State-led economy will fail, warns DA

2009-02-05 00:00

Cape Town - The Democratic Alliance has issued a strong warning against a state-led economic model for South Africa, saying such a system will lead to a failed economy.

Unveiling its new economic policy yesterday, the DA made a strong case for moves to facilitate further investment in the productive capacity of the economy.

Briefing the media on the DA policy ahead of Finance Minister Trevor Manuel's Budget speech later this month, DA Finance spokesman Kobus Marais said the governing party is shifting towards a state-centric development model in which the government has a controlling hand in most areas of the economy.

"The effect of such a move is to raise our international risk profile and increase the costs of capital from risk-averse investors. The long-term effects of a state-led model can be seen in the failed economies of Africa and eastern Europe," Marais said.

He said the failures of Eskom, SAA and other public enterprises are already weakening service delivery and provide evidence that the government does not have the capacity for further involvement in the economy.

Marais said the DA sees a future in which the government and the private sector work together in partnership to grow an economy ripe with opportunities for all South Africans, especially for the millions of unemployed who have been denied access to jobs and life-changing opportunities.

"Empowering more people to get involved in our economy will lead to higher incomes, higher investments, higher savings and higher tax revenues.

"This in turn will provide us with more resources to make sure that those remaining on the sidelines of our community are assisted with every possible opportunity to take charge of their own lives, and provide for South Africa's future economic prosperity."

Marais said the DA proposals aim to create a cycle of skills development, infrastructure and technology investment, improved productivity and increased employment.

"Rather than concentrating on the strong hand of the state, we unleash the productive potential of individual South Africans by encouraging employers to hire more first-time workers and up-skill them through on-the-job training.

"This focus on productivity will not only keep the economy moving in this era of instability and uncertainty, but it will also allow us to take full advantage of the enormous opportunities that will arise when the world economy rebounds," Marais added.

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