Chairperson, hon members, ladies and gentlemen, the President often tells us that the priority for this administration is not further debate, diagnosis or lamentation, but rather implementation. It is therefore a pleasure to deliver this Budget Vote speech today in what has been a highly significant month of implementation for the Department of Trade and Industry.
At the beginning of this month, the national Consumer Protection Act came into force. Yesterday we launched the new Companies and Intellectual Property Commission, which will begin to implement the new Companies Act at the beginning of next month. Two weeks earlier we launched the new iteration of the Industrial Policy Action Plan, Ipap, covering the period 2011-12 to 2013-14, and in between we had highly significant engagements with our counterparts - the trade Ministers of Brazil, Russia, India and China - as an integral part of the first Brics summit that South Africa participated in, an event that also saw the signing of a highly significant memorandum of understanding on co-operation between the business organisations of the Brics.
Both the consumer and the companies legislation mark important steps forward in reforming and modernising our commercial law for the benefit of the vast majority of our economic citizens. The consumer commission is already making its presence felt as a key pillar in implementing legislation that, I am convinced, will be of enormous benefit both to consumers and to producers who are struggling against unfair competition from substandard and shoddy goods.
The new Companies Act will provide for a modern, efficient system of company regulation that will reduce red tape and hassle, while simultaneously making necessary regulation more effective. The business rescue provisions in this Act will also allow for the early detection and turnaround of companies in financial distress, which can go a long way towards saving jobs. Together these new laws and the concomitant implementing mechanisms will fundamentally change the landscape on how business is conducted, and how consumers are protected for the better.
As with almost any other significant new initiative, there will, of course, be a number of implementation challenges and teething problems. Our approach has been that once we are satisfied that sufficient consultation and preparation have been undertaken, we will deal with issues as they arise from day-to-day practice, rather than engage in endless debate in the vain hope that further engagement will deliver a perfect plan on paper. We are thus taking up the President's challenge to implement rather than to debate endlessly and lament.
Similarly, we are moving forward with the implementation of Ipap 2, the Industrial Policy Action Plan 2. Last year when we launched the first iteration of our Industrial Policy Action Plan 2 covering the years 2010-11 to 2012-13, we indicated our view that placing the economy on a new, higher and more labour-absorbing growth path required that we address a number of structural factors that underpinned the reality that even when our GDP growth rates had been relatively high, production-driven sectors of the economy had grown at about half the rate of consumption-led activities.
We identified a need to create a more effective financing framework for industrial development; to reform our procurement systems to ensure that a larger proportion of infrastructure spend went to locally manufactured inputs; and to achieve a better alignment with macro policy, trade policy, competition policy, and standards, quality assurance and metrology, among other things.
We indicated last year that Ipap 2 would be a three-year rolling action plan that would be amended, updated and strengthened at the start of each financial year. On 6 April we launched the latest iteration of Ipap which will cover the period 2011-12 to 2013-14. We report in that document, as we did in a session with the portfolio committee, that substantial progress has been achieved in reaching the targets set out in the first iteration of Ipap 2, and we are beginning to see positive outcomes in some areas.
To illustrate this point, firstly, the automotive investment scheme has been completed, leading directly to planned investments by automotive assemblers and component supplier companies of R13 billion - R9 billion by the assemblers and R4 billion by component manufacturers. Together these investments will support the creation of 24 000 jobs. A feature of these investments has been a significant expansion in local component outsourcing by the original equipment manufacturers, which is significant because most of the job creation in the automotive sector will emerge from smaller companies producing components.
Secondly, our programmes have begun to have a positive impact on the clothing industry. Over 200 companies have utilised the clothing and textile competitive programme and the production incentive, resulting in the retention of 40 000 jobs and the creation of 1 100 jobs in firms accessing the production incentive.
Thirdly, in the past year investments of R40 million in the business process services sector led to the creation of 950 new jobs and a further approval of R42 million new investment commitments linked to 806 jobs. Under the Monyetla II Work Readiness Programme, 3 400 recruits are currently being trained, of whom 70% have been guaranteed employment by the business process outsourcing consortium.
Globally, green industries represent an important new growth sector, and we have begun to orientate our efforts towards playing a bigger role in this regard. These efforts have resulted in the revision of building standards that will require higher levels of energy efficiency and mandatory installation of solar water heaters in new buildings.
We have also met the target set out in Ipap 2 to complete the first stage of the complex work to reconfigure the regulatory framework for public procurement. A new framework of regulations developed by a task team that included the National Treasury and the Departments of Trade and Industry and Economic Development has been adopted by Cabinet, and we await promulgation in the near future of the regulations by the National Treasury. These very significant amendments will allow for the designation of sectors for local procurement, alignment with broad-based black economic empowerment codes and to provide for simultaneous account to be afforded to important cost considerations. The Department of Trade and Industry has developed a sector designation methodology, and research is currently being undertaken with a view to incrementally designating sectors. The implementation of these regulations will represent a significant step forward in supporting local production and will, we are confident, result in growing businesses including a number of new small businesses. The growth of local business should also result in employment growth.
I want to thank my colleagues the Ministers of Finance and of Economic Development for the collegial way we were able to work together on this important development.
The introduction of new localisation and supplier development criteria within state-owned enterprises will similarly encourage new processes and systems to improve and leverage of local procurement. That 90 of 100 locomotives procured by Transnet will be produced in South Africa is a signal of the very significant impact that local procurement policy can deliver, particularly as government rolls out its infrastructure development projects. That 72% of a R4,2 billion antiretroviral tender was awarded to local manufacturers at a substantially reduced cost is another example of what can be achieved. As local manufacturers gear up to new opportunities, advancing and reforming industrial finance become critical. In line with the Ipap 2 objectives, the Industrial Development Corporation, IDC, has reviewed its business model and balance sheet and identified about R100 billion over the next five years for investment in the New Growth Path and Ipap 2 sectors.
Going forward, the 2011-12 to 2013-14 Industrial Policy Action Plan envisages creating 43 000 direct and 86 000 indirect jobs following the implementation of carefully identified transversal and sector-specific interventions. A feature of the latest iteration, like the first, is that actions are tied to timeframes measured in quarters from the date of implementation. Ipap 2 then is not a wish list. It is an action plan which, like any other, will require sustained and focused work and perseverance if we are to succeed. Progress must be measured internally within government and reported to Parliament and bodies like Nedlac. We remain committed to regularly reporting on progress as well as on challenges which we may face.
Of course our ability to achieve our goals will depend also on the external environment - on factors which, by definition, are beyond our control. In this regard it is important to note that the recovery from the global economic crisis has been slow. We may be on a faster track in terms of recovering from the global crisis, but our own GDP growth in 2010 was only 2,8%, following a decline of 1,8% in 2009, although we are now projected to rise to a higher level of growth of 3,4% this year.
Manufacturers have expressed concern to the Department of Trade and Industry that the continual appreciation of the real effective exchange rate to the highest levels on record in 2010, arising from massive short- term capital inflows in the context of a large current account deficit, represents a significant barrier to South African exports.
Notwithstanding these environmental conditions, the Department of Trade and Industry continues to be confident that there are significant opportunities for job creation both in value-added productive sectors in general and through small enterprise development in particular. My colleague Deputy Minister Thabethe, who is deployed in this area, will speak about some of our achievements and challenges here, but I would like to make just one point. We have established an advisory group to look at areas where we could potentially achieve greater impact in our SMME - small, medium and micro enterprise - support programmes. This was motivated by a sense that we are not making sufficient headway in realising the potential of enterprise development.
An early conclusion is that one of the areas of greatest potential success - and this is also borne out by international experience - is incubation programmes. The problem we face in South Africa is that we have between 30 and 40 recognised incubation projects, whereas Brazil has 4 000. Ramping ourselves up will be a major challenge and one in which government cannot achieve the necessary results on its own. We will, accordingly, be seeking more active partnerships with business and are looking at ways to tweak broad-based black economic empowerment programmes, as well as direct small, medium and micro enterprise support programmes to develop the necessary synergies. In this connection, I am pleased to indicate that the Small Enterprise Development Agency, Seda, is planning to roll out support for 250 incubation schemes over the next 5 years, as the first phase towards a target of establishing 1 000 small business incubators.
Regarding economic empowerment more generally, the black economic empowerment codes of good practice were promulgated four years ago, and we are now in a better position to assess their impact. The presidential advisory council has made several policy recommendations to allow for greater participation by black people in productive activities and to tackle what is now emerging as increasingly complex practices of fronting. To this end, the Department of Trade and Industry and the presidential advisory council are focusing on reviewing the codes and possibly amending the Act. This could entail, amongst other things, refinements to ensure greater policy coherence in the application of black economic empowerment across government and to strengthen access to procurement opportunities through the new and approved Preferential Procurement Policy Framework Act regulations. We are also looking at ways to strengthen our efforts to combat the fraudulent practice of fronting.
Co-operatives offer great potential as an accessible form of economic organisation involving many people in productive activity and job creation. In the past year, 100 new small-scale co-operatives with approximately 500 new job opportunities were established, utilising support facilities of the Department of Trade and Industry.
This, however, is not sufficient, and we will shortly be introducing a Co- operatives Amendment Bill as well as a co-operative strategy to strengthen our programmes and address a number of evident shortcomings. Fundamentally these will seek to put in place co-operative-specific institutions, including a co-operative development agency, a co-operative tribunal, a co- operative advisory council and a co-operative academy. The new strategy is a product of extensive engagement with stakeholders in Nedlac and also a product of discussion with the Department of Higher Education and Training, which is working towards the establishment of a co-operative academy.
Our trade and investment programme is an important pillar in our overall strategies to support growth and the drive for decent jobs. A trade policy and strategy framework was completed and adopted last year. Promoting closer mutually beneficial ties as well as developmental regional integration in Africa and Southern Africa remains our top priority.
We have also taken into account the seismic shifts that are taking place in the world economy that have seen developing countries like Brazil, Russia, India and China emerging as new centres of global economic growth and increasingly new sources of investment and exports. By joining Bric, South Africa will be consolidating its already strong economic links with these economies. Our association with Bric will enhance co-operation and co- ordination and strengthen our collective voice in global fora.
We have just returned from our first Brics summit, which outlined a number of new initiatives to strengthen mutually beneficial relations between developing countries. South Africa will commit to working energetically to build on existing trade and investment flows, while encouraging greater inward investment and more exports of higher value-added, employment- generating goods and services.
