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| e.May Dr Jim Harris |
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Updated 30 May 2006 * new additions Letting in private players might save under-delivering ministers Lindiwe Toyi heads the public/private partnerships (PPP) strategic business unit at the Industrial Development Corporation. Her unit’s main focus is facilitating increased private-sector participation in providing industrial infrastructure. She says government has clearly signaled that it doesn’t plan large-scale privatization of state assets, but does look favourably on PPPs. They get the private sector involved in funding and operations. Experience in other countries has shown that these projects can deliver long-term quality services and can be run better and more efficiently with private sector involvement, she says. The unit focuses on energy as well as transportation, telecommunications, water and sanitation and waste management. It doesn’t seem to have made much of an impact as yet, and most of its approved R2.8bn funding has been invested outside SA. Perhaps trade and industry minister Mandisi Mpahlwa should encourage ministerial colleagues battling to deliver cost-effective services to the people to approach Lindiwe for ideas and help in finding assistance from private partners. (BD 25.4) Let private players move people An Eastern Cape transport summit recommends changing the national Road Safety Act, to permit transporting people by bakkie. A September 2004 tragedy killed six children and seriously injured others. Since then, officials have clamped down, but in rural areas bakkies are often the only vehicles prepared to provide transport, particularly for school children. So roads and transport MEC Thobile Mhlahlo says the Act should be changed to better reflect realities. Maybe transport minister Jeff Radebe should survey all dysfunctional regulatory constraints on public and private commuter transport. Rather than tinkering with licence conditions for different types of vehicle he should radically simplify vehicle licensing. Police should ensure that all road-using vehicles are roadworthy and properly driven. Government should once again liberate all drivers to transport passengers free or for gain without fixed routing. Exposing state transport monopolies to competition would reduce prices and enable tax reductions if they go out of business and no longer need subsidising. Then if identified citizens or their children still need transport help, monthly transport vouchers or cash should be issued. (Daily Dispatch 24.4)) Let private players administer ARVs The Actuarial Society of SA estimates that over 5 million people, or almost one in five South Africans aged 20 to 64, are currently infected with HIV. Funded by USAID and UKAID, Stellenbosch University’s Bureau of Economic Research studied the macroeconomic impact of HIV/Aids. Prevention programmes. It was found that a large-scale anti-retroviral treatment programme with a take-up rate of 50 percent will “save” extra economic growth with benefits that far outweigh the costs. By 2020 the economy will be 8.8% smaller than it would have been without HIV/Aids. But per capita incomes will still be 8% higher in real terms by 2020, because the negative impact on the size of the population will outweigh the negative impact on real GDP. This macroeconomic projection may conceal more negative impacts on economic sectors such as government, utilities and mining. And if adequate prevention and ARV programmes aren’t established the average GDP growth rate during 2002-2015 will slip from 4.4% to 4% a year due to the epidemic. With the state healthcare system acknowledged as undermanned and battling, should health minister Manto Tshabalala-Msimang get state clinics to start issuing ARV vouchers for the private sector to administer? (BR 24.4) Let private players generate electricity Sometimes the private sector can’t save a long-neglected state-owned asset. When Kelvin power station couldn’t compete with Eskom tariffs after years without proper maintenance, Joburg sold it to AES. Two years later, in 2003, AES sold its stake to Globeleq, which has now declared Kelvin unviable and handed control to refinancers Investec and Nedbank. City Power’s acting CE Silas Zimu says the city will buy Kelvin rather than let it close, but why? Such an old power station should have been closed down long ago. City Power will only throw good ratepayers’ money after bad. Public enterprises minister Alec Erwin shouldn’t fiddle while Rome burns, shipping out a million Eskom MW/h to Botswana, Swaziland, Lesotho, Mozambique Namibia, Zambia and Zimbabwe while SA goes short. He could issue tenders and vouchers for market provision of the extra