DA urges Zuma to change economic policy path

2011-08-10 12:57

The DA urged President Jacob Zuma today to change policy direction and adopt a new, growth-oriented economic framework for the country.

In an open letter to Zuma, DA spokesperson Dion George said it was common knowledge the country faced enormous economic problems of continued poverty, inequality, and unemployment.

“As such the national consensus has long been that we need to increase the rate of economic growth and job creation to extend more opportunities to those people who have previously been marginalised from the formal economy,” he said.

However, in recent weeks, economists, the public, and leaders from all parties had been growing increasingly uneasy about the state of the economy and the future economic direction.

This had been fuelled by a barrage of mostly negative statistical information about the economic performance over the past 12 months.

“During this time, several credible studies have indicated that our economy is largely stagnant and is failing in the two most important barometers – creating jobs and growing at a sufficiently high pace.”

Among others, the most recent Quarterly Labour Force Survey indicated that during the second quarter of this year only 7 000 new jobs had been created, while the number of formally unemployed South Africans increased by 174 000.

All of these indicators pointed to a struggling economy.

As a small, open economy, South Africa was in a precarious economic position amid the possibility of an international “double-dip” recession increasing after downgrading of the United States’ credit rating and the continuing debt problems in Europe, George said.

After the 2008/2009 recession, Zuma’s government did the right thing in adopting expansionary monetary and fiscal policies to support the economy.

The effect of these policies was now petering out and few expansionary interventions remained within the current economic framework.

“With our growing stock of debt it is unlikely that we can further stimulate the economy with government spending and with inflationary pressure on the rise, interest rates will inevitably have to be increased at some point in the foreseeable future,” said George.

“The only plausible option at our disposal is therefore to shift our economic paradigm and to adopt a new, growth-oriented economic framework,” he said.

He called on Zuma to take a stand on the country’s economic future and to reject proposals for the nationalisation of mines and banks.

“Stand up and explicitly reject proposals for the expropriation of land without compensation. Stand up and tell unions to wield their influence for the betterment of all South Africans, and not just for the betterment of their own members.

“Stand up and implement the wage subsidy you proposed in the state of the nation address this year. Stand up for our mining industry that has failed to participate in the minerals boom of the last decade.

“Stand up and dismiss corrupt government officials that steal precious state resources. Most importantly, consider input from all perspectives,” he said. 

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