NUMSA CRITICAL ANALYSIS AND REJECTION OF THE NDP
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The National Development Plan: Mixed Bag, Or Downright Neoliberal Proposals for South Africa?
NUMSA CRITICAL ANALYSIS AND REJECTION OF THE NDP
March 2013
“We have suffered more than just national humiliation. Our people are deprived of their due in the country's wealth; their skills have
been suppressed and poverty and starvation has been their life experience. The correction of these centuries-old economic injustices lies
at the very core of our national aspirations.”
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5A Few Interesting Quotes on the NDP
“Our land reform model is the only one that has succeeded anywhere in South Africa. Indeed it is the model upon which the National Development Plan’s proposals are based”.
[State of the Province Address, Western Cape Premier Helen Zille, 22 February 2013]
The adoption of the DA's vocabulary throughout the NDP is striking. It borrows much of the same analytical framework that underpins our own political philosophy - the ‘open, opportunity society
for all.'
[National Development Plan: Full DA Response, 23 November 2011]
Convenor of NPC communications, Cameron Dugmore said in an email that: “Minister [Trevor] Manuel [chairperson of the NPC and minister in the presidency] has asked me to inform you that the NPC
chooses to ignore the statement issued by DA leader, Helen Zille”.
[NPC won’t respond to DA statement on development plan, Mail & Guardian, 24 November 2011]
After a thorough analysis, the CC came to the extremely disturbing conclusion that significant and strategic parts of the NDP were directly lifted from DA policy documents, especially its Chapters on
economic restructuring, infrastructure, role of the state, agriculture and rural development.
[Statement issued by the Numsa National Office Bearers on behalf of the Central Committee (CC), March 7 2013]
In response to what Mr Jim is quoted as having said in the article with a rubric "ANC lifted DA Policies for NDP", the National Planning Commission responds thus:
"Whilst generally we would not respond to the musings of Mr Jim, we will make this one exception. He arrogates to himself, as a custodian of ANC policies, power much greater than the 4 500 delegates
who gathered at the ANC 53rd National Conference in Mangaung. What gives Mr Jim the right to suggest that the delegates were misled? Mr Jim suffers from an infantile disorder that manifests as
an acute aversion to anything rational."
[Statement issued by National Planning Commission in The Presidency, March 7 2013]
Numsa is thus puzzled that Comrade Jim is accused of suffering from infantile disorder and not Mrs Zille? Why was the National Planning Commission
quiet when Mrs Zille arrived at the same conclusion as Mr Jim? Why did the National Planning Commission “choose to ignore the statement issued by the
DA leader”, and not ignore the one issued by the leader of metalworkers?
!Focus of the Analysis
1. Background
1.1 NUMSA has always been clear about the bourgeois-orientation of the NDP. The NUMSA National Office Bearers therefore requested that a more detailed analysis of the NDP be undertaken.
1.2 On several occasions, we have made our views known that we reject the NDP (and its Diagnostic of Symptoms) on the grounds that:
a)It leaves intact the power relations of Colonialism of a Special Type
b)It is therefore a major rightwing deviation from the Freedom Charter and thus, it paves a path that derails a socialist-oriented NDR
c) Ideologically, it is firmly anchored in neo-liberalism and does not even represent a shadow of the revolutionary tradition of the national liberation movement
d)GEAR is indeed a living and growing document, it had 66 pages in 1996. It has now grown to 430 pages in the form of the NDP!
e)We have consistently argued that there are very strong parallels between the NDP and DA policy
f) Specifically we have argued that the NDP:
i) Does not have a plan on how to restructure the economy
ii) Does not have a plan on how to fundamentally transform ownership and control patterns of the economy
iii) Plans to roll-out infrastructure to further reinforce raw mineral export dependence and not broad-based industrial development
iv) Minimises the role of the state in the economy
v) Seeks to de-regulate the labour market further and to further weaken working class power, and is thus thoroughly anti-working class in its outlook
vi) Operates within the neo-liberal macroeconomic framework and broadly, and thus offers no hope for fundamental social and economic transformation
2. Content of the Analysis
2.1 This is mainly a compare and contrast exercise. We compare to what extent the NDP has now paved the way to openly align state policy with DA policy
2.2 We determine the extent to which the NDP is “Oppositionist” in its contents, i.e. Oppositionist in relation to the revolutionary tradition of the ANC-led national liberation movement.
2.3 This compare and contrast exercise entails an analysis of the following chapters of the NDP:
a) Chapter 3—Economy and Employment
b) Chapter 4—Economic Infrastructure
c) Elements of Chapter 6—Inclusive Rural Economy
d) Elements of Chapter 15—Transforming Society and Uniting the Country
e) Together these Chapters and Fragments constitute almost 90 pages of the 430 Magnum Opus
2.4 Our compare and contrast exercise is structured around 7 themes
a) The ideology of the NDP
b) The Role of the State
c) Ownership and Control of the Economy
d) Macroeconomic Policy
?e) Industrial Policy, Trade and Economic Infrastructure Policy
f) Labour Market Transformation
g) Land Reform and Rural Development
The Key Features of Neo-liberalism: A Recap
In 1996, we analysed the basic tenets of neo-liberal policy in South Africa as follows:
• Trade liberalization (Allow imports and exports to flow freely in and out of the country)
• Financial liberalization (Allow money to get in and out of the country freely)
• Labour market deregulation (make it easy to hire and fire workers, wages must fall when there is high unemployment and rise when unemployment is low)
• Limited role of the state (privatise state activities, enter into private public partnerships, outsource so-called non-core functions, etc.)
• Fiscal austerity (cut back government spending, “reprioritise expenditure”, implement cost recovery policies on basic services, apply user-pay principle as far as possible,
including through tariffs and e-tolls in order to pay for services)
• Tight monetary policy (inflation should be the overriding concern of the central bank, not employment or industrial development, interest rate is the primary tool to control the
economy, interest rate must in general be above inflation)
• Central bank independence (no political interference with Reserve Bank operations, democratically elected leaders cannot use the Reserve Bank as an instrument to pursue the
developmental agenda).