As far as investment promotion is concerned, we are now involved in target initiatives with China, India, Russia, Brazil, Japan, Spain, Germany, France, the UK, the USA and countries of the Middle East. We anticipate that this work will translate, over the next three years, into an investment pipeline of projects valued at R115 billion. This is a realistic target, taking into account the results for the past year, which show R28,9 billion in investments resulting in 13 000 jobs. We are aware that the issuing of business permits has been a matter of concern, and an interdepartmental task team headed at deputy director-general level is being established to fast-track the processing of business permits.
Another major development will be our hosting of the SADC-Comesa-EAC - Southern African Development Community-Common Market for Eastern and Southern Africa-East African Community - summit later this year. This is expected to formally launch negotiations for a trilateral grand free-trade agreement, FTA, between the three economic communities. The trilateral FTA will create a sizeable regional market, comprising 26 countries with a combined GDP of US$624 billion and a population of between 500 and 700 million people. A larger, more integrated and growing regional market will enhance foreign investment and intra-African trade.
At the multilateral level, renewed efforts to conclude the Doha Development Round this year appear to have come up against major, and perhaps even fatal, obstacles. These arise, in our view, from efforts to place new demands in the areas of industrial tariffs and services on emerging economies without any indication of meaningful reciprocity. These unfair and unreasonable demands threaten to undermine the delicate balances achieved in processes to date; balances which, in fact, we have argued are already tilted against developing countries. We are therefore of the view that any further imbalances threaten to fundamentally invert the developmental mandate that launched the Doha Round. We remain convinced that the only kind of multilateral agreement worth supporting must be one that deals with imbalances and inequities that disadvantage developing countries, and South Africa will therefore continue to add its voice to those who insist that the developmental mandate must remain at the centre of the negotiations.
This year South Africa will host COP 17 - the 17th Conference of the Parties of the United Nations Framework Convention on Climate Change - an important milestone in the ongoing climate change negotiations. It is increasingly clear to us that the trade aspects of these negotiations will need to be addressed. In particular, we need to ensure that a proper balance is found between making adjustments to avoid catastrophic climate change and securing the space for development.
To come back to the regulatory tasks of the Department of Trade and Industry, I am glad to report that a review of the lotteries policy framework is under way, and we anticipate that amendments will be introduced to the Lotteries Act. The Gambling Review Commission has completed its work, and a report has been finalised which will be tabled in Parliament as soon as further deliberations on this report are concluded. Coupled with this process, regulations have been published to limit advertising of gambling activities and to address illegal interactive gambling.
The Intellectual Property Laws Amendment Bill for the protection of indigenous knowledge systems is before the portfolio committee.
Hon Minister, your time has expired.
Thank you very much. The rest of the speech will be available on the website. Thank you very much. [Applause.]
Hon Chairperson, hon members of this House, colleagues, compatriots, partners in our endeavours, people of South Africa, policy, politics and performance underpin strategic direction, delivery and effective implementation. The priority policy giving strategic direction to South Africa's budget is employment creation to concretise the government's commitment to substantively improving people's lives in our country.
The Trade and Industry budget quite rightly recognises that the industrialisation of South Africa is the key to unlock the potential of a developmental state. We have heard from many quarters, whether capitalist or liberal, that no country in the world has ever, ever, ever successfully reached an economic apex other than through industrialisation, whether it was the Phoenicians, the Greeks, the Romans, the British, the Germans and now China.
Only in this way is it possible to harness the potential of our greatest asset, our people, and productive investment collectively, and take advantage of the shift in the global economy from the developed North to the developing countries in the South. South Africa's membership with Brazil, Russia, India and China to form Brics will enable our country to grow our economy within the region and on the African continent.
Only in this way can we actually develop sufficient economies of scale to grow our market. No, we will not be dwarfed - which is one of the fears noted in the papers - because when we compare South Africa, as part of the African continent, with Brazil's 190 million people, Russia's 142 million, China's 1,3 billion and India's 1,2 billion, we will recall that Africa has 1 billion people and that we have all agreed in South Africa that we have to become part of the African continent.
The opportunity beckons. As the International Monetary Fund noted in a recent report, the developing countries will soon overtake the developed countries. The question is: Is the Department of Trade and Industry's budget ready? Is it able to take advantage of these opportunities? This is what the committee had to examine and what our ANC compatriots did. I believe, on further analysis, that it can and it does. We cannot look at a tsunami arising out of nowhere economically. We have to look at track records and at what we have. Of course one does believe that, particularly in the manufacturing sector, but being mindful of the budget and financing. I ask myself: What about allocative efficiency? Is this realistic in the department's budget to underpin the prioritised objectives, because it is essential but not sufficient? You also need realistic measures to evaluate the performance and a very, very tight linkage between what you strategically plan and how you allocate it. And yes, we have communicated this to the department in that we would like to see an improved or tighter linkage between the strategic plan and the budgetary allocations, so that indeed we can improve our own oversight.
Industry development requires not just plant construction, but also skills, innovation and technology, procurement and industrial financing, as well as developmental trade policies. I am happy to say that my ANC colleagues will deal with the others.
There is the National Industrial Participation Programme, Nipp, something our hon Mr Harris has often raised in the committee. But, quite frankly, our programme has been so hectic and rigorous that we have run out of time, other than inviting people to spend Family Day after Christmas doing it. So we will be getting a review on the guidelines of this, and then we will interrogate it intensely and come back to this House.
The Department of Trade and Industry has, however, vigorously embarked on addressing strategic skills with speed, for example the apprenticeships facilitated by tooling and foundry initiatives.
As a lead indicator of the performance of South Africa's economy, I think we would all agree that the automotive sector is a critical one. The DTI ensures that it gets an injection of R5,1 billion. Of course this includes the manufacture of components and an increasing list of value-adding goods. The Polo vehicle, which we all saw, has shifted from less than 30% locally produced products to more than 70%. This is just an example of where we can go in a few years.
Again, we have 2 500 workers, which will fill the number of projected jobs supported by the automotive investment scheme. The DTI's key interventions in industrial financing also include, for the creative, R1,5 billion for films. No, we are not Philistines when it comes to the arts, not at all. So, within a relatively short time, you will have increased labour absorption through 60 films.
Then there are business process services. This is projected to support 5 000 workers. This includes call centres. Yes, we may be snobby about call centres: "Oh, what about call centres? What are they going to do? What about sustainable employment?" But what they will achieve is a job on the spot, and then you can utilise your time after the shift to go and do training on something more strategic.
The tourism support programme is projected to support 5 600 jobs, and the manufacturing investment programme will support jobs for 8 400 workers. Those of you who say that this is a drop in the ocean, well then let's throw them all in the ocean - these jobs. [Applause.] And what will you get?
I believe that if unpacked there is no doubt that the DTI budget is going to achieve 43 000 jobs. It is a budget designed to accelerate manufacturing, business and strategic trade forged on a value-added industrial base.
Industrial development is further boosted by the R8 billion 12i Tax Incentive. The ANC government is not just talking; we are fuelling the industrialisation of South Africa and we will develop an employment environment that can and will support an exponentially expanded employment trajectory.
We have not forgotten exports. The export marketing and investment assistance incentives support 435 enterprises, while the sector-specific assistance scheme on emerging exporters supports 350 enterprises. The enterprise investment programme supports 260 tourism enterprises, and the industrial competitiveness and upgrading programme supports 220 enterprises. I have flagged but a few of these programmes just to give you a little taste.
Now, the SA Bureau of Standards, SABS, of course will produce all these goods and we won't be able to sell them. We used to refer to some of the goods from the East as some kind of junk, and look where they went to. Yes, we know that we have to improve our standards and ensure that while we are the gateway to Africa and goods are coming down, we are able to export them. But we are also lending assistance and supporting our brothers, and of course they are supporting us as well.
Without adding value to all our goods, South Africa runs the risk of economic dependency on its trading partners. However, I am confident, having had the benefit of an engagement with the Minister and his department, that we can and will change this pattern and shift the skewed economic structure from the previous jobless growth to a labour-absorbing economy.
Indeed, President Zuma, in the state of the nation address this year, mentioned the overarching framework of the New Growth Path. Also, the Industrial Policy Action Plan recently intensified its focus beyond traditional commodities to having a sharper focus on nontradable goods. And it can be expected to ensure that equity prevails throughout the SMME structure. No, we do not want to see elitism overtaking equity. So, yes, we are reviewing that legislation to tighten it up and link it more closely to the procurement protocols to ensure that the linkages that occurred before are prevented. So, let's not go back to that one.
Then, of course, we recognise that you can develop businesses, you can have the funds, but all of that is going to go into a hole unless organisations - entities like Seda - within the DTI do a legitimate day's work getting their hands dirty, as someone in the committee said, and go out there and be more proactive and check that, by the way, this is a good business, but we need to improve its management, its cash flow operations, etc.
The budget of R14 million reduces to R4 million in respect of, say, the Intellectual Property Laws Amendment Bill which is coming up and the companies commission, etc, which is due to become a reality any minute. We have adopted the companies legislation. We are simply awaiting ... In fact, it is not a question of awaiting; it will be signed off as soon as the infrastructure is there.
The question mark is the Intellectual Property Laws Amendment Bill, which the committee is still dealing with. It would be premature of me here now to speculate on what kind of budget we will be requiring when the committee is still deliberating on the matter.
However, the recently launched National Consumer Commission, we believe, requires a significant allocation because of its establishment costs and accelerated outreach campaigns, and to build awareness about rights and responsibilities in this regard. Now, all of this is covered: R14 million to start, reducing to R4 million. So, you may say, "Well, they are not going to achieve anything. Did you see that massive cut?" Of course, it costs more to establish anything. And then of course are we not aware that the three-year Medium-Term Expenditure Framework offers you an opportunity to review the budget allocations in that regard?
During the last three or four minutes of my speech, let me just look at the recommendations that the committee came up with in this regard. There was no doubt about it: We do need to track the reports that are coming up and so on. It is only through regular reporting that the committee will be able to exercise its oversight more robustly. I will mention a few examples: the agro industries; the KPAs - key performance areas - associated with the 2010-13 Ipap 2, which is on the table and coming up; the interdepartmental task team report on iron ore and steel; as well as interdepartmental co- ordination which can be a potential risk - how effective is this?
