Transcript The New Growth Path

The New Growth Path: Implications
for Water and Environmental
Affairs
February 16, 2011
Overview
•
•
•
•
•
•
SONA Imperatives
Key Challenges Facing Government
The Global Economic Outlook and Context
The New Growth Path
Implications for Water and Environment
Conclusion
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.”
Key challenges facing
Government
Income Distribution
Unemployment
Concentration of Economic
Power
Apartheid Spatial
Development
Poverty
Education
Disparities
Access to Basic Goods
and Services
Health Disparities
Lack of Beneficiation
Current Challenges
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
4
Public finances have
deteriorated globally
Budget balance in 2007 and 2010 (% of GDP)
15
2007
2010e
10
% of GDP
5
0
-5
-10
-32%
-15
Source: OECD
5
South African economy:
Fixed investment
Gross fixed capital formation
100
110.1%
% Change (q-o-q) *
80
• Real fixed investment
spending by public
corporations
continued to be the
main driver of overall
investment activity.
60
40
20
0
-20
Government
Public corporations
Private sector
Total investment
-40
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2010
|
2009
|
2008
|
2007
|
2006
|
2005
Source: SARB
6
Global economy: outlook
Projections
2011
2012
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
United States
Euro area
Japan
0.2
0.0
0.3
-1.2
-3.4
-2.6
-4.1
-6.3
2.8
2.8
1.7
4.4
2.4
2.8
1.4
1.8
2.7
2.9
2.0
2.0
Emerging and developing economies
Sub-Saharan Africa
South Africa
Nigeria
East Asia & Pacific
China
South Asia
India
Latin America
Brazil
Europe & Central Asia
Russia
5.7
2.0
7.0
6.0
6.1
5.2
3.7
6.0
8.5
9.6
4.8
5.1
4.0
5.1
3.9
5.2
1.7
-1.8
5.6
7.4
9.1
7.0
7.7
-2.2
-0.2
-6.6
-7.9
4.7
2.7
7.6
9.3
10.0
8.7
9.5
5.7
7.6
4.7
3.8
5.3
3.5
7.1
8.0
8.7
7.7
8.4
4.0
4.4
4.0
4.2
5.5
4.1
6.2
7.6
8.4
8.1
8.7
4.0
4.3
4.2
4.0
Source: World Bank, GEP – Jan 2011
7
New global context
• The rise of new economic
powers
80
– China, India, Brazil
– Scramble for Africa’s
resources
70
actual
estimated
60
– 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
% of global GDP
• Economic fragility
China
50
India
South Africa
40
Brazil
Japan
30
United States
Western Europe
20
10
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
0
Confidential
world GDP
and national
shares
calculated
using PPP
dollars (IMF
WEO)
8
China – an example
What we buy:
Top 10 Imports
What we sell:
Top 10 Exports
1.Iron ore
2.Ferro-Alloys
3.Chromium ores
4.Manganese ores
5.Platinum
6.Flat-rolled steel
7.Wool (raw)
8.Copper waste and scrap
9.Zirconium and vanadium ores
10.Nickel plates, sheets and foil
1.
2.
3.
4.
5.
6.
Cell-phones and phones
Computers
Printing machines
Plastic and rubber boots
Televisions and monitors
Kettles, microwave ovens and
toasters
7. Dresses and women’s jackets
8. Suitcases and bags
9. Sports shoes
10. Computer and cash register parts
and accessories
Confidential
9
Rail lines in Africa
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
The approach:
Identify key jobs
drivers where
employment is
possible
Identify what is
needed to achieve
the jobs and
investment
5 million new jobs by
2020
Key steps by the
state: directly and
in facilitating
broader growth
Private sector: how
to align outcomes
with jobs goals
New opportunities
in changing
regional & global
environment
12
Jobs drivers
Infrastructure
Energy, transport,
communications,
water,
housing.