The core elements of the integrated [GEAR] strategy were:
• A renewed focus on budget reform to strengthen the redistributive thrust of expenditure; [This was fiscal austerity, cutting back expenditure, shutting down teacher and nursing
colleges, including FET’s, neglect of school infrastructure and basic municipal infrastructure, etc.]
• A faster fiscal deficit reduction programme to contain debt service obligations, counter inflation and free resources for investment; [See above]
• An exchange rate policy to keep the real effective rate stable at a competitive level; [Flexible exchange rate supported by the removal of exchange controls]
• Consistent monetary policy to prevent a resurgence of inflation; [Inflation targeting maintained at all costs, including cases where unemployment is rising and industrial development
grinds to a halt]
• A further step in the gradual relaxation of exchange controls; [This is to ensure profits can be easily repatriated out of the country, supports flexible exchange rates]
• A reduction in tariffs to contain input prices and facilitate industrial restructuring, compensating partially for the exchange rate depreciation; [This means cheap imports are essential to keep
inflation down, even if it means de-industrialisation and massive job-losses].
• Tax incentives to stimulate new investment in competitive and labour absorbing projects; [These are tax breaks that were given to companies but companies did not invest, instead they
repatriated profits out of the country because of removal of exchange controls, and now tax breaks come in the form of a youth wage subsidy].
• Speeding up the restructuring of state assets to optimise investment resources; [This is privatisation and corporatisation, making SOE’s to operate as if they are private sector profit-
maximising companies, it also involves unbundling e.g. the destruction of ISCOR, and partial privatisation such as happened in Telkom, private public partnerships as has
happened with the toll roads, etc.]
@• An expansionary infrastructure programme to address service deficiencies and backlogs; [But this is private-sector led through private public partnerships and tenders]
• An appropriately structured flexibility within the collective bargaining system; [To ease the hiring and firing, and not to extend collective bargaining agreements to “non-parties”,
exclusion of new entrants into bargaining agreements and extension of probationary periods]
The Ideology of the NDP and that of the DA
“The adoption of the DA's vocabulary throughout the NDP is striking. It borrows much of the same analytical framework that underpins our own political philosophy - the ‘open, opportunity society
for all.'
“We believe the NDP points to a growing consensus amongst a growing number of people at the non-racial, moderate centre of South African politics. This emerging consensus on the fundamental
issues facing South Africa today is an exciting and significant development.”
“Many of the NDP proposals will, however, face stiff internal opposition from factions in the ruling party, its youth wing and its alliance partners.”
[National Development Plan: Full DA Response, 23 November 2011]
Convenor of NPC communications, Cameron Dugmore said in an email that: “Minister [Trevor] Manuel [chairperson of the NPC and minister in the presidency] has asked me to inform you that the NPC
chooses to ignore the statement issued by DA leader, Helen Zille”.
[NPC won’t respond to DA statement on development plan, Mail & Guardian, 24 November 2011]
“We urge government to take heed of this plan, which dovetails in large measure with the National Development Plan. There is a clear basis on which to take the discussions forward and build the
moderate centre of South African politics...”
[The DA’s Plan for Growth and Jobs: Working For Change, Working For Jobs, Foreword, p.3, 28 July 2012]
“The DA believes not in a more equal society, but in an EQUAL OPPORTUNITY SOCIETY…and that is a very, very different matter indeed. If you don’t believe me, have a look at the DA’s official
website. Click on the Icon “Our Policies”, and then scroll down to “The Opportunity Society”. This is how the “Opportunity Society” is described on the website: “In an opportunity society…your path in life
is not determined by the circumstances of your birth, including your material [they don’t like to use the word ‘wealth’] and ‘demographic’ [they don’t like to use the word ‘race’] circumstances, but rather
by your [individual] talents and your [individual] efforts...There you have it. The “opportunity” society. It’s a kind of B-grade version of Oprah Winfrey’s world outlook – “if you want it bad enough, you can
get it.” A myopic, self-satisfied and ultimately cruel illusory outlook for the majority of South Africans”.
[Address by J. Cronin, MP, Deputy Minister of Transport, On the Occasion of the Debate of State of the Nation Address, 15 February 2012].
/The Ideology of the NDP and that of the DA, versus COSATU
Democratic Alliance National Development Plan COSATU
1. The system of apartheid, which involved the legislated denial 1. The social, psychological and geographic elements of apartheid;
of opportunity to black South Africans – to assets, jobs, continue to shape the lives and outlook of many South Africans, even
proper education, and even citizenship – left an economic though apartheid no longer exists on the statute books. This
legacy of racially determined disenfranchisement, systemic racism must be confronted by society as otherwise it will be
marginalisation, and exclusion, which confined our nation’s reproduced and reinforce itself across generations. It is this
talent and wounded our psyche. [Working for Change, p.85]. inherited psyche of racial prejudice, breakdown in values,
inequality of opportunity and massive poverty, as well as
competition for scarce resources, which helps fuel racism and, more
recently, xenophobia.[NDP-Our Future, p.459].
