Quarterly Review October 2017 – December 2017

21 December 2017
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QUARTERLY REVIEW  
 
Progress through freedom
 
 
 
 
 
 

Quarterly Review
October 2017 – December 2017

FMF PROJECTS

The FMF’s projects for 2017/18 include: consumer rights, ECONOMIC FREEDOM / GROWTH, financial sector, HEALTHCARE, jobs creation / labour, LAND REFORM, rule of law, TRANSFORMATION, as well as ad hoc issues such as ENERGY.

MEDIA COVERAGE

The FMF works hard to increase its media coverage and reach as wide an audience as possible with its message about the benefits of economic freedom, growth and the rule of law.

152 ARTICLES that quote or mention the FMF or originate from interviews or were written specifically for the media or the FMF’s website were published this quarter – up from 96 last quarter. See projects below for more information.

INTERVIEWS on radio and TV number 15 this quarter – down from 28 last quarter.

The FMF hosted 3 MEDIA BRIEFINGS this quarter and aims to host one per month whenever possible. The briefings provide journalists with an opportunity to ask in-depth questions about the topic under review. See projects below for more information.

Each briefing is followed by a media advisory to over 1,000 editors and journalists. Additional ad hoc advisories mean the FMF distributed 11 MEDIA ADVISORIES this quarter. See projects below for more information.

FMF is conscious of the power of SOCIAL MEDIA and we are working hard to reach more people via our website, Facebook, Twitter and YouTube offerings.

In November 2017, for example, our website had 38,524 visits with 60,945 page views.  

In the right-hand column, the FMF’s website has three “windows” to our social media making it easier for our members and website visitors to access…
Twitter @FMFSouthAfrica: 3,160 followers
Facebook: 3,997 likes  
YouTube: 174 videos; 586 subscribers; 62,062 views

Videos
Watch these two golden oldies recently digitised and uploaded to our YouTube channel:
South Africa: The solution
A constitution worth fighting for

Cartoons published by FMF can be viewed here.

CONSUMER RIGHTS

Far-reaching health controls with severe implications for consumers have been implemented or are under consideration. What is targeted? Products of greatest significance include tobacco, liquor, salt, sugar, traditional and faith healing, alternative medicines, baby food and junk food.  

Articles
It is likely that draconian tobacco laws will be presented to cabinet in early-2018. To remind South Africans why even controversial anti-freedom laws should be resisted, FMF published several articles this quarter:

  • Red herrings and bureaucrats: What are they smoking? by Leon Louw 
  • Consumer rights and human dignity by Chris Hattingh 
  • Tobacco packaging: Anything but plain by Chris Hattingh
  • Core aspects of anti-tobacco proposals fall short of constitutional criteria by Leon Louw 

Media advisories (available on FMF website)

  • Department of Health plays Mary Poppins 
  • The Department of Health’s proposals are an effective ban on smoking

ECONOMIC FREEDOM / GROWTH

Media briefings
On 15 November, Leon Louw presented SAA: The facts beyond the hype. Leon discussed the current state of SAA and the economic and social implications thereof. 

  • Did you know that SAA loses over R12 million every day?
  • Did you know that SAA loses R370 million every month?
  • Did you know that SAA’s losses amount to almost R4,5 BILLION every year?
  • Did you know that after paying its debts, only R4,5 million out of the R3 BILLION bailout paid 30 September, was left to fund working capital?
  • Did you know the working capital ran out on 6 November?

Leon’s presentation can be viewed here.

On 6 December, Leon Louw presented New law guaranteed to raise price of data and limit internet access. The new Electronic Communications Amendment (ECA) Bill ignores industry and think tank submissions, and makes a mockery of good faith negotiation and proper public participation. The Bill, released on 17 November, gives only a 30-day window for public comment – during the holiday season. This short comment period makes a mockery of public participation and the democratic process. The ECA Bill has far reaching implications for consumers, industry and the economy – data prices will rise, internet access will fall. The ECA Bill has the potential to destroy one of SA’s few success stories and leave the country far behind its peers. Leon Louw provided details of the contents, the flawed process and the implications of the ECA Bill for South Africa.

