Chairperson, this is the first real Budget Vote debate for this newly established department. In many aspects, this department still struggles to find its identity, competitive advantage and strategic position within the new configuration of government departments.
The DA, like many others, still questions the rationale and extra cost to establish this department as an extra bureaucracy primarily to manage entities and responsibilities, previously under the Department of Trade and Industry, and to plan, monitor and co-ordinate functions which can resort under the National Planning Commission. In this Budget Vote we need to analyse the justification of allocated funds to the entities under the jurisdiction of the Department of Economic Development, as well as the objectives and targets of the department, as expressed in its strategic plan. The objectives focus on inclusive economic development to ensure increased, sustainable, domestic economic development and sustainable growth in the share of global trade opportunities. This implies not only sustainable economic growth, but job creation and poverty alleviation.
In striving to achieve this, the investment environment in South Africa needs to be conducive to domestic and foreign investors. More debt is not the answer to increase fixed capital investment, job creation and economic growth. We need more sustainable and long-term equity capital, which will safeguard more long-term job opportunities. We also need a labour regime that will open up opportunities to the millions of unemployed and youth, which should support increased productivity and global competitiveness.
The entities under the Department of Economic Development are divided into two categories. Firstly, there are the three regulatory bodies. The International Trade Administration Commission, Itac, plays an important role to ensure that our domestic economy is not overly protected from fair foreign competition, to use tariffs and trade remedies like antidumping and countervailing duties to ensure that our domestic economy is also not unfairly exposed to dubious global trade transactions, and to administer import and export permits. One can surely question whether enough funds were allocated to Itac, taking into account the impact of creative incentives and trade instruments on future economic growth and job creation.
The Competition Commission has been very successful in combating anticompetitive behaviour and collusive transactions and in investigating mergers and acquisitions that might impact on the economic benefits for especially vulnerable consumers. This is one of the few government entities that has generated considerably more revenue than allocated budgets. More funds should be allocated to it to expand its scope to cover not only the few, very big, doubtful transactions, but also to further increase its efficiency. Its recommendation of unconditional approval of the Walmart- Massmart transaction is proof of its efficiency without fear of the different view of their bosses in the Department of Economic Development.
The Competition Tribunal has been very effective, efficient and credible in handling the legal cases before it. It is clear that its spending will be a product of the number and difficulty of cases appearing on its agenda. It requires the best human capital and support services possible, and should enjoy unconditional support from the Department of Economic Development for its judgments and outcomes. It is clear that more funds are needed to ensure the best human capital available and support facilities to enhance speedy and effective outcomes in the best interests of the South African economy.
Whilst we compliment the efficiency of the Competition Tribunal, it is a concern when the Department of Economic Development uses its own funds, as the parent department, in becoming a contesting party to a case before the tribunal, like the Walmart-Massmart case.
This might leave the impression of a subtle influence on both the Competition Commission and the tribunal, in that the department is supporting mainly the interests of its social partner Cosatu in trying to influence this foreign direct investment transaction.
We are in desperate need of foreign direct investment, FDI, to create jobs, and if the department is not seen as neutral, objective and in support of its own entities, this can jeopardise the work being done by the DTI and even the President to attract FDI in South Africa.
The three development finance institutions are the Industrial Development Corporation, IDC, Khula, and the SA Micro-Finance Apex Fund, Samaf.
There can be no doubt that economic development and sustainable job creation will depend on development finance support to all levels of business, especially to the SMMEs - small, medium and micro enterprises - in the formal and informal sectors. Whilst big business is imperative in gaining a big share of the global trade, it is known that most jobs can be created by SMMEs.
The IDC has the reputation of effectively managing investment and loan opportunities. The shift of both Khula and Samaf under the wings of the IDC is a positive decision and this will, it is hoped, lead to more productive finance agreements that can enhance the success rates of especially the SMMEs.
A concern, however, is that this new development role of the IDC might mean higher risk and lower-return transactions. This pressure on its profitability might mean that the IDC will require capital appropriations by the National Treasury in the future.
The Department of Economic Development's strategic plan outcome indicators confirm that the New Growth Path must be the catalyst to ensure progress in supporting competitiveness, employment creation and equity in the public and private sectors - and to assist in defining more effective economic strategies to achieve those ends. The indicators include, among other things, the number of jobs created, GDP growth, the employment ratio and distribution of earned income.
It is obvious that this is the department that must ensure job creation and economic growth to improve domestic income, which should positively affect domestic savings and spending. It implies that this department cannot only promote dialogue and discussions, as expressed in its strategic ENE - estimates of national expenditure - targets, but must also be able to ensure that government departments comply with requirements to reposition themselves towards these objectives, and to create the supporting environment in which the private sector can grow the economy and create the required sustainable jobs.
Our concern is that this department has no teeth to enforce any targets and that it sees its task as being to promote dialogue, which can be perceived as the promotion of more talk shops. We don't need more talk shops. We need realistic action plans in support of the private sector for increased productivity and competitiveness towards sustainable economic growth and job creation.
The New Growth Path confirms the job creation target of five million new jobs by 2020. Some economists claim that we require an average GDP of 7% per year to achieve this, while the National Treasury projects a GDP of only 4,4% in 2013. The Department of Economic Development claims that its focus will be on sectors where higher job creation absorption can be achieved with a lower GDP, but fails to give any details of these sectors, measurable objectives and quantifiable action plans to try to achieve this.
The budget provides for a social partner fund, which again creates the perception that the allegiance of the Department of Economic Development to trade unions, as its social partners, might be more important than encouragement and support to the private sector as the preferred drivers of economic growth.
While strategic sectors have been identified in the New Growth Path to grow the economy, we have not seen proper incentive plans to stimulate investment in, for example, the green economy. The New Growth Path also focuses too much on the central role of government in procurement, employment, infrastructure, etc, and not nearly enough on how the private sector will be encouraged to drive the economic growth and employment targets.
In the 2011 budget an amount of R1,22 billion, over the next three years, was allocated to the National Youth Development Agency to facilitate job creation among the youth. However, neither the Minister of Finance, nor the Minister of Economic Development, nor his Deputy, nor the director-general could give any information to indicate how the agency will facilitate this, what its job creation targets will be, and how this will be monitored and sanctioned by the Department of Economic Development. Despite the announcements of the intended youth subsidy, we have also not seen any further details in this regard.
The Department of Economic Development has a long way to go and it is hoped that we will see more clarity in the year ahead and with regard to the measurable targets to determine its efficiency in the utilisation of this budget. I thank you. [Applause.]