2. South Africa’s insider/outsider economy is no 2. South Africa’s labour market is highly segmented, with a core COSATU is a class-oriented trade-union federation whose
accident...The transition to democracy in 1994 brought with it (especially public servants and well-organised sectors), a larger strategic objective is to achieve socialism through the
the promise of redress, reconciliation, and a better life for all. periphery of vulnerable unorganised and low-paid workers in the National Democratic Revolution. The minimum programme
However, the policies pursued by successive national formal and informal sectors, and a marginalised group of of the National Democratic Revolution, a programme that is
administrations have not fixed the legacy of poverty and unemployed [Diagnostic, p.12]. the basis of ANC-led Alliance, is the Freedom Charter.
inequalities left by apartheid. Instead, they have created new
barriers and new inequalities that protect established
insiders in both the private and public sectors at the
expense of poor South Africans who continue to lack access
to economic opportunities. [Working for Growth, p.11]
3. ...this policy document seeks to do by accelerating economic 3. In addition to the historical inequities that reduced opportunities for
growth by breaking down the insider-outsider structure of our black people, the way in which the labour market has evolved,
economy to help outsiders participate in the economy. These locking out new entrants, adds to the lack of opportunities. [NDP-
outsiders include unemployed South Africans locked out of Our Future, p.459]
the labour market by Cosatu’s influence on our labour
policies, and small businesses denied access to markets by
private and public monopolies and cartels. [Working for Jobs,
p.53]
4. Vested interests that seek to monopolise access to 4. South Africa’s labourA market is often characterised by
opportunity for the privileged few at the expense of the contestation between profitable firms and reasonably well-paid
majority – whether in the form of closed business networks, employees. Outcomes determined in bargaining processes leavepatronage politics, or protected employment for members of little room for new entrants to enter the workplace. To address high
labour union COSATU and its affiliates –needs to be met levels of unemployment, particularly among youth, extraordinary
with bold and decisive action. [Working for Growth, p.85]. measures will be required....[NDP 2030-Our Future, p.58]
5. Economic growth is a prerequisite for overcoming the 5. The longer-term solution to skewed ownership and control of the
inequalities inherited from our past and opening up economy is to grow the economy rapidly enough and focus on
opportunities for all, but it needs to be inclusive if it is to make spreading opportunities for black people as it grows [NDP-Vision
a difference to peoples’ lives. [Working for Growth, p.49] 2030, p.102].
6. Our Vision- the opportunity society: In an opportunity 6. Creating equal opportunity: Equal opportunity is about nullifying
society, your path in life is not determined by the factors such as gender, ethnicity, place of birth, and family
circumstances of your birth, including both your material background, so that these do not influence life chances. Success in
and “demographic” circumstances, but rather by your life should depend on people’s choices, effort and talents, not their
talents and by your efforts. That is why, in an opportunity circumstances at birth. The discrimination suffered by black people
society, a child born in poverty should nevertheless be able to crucially influences their life chances. [NDP-Vision 2030, p.415]
become a brain surgeon, provided he or she has the talent and
puts in the effort required to succeed. [DA Website, Our Vision,
“Creating Economic Opportunities For All”—DA Policy
Document, 2009].
7. If we are to open up opportunities for all and create a 7. Only by reducing poverty and inequality through broadening
prosperous, inclusive society, the ‘pie’ needs get bigger so opportunity can the country achieve real unity...The country has
there is more to share [DA Diagnosis, p.11]. much more to gain if a win-lose debate shifts to a win-win debate,
focusing simultaneously on growing the cake and redistributing
it. [NDP-Vision 2030, p.416].
[The ideology of the NDP is exactly the same ideology as that of the DA]Some Gibberish Formulations, Platitudes or Cryptic Language in the NDP!
Examples:
1. It is essential to lower the cost of living for poor households. Some elements of the plan will have a cost-raising effect on the economy. In particular, modernising infrastructure after decades of
underinvestment may require higher tariffs. To offset these increases, policy should focus on increasing competitiveness and investing in new infrastructure in areas that directly affect the poor such
as the food value chain, public transport, education and health, and telecommunications. Greater public-sector efficiency will also lead to a lower cost structure for the economy. (Electronic version,
p.40).
2. “Selecting good quality black and female candidates would be easier if the education system is producing ever greater numbers of skilled black and female work entrants” (p.417).
3.
4. “Intensified stimulation of local and foreign markets will be needed, as well as strengthening conditions to promote labour-absorbing activities” (p.**)
5. “Strengthening the capabilities of the workforce, ensuring that earnings are responsive to industrial demands, but also sufficient to ensure a minimum standard of living, and stabilising the
environment for bargaining and labour relations in way that is conducive to investment but also to human rights as discussed in this chapter” (p.97).
6. “The majority of new employment will arise in activities that are domestically-oriented, where global competition is less intense and there is high labour component...Examples include: housing
construction, retail, personal services such as hairdressing or cleaning, business services such as office cleaning or repair.” (p.108).
.On the Role of the State
“The withdrawal of the state from the provision of basic goods to a large extent explains the persistence of unemployment, the rise of structural unemployment and the increase in the Lazarus-
layers of the working class in South Africa. The privatisation of infrastructure provision and the supply of other basic goods meant that labour-intensity was subordinated to the dictates of profit-making.”
[COSATU Growth Path, p.19]
“The break out from national markets also saw attempts to roll back welfarism, to break national social accords between, say, Swedish capital and Swedish workers/small farmers/middle strata, and
to privatise key infrastructural service utilities that lay at the heart of the welfare state (water, transport, electricity, housing utilities).”
[J. Cronin, On Neo-liberalism, Reformism, Populism and Ultra-leftism].
Democratic Alliance—GEAR National Development Plan Proposals COSATU Proposals
1. Providing an environment conducive to growth, including the 1. Provide appropriate public infrastructure and services 1. Decisively intervene in the economy to redistribute resources
provision of critical infrastructure; [Working for Change, and help in lowering the transaction costs across the economy in order to address: divisions resulting from our Apartheid past,
p.13, p.29] [NDP-Vision 2030, p.134]. unemployment, inequality and poverty, and the rural-urban
development divide. [Growth Path, p.30].
