 Good morning, everyone. Welcome to this morning's fireside chat with Duncan Peterson. He is a deputy director general at the Economic Policy Unit at the National Treasury in South Africa. Duncan, thank you for joining us today. Thanks, Marlis, and thanks for having me. Yes, so the discussion for today's fireside chat is around the policy applications of the SA Tide programme. Let's maybe kick off the conversation and say, what is SA Tide? What are its objectives? And yeah, let's kick start our conversation there. Okay, so SA Tide stands for Southern Africa Towards Inclusive Economic Development. And what it is is it's essentially a platform for evidence-based policymaking. And it has these three sort of complementary components. The one component is the production of policy relevant research. And while we're doing the research, our aim is to make sure that the research is rigorous, is academically robust, and is published as part of our working paper series. The second part of it is around capacity building, particularly of policy makers in the region and in South Africa. And the reason that's complementary is, of course, you're producing the evidence through your working paper research series, but you at the same time want to be in a position where you are enhancing the ability of the policy makers who have to implement and interrogate that research to be able to do so. And then finally, we had a goal of effectively communicating that research and taking part in various policy bridging activities, whether these are seminars, whether these are policy briefs that will help us to distill the work that comes out of the SA Tide program. The program had six different work streams and each work stream had an academic lead, an international or South African professor, and a local policymaker as a co-lead. And these work streams really covered the various thematic areas of SA Tide, and they include work stream one, which was enterprise development for job creation and growth, work stream two, public revenue mobilization, work stream three, macroeconomic modeling, four was turning the tide on inequality, five was climate change and an energy transition, and five was regional growth. So those were the six work streams and the main two main partners, and I'll get into the partnerships maybe a bit later, but the two main partners of the program were the national treasury and of course UNU wider. And that essentially were both the goals and the structure of the program. Fantastic. And Duncan, I'm sure there are quite a few programs like SA Tide, but what makes SA Tide really unique and what does it bring to the table? So I think the first part that makes it quite unique is the nature of the partnerships and the networks that underpin the program. So you have two renowned international institutes in the form of UNU wider and IFPRI based in Washington DC, who are collaborating with several government departments and agencies in South Africa and in the region, led by the national treasury, but also including other government departments and the South African revenue service. In a program that brings together many other partners, universities, policy institutes and so on to work together on policy relevant research. And then of course you added to that the funding support that we received from the European Union delegation to South Africa, which really gave the program scale and supported the program over a three year period. So I think the combination of the partners did make it quite unique. And I think it really underpinned the success of the program. I think the second element that makes it unique is this focus on policy relevant research, right? So we started the program with a very ambitious target of producing 150 working papers over the three years. And again, these have to be policy relevant, they have to be academically rigorous and robust. And by the end of the program, we had produced about 175 working papers. And I guess later we'll talk a little bit about some of the contents that was covered. But we also set ourselves in executing the research other targets. So for example, about 60% of the working papers were authored or co-authored by women. And about two thirds of those working papers were co-authored or authored by South African nationals. And finally, just as part of this research, what made us in particular quite proud was the fact that about 18% of the studies had a public South African servant, a public servant as a author or co-author, which means that the policy makers in the country are actually producing some of the research in partnership with some of the best researchers in the world. And then finally, I think what made the program unique was the use of tax administrative data and the secured data facility at the National Treasury. When we started the program, we wanted to make sure that the bulk of our research is actually informed by some of the latest techniques and some of the latest available data. And we started a program where we brought in tax administrative data from the South African Revenue Service that was then codified, anonymized, standardized for use by researchers in a secure data facility. And this data facility also then became a meeting point for local and international researchers. So you would walk into the data lab and you'd find the head of an economics department in there or you'd find other researchers, local or international in there. And it also created this ecosystem, which I think really sort of contributed to the uniqueness of the program and strengthened a lot of the policy work. Oh, fantastic. Thanks, Duncan. How common is it that developing countries make their tax data available for research? Is that quite unique? It is. When we started, we were one of a handful of developing countries that had embarked on this path. And there are still many developed countries who still haven't made administrative tax data available in the manner and in the scale that we have. So it is something that is unique, but more importantly, it is something that provides policymakers' insights that is just not available from many other data sources. And I think the impact that it's had on our ability to investigate new and different policy questions I think has been quite remarkable. Yes, definitely. Wonderful. Duncan, let's move on to the policy lessons that we have discovered in the last phase of the ACTI program to all of the listeners while we are having our chat. Feel free to type some questions either in our chat box or in our Q&A. And towards the end, we will also open the floor for more Q&As. Yeah, Duncan. So let's maybe briefly touch on the policy lessons from the ACTI phase 1 program. So I think, as I indicated before, we had about six work streams, right? Each