electricity SA needs to keep working and stop scaring off foreign investors. (BD 25/26.4) Why delay taxcuts for tardy ministerial paperwork? At the end of March minister Mandisi Mpahlwa announced the scrapping of 5% import duty on some steel products “with immediate effect”. But the tax is still in place, disrupting and confusing the industry and understandably stalling Mittal Steel’s a likely similar price cut in local steel prices. The International Trade Administration Commission has done its bit. Mpahlwa has to tell finance minister Trevor Manuel, who then has to gazette the scrapping and instruct customs and excise. What about those border taxmen showing a bit of initiative in the interests of local steel consumers and South Africa’s economic growth? Instead of making Mpahlwa a liar they could cite his “with immediate effect” announcement and stop imposing his obsolete tax. That would leave Mpahlwa and Manuel, who’ve caused the delay, to sort out their paperwork at their leisure. It’s not as if importers are going to do a duck if ultimately the scrapping is reversed rather than confirmed. And Mr Manuel would approve of sticking to announced timing, since he’s unfailingly quick enough to enforce his tax increases retrospectively from their announced “day one”. (BD 3.5) Identified grey imports sensibly get the nod In mid-April Mpahlwa did remember to gazette a notice declaring unlawful the ‘business practice’ of sellers not alerting consumers that branded products are “grey” or being sold without the original manufacturer’s authorization. It’s still legal to sell unauthorized branded products as long as specific and conspicuous wording advises that: “The authorized South African distributor of this product is under no obligation to honour the manufacturers’ guarantees/warrantees or to provide after-sales service.” Trade and industry department’s Consumer Affairs Committee (CAC), which had investigated parallel imports and grey goods, stressed its sole function of protecting consumers from exploitation by investigating and recommending which unfair business practices to prohibit and regulate. “Protecting licensed importers by a total ban on unlicensed imports could … be more harmful to the economy than the importation of products that do not match local conditions. This would deprive consumers of their right to choose”, said CAC vice-chairman Bonke Dumisa. Give that man and Mpahlwa medals for conspicuous service to SA consumers! (BR 3.5) Good leaders raise tall poppies, not yes men After Cape Town mayor Helen Zille was prevented from speaking at a meeting in Crossroads, DA leader Tony Leon was disturbed by “the absolute silence of some of South Africa’s supposedly independent public institutions and civil society organizations” such as the Human Rights commission, the Institute of Justice and Reconciliation, and the Institute for Democracy in South Africa. SA Institute of International Affairs’ Elizabeth Sideropoulos and Moeletsi Mbeki identified Africa’s ten plagues, with poor leadership topping the list, where it belongs. The “big man” syndrome reflects conviction of infallibility and irreplaceability, with absence of vision and accountability by local leaders, and abdication of responsibility. To this we can add ‘tall poppy’ policies to replace strong independent thinkers with ‘yes men’. The health ministry is gaining sway over some of the country’s key medical institutions as they fall under their own ‘yes men’. Malegapuru Makgoba spoke up for HIV/AIDS orthodoxy at the Medical Research Council but now there’s Anthony Mbewu. Peter Folb refused to register Virodene but the Medicines Control Council’s current Manto-controlled registrar won’t release MCC findings on Mathias Rath’s alleged experiments with CapeTown Aids patients. New leaders please! (FM 28.4, Star 3.5, ST 7.5) Outrunning the regulating rats In July the Regulation of Interception of Communications and Provision of Communication-related Information Act comes into effect. Supposedly part of the global effort to combat terrorism, in fact it will interfere with commerce and immeasurably harm the informal sector unless pragmatically bypassed. All prepaid cellphone users are supposed to be registered. But countless middlemen buy SIM cards in bulk and sell them with no questions asked. The act would have nobody buy a prepaid starter pack without producing an ID document and proof of residence. Get real! Who wants such hassles? Since most informal businesses and some small businesses would be affected, evasive action will follow, such as renting registered SIM cards from other parties. If the Act is later amended to limit how many SIM cards a subscriber can register, some other bypass will be developed. Rather that than just let regulators