2. A DA government will apply a policy framework that ensures 2. The state not only has a role in setting the appropriate 2.
macroeconomic stability, policy continuity and the pursuit of macroeconomic framework, it must also provide the right
appropriate microeconomic interventions.[Creating Equal microeconomic conditions...[NDP-Vision 2030, p.134]
Opportunities, p.5]
3. Correcting market failures; [Working for Change, Working for 3. Identify and resolve market failures [NDP-Vision 2030, 3. Take direct responsibility and must rely less on the private
Jobs, p.13, p.29] p.134]. sector and market forces through: nationalization of strategic
sectors and ownership of productive resources...[Growth Path,
p.30].
4. Ensuring fairness by promoting broad-based ownership and 4. The popular classes cannot simply rely on regulation,
participation; 4. The state must enhance regulation of market because the probability of failure and evasion always exists
participation [NDP-Vision 2030, p.134] [Growth Path, p.112].
5. Speed up the process needed to approve private public 5. Eliminate the profit motive from the delivery of
partnerships...The DA will look urgently at the constraints 5. Urgently address constraints to public-private infrastructure, by directly delivering infrastructure, basic goods
affecting PPPs and take specific steps to resolve them. partnerships—including institutional arrangements for regulation and services to the economy and communities—this means(Creating Equal Opportunities, p.19). and execution of such partnerships as well as relevant capacity in building internal skills...[Growth Path, p.36]; In the expansion and
government departments and spheres [NDP-Vision 2030, p.133]. upgrading of infrastructure, the state should minimize and where
possible eliminate the profit motive, build internal capacity and
should reverse reliance on Private-Public Partnerships [Growth
Path, p.90].
6. Government is committed to the application of public private 6. The privatisation of infrastructure provision and the supply of
sector partnerships based on cost recovery pricing where this 6. Private sector partnerships (primarily with Transnet and other basic goods meant that labour-intensity was subordinated to
can practically and fairly be effected [GEAR, p.17]. SANRAL) are essential to upgrade corridors. Where SOEs are the dictates of profit-making...This meant that private-sector-
unable to meet demand for freight services, the state should driven infrastructure delivery could not deliver as many jobs
vigorously encourage private sector involvement. as anticipated, let alone the requirements of skills development
7. and decent wages. Without a state-driven infrastructure
7. Given the amount of investment needed, as well as programme, it will be impossible to dent structural
Eskom’s stressed balance sheet—and limited fiscal resources— unemployment whilst increasing the skills base of the labour
private investment will need to be accelerated force. [Growth Path, p.20]
7.
8. Across the world, governments are giving concessions to 8. The state should minimize and where possible eliminate the
private sector port operators to manage their harbours. We 8. The National Ports Act (2005), which stipulates that all profit motive, build internal capacity and should reverse reliance
should do the same. new developments should be concessioned, needs to be on Private-Public Partnerships [Growth Path, p.90].
stringently enforced so that all operators (public and private)
9. Rationalise State Owned Enterprises: Begin a process of perform or are replaced
rationalising South Africa’s portfolio of state-owned enterprises 9. See p.393—398 for more details, NDP-Vision 2030.
(SOEs). This will begin with a comprehensive review of their Mandates of SOEs must be reviewed periodically, how it is fulfilling
core mandates, strategic importance, corporate structure, the public interest mandate, renewal, refinement or revocation of
current financial position, and commercial viability. Based on public interest mandate will enable a clear consensus about what
this assessment, an SOE consolidation programme will be constitutes success...new enterprises may need to be created to
rolled out that will see either: attend to unmet public interests...
(i) The full or partial sale of SOE assets to interested
investors;
(ii) The listing of SOE assets on the JSE; or
(iii) The retention of state ownership where this is deemed
strategically desirable or in the public interest. In the case
of scenarios (i) and (ii) the sale of these assets will assist
with deficit reduction;...[Working for Change, p.74].The Role of the State and Institutional Capability or Building a Capable State According to the NDP: More Questions than Answers!
1. Strengthening the role of the state as service provider, as the core provider of public goods (such as infrastructure and other public services), as an economic regulator, as a consumer, and as a
critical player in giving leadership to economic development and addressing market failures. [Strengthen how?]
2. Creating a clear system of hierarchy and decision-making across economic line-function departments and spheres of government. The Presidency will act as the strategic centre of power to
resolve key points of disagreement and ensure policy alignment.[What about other line functions?]
3. Responsiveness on the part of the state to anticipate possible crises and respond to them rapidly and appropriately. [How is this a proposal?]
4. Establishing significant consequences for not reaching targets, whether in social or economic areas of delivery.
5. Measuring performance in economic services departments on the basis of success, or otherwise in facilitating investment and building partnerships among the economic actors. [What about
other departments?]
6. Improving trust between the public and private sectors. The government must treat private actors as partners in policy design and implementation, and the private sector in turn must respond to
and facilitate the realisation of national objectives.[How to improve trust? Is trust, not power relations, really the factor?]
7. Urgently addressing constraints to public-private partnerships – including the institutional arrangements for regulating and executing such partnerships as well as relevant capacity in government
departments and spheres.[How?]
8. Any direct state involvement in productive sectors should be informed by the “balance of evidence” in relation to stimulating economic growth and competitiveness, creating jobs and reducing
inequality, as well as availability and optimal deployment of public resources.[Why is “balance of evidence” applied in the case where “direct state involvement” is concerned and not in
the case where “lack of direct state involvement in productive sectors” prevails?]
On Restructuring State-Owned Enterprises
Pages 394—398 of the NDP dovetail closely in their recommendations with the DA’s Policy Outcome on “Enhanced Performance by SOEs” (p.62) and proposals for “Effective Resource Allocation"
(p.74).
5On Ownership and Control of the South African Economy
“In short, the Communists everywhere support every revolutionary movement against the existing social and political order of things. In all these movements, they bring to
the front, as the leading question in each, the property question, no matter what its degree of development at the time....”