We are also looking for status reports on the developments on regional trade agreements, for example the Southern African Customs Union, the Southern African Development Community, etc; the skills development and multilateral institutions and trade missions; and BBBEE broad-based black economic empowerment which is designed to ensure not only economic development but also equity, and that it equalises the situation within the majority of our population. We have also looked and asked for costed operational plans of the National Consumer Commission as soon as they are prepared. Regarding the gambling commission report, we have not forgotten it, but we are not going to gamble away our time; we want a proper report. Then we will be able to look at it.
On the progress regarding the filling of vacant funded posts, no, we are not just letting that slide. We are going to keep sharp track of that to see that they are filled if they are funded, and so on. I just want to say, in the last minute I have here, that the committee itself as a group did work very, very effectively on this. Of course, there will always be differences as parties.
I want to remind you of the words of one of my favourite poets - and I know you have heard a lot of his verses from me - Ben Okri. I wish to emphasise the importance of this Vote and the need for your support. In his poem "Turn on Your Light", he says "The new era is already here." He then implores us to start now, to begin afresh so that collectively we can all reap the benefits of what bears fruit. You know, as a member of this House - as a South African who wants to see my country develop, the people's potential being given the opportunity to grow - I wish to appeal to you to overcome your ideological differences and to put people first. The ANC supports this budget. I thank you. [Applause.]
Chairperson, Minister, Deputy Ministers, members, since he took over the department, the Minister of Trade and Industry, together with his team, has refocused the DTI and has started to improve internal efficiency in what was a very bloated administration, and has undertaken a wide-ranging and ambitious legislative and regulatory agenda.
Some of this has started to pay off. The recent admission of South Africa to the Brics group of countries is a welcome development that shows that this Minister and others with trade and foreign policy responsibilities have, in at least one respect, moved to a more pragmatic approach, different to the lip service paid to economic diplomacy by the previous administration.
The DA also welcomes the eventual launch of the consumer commission this week, and the long overdue alignment of the preferential procurement Act regulations with the broad-based black economic empowerment codes. The sooner the commission can be 100% operational and the new regulations promulgated, the better.
While these are important highlights amongst a wide range of proposed interventions, there are serious concerns that the department's ambitious agenda exceeds their capacity to deliver. Nobody doubts the work ethic of the deputy director-general Zodwa Ntuli, but the members of the portfolio committee can barely keep up with the wide range of new interventions she brings before us, sometimes several in a week.
This is alarming because if members of the committee, whose main responsibility is to write economic law and oversee the department, find it difficult to keep up with the regulatory agenda, then it must be truly overwhelming to a small business owner.
It is time to scale back the legislative ambitions of the department and focus on improving the institutions of the DTI, to make it as simple as possible to grow and start a business in South Africa. This is because an ambitious regulatory agenda is all very well, unless you lack the capacity to implement it; then it tends to trip you up and get in the way of doing business.
It is clear that the department does lack capacity. Almost one out of every five posts is vacant. Too many of the posts that are filled are held by bureaucrats whose positions may be duplicated elsewhere in the department. Trying to locate the right person to speak to at the DTI's campus in Pretoria is an almost insurmountable challenge for a citizen of this country looking to interact with the department.
While the department has cut bloat in some areas, it continues to rise in other areas. In the office of the director-general, expenditure is up 45% on last year. The compensation of employees in general is up 22%, and the average salary paid to the average employee in the companies commission is up 40%.
The DA remains unconvinced that the strategy of splitting the enterprise and industrial development programme into two new programmes was the correct approach. Instead, these programmes should have remained integrated, and the department should also consider integrating the two programmes that exist with trade. Let's streamline the way the department operates.
The recent debacles around the implementation of the Companies Act and the Consumer Protection Act show that this lack of capacity regularly trips up the department, despite their very good intentions. The former, the Companies Act, missed the implementation date, despite the ANC having argued passionately in Parliament against a temporary delay proposed by the opposition. The Consumer Protection Act regulations were published late, leaving businesses and consumers confused about how to comply with the law.
In addition, the fact that all low - and medium-capacity municipalities, the vast majority of which are ANC run, have been given exemption from complying with the Consumer Protection Act for an unspecified period is a cynical move. It does a serious disservice to any voters living in any of these municipalities by removing their consumer rights relative to other voters. The DA calls on the Minister to urgently remedy this by imposing a time limit on the exemption.
The biggest problem with this budget is best shown by the following example. If I was to present a critique of the approach to small business support, decisions made in competition policy, international trade administration, the management of the Industrial Development Corporation, the policy framework for black economic empowerment and interventions to drive innovation and entrepreneurship, members on that side of the House would probably disagree with me, but assume that I was talking about the policies of the DTI. If I criticised the broad thrust of the interdepartmental plan to drive employment and economic growth across the economy, those members would assume I was talking about the Revised Industrial Policy Action Plan, Ipap 2.
On both counts, these members would be wrong. What's more, you would be able to rule me out of order because we are here today to debate the budget of the DTI, and all of the policy interventions I have just listed are actually contained in the budget of the Economic Development department. That department even has its own interdepartmental plan to drive employment and economic growth across the economy, the New Growth Path.
The main problem with this budget is that only half of it was presented today. The other half was presented last week by the Minister of Economic Development. The DA remains of the view that his department was an unnecessary and confusing addition to government's economics cluster. In many ways, it has simply colonised several important functions and roles fulfilled by the DTI.
The role of the Department of Trade and Industry has clearly and historically been the microeconomic management of the economy. Yet the New Growth Path lays out a 10-step package of microeconomic reforms and seems to limit the DTI to one of these: industrial policy. The Ipap 2, the strategy to deal with industrial policy, is repeatedly referred to in that document as an intervention simply into manufacturing, doing it a serious disservice because the Ipap 2 goes far further than manufacturing, and rightly it should.
The DA has expressed our frustration that the Ipap 2, as it was revised last week, misses an opportunity to report properly on the brave milestone dates included in the original version. We have also gone on record to call for time-limited interventions that target activities rather than sectors. But even after all of that, we welcome the DTI's efforts to co-ordinate industrial policy between numerous government departments and fail to see how this approach can cohere properly with another superior interdepartmental approach designed and implemented by the Economic Development department, EDD.
The lack of co-ordination between these departments is often plain to see. Last month the senior management of the Department of Trade and Industry presented their one hour - 60 minutes - medium-term strategic plan to the committee. They didn't mention the New Growth Path once.
While there are extensive overlaps between the microeconomic programmes proposed in the two documents, there is a distinct lack of coherence between the Department of Economic Development's plans and the strategic plans of the Department of Trade and Industry.
At the end of their strategic plan - and the chairperson referred to this - the DTI says that interdepartmental co-ordination is their number one strategic risk. It is clear to the DA that this is the case.
One place where the DTI and the EDD do appear to be working together is in their opposition to inward investment. It is deeply regrettable that the two departments have chosen to use representations to our competition authorities to oppose two respective investments by Walmart and Kansai.
This sets a dangerous precedent. The government's stance on these two deals puts these two companies at a distinct disadvantage to other retailers who will still be free to behave as they like. It is not clear how such a discriminatory approach could be resolved without extensive intervention into the affairs of other retailers.
The DA is not opposed to measures to incentivise local procurement, but such interventions must not discriminate against individual companies or sectors and must not operate through the competition authorities, unless there are clear competition concerns. Any interventions must aim to tilt the playing field instead of intervening directly in the affairs of individual companies.
The DTI needs to be sending the signal that South Africa is open for business. Instead, the current perception, best described by the Business Day, is of "a fundamental hostility to business embedded in both the DTI and the Ministry of Economic Development". Even if the department disputes that this is the case, the very fact that there is such a perception means the damage is done; that is the nature of investment today.
Instead of blocking investment, we should be scaling up incentives to attract it. This budget shows that so far we have spent R5 billion on our three industrial development zones: Coega, East London and Richards Bay. Over the next three years we will spend R1,6 billion more.
The department says that this expenditure has attracted 38 investors whose investments outweigh the amount spent by the state. But we have to ask the tough questions, like: How much of this investment would have arrived anyway? Would more investment be forthcoming if we linked these investments to geographically limited regulatory reform? We believe we should urgently upgrade these IDZs to incorporate labour law and other regulatory breaks.
Only by matching the bold interventions of the export processing zones established in our rival emerging markets will we come close to matching their job creation records.
Lastly, the DA welcomes the scaled-up role for the Industrial Development Corporation in the economy, and particularly in industrial financing. But, although the institution has supposedly shifted from the DTI to the EDD, numerous transfers to the IDC remain on the DTI's budget.
This is a big risk for the management of the IDC, an excellent organisation, which deserves, at the very least, clear reporting lines. We must resolve this and other apparent contradictions as soon as possible. If interdepartmental co-ordination is the number one strategic risk facing the DTI, as the department themselves claim, then this budget needs to resolve this risk, not make it worse. Thank you. [Applause.]
Chairperson, Israel has approximately 7,5 million people. The country has been in a constant state of war since its founding and has no natural resources. Yet Israel produces more start-up companies than Japan, China, India, Korea, Canada and the United Kingdom. South Africa, a country with all the natural resources in the world, has much to learn.
Trade between African nations needs to be stimulated. We need a specific focus on the SADC group of nations. Foreign direct investment has an important role to play in the African development story. That said, we need to promote our own industries and enterprises and those of our fellow Africans.
Foreign direct investment needs to be properly monitored and regulated. Greenfield foreign direct investments, where new operations are set up rather than existing ones taken over, are most important. In the past, most of the benefits derived from foreign direct investment flowed to offshore shareholders. This needs to change.
Foreign direct investment in Africa decreased from R87,6 billion in 2008 to R50,1 billion in 2010, mainly due to the global recession. In South Africa, foreign direct investment came down from R5,7 billion in 2009 to R1,3 billion in 2010. However, South Africa seems to have been disproportionately negatively affected compared to other African nations. Nigeria received R11 billion in foreign direct investment in 2009, and the Uganda Investment Authority reported 323 investment projects in 2010, creating 149 000 new jobs. Minister, are we being left behind?
Aunde Cartrim is an international company with 80 branches worldwide. They currently operate in KwaZulu-Natal and supply the auto industry. Aunde employs 1 700 individuals in their leather goods supply industry. Three hundred employees have already been retrenched and the company is in the final stages of leaving South Africa and relocating to Turkey and Poland.
