Overview of key sections in submission

1. FEDUSA SUBMISSION ON THE GREEN PAPER: NATIONAL STRATEGIC PLANNING9 November 2009Presented by Gretchen Humphries (Deputy General Secretary)

2. Overview of key sections in submission • 1 INTRODUCTION • 2 POLICY BRIEF ON FUNCTIONS OF GOVERNMENT • 3 THE SOUTH AFRICAN CONTEXT • 4 CRITICAL QUESTIONS LACKING IN THE GREEN PAPER • 5 THE CURRENT STATUS OF THE SOUTH AFRICAN ECONOMY TO BE FACTORED INTO LONG TERM STRATEGIC PLANNING • 6 LESSONS FROM INTERNATIONAL EXPERIENCE • 7 THE VISION FOR NATIONAL STRATEGIC PLANNING • 8 COORDINATION OF GOVERNMENT POLICY VS CENTRALISATION OF POWER • 9 CREATION OF PARLIAMENTARY STANDING COMMITTEE MONITORING PLANNING VS MINISTERIAL COMMITTEE ON PLANNING (SECTION V. 16) • 10 SOCIAL DIALOGUE AS A MEANS OF CONSULTATION (STAKEHOLDER INPUT) (SECTION V17) • 10.1 The role of Social Partners and NEDLAC • 11 NPC • 11.1 Relationship with Cabinet • 11.2 The role of N P C • 12 MONITORING AND EVALUATION • 13 LONG-TERM MULTI-SECTOR MACRO-ECONOMIC MODEL • 14 CONCLUSION • 15 REFERENCES

3. FEDUSA welcomes Green Paper and support long term vision of proper planning • Although government has made important progress in many fields to improve the social and economic conditions of the population since it came into power, there still remains very serious socio-economic problems and serious restrictions. • The most serious socio-economic problems remain unemployment and poverty. • Restrictions on growth remain the lack of skills, including administrative skills that keep us from reaching higher employment-creating growth and which lead to serious backlogs in service and infrastructure provision. Current background: Very uncertain cyclical economic conditions, serious socio-economic challenges and structural problems, ideological differences between role players in government regarding various policies ranging from a totally controlled economy to a free market approach.

4. Review of past experiences on policies such as RDP and Asgi-sa to be used as learning in planning processes for National Planning processes The Reconstruction and Development Programme (RDP) that government published soon after it took office, was criticized for containing an unrealistic set of outcomes, although it was only meant to be a broad social plan with certain outcomes. It however served its purpose of providing a set of goals to work towards and for many years departments used it as a reference for their policy planning. Missing in the RDP were the necessary institutions and structures for planning, coordination and evaluation. In a sense the proposal on national strategic planning could therefore be regarded as a follow up on the previous programme, rectifying its shortcomings.

