Economic policy.pdf - Democratic Alliance

CREATING ECONOMIC
OPPORTUNITIES FOR ALL
February 2009

Creating Economic Opportunities for All
EXECUTIVE SUMMARY
At a time of almost unprecedented international financial uncertainty, the Democratic
Alliance (DA) today outlines our vision for the future of South Africa’s economy, in the
form our new economic policy “Creating Economic Opportunities for All”. Our policy
will give all South Africans the opportunity to take charge of their own lives and make
the most of their potential.
We see a future in which the government and the private sector work together in
partnership to grow an economy ripe with opportunities for all South Africans, most
especially for the millions of unemployed South Africans who have been denied
access to jobs and life changing opportunities. In our vision, every South African has
an opportunity to move forward to a more prosperous future and in so doing not only
improve their own lives and the lives of their families, but to reinvigorate our nation as
a whole.
The failure of the sub-prime mortgage industry and the resulting collapse of bank and
insurance companies in Europe and the USA has strangled credit lines and has led
to an international economic crisis on a scale unseen since the Great Depression of
the 1930s. Demand has dried up and South Africa’s major trading partners in the US,
the EU and Japan are in recession. India and China whose appetite for our
commodities is vital to our own economic prosperity are also facing slowing growth.
Around the world stock markets have collapsed; large financial institutions have gone
under or been bought out; and in the United States and Europe, governments had to
come up with rescue packages to bail out their financial systems.
Clearly South Africa is not immune from the challenges facing the international
economy. We are already experiencing large-scale job losses, the international
prices for our commodities have fallen and key high employment industries in the
mining, manufacturing and retail sectors are experiencing dramatic slowdowns.
South African policy makers have two responsibilities; not only do they need to
respond to the immediate problems caused by the credit crisis but also have to
improve the productivity of our workforce and facilitate further investment in the
productive capacity of our economy. This is the only way that our economy can
provide more opportunities for jobs to the millions of people who are sidelined by
poverty and unemployment and ensure South Africa’s future prosperity.
The DA’s economic policy allows for a virtuous cycle of skills development,
infrastructure and technology investment, improved productivity and increased
employment. Wage subsidies, the simplification of our labour and tax regulations
and the elimination of the skills development levy will cut the cost of doing business
and encourage employers to hire first time workers and improve their productivity
through on-the-job training.
In partnership with private sector contractors, the expanded public works
programme will be used as a mechanism for skills development and will be focused
specifically towards those on the sidelines of our economy whilst our opportunity
vouchers will allow our young matriculants to pursue self employment opportunities
or further study.

A DA government would facilitate, not direct economic activity and would see that
our fiscal and monetary policy acts not so as to control economic activity but to
attract labour creating investment through price stability, a competitive tax
regime and appropriate government expenditure.
Not only would we draw more people into our economy through comprehensive
broad based economic empowerment, we would facilitate our integration into the
international trading economy through more integrated trade and industrial policies.
Increased tax revenues through the broadening of the tax base and higher
domestic savings rates which would provide the government with the resources to
invest in infrastructure, technology and innovation and in so doing improve our
productive capacity.
A DA government would be clean and efficient. We recognise that stability
encourages jobs and investment, and therefore we have put policies, rules and
institutions in place that foster stability. We will increase the capacity of the
competition commission and the consumer protector to ensure that there is fair
competition and that the rights of the individual are protected.
We would put in place specific measures that will improve the capacity and delivery
of our public services and will ensure a more transparent public tendering
process. We would also give more resources and responsibility to key oversight
bodies such as parliament and the auditor general to ensure that public money is
spent wisely, efficiently and economically.
In stark contrast, the governing party is increasingly propagating a shift towards a
more state-centric interventionist model in which the government has a strong
controlling hand in many, if not most, areas of our economy. The immediate effect of
such a move is to raise our international risk profile and dramatically increase the
costs that we need to pay for the capital of extremely risk averse investors. The long
term effects of a state led model can be seen in the failed economies of Africa and
Eastern Europe in which cronyism, corruption and inefficiency have been
comprehensive in their failure to uplift their populations.
Already, the failures of Eskom, SAA and other public enterprises are suppressing
service delivery and provide clear evidence that South Africa’s government does not
have the capacity for further involvement in the economy.
Empowering more people to get involved in our economy will lead to higher incomes,
higher investments, higher savings and higher tax revenues. This in turn will provide
us with more resources to make sure that those left remaining on the sidelines of our
community are assisted with every possible opportunity to take charge of their own
lives, and provide for South Africa’s future economic prosperity.

CREATING ECONOMIC OPPORTUNITIES FOR ALL
Introduction ........................................................................................................... 5
PART ONE: Unleashing potential ......................................................................... 7
1.1) Developing Skills ................................................................................. 7
a) Understanding our skills needs ....................................................... 7
b) Promoting skills development ......................................................... 7
c) Attracting skills ................................................................................ 7
1.2) Cutting the Cost of Doing Business .................................................... 8
a) Simpler labour regulation ................................................................ 8
b) Simplifying regulations for SMMEs ................................................. 9
c) Tax rebates for expenditure on crime protection ............................. 9
1.3) Job Creation for the Most Vulnerable ................................................ 10
a) Wage subsidy ............................................................................... 10
b) Opportunity vouchers .................................................................... 10
c) Expanded Public Works programme ............................................. 11
PART TWO: Stimulating Labour Creating Investment ........................................ 13
2.1) Fiscal Policy ...................................................................................... 13
2.2) Financial Regulation .......................................................................... 14
2.3) Increasing Savings ............................................................................ 15
a) Savings friendly tax policy ............................................................. 15
b) National retirement savings scheme ............................................. 15
2.4) Broad-Based Economic Empowerment (BBEE) ............................... 16
a) Legislation ..................................................................................... 17
b) Implementation ............................................................................. 17
2.5) Infrastructure Investment .................................................................. 19
Privatisation and Private Public Partnerships .................................... 19
2.6) Building South Africa’s International Muscle ..................................... 20
a) International agreements .............................................................. 20
b) Regional development .................................................................. 20
c) Fair domestic protection ................................................................ 21
2.7) Technology and Innovation ............................................................... 22
2.8) Industrial Policy ................................................................................. 22
2.9) Export Processing and Job Zones .................................................... 24
PART THREE: Clean and Effective government ................................................ 25
3.1) Regulating for Growth and Fairness ................................................. 25
a) Competition Regulation ................................................................. 25
b) Consumer Protector ...................................................................... 26
3.2) Oversight and Fighting Corruption .................................................... 26
a) Parliament ..................................................................................... 26
b) Auditor-General ............................................................................ 26
c) Transparent tender processes ...................................................... 27
3.3) An Efficient Public Service ................................................................ 28
Conclusion .......................................................................................................... 29