Three strikes in one year - Transnet, the leather tannery industry and an internal strike - have contributed to the company's decision to leave South Africa. The automotive and leather trim industries are intertwined. This will have a snowball effect and many more than the remaining 1 400 people will lose their jobs. We need to realise that in a modern economic society we need to be competitive on a global scale. If our policies and labour laws do not support economic growth and global competitiveness, we will lose our current investors and, therefore, jobs, and that will discourage potential new investors.
The reinforcing steel industry is in dire straits. The Cisco - Cape Town Iron and Steel Works - steel mill in Cape Town has closed down. ArcelorMittal South Africa has closed down its Newcastle furnace. These are just two examples of entities operating in the steel industry that have closed down. The building industry needs reinforcing steel, and now reinforcing steel is chronically in short supply in an already depressed construction market. Strategic planning and evaluation is obviously lacking.
The Department of Trade and Industry's total budget allocation for the 2011- 12 financial year is R6,8 billion in nominal terms. In real terms, this is an increase of 4,6%. Taking away the effect of inflation, the department has 4,6% more money to deliver on its mandate. This mandate includes job creation. The department's job creation initiatives will be guided by the New Growth Path through the Industrial Policy Action Plan, Ipap 2. However, Trade and Investment South Africa's budget has declined by 16,9% in real terms. Trade and Investment South Africa has an important role to play in foreign direct investment, which is important for our domestic economic growth.
Cope notes Ipap 2's ambitious targets for reducing unemployment by 5% over the next decade. Cope also welcomes the new programmes which include boat building, and oil and gas exploration. This will assist in diversifying the South African economy.
Cope is concerned, however, because of the increased state involvement in the economy. We are witnessing the poor performance of state-owned entities and we have no reason to think it will be any different this time around. Cope strongly supports the small, medium and micro enterprises as the main drivers of job creation. South Africa has recently been included in the new grouping of Bric nations - Brazil, Russia, India and China. This provides an exciting possibility for us. South Africa provides a gateway to the rest of Africa, and the other nations know this. South Africa needs to ensure that we get our fair share of the opportunity pie afforded us.
We do need to do more to promote emerging farmers. Black economic empowerment targets for agriculture set by the Department of Trade and Industry through agri-BEE have failed. The 30% target set for the procurement of produce from previously disadvantaged farmers has not materialised. Most black farmers do not even know of agri-BEE. They are struggling. Government and commercial farmers urgently need to assist with the integration of black farmers into the agricultural food security sector.
Cope understands that the DTI is proposing amendments to the BEE codes, specifically codes 600 and 700. The first amendment will impact on enterprise development. The amendment, we believe, could possibly open the room for fronting and manipulation of companies. The fact that the amendment looks at the whole amount spent during the year, rather than at the average annual value, is a problem.
Cope supports the DTI's Ipap 2 document that lists ambitious plans to boost renewable energy and local manufacturing of green technologies. Support and co-ordination of policies and programmes across departments, state entities and agencies are crucial. The DTI will attest to this fact. This has been the Achilles heel of past government initiatives. South Africa cannot afford any more delays, as we will not meet our renewable energy targets. I thank you. [Applause.]
Mr Chairman, before I proceed to sharply disagree with the alluring but inebriating optimism, I must, nonetheless, acknowledge the great leadership given by the hon Fubbs to our committee. It is a real privilege serving on the committee and an enormously stimulating experience. Let me say, preliminarily, that I agree with everything that the hon shadow Minister of Trade and Industry has said and I will not repeat it in what I have to say.
I want to focus on the Industrial Policy Action Plan, Ipap 2, reloaded, because it is at the core of what we are doing. From an economic viewpoint, there is always an economic cost to an industrial policy based on intervention, a policy which goes beyond merely creating an enabling environment. That is because it shifts economic resources and opportunities away from the well-known Paretian optimum.
For an industrial policy to be viable and justified, there must be an identified profit and an identified benefit to the cost paid in economic terms. In a situation like ours, we need to look at benefits beyond social benefits, because if we do not make the money, there will not be any money to finance all the social programmes which are so desperately needed to address the social issues.
I have taken this document, given it to an economist at the University of Southern California, Los Angeles, USCLA, and received a very lengthy report that my five minutes do not enable me to present to this House. What is significant is that, in the covering letter, there was a statement that, in the short and medium term, this document is pie in the sky with a free door for everyone and that, in the long-term, everything is possible.
What are the costs imposed by this document? When we talk about preferential procurement - and this is just an example which could be replicated - we are talking about our government paying more for goods produced in South Africa, in the hope that that becomes an incubator for the manufacturing of the same goods in South Africa at a later stage, and in the hope that, once those goods are finally manufactured in South Africa, they are economically viable in global terms and can be exported at a profit for the country as a whole.
There are two bridges of hope which, in respect of this document, are not actually verified. The comparison of South Africa with the Bric countries - Brazil, Russia, India and China - is a fallacious one. The difference from all the other Brics countries is that they have an established internal market which justifies the production of widgets on a commercial basis. We do not have that established market. So we can only hope that at a later time - and that is the other bridge - we may develop that market on a continental basis.
What matters is not the money which is transferred, but the retained earnings for the country as a whole. When the hon Fubbs speaks of 435 export programmes, what she is really talking about is taking money from the aggregate of family, from consumers - from all of us - to subsidise exports, which would otherwise not be competitive in the global market.
When we talk about the automotive programme - and this is a move we have already seen in many countries - we are talking about forcing all of us to pay twice for the price of our cars through subsidies, the budget, import duties, the ban of used vehicles, in the hope that at a certain time and place all this will become economically viable. In the meantime, the money that is taken from us is transferred to the industrialists on the assumption that by doing so they will maintain employment benefits.
In Italy, the same thing happened for 50 years. Fiat blackmailed the government on account of employment, selling substandard cars at an enormous price on account of trade barriers. When the European Union forced them to do away with them, nothing happened. The employment levels remained the same and Fiat finally began to produce economically viable cars for the global market. So it is a constant transfer of wealth from the middle class to the industrialists to sustain employment levels which would otherwise very likely be there. Thank you, Mr Chairman. [Time expired.]
Chairperson, please forgive the condition of my voice; I have a cold. I urge the hon Oriani-Ambrosini to listen very carefully. I can see that he is moving around.
This budget debate takes place in a very crucial month, the month in which we celebrate the 17th year of our democratic dispensation. I would hereby like to congratulate the ANC on being the leader of the liberation struggle of the South African people for a period of 99 years. [Applause.] I wish them well when they celebrate their centenary next year as the only long- serving party of the people in the whole world. Indeed, they have achieved a milestone and we hope that they will continue to be torchbearers for the betterment of the lives of the South African masses.
As we move towards local government elections, we take stock of the work done in the previous year, but also look into the future to see what still needs to be done, taking cognisance of our strengths and weaknesses. We appreciate the continued support of our people during these trying times of governance and the ever-changing global political environment. These realities have made it difficult for the economic development of emerging countries, as the big players continue to dominate the global economic markets and continue to exploit the vulnerable economies. Therefore the support of our masses for their government becomes imperative.
As we continue to implement our election promises, our department has provided industrial financing through the Industrial Policy Action Plan, Ipap 2, and will continue to support programmes for industrial innovation through the localisation of production by developing supplies of industrial financing. An amount of almost R70 billion to R100 billion has been allocated so far for a period of five years. That is the work that this government is doing.
The Department of Trade and Industry has finalised the automotive investment scheme, and investment commitments of over R13 billion have been made so far. These mechanisms have created 24 000 jobs, ladies and gentlemen. [Applause.] We rolled out the clothing and textile programme and 200 companies thus far have benefited from our incentives.
We have increased economic activity by ensuring that there are procurement processes that will benefit not the so-called cronies, like the DA always says, but ordinary South Africans. As a developmental state we will implement black economic empowerment to its fullest capacity. People will drive governmental action.
The state can't be responsible for trade facilitation only; it also has the responsibility of creating jobs, as opposed to the hypocrisy advanced by the DA when they speak out of both sides of their mouth. One moment they identify the state as a responsible party in job creation, but the next they don't want government to be a player in economic activities, and relegate it to policy formulation. That is the argument that was advanced now, hon Chair.
They continue to undermine our fiscal policy through this so-called open opportunity society. They actually advocate against BEE and transformation by giving the impression that all are equal. These policies, they claim, will threaten investor confidence. It is interesting to hear this assertion from an international trade perspective.
Hon members, let me reiterate this: We, as government, are the trade facilitators, not the DA. We can't be told by non-negotiators, who have never negotiated for investment elsewhere except in their minds, that we threaten investor confidence. [Interjections.]
So far I can positively report that the South African government continues to be engaged by foreign investors for foreign direct investment. In fact, it is an open secret that South Africa is the industrial hub for the continent as a whole. We don't base our argument on pen and paper research work, but on practical business transactions that South Africans have clinched through our trade missions, which are sometimes led by our President himself, owing to his passion for economic beneficiation.
If business were allowed to give live testimony in this debate, they would have given a full account of how many strategic economic partnerships they have engaged in thus far. Maybe it is high time that organisations like Business Unity South Africa, Busa, created public forums to report on such matters because I don't think it would be ethical for government to report on behalf of private companies and isolate their work from the overall economic activities of the country.
Today we are expected to shy away from explaining that if it were not for separate development introduced by the apartheid system, we would not have these serious backlogs in capacity and skills. [Applause.] In moving forward without forgetting where we come from, we are not going to be whipped into submission by racist tendencies that want us to pretend that the past racist regime did not disempower the black majority in favour of the white minority, hence we are saddled with this huge monster of poverty.
Our approach going forward to address the latter was to craft a New Growth Path, to be implemented through Ipap 2, which intends to increase jobs in the economy. Government will be engaging in a massive skills development programme, especially among the youth. We have already increased our social spending budget by continuing to provide housing and social grants, and through the infrastructure programme of road maintenance in terms of the Expanded Public Works Programme.
We have put clear programmes in place on how to increase productivity and competitiveness by incentivising innovation. Clear action plans have been adopted for implementation. We have set measurable objectives, which the Auditor-General will audit through the new performance auditing system that he introduced. We have indentified our social partners who play a pivotal role in infrastructure development. Our track record in the development of stadia and roads for the 2010 Fifa World Cup is a case in point.
