BRIEFING
The briefing by the Minister of Trade and Industry, Mr M Mpahlwa, focused on the creation of a stable macroeconomic environment and increasing the level of investment, accelerating the implementation of the microeconomic reform strategy, targeted interventions at the second economy and the creation of a governance strategy to build capacity.
The briefing by the Minister of Transport, Mr J Radebe, outlined the review of public transport, the proposed comprehensive logistics strategy and the institutional changes to effect the Department of Transport’s programmes.
Question and Answer
Q: Minister Mpahlwa was asked to explain whether there was any update on Cabinet or government cluster’s decision to privatise state assets.
A: Minister Mpahlwa replied that government continued to deal with this matter in terms of the broad framework on the restructuring of state assets that it had devised. That strategy had already resulted in quite substantial restructuring, as well as much privatisation which enabled government to realise quite significant resources both into the state coffers as well as towards recpitalising some of those entities that have been restructured. There were some major entities around which a restructuring process was taking place that needed much more work to be done before government could be in a position to determine the nature and form of privatisation that would take place around a specific public entity. With regard to the large entities such as Eskom and Transnet, there was no indication by government that it intended to abandon the programme on the restructuring of state owned assets, but government was instead in a position which required much more work to be conducted in those areas.
Q: It has been reported that economists have estimated the costs of government’s Black Empowerment (BEE) Programme at R700bn. Has government conducted its own costing exercise and, if not, could the Minister please comment on the figure estimated.
A: Minister Mpahlwa responded that the first issue that would have to be addressed was that government did not favour an approach which viewed BEE as burdensome or merely as a cost. Instead government believed that the failure to achieve BEE would actually a greater cost to the South African economy and society. Government’s objectives in pursuing the BEE programme was to ensure that it unleashed the potential as well as the opportunities that were present, to ensure that it continuously increased the participation of communities. Government believed that this would allow it to unlock much potential. Thus whether it would cost R700bn, which was usually based on he contents of the Charters that emerged from the different sectors.
This was a matter that society as a whole should tackle, both as the private and public sectors, and all involved should focus on expanding the economy, opportunities and providing skills to people to enable them to participate in the economy either as employees or as those who create jobs for themselves and for others. This was thus a much more broadly-based approach which focused on the growing of the economy, expanding of opportunities as well as the possibility for people to participate in economic activities.
Q: Have some of the state assets sales deals that were already on the cards, such as the concessioning for the Durban container terminal, were still going ahead in the light of the announcement that the asset sales of big core enterprises such as Eskom, Denel and Transnet were no longer on the cards.
A: Minister Radebe responded that there was no Cabinet decision to deviate from the programme devised by government. He stated that he had met with the Minister of Public Enterprises during last week to deal with this issue, amongst others, because there was much complementarity between the Department of Public Enterprises and the Department of Transport. A good example was the issue with the National Ports Authority Bill and a programme was setup with the Directors-General of the two government departments who would then devise a programme of action on what needs to be done to expedite the passage of the Bill. This should be available in the next three weeks. This was a very important Bill because it enabled the expansion of the ports infrastructure in South Africa. As mentioned by the President, government alone would not be able to cover the investments needed as far as the national ports infrastructure was concerned, and it thus required partnerships with the private sector. Thus the regulatory policy framework contained in the Bill was very important.
Q: What was the rationale for placing parastatals at the heart of government’s job creation drive?
A: Minister Mpahlwa responded that parastatals would naturally have to be at the centre of the programme, because there were a number of objectives that paratstatals would assist government to achieve. One of the issues referred to in the briefing was that of input costs and this was important because, as a number of the parastatals were involved in a number of the sectors, it was important that they assisted government in achieving lower cost structures across the economy. Parastatals must also assist government to intensify public infrastructure investment and it was through this that government hoped parastatals would assist it in achieving its objectives.
Q: What role would the private sector play in the Expanded Public Works Programme (EPWP).
A: Minister Mpahlwa replied that in the last few years government has development a framework that enabled it to enter into meaningful and mutually-beneficial public private partnership, and it believed that the EPWP did provide scope for such partnerships to be entered into in order to advance the objectives of the EPWP.