Introduction
In South Africa people have full political freedom. They are able to choose the
political leadership that they wish to have at every level of government through
regular elections. Yet, the vast majority of South Africans do not have economic
freedom. They are unable to use every resource at their disposal to make economic
choices, and millions of citizens remain trapped in poverty and indignity.
The Democratic Alliance (DA) sees a future in which all South Africans are helped
out of this trap not with hand-outs, but by being given the opportunity to take charge
of their own lives; to find employment or use their entrepreneurial skills to run their
own businesses.
We see a future in which the government and the private sector work together in
partnership to grow an economy ripe with opportunities. In our vision, every South
African has an opportunity to move forward to a more prosperous future and in so
doing not only improve their own lives and the lives of their families, but to
reinvigorate our nation as a whole.
To bring this vision to life, we need to sweep away the closed patronage system of
the current ruling party that dominates our economic environment and prevents
millions of people from participating in our formal economy. We will replace it with a
society for all the people, regardless of their circumstance, race, wealth or ties to the
individuals in power.
The role of government is to facilitate, rather than to control economic opportunities.
A DA government will apply a policy framework that ensures macroeconomic
stability, policy continuity and the pursuit of appropriate microeconomic interventions.
We will develop our economy to become more productive and skilled and in so doing
create life-changing job opportunities and promote economic growth. Our goal is to
get every South African who is able to work, participating in the economy.
If South Africa could get its labour force participation rates up to the levels
experienced by countries of a similar economic size to us, like Malaysia, Thailand,
Turkey or Poland, our income per capita would increase by a massive 48 per cent.
This requires a massive expansion in job and business opportunities. We have a
population of 30.8 million people aged between 15 and 65 years of age. Of this total
number, less than 12 million people work in a full time job.
The first priority is to give every child the education that he or she needs to equip him
with the skills to be a productive contributor to our economy. The DA’s position on
education is outlined in our policy entitled “Preparing for Success”.
Following on from this, a DA government will set itself three clear responsibilities.
Firstly, it will be an energetic facilitator of opportunities. It will work hard to find every
possible way for South Africans to unleash their full potential; it will create an
environment in which jobs and work opportunities, particularly for those who are sidelined
at the moment, can grow.
Secondly, a DA government will provide for a more transparent, consistent and
stable macroeconomic environment that will be conducive to both foreign and
domestic investment. Not only is stability and predictability critical in dealing with
uncertainties in the international economy but it is vital in driving investment in our

long term productivity and competitiveness and building towards our future
prosperity.
Thirdly, a DA government will be regulator of fairness and openness and a fierce
opponent of patronage and exclusion. We outline government’s vital role in the
economy and describe how it should act as an overseer, ensuring that all our
resources are responsibly utilised to everyone’s benefit, and making certain that
every person has an equal opportunity to benefit from this society.
The economic policy outlined here makes clear the DA’s ideals of an open
opportunity society and provides a clear roadmap for a future of prosperity and
freedom for all South Africans.

PART ONE: Unleashing potential
Millions of South Africans remain unemployed because they are under-skilled due an
education and skills training system that has failed them. The DA has designed
specific incentives for business owners to employ and train as many people as they
can.
We know that our past has left millions of South Africans at a severe disadvantage,
and that millions of young South Africans continue to bear the brunt of a
dysfunctional education system that continually fails to provide learners with the skills
needed to become productive contributors to the economy. Specific measures are
needed to help them.
The DA is committed to making it easier, cheaper and safer for everyone to
participate in a growing and productive economy. By reducing the cost of business,
while continuing to protect the rights of workers, we will make this happen.
1.1) Developing Skills
The DA will:
In our • present Create economic a National environment, Human Resource it is only Development a few South Africans Commission who are able to
either
•
fund
Attract
their own
skills
skills
from
training
overseas
or take
and
advantage
retain the
of
skills
opportunities
that we currently
provided by
have
others. This leaves millions of South Africans with no way of meeting the
• Allow companies to claim back training costs from the skills
requirements of the mainstream economy.
development levy
The DA is committed to investing in the productivity of all South Africans by
massively expanding opportunities for skills development.
a) Understanding our skills needs
The DA will create a National Human Resource Development Commission to
research the long term growth needs for skills development. This commission will
create an environment that is able to focus on quality and responsive skills
development. This independent body comprised of private and public sector
stakeholders will be used to advise the Minister of Labour and his department.
b) Promoting skills development
The DA will provide incentives to small, medium and large employers to invest in the
productivity of their workers. A substantial component of improved productivity is onthe-job
training. Therefore it is imperative to get as many people as we can working
in jobs where their individual productivity can improve.
The current SETA system is costly, wasteful, overly bureaucratic and largely
ineffective. One of the failings of the system is that it permits bureaucrats, rather than
employers, to identify the skills that businesses need.
The DA regards the skills development levy as a tax on employment. We will allow
employers to claim back the money that they spend on training employees from the
skills development levy. This will encourage businesses to take on unemployed
people and up-skill them.
c) Attracting skills

It is imperative that South Africa retains and attracts as many people with appropriate
skills as possible. Having more highly skilled people in our country will increase the
demand for less skilled workers.
The benefits of expanding our skills base are clear - not only to improve productivity
in the short term but also to improve the skills of our workforce in the long run.
Many reasons have caused thousands of skilled South Africans to leave for other
countries and we have lost significant numbers of educators, doctors and engineers
to overseas destinations. Their loss not only reduces the pool of skills available today
but removes hope for a mentoring and management process that can ensure that
their highly valued skills will be retained in the generations of tomorrow.
We need to attract as many of these South Africans back as we can while at the
same time work to bring in skilled workers from other countries.
To attract skills, highly-skilled immigration should be encouraged. The DA will:
• Introduce a simplified fast-track system for all work visa applicants with scarce
skills.
• Allow foreign companies establishing or expanding businesses in South Africa to
bring senior executives and specialists that they need into the county without
having to undergo lengthy bureaucratic immigration processes in order to receive
the appropriate documentation.
• Place all immigration for non-South African citizens under the control of the
Department of Trade and Industry.
• Introduce a points system that will be used to score a candidate’s suitability for a
work permit and that will be weighted towards those with scarce skills.
1.2) Cutting the Cost of Doing Business
The DA will:
• Simplify labour regulation
• Introduce a longer probationary period in which employers can dismiss
underperforming workers without penalty
• Simplify regulations for SMMEs
• Introduce tax rebates for crime protection expenditure
The DA is committed to creating a simpler regulatory environment that will encourage
employers to hire more people.
Labour costs are a significant portion of an employer’s expenses, but they also face
additional costs in complying with the myriad of different rules and regulations set by
government. Employers are fearful of taking on new workers because they face
significant additional costs in terms of time and money if they realise at an early
stage that the worker is not suitable for the job at hand.
a) Simpler labour regulation
Current legislation provides important job security to workers who already have jobs.
But it acts as a major obstacle to creating employment for new entrants. If a worker is
unsuitable for a job, an employer should not be punished for dismissing that worker

