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Chairperson,
Ladies and Gentlemen
It is a pleasure to find myself tonight in the midst of a cheerful gathering. I do realise that I am surrounded by serious business people. But I imagine that the convivial atmosphere here is not entirely unconnected with the number of new highs in listed share prices.
I must therefore assume that your affairs are beginning to prosper, and I am delighted that this should be so. We have all worked hard - in government and outside - to ensure a smooth transition so that the country could flourish;and it is stimulating and reassuring to see these early signs of progress.
The new positive signs of recovery strengthen me in my fundamental optimism about the future of our nation. I am certain it has the same effect on you;and we all know that such a positive spirit is essential if we are going to have more investment, higher growth and more jobs.
Of course there are those who prefer to explore the darker scenarios and to test our faith with their scepticism. They point out that there are people whose expectations have assumed inflated dimensions and who may react badly when these are not immediately satisfied. To this, one could respond that this fairly describes those speculating on the imminent abolition of the Finrand. I do not expect these speculators to turn nasty when they find that it can only be done in an orderly process over time. The same is true in other cases.
I am sure that was not the example that you would have chosen to illustrate this particular danger. But I chose it because it suits this audience. It emphasises the fact that the government's approach to the functioning of the economy is essentially similar to its approach to its tasks in general.
The Government of National Unity is committed to act methodically and wisely in finding a truly optimum path for the achievement of each of the objectives which together make up our goal of a better life for all in this country. Yet some of these optimum paths are hard to find.
Looking at the government's own situation first, we have inherited what has been described as 'a fiscal mess'. It's elements are:
- consumption expenditure that is too high for the size of our economy;
- taxation that is higher than international norms;and
- a level of borrowing which is unacceptable.
We have, in drafting the current Budget, adopted a policy which addresses all these three elements. But there are a number of reasons why progress will be slower than we would have liked.
Like all very large organisations, the government machine grinds at a slow pace. For us, this is complicated by the birth pains of the new provinces and the death throes of old apartheid creations. To this has been added the task of absorbing new personnel in various services and changing spending priorities in line with the RDP;while observing the constitutional safeguards for all employees.
These realities, however, do not deter us. We plan to keep the line of expenditure at its present level in real terms in the future. Of course there might be a degree of slippage in the first year or two. But plans are in place to minimise this and to neutralise its adverse effect on the progressive reduction of the deficit. All future budgets will take their expenditure cue from the original line, not to be adjusted upwards to accommodate any slippage. In due course, we shall prevail.
When we do, assuming quite modest growth of the economy in the meantime, we shall be well on the way to correcting our major fiscal defects. You do not need to be told what favourable terms in monetary and exchange rate policies will result from this basic act of selfdiscipline.
There are those in business who elect to disbelieve this scenario. Our best, and indeed only, answeoustiwill have to lie in our performance. A little more confidence, though, in the bona fides of our intentions as well as our determination to attain them, would stand our country in good stead.
I wish to emphasise once more that no departmental policy will be approved by Cabinet if it does not come to terms with affordability within the constraints of the overall policy I have outlined.
Ladies and Gentlemen
The ultimate justification for the pain we are putting the public sector through is the scope which it creates for steadily meeting the basic needs of especially the poor. A central requirement in this regard is a more and more vigorous private sector. But public sector discipline is only necessary and not a sufficient ondition for satisfactory economic growth. Without strong entrepreneurial action on your part, our bid for a high growth - rate and developing economy will be stillborn.
Where government can, we will try to create the opportunities. If there are difficulties which we can help remove, we will do so. But we can't do the business of business. That is your job, and it has to be tackled with gusto.
To quote but one example: early this year, the United States granted us admission to their Generalised System of Preferences, giving us a favourable export position to the US market on more than 4000 tariff classifications. Because it is in a sense a free gift it can be unilaterally cancelled. But this generally happens when the volume of our incursion gets to a level - 'a danger point' - which could threaten United States producers.
The scope afforded by this window is enormous by our standards. Are we determined enough to push forward, item by item, even beyond the danger point, as some East Asian countries did? To be more direct, do you have the kind of commitment, the necessary drive, to pursue this kind of success? Add to this, the concessions in Europe and Japan and the new opportunities in India and China. Are we geared for the effort which all this calls forth? I am sure you will respond to this need.
What, then, would be the characteristics of those who have failed to produce an adequate response in similar circumstances? some of them are:
- conspicuous consumption;
- extreme risk - aversion;
- investment in real estate and the avoidance of investment in industry;
- export of savings to foreign banks;
- fear of foreign competition;
- lack of capital for enterprises able to compete with foreign companies;
- lack of entrepreneurial skills;
- poor attitudes for work, and
- a lack of innovation conducive to growth.
We all recognise how close our society has come to this unsatisfactory profile - the profile of a losing nation.
Carrying through the rehabilitation needed in the public sector is going to require the necessary political will. Carrying through the dynamic action needed in the private sector is going to require the necessary entrepreneurial will. We can and must help each other. If we don't, South Africa will not succeed.
The Government visualises the statutory Council which is designed to build on the successes of the former NEF and NMC as the meeting ground between ourselves, the private sector and labour to ensure a fruitful interface. All government economic departments - notably finance, trade and industry, reconstruction and development and labour - will be full participants.
The Minister of Labour will be additionally responsible to Cabinet for the Council's overall effectiveness. The fact that it will be regulated by statute, allowing for amendment in the light of experience, is measure of the importance which the government attaches to the work of the council.
We would of course, be naive to hope that such a council could resolve the day-to-day discord between employers and employees. The hard bargaining that is characteristic of any democracy hto continue, preferably, free of Government interference. What is needed, given th challenges the nation faces, is a set of mechanisms that allow for sufficient mediation and dispute -resolution before matters come to a head.
Further, in line with the national task of deracialising South African society, deliberate efforts have to be put into ridding the work - place of any form of gender or racial discrimination. This is besides ensuring that, in the future, one would address a SACOB that is reflective of the full spectrum of our rainbow nation.
In conclusion, let me address the unspoken question in all your minds. I will state it as simply as possible: "Are we going to make it?" I am sure the answer is: "Yes provided..."
To complete the answer, let me take you back to the spirit of the queues during the elections. In the midst of scepticism, we found a common activity that we all understood was important. We carried it out with a determination and dignity that astounded the world. The flame we lit then, together, continues to burn strongly. To harness the spirit that fans it, all we need to do is to work together in establishing our national objectives and accomplishing them.
Make your commitment to this through sharing in the work of this new tri-partite Council, by deliberately contributing to reconstruction and development, and in shaping your businesses conscious of the new challenges we face. Then we shall improve our answer to the question: "Are we going to make it?" into a straight forward "Of course"
I thank you for the opportunity to share these views with you.