The New Growth Path: Implications for Water and Environmental Affairs

1. The New Growth Path: Implications for Water and Environmental Affairs February 16, 2011

2. Overview SONA Imperatives Key Challenges Facing Government The Global Economic Outlook and Context The New Growth Path Implications for Water and Environment Conclusion

3. 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.”

4. Key challenges facing Government

5. Public finances have deteriorated globally

6. South African economy:Fixed investment

7. Global economy: outlook

8. New global context The rise of new economic powers China, India, Brazil Scramble for Africa’s resources Economic fragility 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

9. China – an example What we sell: Top 10 Exports Iron ore Ferro-Alloys Chromium ores Manganese ores Platinum Flat-rolled steel Wool (raw) Copper waste and scrap Zirconium and vanadium ores Nickel plates, sheets and foil What we buy: Top 10 Imports Cell-phones and phones Computers Printing machines Plastic and rubber boots Televisions and monitors Kettles, microwave ovens and toasters Dresses and women’s jackets Suitcases and bags Sports shoes Computer and cash register parts and accessories

11. 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

12. The approach: Edited BUT REWORK REQUIRED.Edited BUT REWORK REQUIRED.

13. Jobs drivers

14. Policy drivers Macro-economic strategy: counter-cyclical/support a competitive rand More relaxed monetary policy Address inflationary pressures through fiscal policy and targeted micro-economic strategies Address cost drivers and inflationary pressures across the economy Active industrial policy based on increasing competitiveness and targeting sectors that can create employment directly and indirectly Comprehensive rural development Stronger competition policy Stepping up education and skills development Enterprise development Reform of Broad-Based BEE Reform labour policies to support productivity and improve protection for vulnerable workers Technology policies geared to improving innovation in ways that support employment creation and small- and micro-enterprise Developmental trade policies with a strong orientation to new growth centres Investment to support African development

17. 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.

18. Institutional driversThe 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 The DFIs (IDC, DBSA, Land Bank, Khula, SAMAF, NEF) The GEPF and the PIC, as crucial investment drivers The SARB, within its Constitutional mandate The infrastructure SOEs (Transnet and Eskom) ITAC and Customs & Excise The Competition Commission/Tribunal and other regulatory, standard-setting and accreditation bodies The science councils, universities and Mintek Some editsSome edits

19. 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

21. Actions are required to secure supply in each of four time periods

22. Balanced IRP

23. Transmission line requirements to 2020

24. Water Supply Backlog

25. 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?

26. 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

27. 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?

28. 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

29. 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