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Introduction

Speaker, colleagues and comrades in the House, it is once again my honour to be able to address you on the occasion of our budget vote for the financial year 1999/2000.

This is the last budget that will be tabled before this Parliament and accordingly I would like to express my thanks to a number of people that have worked together to make the DTI a Department that I feel we can be proud to be associated with.

Firstly, to my comrade Deputy Minister Phumzile Mlambo-Ngcuka. Our working relationship has been that of equals and Comrade Phumzile has shouldered a tremendous burden. What I have particularly appreciated is that Phumzile was always there no matter if the problem was in her area of work or not. Thanks for being a great partner - I have no doubt that you will make a great Minister.

The Department has performed exceptionally under the leadership of the DG, Dr. Zavereh Rustomjee. We have developed a management team that can be confident of its professionalism, vision, capacity for very hard work and above all it has shown a passionate commitment to building a new South Africa. It is a measure of the calibre of the Department that they are not satisfied with their performance and strive endlessly for even better. I am confident that the DTI will be a benchmark in the world in a few short years from now.

Within the Department I need to say a special word about the Ministerial staff. They are given a tough time by all, but at the end of the day they handle immense pressure with good grace and dedication. Let me particularly mention those who have acted as a team of personal assistants - Cobs Pillay, Rhorho Cloete, Inze Fick, Judy Abrahams, Ayanda Nkhulu. They bear the full brunt of Ministerial demands and those of everyone else as well.

Then let me thank a group that is seldom, if ever, thanked in this House. These are the chairpersons of the very important family of DTI institutions and regulatory structures and the Chief Executive Officers that run organisations in the broad DTI family. These institutions play a fundamental role in the effort of the government and DTI to develop the economy.

Finally I must thank the elected representatives of our people that have been charged with oversight and Parliamentary leadership of this portfolio. To Dr Rob Davies and the Portfolio Committee I can only express my admiration for the amount of work that you have put into this task and in particular the crucial role you have played in the well chosen and well managed public hearings that you have held in addition to those that arose in the legislative process. I believe that you have changed the process of governance for the better by your actions. I will repeat these sentiments even if you decide at this final hour to not pass this excellent budget.

The Budget for 1999/2000.

The range of activities covered by the DTI is very considerable indeed. I will not try and deal with all these areas in this address. The presentation of the DTI budget has been considerably improved for the better. The ten programmes of expenditure that are now set out are a more accurate indication of our restructured activities and allow for a more transparent evaluation of the work and performance of the Department.

The total budget is R2,060,954 spread over the ten programmes. The Portfolio Committee have had a comprehensive discussion and presentation on the budget and they will report on their views. For those seeking more information than I will provide today I would urge them to obtain the presentation made by the DG. This is available from our DTI Parliamentary Office.

The key features of this budget are the following:

The budget remains constant in nominal terms. There can be little question that the DTI has made its contribution to more efficient government expenditure. This will not impact on the efficacy of the DTI since we have made very substantial efficiency gains by phasing out the ineffective and expensive GEIS programme and we are improving the co-ordination of the industrial strategy sectoral policies and investment promotion and support programmes (progs. 2 and 3).

We are better able to track the projects of the Manufacturing Development Programme (MDP) into the Spatial Development Initiatives (SDIs). In the SDIs we are facilitating and tracking 673 projects at present. Of these 83 are under construction or operating involving R4, 1 billion in investment and about 8500 jobs.

We are increasing our IT expenditure ( prog. 1) to provide a better service to our client base and we have continued to increase the indirect and direct resource allocation to SMME's (prog. 4). I attach a more detailed breakdown of the various expenditure lines that will benefit the SMME sector. This remains therefore one of the stop priorities for the DTI. Our focus now will be on afford ability of finance and reaching our targeted group more effectively.

The budget programming reflects the very considerable improvement in the co-ordination between trade policy ( prog. 6) and trade facilitation (prog. 5). A real achievement is the extent to which the EMIA programme is being used. Since its introduction 1277 SMMEs have used the scheme. Another crucial institutional capacity that has been developed is our anti-dumping unit. It dealt with 19 investigations that involved 13400 jobs in the course of last year.

