Hon members, before we proceed with the First Reading debate on the Employment Tax Incentive Bill, I have to inform you that the Speaker received an amendment to the Bill from the Minister of Finance. The amendment is printed in the name of the Minister on page 661 of today's Order Paper. The amendment is meant to effect a technical correction to the Bill in terms of section 14 of the Money Bills Amendment Procedure and Related Matters Act, Act 9 of 2009, by omitting "22(1)" and substituting it with "21(1)", in line 44 on page 5 of the Bill. The amendment will be put at the end of the First Reading debate on the Bill. We now proceed with the First Reading debate on the Bill.
Deputy Speaker and hon members, as we deliberate on the legislation before this House today, thousands of young and old workseekers are sending their curricula vitae to potential employers. They are queuing at business premises. They are answering advertisements for vacancies, or asking friends and family members about job opportunities at their places of work. Just on Tuesday this week the Quarterly Labour Force Survey results for the third quarter this year were released. These showed that approximately 3,3 million of the 10,4 million youth aged between 15 and 24 years were not in employment, or education, or training.
In its 2009 election manifesto, the ANC identified five priority areas, with job creation as the key to sustainable livelihoods and economic development. We said that these priorities would be tackled with all the means at our disposal: the resources of government, the vision of the Freedom Charter, and the energy and commitment of our people. Our priorities would specifically target the needs of the youth, women, workers, the rural poor, the elderly and people with disabilities.
To this effect, government is providing a number of incentives geared to increasing investment; enhancing competitiveness and productivity; supporting employment creation; encouraging on-the-job training; enhancing skills capacity; and addressing climate change challenges. A number of these incentives are in operation already.
The employment tax incentive is one aspect of the ANC government's holistic programme of action on unemployment. Other aspects include the Expanded Public Works Programme; the Community Work Programme; skills development through universities, further education and training colleges, and Setas; the various programmes that flow from the Industrial Policy Action Plan; the Jobs Fund; and small business support.
Government also has a particular focus on youth unemployment, and the programmes that fall under the Youth Employment Accord address other factors that cause youth unemployment. We cannot succeed in any efforts to improve the lives of South Africans if our economy does not utilise the talents, energy, insights and efforts of all its people who are willing to work, including young, inexperienced workers.
Young workseekers are particularly vulnerable to unemployment because they do not have a proven track record to indicate their productivity to potential employers. In addition, long spells of unemployment early in life reduce the chances of eventual employment and the level of future income. We view the introduction of this incentive as a critical intervention, because young workers, the future of our economy, are currently not gaining the work experience that will form the basis of future performance.
The employment tax incentive proposed in this Bill can make a significant contribution in the fight against youth unemployment. It will also do so by sharing the costs of employment of young workseekers between employers and government. Government will reimburse employers up to 50% or R1 000 per eligible worker to stimulate employment. This presents a good business case for employers to expand employment by hiring workers that would previously have been overlooked.
In the past, most of our incentives for businesses targeted investment, which meant that capital-intensive industries received most benefits. This incentive specifically targets the hiring of a vulnerable group of workseekers, which will result in higher labour intensity of production. This is also the reason for extending the incentive to special economic zones and other designated industries, but without the age criteria in these areas. Finally, this is an incentive that can help small and medium- sized businesses most, because they are engines of employment growth and the design is intentionally simple.
Through the public comment process we received submissions from companies that indicated that they were ready to employ young workers due to the availability of this incentive, and we will hold them to that.
This mechanism will operate by lowering employers' tax liability which arises through the pay as you earn, PAYE, system. This means that at the end of each month an employer will subtract the value of the incentive from the PAYE contributions he has withheld on behalf of Sars. Employers that do not have a high enough PAYE liability to offset the full incentive will be allowed to roll the unclaimed amounts over to the next month. In addition, Sars is developing a cash reimbursement mechanism for companies that have no PAYE system.
The intention is that the incentive will be implemented from 1 January in order to allow new school-leavers also to benefit from a better chance at finding employment.
This proposal has been in the public domain for two-and-a-half years, and all practicable suggestions for changes to the incentive have been taken into account as we implement the incentive. We will learn ways to improve the design even more as we implement it, especially since this incentive will be closely monitored and evaluated. Circumstances in the economy may change, which would necessitate adjustments to the incentive. This is always the case in policy implementation.
What we have in front of us is the best possible solution to the problem that we face, but it is not a panacea, given the information that we have available to understand the problem of youth unemployment. Now is the time to implement this solution and there is no better time to do it than now. Thank you, Deputy Speaker.