A: Minister Van Schalkwyk responded that the Department of Environmental Affairs and Tourism has set aside a total of R1bn over the Medium Term Expenditure Framework (MTEF) period for the EPWP. By way of special interventions taken to date 34 000 jobs have been created, and the aim is for the additional R1bn to create 67 000 temporary jobs via the EPWP over the MTEF period. The Department has done an excellent job in addressing the so called fishing quotas in the coastal towns, as in 1994 a total of 350 rights that were basically white-owned and at present there were 5 800 rights of which 60% are owned and managed by persons from previously disadvantaged communities. A total of 70% of those were Small Medium and Micro Enterprises (SMME’s).
Over the next two years, especially in 2005, the Department would have to award the long-term rights and quotas. He stated that he had met with the Marine and Coastal Management to identify a plan of action to identify systems that would ensure the credibility and integrity of this process, because billions of Rands would be involved in the new long-term rights.
A: Minister Radebe replied that there was a very large role to be played by the private sector. The Minister of Public Works stated that government would be spending a total of R15bn over the next five years on the EPWP, but there was also significant amounts of money in the hands of the private sector for private infrastructure programmes. Government thus believed that if labour-intensive technologies that were being promoted by the Department of Public Works could be assimilated by the private sector, it could also play a very critical role in enhancing labour intensity in the construction of projects. A construction development board resided with the Department of Public Works which was chaired by the private sector, and it was one of the critical elements in ensuring that where it was technically feasible labour intensive construction methods would be used.
Studies have shown that an increase in labour intensity would increase the rate of labour absorption three-fold. This meant that if the San construction industry could move towards more labour intensive technology, it could absorb many more people to establish infrastructure.
Q: Could Minister Mpahlwa provide a definition of the developmental state, as mentioned in the President’s State of the Nation Address on Friday. What role should the state play in the economy?
A: Minister Mpahlwa responded that he could not provide a concise definition of a "developmental state". He stated that in a country such as South Africa that faced the kinds of restraints and distortions, which were really legacies of its past, it could not afford to have a state that took up a position of neutrality in relation to issues of economic development and development generally. Thus with all the constraints and difficulties the government has tried not to adopt that position of neutrality around such issues because government recognised that, as a state, it must engage in active measures to both encourage the growth and development of the economy as well as making those interventions that help to address some of the distortions and also help to uplift that section of the society that has been excluded in the past.
Thus issues around the definition of the "developmental state" would probably take many forms, but for government it is essentially that the State cannot simply leave matters to market forces to address the kinds of disparities and distortions that exist in the South African environment. Perhaps a new paradigm needs to be adopted towards the issue of the developmental state because, generally, the issue of a developmental state has been looked at in terms of government activities. Issues such as the better leveraging of resources should also be incorporated into the notion of the developmental state, even from the private sector. This would enable the private sector to perform certain functions and deliver things that government itself might not be able to do. This was part of the thinking that was beginning to emerge.
Government must continue to focus on the first economy, because it was the anchor of the South African economy. Government cannot let up in ensuring that the first economy continues to grow and prosper, but intensified interventions were also needed on the second economy. It was within this that government would have to consider the adoption of a new paradigm for the developmental state.
A: Minister Radebe replied that the South African experience with unemployment and poverty cannot simply be left to the markets to resolve. Instead an active state was needed that must create a framework for reconstruction and development in our country which would ensure sustainable growth and development. Secondly the state must also invest in social and economic infrastructure, as indicated by the cluster’s programme, because the State cannot rely solely on the market to respond to all these issues. The state must also redirect resources for the benefit of the people of South Africa so that the historical imbalances inherited from the system of Apartheid can be addressed.
Q: There were two key appeal decisions involving the former Minister of Environmental Affairs and Tourism Pebble Bed Modular Reactor Project (PBMR) at Koeberg, as well as the N2 Pondoland Toll Road. Could Minister Van Schalkwyk provide an update on these decisions.
A: Minister Van Schalkwyk responded that Earthlife Africa approached the courts and this matter was still sub judice. The Department of Environmental Affairs and Tourism was however in the process of finalising a number of appeals that would then be presented to the Minister hopefully within the next few weeks, and that included the appeals against the PBMR, which totalled approximately 90 appeals.
Q: Could the Ministers of Transport and Environmental Affairs and Tourism please indicate whether there was any policy on the introduction of toll roads in urban metropolitan areas especially in Cape Town along the N1 and N2 and R 300 toll roads, as well as the N2 Pondoland toll road which impacts on the Durban metropolitan area..
