Government policy chief Joel Netshitenzhe has urged those waiting to run the country after next year' election to "go back to basics" in framing economic policy to address the country's social challenges.

In a contribution to a book to be published soon by the Cosatu labour federation, he analyses progress over the first 14 years of democracy and concludes that while the proportion of people living in poverty is falling, inequality is growing.

Netshitenzhe, head of President Thabo Mbeki's Policy Coordination and Advisory Service and a former ANC policy guru, says business, labour and the government have failed so far to speak meaningfully to each other.

Referring to the Millennium Development Council set up to bring business and labour together, he says "the tendency has been to shadow-box and avoid the difficult macro-issues that a leadership of the working class and business should thrash out.

"The tendency, even in relation to the Growth and Development Summit, which brought together government, business, labour and the community sector, has been to collate what are otherwise the demands of each partner, smooth out the rough edges, paper over the cracks and revert back to the blame game.

"There is one lesson in all of this: Go back to basics," he concludes.

Netshitenzhe identifies as challenges facing those who will run the country from next year: l Raising South Africa's growth potential to prevent overheating as planners try to address the country's needs by forcing growth beyond current capacity.

"Many firms are operating technically at full capacity. Our exports and savings levels are unable to generate sufficient resources for investment and thus we have to rely on inflows of mainly short-term capital";

l Undue reliance on raw material exports and "largely insignificant progress" in building up manufacturing to meet domestic demand and export opportunities;

l Progress in job-creation being undermined by the use of labour brokers and the diminishing quality of jobs; and

l The long-term impact of apartheid education policies on the skills base.

He says quality is the major challenge in education, where, as the numbers go up, the standards in schools serving poorer communities are falling.

Contradicting the main thrust of post-Polokwane economic analysis, Netshitenzhe defends the fiscal discipline that has seen the South African budget move into surplus and the 1996 Growth, Employment and Redistribution policy.

"In the recent period, it has become increasingly clear that resources are not the problem, but the capacity to spend these appropriately," he says .

Urging the alliance partners - the ANC, Cosatu and the South African Communist Policy - to work together, he says: "What South Africa requires today is a coalition of all left forces around key strategic issues which will raise, permanently, the growth and development trajectory to a higher level, with qualitatively better results, especially for the poor.

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