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Planning under pressure

Jan 05 2011 10:36 Greta Steyn

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SOME may think that Economic Development Minister Ebrahim Patel had a good year in 2010. One minister who definitely didn't was Planning Minister Trevor Manuel.

Will 2011 be a better year for Manuel? What will become of Patel's grandiose plans?

Manuel in January last year published the revised green paper for the national planning commission, and in April announced the names of the members of the commission. But so far, we haven't seen any "planning" coming out of the commission.

Some might say it's early days yet – after all, they are working on an overarching "national plan" for SA in 2025.

But the release of Patel's new growth path (NGP) places pressure on Manuel to come up with something fast. The reason is that Patel's plan has many of the traits of the national plan, and the coexistence of the two projects may be problematic.

Their coexistence may be a problem because earlier work out of Manuel's department, just after the last election, showed that the approach was to take government policies of every department and summarise them into a document, with some additions to try to please the diverse constituencies of labour and business. This is exactly what Patel has done with his NGP.

Sanlam economist Jac Laubscher sums up the NGP as "a collection of policy ideas from across the full spectrum of government, some of which have been in the public domain for years.

"In the framework's own words, 'The document knits together the industrial policy action plan as well as policies and programmes in rural development, agriculture, science and technology, education and skills development, labour, mining and beneficiation, tourism, social development and other areas'.

"In fact, there is hardly a policy initiative, whether current or under discussion, that is not incorporated in the NGP, positioning the latter as the umbrella under which ALL of government operates."

Surely Manuel's plan would have to be the umbrella under which all of government operates? The revised green paper on the National Planning Commission says: "The establishment of a national planning commission is the embodiment of government's efforts to improve long-term planning and rally the nation around a common set of objectives and pirorities to drive development over the longer term."

The green paper starts off by saying: "Our efforts to massively reduce poverty and roll back the extreme inequalities of the apartheid era have only begun to take effect. We need long-term perspective, focus and determination to realise our vision."

Would the difference between Patel's plan and Manuel's be that Patel's is more short-term in its focus? This might be true of things such as Patel's focus on rand strength (which won't last until 2025!) but untrue of others, such as the social contract for the capping of salaries and wages, as well as skills development, logistics development and regional economic integration.

With the NGP now government policy, Manuel would theoretically be forced to use it as a point of departure for his plan. But the NGP hasn't been championed by President Jacob Zuma.

Wage cap dead in the water

True, it has the cabinet's approval, but so far the president hasn't come out in support of its more controversial measures, such as the capping of salaries and wages. The president's state of the nation address will be watched carefully to see what he does in this regard.

The capping of salaries and wages suggested by Patel met with a negative response from both business and labour. What happens if Manuel's commissioners think it's a bad idea, too? Do they come out and say it, or do they just ignore the topic?

The proposed wages cap is the reason why Patel didn't really have such a great year, despite him pipping Manuel to the post with a Grand Plan.

The furore it unleashed from both business and labour suggests the idea is dead in the water. Yet it is an essential ingredient to other aspects of the plan, such as the focus on weakening the rand. Patel wants to prevent an inflation rise resulting from steps taken to weaken the rand.

There are many problems with the salaries and wages cap, not least the fact that the tax take will be lower in real terms if the wages bill is constrained.

How then, asks Laubscher, will government be able to maintain the real value of social grants and high infrastructure spending? This has to happen while at the same time tightening fiscal policy to create room for looser monetary policy – something which doesn't appear possible, even if the plan's overly ambitious job creation targets are met.

Manuel's plan should acknowledge what Patel's didn't: that SA will have to live with inequality until the vast masses of unskilled become smaller and the skills base improves dramatically.

There's a demand for skilled labour, and this translates into higher salaries. Only through skills will the inequality gap be narrowed. Manuel will do the nation a favour by acknowledging this, unlike Patel.

Manuel faces a challenging year. His team has to come up with a plan that will, in many quarters, be seen as a rival to Patel's. 

 - Fin24

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