasis in the Manifesto on the centrality of rural development. The section of the budget speech dealing with rural development only states the following:

Agricultural support and rural development

"...increasing agricultural output, raising rural incomes, supporting small scale farmers and investing in rural roads are key objectives of government's rural development strategy. The budgets of the Illema/Letsema campaign, which distributes agricultural starter packs to poor households, the comprehensive agricultural support programme and allocations to targeted rural infrastructure projects receive a further R1.2 billion boost. The budget for land reform and land restitution over the next three years totals R20.3 billion."

The budget also says very little of substance on food security, except to espouse the need for increased food production.

On the face of it, because the figures are not consolidated in one place in the Budget Review, it is difficult to precisely estimate the global amounts provided for rural development, land, and agriculture. However figures provided for in different categories, while not comprehensive or consolidated, do give an indicator of the magnitude of spending in these areas. It must be borne in mind that these figures overlap with each other, so should not be considered as separate allocations: in the general classification of consolidated government expenditure, it is stated that the allocation for agriculture, forestry, fishing and hunting has marginally increased (but actually declined in real terms) from R15.92 billion last year to R15.99 billion, or has decreased from 2,2% of the budget to 1.9%. Under the classification of economic services, Agriculture decreases from R2.82 billion last year to R2.79 billion; and land decreases from R6,6 billion last year to R6.0 billion this year. Between these allocations for land and agriculture, they total less than 1% of the budget. However these figures finally stack up, it is clear that they are inconsistent with a major push for rural development and land reform.

Rural Development Issues needing discussion

1. An approach to taking forward the Polokwane commitments, including those missing in the Manifesto, and strengthening the rural development programme beyond the land and infrastructure issues.

2. How to reinforce, and develop the far-reaching proposals on food security, in the face of anticipated resistance.

3. A proper analysis is needed of government resources and programmes allocated to these areas, and how these can be shifted in the short to medium term.

Appendix 1 Other key Polokwane Resolutions

Note: this appendix mainly highlights the progressive elements of the remaining resolutions which need to be taken forward (but excluding Peace and Security and Climate Change). The original CEC analysis also outlined areas of concern in the resolutions.

International Relations

The Resolution on International Relations includes a number of progressive dimensions, inter alia:

• that the ANC, should ensure that the intensification of what it calls ‘economic diplomacy' leads to "changes of colonial patterns of economic relations, and creates possibilities for equitable and balanced North-South relations, transformation and beneficiation of African natural resources, sustainable flows of Foreign Direct Investment (FDI), market access for products from the South to generate employment, and contribute to poverty eradication".
• Related to the above the Resolution calls for a legislated code of good business practice, for South African companies doing business in the continent, and for the ANC to interact with countries in Africa to: encourage them to strengthen their labour and trade laws; and encourage the private sector/business to comply with the standards of the International Labour Organisation (ILO). The code of conduct should have general standards that guide it, such as prohibition of child labour, criminalisation of bribery, the encouragement of recruitment of local labour, imparting of skills, and contribute to the social responsibility programmes of that country;
• On Migration, Immigrants and Xenophobia, it was resolved that the ANC needs to review the current policy, legislation and systems; harmonise policies in SADC; called for humane treatment of refugees; and embark on programmes to combat xenophobia.
• Decided to convene a meeting of progressive parties and movements in Africa, as a run-up to holding a global meeting of all progressive movements; and formalize relations with progressive movements particularly in Latin America and Asia;
• Resolved to support various international struggles of oppressed peoples, but very weak on Zimbabwe (see below);
• Resolved to reject, with other African countries, current moves by the USA to enlarge its military presence in Africa by establishing the African Command military Centre (Africom).

