The New Growth Path: Implications for Water and Environmental Affairs

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The New Growth Path Implications for Water and
Environmental Affairs

• February 16, 2011

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Overview

• SONA Imperatives
• Key Challenges Facing Government
• The Global Economic Outlook and Context
• The New Growth Path
• Implications for Water and Environment
• Conclusion

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SONA 11 February 2011

• We have declared 2011 a year of job creation
  through meaningful economic transformation and
  inclusive growth.
• We have introduced a New Growth Path that will
  guide our work in achieving these goals, working
  within the premise that the creation of decent
  work is at the centre of our economic policies.
  
• All government departments will align their
  programmes with the job creation imperative. The
  provincial and local spheres have been requested
  to do the same.
• The programmes of the State Owned Enterprises
  and development finance institutions should also
  be more strongly aligned to the job creation
  agenda.
• Our infrastructure development programme enables
  us to expand access to basic services and to
  improve the quality of life. This includes
  projects for the provision of water, electricity
  and housing.

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Key challenges facing Government
Income Distribution Concentration of Economic
Power
Apartheid Spatial Development
Unemployment
Poverty Access to Basic Goods and Services
Education Disparities Health Disparities
Current Challenges
Lack of Beneficiation

• Problems with
• Housing Provision

We are under pressure to deliver services with
limited resources, to a growing base of
population, with better and faster results
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Public finances have deteriorated globally
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South African economyFixed investment

• Real fixed investment spending by public
  corporations continued to be the main driver of
  overall investment activity.

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Global economy outlook
Economic growth and outlook around the globe Economic growth and outlook around the globe Economic growth and outlook around the globe Economic growth and outlook around the globe Economic growth and outlook around the globe Economic growth and outlook around the globe
Region / Country 2008 2009 2010e 2011f 2012f
World output 1.5 -2.2 3.9 3.3 3.6
           
Advanced Economies 0.2 -3.4 2.8 2.4 2.7
United States 0.0 -2.6 2.8 2.8 2.9
Euro area 0.3 -4.1 1.7 1.4 2.0
Japan -1.2 -6.3 4.4 1.8 2.0
           
Emerging and developing economies 5.7 2.0 7.0 6.0 6.1
Sub-Saharan Africa 5.2 1.7 4.7 5.3 5.5
South Africa 3.7 -1.8 2.7 3.5 4.1
Nigeria 6.0 5.6 7.6 7.1 6.2
East Asia Pacific 8.5 7.4 9.3 8.0 7.6
China 9.6 9.1 10.0 8.7 8.4
South Asia 4.8 7.0 8.7 7.7 8.1
India 5.1 7.7 9.5 8.4 8.7
Latin America 4.0 -2.2 5.7 4.0 4.0
Brazil 5.1 -0.2 7.6 4.4 4.3
Europe Central Asia 3.9 -6.6 4.7 4.0 4.2
Russia 5.2 -7.9 3.8 4.2 4.0
Projections 2011 2012
Source World Bank, GEP Jan 2011
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New global context

• The rise of new economic powers
• China, India, Brazil
• Scramble for Africas resources
• Economic fragility
• Imbalances and systemic weakness remain
• Slow recovery in global North
• Policy space
• Climate change and new massive green
  industrialisation wave
• Technological innovation jobs for the future

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Confidential
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China an example

• What we sell
• Top 10 Exports
• Iron ore
• Ferro-Alloys
• Chromium ores
• Manganese ores
• Platinum
• Flat-rolled steel
• Wool (raw)
• Copper waste and scrap
• Zirconium and vanadium ores
• Nickel plates, sheets and foil

• What we buy
• Top 10 Imports
• Cell-phones and phones
• Computers
• Printing machines
• Plastic and rubber boots
• Televisions and monitors
• Kettles, microwave ovens and toasters
• Dresses and womens jackets
• Suitcases and bags
• Sports shoes
• Computer and cash register parts and accessories

Confidential
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The New Growth Path

• Addresses
• Deep-seated structural problems that lead to high
  joblessness and inequality
• Specifically have to turn around major job losses
  in recent crisis
• Take advantage of opportunities in regional
  economy and changing global conditions

• The process
• Builds on mandate to prioritise employment
  creation
• Approved by Cabinet in October 2010
• Cabinet lekgotla identified priorities for
  2011/12, reflected in SoNA
• Requires alignment by all spheres and agencies of
  the state, with regular reporting on what they
  are doing to support employment creation and
  growth

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The approach
Identify what is needed to achieve the jobs and
investment
Identify key jobs drivers where employment is
possible
5 million new jobs by 2020
Key steps by the state directly and in
facilitating broader growth
New opportunities in changing regional global
environment
Private sector how to align outcomes with jobs
goals
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Jobs drivers
Main economic sectors Agriculture
agroprocessing Mining and beneficiation Manufactur
ing (IPAP2) Tourism/other services
Infrastructure Energy, transport, communications,
water, housing.
Look for employment opportunities in jobs
drivers and implement policies to take advantage
of them
Spatial opportunities Rural development African
regional development
New economies Green economy Knowledge economy
Social capital The social economy The public
sector
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Policy drivers