We will deal with challenges of procurement, as identified by our people, not the DA. That's the problem, hon members. Today we will be cross- examined about how many jobs we have created. Are they sustainable? Who are the main drivers of these jobs - government or the private sector? We will also be accused of not having the requisite skills and capacity to implement our programme. We will also be reminded of the grinding poverty in our society. All this will be put in such a way that it sounds as if government is represented by headless chickens that do not have a plan. [Interjections.]
Well, ladies and gentlemen, let me take this opportunity to further articulate the work of our department. One hundred billion rand is projected for investment in the automotive investment scheme - that's work - as a return on investment. Therefore 24 000 jobs, as I said, have already been created. Forty million rand is allocated to business process services and this has already created 950 jobs. Thirty-four thousand recruits are also benefiting from the Monyetla Work Readiness Programme, with guaranteed jobs. When they leave that programme, they walk into jobs. It's guaranteed.
We will also hear how fraud and corruption has affected us. But, ladies and gentlemen, we are proud to report that, as part of fighting piracy and clamping down on corruption, we have successfully worked together with the creative industry - as mandated by our President, His Excellency President Jacob Zuma - and launched the antipiracy campaign. You should know that we have launched it. In fact, the ambassadors of the antipiracy campaign are here now. Deborah Fraser, please stand up; they need to see you. [Applause.] All these people sitting here will make sure that you combat corruption.
This campaign was launched last year and we further established a commission chaired by Judge Ian Farlam - everyone should know who Judge Farlam is - and he will receive submissions on the extent to which our people are robbed of their daily bread by those companies on whose behalf the DA is talking here today.
As I have said, I am proud to introduce our ambassadors, and they have shown themselves here already. As government, we are committed to clamping down on corruption.
[Time expired.] [Applause.]
Chairperson, the ACDP supports the Department of Trade and Industry's industrial policy in broad terms with its focus on labour- intensive industries to achieve and focus on job creation in the country. We understand the critical role that the department plays in this area. We also understand, however, that there are significant challenges facing the South African economy, owing to the slow recovery of the global economy and the sovereign debt crisis in the Eurozone.
Ipap 2 is mooted as a major element of the New Growth Path which aims to create 5 million new jobs by 2020. This is a lofty target. But let us, as the hon Fubbs said, join hands to see if we can achieve that goal or a substantial part of it for the good of our nation and the good of our people. If we get 80% or 90% of the target, it would be significant and commendable.
South Africa's invitation to join the Bric group - Brazil, Russia, India and China - is undoubtedly a major achievement. It again illustrates how South Africa punches above its weight in international affairs and how positively the country is perceived by other countries. It appears that the G7 grouping no longer dominates the world economic order, particularly if one has regard to the growing sovereign debt crisis in Europe. It is hoped that the new B5 will be able to successfully contend for financial and economic inclusion, to correct distortions and trade imbalances around tariffs and to address other challenges facing the developing world, such as poverty and unemployment.
There can be no doubt that the Bric group represents new and lucrative markets for South African goods and services, as well as opportunities to implement Ipap 2 and the New Growth Path policy framework. With almost 2,9 billion people living in African countries, a quarter of the world's land mass and a combined GDP of some US$120 trillion - that is approximately R69 trillion - the Bric group already represents a significant portion of the world's economic activity.
What do we bring to the Bric table? The African market, with a population of 800 million and a US$1 trillion economy is, as commentators have pointed out, significant. We, as South Africa, have the opportunity to leverage our world-class corporate governance, financial services and technical skills to reach a higher level of growth, and this the ACDP clearly supports.
A further benefit clearly lies in the area of beneficiation industries for our raw materials. South Africa must move away from being an exporter of raw materials to focus on beneficiation. [Applause.]
Clearly, the question we need to ask is whether we will still be able to criticise certain Bric countries on their human rights. And I'm sure we will reserve that right. Let us, however, be proud of the fact that we have been accepted into the Bric group. This is a major achievement of which we as South Africans can be proud. The ACDP will support this Budget Vote. I thank you. [Applause.]
Hon Minister of Trade and Industry, hon Deputy Ministers, hon members, Chairperson, the ANC supports Budget Vote No 36, the budget for Trade and Industry. There are many reasons for the ANC's support of this budget, but let me draw the attention of this House to three of them, which are: broadening economic participation through SMMEs, co-operatives and the informal business sector; skills development; and addressing the challenges of the estate agency sector.
The creation of decent and sustainable jobs, the elimination of income and social inequalities, and the eradication of poverty and hunger through the manufacturing sector of our economy, lie at the centre of the ANC government's economic policy. Small, medium and micro enterprises, co- operatives and informal businesses are some of the tools for creating decent jobs and achieving inclusive economic development. The SMMEs have a significant contribution to make to sustainable and equitable economic development, to social cohesion and to employment creation and wealth redistribution. The Department of Trade and Industry, together with the Department of Economic Development, has allocated significant resources towards developing the SMME sector.
Hon Harris, what you call duplication between the DTI and the Department of Economic Development is called co-operative and integrated governance. However, it must be acknowledged that notwithstanding huge amounts of money and the support programmes designed to assist SMMEs and co-operatives, there have been low levels of entrepreneurial activity and limited success in creating sustainable small businesses and co-operatives.
For SMMEs to succeed, they should be supported with several measures including incubation, monitoring and mentoring. The Department of Trade and Industry intends to increase growth of the SMME sector through the Black Business Supplier Development Programme as a vehicle for broadening black economic empowerment. This is also going to ensure that broad-based black economic empowerment, BBBEE, entrepreneurs are enabled to participate in the productive sectors of the economy, particularly in manufacturing.
The DTI also seeks to use the support programme for industrial innovation to encourage SMMEs to be innovative and competitive. This is further supported by the Technology and Human Resources for Industry Programme, which seeks to increase the number of skilled people. With the support of the Small Enterprise Development Agency, Seda, through its technology programme and the expansion of the centre for entrepreneurs, SMMEs will be the catalyst for job creation.
These are positive steps which the department is taking to enhance the work of the developmental finance institutions, DFIs, to reduce the failure rate of the SMMEs and to boost entrepreneurial activity. There needs to be constant and consistent contact between the DFIs, the SMMEs and the co- operatives community - a social dialogue similar to Nedlac is suggested here.
As a member of the Bric group - Brazil, Russia, India and China - South Africa must realise that co-operatives play a significant role in the global economy. India, China and Brazil have a significant amount of their GDP generated by their co-operatives. For example, 90% of India's dairy industry is managed by a single co-operative, and 40% of Brazil's agricultural GDP comes from co-ops. Even our trading partners in the North - the European Union and the USA - have used co-operatives to develop their economies. It is estimated, for instance, that in the USA and Germany one in four citizens is a member of a co-operative. The United Nations has proclaimed 2012 the International Year of Co-operatives, and South Africa must play its role to increase participation and the number of successful co-operatives in 2012. The co-operatives offer direct economic participation to a large number of people and communities as they provide worker control of the means of production and the equitable distribution of wealth. Co-ops are a powerful incentive for social cohesion and a potent tool for creating the developmental state. Even more importantly, they provide a tool for involving the rural communities, women, the youth and people with disabilities in mainstream economic activity.
To address the challenges facing the co-operative sector, the DTI has presented to Cabinet the Co-operatives Amendment Bill, and the committee is looking forward to engaging with this amending Bill. There are also incentives through which the DTI seeks to encourage the development of co- operatives. The co-operative incentive scheme is one of these for which a co-operative can qualify for up to R350 000. With technical and financial support, co-operatives can contribute significantly to the growth of the local manufacturing base.
There is also a need to use co-ops to revitalise the farming and manufacturing sectors in the former homelands. Among these are is cotton farming on the Makhathini Flats in KwaZulu-Natal, in Tonga in Mpumalanga and in parts of the Eastern Cape. It is reported that cotton used to be grown on 200 000 hectares of farm land but it has since shrunk to about 8 000 hectares. South Africa's largest spinning mill, which used to produce 40% of local cotton, closed down in 2009 and this has impacted negatively on jobs. This sector alone has the potential to create 1 million jobs and to revive our ailing clothing and textile industry.
A sector that remains completely ignored is the informal business sector and its informal market. There is a need to integrate this sector into the formal economy by providing the people involved with capital, skills and institutional support for them to be active participants in the economy and to contribute meaningfully to the development of SMMEs and co-operatives.
In addition, the Department of Trade and Industry needs to turn its attention to the estate agency sector. The Estate Agency Affairs Board was established in terms of the Estate Agency Affairs Act, Act 112 of 1976. I thank you. [Time expired.] [Applause.]
Chairperson, hon members, South Africa has to create jobs to avoid a human-made calamity; not for the sake of avoiding a revolution so that a political system can be protected, but for the sake of the people. This is the FF Plus's Christian-based view.
This committee's work does not make national headlines, yet it can be regarded as the single most important committee in creating an equitable living environment. Economics is a complex field and not easy to implement. Consensus is rare, and there is a saying that if you laid down all the economists in the world from end to end, they would still not reach any conclusion.
The committee, however, under the pragmatic leadership of chairperson Fubbs, does have a broad consensus, and that is the urgency of job creation. Job creation implies the unlocking of value in the market and supplying a need. This process presupposes a requirement called innovation, which implies the application of existing and new knowledge to new and existing resources to unlock new value in the form of goods and services. It is our view that this is what the department is endeavouring to do and its broad approach therein is sensible.
Ek het dit in die begrotingsdebat oor ekonomiese ontwikkeling aan Minister Patel gestel dat hierdie doelwit van werkskepping ongekende samewerking sal vereis tussen die onderskeie staatsdepartemente, die privaatbedryf en die publiek. Die verslag van die Portefeuljekomitee oor Handel en Nywerheid beaam dit deur die stelling dat daar eenheid tussen mikro- en makro- ekonomiese beleid moet wees. (Translation of Afrikaans paragraph follows.)
[In the budget debate on economic development I put it to Minister Patel that this job creation target will require unprecedented co-operation between the various state departments, the private sector and the public. The report by the Portfolio Committee on Trade and Industry corroborates this by stating that there should be unity between micro- and macroeconomic policy.]
The Industrial Policy Action Plan, Ipap 2, which focuses on promoting the productive sectors of the economy, is a valuable shift away from a consumption-led growth path. We need to be creative, innovative and focused on adding value rather than just being conveyers of mineral resources and crude materials. That this industrial policy therefore also drives and orients the South African trade policy so as to find outlets for our value- added products seems sensible.