Transformation of State and Governance

The Resolution on Transformation of State and Governance has some progressive dimensions, including proposals to:

• abolish floor crossing;
• the creation of a single public service needs to involve an engagement by the NEC sub-committee with relevant Alliance structures;
•  the resolution on transformation of the judiciary has a number of progressive proposals, but the detail needs to be carefully scrutinized. The proposal for integration of courts into a single court system proposes that the Labour Appeal Court should be integrated into the SCA as a separate chamber, and the Labour Court be integrated into each division of the High Court ‘possibly as separate Chambers'. We need to respond to this proposal;
• Introduce measures to combat corruption both by ‘those who corrupt as well as those who are corrupted". The resolution however is short on detail;
• On post-tenure employment rules for elected representatives and public servants, the NEC needs to urgently develop a framework to regulate ‘the flow of skills between the public and private sector'. The resolution proposes elements which must guide this framework.

Communications and the Battle of Ideas

The Resolution on Communications and the Battle of Ideas correctly notes that "the Media is a contested terrain and therefore not neutral, but reflects the ideological battles and power relations based on race, class and gender in our society". It then goes on to undertake "to vigorously communicate the ANC's outlook and values (developmental state, collective rights, values of caring and community solidarity, ubuntu, non sexism, etc) versus the current mainstream media's ideological outlook (neo-liberalism, a weak and passive state, and overemphasis on individual rights, market fundamentalism, etc.)"

The Resolution proposes a number of important interventions and objectives:

• To encourage a more representative and diverse media environment which must also address the qualitative transformation of the newsrooms that reflect the transformation agenda of the country;
• An investigation should consider the establishment of a Media Appeals Tribunal as a statutory institution, established through an open, public and transparent process, and made accountable to Parliament. The investigation should consider the mandate of the Tribunal and its powers to adjudicate over complaints expressed by citizens against print media, in terms of decisions and rulings made by the existing self-regulatory institutions.
• The proposed Tribunal has to be understood as an initiative to strengthen the human rights culture embodied in the principles of our constitution section 36 ...on the need to balance the right to freedom of expression, freedom of the media, with the right to equality, to privacy and human dignity for all.
• The state must substantially and urgently increase its funding of the public broadcaster from the current 2% to a minimum of 60% by 2010, so that the SABC can properly fulfil its public mandate.
• In accordance with the Broadcasting Act, the appointing body, (must) ensure that the SABC Board is representative of all sectors broadly in our society.

The expressed objectives of the proposed Tribunal are well understood. However COSATU needs to consider whether any of the concerns expressed about unintended consequences of this initiative may have validity.

Organisational Renewal

The Resolution on Organisational Renewal focuses mainly on internal organizational questions, which are obviously important in terms of the revitalization of the ANC, and its ability to take the new perspectives of Polokwane forward. We focus here on those aspects which deal with the relationship of the ANC to governance, as well as the Alliance. In this regard there are a number of important statement and proposals:

• (There must be) greater coordination between work of the ANC structures and governance work, to give strategic leadership to cadres deployed in the state and to improve capacity to hold cadres deployed accountable.
• Constitutional structures (must) strengthen caucuses as instruments for robust oversight, mutual accountability, collective leadership and discipline among cadres deployed to government, parliament, legislatures and municipalities.
• Improve capacity of ANC structures to monitor and evaluate the implementation of policy by cadres deployed in government. A monitoring and evaluation mechanism should be developed and include annual assessment of public representatives by branches and regions and mid-term performance evaluations by provinces and HQ.
• The National Policy Conference should become a consultative platform for policy review and debates in the run-up to National Conferences and a consultative body for the development of the Election Manifesto in the run-up to national and local government elections.
• The Policy Institute should be actualised as a matter of utmost priority
• We should strengthen list guidelines and processes for public representatives to enhance democratic participation, ensure that we select and deploy the best cadres for public office and involve the broader community in our candidate selection processes.
• Champion the introduction of a comprehensive system of public funding of representative political parties in the different spheres of government and civil society organisations, as part of strengthening the tenets of our new democracy. And (implement) an effective regulatory architecture for private funding of political parties and civil society groups to enhance accountability and transparency to the citizenry.
• Confirm the relevance of the alliance ,united in action for the joint programme of social transformation, using its collective strength to continue to search for better ways to respond to the new challenges. We must enhance coordination amongst alliance partners, and strengthen the organisational capacity of each individual component. We should respect the right of Alliance partners to discuss and arrive at their own decisions on how they seek to pursue their strategic objectives
• The leadership role of the ANC places on it the primary responsibility to unite the tripartite alliance and all the democratic forces. Within three months after Conference the NEC must convene an Alliance summit to discuss a joint programme of action, including strengthening local structures of the alliance, and an approach on how the alliance manages with differences and discipline.

