Chair, Mr Minister, Madam Deputy Minister, I would like to direct my remarks to the hon Trollip. I see he is very busy, but I think there are some important things that we need to talk about, and I would appreciate his attention if it is possible, all right? [Interjections.] Good, that is very good.
I make the point because I think the country is at a decision-making moment. There are a number of reasons for my saying that, and I would like the Opposition to be conscious and aware of why I say this.
In the last few days, the press has been reporting on a report by City Group Bank in New York that South Africa is the world's richest country in mineral reserves. These reserves have a lifespan of 100 years, which includes US$2,3 trillion in platinum. Now, we still have to verify that report. I am personally chasing it up, but it makes an important point for us at this particular time in our history, because the implications are really quite considerable.
The reason they are considerable is because our economy - the modern economy - was founded on mining with all kinds of consequences for the country as a whole. These consequences included huge riches for a small minority, good jobs for white workers, but a forced cheap migrant labour system for many, and the destitution of what we then called the reserves.
So, if we are to maximise our efforts with respect to mining and these huge resources, which is very tempting - and indeed, it is a very powerful asset which we can use very valuably and very importantly - and if our focus is on mining and a quick buck, as it were, and we neglect the rest of the economy and alternatives, then I think we will be making a mistake.
This is because what we have inherited through a mining economy is a highly skewed economy with a consequent highly unequal society. This is a problem and we live with it now, despite efforts by some governments in the thirties and forties to overcome that imbalance through various industrialisation measures, including using the state to create state enterprises which we have today, like Eskom, and others before, such as Iscor and Foskor. These were an attempt by that government to overcome the imbalance of a mining economy and a dependence on mining.
I want to argue that it seems to me that the DTI, with their new Industrial Policy Action Plan is doing exactly that. They are saying to this country and to you that we have to look at the legacy, the mining legacy, the consequences for the country as a whole, the polarisation it brought into South Africa. Even though it brought a great deal of riches to a small number of people, but also let us admit, high taxes, the consequences are with us today.
We have to do something serious and this is why I approach you to say that we are at decision-making time. We must not go along and accept this legacy as if we cannot change it, and I think that the policies of the DTI are very relevant to that proposition.
We have to change the structure of our economy. We cannot continue to be mining-dependent, even though mining contributes something like 40% of our export revenues. It covers, to a degree, the current account, but it has created all kinds of problems. It has led to the lagging of industrialisation. It has created a dependence on world prices. It has brought very little beneficiation, and we discuss this all the time.
We want your co-operation to ensure that that changes - that we are no longer a primary commodity export country depending on mineral resources primarily. We must actually change the structure of the economy so that we have a more balanced growth, so that we grow and expand the whole economy. [Interjections.]
Well, that is a detail. Let us look at the structure of things. I do not want to be distracted by detail, but thanks for listening! [Laughter.]
The problem with the mining economy, hon Trollip, is that it has a low multiplier effect on the rest of the economy. That is the case I am making.
So, with the job losses, with the import dependence, with the small internal market which goes with a mining economy, we have the problems of inequality, unemployment and poverty that my colleagues and some of your people have been talking about.
The essence of the DTI plan ... and by the way, I was interested in the Cope propositions that were put forward as proposals. It is curious that what you were emphasising is the consumer. You want to subsidise the consumer. We want to subsidise industry. There is a difference.
We, by subsidising industry and creating employment, are, of course, subsidising the consumer, but through jobs and not through consumer support. [Interjections.] So, yes, I am very glad that you are listening and you are barracking. I prefer that to your taking notes or falling asleep. [Laughter.]
Chair, with what we want to do in restructuring the economy, there are some rather difficult decisions that we have to take, because a mining economy is, by and large, a rent-seeking economy. People are making profits far beyond what the market would give them normally. They are engaging in rent- seeking. That leads to all kinds of cartels that the Competition Commission of the DTI has uncovered. They create an environment of strong corporates who engage in collusion, and we are going to have to deal with that.
Let me say very clearly, the ANC is not against private enterprise; by no means. Indeed, the proposals of the DTI in Ipap 2 are precisely to create a capital base which will go on concessional terms to the private sector, to business and manufacturing, so that the cake will grow, so that more people can participate, so that there will be more jobs.
That is the intention of the whole programme. However, we must, at the same time, act against the kind of parasitic, cartel behaviour that we see in the mining sector and certain other areas.
In addition - and this is a lesson I think this House must take seriously - we also need to look more seriously at how we regulate the financial sector, because that is the lesson coming from the international community, where now, suddenly, everybody is waking up to the fact that the big failure of the IMF and the regulation institutions in the United States was the failure to regulate the financial sector. We have got to "pasop", we have got to be careful about that.
So, what do we propose to do? Firstly, we must harness substantial financial capital, give it at concessional terms to the private sector, and ensure that the private sector uses that capital for proper productive activity. My colleagues have referred to the importance of production. Clearly, that is at the heart of restructuring a mining economy.
Secondly, we must analyse the value chain in its full scope. Value is created in many different ways in an economy. There is skill, enterprise, and so on, and various components in the way a value chain operates. We need to value it, look at it in its fullness, so that we can take action in the right way.
We must also identify the roles of the banking sector and the services sector. Our banks are guilty of a degree of gambling in hedge funds and derivatives. They have done that. It has created a situation where, despite the certainty that we have in our banking system, they were not above doing a bit of gambling on the side with derivatives and hedge funds. We need to watch that.
We need to build the regional and domestic markets. The focus is of Ipap 2 very strongly on creating downstream activity, which will develop the domestic market as opposed to simple, pure export promotion, as if export- led growth is the path for South Africa - it is not. We must rebuild our industrial and manufacturing capacity and build the domestic market partly through procurement. A lot has been said about procurement. It is clear that government is the biggest procurer in South Africa. [Interjections.] It is. Well, all right, it does build bridges. It also builds various things that you use in your daily life, including roads, not just bridges, roads too! So, you are quite right. Government builds roads, bridges, and many other things that you use.
So, we need to do more local procurement. Government is a big procurer. We need to ensure that it does not import the bridges you are talking about, but builds them locally.
My final point is this: The ANC built its struggle by mobilising what we call social capital. A great deal of community organisation took place. We built power centres in the rural areas and in the towns. That is what led the ANC to victory.
We are not using that social capital to rebuild the country. And so, my last message is this - help us. Let us build that social capital so we rebuild the economy. It is a simple proposition. Thank you.