Deputy Speaker and hon members, let me start by restating the point that has been made on numerous occasions, that of the objectives of this Bill. The Bill aims to improve employment prospects for young workers over the medium term by giving them experience. Moreover, Government would like to share with employers the initial costs of hiring young people to boost job creation. Work experience gained will improve their long-term employment prospects. We also need to incentivise employment in the special economic zones and designated industries, as identified by the Minister of Finance. Those employed under these tax incentives will enjoy protection under labour law in the same way as do those who remain and who are currently employed.
The Employment Tax Incentive Bill gives impetus to the announcement made by the President in his 2010 state of the nation address - or perhaps it was in 2011 - that government would subsidise the cost of hiring young workers.
In 2011 the National Treasury developed a policy document for discussion to give further clarity on the state of the nation reference, as pronounced by the President. That policy document, Confronting Youth Unemployment: Policy Options for South Africa, was the culmination of a research programme that looked into and analysed global options in addressing youth unemployment. To date, it remains the most comprehensive document on the subject.
The issue of youth unemployment is rife in South Africa. This is not a slogan. On Tuesday Statistics SA released the numbers. Of the 10,4 million unemployed people, 3,1 million are young people with no job experience, and are not at school or in training. Therefore, it cannot be that we end up with the highest number of unemployed people in South Africa being young people, and we stop there. We have to do something. As I said, the issue of youth unemployment is rife in South Africa. It affects all of us, but it has an especially debilitating effect, psychologically, on our young people.
Let me remind hon members, those on my left in particular, and particularly the hon Harris, who serves on our committee, that the issue of youth unemployment is not something that the ANC is raising today because it has become fashionable to talk about it. [Interjections.]
Let me remind you of this. If you have read our resolutions, and I think that you take most of our policies and do so, you will actually have read the resolutions of the ANC at Polokwane. You will know that the 52nd national conference of the ANC at Polokwane noted that the vast majority of the unemployed were black youth and women, many of whom had never held full- time employment and lacked the skills to gain entry into fast-growing sectors of the economy.
Our key challenge is to address the mismatch between the supply of largely unskilled and semiskilled labour that our history has bequeathed us and the demand for skilled labour that the economy is now generating. This requires direct interventions, such as the Employment Tax Incentive Bill. This was the ANC in 2007, not now.
Furthermore, our conference noted that programmes for the youth should seek primarily to give them training and experience to access formal employment in the formal economy. Therefore, we in the ANC said we would seek to develop a multipronged strategy to tackle youth unemployment, as the creation of decent work was one of the priorities of the ANC and its government.
What I want to drive home is simply that this is a programme that did not start today. It is a programme that branches of the ANC, the vast majority of our people, have spoken into and are making sure that we implement at the end of the day.
The Employment Tax Incentive Bill complements existing government programmes, such as the Expanded Public Works Programme, the Community Work Programme, skills development at colleges and further education and training issues, the Setas' programmes and the National Skills Fund. This Bill seeks to complement the initiatives that the government has already started.
What are the key issues that were raised during the public hearings? One is the issue of the Nedlac process. One of the matters I want to highlight is that the Nedlac process had the opportunity to interact regarding the original concept as proposed by the Minister of Finance in 2011. Out of that process further amendments were made to that proposal. A few of those amendments concerned the shift in the draft Bill from a subsidy to tax incentives. If you recall, earlier on we spoke of the youth wage subsidy.
Out of the Nedlac process and consultation there was a shift that sought to emphasise tax incentives for youth employment. We also changed the criteria in regard to age limits; minimum wage requirements; the possibility of the displacement of workers and therefore the penalties that must go with the proposed Bill, or interventions; and the inclusion of seasonal and part- time workers and how we would deal with them. All of these are the product of thorough consultation in the Nedlac process.
I am raising this because, all of a sudden, the DA has found it very, very convenient to speak on behalf of the National Union of Metalworkers of South Africa, Numsa. I am not sure what the commonality between it and Numsa is, but I am certain that Numsa remains an affiliate of Cosatu, and it espouses the positions of Cosatu. [Interjections.]
In regard to the displacement and substitution of workers, one of the things that we came across, as raised by various stakeholders and clarified by National Treasury in the public hearings, was that the current Bill, on its own, has sufficient internal mechanisms to deal with abuse of the tax incentives.
The issue of downward pressure on wages has also been looked into, in order to deal with the possibility of exploitation.
In addition, we realised that there was a key area which was less emphasised in the deliberations on this particular Bill. The focus was on youth tax incentives, but there was much less emphasis on their impact on the special economic zones. That is one area we need to focus on in order to industrialise our country, to make sure that the manufacturing sector is actually propelled, and to begin to respond to the issue of the balance of payments deficit.