progressively shut down the economy. Looking on the bright side, it does all encourage creative innovation in an ‘arms-race’ of backstreet ‘rat-running’ to outrun the regulating rats. (ST 7.5) Better to vigorously reassert judicial independence Large sections of the legal fraternity and eminent jurists including former chief justice Arthur Chaskalson disagree with justice minister Mabandla on whether the Superior Courts Bill and the Constitution 14th Amendment Bill attack the independence of judiciary and the doctrine of separation of powers. Parliament's Justice Committee announced an indefinite extension of the deadline for comment, hoping to ‘further facilitate meaningful engagement with diverse views on the various matters relating to the important matter of rationalising the structure, composition, functioning and jurisdiction of our courts.' The cut-off date was previously extended from February 28 to May 15, but ‘extended indefinitely’ sounds like the British parliamentary convention to re-read a bill ‘this day six months’, signifying scrapping it without publicly admitting it was a gross mistake. Unless clarified, this will forever taint the executive and concern observers. Better to scrap both bills openly and fire drafters and energetic supporters. (BD 8/10.5) Can BEE create and exclude ‘second-class’ citizens? The Broad-Based Black Economic Empowerment Act excludes non-African SA citizens. Also African SA citizens who acquired citizenship by naturalisation after 27 April 1994 but hadn’t been previously precluded from citizenship by apartheid regime laws and policies. That means immigrants and those aged under about 30. Can a law of general application really exclude them? Probably not. The constitution provides for a “common” SA citizenship for all, with all citizens equally entitled to the rights, privileges and benefits of citizenship, and the bill of rights says no person may be deprived of citizenship. The Constitutional Court ruled recently that permanent residents without citizenship qualify for welfare benefits and anyway the additional cost to the state is marginal. Clearly our constitution did not intend to allow re-creating second-class citizens, born after about 1976, or immigrating after 1994, or inadequately ‘African’ or ‘Broad-Based Black’. ‘Preferential procurement’ and BBBEE codes may need new inclusive definitions to survive challenges to their constitutional legality. |
As SA Institute of Race Relations’ John Kane-Berman asks, ‘is government willing to sacrifice growth on the altar of racial preferencing?’ Or constitutionality? (BD 8/11.5) Innocent until convicted and nationalised? The Prevention of Organised Crime Act (POCA) purports to deprive certain types of criminals from obtaining a benefit from crime, says a Pretoria High Court judge. It doesn’t aim at drunken driving, so a motor vehicle is not an ‘instrumentality’ of an offence, so the National Director of Public Prosecutions can’t use POCA to confiscate drunk-driven cars. A man acquitted (on a technicality) of drug-related charges in 2002 claimed in the Constitutional Court that the state had no right to confiscate his Cape Town home. And contrary to prior Cape High Court and Supreme Court of Appeal rulings, the National Director of Public Prosecutions can’t keep his house. “You must first convict a man and then you can apply for forfeiture”, said his attorney. A German national accused of sexually abusing eight girls has not yet been arrested or charged, but in January the state seized his car and home as the “instrumentality of an offence”. From Berlin the man has filed court papers claiming the Deputy Director of Public Prosecutions deliberately misled the Cape High Court. Maybe they’re all as innocent as Zuma, at least of organised crime as per POCA. Surely an over-eager state should suitably convict them before nationalising their cars and other assets without compensation? (BD/Star 11/13.5) Why create unemployment? The 2006 World Competitiveness Report raises SA from 46th to 44th of 61 countries. Among cited negative aspects are labour regulations, which are probably the whole cause of SA’s world-beating 26.7% formal unemployment rate. Labour lawyer Halton Cheadle says labour law has become 'over-proceduralised' and 'over-judicialised'. But he doesn’t want the Labour Relations and Basic Conditions of Employment Acts amended to exclude small, medium and micro enterprises. Quite right – that would unfairly and unconstitutionally discriminate against larger firms. We need laws of general application that don’t create unemployment. Both Acts should be scrapped. Cheadle observes that for an average household to lay off an unwanted domestic worker now requires the same steps as a massive lay-off at a large