Policies up for grabs in budget votes

A flurry of budget votes in Parliament in the past week brought into stark focus clashing policy directions held by members of the same governing party with the fiscal prudency lobby fighting to remain in the ascendancy while the forces of protectionism and greater state intervention publicly flexed their muscles.

Three key economic cluster ministries held their budget votes last week – mineral resources, energy and public enterprises.

Ministers and their deputies in two of the three fed a growing perception that a larger state role in the economy – through state-owned companies as well as meddling in the free market was the road forward.

In contrast to the interventionists, Energy Minister Dipuo Peters is set to pilot the Independent System and Market Operator Bill through Parliament which proposes to transfer responsibility for operating South Africa’s electricity transmission grid to an independent operator.

According to the Free Market Foundation’s Eustace Davie, the bill provides for a process that will allow for the transfer of fixed property that can be legally transferred from Eskom to the operator.

The operator looked set, according to Davie, to buy electricity from Eskom and new independent suppliers to ensure that the demand for electricity was properly met.

“We will know that this has been achieved when the operator, Eskom, new independent power producers and distributors start advertising to encourage consumers to buy more electricity, instead of appealing to them to buy less,” he quipped.

The energy minister’s stance, however, was drowned out by other ministers who generally backed various forms of intervention which would mean the government would play an ever-expanding role in the country’s economy.

Source: Donwald Pressly, Policies up for grabs in budget votes,Business Report, June 05, 2011.

For text: http://www.iol.co.za/business/business-news/policies-up-for-grabs-in-budget-votes-1.1078807

First published by Business Report, South Africa

FMF Policy Bulletin/ 07 June 2011

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