Betreffende die nuwe Maatskappywet, was die VF Plus bereid om die aanname van die wet te ondersteun. Die onnodige dwang om die wet op 1 April in werking te stel en die sogenaamde Yengeni-klousule het dit egter vir ons onmoontlik gemaak. Na al die gejaag het die Presidensie in elk geval nie die wet op 1 April in werking laat tree nie.
Die Yengeni-klousule is problematies vir die VF Plus, nie omdat ons nie kan vergewe indien iemand oortree het nie, maar omdat ons die howe as meer as geskik beskou om te bepaal of iemand vergewe en vertrou kan word om as direkteur te dien nadat hy of sy aan 'n misdryf skuldig bevind is.
Wat die wetgewing oor verbruikersbeskerming betref, vind die VF Plus dit verblydend dat nie net die regte van kommersile verbruikers beskerm word nie, maar ook di van verbruikers van goedere en dienste deur die staat. Dit is daarom kommerwekkend dat die Minister vir Samewerkende Regering en Tradisionele Sake vir Minister Davies gevra het om alle munisipaliteite uit te sluit van die toepassing van die wet. Ons wil graag weet hoekom. Ons vermoed hierdie uitsluiting is inherent ongrondwetlik en is daarop toegespits om die ANC te beskerm teen 'n vloedgolf van klagtes weens swak munisipale dienste. Dankie, meneer. (Translation of Afrikaans paragraphs follows.)
[As regards the new Companies Act, the FF Plus was prepared to support the adoption of this legislation. The unnecessary compulsion to enact this legislation on 1 April and the so-called Yengeni clause, however, made this impossible for us. After that big rush the Presidency didn't enact the legislation on 1 April anyway. The Yengeni clause is problematic for the FF Plus, not in that we cannot forgive someone for having transgressed, but in that we regard the courts as more suitable to determine whether someone can be forgiven and trusted to serve as a director after he or she has been found guilty of an offence.
As regards the Consumer Protection Act, the FF Plus finds it heartening that not only the rights of commercial consumers are protected, but also those of the consumers of goods and services by the state. That is why it is worrying that the Minister for Co-operative Governance and Traditional Affairs has asked Minister Davies to exclude all municipalities from the implementation of this Act. We would dearly like to know why. We suspect this exclusion to be inherently unconstitutional and aimed at protecting the ANC against a flood of complaints because of poor municipal services. Thank you, sir.]
Chairperson, Minister Davies and other Ministers present, Deputy Ministers, MECs present, Members of Parliament, officials of the Department of Trade and Industry, the Council of Trade and Industry Institutions, leaders of organised business - Business Unity SA, the National African Federated Chamber of Commerce and Industry - and labour, distinguished guests, ladies and gentlemen, this Budget Vote takes place at a time when the ANC-led government is consolidating its character as a democratic developmental state. The promulgation of a number of instruments, such as the New Growth Path, the Industrial Policy Action Plan, the new Companies Act - as the Minister has alluded to - the companies commission and the establishment of the National Consumer Commission, are key in that they talk to a developmental state. These developments usher in an age in which the government is making strategic interventions in strategic sectors of the economy to stimulate economic development and growth.
It is imperative to comprehend that policy instruments such as the New Growth Path are driven by the quest to ensure increased economic redistribution. And, as such, we believe that the New Growth Path calls for extensive government support for social economy initiatives, which include building a stronger co-operative support agency, something the Minister also touched on. In responding to this call, we are now in the process of finalising a process that will ensure that the introduction of the co- operatives academy, the co-operatives tribunal and the co-operatives agency will be in place. This illustrates the coherent nature of the work of this government in responding to the needs of the people of South Africa.
These interventions are directed at ensuring that the country has an effective and efficient institutional mechanism to support the social economy initiatives, thus ensuring focused investment in social capital.
This year has been declared the year of job creation by the President of the country. It is for this reason that we have deployed all tools available in the Department of Trade and Industry. We all know that the budget is a tool that we use to implement policy, and the ANC-led government is doing well in terms this.
In this regard, I want to emphasise the pivotal role and the potential of the small business sector in job creation and what we are doing to increase support for SMMEs and co-operatives. There is an even greater role for the co-operatives movement in job creation, as these foster a sense of collective social enterprise.
Our view is that the co-operatives are not just about the bottom line, but also about strengthening ties of community social networks which are critical to building societal capital. I must say that we promote ownership, but that we are also talking to the question of fronting. Our belief is that fronting is already happening, hon MacKenzie. We are trying by all means possible to make sure that this cannot be accelerated and that it is curbed. Nevertheless, your points were quite good and we will be able to take them forward.
As we talk about this co-operatives movement, we would also like to say that we acknowledge the Community Public-Private Partnership Programme, led by CEO Hlonela Lupuwana of Seda, the Small Enterprise Development Agency, and her team. The Community Public-Private Partnership Programme focuses on ensuring that the co-operatives can work. In this case we don't talk theory; we talk practice.
In our midst we have people from two co-operatives that we have launched. In Tzaneen, a far-flung rural place in Limpopo, there is the Tours Co- operative, which is doing well with a Peppadew project. They are here with us today. [Applause.] In Mpumalanga, the Insimi Yami Youth Co-operative from Schagen illustrates our deliberate focus to leverage the labour- absorptive capacity that lies in the primary sector. As such the co- operatives we launched in these two provinces were both in the agricultural sector in line with talking to consumption in that they are exceeding our production. We hope that they will be supported.
One of the tools we utilise to ensure that we build a partnership with other formations is "Taking the Department of Trade and Industry to the People". This programme talks to a lot of people who need to know what the Department of Trade and Industry is all about.
I would be failing in my duties if I did not talk about strategic interventions in terms of women's economic empowerment. As the DTI we have been utilising tools such as the SA Women Entrepreneurs' Network, the Isivande Women's Fund, Bavumile and Technology for Women in Business, or Twib. Over and above this, we have also recognised women who use different forms of technology in their business through the Twib Awards.
In addition to this, we are currently investing in building technology capacity in young girls through the Techno Girls programme. Also in our midst are young female learners from the Ratshisase Secondary School in Limpopo, which is in a deep rural area. They are the winners of this year's Twib Awards. Hence, they are here today to observe the Budget Vote debate. [Applause.]
The Techno Girls programme was born out of a need to build innovative production and business methods. I hope you have time to listen to them and hear what they think about future businesswomen. Also, we would like to say that all this is happening because we have a coherent system that our Minister uses to lead this department. Minister, go ahead; we must be ambitious in any way we can be, because if we are not ambitious, we will not achieve our objectives. The DA always says: Let's keep up the good work. You are running this department superbly, and we are there to support you. [Applause.]
The small business sector and the co-operatives movement have a responsibility to help us transform the social and economic engineering of apartheid. Through our current programmes the different incentives assist the small business sector. China is a giant today because it was built on the small business sector, and South Korea managed to deal with its challenges owing to the small business sector. We are on the right track. We have done a lot in terms of changing all the systems we had. These are working, Minister. Let's just accelerate them and go on with all the good work you are doing. Don't listen to commentators that tell you stories. We don't talk stories; we talk practice, and we make sure that we go to the people. [Applause.]
Allow me to thank the members of Sawen, the SA Women Entrepreneurs' Network - some of them are here - and the Sawen board. These are women who sacrificed their time to come to work with us. [Applause.] We don't pay them, but they believe in the partnership and volunteer their services to mentor other women who go into business. We agree with you that when you empower a woman, you empower the nation. [Applause.]
I also thank the provincial committees of Sawen and the Technology for Women in Business adjudicators - they are sitting amongst us here - and the Techno Girls adjudicators and I thank, of course, the team in the Ministry because we are really working and making sure that we create five million jobs by 2020. Also, I say to the vibrant chair of the committee and to all the members: Let's work together. We can create the five million jobs, because the ANC will indeed make sure that we deal with all our challenges.
One must remember that not everybody can be a businessperson. We are talking of people here who are my age. They would remember that Jan van Riebeeck landed in Cape Town on 6 April 1652 with the ships the Drommedaris, the Reijger, and the Goede Hoop. A businessperson doesn't need the Goede Hoop or the Drommedaris; he or she needs a business plan. [Laughter.] He or she needs to have a marketing strategy for his or her business. We are working on that and doing a very good job. It is not our past - 17 years cannot have a stable economy.
Many G8 countries are successful today although it took time to recover from the World Wars - 30 or 40 years - but 17 years is enough. We say: Support this Budget Vote if you want to see development and to see underdevelopment addressed, and this ANC-led government is doing exactly that. [Applause.] So, Minister, just ride on and make sure that we can deal with all these challenges. [Applause.]
This government is doing so much in terms of procurement. We are changing and reviewing, because these were the architects of apartheid. We make sure that this can talk to the people and that we don't just have good, nice, big English-talking ... People say that we are hostile for investors; I don't think so. Business Day is not talking the language of our people; it is talking the language of business. It is so unfair; it is biased.
This department is dealing with all trade missions - trade initiatives that we are leading - and these are helping. People who are in the second economy are gaining momentum and getting a lot. So please, Minister, carry on and implement this policy. I and the Deputy Minister will make sure that you succeed in your service-level agreement and that the outcomes are realised even before the time, because that is exactly why we are here. I thank you. [Applause.]
Chairperson, firstly, I would like to start by mentioning a date which is very important to the history of this country. That date is 8 January 1912. On this date a child was born. He or she is currently a man or a woman, whatever you want to call him or her, in the process of making history in this country.
Secondly, I want to say that the New Growth Path is not just a document out of the blue; it is a product of this history. It was on 15 January 1953 that the then president of the ANC in the Cape, Prof Z K Matthews, mooted the idea of the Congress of the People while addressing a Cape provincial conference of the ANC.
Not this one. [Laughter.]
This idea was debated by the provincial conference and a resolution was adopted to the effect that such a congress be convened. The ANC national conference accepted that provincial resolution in December of the same year, 1953.
Resulting from this address by Prof Z K Matthews, two new organisations came into being. They were the SA Coloured People's Organisation and the SA Congress of Democrats. These organisations became directly involved in the preparations for the Congress of the People.
The real one. [Laughter.]
A lot of preparation was put into this conference, and ultimately the conference was held on 25 and 26 June 1955. Two thousand, eight hundred and eighty-four delegates from all over South Africa assembled, debated and ratified the Freedom Charter. Life was not easy for the ANC thereafter as it was the ANC that led that process, as it is today leading the country.