Improvements are also occurring in the service capacity of the Companies, Consumer and Patents offices (prog. 7). Our objective is to be a more customer orientated institution with a one stop help line.

We are also now giving more attention to the crucial question of technology enhancement. There has been a real increase in the Technology Enhancement programme (prog. 9). For me a particularly important programme is the Technology and Human Resources for Industry programme (THRIP) where we plan to involve 2000 students in some 500 projects in universities and technikons.

The general financial management of the Department has been tightened and more important the budgets and operational programmes are being more effectively integrated. There is always room for improvement but the extent of the institutional transformation has been considerable.

This transformation has also occurred in the composition of the personnel and their skill base. At a management level we have both changed the representivity of that cadre but also considerably raised its skill and qualification profile. If we have a weakness in this area it is in its gender composition. However, I believe that it is an achievement to have given 79 people access to PHD of Masters study since 1994. In all some 375 staff members have been given to one or other form of postgraduate study.

By my count there have been 34 pieces of legislation passed, with I hope another 3 or 4 in 1999. Of these, at least 6 have been major new legislative measures. This is a reasonable record in regard to legislation.

This budget will be implemented in large measure by a new administration after the elections on 2 June 1999. I therefore, feel that it would be appropriate to look back over the last five years and see what has been achieved and what challenges remain. In doing this I will focus on the key area of job creation.

Assessment.

For me the real achievement over the last five years has been the complete institutional and policy overhaul of the Department. I can now say that the DTI is equipped to handle the real challenges that face this economy. There are a few important areas to be dealt with in the area of commercial and micro-financing regulation, but in general the task now will be to intensify the delivery process and consolidate the various initiatives taken over the last few years.

We have fundamentally changed the policy environment for industrial sectors and made certain changes in the service sector. Five years ago it was an open question as to whether the South African economy could become internationally competitive. Now we know it can and it is a question of the pace that this happens in different sectors. In fact in many sectors our target has changed from being internationally competitive to being world leaders in cost and quality. This has not been an easy process but we have decisively turned the corner.

Just prior to the election in 1994 the ANC's Department of Economic Policy, working with teams that helped draw up the RDP, prepared a document called the ANC Trade and Industry Policy Guidelines. This was one of a number of similar documents that were provided to the new Ministers as a work program. To the credit of the DTI and its then Minister, Derek Keys, the DG, Steff Naude and Deputy DG, Gerrie Breyl, we were given access to the Department and its workings. Our assessment of the DTI did not make good reading. Its one strength was the number of very experienced and capable people we found there. Most of these have remained to this day and continue to play a crucial role because they were open to change a new blood. But no matter how good the people are, decades of bad or non existent policy, had an adverse effect on the Department.

No major programme envisaged in that document remains unimplemented. We have modified and added. However, we have also learnt that to actually bring about structural change takes time and needs very intense implementation and outreach to the intended target groups. It is in these areas that more work will now have to be done.

Job Creation.

The challenge of job creation is the central objective of the work of the Department. It is therefore crucial to understand how this can be achieved and what the problems are. There is now much talk from the opposition parties about job creation, yet it is them who were responsible for the running of the economy for decades. In those decades the employment creating capacity of the economy steadily deteriorated.

We have had to halt that trend and then reverse it. In doing this we have had the courage and the wisdom not to take short cuts.

In an advanced industrial economy the vast majority of people earn an income from employment rather than owning their own business. Accordingly if that employment is to be both meaningful and sustainable it must provide a reasonable income and the product produced must have a stable market.

The ILO study of the South African labour market pointed out that the areas of greatest poverty were found in areas of wage employment. What this meant is that people had so few resources that they were prepared to accept any payment for work despite the fact that this only served to impoverish them. A policy that says that even such jobs are justified is tantamount to feeding someone poison and then giving them pain killers.

This government does not have such a policy. Out policy is to generate the conditions wherein real and sustainable economic activity takes place throughout the economy and to create employment and business opportunities that provide a reasonable income that can continue over time. In short this is the approach of Reconstruction and Development.

