Tuesday, 20 November 2018

Speech in the National Assembly: Growth the pre-requisite for jobs

Yesterday the National Assembly debated the DA's motion on access to jobs and I was selected as a speaker alongside my colleagues Geordin Hill-Lewis (who sponsored the motion) and Gwen Ngwenya.

While the topic was access to jobs, we agreed that my speech should focus on what was required to create the jobs in the first place, i.e. measures to stimulate economic growth.

You can view the debate on YouTube here, my speech starts at 4:13:20.

You can read Geordin's speech here and Gwen's here.

The ANC were on the defensive from the beginning and had nothing to offer the country by way of solutions: they are out of ideas, incompetent, corrupt and stuck in an economic paradigm that will never create broad, inclusive prosperity in SA.
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Just a few days ago I was in conversation with a Wits masters student about the future of South Africa. She said she was seriously considering emigrating to the UK, following many of her friends who had left South Africa in the past few years. Her reason? The jobs situation here is so bad, and prospects in the UK are better, even with Brexit looming.

What really concerned me is that she and the friends she referred to are young, black professionals – the sort of people our country needs to be a successful nation.

This sums up where South Africa is today and it’s not a pretty story. If our economy cannot create opportunities for our best and brightest to stay and thrive, we are in dire straits.

Jobs Summits that artificially “create” 275 000 jobs every year are no substitute for innovative entrepreneurs creating real, sustainable jobs based on rising business confidence. This is what the DA delivers wherever we govern.

For South Africa to create jobs and opportunities for all, we need economic growth. Without growth our growing population will only get poorer.

In its report following public consultations on the MTBPS, the Treasury makes the following observation: “Our main challenge is persistently low economic growth. The underlying causes cannot be fixed through the fiscal framework. What is required is implementation of growth reforms, together with efforts to improve services by strengthening governance, stamping out waste and corruption and turning around key state institutions.”

I couldn’t agree more. The DA has been advocating these measures for years. It seems the Treasury is the only government department to have woken up to this reality. And now the finance minister has gone AWOL.

What are these growth reforms Treasury refers to but does not specify?

They include making the economy more competitive and export-focused; reducing the cost of doing business; equipping South Africans with better skills; attracting more skilled immigrants; and supporting small businesses.

South Africa has dropped from 47th in 2016 to 67th in 2018 in the World Economic Forum’s Global Competitiveness Index. The index scores countries in four broad areas – enabling environment, markets, human capital and the innovation ecosystem. This alarming drop makes us a less attractive investment destination, and shows up in our dropping share of foreign direct investment.

In 2017, South Africa recorded negative foreign direct investment (FDI). The recent Investment Conference was more of a confidence trick than a convincing commitment to make South Africa investment friendly.

Export-led growth has characterised all high-growth economies since the industrial revolution. The so-called “Asian Tigers” and China are the most recent examples of countries achieving sustained levels of 6-8% growth on the back of exports.

South African consumers lack the purchasing power to drive growth to these levels, essential to shift the job creation needed. The DA would prioritise exports to high-income countries and transform our moribund embassies and high commissions into super-charged export promotion offices.



Unbelievably, in 2016 Home Affairs issued not a single business visa for any start-up companies, and only 25 for existing businesses. The DA would go on a recruitment drive to attract entrepreneurs and start-ups by introducing a Start-Up Visa, following the lead of Canada, the UK, the Netherlands and other countries.

The cost of doing business in South Africa has to come down and red tape has to be reduced. They deter investment and kill jobs. The 2018 World Bank Doing Business in South Africa survey suggests recent improvements in key indicators such as time taken to register a business but South Africa still lags many of our peers. Charges at the port of Durban are more than double the OECD average, a huge deterrent to trade.

South Africa’s labour environment was designed by big government, big business and big unions. It excluded small business, which are meant to be the major source of new jobs. Business owners are reluctant to hire staff because it’s too difficult to fire them when times get tough.

They are forced to adopt wage agreements negotiated without their say. A DA government would exempt companies employing less than 250 staff from restrictive labour laws to encourage them to hire more people.

We would also immediately tackle the scourge of late payment of suppliers, particularly SMEs. Both government and big business are guilty here. This morning I was with the owner of a steel fabrication business who was close to going under due to late payment by Eskom.

Government owes suppliers up to R27 billion which puts immense pressure on their cash flow and can lead to closure and job losses. At any one time it is estimated that business has payables of R350 billion. Imagine the positive impact on job creation of that money being injected into the supply chain.

Government must fulfil President Ramaphosa’s promise to lay charges of misconduct against offending accounting officers. Business Leadership South Africa and Business Unity South Africa must publicly support the Prompt Payment Code of paying suppliers within 30 days.

A longer-term problem that must be solved is improving the educational outcomes of our young people. This will involve tough choices the ANC has avoided, including tackling the unions’ grip on our schools. It will also require more resources for our TVET colleges which must produce the skilled workforce a growing economy relies on.

Taken together, these reforms will boost growth and job creation by tackling both the supply and demand sides of our economy. A business-friendly environment in an open market economy is essential for job creation and retaining our brightest minds.

Only the DA can bring this about.

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