A: Minister Van Schalkwyk replied that there approximately 200 appeals regarding the N1 and N2 toll roads in the Western Cape, but many of them were not environmental concerns but instead appeals against the principle of tolling. Those kinds of objections would not be dealt with by the Minister because they did not fall within his jurisdiction.
He stated that he would be visiting the N2 Pondoland toll road area over the next two weeks, and would also be meeting with the Eastern Cape Premier and Cabinet before he visited the area. This would enable them to first arrive at a vision for Pondoland before any decisions regarding the toll roads were taken.
Minister Van Schalkwyk stated that because the appeals were not before him yet he would reserve any comment until he has received them.
A: Minister Radebe responded that this issue would be looked at on a continuous basis. As already indicated by Minister Van Schalkwyk, word was awaited from the Department of Environmental Affairs and Tourism on the matter.
Q: Could Minister Radebe explain the reasons for the delays in the processing of the National Ports Authority Bill, as well as an indication of the problems and behind-the-scenes negotiations that went into the Bill.
A: Minister Radebe replied that, as he stated earlier he had met with Minister Erwin to consider these issues, and he would thus be able to indicate what the plan of action would be in about two to three weeks time. The Bill would however be proceeding because it was a very important piece of legislation that would ensure that government deals with the ports issue in South Africa.
Q: Could Minister Radebe provide an update on the taxi recapitalisation process.
A: Minister Radebe responded that the Departments of Trade and Industry and Transport had set up a steering committee which will brief the Minister during the course of the week. He stated that he would then be able to make a sensible statement on the issues involved.
Q: Could Minister Radebe indicate whether any timeframe was proposed for the review of the public transport system, because this matter has been discussed by the Portfolio Committees for the last three years.
A: Minister Radebe replied that the Department aimed to have it all planned before the end of September 2004.
Q: Minister Radebe was asked to explain how exactly Transnet and its funding through the ports would be resolved, was it still a sticky issue and has it held up the processing of the Bill.
A: Minister Radebe responded that part fo the challenge was that the Bill referred to the National Ports Authority residing in Transnet, and that it would then move out at a certain stage because there would be an inherent conflict of interest if the authority then also operated from within the stakeholders. The Department was thus discussing the separation fo the policy, regulatory, landlord and operations functions. Such an institutional change would also then require an agreement of the lenders of Transnet, and this also formed part fo the challenge to the Bill.
Thus when all these issues were resolved, as indicated earlier, the Bill would be able to proceed so that the passing of the Bill would not trigger any issues for Transnet.
Q: Could Minister Mpahlwa please flesh out his statement regarding the co-operation of the Department of Trade and Industry and local government. Would new legislation have to be introduced to give effect to and ensure this kind of co-operation.
A: Minister Mpahlwa responded that one of the weaknesses that the Department has identified during the recent Cabinet Lekgotla was that some of the programmes that government has been implementing over the alst few years, such as the Integrated Rural Develoment Programme (ISRDP) and the Urban Renewal Programme (URP), was that there has actually been weak input by the economic cluster into those programmes. Thus clearly one of the things that government would want to achieve in the medium term would be to ensure that thsuch programmes were not just about basic infrastructure and services, but that part of those programmes would also create opportunities for other economic activities.
Thus the issure regarding greater co-operation and co-ordination with the Department of Provincial and Local Government has much to do with the fact that ultimately if government wanted to create an environment of greater investment and higher levels of investment, as well as the creation of the possibility for enhanced economic opportunities and activities, this must be achieved at a local level. This was important because it was at localities that investments and economic opportunities and activities took place. This was really the issue government was addressing as it was not looking solely at the basic infrastructure, services and facilities
The context surrounding the statement regarding greater co-operation and co-ordination between the Department and the Department of Provincial and Local Government was to ensure greater economic content into those programmes..
Q: The President mentioned a number of free-trade agreements that were negotiated and might be pushed forward, including potential deals with China and India despite concerns by some regarding opening up to countries that are pretty competitive in the manufacturing exports area. Could Minister Mpahlwa comment on the direction of those negotiations as well as indicate the kinds of issues that could be discussed.
A: Minister Mpahlwa replied that he hoped to give a more comprehensive statement at a later stage around these trade negotiations. It is important to recall that the South African government has embarked on a programme of expanding on markets beyond the traditional European and American markets, to the African continent as well as the far East and Asia. China was mentioned as one of the areas and a bit of fear was raised because of the particular advantages that China would have. But rather than adopt an approach that was based on fear of being overwhelmed, government would rather see an equally great number of opportunities for South African exporters, corporates and enterprises.
