Co-operating to compete
THE INDEPENDENT DEMOCRATS has more than 100 economic and social solutions to these short-and long-term challenges, along with our “Top Ten Solutions” – all of which are available on our website. The global economic crisis and the potentially negative effects it will have on South Africa’s economic development prospects require innovative solutions, the will to implement them and bold leadership from government.
This crisis is occurring at a stage in our development history where our country is still battling with persistently high levels of unemployment and roughly half of our population still living in poverty. While SA has recently enjoyed a long period of growth, the Independent Democrats believes it hasn’t been particularly impressive, given many other emerging economies have been able to grow at a far more rapid rate over the same period.
This period has also been characterised by high commodity prices that SA wasn’t able to fully capitalise on because of certain infrastructural constraints. The ID would therefore focus on fixing the infrastructural and human resources constraints in our economy for the duration of this period of low global growth so that we can maximise our growth opportunities when the cycle turns again. We’d ensure we confront the structural obstacles in our economy, such as its highly monopolistic nature, so that future growth can be more equitable and deliver benefits to all South Africans.
It’s with those objectives in mind that the ID proposes a massive up-scaling of our public infrastructure build programme. We need to repair and build new roads, invest in new sewerage plant, build an efficient public transport system and, most importantly, bring on line new energy generating technologies. We must ensure we reduce the current import intensity of that infrastructure development, with the aim of building up local industries and stimulating job creation.
One particular sector where that can be employed is the renewable energy sector, where the ID believes it has the potential to become a world leader. That will not only reduce our currently high carbon footprint but with the right industrial policy also create hundreds of thousands of jobs. In 10 to 15 years, Germany has created 250 000 jobs in that industry. These will be jobs in a diverse range of industries across the value chain, such as steel and glass manufacturing, plumbing, electricians and turbine design and manufacturing. The ID further maintains we have to give young people a greater stake in SA’s economy. Our education system has also failed to equip our youth with the necessary skills to become productive workers, with the result that 70% of young South Africans can’t find work. Over the short term the ID would introduce a wage subsidy for first-time work seekers between the ages of 18 and 25 to give companies incentives to hire them.
In the long run it’s imperative for us to improve the outcomes of our education system and the ID has detailed solutions on how that can be achieved. We can’t leave one school unattended in our efforts to ensure access to electricity, water and sanitation and the provision of libraries, functioning science laboratories and free Internet connectivity.
The ID would reduce the cost of doing business in SA and introduce a competition policy more pro-active in ensuring free economic activity.
In addition, we need to open up key sectors to competition, such as telecommunications. The ID believes it’s not privatisation that’s needed but competition in order to secure efficiency and lower prices. For example, by reducing the monopoly power of State entities, such as Eskom and Telkom, an ID government would create the right market dynamics for a reduction in the price of telecoms, which is currently one of the highest in the world.
We’d gear financing institutions towards channelling resources to small, medium and micro enterprises. In addition, greater support must be given to potential entrepreneurs, particularly in poorer communities. In that respect the ID advocates the establishment of one-stop shops in poor communities, where entrepreneurs can be given the necessary assistance to start up small businesses.
However, in order for the latter to be sustainable, consumer demand needs to be increased in resource-deprived areas. The ID would therefore introduce a minimum income grant, which would be given to all poor South Africans who currently fall outside the social security net. The funding for that grant will be raised through the taxation of cigarettes and alcohol, as well as certain luxury goods.
Finally, the ID will develop our rural areas, where poverty is at its worst, by introducing a comprehensive rural development programme that would include the provision of basic services, roads and technical support for small-scale farmers. We’ll work to create sustainable livelihoods and local markets, where small-scale farmers can sell their produce.
The ID believes SA is entering the next stage in its development path, where the economic downturn will require expanded government expenditure to make up for decreasing private sector investment and consumer demand. We’d increase the deficit to just under 3% in order to increase government spending.
The ID’s solutions involve investments in key areas that would both provide assistance for millions of poor South Africans as well as position us to maximise our future growth opportunities.