South Africa needed to be a more activist development state, Finance Minister Trevor Manuel said on Monday evening.
Manuel was giving the pre-dinner speech at the Trade & Industrial Policy Strategies conference on “The challenge of growth and poverty: The South African Economy since democracy”.
“In terms of fiscal policy, we have not gone far enough down the road of creating an activist developmental state, equipped with the newer tools of market intervention to minimise negative externalities, maximise the positive externalities, and ease the adjustment burden of labour and capital,” Manuel said.
Among the activist developmental actions/policies already announced by Manuel have been the Growth, Employment and Redistribution (Gear) policy of 1996, followed by the Youth Unemployment Fund, the Capital Gains Tax, and a Skills Development Levy.
The latest policy initiative is a royalty on mineral sales, which in part will be used to fund Black Economic Empowerment. The final details of the various rates of royalties are expected soon.
“Our understanding of a developmental state is one where poverty is reduced in the long term through providing people with the capabilities to engage in productive employment in an economy that is expanding with opportunities. At the same time, our social safety net plays a crucial role in preventing the worst effects of poverty and malnutrition,” Manuel said.
Manuel pointed out that healthy fiscal balances in the past few years have enabled the South African government to expand infrastructure, improve the capacity of health services to deal with HIV/AIDS, invest in quality enhancement in education, widen and deepen the social safety net and enhance capacity to protect the most vulnerable, especially women and children.
“In closing, in the course of your deliberations I challenge that the discourse must be fresh, it must probe, it must provoke. It must drive us from our place of comfort, because the poor know no comfort,” Manuel concluded. ‒ I-Net Bridge