DA unveils its single economic plan

Whether you like the ideas in the Democratic ­Alliance's plan for jobs and growth or not, the opposition has an advantage over the ruling party in terms of economic policy: it has one.

I emphasise the word "one". It is a single and unified vision for economic development. It is uncontested within the party and when any one of its cadres talks on the subject, the DA speaks with one voice.

It is an obvious point and one the DA itself makes at the beginning of the document it released on Saturday last week. But, ultimately, it is a very important factor. It makes it easier for the party to sell its ideas politically. And while the ANC exhausts itself going into Mangaung, the DA will be on the streets punting its message.

Unity of economic vision has been what the ANC has lacked for some time. Its absence has also made it difficult for state departments to implement any new policy proposals.

The most obvious of these is the youth wage subsidy, something for which the treasury had already set money aside. The funds have sat idle because the proposal has not been supported by ANC alliance partners, notably trade federation Cosatu.

National development plan
The ANC-led government has come up with both the new growth path under the auspices of Economic Development Minister Ebrahim Patel, as well as the national development plan crafted under the minister in the presidency for national planning, Trevor Manuel.

There are various views on the merits of each plan, but the fact remains that there are two plans.

The state has argued that the new growth path is meant to act as the medium-term framework for the country and the national development plan is meant to act as a longer-term vision. This is an uneasy attempt at unifying the government's policy approach.

There are points of convergence between the new growth path and the national development plan, such as the emphasis on infrastructure investment. But on other matters they differ dramatically. The new growth path, for instance, calls for a more competitive exchange rate; in other words, a lower rand that aids exports. The national development plan argues that the volatility of the rand, not its ultimate value, is the problem. It seeks policies that minimise "the impact of this volatility on the real economy" rather than ones that would have as their target an artificially low currency.

The DA's economic plan contains no such ambiguities. "The DA supports the inflation-targeting framework implemented by a strong, independent Reserve Bank operating a flexible exchange rate regime," it says.

Beyond economic policy
Crucially, the national development plan, which proposes a broad and detailed new vision for the country that stretches beyond economic policy alone, has yet to be adopted by Cabinet. Only once this is done can plans to implement it be set in motion. In some critical areas such as energy this will require an overhaul of government policy.

The DA's proposals, meanwhile, have been criticised for not introducing new ideas into the economic policy landscape.

The document does indeed borrow heavily from those proposed in others such as the national development plan, or embellishes on what is already government policy.

The DA, like the economic development department and the national planning commission, has emphasised the importance of investment in infrastructure, for instance.

But the DA is definitive that the economy must be market orientated and not follow the route of state ­capitalism. This, it argues, has perpetuated abuses in the state that result in "the fusing of commercial and political interests by introducing commercial criteria into political decisions and political criteria into commercial ones".

As part of its proposal, the DA has targeted high growth at a rate of 8% and emphasises "stable and support­ive" fiscal and monetary policy priorities as a groundwork for its policy objectives.

A sustainable future
There are five overarching policy objectives, namely opening job opportunities to all, breaking down barriers to inclusion, opening the economy to competition, building the base through trade and investment and creating a sustainable future for all.  

Under each of these objectives it lists a series of long-, medium- and short-term goals.

In terms of opening job opportunities to all, it has emphasised things such as lifting bureaucratic requirements from small, medium and micro enterprises.

It also advocates the establishment of job zones, much like the special economic zones already advocated by the government.

The DA, however, poses aggressive exemptions to labour laws, as well as generous trade and tax incentives for companies that invest in the zones.

Economic insiders
It proposes an overhaul of Nedlac. This is in part to break up what the party calls an entrenched system of economic insiders and outsiders in which Cosatu, with its close ties to the state's political leadership, is deemed an insider.

One aspect of its policy proposals has been to place sustainability as a stand-alone element of its plan specifically aimed at addressing water and energy challenges. Most economic activity in the country is going to be impacted by these two issues, which cut across everything from infrastructure planning to housing provision.

The specific interventions on these fronts, however, such as decentralising power production, are things the government is already attempting,  albeit in a rather piecemeal and slow manner.

There are, however, some innovative ideas introduced, such as distributing shares in state-owned entities as part of broadening economic inclusion. This the party sees as a way to access "dead capital" through non-traditional financial institutions such as stokvels, or through groups such as employee share-ownership schemes.

Too ambitious
Apart from the apparent lack of new ideas, the DA's plan has been criticised as far too ambitious by commentators, given its 8% growth rate target. Clearly, implementation is a test the DA has yet to pass.

The DA's spokesperson on finance, Tim Harris, who helped to write the plan, said the party had deliberately  taken on ideas that were already reflected elsewhere, such as in the national development plan. He said although it was clearly unrealistic to target growth rates of 8% in the short to medium term, the point was to turn South Africa into a country that could grow at 8% when economic conditions improved.

A major constraint for the party, said Harris, was that most economic development policy tools lay in the hands of national government. But where the party governs, such as in the Western Cape, it will implement its economic development approach or has already begun to do so. Examples of policies it has already initiated range from recruiting qualified municipal managers to increasing transport infrastructure budgets for expanding bus rapid transit systems and a feasibility study for a desalination plant in Cape Town to secure water supplies.

Harris pointed out that in 2010 the Western Cape economy grew at a rate of 3.1% against national growth of 2.9%, and unemployment at national level was 25.2% against the province's 22.8%. The distinctions were small, but they indicated that measurable differences were beginning to emerge, he said.

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Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.

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