Patel's New Growth Path

In summary

• Create five million jobs over the next 10 years, especially in the green economy, agriculture, mining, manufacturing and tourism.
• Infrastructure investment will focus on energy, transport, communication and housing.
• An African development fund will be established to invest in African infrastructure.
• State agencies, including the Reserve Bank, will be reoriented to ensure the state "is not hostage to market forces and vested interests".
• Monetary policy will be looser to support a more competitive exchange rate.
• A state mining company and state bank must be established.
• Wage settlements will be moderate to save jobs, create jobs and address inequality. This includes a "modest increase above inflation" for employees earning between R3000 and R20000 a month, increases pegged to inflation for those earning between R20000 and R45000 and pay caps or increases below inflation for those earning over R45000.

Commentary

The plan, aimed at creating five million jobs in 10 years, among other things, got little positive reaction from analysts.

"You can't have a weak currency and low inflation and loose monetary policy. One of them will give," said Investment Solutions economist Chris Hart.

"You can't have less regulation and price and wage controls - they just do not go together."

Hart said the impression was that business did not have much input in the compilation of the NGP document.

This impression was strengthened at a press briefing on Thursday after Patel and business leaders met. Business Leadership SA chairman Bobby Godsell called the NGP an "idea-rich document".

But Godsell said companies were not going to give up the right to decide their own salary levels or accept a cap on what people might earn.

"If that is what the government is intending, then there is very little chance of that happening," he said.

Godsell also said that capping pay was not likely to happen, echoing concern voiced by trade unions about the possibility of having to give up their right to collective bargaining.

Hart said business people were, in a sense, to blame for the lack of input as they tended not to be activists.

There were also questions about consultation with other government departments.

Speculation about differences in approach between Patel and Trevor Manuel, the Minister in the Presidency responsible for the National Planning Commission, has been rife since their appointments last year - and it flared up again this week.

Patel assured the media that his document was endorsed by the cabinet through the cabinet system.

"In the process, National Treasury and the National Planning Commission and other economic ministers all had a number of moments to contribute to this," he said.

Manuel appointed his planning commission, on which Godsell also serves, in April, but it has not yet produced any plans.

Hart said he feared the country would end up with "lovely think-tanks and an acrimonious limbo where nothing actually happens" because of differences between competing departments.

"They are not complementary, they are competing," he said of Patel's and Manuel's departments.

But Piet Croucamp, a lecturer in politics at the University of Johannesburg, said he believed the planning commission would complement the NGP.

"I think the planning commission's task will be to sort out the practical problems of implementing the plan as the plan does not spell out how the targets will be reached.

"I think Manuel will become involved at a certain point, but I am not worried about the fact that he does not seem to be involved with the development of this master plan. His role will ultimately be to give effect to the master plan."

Much has been made of an apparent shift to left in the plans formulated in the NGP.

Investec economist Annabel Bishop said the NGP increased state control to the point of socialism.

She said that while the goal of social upliftment of the majority of South Africans was laudable and necessary, the implementation of the plan was likely to prove faulty and unattractive to the private sector.

Dawie Roodt, an economist at Efficient, agreed that the NGP represented a clear shift in policy direction.

"This is a clear move from a demand economy to a command economy," he said.

"It comes straight from the book of the Soviet Union."

The problem with increased government involvement in the economy, said Croucamp, lay with government's bad management systems.

"Government involvement, where government determines the value of the currency or controls capital flows, like it is insinuated in the document, has a very bad history worldwide, even in places where the state is much stronger and more efficient," he said.

"We have a government which is not managed efficiently."

Croucamp said he did not believe the NGP represented a shift to the left, but rather an increased effort by the government to be more involved and take more responsibility for economic growth and job creation.

"The big debate now is how it is going to be done with ideological and practical differences in opinion between Cosatu and the ANC."

Source: Times LIVE