Leon’s presentation can be viewed here.

Media advisories (available on FMF website)

  • R 3bn SAA bailout – but only R 450 m left for working capital. Again taxpayers pick up the bill
  • Open letter from Free Market Foundation to Minister Gigaba re action for SAA – and a wager
  • R10 billion is not enough – let’s get real about SAA
  • ECA Bill signals the end of post-apartheid SA’s greatest success story

Evening event
On 22 November, Dr Adrian Saville, Founder and Executive Director of Cannon Asset Managers and Professor, GIBS, presented Paths to prosperity: Lessons for a six-pack solution

A primary aim of development economists is to identify the ingredients responsible for positive, sustained improvements in countries’ economies which, in turn, help lift the social well-being of populations. Examples of countries that have achieved such progress abound. Countries such as South Korea and Singapore saw income per person rise over 10-fold between 1980 and 2015 along with soaring life expectancies, spectacular gains in education levels and equally impressive advances in other developmental indicators. Whilst these Asian Tigers head the list of emerging markets over the last three decades, the group of countries that have achieved substantial gains in recent times is as wide ranging and diverse as Chile, Estonia and Costa Rica. 

At first blush, these countries appear to vary widely in their makeup, which begs the question “Do they display any common ingredients that point the way to a path of sustained economic development?” 
From researching 120 countries over a period of 50 years, the results point to the existence of six main common elements – the “six-pack”.

Adrian’s presentation can be viewed here.

Indaba
From 28-29 November, Temba A Nolutshungu participated in the Rural and Urban Livelihoods Annual Indaba on Strategies and Approaches for Combating Poverty, Inequality and Youth Unemployment and Impoverishment across South African Urban and Rural Communities. The Indaba took place at the Hilton Hotel in Durban. Temba made two presentations: Rural and urban impoverishment in South Africa: Apartheid legacy or consequence of wrong economic and developmental strategies post-1994 and Policy options for South Africa: Confronting poverty, deprivation and inequality, youth unemployment and impoverishment.

Articles

  • Best way for the state to deal with spectrum is to get out of the way by Leon Louw – Business Day column
  • Government’s embrace of parasitical SAA is unconstitutional by Martin van Staden
  • Public enterprises, guided by “mean-wellers”, are prone to disaster by Eustace Davie
  • Does government want healthier, wealthier citizens? by Jasson Urbach
  • The higher the growth, the better human wellbeing by Temba A Nolutshungu
  • SAA is neither a “strategic asset” nor a “national asset” by James Peron
  • SAA: Life after death by James Peron
  • SAA: Change the incentives by James Peron
  • South Africa at the tipping point? by Temba A Nolutshungu
  • Economic Freedom of the World Annual Report – a powerful source of information for guiding government policies by Eustace Davie
  • Is wealth inequality a problem? by Chris Hattingh
  • Capitalism: A straw man for the world’s problems by Rob Price
  • SAA: The costs far exceed the benefits by James Peron
  • KPMG and the loss of ethics by Chris Hattingh

Submissions

  • In November, FMF made a submission on the Draft Intellectual Property Policy of the Republic of South Africa – Phase 1.
  • In December, FMF made a submission on End-user and Subscriber Service Charter Regulations.

ENERGY

Evening event
On 25 October, Knox Msebenzi, Managing Director of the Nuclear Industry Association of South Africa (NIASA), presented Common myths about nuclear.

The anti-nuclear lobby has embarked on a campaign to discredit nuclear by appealing to public fears. At the centre of this is the association made between nuclear power and corruption. The other major issue is the message that nuclear power plant constructions are always late and over budget. A related issue being advanced as a fear factor is that nuclear waste is a problem, that spent fuel is dangerous to the environment and lasts for thousands of years. This presentation addressed all these issues by debunking these myths and advancing the energy mix approach to electricity planning for South Africa.

