Transcript Solidarity Trade Union

2012 BBBEE Amendment Bill
Presentation to the Portfolio Committee on Trade and Industry
Solidarity Research Institute
About Solidarity
1.
2.
3.
4.
Solidarity is one of the oldest trade unions in the country
Solidarity has members in virtually every industry in South Africa
Solidarity is a trade union in the Christian democratic tradition
Solidarity advocates a system of free enterprise, confident that the
employment relationship can be one of mutual gain
5. Solidarity does not support any political party
Participation thus far
1. Record of recent participation
1. Submission on BBBEE Amendment Bill 2011
2. Submission on BBBEE Codes published October 2012
3. Submission on BBBEE Amendment Bill 2012
2. Would like to have it noted here
1. Announcement in December 2012 by Trade and Industry that Code
series 500 is retracted
Approach to this bill
1. We noted that
1. the key intentions with the 2012 bill remains the intensification of the
programme of reallocation of capital according to political priorities
instead of consumer priorities; and
2. that this is contrary to the spirit of our previous contributions.
2. We therefore decided
1. that it is evident that the key intentions with the bill remain in place;
2. to desist from another round of point-by-point commentary; and
3. to focus our attention and the attention of the portfolio committee on
the consequences of the bill’s adoption – and its key intention of political
reallocation – on ordinary consumers.
Preamble (Act)
Whereas
• South Africa’s economy performs below its potential because of the low level
of income generated by the majority of its people
In order to
• Promote the achievement of the constitutional right to equality, increase
broad based and effective participation of black people in the economy, and
promote a higher growth rate, increased employment and more equitable
income distribution.
Objectives of the Act
1. 2(a) promote economic transformation in order to penable meaningful
participation of black people in the economy.
2. 2(e) promoting investment programmes that lead to broad-based and
meaningful partcipation in the economy by black people in order to achieve
sustainable development and general prosperity.
3. 2(g) promoting access to finance for black economic empowerment
The capital structure
1. The capital structure
1. is the arrangement of durable goods and services that, in time, yield final
goods and services for consumer needs.
2. originates from prior acts of saving and investment
3. has very specific properties, depending on how its parts are arranged to
produce (which, when) final goods and services;
4. is arranged by entrepreneurs based on estimations of future consumer
needs.
2. How are the entrepreneurs determined?
1. Consumers demonstrate preference for certain final goods and services
2. This process rewards whoever serves these consumer preferences best
3. Investors recognise that some producers (entrepreneurs) are more
profitable
4. Investors channel their resources to these (best) entrepreneurs
Capital allocation a consumer-led process
1. Consumers, in their buying-patterns, identify the preferred entrepreneurs;
and
2. investors act upon this preference by channeling resources to the
entrepreneurs that consumers demonstrate preference for.
The Capital Structure and Consumer Goods
1. Consumer goods
1. Are goods and services used directly by consumers in the pursuance of
their ends; and
2. are the end product of the capital strucure, its raison d’etre.
2. Who uses consumer goods?
1. Everybody.
2. In BBBEE terminology: black , coloured, indian and white
3. Importance of the capital strucure evident
1. If more efficient entrepreneurs manage capital structure, everybody
benefits; and
2. if less efficient entrepreneurs manage capital strucutre, everybody loses.
How significant can a slightly less effective entrepreneur be?
How significant can a slightly less effective entrepreneur be?
• By 2017: consumers have paid for BBBEE by sacrificing the equivalent of a year
and a half’s worth of consumer goods production.
Conclusion
1. We can choose our policies, but not their consequences.
2. The goal of production is to provide means for consumption.
3. A policy that replaces a consumer-led process of resource allocation with a
political resource allocation, has as its consequence that consumers have less
access to goods and services, including black, coloured, indian and white.
4. Insofar as the BBBEE amendment bill succeeds in further suppressing the
consumer-led process with the political allocation process, it is to the
detriment of consumers – black, coloured, indian and white.
5. The cost of allocating resources to even slightly less efficient entrepreneurs is
significant, and once paid – even if unseen – can never be recovered.
6. Naturally, true entrepreneurs exist among all population groups.
1. Resources should not be redirected away from them.
2. True entrepreneurs are not dependent on political allocation and can
never be discovered by political allocation.
3. True entrepreneurs must be found by a consumer-led process.
7. We recommend that the BBBEE bill be withdrawn, since its core idea is to
strengthen the BBBEE act, to the detriment of consumers, who are everyone
in South Africa.