and hiring somebody else who will be more productive. It is financially risky for an
employer to hire a new worker if they cannot gauge what that employee’s future
productivity will be. They face additional costs if they want to dismiss the employee
later 1 .
The DA, in partnership with labour and business will review all current labour
legislation. It will introduce a longer probationary period for employers to assess new
workers’ productivity before offering them full time work.
b) Simplifying regulations for SMMEs
Complying with tax and labour regulations places particular stress on micro, small
and medium sized businesses. These companies contribute between 30 and 40 per
cent of our GDP and employ more than 62 per cent of our private sector workforce.
The DA wants to provide every possible encouragement to this sector of our
economy to hire even more people. A recent World Bank study argued that the
average annual costs to these enterprises for complying with tax legislation was
equivalent to an additional 12 per cent tax on their profits 2 . A further consequence of
this is that an estimated 60 per cent of these companies choose to remain in the
informal sector. This constrains their ability to grow, to access finance and to create
employment opportunities.
The DA will broaden the tax base by designing a specific and simplified VAT, income
and provisional tax regime for small businesses. Not only will this significantly reduce
the costs of doing business and encourage the creation of work opportunities, it will
also draw more firms into the tax net. As our economy grows, our tax base will
expand and this will lead to higher tax revenues and more resources for public
service delivery.
c) Tax rebates for expenditure on crime protection
Businesses also face substantial costs in protecting themselves from crime. It
impacts especially severely on small and emerging businesses, wiping them out
before they can even begin to get traction in our economy. According to a World
Bank study: “Direct losses due to crime and the cost of security are higher in South
Africa than they are in other middle income countries such as China, Poland, Brazil
and even Russia.” 3 .Over the short term, we need to ensure that the threat of crime
does not negatively impact on growth, investment and the creation of job
opportunities in our economy.
Providing some relief to the expenses that businesses incur in protecting themselves
from crime would go some way towards facilitating investment and creating jobs. The
DA proposes that expenditure by businesses on verifiable security-related expenses
be tax deductible up to the value of R5000 a year (increased yearly according to
CPI). This includes expenditure on burglar bars, alarm systems, boom gates,
surveillance cameras, motor vehicle tracking devices and rapid response teams.
1 Levinsohn (2008) “Two policies to alleviate unemployment in South Africa”
2 World Bank (2008) “Tax compliance burdens for small businesses: a survey of tax practitioners in
South Africa”
3 World Bank. (2005). South African Investment Climate Favorable But Challenges Remain. News
Release No: 2006/198/AFR

1.3) Job Creation for the Most Vulnerable
Facilitating the creation of job opportunities for those left on the sidelines of our
community such as the long term unemployed, the disabled and new matriculants
looking for work is a policy priority of the DA. Young adults who have not had the
chance to further their education face a particularly difficult time in finding jobs.
Specific interventions will be introduced to assist in the creation of first time work
opportunities.
The DA will:
• Introduce a wage subsidy to reduce the cost of hiring first time workers
• Introduce an opportunity voucher to improve skills
• Focus the expanded public works programme as a mechanism for skills
development
a) Wage subsidy
The provision of a government-funded wage subsidy would significantly lower the
cost of hiring unskilled, inexperienced labour. The DA proposes that a wage subsidy
card of a fixed amount be issued to all school leavers when they graduate from grade
12.
Upon graduation, each school-leaver is to receive an account in his/her name. The
account will start with a balance of R3,600.
If the school leaver starts work with a company with more than 50 employees, then
that company can claim a R300 monthly deduction per a new employee from their
PAYE payments which will be allocated from their wage subsidy account.
Companies with less than 50 workers, and individuals who hire new workers such as
domestic workers, gardeners, child minders, care givers and drivers can claim back
the R300 subsidy from their tax submission to SARS at the end of the year.
At the end of 12 months of employment, the Subsidy Account will be exhausted. A
no-questions-asked termination period should be permitted during the first six months
of the subsidised trial period. Subsidy accounts will not expire and can be used
whenever the account holder enters the labour market. The payout from the Subsidy
Account will be cross checked with registration of the employee on the UIF database
b) Opportunity vouchers
The DA will also provide funding to those young adults who would like to start their
own business or study further. These individuals will be eligible for an opportunity
voucher, given certain criteria. The vouchers will be allocated according to strict
requirements based on the skills shortages faced by the country from time to time,
and will be available to individuals who have completed matric or have completed a
volunteer programme at the SAPS, the SANDF or the Youth Development
Programme.
This voucher will entitle the graduate to:
• A partial subsidy of university or FET college fees. The extent of the subsidy will
be determined by the area of study chosen by the graduate. Currently, those

wanting to qualify for subsidies in the construction industry would, for example,
qualify for a higher subsidy than those in the humanities or social sciences
• Seed capital to establish small or micro enterprises subject to a well-formed
business plan
• A state guarantee to cover loans extended by commercial banks to graduates to
establish small or micro enterprises subject to a well-formed business plan and
other requirements
The value of the voucher will be up to a maximum of R6,000 – but will vary by area of
application. The voucher will be paid over three years i.e. R2,000 per year.
Qualification for the voucher in the second and third year will be conditional, for
example, on the recipient passing his or her exams.
c) Expanded Public Works programme
An Expanded Public Works programme, if administered effectively, can act as an
important bridge for our unemployed people to gain skills and work experience and
move into formal sector employment, whilst simultaneously improving our
infrastructure.
The DA believes that the EPWP can only be used as a mechanism for skills
development if it is viewed as a skills development pipeline and not as an ad-hoc
poverty alleviation tool in which workers are not given the opportunity (or sufficient
time) to up-skill through on-the-job training. Poverty alleviation should not be the
focus of the EPWP, rather that should be the responsibility of a comprehensive social
development policy.
We believe that a stronger incentivised partnership between government, the
department of labour and private sector contracted employers will enable the EPWP
to become a strong force for labour absorption and skills training.
Given the failure of the education system to adequately provide learners with the
skills needed for productive work, the Expanded Public Works programme should act
as a “working curriculum”, that trains them for work in the private sector, rather than a
temporary stop gap measure that supervises but doesn’t train unskilled labour.
The aim of the programme is to ensure that EPWP participants are able to use the
work experience that they gain to find employment or become self-employed, find
further training and education opportunities or to continue in the employ of the
contract employer.
The presidency indicates that almost “955 000” jobs were created through the EPWP
in 2008. Yet, the EPWP quarterly report shows that this number is equivalent to less
than 136 000 full time jobs.
The first change that the DA will make to the EPWP is to ensure that each provincial
EPWP sector (infrastructure, economic and social) has a constant stream of EPWP
projects throughout the year. This will provide an opportunity for EPWP workers to
have full time employment.
The DA believes that part of the agreement between the EPWP and the contract
employer must include an obligation on the employer to keep and provide some
record of each EPWP’s participant’s performance as well as registering the worker
on a UIF database. A good performance record will be a requirement for an EPWP
worker to be able to move from a completed project to one that is being initiated.