of which had a very specific thematic focus. So I'll try to touch on different sort of research papers that came out of some of that work. And let me start perhaps with the tax data because what the administrative tax data gives us is, it gives us essentially the income statement and the balance sheet for all the large firms in South Africa. And in South Africa, those large firms not only contribute most of the tax revenue, but they also account for most of the economic activity in the country. So if you have this very detailed financial and other information for these companies, you are able to analyze questions that you weren't able to before and you're able to look into firm behavior in a way that you weren't able to before. So one of the things we were able to do, for example, is we were able to, for the first time, properly track productivity growth in South Africa over time. And with each iteration of tax data that becomes available, we are able to update that productivity tracking. And we're able therefore to get a sense of, well, what is really happening with productivity growth at the firm level in South Africa? And I think that's been quite important for us. And of course, for the national treasury and for the other departments in the economics cluster, we then are able to understand, well, what are, for example, some of the relationships between firm entry and exit dynamics and productivity growth? How much of the productivity growth in South Africa is accounted for by productivity growth within firms versus changes between firms? And again, that then helps us calibrate our interventions much more acutely. One of the areas we were also able to look into quite specifically was, for example, the return on research and development spending undertaken by firms. And what we discovered was that actually South Africa's return on R&D spending is in line with most of the developed countries in the world, so it is quite high. And one of the incentives that the treasury looks at is the R&D tax incentive. So again, you have an incentive that's meant to encourage firms to invest in R&D because typically they're under-invest. You then have policy research that gives you a sense of the return to that investment and you can then make a much more informed decision about that particular tax incentive and other spending priorities, which is obviously part of the kind of work that the National Treasury does. I think the other area we were able to look to get new insights into was because the tax data not only obviously covers firms, it also covers households and individuals. We were able to measure wealth and inequality in South Africa in a way that we haven't been able to before. And South Africa obviously is a highly unequal society. And so those insights are very important from a policy perspective to give the Treasury and other government departments a sense of how to respond to that. And we were able to, for example, triangulate the tax data with survey data and with national accounts data to come up with really good estimates of the distribution of wealth to inform the kind of policy decisions that we're making. Link to that, when COVID first arrived, we had to very quickly get an impact of COVID on households and on the economy more broadly. And because of the work that SA Tide had already done, the program was very well positioned to very quickly come up with some independent estimates of the impact of the COVID-19 pandemic on the South African economy in a way that also helped inform the national Treasury's response from a policy perspective when we responded first with our first measures, whether those were fiscal measures or other measures in response to the pandemic. There's another two areas I wanted to just touch on in terms of their policy lessons that came out of the work of SA Tide. The one was the extensive work that SA Tide did on fiscal multipliers, which of course is something that a Treasury needs to have and a government needs to have a very good handle on because especially when you're in a pandemic such as COVID, but even more generally, when a government considers its spending choices and when it considers whether, for example, deficit-based or tax-based spending is appropriate, it needs to understand what the relationship is between that spending and economic growth. And there was a range of work that was done by SA Tide on estimating different kinds of fiscal multipliers and a lot of that work directly informed the macro fiscal stance that we undertook at the national Treasury. We now have a very good sense of the differences between consumption and investment spending in terms of the multiplier effect. We have a very good sense of taxes and its impact on growth and a lot of this work was made possible by SA Tide in addition of course to the work that we do internally. And then finally on the policy side, a lot of countries of course are now focusing on an energy transition and investigating what that transition would entail, how to ensure that that transition is just and for an economy like South Africa that is still very carbon intensive and that still gets most of its energy from coal and other fossil fuels. It was very important for us to understand the potential impact of a transition to renewable energy on GDP, on employment and so on and a lot of that work was done by SA Tide. And SA Tide was for example able to show that shifting to renewable energy for South Africa actually does have a positive impact on real GDP. It does come with employment gains that are widely shared across the economy and it does have implications for example for the manufacturing sector. And I think that work was also able to be used by policy makers to better articulate and understand what this transition, this energy transition entails and how it should be done in a manner that minimizes the overall social cost to society. Wow, thanks Duncan. It's really amazing how broad SA Tide is going from firms and productivity to climate change and energy and it's really fascinating work. Maybe one question that I have is you have touched on the fact that policy makers are part of conducting the research but how do we go from an academic paper being written and how does that actually feed into the policy making process in South Africa because ultimately that's the goal that we would like to achieve. Yes, I think there are two elements to that. The first element is it helps to have policy makers engaged from the beginning of the research process because they can then shape the research question and they can help articulate and execute it in a way that maximizes its policy relevance. So in SA Tide we had various government departments directly involved, we had policy institutes involved, of course the