multinational. So it should! But those ‘required steps’ should be simple, swift and affordable. You don’t hire if you can’t fire, so nobody’s hiring. (BR 10.5) Prudent banking comes under further pressure Taxing and regulating private property nationalises by stealth. The Freedom Charter wants to nationalise banks and mines. Minerals have already gone. Many see no difference between taxing private miners and collecting ‘royalties’ from those permitted to work ‘state-owned’ mineral assets after their expropriation without compensation. Having previously borne significant taxation, mining houses have pragmatically accepted ‘whatever it takes’ to keep generating shareholder profits. Now for banks. SA rates highly for its private banking system so overt nationalisation might bomb abroad, but there’s always regulation. Housing minister Lindiwe Sisulu has a bill ready to be processed before year-end. She’ll compel reluctant banks to make housing loans to low-income groups risk-rated too highly for prudent business. No chance of government guarantees to cover non-commercial risk either. Banks seem willing to write off much of their BEE lending in order to be seen to comply with government’s unlegislated wishes. Why nationalise or provide guarantees when you can achieve the same ends by bullying and new law to loot supine shareholders? (BT/Sind 21.5) What about taxi drivers without permits? 30% of KZN taxi drivers operate unregistered without permits, which are tradeable and can be willed to family members. Transport department aims to end this by its May 31 deadline to convert all minibus taxi permits to new-order operating licences. ‘The deadline won’t be shifted’, says transport department spokesman Collen Msibi, and ‘failure to apply for conversion means taxi operators losing their permits and right to conduct legitimate business’. ‘We live in a free democratic country with free trade. Why are they pushing this on to us?’ asks KZN Transport Alliance chairman Eugene Hadebe. A two-day strike stranded hundreds of thousands of commuters then the Alliance handed ANC provincial premier S’bu Ndebele a memo outlining concerns about the taxi ‘recapitalisation’ programme. This week the SA National Taxi Council marches on the transport ministry. Municipalities are to put routes out to tender among new permit-holders. Will KZN’s unregistered 70% and others throughout SA quietly forego jobs and income or keep on satisfying commuter demand “illegally” for two more decades? (BD 15/18.5) Don’t quite go bust for BEE! Protecting capital and the interests of creditors and shareholders, the Companies Act prohibits firms from providing financial assistance to purchase their own shares. Since would-be black empowerees mostly lack finance, trade and industry department tabled a Corporate Laws Amendment Bill allowing financing of selected BEE beneficiaries as long as the firm remains liquid. A solvency test must ensure that company assets still exceed liabilities. No committing patriotic commercial BEE suicide, then, but ‘almost’ will do. ‘We have to ensure that the company can stay afloat afterwards’, says trade and industry chief director of policy and legislation Fungai Sibanda. Minority shareholders feeling ‘prejudiced’ can complain to Trade and Industry Minister Mandisi Mpahlwa, but hey it’s his bill. He’ll only worry if the new BEE shareholders are placed at any risk of losing their freebee shares. ANC MP Ben Turok rightly notes the need for caution when approving such a provision of the Bill. All kinds of distortions take place in the equity market. Not least when government enacts laws like this! (BD 15.5) Pouring funds down parastatal drains Public enterprises minister Alec Erwin says government and public enterprise investment expenditure for the next few years is planned to exceed R370bn. First that has to be squeezed from the real economy. Just Transnet will be investing R40bn ‘to address infrastructure backlogs’. CEO Maria Ramos suggests ‘a state-owned enterprise’s sole purpose is to provide economic support to the dreams of a country for strong and equitable growth’. Excellent, but does parastatal tax-spend boost growth or hamper it, in which case let’s sell it. Consider a typical parastatal. Denel offers poor marketing, excessive costs and antiquated production plant. Productivity of its 9500 workforce is one fifth of global benchmarks. CEO Shaun Liebenberg says it’s only worth R1bn if sold off to the private sector. At least then it would have to make profits and pay tax! No, he wants another R3bn on top of the last budget’s R2bn cash injection, to ‘fully develop’ Denel’s operations first if there has to be a sell-off later. Why would pouring good taxpayers’ money after bad add equivalent value or more? It’s not the