The National Council of Provinces has a unique role because of its position as an interface between Provincial and National government. Today I would like to report back on a perspective on the Global Financial Crisis from that position.
The Crisis has triggered a painful and prolonged recession that has cost almost half a million jobs nationally. This downturn was triggered by a dramatic decline in demand globally, but it is biting harder and deeper here because of structural problems like our unreformed labour market and a lack of competition in our economy.
In the short term, South Africa's economy needs to be lifted out of recession, and vulnerable citizens need to be protected, but - in the long run - structural economic reform is required.
The realm of short-term interventions is National Government's, due to their relatively deep pockets and their control of fiscal policy. The R2,4bn Training Layoff Scheme announced recently is an admirable initiative, but action was promised six months ago, and this plan has yet to be implemented.
Much as Provincial Government is motivated to assist with short-term interventions, its hands are severely tied by the size of the available budget. The Economic Development and Tourism department has a budget of only R276m - a drop in the ocean of National's economic budgets that are hundreds of times bigger.
In the long run only fundamental economic reform will solve the problems of an economy where 1 in 4 people are structurally unemployed. The list of economic reforms that need to be implemented by National Government is long, and familiar. It is long because the ANC has stubbornly maintained an insider-outsider labour market and retained inefficient state ownership in key economic sectors, and it is familiar because the DA has been putting these ideas forward as policy positions for more than ten years. I do not want to cover this ground again today.
Instead I want to discuss two relatively new proposals: the first, to be implemented by the National Government, and the second by the Provincial Government. In the medium-term both will help to get South Africa out of recession and onto a labour-absorbing growth path.
First, the proposal for National Government, which I intend driving in my dealings with them in the Council. You could call it "Harnessing the Power of Competitiveness".
It is clear that the ANC nationally is threatened by the idea that sub-National institutions should have the freedom to improve their lot. The most recent example is this week's publication of new education regulations that will stop schools from being able to top up teachers' remuneration.
The example most relevant to this House, however, is the unhelpfully hostile approach of certain members of the ANC towards the Western Cape administration. The attitude of some members in NCOP Select committees and plenaries, as well as proposals like the 17th Constitution Amendment Bill and the so-called "review of the provinces", bears this out.
This year the Financial and Fiscal Commission recommended that Provincial Governments should be encouraged to exercise their revenue powers granted by the Constitution. They also proposed that Provincial borrowing should be facilitated through the Borrowing Powers of Provincial Governments Act. Both proposals were met by strong opposition by National Departments.
The National Heath Department, for one, opposed the FFC's proposals on the grounds that, that if a province successfully generated additional funding; it would create an "inevitably unequal financing stream".
While this statement is technically true, it is important to note this "inequality" would not arise because one or more provinces are suddenly receiving less funding - just that one province has managed to generate more. On aggregate, delivery budgets would be higher and South Africans would be better off.
If they were to successfully oppose an initiative like this, National Government would be forcibly dragging all provinces down to baseline income level, in the same way their proposed Education regulations would bring quality schools down to the level of our worst schools.
Instead, National Government should realise the power of the contest of ideas and policies to achieve excellence for South Africa as a whole. They should take guidance from the USA, where the states of Nevada and California are currently competing to attract business investment based on better infrastructure and lover tax rates - to the ultimate benefit of all citizens of Nevada, California and, indeed, the US itself.
My second proposal is for Provincial Government, and that is to "Facilitate Access to Africa".
As I have already explained, the lack of provincial funds for economic development means that this administration should mainly fulfil a strategic co-ordination role in the economy.
The recently announced "Mega Project" is the best example of such an initiative, and it is encouraging that this project will re-invigorate the Cape Oil and Gas Supply Initiative - the project that aims to create a local hub for servicing Central and West African Oilfields.
I hope that this will be the first of many initiatives to link the Western Cape to the fast-growing economies to our north. Our continent has 900 million consumers making it potentially the third biggest global market after China and India and, as Vijay Mahajan shows in his recent book, Africa Rising, is richer than India in per-capita terms.
I have personally seen the pent up demand caused by booming African industries with inadequate supply channels.
A shipping worker in Gabon explained to me how his company would source all of their supplies for their Oil industry from South Africa were it not for the long delays and thievery when shipping out of Cape Town. The Provincial Government needs to redouble co-ordinated efforts to make our harbours more efficient and safe.
Improving road connections between Cape Town and Angola is another possibility. A 200km stretch of terribly potholed track on the other side of the Angolan border is the only thing preventing a clear, tarred run from Cape Town to Lubango in the south of the country - which has good access to Luanda. Angola has been growing at double-digit rates for the past few years but an over-congested port in Luanda means that many South African goods are effectively blocked from the country.
Perhaps once the Mega Project has successfully unlocked the value of the harbour and Foreshore through co-ordination of local stakeholders, the Province could look north and work on assisting Western Cape companies to trade with our northern partners.
The benefits to Western Cape business will be real and large: Paul Collier points out in The Bottom Billion - the seminal book the Premier referred to in this morning's address - that countries do better if their neighbouring countries are doing well, so there will be what he calls a "halo effect" for South Africa, beyond the expected gains from trade.
This speech by Tim Harris, DA member of the NCOP for the Western Cape, was delivered today during the provincial Legislature's debate on the impact of the economic recession on the Western Cape, September 8 2009
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