[Karl Marx and Frederick Engels, The Communist Manifesto]
“The leadership that must lead an ANC rooted amongst our people and led by the working class must have an unquestionable commitment to this mass-based NDR. It must not have an
ambivalent commitment to all the demands of the Freedom Charter including its call for nationalisation, redistribution of wealth and land, and free and compulsory education.”
[COSATU Paper on the Leadership Challenge, 2007]
The Freedom Charter says:
“The People Shall Share in the Country's Wealth!
1. The national wealth of our country, the heritage of South Africans, shall be restored to the people;
2. The mineral wealth beneath the soil, the Banks and monopoly industry shall be transferred to the ownership of the people as a whole.”
Democratic Alliance—GEAR National Development Plan Proposals COSATU Proposals
1. Growth creates wealth, and with more wealth, 1. The longer-term solution to skewed ownership and 1. Collective and public forms of ownership: Our society
there is more to share: enough, for all, forever [Working for control of the economy is to grow the economy rapidly suffers from a history of dispossession...The new growth path
Change, p.18]. enough and focus on spreading opportunities for black people will progressively support the emergence and expansion of
as it grows[NDP-Vision 2030, p.102]. collective forms of ownership. Some strategic inputs to
industrial development e.g. the mines, steel production and
petro-chemicals should be in the hands of the state in order
to build state power to direct industrialisation... Such an
initiative will lead to redistribution of power in the economy and
break the stranglehold of a few conglomerates [Growth Path,
p.24, see also p.110].
2. BEE is flawed largely because black people in 2. Congress notes the promotion of privatization of state
2. Providing redress by assisting poor South general lack capital which raises the cost of capital for other assets as a way to promote black enterprise…and resolves
Africans to access capital is a high priority for the DA. participants thereby undermining investment in capacity and to strengthen the role of the state to resolve the historic
Proposals include financial incentives to enhance Broad-Based production, policy has to remain true to its intent to broaden marginalization of the majority and to reverse the
!BEE, and changes to the tax code to encourage wealthy South ownership and control of production to black people and privatization of state assets, which is being justified in the
Africans to give more (p.15). women without undermining overall levels of investment name of black economic empowerment”, [Growth Path,
(p.418). p.31, Footnote 44].
3. In relation to the growth path, the concept of redistribution of
3. A pragmatic view, ensuring transparency and 3. Address uncertainties over ownership, tax power and resources was linked to building workers’ power:
enforcement of ownership rights, creating a stable and treatment and allocation of mineral rights (p.30), ensure which is made up of worker control and democracy, and
predictable regulatory environment (p.29). certainty in respect of property rights, pass amendments to the social ownership, of which nationalization is seen as a
MPRDA to ensure predictable competitive and stable component. [Growth Path, p.111].
mining regulatory framework (p.126).
4. Introduce tax deductions to create strong incentives 4. Transforming the economy also means changing 4.
for the creation of employee share ownership schemes patterns of ownership and control. To date, efforts to transfer
(p.15) ownership of productive assets have not yielded the desired
results, with employee share ownership schemes playing a
less significant role.
What Conclusions Can Be Drawn on Ownership and Control of the Economy?
1. State-ownership or nationalisation is not part of the NDP, this means the Freedom Charter’s call that “the mineral wealth beneath the soil, the banks and monopoly industries shall be transferred
to the ownership of the people as a whole” will not be realised at least, until 2030.
The 9th Congress of COSATU resolved the following:
a) We must bring back the fundamental thrust of the Freedom Charter and the RDP on nationalisation of key and strategic industries.
b) Government must return to the Freedom Charter demands for the nationalisation of monopoly industries like mines and the banks
c) To campaign within the Alliance and society at large for the nationalisation of economic assets in key economic sectors such as minerals, telecommunications, petrochemical, etc.
The 10th Congress of COSATU further noted that “the Freedom Charter propagates state ownership of the commanding heights of the economy and control of the private sector for the benefit of
the people”.
?The NDP therefore neither advances the objectives of the Freedom Charter nor does it advance working class perspective on ownership and control of the economy.
.
2. The NDP:
a) Says nothing about ownership and control of well-known strategic monopoly industries such as SASOL, Arcelor-Mittal, the Banks, the Mines and others.
b) Says nothing about the following:
a. State Bank
b. State pharmaceutical company
c. Private ownership of the South African Reserve Bank
d. State Mining Company
3. In the NDP, BEE remains the primary vehicle to deracialise and democratise ownership and control, no plan to broaden ownership and control, and no plan to change the class character of
ownership and control of the economy.
This means that the continued concentration and centralisation of economic power in the hands of a few people, and the concentration of
unemployment, poverty and negative effects of extreme inequality among the majority, which have been the characteristic economic features of
colonialism of a special type, must continues well after 2030!
@Macroeconomic Policy in the DA and the NDP and COSATU
Democratic Alliance—GEAR National Development Plan Proposals COSATU Proposals
1. On Monetary Policy: The DA supports the inflation- 1. On Monetary Policy: Macroeconomic policy ensures 1.Employment will be the primary target of monetary policy,
targeting framework implemented by a strong, independent relative stability in prices and critical variables such as interest whilst price stability plays a subordinate role. Monetary policy
Reserve Bank operating a flexible exchange rate regime. In rates and the exchange rate (p.120). will support industrial development. [Growth Path, p.79]
considering the official task of the Reserve Bank, we believe that
it should be responsible for maintaining macroeconomic stability,
with the primary objective being price stability.[Working for
Growth, p.37].
2.The Reserve Bank must resist pressures on the real
2. On Exchange Rate Management: The bank should 2. On Exchange Rate Management: A stable and exchange rate to appreciate. It must follow a strategy that
act in a flexible exchange rate regime, with active participation enabling macroeconomic will underpin sustainable growth and imposes capital controls to manage sharp depreciations,
in currency markets only to build the country’s foreign exchange employment creation. Within a framework of a floating exchange accumulate foreign exchange reserves more aggressively,
reserves, with no objective of influencing exchange rates (p.37). rate, approaches to protecting firms from Rand volatility will be administer a tax on capital flows and impose frictions on
explored (p.120). The present approach of a floating exchange rate foreign exchange transactions. [Growth Path, 80]
is the most sensible instrument to protect the economy from external
shocks (p.121).
