ID ECONOMIC POLICY
Bridging the Divides and Growing an Economy that delivers to all our People
The ID believes that it is essential to address our structural economic
divides, both to create the conditions for sustainable economic growth
and to ensure that this growth translates into increased prosperity for
all the people of South Africa. These divides are:
1) Unemployment Divide - Unemployment is about 41 percent and is particularly bad amongst young South Africans.
2) Inequality Divide - income inequality has not improved over the last twelve years of democracy and by some accounts has even become worse.
3) Poverty Divide – There are roughly 11 million South Africans living in extreme poverty, equating to over 30 percent of our population.
4) Capital/labour divide - There has been a 40 percent decline in labour intensity over the last three decades. It is not just economic growth that South Africa needs, but labour intensive growth.
5) Big Business/Small Business Divide – South Africa has a high level of vertical and horizontal integration in ownership patterns. This is making it difficult for small businesses to enter the market.
6) Declining investment – Private investment has fallen from a level of 25 percent in the early 1980s to around 16 percent in 2004. Government investment has also fallen over the last 12 years from 4 percent of GDP to less than 2 percent.
7) Infrastructural divide - Infrastructural divides must be bridged if all communities are to be given the opportunities to fully participate in the mainstream economy.
8) Skills Divide - There is a huge skills mismatch in the economy, which the education and training sector has to address if we are to move forward as an economy.
9) Divide between Government and the People - While the ANC believes in State-centred development and the DA believes in market led development, the ID believes in people centred development. It is clear to the Independent Democrats that while both the State and the market are essential actors in development they are inadequate in achieving our developmental objectives unless the enormous capacity of our people is unlocked and built upon.
10) Unsustainable Economic Growth –Current investment decisions do not factor in natural resource constraints.
11) Lack of Social Cohesion - For South Africa to succeed it is imperative that we build social cohesion and trust between all our citizenry.
ID Solutions
• As a party with a social democratic ideology, the ID firmly maintains that the market mechanism must be allowed to flourish within the economy, but that the government in partnership with the people must also play an active part in ensuring that the economy delivers on certain shared societal objectives.
On the Macro-Economic Framework
• Given such huge infrastructural, social and human development backlogs the ID maintains that the government must invest far more in human development.
• Budgetary spending can be increased while still keeping the deficit within manageable levels. This spending should be directed at the poor, which will in turn increase consumer demand in the country, spurring on both investment and growth.
• The ID will change the mandate of the South African Reserve Bank to develop a monetary policy that is not only conducive to inflation targeting but is also growth enhancing. Interest rates in South Africa have been far too high for a developing country and have in some instances choked off real investment in the economy.
On Industrial Policy
• The ID would institute a subsidy and tax break scheme that would provide incentives for businesses increasing their labour intensity.
• The ID would also introduce an Employment Impact Assessment for any new businesses on the basis of which they would qualify for tax breaks and credit subsidies.
• The ID would increase government Research and Development spend on certain key sectors so as to position ourselves as global leaders in these fields.
• The ID would stop subsidising wasteful government projects especially our Arms Manufacturing industry.
On Rural Development
• The ID would institute a Comprehensive Rural Development Programme.
• The ID would improve the pace and quality of land reform. We would institute proper post settlement support to enable new farmers to acquire the skills to turn their piece of land into a viable economic entity.
• ID will also put emphasis on supporting a subsistence plus model of agriculture which provides support and inputs to small scale farmers across South Africa.
On Social Security
• The Independent Democrats maintains that there are far too many gaps in our current social security system. Millions of South Africans who are living in dire poverty do not currently qualify for any form of social assistance. The ID would broaden the social security net.
On Model of Delivery
• ID firmly believes that communities have to be put at the centre of development and must not be treated as passive recipients of delivery.
• ID believes that development needs to be decentralised to the realm of the community and that government must then play a facilitating role by providing the necessary financial resources and advisory services.
• ID would streamline the channels for funds to be transferred to civil society organisations so that they are able to perform the functions that government is unable to.
On Sustainable Development
• The ID would start instituting a shift away from some of our most capital and energy intensive industries.
• The ID will position South Africa as the pioneers of a new form of sustainable development.
On the Public Service
• The ID will change the ethos and culture of the public sector so that it becomes a place whereby people view it as a privilege to work there.
• The ID would immediately set about building the pride of the civil service and removing the politics which has often made it unbearable for people to perform their jobs.