The process of implementing the Freedom Charter was barred by the activities of the then government, from the early 60s up until 1994. In 1990, after their unbanning, the ANC consulted broadly to ensure that South Africans were able to say through their organisations how the Freedom Charter must be implemented.
These consultations brought about the Reconstruction and Development Programme, which we started in this government in 1994, and which led to a White Paper. From there we moved on to the Growth, Employment and Redistribution plan, Gear, and today we talk about the New Growth Path. This is the history that brought about these policies. We are on the way to making history in South Africa.
I am tasked with talking about issues of climate change and the green economy. The major challenges facing South Africa in this regard include the creation of decent jobs and green jobs as a response to climate change. Climate change poses one of the greatest challenges to South Africa, especially in terms of adaptation to it and efforts to arrest it by reducing emissions. This is because adaptation to, and mitigation of, climate change have far-reaching implications for economic and social development, production and consumption patterns, and thus for employment, income and poverty reduction.
These implications have both major risks and opportunities for working people in all countries, but particularly for the most vulnerable in developing countries like South Africa, considering South Africa's high emissions profile. Remember, South Africa is regarded as the 13th major greenhouse gas emitter globally and ranks 10th in terms of per capita emissions. South Africa is Africa's greatest emitter of greenhouse gases as it depends on coal for its power production. This high greenhouse gas emissions profile has forced the South African government to take necessary measures both domestically and internationally.
Achievements in the domestic arena have been the release of the national climate change response strategy for South Africa in 2004; completion of the long-term mitigation scenario study and its release in 2008; the hosting of the Climate Change Summit to discuss the climate change response policy for South Africa at the Gallagher Convention Centre, Midrand, in March 2009; and convening the Green Economy Summit in May 2010, and the 2010 Green Paper, on which the Portfolio Committee on Water and Environmental Affairs held public hearings here in Parliament in March 2011. That was very recently.
The need to mitigate energy-related greenhouse gas emissions is a major theme of the Green Paper. The green economy includes green-energy generation based on renewable energy to substitute for polluting fossil fuels, and energy conservation for efficient energy use. The green economy is considered viable in terms of creating green jobs, ensuring real sustainable economic growth and preventing environmental pollution, source depletion and environmental degradation.
In fact, a green economy is based on six main sectors. Firstly, there is renewable energy, in terms of which you will find solar, wind ... Oh! [Laughter.] Thank you, Chairperson. [Time expired.] [Applause.]
Chairperson, hon Minister, Deputy Minister, colleagues and guests, allow me to focus on Programme 5: Consumer and Corporate Regulation Division. The regulatory regime for industry is important when we have an unemployment rate as high as ours in South Africa. Government owes its citizens good governance, which includes the creation and maintenance of a regulatory and policy environment that is conducive to sound business decision-making.
Part of this trajectory is a stable environment that is marked by regulatory certainty in which firms can flourish and provide jobs, and the goods and services the people expect of them. Is this what obtains in South Africa? Achieving this is the core mandate of the Department of Trade and Industry.
Firstly, it is worrisome that we are one of the most regulated countries in the world. A recent World Bank Doing Business report placed South Africa halfway down a list of 141 countries that were measured. Zimbabwe was last on this list. The report says that higher regulatory costs are associated with more poverty, larger informal sectors, higher unemployment, lower productivity, longer delays, more corruption, and so on.
Small firms are worst affected by red tape and taxation, which detracts from their ability to carry out their vitally important functions in the economy, such as job creation. In most countries, small firms are the job creators - the employers of young and old, unskilled and otherwise handicapped individuals. They teach skills to the unskilled on the job and provide experience that is essential to increased employment opportunities.
A rapidly growing economy that creates wealth and raises everyone's average income will always be lightly regulated. Excessive regulation is, without doubt, the reason why South Africa's small firms produce a relatively lower level of GDP than other countries. It is also one of the reasons why we have one of the highest rates of unemployment in the world.
The Economic Freedom of the World's annual report in 2010 rated South Africa, using 2008 data, at 6,65 for a ranking of 82nd in the world. This is South Africa's lowest rating in over 10 years, and suggests a downward trend from the peak in the 2002 data. The threat of a retreat from economic freedom in South Africa is not a call to panic, but a call to action.
The Department of Trade and Industry is at the epicentre of this regulatory framework. We are not convinced that the department is succeeding in achieving its mandate to develop and implement coherent, predictable and transparent regulatory solutions that facilitate easy access to redress and to efficient regulation for economic citizens.
Turning to the current state of regulation, our case in point is that the Companies and Intellectual Property Registration Office, Cipro, now called the Companies and Intellectual Property Commission, is in shambles. This has a negative impact on our economic growth and on how we nurture small businesses which are critical for economic growth and which, by extension, lower unemployment rates. One of the duties that is expected to be done is the transfer of properties which are registered within a company when it changes ownership. This simple action should take a day, but currently that is not the case.
Just recently it was reported that thousands of close corporations were being deregistered by Cipro for failing to submit their yearly returns and details. We are inundated with complaints from the public complaining about the poor service they get from Cipro.
Now government not only creates a cumbersome regulatory framework for businesses to operate, but also makes it impossible for businesses to adhere to these regulations through the sheer ineptitude of government institutions like Cipro. This comes swiftly after another scandalous case of impunity in which company hijackers could hack companies registered with Cipro owing to its defective IT system. Is the Department of Trade and Industry succeeding in achieving efficiency of institutions under it like Cipro? It does not look like it.
The National Lotteries Board, the NLB, is also failing to meet its mandate. A study entitled "Meeting Their Mandates? The research report on the National Lottery Distribution Trust Fund" found that the NLDTF has distributed less than 50% of the available funds in each of the past three financial years. This is as unacceptable as it is painful. Many HIV and Aids hospices, orphanages and youth development groups are not getting any form of assistance from the NLDTF at a time when it is much needed. But when the ANC Youth League, masquerading as the National Youth Development Agency, wants R40 million for a drinking spree with youths from backward countries, the red tape is cut, and money is made available. We must truly question the ability of the NLB to optimally channel the benefits to worthy beneficiaries.
We also need to take note that the National Youth Development Agency, NYDA, has failed to meet its mandate in respect of, one, disbursing funds to CSOs - civil society organisations - for poverty alleviation activities; and two, relations between state and civil society through consultation dialogue. The key reason is that the NYDA focused on the practice of grant making. The number of beneficiaries decreased from 104 in 2005-06, to 59 in 2009, but the total amount of money granted increased.
The DA consequently supports the Medium-Term Expenditure Framework objective of improving lottery governance and reviewing the Lotteries Act to ensure a better distribution of lottery funds for the betterment of our people. Thank you. [Time expired.] [Applause.]
Chairperson, hon Minister and Deputy Ministers, and members of this august House, Sunday, 24 April 2011 will mark the 18th anniversary of the passing of struggle icon Comrade Oliver Tambo. This struggle giant was able to sell and market the struggle of the South African people to the world, and he ensured that the parasitic and predatory apartheid regime was isolated from the international community.
It is also fitting to pay tribute to Oliver Tambo's legacy of being an internationalist by ensuring that the people's government promotes regional integration, continental development and international solidarity. This international dimension of the government's intervention is critical because our struggle was international in its character.
The founding President of Ghana, Comrade Kwame Nkrumah, once said that the liberation of the African continent started from the north, but he predicted that the economic emancipation of the continent would come from the south, through industrialisation and value-added exports. [Applause.]
It is fitting that South Africa is leading the way in promoting the issues of the continent in multilateral institutions like the United Nations and the World Trade Organisation, and in international fora like the World Economic Forum, the G20, and the Bric group - Brazil, Russia, India and China. Our participation in these fora is characterised by our development agenda which is now accepted by international bodies like the World Trade Organisation, WTO, and the World Intellectual Property Organisation, WIPO.
Budget Vote No 36 provides adequate funding for promoting regional integration through the programme on international trade and development. This programme has been allocated R129 million. This will ensure that the DTI is able to build an equitable global trading system that facilitates development by strengthening trade and investment links with the key economies of the world. This programme will also foster African development through regional and continental integration and development co-operation in line with the New Partnership for Africa's Development.
This programme is also responsible for the payment of membership fees to organisations like the WTO. During the portfolio committee's study visit to the WTO headquarters in Geneva last year, the portfolio committee observed the low representation of South African nationals in this institution. That is why the portfolio committee recommends that the DTI comes up with a skills programme on international economics for South African students so that they can take up positions in the multilateral institutions.
This would be a fitting tribute to the longest serving president of the ANC, Oliver Tambo, who ensured that our struggle for freedom was internationalised. We expect that the DTI will ensure that we fight unemployment and underdevelopment by ensuring that our youth take up positions in international fora.
Last year the heads of state communiqu of Sacu - the Southern African Customs Union - instructed the Ministers of trade in Sacu to ensure that all work on industrial policy, agricultural policy, unfair trade practices and other priority commitments in the Sacu agreement be implemented. This communiqu also directed the Ministers to develop a Sacu trade and tariff policy, and a trade strategy that supports industrialisation in the Sacu region. Therefore the Parliament of the Republic passed and adopted a trade policy and the Industrial Policy Action Plan last year.
The portfolio committee will expect the Ministry and the department - when they fulfil their obligations as per the communiqu - to always keep the committee in the loop so that they can interact with their counterparts in Sacu and avoid the recurrence of the economic partnership agreement saga like that with the European Union. This is so that we take the people of the region onboard when we make decisions.
This is motivated by the fact that when we were in Geneva, a Lesotho national came to me personally and pleaded with me that when I went back home, I must tell our committee and our people that the people of Lesotho are not in support of the interim partnership agreements with the EU because they know that, eventually, they were going to affect them adversely. That is why we would like the are committee to be kept informed when the department and the Ministry engage in such bilateral agreements. This will enable us to inform our counterparts so that we move in unison, as we move forward.
The people of Botswana, Lesotho and Swaziland were with us during our darkest hour of apartheid. They offered their material and political support to our liberation movement. As former President Mandela once said, the morality of South Africans demands that we don't abandon our friends during their hour of need.
