In this issue:
INTRODUCTORY LETTER
DA WILL SUPPORT MBOWENI'S CONTINUED TERM OF OFFICE
SCRAP SETAs AND GIVE EMPLOYERS TAX BREAKS
ESKOM DOWNGRADING – DA CALLS FOR GOVERNMENT ACTION
DA CALLS ON SAA CEO AND BOARD CHAIRMAN TO ACCOUNT FOR FINANCIAL WOES
AT THE NATIONAL CARRIER
REAL PICTURE BEHIND 2008 'DEVELOPMENTAL INDICATORS' NOT SO ROSY
DA CALLS FOR URGENT REMOVAL OF IMPORT QUOTAS ON CHINESE TEXTILES
DA WELCOMES LAUNCH OF VENTURE CAPITAL FUND TO AID ENTREPRENEURS
INTRODUCTORY LETTER
While the Democratic Alliance shares the concerns of South Africans
everywhere who are being squeezed by rising food and energy prices,
the COSATU leadership's entirely self-interested and narrow-minded
response to this problem last month makes no constructive contribution
to the debate about how to reduce the burden of the country's economic
hardships.
Moreover, the personal threats to cabinet ministers (including a
highly inappropriate and threatening gesture by Zwelinzima Vavi
towards Finance Minister Trevor Manuel) who do not follow "pro-poor"
policies adopted in Polokwane demonstrate a reprehensible level of
intolerance that we should not put up with in a democratic society.
The recent series of protests, strikes and stay-aways organised by
COSATU only serves to undermine much-needed economic growth, compounds
poverty, and in the end, undermines efforts to reduce the unacceptably
high level of unemployment in South Africa.
COSATU's increasingly militant stance is anything but noble and
high-minded; rather it is part of a concerted political strategy to
increase its own influence within the tripartite-alliance. This is an
approach which is both dangerous and short-sighted, because the South
African economy - especially within already hard-hit sectors such as
mining and manufacturing - is being dealt yet another blow by the
non-attendance of its work force.
If COSATU is serious about addressing spiralling inflation and other
economic problems then it should rather announce that it will abandon
the very policies which have helped contribute to the current economic
downturn and to chronic unemployment.
It is because of Cosatu's insistence on an inflexible labour regime
that millions of South Africans have been shut out from the formal job
market, and initiatives such as a dual labour market - which would
offers thousands, if not millions of young South Africans the prospect
of formal employment - have not been implemented .
Instead of resorting to knee-jerk, interventionist policy responses,
such as regulating food prices or imposing export restrictions, the DA
advocates the provision of targeted assistance to help alleviate the
crisis caused by rising prices, which includes; the provision of basic
income grants; the use of food vouchers in cases of extreme crisis;
extending the list of items zero rated for value added tax (VAT); and
supplementary feeding programmes (SFPs), such as school feeding
schemes or food for work programmes, which would provide a direct
transfer of food to targeted individuals.
South Africa is beset by growth-reducing structural constraints such
as infrastructure deficiencies, chronic unemployment, a debilitating
skills crisis, a lack of entrepreneurship and more recently,
uncertainty regarding the future of property rights in South Africa.
These constraints must be urgently addressed through an
enterprise-driven economy which promotes growth-centred policies –
such as price stability, fiscal prudence, a deregulated labour market,
accelerated privatisation and greater public-private partnerships; not
by public grandstanding, which will further erode the productive base
of the economy.
Kind Regards
Kobus Marais MP
DA SPOKESPERSON ON FINANCE
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DA WILL SUPPORT MBOWENI'S CONTINUED TERM OF OFFICE
The Democratic Alliance welcomes the announcement by Reserve Bank
Governor Tito Mboweni that he will make himself available to serve
another term of office if asked to.
"The DA would welcome the continuation of Mboweni's term of office in
the new dispensation," said DA deputy spokesperson on finance Deon
George in September.
"The Reserve Bank has throughout Mboweni's term created a stable,
certain monetary policy environment, which to some extent has boosted
investors' confidence in the economy. He has had an excellent record
at the central bank and has maintained the independence of the bank in
a commendable fashion."
George said that now, more than ever, South Africa could not afford
any policy missteps which would undermine confidence in the economy.
"At a time when our economy is facing daunting socio-economic
challenges, boosting investor confidence is not an option – it is
mandatory. South Africa is part of the international financial
community and, as such, the reality of global and investor sentiments
must be taken into account; certainly key policy decisions such as the
appointment of the Central Bank governor play a crucial role in
boosting investor confidence," said George.
"It would be tragic if the Reserve Bank's hard won credibility was
compromised under the new ANC government by COSATU's concerted
political strategy to increase its own influence within the
tripartite-alliance by undermining monetary policy with its misplaced
ideas on inflation targeting."
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SCRAP SETAs AND GIVE EMPLOYERS TAX BREAKS
The sector education and training authorities (Setas) should be
scrapped and replaced with a tax rebate scheme for skills development
by employers, the Democratic Alliance said in August.