5. Policy brief on functions of Government In modern democratic systems, controversy exists over the forms, procedures, and especially the functions of government. Government policies: A response to pressure groups, party interests and legislative and constitutional guide Ideally of course, the question should be whether a particular policy is in the national interest and not only based on narrow interests and specifically on regime interests. Differences however, obviously exist in constitutional democracies over issues such as government involvement in economic planning, the extent and role of State-owned enterprises (SOEs), and government involvement in social welfare issues. Since the 1940s, the concept of the welfare state has been widely used to indicate a government guaranteeing certain minimum conditions to all its citizens, such as formal education, medical care, economic security in old age, housing, and protection against loss of jobs or business. To some extent it represents a middle position between laissez-faire and socialism, while the so-called ‘developmental state’ idea seems to lean more towards the centralized planning that is associated with socialism. In practice, all governments represent mixtures of the above, in which the relative proportions vary. In some views, the question is therefore not whether there should be socialism or laissez-faire, but whether there should be more or less of each. In a more specific sense, the content of government outputs can be classified as firstly making regulations, for instance governing private competition such as enforcing anti-monopoly laws and prohibiting unfair labour practices; as well as regulations affecting general safety, welfare, and morals, for example, maintaining law and order, health and sanitation standards, minimum wage and maximum hours laws, and enforcing safety standards. Secondly, government provides direct or indirect subsidies to a private person or group of persons, such as contributions to social security, tariff charges on imported goods, and construction of airports, harbours etc. Thirdly, governments provide certain services, namely activities or benefits that are made available at generally lower cost than the equivalent from a private firm, for example, the maintenance of armed forces, public schools, and fire prevention. The United States (US) is one of the few modern nations in which the concept of laissez-faire still commands substantial support. However, the argument is not for Adam Smith’s variety of laissez-faire, but ‘free enterprise’ subject to government assistance to business such as protective tariffs or direct subsidies. It has been stated that all governments recognize, or should recognize the principle that the public must be protected and served. In return for the government’s protection, the citizen relinquishes a degree of individual sovereignty. Governments are responsible for ensuring that laws are enforced with due regard to rights as well as obligations. They also take the lead in regulating economic relationships while providing essential services such as transport, the provision of potable water, sanitation, education, and social and welfare services. The concept of the ‘minimal’ and the ‘maximal’ State represent part of the debate about the functions of governments. In the former case, the State is seen as no more than the sum total of individual rights, while in the latter case, the State acquires independent standing and State interests supersede individual values. The ‘maximal’ State concept can however readily lead to the equating of regime and State security (in the political, economic, social and military sense) with broader national security, while in reality only the interests of a narrow elite are served. Ultimately, the State may become a so-called ‘failed state’, even if government attempts to regulate or participate in all spheres of for instance, the economy, because this alone, is no guarantee of efficiency. Many maximalist states are also ‘weak’ states where there are low levels of legitimacy, high levels of political violence and low levels of socio-political cohesion. Specialist input by Prof Mike Hough, Director for the Institute for Strategic Studies, Political Studies University of Pretoria 8 November 2009

6. The most durable and frequently debated general issue over the role of government was defined by the British philosopher, Edmund Burke as, “what the State ought to take upon itself to direct by public wisdom, and what it ought to leave, with as little interference as possible to individual discretion”. In the early 18th century, the English philosopher, John Locke and a group of French economists, believed that, “government is best which governs least”. In economic terms, this reflected a laissez-faire belief, namely that government should basically leave the economy alone. However, as Adam Smith, a Scottish professor stated in 1776, this did not mean that government should leave any citizen to starve, and that government should regulate production and consumption in whatever ways necessary to ensure adequate defence and protection against foreign attack. Such ‘deviations’ were however only justifiable on humanitarian and nationalistic grounds, and from the standpoint of strict economic efficiency, they are indefensible and should therefore be undertaken only when absolutely necessary.

7. The main two alternatives to laissez-faire are generally seen as either socialism or the welfare state. More recently the concept of the so-called ‘developmental state’, with an emphasis on more centralized planning, has also been coined. • Specifically, the content of government outputs can be classified as firstly making regulations, for instance governing private competition such as enforcing anti-monopoly laws and prohibiting unfair labour practices; as well as regulations affecting general safety, welfare, and morals. •  Secondly, government provides direct or indirect subsidies to a private person or group of persons, such as contributions to social security, tariff charges on imported goods, and infrastructure development. •  Thirdly, governments provide certain services, namely activities or benefits that are made available at generally lower cost than the equivalent from a private firm, for example, the maintenance of armed forces, public schools, and fire prevention.

8. The primary basis for governing in South Africa is the constitution Bill of Rights (Clause 27 (1) and (2)): “Everyone has the right to have access to (a) healthcare services, including reproductive healthcare; (b) sufficient food and water; and (c) social security, including if they are unable to support themselves and their dependents, appropriate social assistance. The state must take reasonable legislative & other measures, within its available resources, to achieve the progression realization of each of these rights.” Public administration: Basic values and principles governing public administration (Clause 195 of the constitution) include the following: A high standard of professional ethics; efficient economic and effective use of resources; services impartially, fairly, equitably and without bias; public administration be accountable; and, good human resource management. SA Government’s programme of action for 2009 (Governance and Administration): Building a developmental state; improvement of public services; strengthening democratic institutions; capacity for planning, monitoring and evaluation at the centre of government; developing policy on national strategic planning ;policy review of provincial and local government. The South African Context