The Resolution on Organisational renewal is relatively progressive but suffers from one major omission, namely: It is silent on the discussion of the relationship of the Alliance to processes of governance, the political centre, policy formulation, and the Alliance Pact.

FOOTNOTES

[1] In analysing the Manifesto we also sometimes refer to final manifesto framework document, available on the ANC website, which contains more details than the ‘popular manifesto'.

[2] These documents are extensively quoted from in this analysis, as well as the analysis on the Polokwane resolutions prepared for the February 2008 CEC. The areas of emphasis, in bold, are inserted by us, to highlight particular points.

[3] The analysis presented to the Feb 2008 CEC didn't include two areas of the Polokwane resolutions, namely Peace and Stability, and Climate Change, which are therefore not included here. This analysis should however still be done

[4] Ie the expansionary fiscal policy is only designed to counter recessionary economic conditions (‘counter-cyclical') and will be reversed once economic conditions improve.

[5] Spending actually comes in slightly below what was projected in the MTEF for this year.

[6] This is despite his statement after Polokwane that all the commitments of the resolutions had been costed, and that they would be incorporated into the budget.

[7] This impression is strengthened in a recent speech by Kuben Naidoo, head of Treasury's budget office, who asked "are we prepared to tackle the microeconomic constraints to higher growth? Are we prepared to at least open the debate on whether our labour laws inhibit the creation of low skilled work. You see, what we are trying to do is to create jobs for the work force we wished we had, not the one that we do have." (19 January 2009, address to the IJR Transformation Audit launch)

[8] "Are we prepared to accept that high tariffs protect a few jobs at the expense of competitiveness and a high cost economy? Are we prepared to accept that our industrial policy interventions contribute little to either exports or employment, but costs significant amounts of money?" (Kuben Naidoo 19 January 2009, address to the IJR Transformation Audit launch)

[9] An important element where there is some silence in the Resolutions is on the question of State ownership. In the Policy Conference Resolution, a number of decisions were ‘parked' for ‘further discussion', but were not addressed at Polokwane. These included the following important areas: "Commissions proposed : the establishment of a State Bank to fast track development and that we establish a bank to provide start-up capital to small and micro enterprises and co-operatives; to retain and expand state ownership of strategic assets in sectors of the economy that are critical for the success of our economic transformation agenda, such as mining, steel, energy, ICT and land; the state establish a mining company to exploit our mineral resources and direct the proceeds towards social needs..."

[10] An earlier version of the Manifesto proposed to employ an additional 80 000 health workers over the next 5 years. The Manifesto framework also contains detailed proposals on how to determine the appropriate level of health personnel .

[11] Earlier drafts of the Manifesto, following the decisions of the Alliance Economics Summit, made an undertaking to introduce a grant for young unemployed workers from 18-25, and introduce a ‘caregivers benefit' for poor households. The Alliance Summit went further in calling for comprehensive cover.

[12] Sadtu needs to clarify the purpose and implications of this unit.

[13] See the statements by the Peoples Budget Campaign, Black Sash, Access (a coalition of childrens organisations), and UCT's Childrens Institute

[14] Organisations estimate that 2,4 million poor children aged 15 to 18 years desperately need the CSG.

Issued by the Congress of South African Trade Unions, February 26 2009

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