STATEMENT BY DR. DION GEORGE, MP

DA SHADOW MINISTER OF FINANCE

 12 FEBRUARY 2010

State of the Nation: wage subsidy welcome, but no direction on economic policy

The President's announcement of a wage subsidy targeted as young South Africans is certainly a welcome measure. This is a proposal that we have been advocating for the last decade; it will encourage employers to take on new staff and invest in on-the-job training, in turn helping to improve employment rates, labour productivity, skills development and our emergence from this recession.

The announcement of a wage subsidy acknowledges the critical nature of market-orientated measures to stimulate growth and job creation. What was perplexing about the President's State of the Nation address was that in almost every other sphere of economic activity, the President remains stubbornly unwilling to acknowledge precisely this central premise that underpins the wage subsidies proposal.

Firstly, next to nothing was said of parastatals, which are a central component of the ANC's so-called developmental state, and whose problems are profoundly linked to their state- rather than market-orientated design. In recent times what has emerged quite unequivocally is that the ANC's particular development state model actually works to stymie development. It is the failure of Eskom to secure South Africa's electricity supply, the string of bailouts to parastatals at a cost of R 243 billion over the last four years, a series of golden handshakes to deposed parastatal CEOs costing R262m over the past decade, and the slew of crises that have engulfed SAA, Transnet, the SABC, Armscor, the Land Bank and Denel, which stand at the heart of the problems with the ANC's approach to economic governance - and which have profoundly impeded the economic development of South Africa.

‘Parastatals', or ‘state owned enterprises', were conspicuous by their absence from last night's speech, as was any mention of the SABC, SAA, Transnet, Armscor, Denel, or many of the other parastatals facing serious crises. Only Eskom received any attention, and although there were some positive noises about independent systems operators and independent power producers, neither of these positions are anything new. What is particularly significant, however, is that the president seemed completely impervious to the quandary in which the ANC's developmental state finds itself. These problems ought to be admitted and addressed as a matter of urgency. The refusal to accept that parastatals, and the developmental state by implication, are fundamentally flawed is indicative of a larger problem - a failure to articulate a coherent set of economic policies.

Secondly, it is far from helpful to workers and business-owners alike to be treated to bland promises, devoid of any detail or implementation timetables. Whereas the announcement of the wage subsidy is certainly welcome, particularly given its seminal place in DA economic policy, there was also no mention of measures to make it easier for small and medium sized businesses to hire new labour, nor indeed any other supply side measures to generate economic activity. It seems as if the role of the private sector is seen by the ANC is one of a casual spectator that is tolerated rather than engaged as a core component of economic activity.

The DA would have like to have heard from President Zuma on:

• Whether labour regulations will be relaxed in order to make it easier for firms to employ workers?
• What will be done to parastatals that have failed to deliver on their mandate, and cost the taxpayer billions of rands in bailouts?
• How the supposed 480 000 newly created "job opportunities" is quantified - since it is clear that 870 000 jobs were lost last year.
• What role will the National Planning Commission take in guiding macro economic policy?
• What measures will be introduced to ensure that the biggest drivers of employment creation, small to medium sized enterprises, will be better able to grow?
• Is the President aware of the fact that the R 2.4 billion allocated to the layoff training scheme has barely been used, even though the economic crisis is all but over?
• Whether he does or does not support measures to ban labour broking. His Labour Minister seems determined to destroy half a million jobs by banning them; other departments have indicated that they play an essential role in upskilling both government and the private sector, and in contributing to the fiscus via taxes. What is the President's position?
• Finally, how does the government plan to create 4 million jobs - not "job opportunities" - by 2014, if they have to catch up to the 400 000 jobs already lost in 2009? Notably, this promise was made at last year's State of the Nation, but no mention of it was made this time around.

President Zuma's failure to address these issues leaves South Africa's economy in limbo, and demonstrates that the ANC still does not understand how to create an economy that rapidly creates jobs and provides for real poverty alleviating development.

Statement issued by Dion George, MP, Democratic Alliance shadow minister of finance, February 12 2010