Defend Truth


South Africa needs an economic policy spring clean


Geordin Hill-Lewis is the Mayor of Cape Town.

South Africa has suffered from two decades of economic policy that is stuck in a time warp. The consequences are obvious and inevitable — national decline and growing poverty. The DA must show residents that where we govern, we will proactively protect the public from the worst effects of a failing state.

Last week the Democratic Alliance hosted its first “Innovation Summit”, to look at how DA governments are embracing innovation to solve South Africa’s problems and make peoples’ lives better.

Innovation for us means finding new ways to do more with less in government so that every South African has a chance to live a life of dignity and aspiration. It means creating the conditions in which millions of South Africans can be lifted out of poverty over time.

And it means running an efficient and capable state, laying the groundwork for innovators in the private sector to take risks, develop new ideas, and invest in new businesses. That is the formula for job-creating economic growth the only way to lift millions of South Africans out of poverty.

South Africa has suffered from two decades of economic policy that is stuck in a time warp. The consequences are obvious and inevitable national decline and growing poverty.

This old-fashioned orthodoxy sees the state at the centre of all development and ignores the incredible potential of enterprise. The economic policies of the 1970s won’t put food on the table in 2021.

The contrast could not be starker between these outdated policies, which don’t work for anyone and functioning governments built on modern policy.

There is now only one party that represents progress, innovation, and a growing economy that spreads prosperity more broadly. It is the DA. This is crucial for the DA’s future. It is how we will grow our support and win in more places. This is the DA’s “path to victory”.

When the DA shows that we lead the most competent, most innovative governments that deliver economic growth for all, then South Africans can know that their vote for the DA is not just a protest, but an active choice for a better future.

The capable state vs the failing state

We know that provincial and local governments will face the pressure of ever-shrinking budgets and collapsing national services in the years ahead. Last year, National Treasury cut provincial budgets by a whopping R209.7-billion over the next three years, and municipal grants have been slashed by a further R17.7-billion.

In that context, it is not enough to rely on our track record of no corruption and good government. Those things are necessary, but not sufficient. Clean, efficient government within the context of the current system is no longer enough because the system itself is broken. The only way for us to thrive is to have the courage to redefine the system.

Our choice is between managing the national decline or charting a new courageous path. We must show residents that where we govern, we will proactively protect the public from the worst effects of a failing state.

We must claim the maximum policy space that the Constitution offers provincial and local governments and test the bounds of the Constitution’s federal provisions.

It is inspiring to see many of our governments already moving to claim that space.

Hessequa Municipality, a DA government, is using solar-powered desalination plants to provide clean water to residents. This is protecting residents from the effects of a failed national department of water.

Stellenbosch and George, both DA governments, have made important progress this week in the goal of procuring renewable energy to protect their residents from a failed Eskom.

These are inspiring examples. And they will pay dividends not just in a well-served public, but in a growing economy. These are the best kinds of economic stimulus. Businesses will flock to invest in those places with stable electricity and water supply.

This will create a virtuous cycle: DA governments protect the public from crumbling services, attracting investment and more jobs, which then delivers the resources for even better services.

This is the new frontier of fighting for residents. Being out on this frontier means we won’t just be managing decline, but working every day to find new paths that lead to growth and jobs.

Regulatory stimulus

Next, our governments must focus on unleashing the most powerful innovators – entrepreneurs.

All too often, when the DA wins a new government, we take over an administration that is steeped in the ideas of the government we have just replaced. All too often these administrations view entrepreneurs with suspicion and look at the informal sector as a problem that needs to be stamped out, rather than fledgling economic activity that needs to be nurtured.

But anyone who has ever run a business or even worked in a small business knows that it is entrepreneurs who are the real creators of prosperity in society. They take risks, put everything on the line, and create work for others.

We must unashamedly remove restrictions on enterprise. Let’s innovate not just in technology, but also in competitiveness and in slashing red tape. Let’s aspire to run the best, most competitive, easiest places to do business in the world.

Auckland, New Zealand, is currently the most competitive city to do business in the world, according to the World Bank’s “Ease of Doing Business Report”. No South African likes losing to New Zealand. If we can beat them at rugby, we can beat them at this too. If we put our minds to it and show political leadership, we can do it.

Policy innovation

Finally, we should not only innovate in tech and data but also in innovative policy. South Africa needs a policy spring clean. And the DA can do it.

Out with the old, in the new. In with the change-makers. Innovative policy can offer new, low-cost solutions to old expensive problems.

The Centre for Development and Enterprise (CDE) has championed the idea of a “massive small” housing policy. This approach would see local governments incentivising micro-property developers to subdivide their properties and build one or two extra rooms or flats for rental income. This only requires regulatory change, and doesn’t cost a thing, but delivers huge social wins for everyone.

Poorer people have a secure income stream, much-needed gap housing is provided, and building businesses boom.

Even in big infrastructure projects, the world has moved on from the state-centred model. The two biggest airports in India, Mumbai and Delhi, are both privately owned and run. This saves billions in state infrastructure costs and unlocks billions in new investments.

Our failed rail system and cripplingly slow ports are ripe for a totally different approach, pioneered by the DA.

I have made the case that:

1) The DA must prepare to save South Africa from the worst effects of the failing state because business as usual won’t cut it. We can do so by courageously claiming all the constitutional policy space that our governments can. This is morally right, and it will result in a huge economic boost that will lift many out of poverty;

2)  The DA can back this up with a regulatory stimulus aimed at making DA governments the easiest, best and most competitive places to do government in the world; and

3)  In addition to data and tech, DA governments can innovate in new, path-breaking policy solutions to old, expensive problems.

It is an incredibly exciting time to be in the DA. We are showing the way for South Africa, showing the country what is possible under a DA government.

There is a new sense of possibility and hope. And it is invigorating to be at the forefront of leading change in South Africa. DM

Geordin Hill-Lewis is an MP and the DA’s shadow minister for finance. This is an edited extract of a speech he delivered at the DA’s Innovation Summit.


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