After these serious deliberations, the committee finally agreed that the Bill should be presented to this House for consideration and that it should be passed so that implementation can take place as soon as yesterday! On behalf of the committee, I therefore want to put it to the House. The ANC supports the Employment Tax Incentive Bill. Thank you. [Applause.]
Hon Deputy Speaker, it goes without saying that unemployment is our most pressing crisis. I am sorry the hon Trevor Manuel is not here because he would have us believe that Limpopo province has the lowest unemployment rate in the country. This is absurd. The plain truth is that hopelessness is so entrenched in that province that for every person looking for work, there are two people that have given up looking. When these hopeless people are included in the unemployment measure, you can see the truth that unemployment among the provinces is the second highest in Limpopo.
One can also see that the Western Cape is the province of hope with, by far, the lowest level of unemployment and hopelessness. [Interjections.] This is what I mean - the Gauteng labour force is twice the size of the Western Cape's, but there are 10 times more job seekers who have given up looking for work in Gauteng than there are in the Western Cape. [Interjections.] Statistics SA's latest figures show that unemployment increased from 29% to 30% in Gauteng, while it decreased from 27% to 25% in the Western Cape.
But, hon Deputy Speaker, this is a good day for young unemployed South Africans across the country. This is because three years, eight months and 21 days ago, the President stood at this podium and announced a youth wage subsidy, the intervention to help reduce the cost of hiring young people, who make up 70% of the unemployed.
The policy document that Treasury published estimated that 423 000 young people would benefit over three years. The policy was supported by economists, trade unions and all of the parties in this House. Unfortunately, while it had this broad support, Cosatu opposed it and refused to debate it at Nedlac. So, the policy remained stuck at Nedlac for three years. Whilst it was stuck at Nedlac, 218 000 young job seekers joined the ranks of the unemployed. That's the price of Cosatu's delay. Of course, the DA did not take this lying down. We were convinced that a youth wage subsidy could help thousands of young South Africans get much- needed work experience. So, in May 2012 we led a march of 3 000 young people to Cosatu's head office to stand up to the trade union federation and protest their opposition to the policy.
Also, in the province of the Western Cape we moved quickly to pilot a youth wage subsidy in that province. Despite our very limited budget for such interventions, we have so far subsidised 4 000 young people and there is no evidence that a single one of them has displaced an existing worker. I must take this moment to thank the Development Bank of Southern Africa for their contribution of R67 million from the Jobs Fund to help us expand this scheme.
Now, obviously frustrated with this filibustering from Cosatu, Treasury simply tabled a Bill to implement a youth wage subsidy in Parliament earlier this year. This is not a good thing for Nedlac. According to section 5 of the National Economic Development and Labour Council Act, the Nedlac Act, it this institution that is meant to consider all significant changes to social and economic policy before they are introduced in Parliament or implemented. Normally, when Nedlac has attempted to reach consensus, they publish a report, and that clears the way for policy to be legislated, but here Treasury simply side-stepped Nedlac! They brought a Bill straight to Parliament. Is this the final nail in the coffin for Nedlac? It is an important institution. It is meant to work towards consensus between business, labour, government and civil society, but it is now fundamentally compromised by the crippling divisions within the tripartite alliance! So this is a bad day for Nedlac, hon Deputy Speaker.
But it is a good day for young people. That said, it could have been a much, much better day. This is because the version of the subsidy before this House is significantly watered down from the version tabled in the 2011 policy. It provides a weaker incentive and it supports only half the number of young workers the original version would have supported. In fact, if this version works as it is predicted to work over the three years, it will only be able to absorb those young workers who have joined the labour force while the Bill has been delayed at Nedlac. So net job creation will, in effect, be zero.
You can also see that the Bill has been watered down in the cost to the fiscus. The first version would have cost R5 billion over three years. This version will cost somewhere between R1,3 billion and R3 billion. This is because key changes have been made to the incentive.
Existing young workers will no longer be subsidised. If you are worried about substitution, those are the people you should be most worried about. Some new jobs created for entry-level and part-time workers in sectors without wage determinations will no longer be subsidised. So some of the most vulnerable people looking for work will not be eligible for the subsidy. The mechanism to allow a cash pay-out for firms unable to claim their tax back because of the limit and the size of their tax bill has been suspended. A sunset clause has been inserted which, halfway through the next term of Parliament triggers self-destruct of the Bill, taking away Parliament's power to decide on the continued existence of the Bill.