Knox’s presentation can be viewed here.

Articles

  • How government failed to privatise Eskom by Nicholas Woode-Smith
  • South African taxpayer to foot Eskom’s debt bill by Chris Hattingh

FINANCIAL SECTOR

The purpose of the FMF’s Finance Policy Unit is to promote the application of free market principles to financial markets. Current actions focus on the “twin peaks” regulation of which the Financial Sector Regulation (FSR) Act is the architecture, and the Financial Advisory and Intermediary Services (FAIS) Act. 

Video on Twin Peaks
Some years ago, the Financial Services Board (FSB) announced that it had “deregistered” over 15,900 financial service providers. The FSB did not specify race, but how much are you willing to bet that many of those deregistered were emerging black brokers and advisors? Now the proposed “Twin Peaks” (or Financial Sector Regulation Bill) will further undermine transformation in South Africa. In addition, it will create an enormous bureaucracy with reams of red tape. It will cost an estimated R4,8 BILLION per year, every year, which is equivalent to 500,000 RDP houses or 5,000 new clinics per year, every year. Understanding what is proposed and that it has zero measurable benefits is crucial. 

The FMF’s Twin Peaks video can be viewed here.

Articles

  • The right to work and debarment in the financial market by Robert W Vivian
  • Illegitimate FSB directive revoked by Gary Moore

Submissions

  • In October, FMF made a submission on the latest drafts of Schedules 1 and 3 to the Insurance Bill, 2016.
  • In November, FMF made a submission to the National Treasury on “A Known and Trusted Ombud System for All” Consultation Policy Document.

HEALTHCARE

The FMF’s Health Policy Unit (HPU) contends and persistently provides evidence that in all sectors of the economy, free, open markets with competitive private enterprises serve consumer needs best. For the indigent, it would be better for government to purchase higher quality healthcare at a lower cost from the private sector than to provide the service itself. The HPU argues that patients are harmed when government dictates to healthcare providers, pharmaceutical companies and other firms in the healthcare industry how to manage their affairs, or at what prices they should sell their products and services. The HPU’s mission is to increase access to high quality healthcare for all South Africans. 

FMF solutions to healthcare for the indigent
The FMF’s alternative solutions to improved health care for all include: 

  • Privatising the provision of health care – via giveaways of public hospitals to those who work in them or sales to those who wish to buy them.
  • Financing health care for the poor – preferably via state-sponsored vouchers, which the indigent can spend where they choose.
  • Encouraging more private hospitals by deregulating the industry and eliminating Certificates of Need.
  • Reducing prices and increasing health care quality through increased competition.
  • Training more doctors and nurses (the number of doctors is limited to 1,300 a year; this number has remained the same since the 1970s despite increases in the population and the disease burden).
  • Allowing the private sector to train doctors and nurses.
  • Encouraging income-producing medical tourism.
  • Retaining skilled South Africans and attracting others by removing the limit on skilled foreign doctors.
  • Deregulating medical schemes so they can offer their clients exactly what they want.
  • Deregulating pharmacies.
  • Removing price controls, which send mixed messages to the industry.
  • Speeding up registration of clinical trials.
  • Giving those who pay for their own health care a tax deduction.
  • Allowing low cost insurance options.

Media advisories (available on FMF website)

  • Healthcare Demarcation Regulations remove low cost benefit options for poor
  • Demarcation Regulations for the healthcare insurance sector are an attack on the black middle class

Articles

  • The NHI is morally bankrupt by Chris Hattingh
  • Is it freedom or is it dom? by Jasson Urbach
  • It may be necessary but is it empirical? by Jasson Urbach
  • The intellectual property policy requires a "workable" compulsory licensing system by Jasson Urbach
  • Steamrolling unaffordable policies – the new norm in South Africa by Dr Johann Serfontein
  • South Africa bucking the IP rights trend by Jasson Urbach
  • Healthcare Demarcation Regulations remove low cost benefit options for poor by Jasson Urbach
  • NHI – the danger of political promises by Dr Johann Serfontein
  • Taking the NHI debate to new levels by Dr Johann Serfontein
  • NHI tax credit conundrum by Dr Johann Serfontein

Submission

  • In November, FMF made a submission on National Health Insurance Implementation Structures. 