9. Benchmarking SA Government performance US think tank:Fund for Peace & Foreign Policy journal, rank the South African State as the 125th most vulnerable to failure out of 177 countries analyzed in their 2008 Failed State Index, slipping eight places compared to 2007. It is for instance remarked that, “the economy and the state institutions are quite strong, however, the corrosive legacy of apartheid remains and unemployment, crime, and HIV/Aids ravage the poor. The state faces real challenges in rising expectations”.

10. The World Economic Forum (WEF) Global Competitive Index for 2008/09 rates South Africa 45th out of 134 countries, down one place from the 2007/08 rating. • The Report amongst others stated that, “the country continues to receive good marks in more complex areas measured by the Index, such as intellectual property protection, the quality of private institutions and goods, as well as financial market efficiency, business sophistication and innovation”. • South Africa faces a number of obstacles to competitiveness: lack of labour market flexibility, low university enrollment rate, the poor security situation, and high rates of communicable diseases affecting the health of the workforce.

11. The Harvard University Index of African Governance for 2009: SA has dropped four places due to concerns about the rule of law, transparency, corruption, human rights, safety and security as well as and poverty and inequality. • SA :ranked 9th out of 53 African countries, dropping from 5th place in 2008, with Mauritius, Botswana, Seychelles and Cape Verde occupying the top countries on the Index. •  More recent concerns of foreign investors also include the availability of continuous and affordable electricity, water and transport infrastructure.

12. FEDUSA Concerns in Green paper on National planning FEDUSA proposes that the following hypothetical questions be carefully considered for further deliberation, including: • How to maximise the efficiency of government, as planning is not policy? • How will the Planning Commission find a way to increase effectiveness and efficiency, without involving policy? • What is the role of the MTBPS and budget cycles in assisting strategic planning? • What is the role of current Ministries such as Economic Development within the framework proposed by the Green paper? • What should the National Planning Commission be planning, in the light of the current institutional arrangements of government with specific reference to NEDLAC? • FEDUSA would like to recommend that the next discussion document on planning addresses these questions.

13. International experience • The Green Paper propose high level national strategic planning based on Asian model to address the serious socio-economic problems and restrictions. • Green Paper refers to the term national, the planning process has mainly to do with the government sector. • Strictly speaking, the proposed planning process is more of a government strategic planning process than a national one. • Government proposes national strategic planning & implies that both the public and private sectors are involved. Implies that the respective roles of government and the private sector should be clearly spelled out in the plan. • In South Africa an important goal could be how to move out of the recession so that attention could be given to longer-term social problems.

14. Centralised planning in a coherent manner is a preference in a developmental state. • During the past ten years, power was centralised within the Presidency & needs to be broadened. The President as Executive needs to ensure that all departments and spheres of Government undertake activities of policy development, strategic and operational planning; allocation of proper resources in terms of the MTBPS to fulfil strategic objectives; implementation of agreed strategic objectives and policies and the monitoring and evaluation of policies within clear boundaries. • The role of the Minister responsible for the NPC and the Ministry of Economic Development needs to be aligned and clearly defined within agreed parameters.

15. FEDUSA agree with Item 5 (Planning and policy-making; leadership and collective responsibility) of Green paper. Concerns raised as to the assumptions in Item 5 : The NPC and the Ministry responsible for the National Planning Commission (NPC Ministry) should not be allowed to veto other government departments’ strategic & operational planning processes & decisions, but rather ensure effective alignment to achieve the outcome and overall holistic objectives determined by Cabinet. In advisory capacity NPC to provide strategic guidance to government departments to ensure effective monitoring & implementation of set deliverables to ensure service delivery. The role of Cabinet’s oversight be maintained in planning structures. The role of Cabinet clusters, particularly cross-cutting departments, line functions between national, provincial, local government, and parastatals needs to be properly defined and coordination improved.