And now the Minister is able to introduce all sorts of conditions that beneficiaries would need to meet in order to be eligible for the subsidy. However, Treasury's own policy document claimed that such conditions would discourage take-up of the subsidy and reduce the number of unemployed young people gaining vital work experience. Why would we want to do that? We as the DA proposed fixes for all of these problems in committee, and every single one was outvoted by the ANC in committee.
It is important to note that they were with the DA for a while, on the proposal to remove the sunset clause, until our legal advisor pointed out that this would delay the Bill. Suddenly the ANC members had a change of heart and decided that they could live with the sunset clause. This is law- making at its most expedient.
After three years of delays caused by an ideological standoff in the tripartite alliance, young South Africans are finally getting their youth wage subsidy, and we will be supporting the eventual introduction of it. This is not because it is a silver bullet for unemployment, but because it represents some much-needed hope for young unemployed South Africans. We strongly condemn, however, the way it has been watered down, to the detriment of hundreds of thousands of young people.
It will be interesting to see if the more than 30 members of Cosatu on this side of the House object, considering that their federation told the Portfolio Committee on Finance that they were committed to resisting the passing and implementation of the Bill. Or to see what the members of the SACP will do, considering that the hon Manamela rejected the Bill and said that he was firmly opposed to it. Perhaps that is why he is hiding in his office! Or to see whether Minister Obed Bapela will object, considering that he told this House that the money for the youth wage subsidy would now be funding the Youth Employment Accord, which deliberately does not mention the youth wage subsidy. Perhaps the hon Minister is hiding with the hon Manamela!
That is because the real choice today is not between a youth wage subsidy and something else. It is a choice that South Africans will make at the ballot box next year when they choose between the ANC, a party that holds up hundreds of thousands of jobs for young people, and the DA, a party that does what it says it will and puts young unemployed South Africans first. [Applause.]
Deputy Speaker, I can say that hon Jeremy Cronin is here to stand in for all his colleagues, who are hiding somewhere else! So the hon Harris can relax.
Gill Marcus warned us last week that the effects of South Africa's high unemployment would be felt for decades. The youth unemployment index, a recently launched study, has warned that growing unemployment among South Africa's youth is an issue that has far-reaching social and economic consequences for the nation.
The index is echoed by the findings of a study of the Development Bank of Southern Africa, which warned that South Africa could not sustain the pattern of youth unemployment that has characterised the democratic period. The study further says, neither can young people continue to leave the formal education system with no hope of attaining an income, dignity and self-worth through employment.
Joblessness is the most pressing economic issue facing us, and the world, today. The National Development Plan, NDP, has warned that youth unemployment could become a major source of destabilisation.
There is no uniqueness to the South African problem. What makes it a challenge is when Cosatu shoots down an initiative like this Bill. Our youth unemployment stands at almost 5 million. Furthermore, 122 000 people joined these ranks between the first and second quarters of 2013. Cosatu's Patrick Craven does not like the unemployment figures and said they would campaign for the implementation of policies such as the Industrial Policy Action Plan, the infrastructure development programme and at least some of the New Growth Path, but is silent on the NDP. Cosatu is vehemently against any implementation of the youth subsidy, including this Bill. By not supporting this they are keeping young people unemployed. They are deliberately attempting to exclude young people from the economy. It is certainly very strange that Cosatu is against this Bill, if their own studies show the positive impact of such a youth subsidy on the problem!
The other benefit of this subsidy, according to Roelof Botha, is that because of indirect taxes the Treasury can expect a fiscal dividend of about 20% of the value of the wages paid. That is good news for the hon Minister of Finance.
However, all indications are that this subsidy will be a favourite mechanism, will be embraced by the youth and employers, and will lead, once again, to the tainting of Cosatu's already harmed image. It's all about perceptions in politics. If the youth turn against you, your growth potential is harmed. This should be a lesson to Cosatu and it is time for them to embrace policies that make sense for South Africa.
There was unanimous support in our committee for the scrapping of the sunset clause and further support for getting the employment date for those who can participate scrapped in the Bill, or at least brought forward to the date when the subsidy was announced. However, due to time constraints it was not possible. Legislation before a committee is always a compromise. In working against time you are sometimes forced to compromise, and this was even more the case with this Bill.
However, this is a positive Bill and this initiative will change the lives of thousands of young workers and allow them to grow and grab new opportunities. It will be reviewed after two years. Let us hope it is a success and then we shall at that time see the strengthening of the measures introduced.
The Bill is creating a seat for the so-called "unemployed" at the labour table. We hope it is a forerunner of many changes we would like to see in order to streamline our labour dispensation more, which has been pointed out by many commentators as one of the factors hampering our economic growth potential.