Main economic
sectors:
Agriculture &
agroprocessing
Mining and beneficiation
Manufacturing (IPAP2)
Tourism/other services
Look for employment opportunities in
“jobs drivers” and implement policies
to take advantage of them
New economies:
Green economy
Knowledge
economy
Social capital:
The social economy
The public sector
Spatial
opportunities:
Rural
development
African regional
development
13
• Macro-economic
strategy: countercyclical/support a
competitive rand
– More relaxed
monetary policy
– Address
inflationary
pressures through
fiscal policy and
targeted microeconomic
strategies
Microeconomic policy drivers
Policy drivers
1. Address cost drivers and inflationary pressures
across the economy
2. Active industrial policy based on increasing
competitiveness and targeting sectors that can
create employment directly and indirectly
3. Comprehensive rural development
4. Stronger competition policy
5. Stepping up education and skills development
6. Enterprise development
7. Reform of Broad-Based BEE
8. Reform labour policies to support productivity and
improve protection for vulnerable workers
9. Technology policies geared to improving
innovation in ways that support employment
creation and small- and micro-enterprise
10. Developmental trade policies with a strong
orientation to new growth centres
11. Investment to support African development
Increase FET
college intake to
1 million
students
Sufficient
resources for
training
Key skills targets
Engineers: 30 000
Artisans: 50 000 by
2014/15
Training at
centre of new
growth path
Easier recruitment
of foreign skills
coupled with skills
transfer plans
SOEs to target artisans.
Confidential
Broad-based
workplace training:
10% of workforce or
1,2m workers on
training
Computer skills at all
schools, training for all
public servants
Review of
SETA
performance.
15
Measures to
address inflation
focussing on
volatile prices
Address main
cost drivers to
enhance
competitiveness
Support higher
savings including
through retirementfund reform and
reduce the cost of
industrial finance
Confidential
Looser monetary policy
stance to support a more
competitive (and stable)
exchange rate and reduce
cost of investment
Policy driver:
Development
policy
package
Pact with organised labour
and business on wages and
prices, protect the social wage
and support job creation
Additional measures
to depreciate and
then stabilise the
rand, as required
More restrained fiscal
policy reflected in
around 2% real growth
in expenditure
Eliminate
waste and
ensure rigorous
reprioritisation
of budgets
16
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 jobcreating projects
– R20 billion in investment
subsidies
– Comprehensive support for
SMEs
17
Institutional drivers
The 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
18
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
19
In other words…
…a comprehensive response to the
structural crises of poverty,
unemployment and inequality…
…based on solidarity across society
Actions are required to
secure supply in each of four
time periods
Time period
Impact in
2014-2017
Impact in
2010-2013
Capacity
addition
10GW
▪
Ensure DSM
success
▪
Enable
signing of
critical PPAs
▪
Enable PCP
1
Decisions to
be taken in
2010 that
impact each
horizon
2
3
Impact in
2018-2020
9GW
▪
4
Pursue
import
options as
back up
21
Impact in
2021 onwards
26GW1
5GW
▪
5
Decide which
option to
commit to
(imports, gas,
coal, further
DSM) and
what is the
back up
1 16GW incremental plus 10GW replacement for decommissioning by 2028 in the proposed scenario
▪
6
Define long
term base
load option,
including role
of life
extension of
existing coal
fleet
Balanced IRP
Net new capacity (2030)
Total capacity (2030)
Baseload Coal
11%
Renewables
32%
Baseload Nuclear
24%
Renewables
16%
Peaking Pumped
Storage, Hydro
6%
Peaking - OCGT
11%
Peaking Pumped
Storage Peaking OCGT
3%
17%
Baseload Import hydro
8%
Mid-merit
Gas
5%
Mid-merit Gas
2%
Baseload Import hydro
4%
Baseload Nuclear
14%
22
Baseload - Coal
47%
Transmission line
requirements to 2020
Cumulative Transmission Line requirements (km)
10,000
km
8,000
6,000
4,000
2,000
0
2004
2005
2006
2007
2008
HVDC
0
0
0
0
0
0
0
0
0
0
0
0
765kV
0
0
0
0
0
234
469
729
2,134
2,564
3,264
3,764
400kV
386
582
619
1,074
1,185
1,301
1,535
2,321
3,489
5,205
6,238
6,418
275kV
0
0
0
0
0
0
85
87
87
119
129
147
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
0
600
1,700
1,700
1,700
4,044
5,674
5,674
5,824
6,554
7,412
8,403
9,413
9,530
9,552
808
826
826
826
826
Water Supply Backlog
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?
Water
• Water is
critical
– For economic
activity,
including
agriculture
– For public
health and to
improve living
standards of
the poor
• 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
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?
Water
• Water is
critical
– For economic
activity,
including
agriculture
– For public
health and to
improve living
standards of
the poor
• 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
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
29