Mr Speaker, the financial crisis has exposed many countries' weak spots. We have not been saved in the process and, according to Sanlam's Jac Laubscher, it hit South Africa at a very bad time. In 2008 we were in a very volatile position politically - just after Polokwane - and, in fact, we saw the transformation from the Mbeki era to the Zuma era.
He emphasises that the crisis created a climate for a global weakening of fiscal parameters. Countercyclical fiscal policies were embraced, and those countries like South Africa, who had the fiscal room to stimulate their economies, did so. Then Laubscher concluded that the result was quite different. We have seen how a sharp increase in consumption spending, financed by loans, resulted in South Africa's showing the greatest reversal in its fiscal position for the smallest benefit in terms of growth and employment, compared to our peers. Therefore, the crisis laid the foundation for our predicament. Under the hon Pravin Gordhan's leadership we hit the brakes, but that was not enough. We are now part of the so- called "fragile five" world economies, which are running double deficits.
The big question now is: Will the world and our growth ever be as vibrant again, or has the crisis changed them forever? Unfortunately, in my opinion, the golden growth years are over. Growth projections of more than 5% are an illusion. We are linked to what is happening elsewhere in the world.
Four years ago, in the middle of the financial crisis, Brazil took off like a rocket. It barely stumbled in the world crisis, and it grew by 7,5%. But since 2012 Brazil has come down to earth with a bang. It grew by only 0,9% in 2012. Public unrest is the name of the game in Brazil now, and the economists refer to its economic boom as a "chicken flight". Why did Brazil flop? The sudden opening of trade coincided with commodity prices rocketing. We saw a big increase in credit and state consumption in Brazil, and policies have simply played themselves out. Brazil lost focus and did too little to reform the government in the boom years. Today in Brazil company taxes are too high, and 58% of the GDP goes towards the state wage bill. The spending on infrastructure in Brazil is a mere 1,5% of the GDP. It is too low. Brazil can only rectify it by cutting the red tape, merging ministries and curbing public spending.
This brings me to the European connection. Are we taking Europe seriously enough as our major trading partner? I put that question to the President yesterday. Yes, of course we should develop new markets and enter into new alliances, but to think that by belonging to the Brazil, Russia, India, China and South Africa group we can turn on Europe is simply wrong. Too many times I pick up on negative sentiment towards Europe in all quarters of the ruling party. I think our relationship is at a low, and it is dangerous.
Tim Cohen, editor of the Financial Mail, put it so eloquently:
If nothing else, the past few years have demonstrated something South Africans have appreciated too little about our economy: China might be an increasingly important trading partner, and the US remains crucial for capital markets, but the country remains very dependent for its overall growth on the European economy.
While growing other markets, you look after what you have carefully. I think South Africa has taken its eye off the ball and should refocus in regard to Europe. The continent remains our major trading partner. Minister, we want more positive news about South Africa in Europe. There is a huge underperformance by government departments in their relations with the European Union, and this has impacted on the roll-out of aid. My information is that more than half of the aid budgeted for is not yet rolled out, and there are only a few months left.
This is adding to the perceptions that we do not value European Union input and co-operation. I am concerned that in some circles in Europe the perception is growing that we are melting down. Now whether you like it or not, hon Minister, it is a serious perception. I want to suggest that you put on your running shoes and visit Europe, and that you invite your heads of mission back to South Africa and give them a renewed message to convey to Europe about what South Africa thinks about it.
Brics will not be the panacea people thought it would be. All the Brics economies are slowing down. Brics will not be the only engine of growth for us. We have to accept that growth figures beyond 5% are over for the majority of the world, including us. Growth in China will be higher but it will be inward. The African countries that grow more than 5% are doing it from a low base and against a very debatable set of human rights.
So, what should we do? We should firmly apply the brakes, cut government spending more, merge ministries, keep our good relationship with Europe, reform our labour regime, and emphasise the matters we are good at and do those things.
Cope will support the MTBPS and the Adjustments Appropriation Bill. [Applause.]