The fact that hon Minister Pravin Gordhan, with the support of the ANC caucus, has tabled this against a barricade of opposition from Cosatu, is introducing a new era in the tripartite alliance relationship. Cosatu's opposition as a unified force is dwindling and maybe we can expect better policies from the government, and ignore Cosatu more and more. Cope will support this Bill. [Applause.]
Order! I now call upon the hon member Ms Nkomo. I wish to remind the House that this is her maiden speech.
Deputy Speaker, it gives me great pleasure to stand before this honourable House and deliver my maiden speech on the Employment Tax Incentive Bill. I would like to express a special word of thanks to my party, the IFP, and its members for their confidence in me.
This Bill comes at a time in which we find sweeping unemployment in South Africa, with this year's second quarter figures officially topping the 25% mark, yet with many pundits stating we are actually closer to 40% unemployment. Our Minister of Finance recently stated upon his introduction of this Bill that we currently have some of the highest rates of unemployment in the world. This intervention is therefore wholly welcomed and absolutely necessary.
Our youth unemployment remains at critical levels, and this Bill will hopefully incentivise employers through tax breaks to employ young people between the ages of 18 and 29, as currently our youth are experiencing extreme difficulty in securing internships or first-time gainful employment, which is necessary in order for them to build their future careers.
The government, through the National Development Plan, has set itself the goal of creating 11 million jobs by the year 2030. Without faster economic growth this challenge of creating sustainable jobs will not be met.
We, as the IFP, would like to see a holistic approach to job creation. This would encompass changes to our labour laws, which would make it easier for smaller businesses to create jobs; provide easier access to capital for small businesses and new entrants into our economy; improve our transportation infrastructure; and liberalise our communication sector.
Whilst we do not advocate an overinterventionist state, but prefer that greater emphasis be placed on the role of the private sector in promoting economic growth and employment, we do recognise that the state must get involved, and the important role the state can play as a catalyst for growth.
There is national consensus on the need to open the doors to youth employment by means of the youth incentive plan, and there are perhaps issues which could be explored further in the future. We cannot let our youth down. This is the time to be courageous.
In conclusion, the IFP supports the Employment Tax Incentive Bill, and we look forward to seeing the creation of real and sustainable jobs as a direct result thereof. I thank you. [Applause.]
Deputy Speaker, this Bill has certainly been a long time coming. It had its genesis many years ago, as a possible yet only partial solution to the youth unemployment crisis that we are facing in South Africa. Any measure that can in any way reduce our completely unacceptable youth unemployment rate, which is currently over 60%, has to be welcomed.
We urgently have to give our youth a real stake in this economy, if we are going to have any chance of building the united and prosperous South Africa that we all aspire to. We have to give the youth of this country a foot on the economic ladder, so that they can gain the necessary experience and opportunities to build a thriving career. If we deny our youth this opportunity, we will be denying all of us a stable country and a better life for all.
The unemployment figures of the Quarterly Labour Force Survey that Minister Manuel referred to earlier today bear this out. What the Minister quoted, though, was derived only from the narrow definition of unemployment, and he neatly ignored all of those unemployed who have given up hope and have stopped even looking for work. If one includes those figures, then the Western Cape has the lowest rate of discouraged workseekers in the country, 10 times less than that of Gauteng. [Interjections.] The Western Cape is, in fact, offering hope to the unemployed, and this is in part due to the DA government's piloting a form of the youth wage subsidy.
It is therefore extremely unfortunate that the youth have been forced to wait for so many years for this Bill to be passed, as the factional battles within the tripartite alliance have held the dreams of our youth hostage. It should never have been this way. [Interjections.] Close on 3 000 youth, led by the DA, were forced to march on Cosatu House last year in an effort to break the stalemate that had emerged in government over this legislation.
I honour those brave youth today, because they were not afraid to put their bodies on the line to fight for a measure that has the potential to help all the unemployed youth in South Africa. They endured bricks being thrown at them, and they have the scars to prove that they were prepared to go to battle for the unemployed youth of this country. For that I salute them, and let this be seen as their victory. I thank you.
Adjunkspeaker, die VF Plus is op rekord dat belastingverligting in plaas van meer belastings ekonomiese groei sal stimuleer. Die hele kwessie van belasting moet in sy geheel verstaan word teen die land se ekonomiese stand en dit wat ons wil bereik. In 'n neutedop is dit oor en oor bewys dat ekonomiese groei net plaasvind indien die staat ophou inmeng in die mark. (Translation of Afrikaans paragraph follows.)