Contrast this with the expedient approach of the previous government. They did not spend on social infrastructure and then used the money saved to provide massive subsidies to business and farmers. There is documented evidence that in many border areas the subsidy received was larger than the wages paid. The wages paid were merely painkillers because the level of poverty and the social infrastructure got steadily worse. Some business people got very rich and that may have been the intention anyway. Such a policy was not sustainable.

What I have just described was the economic effect of apartheid. At every turn they took economic shortcuts and were just expedient. The result was poverty, inequality, protected and inefficient economic activity and high costs and prices. The economy was destroying itself as it could not develop its market not could it export. With no markets there was no investment and with no investment there was no jobs. There was also no development because in a desperate attempt to keep power the regime borrowed recklessly to initiate ill-conceived and badly planned social expenditure on a racial basis. The deficit before borrowing rose to about 10%.

When you repossess your house from a terrible tenant in the state of repair that I have just described [ no one in their right mind would have bought such a house] then it is not wise to cover the problem with a coat of paint. You have to strip down everything find all the structural weaknesses and then repair, rebuild and reconstruct. That is what we have being doing over the last five year. This is the reconstruction part of the RDP and the financial discipline of GEAR is to ensure that we don't spend money on a collapsing house.

We knew that it would not be possible to rapidly increase the absolute level of employment in this process of reconstruction. We could and we have created new jobs. From the beginning of 1994 to the end of 1998 the DTI managed programmes (excluding therefore the large IDC programmes) facilitated some 260 000 new jobs. All new jobs created and facilitated by government are considerably greater than this. It has been a process of clearing away dead wood to allow the new to grow.

This was a tough choice that none of the opposite parties would have been prepared to take because they are merely political parties and they do nothing that might lose them votes. Equally they will say anything that they think might win them votes because they know that they will not have the responsibility for actually implementing them. It is only the ANC that could lead such changes because we are more than a political party - we are a liberation movement that mixes with our people and explains the reality of our situation. Being in government is a means to liberate our people from poverty and racial oppression - it is not an end in itself.

I make these political points because they need to be made as we hear the banal advice given by some in this house. However, I make it for a much more fundamental reason. The reconstruction of the south African economy is a task that can only be achieved by a massive combined effort. There is no guarantee that we will succeed unless we continually work at it. Students of history will know that economic transformations such as the one we are attempting are only achieved rarely and in specific positional circumstances.

The existence and the strength of the Alliance are such political circumstances. They must be used to lead this transformation which benefit all of South Africa's people irrespective of their political affiliation or race. This also places obligations on the leadership of the Alliance to take responsibility for all the policies - the tough and the pleasant.

The tough part of our policy is that we have lost hundreds of thousands of jobs over the last ten to fifteen years. Up to about 1992 this was because the apartheid economy could not provide enough jobs and the unemployed were conveniently lost in the chaotic statistical system of the apartheid regime. From 1992 on a new process started as the National Economic Forum realised that the economy would have to become competitive and when it was clear that apartheid was on its death bed. This was a process of massive restructuring for greater efficiency.

This new process is complex and there are aspects that we need to be more in control of such as the casualisation of workers and the unmonitored use of subcontracting. Both of these tendencies are probably being recorded as job losses in the formal sector. This is a problem but not as serious as the danger of creating further divisions of rights and income inequality in the labour market. This is not to say that subcontracting is always bad but it depends if it is adding to efficiency in a manner that is sustainable at a reasonable income for the subcontractor. If it is not then all that is happening is that certain areas of efficiency are being achieved on the backs of poverty elsewhere.

There is no doubt in my mind that the Democratic Party's baying for flexible labour markets is really out of ignorance about the labour market. However, the effect of their simplistic chirping will be what I have just described.

It is essential that as we make these massive structural changes that we monitor what is happening across a wide front. It is also essential that we ensure that organised workers have the rights and powers to protect their members. Social plan measures are essential and the proposed Sectoral Summits must be used to good effect.

But our courage will pay off. We can say with confidence that we are close to completing the reconstruction of our economy and we can now address the drive for an absolute increase in employment.

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