• Address cost drivers and inflationary pressures
  across the economy
• Active industrial policy based on increasing
  competitiveness and targeting sectors that can
  create employment directly and indirectly
• Comprehensive rural development
• Stronger competition policy
• Stepping up education and skills development
• Enterprise development
• Reform of Broad-Based BEE
• Reform labour policies to support productivity
  and improve protection for vulnerable workers
• Technology policies geared to improving
  innovation in ways that support employment
  creation and small- and micro-enterprise
• Developmental trade policies with a strong
  orientation to new growth centres
• Investment to support African development

Microeconomic policy drivers

• Macro-economic strategy counter-cyclical/support
  a competitive rand
• More relaxed monetary policy
• Address inflationary pressures through fiscal
  policy and targeted micro-economic strategies

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Resource drivers

• Resource drivers
• state budgets (national, provincial and local)
• the resources of SOEs and DFIs
• Universities and science council resources
• retirement funds
• the domestic private sector
• international investment
• donor funding
• community-owned financial institutions such as
  stokvels and co-ops.

• SoNA
• R9 billion in the Jobs Fund over the next 3 years
  public employment schemes plus subsidies to
  private employers
• R10 bn from the IDC in next 5 years for
  job-creating projects
• R20 billion in investment subsidies
• Comprehensive support for SMEs

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Institutional driversThe developmental state

• Agile, responsive, learning
• Profound shift in culture from
  compliance/process to delivery/outcomes
• Alignment around growth path review budgets,
  programmes and procurement policies

1. The DFIs (IDC, DBSA, Land Bank, Khula, SAMAF,
   NEF)
2. The GEPF and the PIC, as crucial investment
   drivers
3. The SARB, within its Constitutional mandate
4. The infrastructure SOEs (Transnet and Eskom)
5. ITAC and Customs Excise
6. The Competition Commission/Tribunal and other
   regulatory, standard-setting and accreditation
   bodies
7. The science councils, universities and Mintek

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Institutional drivers outside the state

• BUSINESS
• Business and markets vital jobs, investment,
  entrepreneurship, technology
• Large companies linked to national-base
• Developmental state not simply hostage to market
  forces and vested interests through careful
  alliances, clear purpose and leveraging its
  resource and regulatory capacity, can align
  market outcomes more clearly with development
  needs

• LABOUR
• Resources include skills commitments,
  productivity-agreements, retirement funds, union
  investment vehicles, wage agreements, public
  service delivery
• Without a common vision and strategic unity, not
  possible to make real progress and the society
  will simply exhaust itself on policy
  polarisation, while the extent of the
  developmental crisis grows

• SOCIAL DIALOGUE
• Time-consuming but crucial
• Deepen dialogue at sector and workplace
• Strengthen institutions from
• constituencies to NEDLAC
• Mobilise South Africans behind a vision

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In other words
a comprehensive response to the structural
crises of poverty, unemployment and inequality
based on solidarity across society
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Actions are required to secure supply in each of
four time periods
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Balanced IRP
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Transmission line requirements to 2020
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Water Supply Backlog
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The regulatory burden

• Transformation will require some new regulatory
  costs for business
• But those costs have to be proportionate to
  benefits AND minimised as far as possible in
  order to sustain economic development and
  employment creation
• Concerns about EIA
• Lack of clarity about information requirements
• Delays especially at provincial level
• Tendency to prevent projects in least developed
  areas reinforces spatial inequalities
• How can this process be made more efficient,
  employment-friendly and equitable?

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Water

• Concerns
• We need to do much more to diffuse water-saving
  agricultural techniques
• Inadequate maintenance of municipal water systems
  means we require huge sums for recapitalisation
  as well as wasting water
• Improved planning of water construction projects
  could ensure both greater direct employment
  creation and stronger local procurement
• Delays and lack of transparency around water
  licences prevents employment creation
  unnecessarily

• Water is critical
• For economic activity, including agriculture
• For public health and to improve living standards
  of the poor

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The regulatory burden

• Transformation will require some new regulatory
  costs for business
• But those costs have to be proportionate to
  benefits AND minimised as far as possible in
  order to sustain economic development and
  employment creation
• Concerns about EIA
• Lack of clarity about information requirements
• Delays especially at provincial level
• Tendency to prevent projects in least developed
  areas reinforces spatial inequalities
• How can this process be made more efficient,
  employment-friendly and equitable?

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Water

• Concerns
• We need to do much more to diffuse water-saving
  agricultural techniques
• Inadequate maintenance of municipal water systems
  means we require huge sums for recapitalisation
  as well as wasting water
• Improved planning of water construction projects
  could ensure both greater direct employment
  creation and stronger local procurement
• Delays and lack of transparency around water
  licences prevents employment creation
  unnecessarily

• Water is critical
• For economic activity, including agriculture
• For public health and to improve living standards
  of the poor

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Conclusion

• 2011 is a year of job creation
• Coordination of policy, regulation, planning and
  implementation across government is critical
• Involve communities
• Social partners - business, labour and civil
  society - have a crucial role to play
• Water and environmental issues offer both
  challenges and opportunities for creating a more
  employment friendly and equitable economy
• We need to involve communities more in finding
  solutions, not just as the objects of policies
• But we also have to move far more decisively on
  key concerns even as we minimise unnecessary
  costs and protect poor communities as far as
  possible