3. On Capital Controls: A DA government would fully 3. On Capital Controls: No proposals, current trajectory 3. A critical element of the financial policies in this growth path is
dismantle South Africa’s out-dated exchange control regime in of gradual dismantling of capital controls remains. to reverse the relaxation of capital controls...Foreign exchange
order to eliminate the many restrictions and administrative control measures will be an essential part of monetary policy.
burdens it imposes. [Growth path, p.67, p.79]
4. Fiscal Policy Stance: A DA government would hold 4. Countercyclical Fiscal Policy Stance: Government 4.Stabilize employment over the business cycle, and increase
the fiscal line in the face of populist pressure and run a counter- needs to build in macro-policy cushions to enable South Africa to employment over the long term, influence changes in income
cyclical fiscal policy to lessen the impact of downturns. The counteract the effect of the global crisis. Continued fiscal discipline distribution over the business cycle, and set target share of
long term objective will be two-fold: First, to reduce the is important, though a more expansionary stance might be workers in national income over the long term, influence the
participation of the state in the economy and to ensure that necessary if the EU contracts (p.101). structure of the economy through activist tax and expenditure
fiscal spending does not affect price levels, or crowd-out policies, in line with the requirements of the new growth path... In
household and corporate expenditure....Second...we would an employment-based fiscal policy framework, it is the cycle in
entrench limits on fiscal expansion, using mechanisms such employment that takes precedence. Fiscal policy is directed
as the Swiss and German constitutional limitations on towards stabilizing the employment cycle. This means that,
structural deficits, which link the government’s ability to expand even if the goods market may rapidly recover, it is the
/expenditure with key debt-to-output measures [Working for recovery in the labour market that should inform the fiscal
Growth, p.36]. policy stance. [Growth path, p.71, 73—74]
5. On Tax Policy: No proposals on tax policy, status quo 5.Redistributive tax interventions can be implemented through
5. Reduce corporate tax rate: Reduce the corporate remains. A number of tax incentives are mentioned: skills a progressive tax system, with an introduction of a tax category
tax rate to 27% with a view to reducing it to 25% in the medium development tax incentive, youth wage tax incentive, export tax on of the “super-rich”, solidarity tax, whose aim is to cap the
term. By making South Africa a more attractive place for both minerals could be considered, carbon taxes. growth of earnings of the top 10% and to accelerate the earnings
local and international businesses, this proposal aims to make is of the bottom 10%, tax on both domestically produced and
cheaper and easier for people to start run successful enterprises, imported luxury items...Transformative taxes must be used to
and ultimately stimulate private sector growth, both of which are support industrial development...closing the apartheid wage
central to job creation [Working for Growth, p.62]. gap...[Growth Path, 72—73].
6. On financing infrastructure: Public infrastructure 6. Reverse relaxation of capital controls, prescribed assets,
6. On financing infrastructure: Increase infrastructure investment at 10 percent of gross domestic product (GDP), redistributive and transformative taxes, asset-based
investment to 10% of GDP... Financing the infrastructure financed through tariffs, public-private partnerships, taxes and requirements on commercial banks, etc...[Growth Path p.67—
development programme will require a mix of (i) direct state loans and focused on transport, energy and water [Electronic 74]
expenditure; (ii) listing SOEs themselves and/ or selling existing version, p.34].
SOE assets; and (iii) private investment.
What Conclusions Can Be Drawn on Macroeconomic Policy of the NDP?
1. Inflation-targeting remains the macroeconomic policy framework.
2. Exchange controls will continue to be gradually dismantled.
3. Existing tax policy framework will largely remain in place, no progressive taxation, tax on financial transactions, speculative capital inflows, etc.
4. Financing of infrastructure development will be through tariffs and mainly through PPPs (or partial privatisation)
5. Fiscal framework remains constrained by the inflation target
6. Employment is not the direct primary focus of macroeconomic policy
In the main, the macroeconomic framework of the NDP remains identical as that of GEAR and the DA.
AOn Industrial, Trade and Economic Infrastructure Policies
All other industry and trade shall be controlled to assist the wellbeing of the people—Freedom Charter.
Democratic Alliance—GEAR National Development Plan Proposals COSATU Proposals
1. Replace the current Industrial Policy Action Plan 1. Public and private procurement will be leveraged to promote 1. Industrial policy interventions must necessarily
(IPAP2) with a simpler, streamlined Industrial Development and localisation and industrial diversification, R&D support for product include:
Growth Strategy (IDGS), the twin aims of which will be to correct development, innovation and commercialisation will be intensified, • Regulation of exports of:
market failures resulting from information constraints and coordination approaches to buffering manufacturers from the effects of currency o raw mineral, including agricultural raw produce
constraints. volatility will be explored, strengthening network infrastructure skills and unprocessed wood
supply and bringing administered prices under control; o metals
o petro-chemicals
2. Special intervention areas. These areas require particular forms of • Ban the export of scrap metal, and encourage local
2. Establish Jobs Zones: Establish Jobs Zones in close state support for specified periods. They include Job Intervention recycling
proximity to each of South Africa’s ports and airports to attract and Zones, Growth Management Zones, and Green Economy Zones • Promote targeted industrial financing at generous
retain investment in key labour-absorbing industries in order to [NDP-Vision 2030, p.250]. terms
stimulate employment creation in these job-rich sectors [Working for • Promote state investment in the capacity of the
Growth, p.41]. targeted sectors
a) Generous exemptions from labour legislation. • Link state support with local procurement and job
b) All investors operating in Jobs Zones will be exempt from restrictive The institutional arrangements for supporting these zones need further creation
aspects of South African labour legislation in order to enhance consideration, and may involve public-private partnerships and support • The wholesale and retail sector must carry at least
flexibility, productivity and competitiveness with regard to labour input from national government.... 75% local content
costs. • Develop codes and targets for SMME and co-
c) Amendments to the Basic Conditions of Employment Act and the operative support and procurement that apply
Labour Relations Act will be made accordingly; throughout the economy, not just the public sector
d) Strong tax and trade incentives for investors operating in Jobs Zones.