16. FEDUSA would also like to recommend: The President or the Deputy President should be the Chair to all ministerial and ministerial cluster committee meetings. The coordination of Government policy and objectives need to be evaluated and monitored on a continual basis to ensure coherent planning and efficient utilization of resources. FEDUSA have experienced various frustrations during the period 2003-2009 due to the overlap of government policy and departmental views on overlapping policies. The area of Social insurance and retirement reform is one example where the lead Departments of Finance and Social Development and Planning could not agree on who is the leader/ coordinating department in the debate pertaining to social health insurance.

17. 9 CREATION OF PARLIAMENTARY STANDING COMMITTEE MONITORING PLANNING VS MINISTERIAL COMMITTEE ON PLANNING (SECTION V. 16) FEDUSA would like to recommend that the proposal for a Parliamentary Standing Committee rather than Ministerial Committee as raised during the hearings in October 2009 should be taken seriously. This would afford deeper debate.

18. 10 SOCIAL DIALOGUE AS A MEANS OF CONSULTATION (STAKEHOLDER INPUT)(SECTION V17) A further implication of doing national strategic planning is that there should be closer consultation between the social partners. Experience shows that participation by social partners in the development of a nation’s plan is fundamental and that each successful planning process builds consensus in ways appropriate to a country’s own history, culture and institutions. In South Africa it means that the planning process will have to be discussed in NEDLAC. The Green Paper confirmed that this would be the case, but mentions that “the outcomes in NEDLAC have often been a minimum common denominator rather than an approach that that helps society as a whole to transcend the conventional wisdom and standard frameworks of the day.” FEDUSA is naturally concerned with this remark.

19. The social partners will continue to use the mechanism of NEDLAC. FEDUSA recommends that the NPC should be constituted on a similar basis where experts are sourced from within the organised and recognised civil society organisations.

20. The National Planning Commission (NPC) The role and the mandate of the National Planning Commission need to be defined with greater clarity. There is a requirement to develop a coherent framework for the appointment of the Commissioners. FEDUSA is proposing that the overall responsibility for their appointment resides with the President similar to other Commissions and Statutory Bodies. It is also important that the criteria and requirements for nomination and subsequent appointment of commissioners are clarified. FEDUSA cautions against the risk of concentration of experts and that deliberate attempts must be made to have an inclusive commission. In the governance of the Commission, it is proposed that the President has the overall authority of the Commission and may designate a specific individual as responsible for the Commission.

21. NPC relationship with Cabinet • NPC should plan the implementation of government policy by sequencing programmes and activities; fight inefficiencies and identify required technical capacities. • NPC must be as independent as possible to meet the desired objectives. • In our view, the Commission does not have the responsibility of formulating policy but rather to provide research and input into the development of National Plans. • This role implies an advisory capacity of the Commission, the relationship with Cabinet is envisaged such that it advises Cabinet on major policy decisions, including the adoption of medium and long – term plans and development targets. The responsibility of endorsement of plans and adoption of National Plans would remain within Cabinet, which must define a National Process towards the achievement of stated objectives.

22. NPC relationship with Cabinet The Ministerial Committee on Planning will be established to provide collective input into planning. It is envisaged that the Committee will be appointed by the President, whose Role will include: Provision of political guidance to the planning process; Integration of government policies and programmes across multiple layers policy – making, planning and implementation; The role of the inter–ministerial committee is important at minimizingintra–governmental rivalries, which can be a challenge to service delivery and government performance.

23. Role of NPC  Statutory framework established to ensure the legitimacy and oversight of planning structures. Green Paper set out clearly how outcomes of the National Planning Commission will be developed & how they will relate to the planning activities of other organs of state. Stakeholders’ involvement is included in the planning process. Performance monitoring is enhanced through, for example, the annual publishing of results of government progress in terms of the main objectives of planning. Instruments such as Regulatory Impact Assessments are used to inform policy decisions and execution across government. The NPC’s interaction with institutions such as NEDLAC is clarified.