way to bet, in Transnet or Eskom either. Rather sell them voetstoets for R1bn apiece. It’s the private sector that achieves business success, not government. (BR 25.4, BD 18/21.5, BT 21.5) * Regulate the whole criminal waterbed and unblock the outlets An American study of the effects of vehicle tracking, in cities where it had been adopted as compared with cities without it, showed it reversing the rising trend of car-theft. What did car-thieves do instead? Apparently not other crimes such as mugging or robbery, so they seem to have found proper jobs. A similar study in SA also showed reduced car theft and hijacking but recorded robberies rose sharply. Why the difference? Are American criminals less ‘hardened’? More probably law enforcement in SA has stronger (often private) and weaker areas. So you press down on one part of the waterbed and a bump appears somewhere else. And with America’s essentially full employment it’s easy to find a legitimate job, whereas restrictive labour laws make job-creation and job-seeking difficult in SA. To drain waterbed contents into legitimate outlets you have to unblock the connecting pipework. (BD 22.5) * Roads spending shouldn’t advertise failure For decades SA roads have been decorated with ‘slaggate’ and ‘potholes’ signs as well as roadworks signs left in place long after roadwork is complete. The common refrain of frustrated motorists has been ‘why don’t they fix the problem instead’. SA has underspent on roads for 25 years, claims the SA Road Federation. Repairing potholes takes around 72 hours in developed countries. In SA it now takes 6-9 months on average and sometimes several years. Subjected to massive road haulage since railway ‘services’ collapsed, highways such as the N12 between Bloemhof and Christiana now display much reduced speed limits and can’t be risked at night without vehicle damage. Transport department says government has had to upgrade roads in former homelands and spend funds on more pressing priorities such as water provision and housing. But motorists and road-hauliers want more than R13bn of their annual R43bn of transport taxes ploughed back into maintaining roads. Timely repairs should become the norm, not those nationally-disgraceful permanent warning signs. (BD 22.5) * There may be sanity at the end of the BEE tunnel Towards the Magistrates’ Commission’s selection of new appointees, a white male applicant’s LLB (1) and 19 years experience as magistrate (3) scores only 4 points, while even an unqualified and wholly inexperienced black (3) female (3) already scores 6 points. But the process of corporate empowerment dealing creeps closer towards sanity. Massmart allocated about 10% of the company to staff directly involved with the company and almost manages to avoid the usual racist nonsense, except with its black managers and black non-executive directors. Otherwise all staff share the staff allocation regardless of colour or former political status. As it happens, most staff are non-white, but Massmart has largely avoided creating the usual rift. White employees needn’t resent any relegation to the ‘status’ of second-class citizens’. Black employees needn’t think being black is in itself any sort of automatic entitlement to receive handouts. Shareholders needn’t fret about racist discrimination replacing merit selection and remuneration for performance and wasting company resources in pursuit of un-business like ideology and perverse government agendas. Chief executive Mark Lamberti refers to retailers’ slowness in announcing empowerment deals as related to them not being beholden to the government for business. Other such independent firms should also do what makes sense and ignore pretence. It’s what happens in normal economies. (Star 22.5, BDW 27.5) * What a bad-news winter of discontent! Nationalisation of privately-owned Kruger Mpumalanga International Airport and the taxi industry. No further expansion of public-private-partnerships in running jails. Jail or huge fines ahead for cellphone firms unable to register millions of informal-sector cellphone and SIM card users. Noncore Transnet assets saleable only to firms scoring over 40% on their BEE scorecard, and no management buyouts permitted. Red tape that’s strangling business growth and skills development or import gets worse. A leaking Koeberg fuel rod, inevitable Eskom load-shedding and household gas shortages. More security-guard strikes and violence ahead. Well, it’s good news that Mbeki just told British businessmen, “We would get a much better outcome if we, the government, listen to the potential investor rather than the other way around.” We sure could use some better outcomes. (BD/Star/Cit/SInd/ST 24-28.5) |
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