"Many billions of rands have been pumped into Setas over the past
seven years - at least R4.6 billion was received by 22 of the 23 Setas
in 2006/07 alone - and they have yet to show they are capable of
producing people with the skills that our economy needs, or of
fulfilling the promises that have been made to the young South
Africans who have placed their hopes for the future in these training
programmes," said DA spokeswoman on labour Anchen Dreyer.
"SETAs are operating as sausage machines, concerned only with making
their learnership uptake figures look good. They give little or no
consideration to ensuring that these learners actually acquire skills
and find employment, to the point where it is impossible to find
information on some of the outcomes targets they are supposed to
meet."
Dreyer said that the DA had attempted to find out exactly what the
facts were regarding the number of learnerships available, how many
had been completed, the number of South Africans who had been
successful in finding employment after completing learnerships, and
any other evidence of the success, or failure, of these institutions.
"However, it proved to be a difficult task to get the information we
needed. Initially, the DA attempted to obtain the information needed
via detailed parliamentary questions. The Labour Minister asserted
that all the information was contained in SETA annual reports," said
Dreyer.
Dreyer said that the 2006/07 reports only confirmed the DA's
conviction that SETAs are largely ineffective. The reports revealed an
overall underperformances by most of the SETAs as National Skills
Development Strategy (NSDS) indicators were regularly and repeatedly
not attained.
"Only the Energy SETA provided adequate information to enable us to
assess performance across all National Skills Development Strategy
indicators. The DA questions the basis on which the government
continues to pour in money into SETAs without knowing what is coming
out of them - this kind of scenario makes impact assessment
impossible," she said.
"Therefore, the DA calls for a clean slate in skills development and
the scrapping of the Setas approach. We believe that industry badly
needs a training system that is demand-driven; hence we reiterate the
need to implement a system of tax rebates for skills development
efforts by employers."
"If adopted, this system would lead to a highly-adaptive and efficient
skills development system, as industry is best placed to respond to
trends and needs."
Read more on this story…click here >>>
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ESKOM DOWNGRADING – DA CALLS FOR GOVERNMENT ACTION
In August, ratings agency Moody's Investors Services announced a cut
in State-owned Eskom's local and foreign currency ratings.
"In light of the downgrading of Eskom by Moody's Rating Agency, the DA
calls on the government to provide a clear plan on how it is going to
help Eskom raise the R343 billion for its capital expansion programme
without resorting to tariff increases," said DA spokesperson on public
enterprises Manie van Dyk.
"Government is the only shareholder in Eskom and should thus adopt
actions that will bolster the utility's plummeting credit rating, and
ensure that the South African public is receiving the service from
Eskom it deserves."
Van Dyk said that one of the prerequisites for economic growth in any
industrialised economy was the presence of predictable and sustainable
electricity supply. In the long run, not being able to ensure a steady
supply of electricity would pose a threat to South Africa's growth
prospects.
"The Government must therefore take immediate action to ensure that
Eskom's capital expenditure programme is not compromised by the credit
or investment downgrading," he said.
"There is no doubt that the power outages that South Africa witnessed
at the end of last year are the outcome of government's neglect of our
electricity generation infrastructure over the past decade. The DA
therefore calls for the government to abandon its usual laissez-faire
attitude and immediately release the first tranche of the R60 billion
it committed to Eskom – and allay fears over insecure funding for the
power utility."
Van Dyk said that the DA was strongly opposed to any unjustifiable
tariff hikes as these were likely to have a substantial effect on
inflation and hence monetary policy.
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DA CALLS ON SAA CEO AND BOARD CHAIRMAN TO ACCOUNT FOR FINANCIAL WOES
AT THE NATIONAL CARRIER
In July, the DA wrote to the Chairperson of the Portfolio Committee
for Public Enterprises to request that SAA Chief Executive Officer
Khaya Ngqula, SAA Board Chairman Professor Jakes Gerwel and Manager
for Major Maintenance Reinhard Rohm be called to appear before the
committee.
DA spokesperson on public enterprises Manie van Dyk said that the CEO
and the Board Chairman needed to account for SAA's request for a R3
billion bail-out from the National Treasury and the airline's
retrenchment of 1 192 employees in the past financial year - when in
the same year SAA had a vacancy of 240 technicians.
"They also need to explain the resignation of 53 pilots and 217
technicians from SAA in 2007/08 despite their being awarded retention
premiums to the tune of R4 million," he said.
Van Dyk said that, after several years of receiving rescue packages
from Treasury to prop it up, SAA had reportedly requested a further R3
billion for this financial year to help offset losses sustained in the
last financial year - in which it ran a R1.09 billion loss. In the
midst of these huge losses, there were allegations that hefty bonuses
had been paid out to top executives.
"SAA must publicly explain why the rescue plan it implemented last
year has failed, and what it now plans to do in order to prevent more
money - which could be better spent on poverty alleviation, hospitals
or housing - from being used to shore it up in the face of these
losses."
"The high vacancy-rate for technicians is also worrisome given that
the majority of South Africa's domestic airlines make use of South
African Airways Technical (SAAT) – SAA's aircraft service and
maintenance arm. Cursory investigations by the DA in 2007 revealed
that SAA-serviced airlines are responsible for most technical
incidents," said Van Dyk.