[Adv A D ALBERTS: Deputy Speaker, the FF Plus has put it on record that tax relief, as opposed to more taxes, will stimulate the economy. The whole tax issue should be understood in its entirety against the country's economic status and the goals we want to achieve. In a nutshell, it has been proven over and over again that economic growth only happens once the state stops interfering in the market.]
As for the Employment Tax Incentive Bill, we are of the view that it is a good start in lessening the tax burden of the taxpaying middle class. We are of the view, however, that this must not be limited only to employees within special economic zones but should extend to the country as a whole. The Special Economic Zones Bill has not been finalised as yet, and due to the fact that the process of declaring special economic zones is long- winded, it will thus take some time before the incentives can be effected.
Die realiteit is dat Suid-Afrika tans onmiddellike belastingverligting nodig het. Daar is geweldige finansile druk op die middelklas, terwyl daar oral nuwe belastings opduik. Tans hou 'n klein minderheid belastingbetalers die land aan die gang, en dit kom al hoe meer voor asof die ANC-regering geen respek vir hulle het nie. In plaas daarvan dat hulle gekoester word, word net al hoe meer belastings ingestel wat verarming tot gevolg het. Voorbeelde is die e-tolstelsels wat in Gauteng gemplementeer gaan word en die talle wat daarna landwyd gaan volg en soos paddastoele opspring. Talle pensioenarisse moet hul eiendomme verkoop, omdat hulle nie meer eiendomsbelasting kan bekostig nie, ensovoorts. (Translation of Afrikaans paragraph follows.)
[The reality is that South Africa is in need of immediate tax relief at the moment. The middle class is under enormous pressure, whilst new taxes are being imposed everywhere. A small minority of taxpayers are currently keeping the country afloat, and it seems increasingly as if the ANC-led government has no respect for them. Instead of cherishing them, more and more taxes are imposed that lead to impoverishment. A case in point is the e-tolling system that is to be implemented in Gauteng, and the many others that will follow across the country, springing up like mushrooms. Many pensioners have to sell their property because they can no longer afford rates and taxes and so on.]
So, while this Bill is a step in the right direction, the other tax Bills are enhancing a tax system that is tightening the noose around the throat of the average citizen's financial health. This is taking place against a background where South Africa is regarded as the most vulnerable emerging market, according to a poll of investors conducted by the influential The Economist magazine. This country's economy is underperforming due to internal structural problems that keep the true racing horses of our economy from bolting.
Dit is deur rasse-ideologiese verknegdheid wat gestalte gee aan perverse beleide soos regstellende aksie, wat kaderontplooiing moontlik maak en meriete ignoreer, en swart ekonomiese bemagtiging, waarvoor geen bewyse bestaan dat dit werklik werk nie, dat die ekonomie teruggehou word en almal uiteindelik benadeel word. (Translation of Afrikaans paragraph follows.)
[It is because of the obsession with racial ideology that shapes perverse policies such as affirmative action, which allows for cadre deployment and ignores merit, and black economic empowerment, with no evidence that it actually works, that the economy is hampered, which is ultimately to the detriment of all.]
The Minister of Finance has taken a step in the right direction, but on the other end of the spectrum there are too many steps in the wrong direction that will probably extinguish any advances arising from this Bill. Thank you.
Deputy Speaker, many speakers have referred to the very high levels of unemployment, poverty, and inequality in our nation. We as the ACDP partake of that sentiment and are similarly concerned. We welcome this Bill as a move in the right direction.
We recognise that it is, as this Bill points out, the private sector that is the engine for the creation of jobs and that government creates the environment for that. That is what is foreseen in this Bill. As we see it, it seeks to provide an employment tax incentive to encourage job creation. This is an incentive in the form of an amount by which employees' tax may be reduced.
As other speakers have indicated, we know that this Bill was opposed and stalled by Cosatu, to the detriment of job creation. It was suggested more than three years ago, but has only now seen the light of day. We commend the government for taking a strong stance at this stage and standing up to Cosatu, but, regrettably, it has taken a long time and should have been done a lot earlier.
Whilst we as the ACDP wholeheartedly support the Bill, we also expressed some concerns during the deliberations on it, such as the capping of the wage to qualify for the incentive, as we believe that this, in effect, excludes large numbers of persons from the low income group and those that are particularly vulnerable. We also regret that the incentive will apply only from 1 October 2013, which further excludes large numbers of existing workers, as pointed out by the hon Harris. However, we as the ACDP do understand that this is an experimental Bill, that it is phase one of a phased approach, and that one will be reviewing it in the future.
