Issued by African National Congress - Parliament
18 March 2003
The budget debate offers a unique opportunity each year for parties represented in this Parliament to put forward their views on economic policy issues. It is an occasion therefore that allows contending perspectives to be identified, differences to be demarcated and the alternatives being presented to be debated both by us as MPs and by the public at large.
The ANC, as the party of government has put forward its approach in some detail - both in the President's State of the Nation address and in the Budget speech. Our current perspectives were widely canvassed and debated in processes that culminated in the adoption of resolutions at our 51st national Congress held in Stellenbosch in December last year. Our fundamental objective is an unshakeable commitment to roll back the frontiers of poverty and bring a better life to our people.
Our basic approach is to see the challenges of promoting economic growth (an increase in the output of goods and services) and improving human development as inextricably interrelated requiring therefore integrated and multi-faceted strategies. As the Hon. Barbara Hogan has indicated the complex reality created by the appalling legacy of apartheid and the new challenges of globalisation have required different emphases at different phases. Our approach has always been to consolidate on achievements of one phase to bring us ever closer to being able to promote lasting and sustainable solutions to the problems of poverty and underdevelopment confronting our people.
Priorities in the current phase include pushing forward the micro-economic reform strategy as a key component of raising investment and promoting growth. Key initiatives here include infrastructure development, promoting a transition from dialogue to collective action by stakeholders within the framework of the Integrated Manufacturing Strategy and the Growth and Development Summit.
Simultaneously, we have recognised the need for a number of new focussed, integrated initiatives to combat poverty and unemployment. These include expanding public works programmes, accelerating efforts to promote income generating opportunities for people in the so-called informal sector, encouraging the growth of a viable cooperative movement and expanding the social security system. All of this is informed by the target we set ourself in Stellenbosch of halving the number of people who are unemployed by the year 2014.
The Hon. Hogan has already eloquently addressed a number of these points, and other speakers from our side will elaborate on various aspects later. I want to use the time still available to me today to reflect on the alternative offered by the party that is today physically on my left, but which in political and ideological terms is far to the right.
What is the alternative that the official opposition in this Parliament has to offer? We have recently seen a series of populist interventions from the DA on various issues of poverty and social transformation. We are told that the DA will be launching a new economic policy document in a few days. No doubt this document will offer more of the same. Anyone who dropped in from Mars, and had no other idea of what the DA was, could be forgiven for imagining that the DA was a party preoccupied with promoting a Basic Income Grant, with reducing poverty and unemployment and with promoting access to treatment for sufferers from HIV/AIDS. Those of us who don't come from Mars, however, know that behind this new found façade of concern with poverty, promoted with all the sincerity of a used car salesman, lurks another more familiar DA.
This is the DA whose core economic policy perspectives have frequently been presented in the form of a winge about reducing taxes for the benefit of the rich. If you doubt what I am saying I suggest you consult what I presume still to be the DA's current economic policy document - entitled "DA Economic Policy Information". The first substantial chapter of that document is entitled "Fiscal Reform" and it begins with a call for reduction in the tax burden.
This is immediately followed by a more specific call to "reduce the maximum marginal tax rate on individuals". If you want another example consult the speech of the Hon Ken Andrew in the 2001 Budget Vote debate recorded in Hansard of March 15, 2001, columns 1251 - 1257. Most of this speech is a rant about the alleged excessive tax burden on middle and upper income tax payers and the impact this was allegedly having on emigration by what he called "high income and high-wealth individuals" This is the DA we are familiar with.
It is the DA that has consistently opposed capital gains tax again because it would hurt those same "high wealth individuals". This familiar DA, let us remind ourselves, has also consistently championed less progressivity in the tax system by advocating a shift away from income and profit based taxes, in which the rich pay proportionately more, in favour of expenditure taxes like VAT, where the poor pay proportionately more. The DA we all know is a party that has instinctively supported less regulation driven by a naive belief that markets will always deliver, when in fact many government activities arise precisely because markets have failed to deliver. This is the party whose instincts have led it to blindly champion corporate demands on issue after issue resulting in what its leader later acknowledged was a biggest tactical blunder when in 1996 it slavishly responded to lobbying by pharmaceutical companies and opposed the Medicines and Related Substances A/B.
This, too, is a party that has championed and continues to champion a big bang, ideologically driven approach to privatisation. I won't pretend that this has been an easy issue for the ANC or the alliance. But we are agreed on a number of fundamental principles. These include agreement that the fundamental issue with regard to SOE's is one of restructuring, not privatisation and that the main goal of restructuring is to make SOEs operate more effectively as public institutions operating according to a public and developmental mandate. The second principle is that where restructuring involves elements of privatisation or nationalisation the decision will be taken on a case by case basic on the balance of evidence. In other words there is a strategic approach to this issue.