We expect that when the revenue-sharing formula of Sacu is revised, our compatriots in these countries will not be adversely affected. You can see all the picketing and strikes taking place in Botswana and Swaziland, even in Lesotho, which shows that discord in this Sacu revenue-sharing formula is already affecting them adversely. So, really, as South Africa, we must take care of our neighbours first before we take care of people far away from us. We cannot sleep well when our neighbour's children are hungry and we are well off. [Applause.]
Chairperson, as Sacu is going to be used as a model for the building blocks of the integration of the SADC region, the portfolio committee and the people of South Africa support the spatial development initiatives and infrastructure development of the road corridors. These initiatives will promote the movement of goods and people within the region, and this will enhance intraregional trade.
With cross-border financing of these projects, the industrialisation of the region will be enhanced if the principles of the Industrial Policy Action Plan are used. Since SADC is dominated by underdevelopment and unemployment, the free-trade agreement offers a rare opportunity to have common industrial and trade policies within the region. These common positions will enable us and the region to negotiate better in international fora.
With all the noble intentions of the department of integrating the region and the continent, the department must ensure that we create a better South Africa, a better Africa and a better world. That's why the ANC says that all of us in this House must work together so that we can do more. That is why the ANC supports this budget.
But what is also critical is that there are certain things which cannot be left unattended in this House because, as we are speaking, we are speaking with the people of South Africa.
HON MEMBERS: Phez' kwabo! [Take them on!]
There is something which is very critical, something I will never take away. This committee is one of the best performing committees in this Parliament. There is cohesion and there is a common vision. But it is the cheap politicking which tends to bedevil some of the programmes and the progress which we are making.
For example, today the hon Harris raised a very critical issue. He said that Director-General Zodwa Ntuli brings a lot of work to the committee. So, we are being overworked by this regulatory work. That is precisely what we are here for. We have to work for our own people ... [Applause.] ... because if we don't, how are we going to ensure transformation in this country? So, hon Minister, keep up the good work. [Interjections.] We will always support that. We will work as hard as we have done in the past.
What is also critical here is that hon Harris raised the issue of discrimination against the Walmart-Massmart merger. [Interjections.] What is critical is that each and every country has its priorities. The priority of this country is to create jobs. That is the first priority. So, when you look at Walmart, let's look at its track record: Wherever they go internationally, in other countries, for each and every two jobs they create, they destroy three.
How do they do that? They do this because their competitiveness and efficiency is not found by being good in financial management or human resource management. They use the sweatshops in Bangladesh, where you find that the people in Bangladesh ... One Bangladeshi worker once said that he had to work for 18 hours for 15 days in a month. He had to work for 18 hours a day. So, what does that mean? It means that each and every businessman, when he creates a business, must make a profit.
Here in South Africa, Massmart is supported by a lot of suppliers who are manufacturers. So, if their competitor is going to set prices in terms of which their cost of doing business is not going to make their business viable, they are going to close down. This means a lot of people are going to lose jobs. That's why, as the ANC-led government, we are not going to allow that situation.
This is not unique to South Africa. Malaysia also controlled their direct foreign investment. They decided the sectors in which direct foreign investment was going to be accepted. If it was in the sectors they were not interested in, they would block that. So, since this is a developmental state, it is doing its duty to defend and promote the economic integrity of this country. [Applause.] So, that is why we support the Minister when dealing with that.
Amalungelo abasebenzi! [The rights of the workers!]
There is something that the hon Oriani-Ambrosini raised. He is already gone, but we cannot allow him to say these things and run away. What is critical is that he condemned the Industrial Policy Action Plan left, right and centre. But let's go back to the history of development. The first countries or city states which were successful were Venice and Florence. Those city states were viable because they processed their raw materials and sold value-added goods.
During that time Britain was exporting cotton. So, England itself was poorer than Venice and Florence. That is why when Queen Elizabeth I took over, the first thing she did was to slap an export tax on cotton so that the merchants in Florence and Venice would have expensive input material. However, in the process, they supported the local cotton industry of England. That is why England, at the end of the day, emerged as one of the superpowers, because they protected their infant industry. So, I don't understand why he expects us to do things differently for the African people of South Africa. [Applause.]
Hon Radebe, could you just sit down for a moment, please. I would like the colleagues who are not Members of this Parliament to please refrain from clapping and making a noise. Please be quiet so that the speaker can be heard. Any kind of interference is not allowed - even if it is clapping - from the benches apart from the parliamentary benches of the members. Thank you. I would appreciate your co- operation. Mr Radebe, please carry on.
Chairperson, the hon Smalle raised an issue about the R40 million that was allocated to the National Youth Development Agency. But what he omitted to say is that at that conference or at that festival there were 15 000 future youth leaders of the world. So, in that process, it means that, at a single mass gathering, South Africa was marketed to more than 100 countries. So, for the country to prosper in the future, we must leave no stone unturned in promoting it internationally. [Applause.] That's what helped us to stage the best soccer World Cup, because we were able to market our country left, right and centre. In that regard we support the National Lotteries Board for funding that conference. [Interjections.]
But what we have to expect as public representatives is that the National Youth Development Agency must give us a report on what they have done with that money. I think that is what we must do as public representatives. But we cannot question why they were funded when they promote our very own country to the international community. Thank you, Chairperson. [Applause.]
Chairperson, let me start by thanking the hon members across the aisles for their support. Let me also thank those members of the opposition who made criticisms for the tone in which they did so, which I think was quite thoughtful. I want to try to respond and disagree with them in a similar way.
The hon Harris said that we had a legislative programme which was too ambitious and that we should be focusing instead on improving institutions and reducing red tape. Well, I'm afraid to say that, actually, improving institutions and reducing red tape very often require that we make legislative changes. I think that is the case in the example that Mr Smalle gave.
If we were to simply leave the legislative framework for the Companies and Intellectual Properties Registration Office, Cipro, untouched, our efforts - which were ongoing and, by the way, were yielding some results in solving some of the problems in that institution - would be much more difficult than if we moved towards the new regime of company registration through the new commission that we launched yesterday. That remains the case even if some members, apparently, have less energy than this excellent public servant, Zodwa Ntuli. We have to go ahead with the legislative programme, and I thank those members who have said that they are committed to working with us on this.
There was also a question of whether we should now be constructing a new organogram for the DTI, merging divisions and separating others, and so on. That is exactly the exercise that DTI went through some years ago. I think it's important to note that that exercise does not happen without a significant number of costs in terms of morale in the institution, in terms of the relocation of people, and so on. We have taken the view that we should rather focus on continual improvement within the existing institutions, and then when there is a case for making those changes, we will make them.
One case which I think was overwhelming was the separation of the Industrial Development Division from the Enterprise and Industrial Development Division, the old EIDD. The old EIDD was just far too big and too cumbersome. Through separating these, we have been able to give a renewed dynamism to industrial development.
In fact, more generally I want to say that I think our process of continual improvement has borne results. The bit of the speech which I didn't have time to go through was going to indicate some of that. The figures for the vacancy rate are not one in five. In fact, what has happened is that the vacancy rate has gone down from 25% to 16%. It is still too high, but it's moving into the right direction.
On the question of corruption, there was a corruption study conducted by the Public Service Commission about minimum anticorruption levels. The DTI was ranked second after the SA Revenue Service as the top government department. Just to give another example: The Office of the Premier of the Western Cape came in at 31st. [Laughter.]
On the question of our involvement in these particular mergers, let me say that it is not motivated by opposition to inward investments. The hon MacKenzie made an important point when he said that there is a distinction between greenfield investments and mergers. Mergers are recognised in our competition law. Maybe they have positive implications, maybe they don't. Therefore there is an injunction on the competition authorities to consider a whole range of factors in terms of mergers and approvals for mergers, including their impact on industrial development and employment. It is exactly there that we have decided that it is necessary that this regulatory process proceed.
The fact that some players in these transactions are foreign is immaterial. It's a large merger that may have those consequences. Certainly, what we can't do is to discriminate against South African players in such a case by saying, okay, they're foreign; we must just butt out. I think that that would be wrong. We have to follow those processes through.
Let me come to the hon Oriani-Ambrosini. I have to say that whether he called on some unnamed authority in the University of California, Los Angeles, or not, the fact of the matter is that everything that he has said has a call for withdrawal of the role of government and indifference as to whether or not we have a consumption or production-led growth process. There is absolute indifference to that. I'm afraid that the reality is that what he was saying to us would take us on the path of continued unemployment, continued inequality and continued poverty.
I want to just agree with what the hon Fubbs and the hon Radebe said. There is no country anywhere in economic history that set itself on a path of increasing returns to scale, as opposed to diminishing returns, without having a targeted approach to the development of value-added activities. And this has also been involving the active support by the state. I'm pleased to see that the DA is not objecting to that either.
Those countries that thought it was okay to let manufacturing go in favour of focusing on derivative trading in the financial sector are the ones that are struggling now in the recession. Those are the ones we cannot afford ...
They took shortcuts.
They took the wrong cut. [Laughter.] We can't, in fact, afford to move in that direction at all.
I think the hon Oriani-Ambrosini's view of the world motor industry seems to be some kind of an ideal type of free-market economy. Well, I presume that he has the same view of the world agricultural market because I think both are wrong. It's living in cloud cuckooland or being Alice in Wonderland. We have to work in the real world, I'm afraid.
With regard to the points that were made about the role of the Department of Economic Development, I don't think that we have conflicts, or difficulties, or a lack of co-ordination. The fact of the matter is that in the past administration the DTI had grown too big. It was difficult to actually give focused attention to all the agencies that were under it and also carry out the international trade mandate.
I can say right now that the fact that the Department of Economic Development has been able to dedicate time to leverage funding from the Industrial Development Corporation - and it has been able to do this because it is a smaller department and has had more time to do it - has been a factor behind R100 million of additional resources for investment in industrial development. The fact that it has been able to devote dedicated time to the strengthening of the competition authorities has, likewise, had an important effect. The fact is, you know, by working together we can actually do more. That's a fact.
Lastly, let me just say that I very much want to support very much the excellent report that came from the committee. We are committed - as we, in fact, are bound to be - to responding to all the recommendations which you have put down there. We will also respond to the point made by the chairperson when she talked about the need for a tighter link between the strategic plan and budget allocations. We will attempt to do that work.
We will do all this within the spirit of working harmoniously with the committee. We will keep trying to provide the committee with the resources and information that it needs so that it can do its important work, hold us accountable, keep us on our toes, and keep us moving forward in the task of creating sustainable growth and job creation in our country. Thank you very much. [Applause.]
Debate concluded.