As we discussed in the committee, the one issue that we were unanimous about was the sunset clause, which would result in the ending of this tax incentive in the year 2017. This, we believed, would hang like a Sword of Damocles over employers and youthful employees. National Treasury made it very clear that they wanted the incentive to work and, in fact, they wanted to roll it out further. They would, in fact, be reviewing it with the intention to roll it out further. The logical approach for us was then to review the incentive in 2015 or 2016, rather than having a clause now that effectively ended it in that year.
We are, in effect, legislating for the repeal of an Act for a future Parliament which I, in my experience, have not seen before. However, we understand that, had we insisted on the amendment, it would have resulted in the further delay of this incentive Bill.
The ACDP will support this Bill. We commend the government on eventually implementing this tax incentive, albeit in a watered down version, and we trust that the private sector will embrace it and seek the common good of creating jobs for the youth and giving them hope for the future. Well done, hon Minister. I thank you. [Applause.]
Deputy Speaker, previous speakers have indicated that today is indeed a very good day for the youth of South Africa, because the employment tax incentive is raising the expectations of thousands of young people. However, we need to ask ourselves very honestly today, Minister: How strong is the current incentive? The honest answer is, and this has been indicated by other speakers as well, that it has unfortunately been watered down to a certain extent.
The Employment Tax Incentive Bill, to introduce a youth wage subsidy, can be considered a disappointment compared to the 2010 aspirations for the subsidy. In its current form it might let the young people of South Africa and the poor down, because it is a watered down version of the Bill.
The DA believes that the Bill provides a weaker incentive, for three main reasons. The Bill introduces a minimum wage requirement and, secondly, existing young workers will not be considered for the incentive. The mechanism to allow the cash payout to the employer for the incentive, if a company's pay as you earn bill is depleted, will not be implemented immediately, and the Bill gives us no indication of a timeframe in this regard.
My colleague Tim Harris made a concerted effort to introduce a really strong youth wage subsidy, but this Bill will now not introduce that really strong youth wage subsidy, because of the changes made to the original 2010 policy.
The cost estimate, and that is the example, of R1,3 billion to R3 billion is significantly less than the original R5 billion tax loss budgeted in 2010. The effect of this has unfortunately reduced the number of young people estimated to benefit from the subsidy. The original version would have helped 423 000 young people. However, only last week it was seen that the expected support will now go to only 200 000 jobs.
In closing, I wish to make the following remarks. The DA supports this incentive. We think it is a step in the right direction and it has, indeed, been calling for this action for a couple of years. However, we sorely regret, Minister, that the disagreements within the tripartite alliance have stood in the way of fixing the greatest crisis facing our nation. Thank you so much. [Applause.]
Deputy Speaker, hon Deputy Minister of Finance, hon Minister of Finance and hon members, today we are debating the youth tax incentive that has been introduced. It has been long awaited and it is important that we acknowledge its effects.
However, let me start by addressing hon Harris on the absorption vision he spoke about. I really cannot make sense of what you were talking about, the steps that you were talking about in connection with there being no jobs, and the fact that the Western Cape went ahead and implemented the tax incentive. It is their right to do that. However, then you cannot come here and cry about the issue of budgetary constraints.
Hon Jacob Zuma mentioned in 2010 that we needed a youth tax incentive to be implemented. However, we also need to acknowledge the fact that we need to have a democratic situation where we allow all social partners to engage in the deliberations, because this affects the fiscus and everything that we have to do.
On the issue of us and the ACDP, and also what you as the DA have raised around the Youth Employment Accord, it is there, and there will not be an impediment when it is implemented. The Youth Employment Accord takes cognisance of further issues that need to be dealt with. While we have to deal with the youth tax incentive, it is amongst the issues that we have to eradicate.
Gill Marcus has taken cognisance of the fact that youth unemployment has now risen. We say that there are a lot of measurable measures that we have to take, and we have to take cognisance of issues that we have to deal with, such as skills development; entrepreneurship development; further education and training, FET, colleges that we are introducing today in the education Bill; and learnership programmes. We are not just sitting and folding our arms. We are making a call to the South African youth to stand up and claim the youth tax incentive, because it is brought to them by the ANC to ensure that their lives are better.
We need to speak about the issue of the sunset clause. We as a committee shared the same sentiments, that with the sunset clause youth unemployment will not be able to be eradicated in the four-year period. As a committee we said that Treasury had to be able to implement the employment tax incentive with caution so that when it was reviewed after a two-year period, we could say, "Look, this has been tried, and therefore it is important for us to proceed with the Youth Employment Accord." So, it is something that we need to take cognisance of - the House must note it.
