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Economist defends NDP

Cape Town - The National Development plan is not without flaws, but it's the best we’ve got in the current political reality, Nomura International's emerging markets economist Peter Attard Montalto said on Tuesday.

He was coming to the defence of the National Development Plan (NDP) after the South African Institute of Race Relations (SAIRR) issued a scathing report.

The SAIRR said on Monday the NDP tries to do too much and its costly ambitions are not discussed.

"It reads as if various government departments have provided wish lists without much attempt to pull them all together," the SAIRR said in the July edition of its monthly magazine Fast Facts.

"But one thing the NDP does not do is put a price tag on all the wish lists it incorporates and endorses."

Montalto said he felt "the need to write a few lines" in defence of the NDP following the SAIRR report.

He said the NDP is in many ways a flawed document with internal inconsistencies, but it should be borne in mind that it was "the product of a politically hemmed in process".

This, said Montalto, involved "a range of contributors across the political spectrum of the left, which Planning Minister Trevor Manuel has managed to wrestle back into something that is still overall pretty market friendly, compared with the thought processes going on elsewhere in government".

Montalto said his reading on issues like the labour market was slightly different to that of the SAIRR, and that he feels that - taken as a whole - the only option the NDP proposes is a relaxation of currently tight labour regulations, albeit offset in part by greater regulation in some other areas.

The economist said he doesn’t quite understand where the NDP is saying that there should be a big step change increase in the level of state involvement in the economy.

"It is true it says the state should be directing activity more in a variety of areas in the economy, but often then goes on to say the state doesn’t have the capacity for implementation and instead needs to partner with the private sector."

Montalto said he agreed with the NDP concentrating on lower wage growth as the only way to meaningfully dent unemployment, given the current skills base: "SA cannot skip going through this level of development straight to more skilled jobs base".

He feels the fact that there is no costing is of little relevance to getting the policy debate in the right place.

"Overall, I think we should accept that the NDP is the best we’ve got in the current political reality and much better than many of the alternatives out there like the NGP (New Growth Path)."

Montalto warned that a new process now of reformulating the NDP document could lead to a dangerous step-up in the involvement of unions and other leftist groupings in the process.

He admitted that the SAIRR was not wrong in saying the NDP may well die due to lack of implementation, but said this is not a reason to simply throw the NDP out. 

Montalto fully agreed with the SAIRR's zero-based policy recommendations of radical deregulation and the abandonment of racial policy, better education and a constituency-based electoral system.

"The trouble is with the current political dispensation that is not going to happen any time soon. 

"These issues may not even play that strongly in the election campaign next year," he said. 

 - Fin24













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