Doing less will achieve more under DA’s policyComment on this story
The DA’s policy on the economy is actually – and forgive my mild tone of surprise – very promising. Its strength lies not in what the DA plans to do, but in that it plans to do comparatively little, which is exactly what South Africa needs.
My favourite line, “This will bring to an end the monopoly enjoyed by Telkom”, is representative of the general attitude behind the policy document and the DA’s outlook on the economy.
The DA, in contrast to the ANC, wants to lead a government that will be less of a key role-player in the responsibilities of the economy and more an enabler for efficient and job-orientated market activity.
This is not to be confused with a policy of overt privatisation – rather than let go of the reins completely, the DA’s policy seeks to give the economy room to breathe.
It starts with the stripping of regulations that bog down the fluidity of business interactions. The policy wants the definition of a “big employer” to include only businesses that employ more than 250 workers, reducing the heavy regulatory burdens that choke small businesses.
A large part of the document is dedicated to policies that will help create a nation of business owners and includes recognition that the informal economy has a role to play and should be accommodated.
The DA wants to reduce the costs of importing and exporting, and simplify complex customs processes. It suggests that exchange controls should be abolished. If implemented, this would need to be done gradually to avoid short-term volatility in the exchange rate.
It terms of land, the policy recognises that redistribution should start with state-owned land; approximately 22 percent of the country’s land is owned by the state. In addition, it seeks to encourage registered land ownership in the former homelands and simplify property registration to free up greater collateral for business creation.
A major focus is job creation and skills development through experience. First, the policy states that the government will reimburse all training costs incurred by employers. It details how it plans to implement a policy of apprenticeship wages, in terms of which first-time employees can be employed at a percentage of the minimum wage. The success of this policy would depend entirely on the conditions in place to ensure that companies do develop an apprenticeship relationship and do not just abuse access to cheaper labour.
Regarding infrastructure, the DA wants to turn its focus to bringing down the costs of transport and logistics. It promises to renew the freight rail fleet, bringing down the costs and dangers of road-based freight.
In a move that the economy has been demanding for two decades, the policy puts forward a major upgrade to IT infrastructure. It admits this is not primarily the role of the state. The responsibility of the state is to enable a competitive environment for the market to resolve this challenge, hence the disbanding of the Telkom monopoly.
The DA claims that under the right conditions the economy can grow at 8 percent a year. This is almost impossible for any government to achieve, but the virtue of its economic policy is that it admits that the government doesn’t need to. By putting key policies in place, the government can free up individuals and businesses to create the change they want to see.
The government’s job is not to create economic capacity, but to free up the capacity that already exists.
Pierre Heistein is the convener of UCT’s Applied Economics for Smart Decision-Making course. Follow him on Twitter @PierreHeistein