Find a full transcript of the Chatham House webinar hosted by John Steenhuisen on 3 June, below.
Good evening, ladies and gentlemen, and thank you for inviting me to participate in this forum.
I’m not the first leader of the Democratic Alliance to speak at a Chatham House event, but I’m sure I’m the first to do so from a computer here in Cape Town rather than a podium in London.
The events of the past few months have reshaped our world in ways we could barely have imagined at the start of 2020. If someone had told us then what the world would look like in a few short months, we wouldn’t have believed them.
Yet here we are – adapting, evolving and coping.
Humans are resilient and resourceful. Three months ago, few of us even knew what a Zoom or Microsoft Teams meeting was, and today we go about our lives as if it were always this way.
Businesses have been forced to reinvent and evolve at an incredible speed, and so have schools and universities. Even the way in which we fulfil our most basic need – human contact – has undergone this dramatic change.
This coronavirus, devastating as it is, will not defeat us. It will test us, but it won’t win.
But that’s not to say the coming months, and even years, will be easy.
Across the world, the long journey towards a post-Covid recovery has already begun. And this journey will look very different for different countries.
In the developed world of Europe, Asia and North America, governments will have far more chess pieces to move around the board than in developing economies.
The ability of the United Kingdom to extend income support to citizens, or to assist stricken businesses so that they may save the jobs of their employees, bears almost no resemblance to the challenges and limitations faced by developing nations.
It is this ability to bounce back that should determine the extent of the measures taken to slow the spread of the virus.
Shutting down the economy for an extended period can be justified if a government has the resources to protect its citizens from extreme poverty and hunger in the wake of the lockdown.
But in South Africa we have just come out of a nine-week hard lockdown – the longest in the world – and our government cannot even begin to shield its citizens from the brutal effects of this lockdown.
Our government has tried to copy the lockdown playbook of nations that find themselves in an entirely different situation to us.
Whatever number you might have in your head as a bad outcome for job losses post-Covid, double it. And then double it again. A 50% unemployment rate is being touted as a realistic expectation in South Africa.
This, in a country where more than 10 million people already don’t have work, and where 17 million social grants are paid out each month from tax revenue that continues to miss its targets by increasing margins every year.
Bear in mind, when processing these massive unemployment numbers, that South Africa has a population roughly the same size as the UK.
Post-Covid job losses are projected to be between 3 and 7 million. Add those numbers to the long queue for state assistance, and you begin to see the scale of the problem.
Our government has used the bluntest possible instrument to respond to this pandemic. And in doing so it has created a lockdown crisis that will dwarf the Covid crisis tenfold.
It has also revealed a disturbing authoritarian streak among many of our cabinet ministers who suddenly found themselves with seemingly unfettered power under the Disaster Management Act, which was enacted just before our lockdown started.
They started churning out a raft of petty regulations that had absolutely nothing to do with slowing infections, and everything to do with their own personal crusades.
Yesterday, in a damning court judgment, many of these regulations were ruled irrational and not justifiable in an open, democratic society.
The DA has also challenged the constitutionality of the Act – which has no provision for parliamentary oversight – along with several of these regulations individually.
Through its own actions, our government has squandered whatever goodwill and buy-in they might have had at the start of the crisis.
Our lockdown was originally going to be three weeks. But three became five, and then those five were followed another four weeks of restrictions that were barely different from the first phase.
And the truth is those nine weeks were largely wasted.
The sole reason for the lockdown was to slow the rate of infection to buy our healthcare response some time to prepare, and to dramatically ramp up our testing and tracing capabilities.
This didn’t happen. The reason our government has been so opaque with this data is because it is so damning.
Outside of the DA-run Western Cape province, there is little indication that we are anywhere near ready for the imminent wave of infections. And the testing programme has only managed a fraction of its targets, with massive laboratory backlogs.
We have almost nothing to show for nine weeks of hard lockdown that will cause far greater suffering and more premature deaths than the virus ever will.
We’re not Italy or Germany or Spain. We don’t have anywhere near those kinds of resources and reserves.
In fact, we couldn’t have entered this Covid crisis any lower in the water.
The South African economy had already entered into a recession long before the pandemic hit. Our two consecutive quarters of negative growth – which defines an economic recession – were quarters three and four of 2019. Covid-19 came months later.
And this recession was not a once-off either. The economy had also contracted for two consecutive quarters in the first half of 2018.