Other options that must be explored are:
• Contracted employers will be obliged to include a training element to the
curriculum, through their own human resource training programme or
tendered by independent and certified trainers.
• Private companies tendering for provincial projects will be given additional
points if they provide expertise and training to the province’s citizens through
involvement in the EPWP.
• Private Public partners can be rewarded for including a role for workers who
have graduated through a year of EPWP work with strong performance
records.
• That each EPWP project pays the same minimum wage to EPWP workers,
regardless of the sector involved. This wage can increase relative to any
productivity, skill acquisition or performance improvement.

PART TWO: Stimulating Labour Creating Investment
To make more work opportunities available, amongst other things we need factory
owners to build more factories, we need offices to be built and call centres to expand.
Domestic and international investment provides the foundation for this. The DA will
work hard to make South Africa a place that people want to invest their capital.
In an efficient economy, government’s role is to manage perceptions. It takes time for
money that is invested to earn a return and no one will invest unless they have
confidence in the long term stability of the government and the broader environment
in which they invest their money.
Government can attract investors by improving South Africa’s competitiveness. This
can be done by encouraging trade and competition through the liberalisation of tariffs
where appropriate and the enforcement of competition policy, adopting a more
flexible labour market framework, and developing export processing and job zones.
We want to ensure that both local and international investors have the confidence in
the future of our country to plant the seeds in our economy. Without these investment
seeds, our economy cannot grow. Higher levels of investment will improve the
economy’s capacity for delivery, this will increase our social and political stability,
which in turn will increase investor confidence and will draw further valued
investment.
Investors look for a safe and secure environment in which there is legal certainty and
the rule of law applies. Certainty is the key issue. In order to create certainty,
government policy and government policy changes need to be transparent,
consultative and consistent.
2.1) Fiscal Policy
The DA will:
• Maximise our tax base
• Reduce tax rates in the long term
• Maintain a counter cyclical fiscal strategy
The central focus of our government’s fiscal policy must be the maximisation of our
tax base. Without tax revenue, government cannot build schools and roads, pay for
its workers in its public works programme or its nurses in rural clinics and hospitals or
provide pensions and child care grants to our most vulnerable people.
Government needs our economy to grow in order for it to earn the tax revenues it
requires to be able to facilitate South Africa’s economic transformation. Even if tax
rates were to increase drastically, our current tax base simply does not have the
resources to pay for all we need.
We don’t need higher tax rates, we need more individuals and companies to be
earning more and as a result, increasing the size of the tax intake. Already, our high
tax rates make South Africa relatively less competitive to other emerging market
economies in South Asia, East Asia and the Pacific. The DA proposes that our
corporate tax rate be reduced to 27%. We further propose that within a given period
of time our corporate tax rate be reduced to 25%.

The DA believes that government has a responsibility to engage a counter-cyclical
fiscal strategy. This ensures that government spending and tax cuts do not
exaggerate the business cycle and provides room to manoeuvre when the economy
requires stimulation during an economic slowdown, as at present.
In times of robust economic expansion, a restrictive fiscal policy should be applied to
make a greater contribution to restraining the growth of domestic demand. This also
allows the state to save income for an economic downturn.
When adopting a stimulatory fiscal stance, the state must guard against exacerbating
inflationary pressures. This is currently a worldwide challenge to governments, as
growth has slowed globally but inflationary pressures are on the rise in a number of
countries. Corporate tax cuts, will act to stimulate the supply side of the economy
without placing avoidable inflationary pressure on the demand side.
2.2) Financial Regulation
The DA will:
• Regulate against systemic risk
• Maintain inflation targeting
Inflation and an unstable financial environment hurt the poor and people living on
fixed incomes the most. The Democratic Alliance is committed to protecting our
economy through rigorous inflation targeting and regulation of our economy.
The Financial Services Board, the Banking Ombudsman and the Pension Funds
Adjudicator each have their own responsibilities to adjudicate, supervise and regulate
our financial system to ensure that systemic risks to our economy are minimised. The
DA fully supports these bodies and will ensure that they are adequately resourced to
fulfil their responsibilities.
The SARB is the key regulatory body in managing our economy. Through its inflation
targeting mandate, the SARB is able to manage the cost of capital for investment,
consumer purchasing power, and inflation expectations. Lower inflationary levels
promote a more stable environment that enables both economic and employment
growth.
The DA believes that price stability is a precursor to the creation of job opportunities.
In creating more certainty in our economy the SARB has a direct influence on
encouraging investors to put their money into projects that will create opportunities
for jobs.
Both credible monetary policy and the widely perceived independence of the SARB
have greatly improved the credibility of the Reserve Bank and anchored inflation
expectations accordingly. Under the successful stewardship of the Reserve Bank,
interest rates have declined from the high of 25% plus that they were a decade ago.
The significant advantage of an inflation targeting framework is that it acts to anchor
inflation expectations – as our monetary policy goal has explicitly stated. By removing
the inflation target, inflation expectations would no longer be anchored to an explicit
monetary goal.