JOBS CREATION / LABOUR

South Africa has an unacceptably high and rising level of unemployment. One of the most important issues facing SA today is improving conditions for greater labour absorption. For government to achieve its stated objective of reducing unemployment and stimulating growth, it must urgently address labour market policies and laws that exacerbate unemployment. A significant part of our current work involves educating the public about the consequences of adopting a National Minimum Wage (NMW). There are currently an estimated 9.3 million unemployed – a NMW will just make it that much harder for these individuals to climb onto the first rung of the economic ladder. 

Articles

  • Failure to respect constitutional rights causes mass unemployment by Eustace Davie
  • The truth about South Africa’s mass unemployment by Eustace Davie
  • Abundance of unskilled labour in SA could be an opportunity for growth without the National Minimum Wage by Chris Hattingh
  • The more trade unions, the less job growth by Frans Rautenbach
  • Don’t allow altruism to blind you to the economic laws that govern labour by Jessica Canada Wellman
  • Catastrophic jobless rate warrants institution of state of emergency by Leon Louw (Business Day Column)
  • Unemployment: The logical outcome of the minimum wage by Chris Hattingh

Occasional Paper
FMF published an Occasional Paper by Prof Brian Kantor: The market for jobs in South Africa – why it performs so poorly and what can be done to improve it. In it he argues that it is not market failure but policy intentions that explain the outcomes in the labour market. In 2014, some 71 percent of all household incomes took the form of wages, salaries, and other benefits received from employers. The SA labour market statistics tell of a highly dysfunctional labour market. One where the supply of potential workers to the formal sector vastly exceeds the demand to hire them. Yet, one where real wages for those working in the formal sectors of the economy have risen consistently over the years, despite the abundance of work seekers.

Brian Kantor's Occasional Paper can be read here:

LAND REFORM

FMF believes that secure property rights represent one of the most important requirements for the protection of both economic freedom and civil liberties. FMF proposes that:

  1. All black occupied council-owned urban plots be converted to full ownership (“freehold”) – FMF is working with Ngwathe municipality (Parys, Free State) to convert 20,000 plots to full freehold.
  2. Superfluous government land be redistributed to the victims of apartheid as a substantial once-off compensation.
  3. Pre-emptive clauses be removed from existing and future RDP titles.
  4. In tribal areas, communities be allowed to grant private title over homesteads while maintaining communal rights over arable land.
  5. The Subdivision of Agricultural Land Act, 1970 be repealed to make it easier for poor individuals to finance smaller, more affordable plots of land.

Khaya Lam (My Home) Land Reform Project
Khaya Lam is an FMF initiative that seeks to reverse the evils of apartheid. FMF Executive Director, Leon Louw, notes: “Black land deprivation was probably the single worst element of apartheid. Since apartheid ended, little has changed. In South Africa today there are still around 5 million black families living as tenants or without ownership rights in houses they have lived in for generations. There has been no systematic conversion of these “council owned” and “traditional community” properties to full unrestricted ownership. The prospects for economic upliftment throughout South Africa through the Khaya Lam national property titling project are exciting and immense”.

Under the project management of Perry Feldman, the FMF’s Khaya Lam project is gaining momentum. In addition to Ngwathe (FMF’s pilot project), FMF is now working in Grabouw, Stellenbosch, Graaff-Reinet, Barkley West, Robertson, Viljoenskroon, Thanda and Cape Town. 