"With 2010 just around the corner, it is of great importance that
SAA's service facilities and service levels are beyond reproach and
ready to take on the many demands which will be made of them."
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REAL PICTURE BEHIND 2008 'DEVELOPMENTAL INDICATORS' NOT SO ROSY
The 2008 'Development Indicators' released by the Presidency in July
are based on a series of cherry-picked information, carefully selected
in order to ensure they reflect well on government, without giving due
and honest consideration to the true realities confronting the
development of South Africa today, said the Democratic Alliance in
July.
"The DA is particularly concerned that government has attempted to
create a misleading picture with respect to a number of issues," said
DA Chief Whip Ian Davidson.
"For example, the Development Indicators report quotes Labour Force
Survey statistics to show that narrowly-defined unemployment figures
have decreased to 23.1% up until September 2007, but fails to mention
that broadly defined unemployment rate - including discouraged work
seekers - is still in excess of 36%."
Davidson said that economic growth is predicted at a slightly higher
pace than the AsgiSA target of 4.5%, despite Finance Minister Trevor
Manuel reiterating Treasury's growth expectation for the country to be
no more than 4%.
"This must also be read against a number of other forecasts that peg
South Africa's growth for the year as closer to 2%."
He also said that there was much more room for growth and job creation
to bring the economy in step with other middle-income countries, which
had been growing at an average rate of 7% or more since 2004, but this
would not happen if the government did not evaluate its success
against comparable countries so that their successes could be
duplicated.
"A typical example is the relative complexity of South Africa's
red-tape regime, which hampers business growth-promoting and
job-creating business transactions. In 2006, we ranked 28 out of 178
countries in the Ease of Doing Business index only to slip to 35th
place in 2008, which means that the economy is becoming less
competitive as an investment destination."
"If the government cannot be open about these realities, complacency
will set in. This will only be to the detriment of the people."
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DA CALLS FOR URGENT REMOVAL OF IMPORT QUOTAS ON CHINESE TEXTILES
In July, the Democratic Alliance called for the urgent removal of
import quotas on Chinese textiles and the introduction of a Customized
Sector Programme (CSP).
"The DA has repeatedly pointed out that the implementation of import
quotas on Chinese textile and clothing items is detrimental to the
local clothing and textile industry, citing closures of countless cut,
make and trim operations (CMTs)," said DA spokesperson on finance
Kobus Marais.
"Three months ago, the DA asked the Minister of Trade and Industry to
review import quotas on Chinese textile and clothing items with a view
to lifting them. Today, these quotas still stand and the textile
industry continues to be in distress. It is reported that 4700 jobs
have been lost this year alone and that hundreds more may soon follow.
The Western Cape Province is reporting closure of 24 factories."
Marais said that the Minister of Trade and Industry, by forcing
through trade restrictions without putting in place alternative
measures to assist the manufacturers in the clothing sector, must now
shoulder the blame for the clothing and textile industry's woes.
"Given that unemployment is currently estimated at around 23%, every
job in the economy has to be saved. The clothing industry creates
three times as many jobs as the economy-wide average; thus making the
industry a strategic sector for employment creation," he said.
"The Minister of Trade Industry must urgently explain what steps his
department is taking to help ensure the continued existence of a
vibrant and commercially viable textile industry in South Africa."
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DA WELCOMES LAUNCH OF VENTURE CAPITAL FUND TO AID ENTREPRENEURS
The launch by VenFin of a venture capital fund called InVenFin, aimed
at supporting entrepreneurs in the development and growth of their
intellectual property, is an excellent initiative, said the Democratic
Alliance in July.
"The fund is a good example of independent institutions providing the
space and showing the will to act for the establishment of a better
South Africa. Private sector participation in public sector
initiatives is a key tenet of the DA's vision of an Open Opportunity
Society for All," said DA spokesperson on trade and industry Pierre
Rabie.
"Entrepreneurship and the development of small-to medium-sized
businesses is an essential element for driving growth and job
creation. Therefore, any new and creative ways to fund such
entrepreneurial activity should be welcomed."
Rabie said that private initiatives which supported innovation were in
line with empirical economic findings which had shown a "...growing
awareness among policymakers that innovation is the main driver of
economic progress and well being…" In addition, innovation had also
been noted to be a crucial determinant of competitiveness.
"This initiative by VenFin is therefore very timely, given that South
Africa has been ranked 53rd out of 55 countries on the 2008 World
Competitiveness Scoreboard, a three point drop from the previous
year's ranking," Rabie said.
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DID YOU KNOW?
• In 2007, SAA and its subsidiary Mango received over R2 billion in
state funds as a form of capital injection. This was after the
Competition Commission fined SAA over R45 million for engaging in
anti-competitive behaviour by giving incentives to travel agents.
• SAA ran at a R1.09 billion loss in the same year.
• Also in 2007, SAA left Transnet with a R9 billion debt it had
incurred to close out its disastrous foreign currency hedges. It has
yet to repay this debt.
• The years preceding 2007 paint an even bleaker financial state of
affairs. In 2004, SAA recorded a loss of over R8.7 billion, with a
R5.9 billion loss for the previous financial year.
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