The DA will jealously guard the independence of the South African Reserve Bank as
it is enshrined in our constitution and will have it continue with its inflation targeting
mandate. Dissuading the Reserve Bank from acting to manage the inflation outlook
will severely damage its reputation and affect its ability to manage inflation
expectations. While building a credible inflation targeting process is a long and
arduous process, squandering that credibility is fast and easy. If we are seriously
committed to creating jobs in our economy, it is important that we maintain our
inflation targeting regime.
2.3) Increasing Savings
The DA will:
• Boost corporate savings by reducing corporate taxes
• Scrap income tax on deposits that are held for longer than 12 months
• Create a national retirement savings scheme to boost household
savings
South Africa needs to boost its domestic savings rate. This will enable us to have
money to invest in projects that will provide job opportunities. Without a savings
base, the investment capacity within our economy is reliant on the vagaries of foreign
fixed direct investment, investment on the Johannesburg Stock Exchange or
international bond issues. Borrowing money from the savings pools of foreigners
creates balance of payments imbalances, exchange rate vulnerability and places
further unaffordable uncertainty into our economy.
a) Savings friendly tax policy
Government’s current tax policy is ineffective in encouraging people to save. The
majority of savings within our economy come from corporate profits. High corporate
taxes mean that companies have less money to save. High personal income tax
reduces personal disposable income. In addition, our government taxes the interest
individuals earn on their deposits.
Relatively high inflation rates mean that our real interest rates are negative. It makes
more sense for people to spend money today rather than saving some of what they
have for tomorrow.
In addition to its reduction in the corporate tax rate, the DA will also scrap all income
tax on deposits that are held for longer than 12 months.
b) National retirement savings scheme
The creation of a national retirement savings scheme will be an additional measure
to increase our domestic savings. At the moment, household savings are estimated
at approximately 1% of GDP, whilst household debt as a percentage of household
income is about 70% 4 . Clearly, many of our households are living beyond their
means. The DA therefore proposes mandatory and incentivised contributions to a
retirement scheme.
All formal sector employees earning above R60 000 per annum will be required to
contribute 10%-12% of after-tax earnings to an approved private sector fund of their
4 Ntingi, A. (2008). “State pension scheme slated”. City Press. 20 April

choice, or alternatively, the state National Social Security Fund (NSSF). While there
is no specified percentage of income that those earning below the threshold must
contribute, they must be a member of either the NSSF or a private sector fund and
are expected and incentivised through a Rand-for-Rand state subsidy to contribute
when possible.
An additional external benefit of the National Social Security Fund is that it will assist
in broadening banking access to those who currently don’t have bank accounts. As
our economy grows and our people prosper, this formalisation of the banking net will
draw more people into our formal economy and our tax base. This will drive
competition within the banking sector and bring down bank fees, further incentivising
individuals to save more money.
2.4) Broad-Based Economic Empowerment (BBEE)
The DA will:
• Ensure that more emphasis is placed on skills training and socio
economic investment
• Prevent the serial enrichment of a handful of well connected individuals
• Allow for companies to self-accredit
• Provide resources for an ombudsman or commission to audit self
accreditation and red-list offenders
BBEE is an economic and moral imperative for South Africa. If correctly
implemented, not only will it redress the imbalances of the past but it will pull more
people into the economy, stimulate competition, improve our skills and productivity,
raise our domestic investment levels, reduce poverty, increase employment and
broaden our tax base.
The DA believes that BBEE interventions as currently constituted have created
significant distortions in the economy that are not conducive to economic growth.
Although it has enriched an elite few, the current black empowerment criteria have
done little to uplift the poor. Despite more than R150 billion worth of Black Economic
Empowerment deals being undertaken, more than 40 % of our population still lives
on less than R370 a month. Clearly, whatever it may be, the current economic
empowerment process is not broad based.
The DA believes that it is necessary to undertake a comprehensive analysis of BBEE
in terms of its impact on the economy and whether it has achieved its stated
objectives. A credible system to collect information on BBEE should be developed
and a mechanism to use the information adopted.
This review will explore the merits and consequences of:
• Placing less emphasis on ownership, and more emphasis on skills training
and socio-economic investment, in the weightings accorded to the various
categories used to evaluate businesses.
• Developing ways to prevent credits from being used over and over again by
the same individuals.
• Establishing an ombudsman to resolve questions of compliance quickly.

a) Legislation
The lack of clarity surrounding BBEE legislation is creating a bottleneck that is
stopping much needed investment planning in our economy. Any economic
environment first and foremost needs certainty.
There is some confusion with regards to the generic and sector specific scorecards
as compliance with the requirements of the generic scorecard does not necessarily
match the requirements of a sector specific scorecard. For example, unlike the
generic scorecard, the Financial Services Charter allocates points to companies that
provide access to financial services to poor communities. Firms do not want to
commit investment and planning resources to the one if the other is going to be the
yardstick used in determining tenders.
Changes to the state procurement legislation have been proposed that will demand
specific black ownership requirements and could effectively sidestep the generic
scorecard and sector specific BBEE codes that have taken years of consensus
building to be finalised.
The DA believes that BBEE legislation must be implemented properly and
transparently, and any individuals found manipulating the requirements to suit their
own interests must be excluded from any further opportunities to obtain government
business. Until their sector specific charter has been gazetted, any firm’s tender must
comply with this generic scorecard.
b) Implementation
The DA believes that current BBEE interventions have created significant distortions
in the economy that are not conducive to economic growth.
Currently, companies are audited by a few registered BBEE verification agencies
which determine their BBEE compliance and provide them with a score and an
accreditation as determined by the requirements of the relevant sector / code. The
framework for accreditation was gazetted in July 2008, yet no agencies have
received final accreditation.
Clearly, this can create a skewed incentive as the auditing firms are reliant on the
payment of the companies that they audit and thus have an incentive to treat them
favourably.
Another issue with the current implementation is consistency. Two different auditing
firms may provide the same company with two different scores. Given that higher
BBEE points lead to more tenders, companies have an incentive to hire firms that will
give them the higher score, not the firm that will ensure that their accreditation is
reflective of their compliance.
We believe that, like tax, BBEE should be self signalling. In the same way that
individuals submit their earnings profile to the South African Revenue Service for tax
purposes, companies should be allowed to submit their BBEE profile to the DTI.
The DTI does make provision for self-accreditation, however it also requires
companies to provide full documental proof of their compliance. This is impractical
both from the company’s and DTI’s perspective.

In applying for their accreditation, companies that have multiple procurement
partners would not only have to provide proof of their own BBEE compliance but that
of their partners. This weaves a domino web of cross checks and audits that will not
only be time onerous but will also add significantly to the cost of doing business. DTI
simply does not have the capacity to audit the paperwork of every firm’s submission.
We suggest that companies are allowed to accredit their supplier lists themselves.
The CEO of the supplier must attach an affidavit confirming the compliance of their
firm. If a company wishes to award a tender to that supplier they will have the right to
insist on an independent rating. Larger tenders will require independent certification.
DTI or a BBEE commission can select a sample of firms to audit. Those companies
found to have overstated their compliance will be red-listed and fined. Red-listing will
be publicised and will prevent the offender from competing for any state/provincial or
municipal tender for a period of five years. An ombudsman or BBEE commission (as
modelled on the competition commission) will investigate and / or mediate BBEE
disputes. This will reduce the delays experienced by tender disputes through the
judicial system.
Self signaling is a win-win situation. Companies reduce their compliance costs and
DTI or a BBEE commission can focus their capacity on offenders who are punished
swiftly and measurably. Companies have an incentive to increase their BBEE
compliance as they can see what their competitors are doing. BBEE scores become
more consistent as inflated scores are punished aggressively.