Of the 6,724 transfers for which FMF has raised funding to date, 1,620 title deeds have been registered and lodged in the deeds office. As each property transferred from council to legal resident is worth on average R100,000, this latter figure represents a boost into the economy of over R162 million – now there’s bang for your buck. (See donation option below.)

Title deed presentation this quarter
On 4 October, 100 title deeds were presented to residents in the Kwakwatsi, Koppies community in the Free State. The title deeds were presented by the deputy mayor of Ngwathe Municipality, and Boitumelo Phungwayo, head of affordable housing products and strategic partners at Standard Bank PBB Products.

Wow...wow...wow!
What an amazing experience! I'd like to take this opportunity to thank you for all the hard and great work you did with managing this project – it really was a highlight of my career. 
Thank you for ensuring that you guide us to change people’s lives.
I want to thank the Free Market Foundation team for your great work and choosing us as your partner's. 
You really have brought about a meaningful point about the work we do every day.

Boitumelo Phungwayo
Head of Affordable Housing Products & Strategic Partners
Standard Bank

Photos from the Kwakwatsi handover can be viewed here.

Media advisory (available on FMF website)

  • Key Standard Bank support helps 100 residents of Kwakwatsi find true economic transformation in a title deed and home ownership

Submission

  • In October, FMF made a submission on the Communal Land Tenure Bill.

FMF a WINNER! Impumelelo Social Innovations Centre award
On 4 November 2017, in the Artscape Opera House in Cape Town, the Impumelelo Social Innovations Centre, in partnership with the Distell Development Trust, announced that a Panel of Judges had selected the FMF’s Khaya Lam (My Home) Land Reform Project as a PLATINUM Award Winner 2017! The Impumelelo Social Innovations Centre, for 17 years, has promoted initiatives in civil society that improve the quality of life of the poor in exceptional ways. Awards are made on rigorous evaluations, uncovering what is good and what works in South Africa. More than 500 people attended the event including FMF representatives Temba A Nolutshungu, and Perry and Veronica Feldman.

Photos from the award event can be viewed here.

Change a family's life for the better today
If you would like to sponsor a title deed at just R2,100 (or a part title deed), please email gailday@fmfsa.org or do so directly through our website here: PLEASE NOTE: We have a sponsor who donates just R200 per month toward Khaya Lam. His monthly contribution has so far sponsored 6 title deeds, contributing a whopping R600,000 into the economy. And another who sponsors one title deed per month, changing the lives forever of over 35 families! Why not join them? 

RULE OF LAW

The Rule of Law is a Founding Provision of South Africa’s Constitution but this potentially powerful brake on the executive branch of government has not been playing its proper deterring role. A likely reason for this is that most South Africans do not have an adequate understanding of the true meaning of the rule of law. This is not unique to South Africa, but in many countries it does not make as much difference to their laws as it does here, where any proposed legislation that is in conflict with the rule of law is ipso facto unconstitutional.

Annual report of the Rule of Law Project
In his Message in the 2017 Annual report, former judge of the Supreme Court of South Africa Rex van Schalkwyk wrote that the “function of the rule of law is to ensure that all – politicians included – are subjected to the principle of legality”. 

The dual purposes of the Rule of Law Project are to give intellectual substance to section 1(c) of the Constitution, and to persuade South African opinion leaders to support the ideal of the Rule of Law. The Project thus attempts to ensure that anyone involved in writing legislation and regulations, considering their parliamentary approval, or interpreting the law, does so in accordance with the law.

10 imperatives of the Rule of Law
The Rule of Law Project formulated the following 10 imperatives of the Rule of Law.

