Quarterly Review 2009.06

21 December 2012
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Quarterly review

Free Market Foundation  April – June 2009

Private health care under threat

In the last month or so there has been a propaganda blitz promoting a National Health Insurance (NHI) scheme for South Africa. It is bad enough, and ineffably sad, that our government should be proposing an insurance scheme that is doomed to provide inferior health care for the most needy. The “clear and present danger” lies, however, in the fact that the state’s proposals will probably pull the plug on the private health care sector.

Everyone earning an income in the formal sector will be expected to contribute a percentage of it to the NHI via increased taxes. In addition, the state has its eye on the monies paid to private medical aids. Statements by NHI proponents indicate that they will propose that the cash in medical schemes should be distributed equally: in other words, that the bulk of medical aid premiums should be added to the NHI pot for medical spending across all patients. A further proposal suggests that all those covered by the NHI (the entire population) should be free to seek medical assistance at either public or private sector hospitals, and that the state will fix NHI prices.

Should these proposals be implemented, we foresee the following:

  1. those who cannot afford to pay for both private and public medical schemes will cancel their private contributions;
  2. more doctors and nurses will leave for greener pastures;
  3. fewer foreigners will choose to invest in South Africa and our economy will suffer;
  4. demand for “free” health care will increase exponentially;
  5. the private health care sector will implode leading to massive job losses;
  6. more of the 1 million taxpayers who carry 80% of the tax burden will “pack for Perth”;
  7. you will have to say goodbye to freedom of choice and excellent health care, and hello to queues and inefficiency.

The numbers just don’t add up. Assuming a population of 48 million and government perhaps expecting taxpayers to contribute a modest R400 per person per month for health care. That totals R19.2bn per month or R230bn per annum. It just cannot be done.

It would be better by far if the state separated the funding and provision of health care so that all care is eventually privately provided and care for the needy is publicly funded. This would ensure competition, lower prices and quality health care for all.

The Zimbabwe Papers

On June 9, Tom Palmer of the Cato Institute handed bound copies of The Zimbabwe Papers to Morgan Tsvangirai and three of his Ministers prior to their meeting in the USA with President Obama.

The Zimbabwe Papers: A Positive Agenda for Zimbabwean Renewal, a major report by eight of Africa’s most respected think tanks, was released in mid-May. Commissioners of the papers include Temba Nolutshungu, our Cape Town Director, and Leon Louw, wearing his Law Review Project hat.

Over the past decade, average incomes in Zimbabwe have declined by more than two-thirds and life expectancy has fallen by 20 years. As Temba points out: “Zimbabwe has turned from Africa’s breadbasket into a basket case in less than a generation.” The report examines the causes of Zimbabwe’s social and economic problems and offers a blueprint for urgent and practical reform.

Top priorities advocated by the report include: Stabilising the currency; reducing government expenditure; ending arbitrary violence; reducing and simplifying taxes; reducing the burden of regulations; and supporting the rule of law – essential for a peaceful, well functioning liberal democracy.

The report received unprecedented media coverage. Within days of its release, both Leon and Temba were interviewed on several radio stations (including SAFM, Lotus FM and Radio Sonder Grense) and several TV stations (including CNBC Africa, Channel Africa and SABC News International). Our press release and website Feature Article were picked up by the following newspapers in Zimbabwe: The Zimbabwean, the Harare Tribune, and the Zimbabwe Telegraph. In South Africa the report was covered by the Cape Argus, the Weekend Post and The Herald while website coverage included ModernGhana.com, Fin24.com and Moneyweb.

The Zimbabwe Papers can be downloaded from www.zimbabwepapers.org.

Intellectual property rights (IPR)

The IPR 2009 Indaba, our third annual Intellectual Property Rights conference, co-sponsored by Microsoft, will take place at the Indaba Hotel on November 19 and 20. The conference will cover the role of IPR in innovation, economic growth and job creation. Specific topics will include software, pharmaceuticals, agriculture, competition policy and the music and movie industries.

Media coverage

Our Media Cuttings folder has grown considerably during the second quarter of this year. As you know, the Foundation’s website articles, emailed to you weekly, are regularly republished by the local and international media. Additional articles are written specifically for the media, who regularly quote or mention the FMF, or conduct interviews with FMF directors. The directors are regularly heard or seen on radio and TV.

Recently republished website articles include: Economic stimulus: When government stimulates economic activity it can turn sheep into chickens by Johan Biermann; Why SA should not nationalise its private health care by Eustace Davie; and The government-created sub-prime crisis by Leon Louw.

Articles written specifically for the media include: Trying times call for more than just ‘muddling along’ by Jim Harris; and The New Deal: America’s experiment with fascism by Neil Emerick.