2.5) Infrastructure Investment
The DA will:
• Encourage privatisation where private sector expertise can provide
skills and investment which the state can’t
• Improve efficiency by encouraging more private public partnerships
• Speed up the process needed to approve private public partnerships
Our economy is dependent on infrastructure to facilitate the movement of goods,
services, people, information, water and energy. As such, roads, railways, ports,
bridges, airports, communication networks, waterworks and power lines are vital
inputs to our economic activity.
Poor infrastructure – either in terms of quality or quantity – imposes significant
economic and social costs. Transport, in the form of rapid and cost-effective logistics,
is central to our global competitiveness.
Commodities currently account for about 80 % of our exports, yet despite our vast
mineral wealth the South African economy has not increased the volume of its
mineral output and exports. To do this, we require substantial improvements in our
infrastructure network. Until that happens, our current infrastructure capacity won’t be
able to handle any further load.
When foreign markets buy goods produced by our factories and mines further inland,
they also have to pay for the cost of transporting what they buy. If our infrastructure is
inadequate and it takes more time than necessary to transport our goods overseas, it
makes South Africa’s output more expensive and less competitive than it needs to
be. This restricts our sales volumes, limits investment and strangles the creation of
job opportunities.
Privatisation and Private Public Partnerships
Government has committed to spend R600 billion on infrastructure investment in the
next three years. Although it is vitally important that infrastructure is built, there is no
need for government to spend taxpayers’ money on investments that the private
sector can build and manage more efficiently. While a detailed framework for Private
Public Partnerships (PPPs) exists it is seldom used. The DA wants to see our
resources being utilised in the most efficient manner possible and strongly supports
the efficiency gains made through more private public partnerships in the building of
a world class infrastructure network.
Transnet’s pipeline business has committed to spend R11.2 billion on building a fuel
pipeline from Durban to Gauteng. This investment could have been made by the
private sector. The Airports Company of South Africa is a wholly owned subsidiary of
the South African government. Our government should not be operating airports, it
does not have the expertise to do so. Similarly, our ports are hampered by
inefficiencies, labour disputes and time delays. Across the world, governments are
giving concessions to private sector port operators to manage their harbours. We
should do the same.
Wasted public money means less money for essential service delivery. Not only is
infrastructure investment vital for maximising our future economic potential, it also
offers a very real opportunity to get more people involved in the workforce today. In

awarding private public partnership projects, tenders with a stronger job creation and
training component will be favoured.
Partnering with leading private sector expertise will also allow for the much needed
transfer of skills and an increase in the capacity of our workers (Only twenty private
public partnerships have been agreed upon since 2000). The current process needed
to formalise private public partnerships delays much needed service delivery.
The DA will look urgently at the constraints affecting PPPs and take specific steps to
resolve them. The DA will see that the time taken for PPPs to be agreed on will fall
by 25 per cent.
2.6) Building South Africa’s International Muscle
The DA will:
• Bolster trade between South Africa and the USA, the EU and our region
• Hold the G8 accountable for promised aid to Africa
• Promote regional development
• Ensure that any domestic protection is fair and targeted
• Support infant industry
The DA will use South Africa’s international influence to expand our access to
international markets, and in particular to bolster South Africa and Africa’s trade,
press for institutional reforms of the subsidy systems and policies of the EU, the US
and others which marginalise our region and markets, and further our integration into
the global marketplace.
a) International agreements
South Africa’s stance in the World Trade Organisation (WTO) and in other
international bodies must work to the advantage of South Africa’s export industries
and must be driven by trade interest, not ideology. Specifically, the DA will:
• Press for the extension of the US Africa Growth and Opportunity Act (AGOA),
which Africa as a whole has benefited from.
• Lobby the European Union (EU) to ensure that its ineffective EBA (Everything But
Arms) trade access initiative for Africa is reconfigured. In the light of the 2008
Doha development round collapse, we will re-initiate efforts to negotiate a free
trade agreement between the Southern African Customs Union and the US.
• Work for consistency in requirements imposed by various regional bodies which
often require contradictory positions.
• Continue to hold G8 nations to their 2005 agreement to increase aid to Africa and
to provide debt relief for Africa’s poorest nations – but to explicitly acknowledge
that democratic and good governance reforms in African states are the key
requirement for such enhanced assistance.
b) Regional development
The DA will continue to help South African companies to move into Africa. In
particular we will help to grow development corridors within our region, such as the
successful Johannesburg-Maputo corridor by:
• Prioritising the removal of bureaucratic and administrative impediments.

• Providing transparent and accountable commitments to the private sector to
safeguard their investments.
• Providing neighbouring countries with technology and skills assistance.
Chinese investment in Africa is becoming increasingly important, and the DA will
engage with the Chinese government to establish the “rules of the road” regarding its
economic involvement in South Africa. China’s rapidly expanding influence on the
continent holds promise for Africa, especially for infrastructural development and
exports. But there are also many concerns about China’s record on the environment
and worker protection.
c) Fair domestic protection
Many aspects of South Africa’s economy are characterised by limited competition,
high profit margins and restricted entry, to a large degree because international
competition is limited.
The DA supports the management of an economy that is integrated into international
markets. We support temporary infant industry protection that will enable our
producers and employers to establish themselves and become internationally
competitive. However this support must not last forever. If an industry is not selfsustainable
in the longer-term, it must be replaced with a more viable alternative.
Open-ended protection to specific sectors is not sustainable
Not only were efforts to protect local clothing manufacturers against competition from
China through the imposition of import quotas not successful, they have harmed
clothing manufacturers through reduced fabric supply and higher material sourcing
costs. The poor are paying the cost in terms of higher clothing prices. We will simplify
our tariff structure where appropriate in order to facilitate trade and provide job
opportunities.
The simplification of our relationships with the economies of other countries will boost
trade, create jobs and lower prices.