  1. All law must be clear, predictable, accessible, not contradictory, and shall not have retrospective effect.
  2. All legislation that makes provision for discretionary powers, must also incorporate the objective criteria by which those powers are to be exercised. The enabling legislation must, in addition, stipulate the purpose or purposes for which the powers may be exercised.
  3. All law must apply the principle of equality before the law.
  4. All law must be applied fairly, impartially, and without fear, favour or prejudice.
  5. The sole legitimate authority for making substantive law rests with the legislature, which authority shall not be delegated to any other entity.
  6. No law shall have the aim or the effect of circumventing the final authority of the courts.
  7. No one may be deprived of or have their property expropriated, except if done with due process for the public interest, and in exchange for market-related, fair and just compensation.
  8. The law shall afford adequate protection of classical individual rights.
  9. All law must comply with the overriding principle of reasonableness, which comprehends rationality, proportionality, and effectiveness.
  10. The legislature and organs of state shall observe due process in the rational exercise of their authority.

Media advisories (available on FMF website)

  • Ominous trend of presenting critical Bills for public comment just before Christmas continues with Electronic Communications Amendment Bill and four others
  • Request for extension of public comment period on bills gazetted during November 2017

Articles

  • Substantive equality cannot override formal equality by Martin van Staden
  • Parliament’s surrendering of power to bureaucrats jeopardises democracy by Martin van Staden
  • Short comment periods on new laws are unreasonable and unconstitutional by Martin van Staden
  • Mandatory transparency in political party funding could jeopardise South Africa’s democracy by Martin van Staden
  • London's Uber ban shines light on the sorry State of the Rule of Law by Martin van Staden

Videos
FMF has to date produced three videos on the Rule of Law.

  • Introduction to the Rule of Law can be watched here.
  • Rule of Law – What it is NOT can be watched here.
  • Rule of Law – What is IS can be watched here.

TRANSFORMATION

Some argue that freedom from apartheid has not made a substantial impact on black advancement. Others argue that for blacks to succeed they need government assistance through Reconstruction and Development Policies and Black Economic Empowerment legislation. Still others are of the view that economic freedom and growth, the development of a strong legal framework, and good infrastructure and security, are all that is required for the realisation of human potential. 

Media briefing
On 18 October, Jannie de Villiers, CEO of Grain SA, presented Threats to food security. Jannie discussed various threats to food security in South Africa, covering the following:

  • Why is maize so important to the SA economy and is climate change impacting it?
  • How does poor implementation of land reform affect our food security?
  • Where are we with transformation of farmers? 
  • What can SA do to secure our food production despite losing our best soils to mining and other causes?

Jannie’s presentation can be viewed here.

Articles

  • Be cautious in the regulation of basic education by Martin van Staden
  • South Africa is repeating the mistakes of apartheid by Martin van Staden

OTHER

Submission

  • In November, FMF made a submission to the Department of Basic Education on the Basic Education Laws Amendment Bill.

High Level Panel report
On 21 November Leon Louw attended the launch of the report of the High Level Panel on the Assessment of Key Legislation, at the Sandton Convention Centre. Chaired by former president Kgalema Motlanthe, the panel’s members included Evidence Based Solutions CEO Olive Shisana, University of Cape Town (UCT) economics professor Haroon Bhorat, UCT Graduate School of Development Policy and Practice professor Alan Hirsch, FirstRand founder Paul Harris, former auditor-general Terence Nombembe and former UN Human Rights commissioner Navi Pillay.

In 2016 the FMF made 17 submissions to the High Level Panel, taking full advantage of government’s call to make written submissions to assess the impact of key legislation on the triple challenges of poverty, unemployment and inequality. 

The persistence of poverty was one of the most important themes emerging from the panel’s public hearings. People who testified “overwhelmingly” ascribed it to an absence of employment opportunities. Among the recommendations from the panel, those of crucial importance are that Parliament reviews the implementation of the Special Economic Zones Act 16 of 2014 to see how it could be optimised to create special zones for manufacturing production destined for export, with appropriate incentives and exemptions.

Furthermore, the panel recommended that emphasis be given to reducing the time to register a new business, including getting appropriate permits and telephone and electricity services, registering a property and accessing state sources of business development funding.

Contact Us  
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