Last year our economic growth for the year was just 0.2% – the lowest it’s been in a decade.
Our state-owned power company, Eskom, has all but collapsed and can no longer keep the lights on. The euphemistic term for these planned rolling blackouts – “load-shedding” – has become part of our daily lives.
And when steady, affordable electricity cannot be guaranteed, investors turn their backs and look elsewhere.
Every international ratings agency has consigned the South African economy to junk status.
Our economy is in a dire position, and it was in this position long before Covid-19 hit our shores.
But what this pandemic has done, though, is expose just how fraught our situation really is. It has exposed how little wiggle room there is in our national budget to deal with an emergency like this.
It has exposed how thin this budget was already stretched, before there was a need for increasing healthcare resources and scraping together some kind of economic stimulus package.
And it has exposed the massive shortcomings of a truly incapable state. A state that has been hollowed out by decades of corruption, looting and weak, politically connected appointments.
And now, like a tsunami that causes most of its damage as the wave pulls back, it is government’s response to this pandemic, rather than the virus itself, that is set to cause the real devastation.
Still, it is never too late to change tack.
South Africa needs to move forward as best possible. We can’t change the past but we can still influence the future by acknowledging and learning from our lockdown mistakes.
These are the five most important lessons to be drawn:
- South Africa should immediately end what remains of the lockdown. And we should not return to hard lockdown, whether during the upcoming peak, or during any future waves of Covid-19, as the costs far outweigh the benefits.
- South Africa would have fared better if decision-making power had been less concentrated in a small group of unaccountable cabinet ministers, and instead decentralised to individuals, households, districts and provinces.
- South Africa needs to start prioritising results over intentions. The lockdown may have been well intended, but the actual net result has been overwhelmingly harmful to society, with millions of lives and livelihoods destroyed, thousands of businesses lost and billions of rands of tax revenue foregone.
- South Africa needs to realise that every policy decision is a trade-off, rather than a simple solution. It is always tempting to devise policy responses in a vacuum, focusing on a single problem, but society is a complex system of interactions. Any risk being addressed must be balanced against all the other risks faced by society.
- And finally, we have to realise that while policy A may be better than policy B in theory, if it is not feasible in practice, then policy B may be the one that produces better results.
The reality in South Africa is that we have an incapable state that is simply not able to implement many of the policies devised by government.
In the case of the lockdown, President Ramaphosa made sweeping promises of economic relief to mitigate the fallout from lockdown. But every well-intentioned plan has run into the brick wall of this incapable state.
Whether it is claims from the Unemployment Insurance Fund, applications for government’s Temporary Employer/Employee Relief or simply the payment of extended social grants, millions of desperate South Africans have been left empty-handed and frustrated.
This incapable state has always been there, but it has now been brought into sharp focus by this crisis.
What South Africa desperately needs now is for political ego and ideology to step aside and make way for real-world solutions and evidence-based decision-making.
If the DA were to be given the task of resuscitating our failing economy in the wake of this crisis, that is where we would start.
For all the talk of the Fourth Industrial Revolution and leapfrogging technologies, the best way to build a better life for all South Africans is to get the basics right.
Everything else is noise, until we have laid the obvious foundations for success: clean water, reliable electricity, safe communities, the rule of law, and a growing, inclusive market-driven economy.
Globally, many commentators believe that this pandemic opens up the opportunity for a “new normal” in which we live more sustainably and equitably than before. And indeed, this is a noble and worthwhile pursuit.
In many developed countries, this could mean foregoing the pursuit of some economic growth in favour of pursuing wellbeing, equality and sustainability.
In other words, the growth objective competes with the noble objectives of equality, wellbeing and sustainability.
But this is not the case in South Africa, with our situation of extreme unemployment, poverty and inequality coupled with deep fiscal recession and national debt.
In South Africa, the pursuit of growth is aligned with the pursuit of the noble objectives, meaning that the best way to grow wellbeing, equality and sustainability is through growth-focused policies.
This is best illustrated by way of example. And so I would like to outline the six policies that the DA considers to be the most powerful, in terms of picking the low-hanging fruit, to build a better future for South Africans.
- Open the energy market to competition.
Eskom, South Africa’s state-owned national power utility, is a monopoly buyer and seller of electricity. It is hopelessly insolvent, unable to service its interest payments, let alone cover any operating costs, and unable to provide a reliable power supply at rates that enable South Africa to compete with other countries.