Many of the biggest debates in our ranks are not over these principles but over the details of particular plans or proposals. The DA's view by contrast sees large scale privatisation as a panacea - in which SOEs are mere cash cows to be milked for revenue to avoid having to tax the rich, and in which privatisation is seen as an unmitigated benefit based on naïve belief that the private sector or profit seeking institutions will always deliver services better.
The DA, in other words has come to defend the kind of big bang, ideologically driven approach to privatisation, which Nobel economics laureatte Joseph Stiglitz, speaking note from a perspective of support for privatisation, has severely criticised. In his recent book, Globalisation and its Discontents, Stiglitz argues that while in his view strategic privatisation of certain assets can be beneficial under the right circumstances, proponents of big bang approaches ignore the reality that there are a range of vital services that profit maximising institutions are simply not equipped to deliver. He also criticises the cavalier dismissal of concerns and fears of workers about threatened pay offs arguing "… moving people from low productivity jobs in state enterprises to unemployment does not increase a country's income and it certainly does not increase the welfare of the workers".
Even the DA's new flagship populist gesture - its supposed support for a Basic Income Grant
is fundamentally flawed by its overall ideological perspective. The BIG emanates as a proposal from a Commission appointed by government and ibeing championed by forces within our tripartite alliance. The Deputy President confirmed last week that this remains under consideration as a proposal within a shared perspective that accepts the need for a comprehensive extension of social security.
The DA has opportunistically taken up the call for a grant of R100 per month, but added a proposal that this be financed by an increase in VAT. What the one hand giveth, the other taketh away. When a similar proposal was put by academic economist, not linked to the DA, to the hearings held by the finance committee it was suggested that VAT be raised to 21%. It was further argued in those hearings that this would be of net benefit because families that would be dependent on the grant consume only a few zero-rated commodities.
Perhaps yes for the very poorest of the poor, but for many other poor people and ordinary working people raising VAT to 21% would be a cause of great hardship. What this debate has highlighted is the total unacceptability of proposals that envisage the burden of redistribution measures falling on other strata of the poor rather that the rich. Even the DA's flagship populist gesture is constrained by the need to prioritise the interests of its core constituency - the rich and the privileged.
This then is the DA that we are familiar with. The DA we know is a party that has consistently rooted its core economic policy perspectives in calls for tax relief for the rich, rapid big bang privatisation, weakened labour rights and opposition to affirmative action _ which its current policy document calls "race based quotas". If you doubt that look at the section of their policy document, headed "Priorities". This says and I quote " Many of the impediments to savings, investment and growth will disappear if the DA's macro - economic, privatisation and labour policies are implemented".
This DA that we are all familiar with is, in short, recognisable as the local peddler of an ideology that is well known internationally. It is an ideology described by prominent British commentator, Will Hutton, in his recent book, The World We're In, in the following terms:
"…the rights of the propertied and the freedom of business come before any assertion of the public interest or social concern…taxation is depicted as confiscation…an intolerable burden that should be reduced. The social, the collective and the public realm are portrayed as enemies of prosperity".
Whether they know it or not, the DA are our own local Tories or neo-conservatives - the purveyors of an ideology that continues to enjoy support in powerful circles of the rich across the world, but which is increasingly widely recognised as incapable of producing answers to the central challenge facing peoples across the world of promoting inclusive growth and development, eliminating poverty and reducing inequality within countries and globally. Theirs is an outmoded and passé neo-conservative approach whose claims to offer a way forward - let alone the only way forward - have patently proved to be false. But, this is an ideology that is of critical importance to the DA. The past decade or so, has seen the DA increasingly abandoning the human rights liberalism of its predecessors - under whose banner a small number of individuals campaigned with honour against human rights abuses of apartheid. The contemporary DA has abandoned this approach in favour of an aggressive economic, neo - liberalism which marks it as a conservative force today. It is this ideological shift that underpinned the DA's transition from a fringe group in the previous order to becoming today the authentic representative of a sizeable section of the most backward and reactionary forces in our country - united in their determination to fight back against transformation in our country. For such a group to present itself as a champion of the poor is rather like the Sheriff of Nottingham masquerading as Robin Hood. The DA's campaigns on poverty issues are ill thought through, populist gestures aimed opportunistically at broadening its electoral support.
But I have news for the DA. Neither we, nor the electorate, come from Mars. We know who you are and what you represent. Tony's new façade of concern for the poor, to shift the metaphor, is like the emperors new clothes. It won't take long to recognise that there's nothing there.