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The policy discussions which have taken place at this week’s ANC policy conference in Midrand seem to have served more as a proxy for the internal fight for the leadership of the ANC, rather than as a serious discussion about how to tackle job creation.
Political divisions in the ANC have trumped the interests of the country and its people once again.
Far from being a substantive debate on how to get our economy working, many of the ANC’s proposals actually go further towards destroying jobs and increasing unemployment. The biggest problems are:
50% resource rent tax on mining: This proposal will seriously undermine the profitability of the mining industry and will inevitably lead to mine closures, disinvestment and job cuts in the mining industry. The increased revenue for government will be short lived, and cannot hope to offset the economic and social impact of thousands more unemployed people. The state already owns the mineral wealth beneath the ground and must impose a taxation and royalty regime that maximises mining output and tax revenue. The ANC's proposal will do neither.
Intentions to control the value of the rand: The second transition document proposes that government control the fluctuations in the value of the rand. As a small, open economy we simply do not have the foreign currency reserves to intervene sustainably into the currency market. If we want to participate in the global economy, enjoy monetary policy autonomy, and remain open to international capital flows, we have to accept that our currency will have to float freely.
Mineral licence minimum performance conditions: If government forces mining companies to engage in activities other than mining like beneficiation, it will drive up the cost of mining investments and further discourage investment and job creation in our mining sector. Companies will invest in those activities they can conduct profitably. If we fix our business environment and regulatory regime, mining and other companies will invest in beneficiation activities of their own volition.
Centralisation of human resource planning: The second transition document proposes that government should manage the national flow of human resources through a central human resource planning entity. This is an absurd proposal. The state has proven to be highly ineffective at managing human resources. The job market can determine with near perfect efficiency what skills are needed where. The fact that there is excess demand for skills and an over-supply of skilled labour cannot be fixed by central control. A functioning education system, including FET colleges, is needed to produce the skilled graduates required by business and government across South Africa.
Creation of a single police force: Although the creation of a single police force is not an economic policy, it could have consequences for the economy if it undermines crime fighting. The metro police departments should be maintained as entities separate to the SAPS, since they are generally much more effective. Less crime means more investment and more jobs. The metro police departments must be maintained.
Over-reliance on the state: A thread throughout all of the proposals is increased reliance on the state to direct and control the economy and create jobs. The state presently does not have the capacity to deliver on its most basic responsibilities, like ensuring each child has a textbook – it is simply not credible to suggest that the state alone can transform South Africa’s economy, create jobs and redress the economic legacy of apartheid.
But the omissions from these documents are just as troubling. These are the most problematic:
No mention of teacher accountability: The ANC policy documents do not deal directly with improving the quality and performance of our teachers. The fact of the matter is that education outcomes will be improved significantly if we hold teachers and principals accountable for their performance. Yet it is clear that President Zuma has shied away from a more accountable teacher corps to appease the South African Democratic Teachers Union in the run-up to the ANC leadership election in Mangaung.
No further details on NHI: No further clarification has been given on National Health Insurance, with regards to costing or implementation.
No youth wage subsidy: The documents give no indication of the party’s plan to implement the youth wage subsidy. This is scandalous since the subsidy would benefit 423 000 young jobseekers in three years.
The DA has a plan to grow the economy at 8% and create the jobs we need to lift South Africans from poverty. That is the only way a substantial improvement in people’s lives can be brought about. We will release our plan to do so next month.
The ANC have spoken at length this week about restructuring our economy and achieving a more equal society. Despite these noble intentions, they have unfortunately only come up with proposals that will make South Africa less competitive, kill economic growth and kill jobs. In the process, these proposals will in effect make South Africa less equal since the poor always suffer most when jobs are cut.
We need to adopt a growth-oriented economic policy to improve our people’s lives. The ANC has already said that they are aiming for 2-3% economic growth. These proposals will likely pull growth down to even lower than that.
The DA has the plan and the vision to achieve 8% economic growth in South Africa. That is the only way to fundamentally transform our society and improve people’s lives.