If our energy market is opened to competition, supply will go up and prices will come down. Importantly, supply will be more reliable, as more power will come from a greater diversity of sources, particularly from renewables.
This is an intensely growth-focused policy, since it will dramatically cut costs to businesses and households, and particularly poor households, where electricity accounts for a greater share of household spending.
- Reform our labour legislation.
South Africa has one of the most inflexible labour regimes in the world, which is particularly tough on small businesses. This places new entrants to the market at a great disadvantage.
Relaxing our labour legislation will enhance growth, equality and wellbeing. Our rigid labour legislation may have been well intended, but it has resulted in unemployment on a scale not seen anywhere else in the world.
- Walk away from investment-killing policies.
South Africa will not see any meaningful investment in its economy until the government decisively rejects a raft of investment-killing policies. These are Property Expropriation Without Compensation, the National Health Insurance, asset prescription and nationalising the Reserve Bank.
Regardless of the intentions of these policies, each one will result in lower growth and higher poverty and inequality, since they will all hurt the poor most of all.
As with opening the energy market, walking away from these policies requires little more from government than a decision.
- Reform or sell off State-Owned-Enterprises.
The intention behind state-owned companies may be honorable, but thanks to the reality of our incapable state the results are disastrous.
SOE’s like Eskom, the national airline and the national broadcaster continue to cost the state billions that could be spent elsewhere.
It’s far better for the state to focus on its core role of education, healthcare and social welfare, rather than propping up these overstaffed, overpaid parastatals that add very little value to society.
- Auction off spectrum to bring down data costs.
This will dramatically reduce the cost of data, which will help drive economic growth. It will also enable more work to be done remotely, which drives ecological sustainability.
And this too will have the greatest impact on the poorest in society, since a much higher percentage of their income is spent on data.
- Abandon Black Economic Empowerment and Affirmative Action.
These policies best illustrate the difference between intentions and results. They may have intentions of redressing past wrongs, but their result is to perpetuate past wrongs by killing investment and by rendering South African businesses uncompetitive.
No competitive business can afford to consider race over performance when choosing its suppliers, its employees or its board members.
The net results of BEE and Affirmative Action have been bankrupt municipalities, large-scale tender corruption, and a hollowed-out state incapable of implementing policy.
That’s where the DA would start, if we were voted into government tomorrow.
But as we have seen over the past 26 years, getting into government and challenging the dominance of the liberation movement is no small task.
The DA has made great strides to grow from a tiny 1.7% minority party in 1994 to become the official opposition, as well as a party of government in a province and various metros and municipalities.
The next step up – positioning the DA as a credible party of national government – will require of us to shift political perceptions in a way that has never been done before in South Africa.
It will require of us to make a case for liberalism, individual freedom and an open economy in a country still largely dominated by nationalism, a patriarchal state and an economy with high levels of state control.
Where opposition parties in democracies elsewhere must compete against the policies and the track record of the incumbent, we find ourselves pitted largely against the history and mythology of the liberation movement.
It is this emotive connection to the party of the struggle that sees voters remain loyal, even when election promises are repeatedly broken and service delivery breaks down.
Our country’s brutal history of injustice and oppression has also created fertile ground for competing racial nationalisms – something the ANC eagerly pursues. And particularly since the hard socialist Economic Freedom Fighters have started leading them down that populist rabbit hole.
The result is a political playing field where policy and track record hold far less sway than they should, and where voting still largely happens along decades-old allegiances.
The temptation in such an environment is to spot a space in the political landscape and then try to fill it. But that space might not necessarily lend itself to our liberal values and principles.
It is not our role at the DA to fill the void, but rather to carve out our own space.
The truth is that not all voters will be available to us right now. But we have to work hard to attract the majority of those who are, and then we must actively grow our space so that we can include more in future.
It is also possible that this future will look different to our current political landscape.
There are undeniable tensions and competing factions within the governing ANC, and we have long held the view that a realignment of politics around shared values rather than racial nationalism is our future.
It is the only future that we believe is worth pursuing. A future where those who stand for freedom, growth and accountability ultimately prevail over those who still cling to out-dated 20th Century ideology and its destructive policies.
That is our project in the DA, and there are no short cuts in this game. We have to do the hard yards, one election at a time.
Where we already govern, we have been given an opportunity to show that honest, accountable government does make a real difference in people’s lives.
Sooner or later, that message will reach a critical mass of voters, and we will have our opportunity to rebuild South Africa to its full potential.
Thank you.