•
e) Prioritise Jobs Zone investors for preferential loans through the
2. The Competition Commission will be focusing
Industrial Development Corporation (IDC) to fund and support
on:
industrial development projects.
3. Institute far-reaching review of current infrastructure
• Pricing of certain strategic inputs in manufacturing
3. Conduct a comprehensive analytical review of the regulators to clarify roles, strengthen accountability, update
and other productive processes, making these inputs
current state of South Africa’s independent infrastructure regulators. legislation and regulations, and reform institutional design,
affordable to downstream industries. This will include
The review process will (i) clarify their respective roles; (ii) strengthen establish a unit in the Presidency (Monitoring and Evaluation) to
combating import-parity pricing in the economy as
accountability; (iii) update relevant legislation and regulations; and (iv) undertake periodic regulatory impact reviews, and to provide
a whole
make recommendations regarding institutional design reform. The advice and support to regulatory authorities [NDP-Vision 2030,Regulatory Impact Assessment Unit, located in the Presidency (see p.139]. • Pricing of wage goods and other products
previous chapter) will conduct regular reviews of the impact of the purchased largely by poor and working class
independent regulators on economic growth, while also providing households
advice and support to these bodies [Working for Change, p.74].
• Cost-effectiveness of the public infrastructure
4. Renew Freight Rail Fleet: Initiate a process of renewing 4. Renew the commuter rail fleet, with a region-by-region shift to programme
the country’s entire freight rail fleet to expand capacity and enhance current generation high-capacity rolling stock, supported by
the efficiency, reliability and competitiveness of transporting goods station upgrades and improved facilities to enhance links with • Furthermore, we propose that the Commission must
around the country and to our trading partners abroad. This will take road-based services [NDP-Vision 2030, p.169]. balance the need for competition with the need
the form of a region-by-region shift (beginning in areas facing for decent work and employment protection.
immediate capacity constraints) to new generation high-capacity
rolling stock, and will be augmented by station upgrades and We further propose criminalization, beyond fines,
improved facilities to enhance the interface between rail and road- should be taken against CEO’s whose companies are
based services [Working for Change, p.75]. found to be guilty of anti-competitive behaviour.
[See Growth Path for more details, p.37—57]
5. Decentralise power production: Move Eskom’s current 5. The Independent System and Market Operator Act
system operator, planning, power procurement, power will be passed, following which, Eskom’s system operator,
purchasing and power contracting functions to an independent planning, power procurement, purchasing and contracting
system and market operator. Eskom’s transmission assets may, functions will be transferred to an independent SOE. Plans will
over time, also be transferred to this separate entity, while capacity be established to transfer Eskom’s transmission assets into this
will be enhanced through the development of dynamic, frequently entity. Capacity will be built to support the development of
updated indicative power and transmission plans and the expedited dynamic, frequently updated, indicative power and transmission
procurement from and contracting of independent power producers expansion plans and the effective procurement and contracting of
(IPPs) [Working for Change, p.82]. independent power producers (including those able to provide
renewable energy technologies) [NDP-Vision 2030, p.152].
6. Develop a National Coal Strategy: Develop a long-term 6. Develop a national coal policy and investment
coal policy and country investment strategy based on a thorough strategy based on a thorough scientific assessment of South
scientific assessment of South Africa’s coal reserves, the sustainable Africa’s coal reserves, the sustainable supply of domestic coal
supply of domestic coal needs to power high rates of economic growth needs to power high rates of economic growth and rapid industrial
and rapid industrial development, and the sustainable expansion of development, and the sustainable expansion of coal export
coal export markets with the intention of gradually reducing carbon markets within the context of diminishing carbon intensity [NDP-
intensity in the long-term [Working for Change, p.82]. Vision 2030, p.151].
7. Revise National Electrification Plan: Revise the national
electrification plan to ensure 95% coverage by 2020 and 100% 7. Develop a new and sustainable national
coverage by 2030 through an appropriate combination of on-grid and electrification plan (NDP-Vision 2030, p.152]...Revise national
off-grid technologies.[Working for Change, p.82]. electrification plan and ensure 90 percent grid access by 2030
(with balance met through off-grid technologies). [NDP-Our
.8. Ring-fence the electricity distribution businesses of the Future, p.66].
12 largest municipalities, resolve maintenance and refurbishment
backlogs and develop a financing plan, with a complimentary 8. Ring-fence the electricity distribution
programme investing in human capital in the energy sector. [Working businesses of the 12 largest municipalities (which account for
for Change, p.82]. 80 percent of supply), resolve maintenance and refurbishment
9. Conduct a feasibility study for a large-scale backlogs and develop a financing plan, alongside investment in
desalination plant to augment the water needs of the City of Cape human capital. [NDP-Our Future, p.66].