TV and radio interviews have covered a broad range of topics such as State-owned enterprises: What is best?, Fiscal and monetary policy, and The constitutionality of BEE.

Free books

The FMF has had a fantastic response to its Free Books offer. We still have books in stock, however, and have added new titles to our freebie list. If you would like a copy of our updated catalogue, please email a request to fmf@mweb.co.za.

In addition, having read a May 28 Business Day article entitled The urgent, practical work of creating jobs for SA’s young, we were alerted to the Centre for Development & Enterprise/Business Leadership 5-million jobs initiative.

To each of the 20 participants we mailed a copy of Jobs for the jobless by Eustace Davie. This booklet proposes special exemption certificates for the unemployed; a solution that would be effective, easy to implement and politically ‘saleable’ to help those who need help – the unemployed – without affecting the statutory rights of the employed.

In-house events

Statistician Garth Zietsman explained to a public meeting at the offices of the Foundation on Monday, 11 May, how Tax Freedom Day (TFD) is calculated and that it falls 21 days later than it did in 2001 – this year falling on May 10. Economist Chris Hart discussed TFD in the light of the current crisis, predicting a “huge leap in government take”. Both speakers were introduced by FMF Deputy Chairman, Ayanda Khumalo. TFD is the day on which average South African income-earners start working for themselves. Almost one-third of their working year (the 129 days from January 1 to May 9) were spent working to pay their total taxes for the calendar year, ie, to pay the costs of government. Tax takes a greater percentage of some people’s incomes and less of the incomes of others, so TFD is merely a rough guide. The greatest value of the concept is that it gives us an indication as to whether government is taking more or less of our money each year, how much taxes are increasing or decreasing, and how our taxes compare with the taxes of other countries.

Fulbright student Laura Grube and FMF Executive Director Leon Louw explained to a public meeting at the offices of the Foundation on Wednesday, 24 June, that despite national land reform programmes, millions of black South Africans continue to live under apartheid land legislation. Both speakers were introduced by the FMF’s Cape Town Director Temba Nolutshungu. Their presentation was divided into two parts: the first dealt with rural land tenure and the Communal Land Rights Act of 2004 (CLaRA), and the second with a new FMF project entitled: Land tenure in South Africa: Does apartheid legislation still apply? Leon and Laura called for accelerated access to freehold title saying blacks must enjoy the same benefits to land that whites enjoy: Security of tenure; the right to rent or sell their property; and borrowing privileges using tradable title as collateral for loans.

Networking lunches

Brian Benfield, FMF Chairman, and Ayanda Khumalo, FMF Deputy Chairman, hosted our 36th networking luncheon on May 15.

Among our guests were Don Ncube, a Patron of the Foundation and the Executive Chairman of Badimo Gas; Sam Alexander, Chief Executive Officer of The Pacific Institute and an FMF Council Member; and Robert Vivian, Professor of Finance & Insurance at the University of the Witwatersrand.

Humphrey Borkum, Chairman of Merrill Lynch SA, hosted our June 19 luncheon at his offices in Sandton.

We were joined there by, amongst several others, Greta Engelbrecht, an advocate in the High Court of South Africa; William Gumede, Programme Director of the Africa Asia Centre at the University of London; and Linda McClure, Managing Director of Junior Achievement South Africa.

On both occasions FMF Executive Director Leon Louw, explored strategies for South Africa to achieve sustained economic growth, described the Foundation’s priorities and role in influencing national policy, and explained why governments, not free markets, are the cause of the current global crisis.

Words of wisdom

In this quarter FMF Executive Director, Leon Louw, addressed the following on a diversity of topics:

GEDA Colloquium on The global government failure crisis.

Institute of Directors on Habits for highly effective countries: Lessons for South Africa.

South African National College on The world economy and global market trends.

South African Institute of Race Relations (SAIRR) on The rule of law and Scope for free enterprise.

South African Property Owners Association (Sapoa) on The post-election political landscape.

Business fraud breakfast on Fraud: Causes and solutions.

Rotary Club of Johannesburg on The global crisis explained.

Did you know that …

…the FMF is Africa’s oldest independent economic policy institute?

…the FMF was created in 1975 by pro-liberty, anti-apartheid businesses and civil society by diverse national bodies such as Nafcoc, Assocom (now Sacob/Busa), the Consumer Union and the Chamber of Mines?

…the FMF was recently ranked 4th in the list of Top 25 Think Tanks in Sub-Saharan Africa by The Think Tanks and Civil Societies Programme of the University of Pennsylvania and also among the 407 think tanks nominated as “One of the leading think tanks in the world” out of a total of 5,465 included in the study?

…the aim of the FMF is to persuade government to adopt proven pro-market policies that ensure sustainable prosperity for all? And that Nafcoc’s former head, Dr Sam Motsuenyane is the FMF’s President?

 

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