24. Role of NPC To support good development plans, an appropriate balance be found between planning and market factors, perhaps through greater use of public private partnerships. The parameters within which the NPC operates be realistic and take account of existing circumstances.

25. Monitoring & Evaluation Green Paper attempts to effectively put the NPC in a position to develop policy, determine policy priorities and thereby, determine the content of the budgeting process and plan the implementation of policy. Reduces the Ministry of Monitoring and Evaluation into an administrative desk of the NPC. NPC to set targets, then it means that it will have measurable indicators through which to quantify its outcomes and to calibrate its targets. Green Paper seeks to make sure that the Monitoring and Evaluation function is to some extent linked to the NPC and is informed by reviews from the NPC. FEDUSA would concur that the NPC needs to focus on the design of programmes, alignment of programmes and the specification of technical capacity required to implement policy.

26. Monitoring & Evaluation Once it has done this task, the Ministry on Monitoring and Evaluation will assess the extent to which those programmes have been carried forward and if so, the extent to which they have been successful in meeting their desired goals. If it is found that these programmes do not function well, another process of re-design will have to be undertaken by the NPC until the programmes function properly. In the current institutional arrangements there is therefore a clear separation of functions. The NPC cannot “from time to time contribute to reviews of implementation and progress” because that would be tantamount to being a referee and a player at the same time. Monitoring and Evaluation Ministry should have the required autonomy to provide credible and authoritative assessments of progress and challenges of implementation.

27. LONG-TERM MULTI-SECTOR MACRO-ECONOMIC MODEL • Limited sources for unlimited wants are our basic economic problem. Government & private sectors compete for scarce factors of production & savings. In case of national strategic planning, it would be necessary to determine whether the different projects proposed would be affordable. • The only way to determine whether one sectors does not crowd out the other one, is by way of a long-term multi-sector macroeconomic model. Such a model could also be used to determine the outcome of different scenarios considered. • A team of economic experts could give valuable support to the proposed planning commission. •  The proposed National Strategic Planning process is largely in line with ones used in some successful Asian countries and FEDUSA would support such a system. FEDUSA however realises that it would not be easy to find a common vision that would satisfy all stakeholders. A common shared vision is crucial to the success of the planning process and government will have to work hard to attain this.

28. Conclusion Government’s basic challenge in South Africa: To provide broad direction to the economy through the determination of economic, fiscal and labour policies, as well as providing cost-effective and efficient public services at all three levels of government and the parastatals. Government-created employment is not a longer-term solution, and a suitably trained and educated workforce, and the appropriate environment and infrastructure for markets to create wealth and jobs, are the primary conditions for them to perform well. Poor service delivery; political rivalry at local government level; and corruption at all levels of government, as well as unacceptable levels of crime, are issues that need urgent government attention.   More centralized planning co-ordination should therefore as a first priority focus on issues such as service delivery and crime, which in most views are causing South Africa to show some of the symptoms of weak and failed states.

29. Conclusion The main problems however still include the available resources, including human resources to implement national plans relating to the areas referred to in the Green Paper; the problem of a lack of accountability and of corruption; the risk of the NPC becoming a ‘Cabinet within a Cabinet’; and an overly ideological commitment towards the developmental state concept. In the Green Paper it is for instance stated that, “We need to attend to the tendency towards voluntarism and short-termism that has in many respects marked activities of government, state entities, the business community and civil society”. This does raise concerns about excessive reliance on centralized planning.

30. Final Conclusion The system envisaged in the Green Paper is likely to continue suffering from poor implementation, and a lack of resources despite controls such as performance measurement and monitoring. The lack of effective government capacity; vacancies in many government departments due to a lack of professionals; and the emigration of skilled people contribute to this. Previous attempts at more centralized planning (for example, the RDP, GEAR and NEPAD) have not shown much success. Lack of capacity & lack of cooperation and coordination as well as a lack of political will also tended to render the National Crime Prevention Strategy ineffective. The previous system of ministerial clusters, likewise has been viewed as not having properly functioned, and a new system of clusters was recently announced to “improve coordination and service delivery”.