2.7) Technology and Innovation
The DA will:
• Promote research and development in agriculture, medicine, mining and
forestry
• Increase the research output of our universities and non-governmental
research institutions.
• Improve our patent system by increasing the capacity of the companies
and intellectual property registration office
Innovation is one of the primary drivers of economic growth and a crucial determinant
of competitiveness. Our business sector contributes more than half of total research
and development (R&D) expenditure. This is favourable as the gains from applied
research are largest not when research is dictated by government priorities, but
rather when research is conducted as directed by the needs business and industry –
and is thereby more closely integrated with the problems and needs of the private
sector.
As economies can learn faster than they invent, in addition to R&D, South Africa
should focus on taking advantage of the world’s available stock of knowledge through
importing technologies and skills from other parts of the world.
With the aim of developing our skills and knowledge base and maintaining our
international competitive advantage in certain key industries, the DA will develop the
following initiatives:
• Invest further in R&D into agriculture, medicine, mining and forestry.
• Promote innovation and R&D in the private sector by ensuring that intellectual
property rights are protected by our legal system, by further resourcing the
companies and intellectual property registration office (CIPRO). The efficient
functioning of CIPRO is integral to the defence and substantiation of South
Africa ideas, both in our local economy and abroad.
• Create a small number of tertiary level institutions that focus specifically on
research
• Bring universities and research facilities under the management of one
ministry
• Establish a unit to rank tertiary institutions on the quality of output
• Properly fund non-governmental research institutions and distance politicians
from the management of their operations
• Prioritise the liberalisation of telecommunications which will slash the cost and
time spent in idea-sharing
2.8) Industrial Policy
The DA will:
• Allow for the Industrial Development Corporation (IDC) to co-ordinate
industrial policy
• Set up a sovereign venture capital fund to support innovation

Government can play an important co-ordinating role in consulting with private sector
players so that resources can be directed towards opportunities with the greatest
potential for economic growth and employment. Government needs an agency with
an appetite for risk (like a sovereign venture capital fund) that can direct money
towards innovations, in order to establish local companies that are able to compete
both domestically and abroad.
The DA believes that industrial policy must be private sector led and not be
dominated by government. The focus of the current industrial policy on capital or
transport equipment manufacturing, metals fabrication; automotives and components
manufacturing; chemicals, plastic fabrication and pharmaceuticals; and forestry,
paper and furniture must be reviewed so as to become better aligned with private
sector opportunities that will make the economy more competitive.
In order for our industrial policy to be more effectively implemented it needs to be
better co-ordinated. Currently the Department of Minerals, the Industrial
Development Corporation and the Department of Public Enterprises each have
overlapping goals aimed at various industrial policy targets such as the beneficiation
of minerals, developing customised sector programmes, the financing of small
businesses and empowerment deals and the development of local suppliers through
capital expenditure allocations.
The DA will ensure that objectives will fall under one co-ordinating body. The DA
believes that the IDC is well placed to act as a venture capital fund, and the DA will
ensure that the IDC’s technical capacity is improved in order to fulfil this function.
This will allow for all private sector proposals to be sent to one organisation, which
can vet and allocate funds towards successful innovative tenders.
At its heart, industrial policy must act as a conductor and bring together various
competing private sector initiatives. Particular focus must be directed towards the full
supply chain of industry and not just one component. Only through a co-ordinated
partnership between state and the private sector will our economy be able to develop
a comparative advantage in key industries.

2.9) Export Processing and Job Zones
The DA will:
• Set up export zones where trade tariffs, quotas and other bureaucratic
requirements are reduced
• Encourage foreign direct investment by allowing full repatriation of
profits
• Promote employment by only allowing labour intensive industry to be
eligible to be part of the zones.
Some parts of South Africa remain trapped in underdevelopment, underinvestment
and poverty. The DA will stimulate investment in these areas.
An export processing and job zone (EPJZ) is a geographical area where various
trade barriers such as tariffs and quotas are eliminated and bureaucratic
requirements are lowered, in the hopes of attracting new business and FDI. In an
EPJZ, investors are given tax incentives and are exempted from foreign exchange
control provisions and from profit and dividend repatriation requirements. Labourintensive
manufacturing is encouraged and normal labour regulation requirements
are reduced.
The establishment of Industrial Development Zones (IDZs), which formed the main
pillar of South Africa’s post-apartheid industrial policy, has failed to deliver the
promised levels of investment and the creation of work opportunities. The problem
with South Africa’s application of IDZs as a tool to encourage industrial development
has been that it provides incentives that are predominantly limited to infrastructure.
The conversion of IDZs into EPZs will see these muted incentives giving way to more
meaningful tax investment incentives and will encourage labour-intensive
manufacturing.
EPJZs have been enormously successful internationally. EPJZ-operating countries
such as Malaysia, Mauritius and Ireland all agree that EPJZs constituted a dynamic
force in renewing the economies of their countries.
South Africa’s IDZs should be converted into fully-fledged EPJZs in which:
• Only labour-intensive industries will be permitted
• New ventures enjoy a sustained tax holiday
• Businesses must be registered with DTI as exporters
• Duty free imports of machinery, equipment and raw materials are allowed
• Firms are exempt from more onerous labour laws
• The full repatriation of profits and capital will be permitted

PART THREE: Clean and Effective government
A DA government will ensure that there is a fair competition, and it will stand up for
the rights of the individual, regardless of their financial resources and connections to
the policymakers in power. We will create an environment in which individuals are
able to invest in their businesses without fear of their property being taken away from
them through crime or failed contracts and when disputes do arise, they are swiftly
resolved by a system that is fair, representative and impartial.
We see a government that realises that its capacity is best spent monitoring and
regulating the millions of decisions that take place in our economy each day, rather
than inefficiently trying to have a central hand in each and every one of them. This
government recognises that stability encourages jobs and investment, and therefore
puts policies, rules and institutions in place that foster stability.
3.1) Regulating for Growth and Fairness
The DA will:
• Strengthen the capacity of the Competition Commission
• Give the Office of the Consumer Protector chapter 9 institution status
Excessive regulation hampers productivity, and drives up costs and unemployment.
But every economy needs regulation to allow all participants to compete on a level
playing field and to reduce risks for everyone.
The DA supports efficient and appropriate government regulation. We will ensure that
our monitoring bodies have sufficient funding and human resources to ensure that
our economy is not put under systemic risk, but at the same time will not place
additional and avoidable constraints on economic activity and the creation of job
opportunities.
a) Competition Regulation
Price fixing is detrimental to economic growth and social cohesion. The DA is
committed to strengthening the legal and technical measures available to combat
anti-competitive behaviour. South Africa has been rocked recently by high profile
cases of price fixing.
Collusive behaviour affects the poorest of the poor, be it in terms of higher food
prices or reduced job opportunities. By strengthening these measures, price
collusion, particularly of staple foods such as bread, could be stamped out,
competition could flourish and the consumer would benefit from lower prices.
Protection of whistle-blowers is a core ingredient in dismantling cartels, should they
arise. The DA believes that legislation is required to provide full immunity to the first
individual who breaks ranks and reports anti-competitive activities.
While companies may be fined up to 10% of revenue by the competition authorities,
individuals face less stiff sanctions. The DA will make it possible – as it is in other
countries – to hold senior management of companies implicated in anti-competitive
behaviour personally liable for their conduct.
The DA will also empower the Competition Commission to adopt a more pro-active
rather than a complaints-driven approach. Rather than waiting for a request from a

