Address by Mr Bantu Holomisa, MP in the Parliamentary Debate: Budget Vote 28 on Economic Development (07 May 2013)

Mister Speaker, Ministers and Deputy Ministers and Honourable Members,

The UDM supports Budget Vote 28.

According to Statistics South Africa’s latest Labour Force Survey the rate of unemployment in South Africa has increased to 25.2 percent during the first quarter in 2013 from 24.9 percent in the last quarter in 2012.

This means that more than 100 000 South Africans are without work since the last quarter in 2012. The unemployment rate deteriorates to approximately 36.7 percent when the number of discouraged work seekers is factored in.

This dismal performance regarding employment proves beyond reasonable doubt that government’s economic policies have failed to grow our economy at the levels required to reduce unemployment and eradicate poverty. This occurs against the background of the ever-increasing gap between the haves and haves-not.

In addition, South Africa seems to be on a fiscal slippage. In the year 2007/2008 our budget balance declined from a surplus of 1.7 percent, to a deficit of 5.2 percent in the year 2012/2013.

Our debt-to-GDP ratio has increased from 23 percent in 2008 to approximately 40 percent in 2012/2013. Corruption and wasteful expenditure in government have reached crisis levels.

With the bleak picture I have sketched thus far, it is not difficult to conclude that South Africa is on the slippery slope to become a sub-investment grade country.

We need to take decisive steps to turn the situation around and there are unfortunately no shortcuts to long-term success.

To reduce unemployment, government needs to develop an environment that is conducive for small and large businesses to flourish. Not the current situation where you find companies that employ workers from neighbouring countries. So-called outside investors, that we find in every corner of South Africa, do not give work to South Africans, but exclusively employ their family and friends. We have to consider whether businesses should not be compelled to ensure that 60 to 70 percent of their staff complement is made-up of South Africans.

Government can develop the aforementioned environment by, amongst other things, ensuring that there is the required level of labour flexibility in the economy. This means that the labour market framework should enable businesses to frame appropriate responses to changes in market conditions. For this to succeed, government would need to reign in its alliance partner, the Congress of South African Trade Unions (COSATU), which seems to only be interested in protecting the interests of the employed at the expense of the unemployed.

In the past, many raw materials were processed domestically, but today most of these factories close down in droves. The common denominator is their inability to compete with imports from countries where such products are subsidised by their governments.

Government needs to root out corruption and wasteful expenditure in the system and needs to adopt policies that are aimed at reducing its deficits and debt accumulation.

In conclusion, government’s proposed review of the current tax system should not see the light of day until the aforementioned measures have been taken into account and until such time that taxpayers get value for the money they pump into the fiscus.

I thank you.