On the issue of democratic processes and Cosatu, when we speak about the alliance partners - and I can see, hon Harris, you are very passionate about it but unfortunately you don't have alliance partners in the DA - you cannot blame the ANC because we have that and we went to Nedlac. Nedlac involves an important process that needs to unfold and you need to appreciate that.
The issue of businesses is involved in that. The tax incentive states that we need to encourage businesses to ensure that they employ and absorb young people into the mainstream economy.
Let me make a point in regard to the National Development Plan, NDP. We are saying that young people need skills development to ensure that, when we roll out the NDP, we have young people who have job market readiness. That is what we are trying to deal with. To state that we are quiet about the NDP is your own illusion and you need to wake up there. It is high time you understand that this is not a youth subsidy. It is an employment tax incentive. Can this House note that? [Applause.]
We are starting with implementation and there is no three-year backlog. It is important for us to acknowledge that we are running government, and we did not just wake up one day and allocate the money because we felt like it. Hence, we are saying this is one area - as hon Jacob Zuma said in 2010 - where we need to put in measures to ensure that we deal with the scourge of unemployment.
Hon Deputy Speaker, in closing let me say that the youth employment tax incentive, learnerships, FET colleges, Adult Basic Education and Training, free basic education, and the Expanded Public Works Programme have been proudly brought to you by the ANC government. So, we are saying we are not sitting and simply folding our arms, and our young people are definitely with us. Ndolivhuwa. [I thank you.] [Applause.]
Deputy Speaker, if there is any deep scar of apartheid that I personally, and many of us in this House, have, it is that of job reservation and discrimination in the workplace. While some of us were such victims, it is clear that some of us were beneficiaries of that system. It is this history that continues to deprive them of the ability to see the reality of life.
I thank the hon Tshabalala for emphasising again that this employment tax incentive is not just about youth. While it is about the employment of young people, it also extends to the special economic zones, SEZs, where it includes all categories of people that are in the SEZs.
Hon Harris firstly bemoaned the reason that the process did not go to Nedlac. He also, in the same vein, complained that we have now sidestepped Nedlac. He said that the Bill was a watered-down version. He made a lot of inaccurate statements, among which was his disputing the figures that Minister Manuel put on the table, which arose out of the latest statistics in the Statistics SA report. I don't know which one he was reading, and hon Tshabalala referred to that.
I get worried when people read these things. Perhaps I should just offer you one piece of advice, hon Harris. You see, this is the problem. You conveniently quote the expanded one when you want to mislead this House, and when you want to state your facts, you come back and say that the Western Cape implemented the youth wage subsidy. Let me warn you again: Stop turning youth unemployment into a political football! [Interjections.] It is because you have no experience of having an unemployed person under your roof. You have no experience of having been unemployed yourself. You have no experience of working in communities where this kind of unemployment is rife.
Let me repeat the numbers that you deliberately distorted, even if you don't want to hear them. [Interjections.] The Western Cape stands at 23,4% and Limpopo - because that was the comparison that you made - stands at 17,8%. The Western Cape moved down. They were able to make a difference of 2%, whilst Limpopo was able to improve its employment statistic by 4,5%, and Mpumalanga by 4,5%. [Applause.]
This is the problem. [Interjections.]
You can't concoct ... [Inaudible.]
This is the problem. I do not know which ones you are reading.
The other thing that you said was this. You complained ... [Interjections.]
Maybe we should audit this, Minister. I think we should follow up on the R67 million that came out of the Jobs Fund, was given to the Western Cape, and was misdirected to the youth wage subsidy before we pass legislation on youth employment. [Interjections.] Maybe we should also follow up on the agency here in the Western Cape which undertook to place 3 000 workers in the workplace after training, using the very same Jobs Fund, and has only placed 647 workers in the workplace! [Interjections.] So, if those numbers that you are talking about are the actual numbers, then I think we need to look into the numbers, Minister. I must take this opportunity to thank the committee for having worked with us in making sure that we followed a democratic process in arriving at this point. You can speak of three years, but democracy was actually earned over many years - decades and decades. Now that we have it, we will also take our time to preserve and defend it. Thank you very much. [Applause.]
Debate concluded.
Hon members, as I indicated earlier, I will now put the amendment to the Bill as printed on page 661 of the Order Paper, as follows:
On page 5, in line 44, to omit "22(1)" and to substitute "21(1)".
Question put: That the amendment to the Bill be agreed to.
Amendment agreed to.
Bill, as amended, read a first time.