Date: 17/08/2006
Source: Department of Public Service and Administration
Title: Department of Public Service and Administration


  Address by Minister of Public Service and Administration, Ms GJ Fraser-Moleketi, at the Graduate School of Business, University of Cape Town

Director of the Graduate School of Business, Prof. Frank M Horwitz
Members of the Board of Advisors
The sponsor for today's event Deloitte and Touche
Distinguished faculty members and other staff of the University
Distinguished students and other guests

The topic initially provided by the organisers certainly provides food for thought, especially since not everybody makes the very important connection of the functioning of the public service and the economic growth we are capable of achieving. I took the liberty to tweak the topic ever so slightly for this presentation.

Before I focus on Public Administration challenges, allow me to engage with some of the assumptions that lurk in an approach solely focusing on economic growth rate as the indicator of societal well-being. As government, the approach we choose to embrace has more nuance, we opt for a "shared growth" approach in which some of the worst elements of an unqualified growth approach is tempered and directed in a specific direction that will allow us to achieve some of our other policy objectives as well. I would also like to have a broader discussion contextualising the role of the developmental state in ensuring a society within which such growth can be achieved, whilst protecting the interests of those who were hitherto predominantly excluded from the benefits of our growing economy, as well as those of future generations who do not possess a voice of their own in the current policy debates. Only after having dealt with these two larger and more strategic discussions will I venture in outlining the challenges we see for the Public Service and Administration portfolio.

The economic growth approach and some of its shortcomings

Conventional economics has for a long time elevated the indicator of Gross Domestic Product (GDP) above all others. The fates of nations are influenced in the corridors of power on the GDP that it manages to achieve and the changes registered in terms of this single indicator. Consequently conventional economics has a way of measuring success of societies in terms of its purchasing power and its increase in consumption.

When one uses economic growth as indicated by change in the GDP of a country you will agree with me that the success of Ireland during the 1990s and early 21st century has been phenomenal. An average of 6,8% growth in GDP over a decade would be seen as indicative of a success story. Being ranked 4th highest in the world in terms of purchasing parity, with a GDP per capita of over US$33 000, is what others can only strive for. We could therefore expect that students such as you would study the case of Ireland to see how we could emulate that situation given that we are chasing a 6% growth in GDP. Right?

But if I share some additional information regarding Ireland you might change your opinion, even consider a view that describes Irelands economic growth rate as nothing else but a "Celtic Cancer".

During the high growth years of the Irish economy the following changes occurred on the socio-economic level:
* working hours for the Irish increased notably, with less time for family, personal development, social recreation, and so forth
* perception surveys regarding the Irish’s satisfaction with life in general showed a drop in the level of those who felt satisfied with their lives
* analysis re division of disposable income clearly indicated a trend of the rich getting much richer and the poor, even poorer. The top 20% in society gained, with the top 10% gaining most, while the bottom 40% lost out notable
* more poverty in old age became a fate that few could escape
* a higher death rate became evident, especially in terms of causes of death that has known links with stress and life style, e.g. heart attacks, circulatory diseases, cancers, suicides, etc
* a phenomenal increase in alcohol consumption (and bear in mind the Irish had a high threshold from which it started out)
* the poor got sicker, measured in terms of number of times they accessed the health system and engaged with it and finally
* the public’s confidence and trust in the nation’s institutions (both public and private) fell through the bottom, with trust in honest and fair treatment being eroded almost completely

From this case it should become clear that there is more at play than only economic growth and GDP. The Chilean developmental economist, Manfred Max Neeff, has formulated and tested a hypothesis to capture this phenomenon. He calls it the "Threshold Hypothesis". Through conducting various country studies, including Austria, Germany, Australia, the Netherlands, Sweden, Italy, the United States of America (USA), the United Kingdom (UK) and his native Chile he has proven the robustness of this hypothesis. The hypothesis is structured as follows:

"For every society, there seems to be a period in which economic growth – conventionally understood and measured – brings about an improvement in the quality of life, but only up to a point – the threshold point – beyond which, if there is more economic growth, quality of life may begin to deteriorate."

What Max Neeff therefore argues, and what I would like to endorse, is that as a responsible state we cannot fixate solely on the issue of a growth in GDP, although that is what captures the minds of economists. We must look at other indicators in combination in order to really ascertain the overall well-being of society. Overall societal well-being for this and future generations is after all the responsibility of government.

Role of the Developmental State

In the South African situation we will have to be double as vigilant to ensure that economic growth as a policy goal does not displace some of our transformational goals. As you know we are fresh out of a period that world history has been regarded as one of the most unjust systems ever.

Overall we are still in a phase of transforming our society and therefore transformation as a societal goal on every level – including the economy - needs to be pursued relentlessly. The government of which I form part has chosen to embrace multiple policy priorities of which an economic growth rate of 6% by 2014 is but one. The policy aim of achieving 6% growth rate is contextualised by a range of other policy aims that in terms of a policy hierarchy is of a higher order.

First of all, a growth of 6% in the GDP has to be obtained in a manner that embrace development as a guiding principle, therefore it will place people and their development central to the process and expect the economy to serve the people, rather than the other way round. As such it could favour labour intensive growth, rather than jobless growth. We have qualified the idea of growth and stated that it must be shared growth. We cannot tolerate a situation where the wealthy gets wealthier and the poor suffer even more. 6% growth where the yawning gap between rich and poor is forever deepening and growing bigger will not be good enough. Along the same lines we cannot ignore the social injustices of the past and allow a growing economy to further entrench the past patterns of only whites benefiting. Growth in the economy has to be achieved while we transform it at the same time. For this purpose policy priorities such as achieving employment equity have been put in place and will not be sacrificed in the interest of achieving the 6% growth rate we have set as a target. We are not facing an either – nor situation, but has to achieve both goals simultaneously. The same can be argued with respect to the asset distribution that underpins wealth creation, e.g. land holdings.

In addition, our Constitution is underpinned by a strong human rights culture. For example, labour enjoys certain rights of association and protection vis-