• The ID would also look to encourage the twin imperatives of transformation and excellence within the public service by ensuring that the right mix of innovative thinkers and solid workers are employed.
1) Unemployment Divide - Unemployment is about 41 percent and is particularly bad amongst young South Africans.
2) Inequality Divide - income inequality has not improved over the last twelve years of democracy and by some accounts has even become worse.
3) Poverty Divide – There are roughly 11 million South Africans living in extreme poverty, equating to over 30 percent of our population.
4) Capital/labour divide - There has been a 40 percent decline in labour intensity over the last three decades. It is not just economic growth that South Africa needs, but labour intensive growth.
5) Big Business/Small Business Divide – South Africa has a high level of vertical and horizontal integration in ownership patterns. This is making it difficult for small businesses to enter the market.
6) Declining investment – Private investment has fallen from a level of 25 percent in the early 1980s to around 16 percent in 2004. Government investment has also fallen over the last 12 years from 4 percent of GDP to less than 2 percent.
7) Infrastructural divide - Infrastructural divides must be bridged if all communities are to be given the opportunities to fully participate in the mainstream economy.
8) Skills Divide - There is a huge skills mismatch in the economy, which the education and training sector has to address if we are to move forward as an economy.
9) Divide between Government and the People - While the ANC believes in State-centred development and the DA believes in market led development, the ID believes in people centred development. It is clear to the Independent Democrats that while both the State and the market are essential actors in development they are inadequate in achieving our developmental objectives unless the enormous capacity of our people is unlocked and built upon.
10) Unsustainable Economic Growth –Current investment decisions do not factor in natural resource constraints.
11) Lack of Social Cohesion - For South Africa to succeed it is imperative that we build social cohesion and trust between all our citizenry.
ID Solutions
• As a party with a social democratic ideology, the ID firmly maintains that the market mechanism must be allowed to flourish within the economy, but that the government in partnership with the people must also play an active part in ensuring that the economy delivers on certain shared societal objectives.
On the Macro-Economic Framework
• Given such huge infrastructural, social and human development backlogs the ID maintains that the government must invest far more in human development.
• Budgetary spending can be increased while still keeping the deficit within manageable levels. This spending should be directed at the poor, which will in turn increase consumer demand in the country, spurring on both investment and growth.
• The ID will change the mandate of the South African Reserve Bank to develop a monetary policy that is not only conducive to inflation targeting but is also growth enhancing. Interest rates in South Africa have been far too high for a developing country and have in some instances choked off real investment in the economy.
On Industrial Policy
• The ID would institute a subsidy and tax break scheme that would provide incentives for businesses increasing their labour intensity.
• The ID would also introduce an Employment Impact Assessment for any new businesses on the basis of which they would qualify for tax breaks and credit subsidies.
• The ID would increase government Research and Development spend on certain key sectors so as to position ourselves as global leaders in these fields.
• The ID would stop subsidising wasteful government projects especially our Arms Manufacturing industry.
On Rural Development
• The ID would institute a Comprehensive Rural Development Programme.
• The ID would improve the pace and quality of land reform. We would institute proper post settlement support to enable new farmers to acquire the skills to turn their piece of land into a viable economic entity.
• ID will also put emphasis on supporting a subsistence plus model of agriculture which provides support and inputs to small scale farmers across South Africa.
On Social Security
• The Independent Democrats maintains that there are far too many gaps in our current social security system. Millions of South Africans who are living in dire poverty do not currently qualify for any form of social assistance. The ID would broaden the social security net.
On Model of Delivery
• ID firmly believes that communities have to be put at the centre of development and must not be treated as passive recipients of delivery.
• ID believes that development needs to be decentralised to the realm of the community and that government must then play a facilitating role by providing the necessary financial resources and advisory services.
• ID would streamline the channels for funds to be transferred to civil society organisations so that they are able to perform the functions that government is unable to.
On Sustainable Development
• The ID would start instituting a shift away from some of our most capital and energy intensive industries.
• The ID will position South Africa as the pioneers of a new form of sustainable development.
On the Public Service
• The ID will change the ethos and culture of the public sector so that it becomes a place whereby people view it as a privilege to work there.
• The ID would immediately set about building the pride of the civil service and removing the politics which has often made it unbearable for people to perform their jobs.
• The ID would also look to encourage the twin imperatives of transformation and excellence within the public service by ensuring that the right mix of innovative thinkers and solid workers are employed.