It must also be borne in mind that there were fears as well at the commencement of the Tariff Liberalisation Programme. Yet the fact that government got rid of the tariff walls that its companies used to hide behind actually did not disadvantage South African companies but actually helped them to become more competitive globally, and this resulted in quite an expansion of South African exports to various parts of the world.
He stated that South Africa has reached agreement with certain developed countries such as India that we ourselves must do more amongst ourselves as developing countries, and not merely rely on assistance from developed countries. Thus efforts are being made to collaborate, invest and trade more with each other as developing countries, and it is believed that this would unleash greater potential via improved co-operation between developing countries. This was the broader approach that needed to be taken.
Q: Could Minister Radebe provide a slightly clearer sense of how the restructuring of Spoornet and tis commuter rail division would be worked out, and the implication for Transnet.
A: Minister radebe responded that government subsidises rail and bus transport in South Africa. As far as rail was concerned, the South African Rail Commuter Service resided in the Department of Transport which in turn, on an agency basis, contracts to Metrorail which ran the operations. Metrorail does not own the assets and whenever the problems are reported in the media "SARC is always in the background and Metrorail always gets the rep". This institutional arrangement must change so that public transport must be separated from the freight logistics, which Transnet ought to be. This was thus the direction followed, so that those funded by the State directly to subsidise commuters.must reside at the source of the subsidy, so that there is a clear demarcation of roles and responsibility between public transport, the transportation of people and the movement of goods via Spoornet, which would be the freight logistics company.
This demarcation would enable the resolution of the issue of public subsidies in South Africa, and transform it further so as to ensure that the cost of public transport in South Africa is affordable, accessibly etc.
Q: The Minister’s were requested to indicate their department’s legislative programme for the rest of the year.
A: Minister Van Schalkwyk replied that the Department would be presenting amendments to the Air Quality Management Bill to the Portfolio Committee within weeks, as well as the Protected Areas Amendment Bill. These two Bills were of the Bills that were revived by Parliament, rather than allowing them to lapse. Later this year the Department planned to bring the Coastal Management Bill to Parliament, and early in 2005 the Waste Management Bill would be introduced to Parliament.
A: Minister Radebe responded that the urgent Bill to be processed by his Department was the National Ports Authority Bill, the other was to effect amendments to the Road Accident Fund to deal with some of the issues that arose from the Judge Satchwell Commission. There were other Bills such as the Air Traffic Navigation System Amendment Bill, the Roads Agency Bill that would also have to be finalised as Bills of a technical nature.
A: Minister Mpahlwa replied that the critical Bills that the Department was looking at placing before Parliament this year and/or early next year was the Enterprise Bill, the Co-Operative Bill as well as the Consumer Credit Bill.
Q: Could Ministers Mpahlwa and Radebe comment on the proposal to bring all the large parastatals under a single Ministry in order to drive the job creation and economic growth contribution of those.
A: Minister Radebe replied that the big issue was that clarity was needed on the policy and regulatory functions as opposed to operational functions, as he stated earlier. The listing of Telkom is a prime example to illustrate the point. The Department of Communications is responsible for policy, legislation and regulation and was also a shareholder in Telkom, and the Department of Public Enterprises was responsible for the listing of Telkom. The debate was thus how to effect institutional arrangements such that many of these practical problems do not materialise.
Q: Could Minister Mpahlwa expand on government’s examination of administered prices especially with regard to the telecommunications and energy industries, both of which were regulated at the moment. What mechanisms could be put in place to reduce administered prices?
A: Minister Mpahlwa responded that patience was needed on this matter because Treasury was doing work on this matter, and was due to produce a comprehensive report on the matter. The report must not be pre-empted.
Q: Could Minister Mpahlwa elaborate on government’s strategy on striking a balance between multi- and bi-lateral negotiations, given the concerns raised that South Africa’s bargaining power with the United States for example was much weaker than it would be with a multi-lateral backing.
A:Minister Mpahlwa replied that government always endevoured to ensure consistency between what was negotiated on a bi-lateral level and the objectives that government was pursuing on a multi-lateral level. At times strict bi-lateral agreements are not always applicable, as a much broader-based approach is needed as with the negotiations with the USA..