private party before intervening, the Commission must be able to act of its own
volition or on government’s initiative.
b) Consumer Protector
The Office of Consumer Protection ensures that there is fair trade between
consumers and service providers and educates consumers about their rights and
duties. Currently this office falls under the Department of Trade and Industry.
The DA would like to see the Consumer Protector act as an independent body under
chapter 9 legislation.
3.2) Oversight and Fighting Corruption
The DA will:
• Ensure independence of the key crime fighting units
• Allow the Appropriations Committee to reallocate under-spent budgets
every six months
• Investigate alternative funding models for the Auditor General
• Independent oversight committee for reviewing state tenders
No economy can allow equal access to all if some individuals are able to manipulate
the rules to benefit themselves. The key weapons in the fight against corruption are
transparency and independent oversight. In fighting internal corruption the DA will
see to an increase in salaries and resources for our key crime fighting units, including
the National Prosecution Authority, the Asset Forfeiture Unit, the Independent
Complaints Directorate, the Directorate for Priority Crime Investigation and the Police
Anti Corruption Unit.
We will see that anti-corruption bodies are legally protected from undue interference
by a clear legislative framework that places their accountability under the judiciary
and thereby reinforces our constitutional separation of powers.
a) Parliament
The DA will ensure that government departments start off on a zero-based budget
each financial year. Every budget allocation must be fully justified and the rollover
and/or moving of funds towards year-end will be closely monitored. Any new item
included in the budget must be accompanied by a full business plan accepted by
both Treasury and the relevant portfolio committee. The tendency by departments to
underspend on budget in the first three quarters of the financial year and then to
suddenly start spending in the last quarter of the year mainly by way of the redirection
of funds not used to fill vacancies will be closely watched and controlled.
The DA will ensure that the portfolio committees of parliament will be required to
strengthen their parliamentary oversight role. Regular quarterly reporting on
performance to date by national and provincial authorities to the relevant portfolio
committee will therefore be necessary. Funds not appropriately spent by departments
must be re-allocated to other departments every six months by the Appropriations
Committee in conjunction with Treasury.
b) Auditor-General

We cannot be serious about delivering an efficient and effective government if the
officers responsible for ensuring that our checks and balances are in place are not
funded properly.
The Auditor-General acts as a key safeguard in the protection of our democracy. It is
the role of his office to ensure that taxpaying money is spent efficiently, effectively
and economically. Public sector audits are more complex and detailed than those
found in the private sector as the Auitor-General. not only has to look at the allocation
and expenditure of money by public institutions but is also expected to audit a range
of performance indicators.
Its chapter 9 institution status guarantees the Auditor-General’s independence. It is
self-funding and charges the institutions that it audits for its time and expertise.
However, the failure of public sector departments to pay the fees due to this office is
severely hampering its capacity to keep watch on our country’s finances. The DA will
ensure that any money due to the Auditor-General will be taken out of the liable
department’s budget for the following half-year. Other payment models that we will
explore include conditional grants or guarantees from treasury or direct charges
against the national revenue fund.
c) Transparent tender processes
Given the substantial amounts of money allocated towards much needed
infrastructure spending, the DA will introduce a more transparent tendering process
and the formation of an independent oversight committee for the evaluation of private
sector tenders for state money. The Municipal Financial Management Act already
legislates structures for accountable public expenditure. However, without
transparency (which is not legislated for) the public is unable to know whether the
MFMA is being correctly administered.
This body will be responsible for ensuring that tenders are allocated to the most
efficient companies, with a particular emphasis on cost, quality and job tenders.
Furthermore, this body will be able to institute penalties against successful tenders
who fail to deliver on the stipulations of their contract.
Transparency and independence are the bedrock of an efficient and cost effective
public tendering process. This results in improved service delivery.
In the cities and municipalities that we govern we have found that our transparent
tendering processes have led to quicker service delivery (the average time taken for
a bid process to be completed has been halved from 12 weeks to 6 weeks), more
tenders, more broad based economic empowerment and more efficient service
delivery.
Part of the DA’s municipal management process has been setting up a series of 2
year contracts for its major tenders. This has cleared the project pipeline and
reduced a substantial portion of the day-to-day workload. In turn this has allowed our
public service structures to build up our supply chain management capacity, focus on
special projects and deliver on our primary mandate: service delivery.
The DA is committed to ensuring that the public sector puts into place a sound,
sustainable and accountable supply chain management system. This will promote
black economic empowerment and local economic development, and encourages
small businesses and joint venture partnerships.

3.3) An Efficient Public Service
Government must deliver an acceptable level of service. This entails performing
specified tasks within agreed timeframes.
Government cannot be effective, economical and efficient if it continues to have
unfilled posts year after year. The DA believes that government is best served by an
independent professional public service that rewards and promotes excellence and
does not tolerate inefficiency and corruption.
For too long, government service delivery has been hampered by the ANC’s cadre
deployment policy which has created a weak senior management system that is
under-qualified. In some instances, affirmative action policies that were designed to
promote equality have been distorted to such an extent that much needed positions
are left vacant as the public sector cannot compete with the private sector in the
remuneration of highly skilled black professionals. Currently there are more than 330
000 vacant posts across government, many of which require much needed
specialised skills.
In order to ensure that the public service is able to provide the services it needs to
the South African public, the DA will:
• Undertake a full audit of the skills needed across all levels of government.
• Ensure that every priority, scarce skills posts are filled with appropriately
skilled professionals.
• Institute a proper performance management system that guarantees
performance incentives to those who excel in their positions.
• Provide for a clear career development process within each government
department that is transparent and apolitical.
• Evaluate the pay scales applicable to professionals within the public service.

Conclusion
The DA is committed to a long-term process of sustainable economic growth. It
recognises that deep structural fault lines exist within the economy and that shortterm
solutions are unlikely to unlock South Africa’s growth potential. The DA has
demonstrated, through its successful and effective management of several
municipalities across South Africa, that it is a credible alternate government, capable
of bringing economic growth to all of the people in South Africa.
We are also acutely sensitive to the plight and indignity suffered by our unemployed
people. Unemployment stops people from reaching their full potential and places
additional strain on families and friendship networks who have to find money to
support those who do not have the opportunity to support themselves. Our emphasis
is on creating more opportunity, jobs and wealth and not maintaining poverty and
state dependency.
Our economic policy provides every South African with an opportunity for dignity and
opportunity. It weaves a thread through every sector of the economy and creates a
fabric in which workers, employers and government regulators all benefit from cooperating
with each other.