No+contradictions+between+RDP+and+GEAR,+Trevor+Manuel

COSATU Daily Labour News extra 11 August 2006

 * //Originally from ANC Today, Vol.6, No.31 • 11-17 August 2006 (see end)//**

=No contradictions between RDP and GEAR=


 * Trevor Manuel**

The 5th National Conference of the African National Congress held in Mafikeng in December 1997 adopted a definitive resolution on economic policy. This resolution included a clause that read: "Conference reaffirms that our macroeconomic framework policies must be directed to advancing the RDP [Reconstruction and Development Programme]. We are not pursuing macro balances for their own sake, but to create the conditions for sustainable growth, development and reconstruction. The strategy for Growth, Employment and Redistribution (GEAR) is aimed at giving effect to the realisation of the RDP through the maintenance of macro balances and elaborates a set of mutually reinforcing policy instruments."

This important clause settled an exceedingly important debate in the ranks of the ANC. The Growth, Employment and Redistribution strategy (GEAR) could not displace the RDP, but its correct implementation could effect the realisation of the RDP. In recent weeks, it has once again become fashionable to attempt to suggest that the adoption of GEAR was an endeavour to bury and replace the RDP. If cartoonists are unaware of the facts, they might be forgiven. The same cannot hold true for the leadership of the ANC or its Alliance partners.

The year 1996 was a difficult year for the fledgling democratic government. The currency was repeatedly mauled; rising debt service costs threatened to crowd out expenditure on public services; the economy appeared stuck in a rut by a balance of payments constraints; and, in the political sphere, the National Party abandoned the Government of National Unity. These circumstances demanded decisive action. Thus an initiative to focus on the macroeconomic balances was born to deal with what the RDP document referred to when it said, "the existing ratios of the deficit, borrowing and taxation are part of our macro-economic problem".

This was a matter left consciously vague in the drafting of the RDP document since, unlike most other aspects, it was always going to de difficult to reach agreement on these less-popular elements of the RDP. While the technical work was in process, and contrary to the denials by some, the matter was discussed in the ANC National Executive Committee.

The Growth, Employment and Redistribution strategy was tabled in parliament on 14 June 1996. Prior to this, a Tripartite Alliance 6-a-side meeting was convened on Sunday 9 June to discuss the matter in some detail. The records reflect that the South African Communist Party (SACP) delegation was led by Blade Nzimande and the Congress of South African Trade Unions (COSATU) delegation was led by its then Deputy General Secretary, Zwelinzima Vavi. That meeting agreed on vital aspects of GEAR and agreed to disagree on the fiscal stance.

Prior to the tabling of the proposals, parliament was addressed by the then Deputy President of the Republic and of the ANC, Thabo Mbeki, who said, "The RDP is (therefore) not a conglomeration of particular projects, but an integrated and sustainable vision for the creation of the post-apartheid society for which so many of our people sacrificed everything, including their lives." Among the speakers in the parliamentary debate was Philip Dexter, who announced his participation as being from the SACP. He said, "In terms of the macroeconomic policy framework that has been outlined, I think that the key positive aspects are that it builds on the RDP."

Before concluding, he cautioned, "There is one potential pitfall in the document which I think we really need to emphasise and which the Government is going to have to be cautious about, and that is the strong emphasis on deficit reduction."

This statement contained no surprises; it was indeed a reiteration of what the Alliance meeting agreed to disagree on.

Later, on 14 June, COSATU issued a statement through its Deputy General Secretary, Zwelinzima Vavi. The Saturday Star of 15 June 1996 reports that, "COSATU assistant secretary-general Zwelinzima Vavi said the labour movement was pleased to see the incorporation of several points in the plan, including the focus on education, the use of public works programmes, the commitment to infrastructure development, and the linking of tax incentives to job creation schemes. These aspects, among others, had all been advocated by labour and had featured strongly in its own contribution to the economic policy debate, Social Equity. But Vavi also said COSATU had serious reservations over other elements of the plan, in particular the 'conservative fiscal policies' the document intended to implement."