Town, which currently stands at 511 million cubic meters per year. The 9. Investigate water reuse and desalination. There
terms of reference will include all projected costs, the plant’s broader is already extensive indirect reuse of water in inland areas, where
environmental impact, its estimated water supply capability as well its municipal and industrial wastewater is reintroduced into rivers after
energy needs. Wastewater purification alternatives will also be treatment. However, there is considerable scope for further water
considered. reuse. Many municipalities lack the technical capacity to build and
manage their wastewater treatment systems. As a result, a
regional approach to wastewater management may be required in
10. Develop a National Water Resources Management Plan certain areas. [NDP-Our Future, p.180]
(NWRMP) that will identify and guide the implementation of 10. The national water resource strategy should be
interventions to identify and prioritise the reconciliation of water reviewed by mid-2012, and approved as a roadmap to guide the
requirements with available water resources across South Africa. development of the sector. It should then be reviewed, along with
This will include a detailed investment programme for water resource the water resource investment programme...[NDP-Vision 2030,
development (including alternative sources such desalinated p.160]. Future institutional arrangements for water resource
seawater and purified wastewater), bulk water supply, and wastewater management must be defined by the end of 2012, with
management. The plan will, in addition, provide details on: implementation by 2015 at the latest...The institutional
arrangements could include:
(i) A National Water Resource Infrastructure Agency (NWRIA)
[which] will be established to provide assistance to the relevant (i) A national water-resource infrastructure agency that will
authorities by helping to plan, develop and manage large-scale develop and manage large economic infrastructure systems.
water infrastructure systems. Catchment management agencies to undertake resource
management on a decentralised basis, with the involvement of
(ii) A programme to develop water resource management, research local stakeholders.
and technical capacity; and (ii) National capacity to support research, development and
(iii) A dedicated conservation and demand-management operation of water reuse and desalination facilities.
programme, with sub-programmes focussed on (iii) A dedicated national water-conservation and demand-
municipalities, industry and agriculture. [Working for Change, management programme, with clear national and local
p.81]. targets for 2017 and 2022, and sub-programmes focused on
municipalities, industry and agriculture. [NDP-Our Future,
11. p.183, NDP-Vision 2030, p.160].
11. Expanding capacity of the coal, iron-ore and Manganese lines,
with considerations given to concessioning parts of this network[NDP-Vision 2030, p.32].
12. Expand capacity for mineral exports through targeted focus on
metal ores and coal, and strategic freight corridors for Southern
African and international trade. Strengthen rail infrastructure for the
central coal basin and the coal line to Richards Bay. Government
will broker a partnership between Transnet and the private
sector for these projects (NDP-Our Future, p.175]
13. Policy and planning priorities need to be informed by actual
experience and the performance of Transnet’s capacity expansion
programmes, which have failed to deliver capacity...a new
approach is required to co-ordinate the efforts and interests of
multiple role-players. Essentially, this means building
partnerships between the public and private sector [NDP-
Vision 2030, p.166].
14. Develop, deepen and enhance linkages with other sections of
the economy. This includes; linkages with both manufacturers of
inputs (capital goods and consumables) and suppliers of mining
related services; downstream producers, especially for Platinum
Group Metals and Chrome Ore. In this regard, an export tax
could be considered. [NDP-Vision 2030, p.126].
What Conclusion Can Be Drawn on Industrial, Trade and Infrastructure Policy?
The Sectors and Clusters of the NDP: A case of National Development Planning Without an Industrial Plan, a Wish-List!
1. No Plan for Manufacturing!
The NDP proposes to stimulate manufacturing through, amongst others [NDP-2030 Vision, p.127]:
1.1 Ensuring a growing share of products that are dynamic, and have potential for domestic linkages. [How?]
1.2 Leveraging public and private procurement to promote localisation and industrial diversification.
1.3 Intensifying research and development support for product development, innovation and commercialisation. [How?]1.4 Exploring approaches to buffering manufacturers from the effects of currency volatility. [How?]
1.5 Strengthening network infrastructure and skills supply, and bringing administered prices under control. [How?]
[The NDP makes a passing reference to beneficiation, but no set of minerals is identified as strategic for local beneficiation].
[Domestic industries that will create jobs are housing construction, retail, personal services such as hairdressing or cleaning, business services such as office cleaning or repair]. Not serious
commitment to broad-based industrial development and manufacturing].
2. No Plan for Construction/Infrastructure Sector! [NDP-Vision 2030, p.128]
2.1 Address government's ability to spend its infrastructure budget, particularly with regard to project-management capacity, long-term planning, and monitoring and evaluation of both expenditure
patterns and construction work.[How?]
2.2 Support the civil construction and the supplier industries in their export efforts – with the establishment of a Financial Centre for Africa, and more support in commercial diplomatic
relations.[How?]
2.3 Intensify support to supplier industries such as building supplies, steel, glass and cement.[How?]
2.4 Create conditions for a less cyclically volatile industry by emphasising numerous, smaller scale, regionally dispersed projects to address backlogs, which are more accessible to smaller firms
and new entrants.[How?]
2.5 Expand public funding for alternative types of low-income housing that would generate more demand directly and in supplier industries.[How?]
2.6 Promote a simultaneous focus on more energy-efficient buildings and building techniques to reduce demands on electricity supply in the longer term. Home insulation and the installation of solar
water heaters are labour-intensive activities that have strong backward linkages to supplier industries.
3. No Plan to Transform the Financial Sector! [NDP-Vision 2030, p.130]
3.1 Continuously broaden access to banking services to poorer people and lowering costs through a combination of competitive pressures and reducing other infrastructure costs. [What are these
competitive pressures?]
3.2 Strengthen credit extension to productive investments, especially small and expanding firms, and for working capital. Government and the private sector have to work together to find ways of
increasing business lending. [Ways such as what?]
3.3 Provide small-business advisory and support services, financed partly by the state. [How?]
3.4 Conclude discussions to identify and deploy investable capital to increase production in labour-absorbing sectors. [Where are these discussions taking place?]
3.5 Encourage private firms, such as construction firms, to partner with South African banks in providing project finance for contracts on the continent. [Encourage how?]
In the NDP, there is no mention of the ownership of the financial sector, no mention of the State Bank, no mention of how “the banks shall be
transferred to the ownership of the people as a whole"!
4. No Plan to Transform the Retail Sector!
In support of employment and growth, the following will be pursued in the plan [NDP-Vision 2030, p.131]:
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