treasury was involved and so the involvement of policy makers in the conception and execution of research I think is very critical because once you bring policy makers on board from the beginning you maximize that policy relevance. I think the second part of it is you then need to make sure that you have advocates for that policy or for that research within the government system. People who can both filter that work into the various government debates, into the various committees and clusters and so on to make sure that it actually informs policy development and I think the reason why SA Tide was able to be successful in this regard is because you had this very close collaboration between the policy makers and the academics who were conducting the research. Fantastic. And then maybe the last question from my side before we can maybe open the floor for some Q&A what are the key areas that you would like to see analyzed in the next phase of the SA Tide program? How will the SA Tide program perhaps change some of its focus? What are we wanting to get out of SA Tide phase two? Well I think we obviously for SA Tide phase two which we plan to launch at the beginning of next year now that the first phase of SA Tide is coming to an end. We want to on the one hand I think retain a lot of the things in SA Tide one that worked well and a good example of what worked well is this collaboration between the program and the researchers and policy makers. We want to also strengthen synergies across the various work streams. I think that is something that we are focusing on but the program is going to remain largely the same. And I think one area that we certainly want to enhance is the secure data facility and building on that with of course on the one hand continuing to bring in the tax administrative data that we had brought in before but also bring in other data sets. We are now working on public procurement data. There are other data on the tax side that one could potentially bring in and there's a range of other government administrative data one can bring in as well. And in the end I think if this secure data facility can be positioned as a sort of world class hub for South African and regional administrative data I think that would have been a great success. I think alongside the data it's clear that what SA Tide also revealed to us is a clear demand for training and capacity development on the use of the tax data. So once you make the data available then you suddenly have a demand for people who want to learn new software packages. They want to learn new econometric techniques. There's a whole range of data science that goes along with working with big data sets that we've also been able to develop and I think that needs to be a very important part of the program going forward and perhaps developing specific courses around administrative tax data with local academic institutions I think will be something worth focusing on. And of course that means therefore a collaboration with not only the South African Revenue Service but also with other statistical agencies. And I think the other area just to briefly touch on is towards the end of SA Tide with the work that we did on evaluating the COVID pandemic and other work we started doing a lot of policy research that was directly relevant to South Africa's reform agenda and we started creating synergies between the technical work that policy makers immediately required to make decisions and the research undertaken by SA Tide and I think that's another area worth strengthening because if SA Tide is positioned to in real time respond to some very important policy dilemmas then that obviously enhances the credibility of the program and one area that I think everyone will have to focus on now is obviously the impact of COVID-19 the scarring impacts on labor market, the impacts on inequality, the implications for social protection and so on and so forth and I think to the extent that SA Tide can be positioned to respond to those quickly I think it enhances the efficacy of the program. Fantastic. Thank you Duncan. I see Tatenda has a question. Let's add them to the panel. Tatenda, are you there? It doesn't seem like it. Perfect. I see there's a question from Amina in the chat. We've briefly touched on this but maybe some pricing policy research questions that we would like to focus on going forward. One that really jumps to mind for me and maybe I'm biased because I do research on minimum wages is the impact of the national, the introduction of the national minimum wage in South Africa and obviously with the tax data being quite delayed or having a two-year or three-year data lag with a new extraction that will be getting, those are one of the research questions that we would be able to analyze using the tax data. Are there any other policy innovations that you can think of on top of your head that we should be analyzing going forward? I think so it ties to the earlier question and the minimum wage is part of this. I think there's a range of work that governments around the world will need to do to understand some of the permanent impacts that COVID has had on various aspects of society and the labor market is an obvious place to stop. There's a lot of value in the tax administrative data for exploring those questions but of course one could use survey data more broadly. What have happened, for example, to informal dichotomies in the labor market? What has happened to wage inequality and to the distribution of income as a result of the COVID pandemic? Because I do think that governments will need to obviously respond to this both in terms of the fiscal choices that they make but also in terms of the programs that they develop in order to help manage this transition to the post-COVID world. And I think that that whole area of sort of labor market scarring, inequality dynamics and so on is an area that needs a lot of work and of course it's something that will evolve because the pandemic will still likely be with us for some time to come and understanding its effects will therefore take time but that I think is an obvious thing. And one could say the same on the firm side, right? I mean firms have changed some very fundamentally the way they work in response to the pandemic understanding some of the, for example, productivity implications of the pandemic for firms in particular at a sectoral level, at a regional level and so on I think is another area that just brings to mind as an area where one can do significant additional work. Fantastic. Great. Duncan, that brings us to an end for the fireside chat. Thank you so much for your time and for the really great insights. Yes. Thank you so much. Thanks for having me, Marlis, all the best. All the best. Bye-bye. Bye-bye.