These comments, on behalf of the SACP and COSATU, hardly appear to suggest either a "complete lack of consultation" or an attempt to "mobilise and hoodwink COSATU and the SACP into supporting this project". Rather, there was an agreement to disagree about some aspects of GEAR.

The commission that debated economic policy at the Mafikeng Conference was the largest of any at the conference. The resolution was adopted with acclaim both in the commission and on the floor of conference. Essentially, this settled the debate on the inter-relationship between GEAR and the RDP. And, since the 51st conference held in Stellenbosch in 2002 sought no amendment to the Mafikeng position, it confirmed the earlier resolution. That therefore is the policy of the ANC.

The RDP also put sustainability at the centre of our efforts to build a people centred society: "It is no use merely making a long list of promises. Making promises is easy - especially during election campaigns - but carrying them out as a government is very much more difficult. A programme is required that is achievable, sustainable, and meets the objectives of freedom and an improved standard of living and quality of life for all." That GEAR called for a period of fiscal consolidation is not in dispute, but the objective was always to ensure the sustainable delivery of the RDP. From 1996 to 2000, spending on public services fell by 4.5 per cent in real terms. Since 2000, public spending has increased by over 60 percent in real terms. The fiscal consolidation of the late 1990s has provided the resources to accelerate the implementation of the RDP at a pace even the authors could not have forecast.

Curiously, it was the much-disputed "conservative fiscal policies" that Vavi referred to on 14 June 1996 that allowed us to advance the RDP and improve on both the spending and the quality of public services.

The RDP document called on us to maintain rationality at the centre of our decisions on economic policy. It cautioned thus: "It is clear that government policy and mechanisms of raising finance are crucial to the success of the RDP. If they were to cause excessive inflation or serious balance of payments problems they would worsen the position of the poor, curtail growth and cause the RDP to fail." The RDP document warned that short-term solutions would hurt the poor.

Recent political commentary also attempts to lay the 'get rich quick' culture at the door of GEAR. It is claimed that the "move away" from the RDP to GEAR brought about a culture that has benefited the elite. This assertion too must be dispelled. It is intellectually dishonest to argue that any element of GEAR, either on paper or in implementation, has contributed towards the culture of materialism, a culture which both President Mbeki and former President Mandela have consistently criticised.

GEAR did not deal with the black economic empowerment at all. Since the introduction of GEAR, this government has introduced a capital gains tax, broadened the tax net to cover the global earnings of corporates and individuals, increased taxes on vehicle allowances, reduced taxes on medical aid and provided considerable income tax relief to low and middle income earners and for small businesses. At the same time, the number of people receiving income support directly from government has increased from about three million in 1994 to over ten million today. These policies have ensured that South Africa's budget and tax policies have played a strongly redistributive role.

Instead of contributing towards a culture of materialism, the management of our public finances has contributed towards a culture of social solidarity and of shared responsibility. We can, and indeed must, all look back on the past decade for honest and critical evaluation. Then we will all concur that both the letter and spirit of the relationship between the RDP and GEAR has served South Africa incredibly well.

The key measure is in the quantity and quality of public services we have been able to render.

There are no contradictions between GEAR and the RDP. Both programmes, mutually reinforcing as they are, have served us well. Thus, those who claim that the values of the RDP were buried on 14 June 1996 and only resurrected when President Mbeki delivered the Nelson Mandela Lecture on 29 July 2006 do themselves, their readers and listeners the disservice of being profoundly disingenuous.


 * Trevor Manuel is an ANC National Executive Committee member and Minister of Finance.


 * Article originally taken from:** **http://www.anc.org.za/ancdocs/anctoday/2006/at31.htm#art1**


 * Shortly afterwards, on 11 August 2006 the article was removed.**

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