Quarterly Review 2013.06

20 December 2013
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FMF

Quarterly Review

April – June 2013

The FMF’s projects for 2013 include: civil liberties, COMPETITION, energy, GOOD LAW, growth, HEALTH, job creation / labour, LAND REFORM / PROPERTY RIGHTS, nationalisation, and RED TAPE, as well as ad hoc issues as they arise.

Note: As a Special Chairman’s Letter dealing exclusively with the FMF’s labour law challenge replaced the first Quarterly Review of 2013, this Review includes previously unreported news from January through March.

Media Coverage

The FMF has been working hard to increase its media coverage and reach as wide an audience as possible with its message about the benefits of economic freedom and growth.

In the last five months (January through May), the FMF’s WEBSITE ARTICLES, sent to our mailing list weekly, were republished on 21 occasions, in other words each article was republished once on average.

241 ARTICLES that quote or mention the FMF or originate from interviews or were written specifically for the media were published since January 2013. These include Leon Louw’s weekly column in Business Day. The column is published each Wednesday and this year has dealt with the following:

January 23: Why is the state ignoring its own power policy? – EXPORTING coal to Newcastle — that’s what Eskom proposes. The coal-to-Newcastle idiom arose because England’s Newcastle prospered for centuries by exporting coal.

January 30: Poverty, not prosperity, is an economic phenomenon – MUD OOZES between her toes. Mud mixed with rotting garbage, urine and excrement. Yet she seems accustomed to the appalling stench.

February 6: Land-reform ‘lie’ keeps Verwoerdian tenure alive – IF YOU tell a big lie and keep repeating it, people will eventually believe it," observed Adolf Hitler’s propagandist, Joseph Goebbels. Three of SA’s big lies are that "land reform" means redistributing white farms; that "willing buyer, willing seller" redistribution has failed; and that people who support that principle oppose restitution of land misappropriated under apartheid.

February 12: ANC must shift back to its laissez faire roots – REMEMBER the tsunami of scenarios during and after our transition years: Anglo American high road-low road scenarios, Mont Fleur flight of the flamingos-Icarus scenarios, Clem Sunter premier league-failed state scenarios, Dinokeng’s walk together-walk apart scenarios and Etana’s effective state-ineffective state scenarios?

February 20: Bailing out SAA takes from poor to give to rich – SOUTH African Airways (SAA) bail-outs are duplicitous. They divert billions of rand from the poor, who do not fly, to the rich who do, in a bizarre orgy of welfare for the well-to-do.

February 27: Impossible for men not to promote own ends – “WHEN morality comes up against profit, it is seldom that profit loses," said African-American Congresswoman Shirley Chisholm, a strident critic of corporate greed. Scandals, scams, Ponzi schemes and the financial crisis raise concerns about dishonesty, corruption, fraud and greed and whether they are evil characteristics of capitalism.

March 6: Who would oppose reforms to labour law? – WHATEVER you do, don’t employ or house anyone," said local farmers when Don Rush, a foreign industrialist, bought his farm. "If you do, they won’t work and you’ll never get rid of them. Unions will torment you.”

March 13: Vilified for trying to give the jobless a choice – WHERE in the world do partners in government call an application to one of its courts a "brutal attack" and "nothing less than war"? Where do partners in government "vehemently resist" court proceedings and place their members on "high and militant alert" for battles to be "fought on the streets" threatening that "blood will flow" if the courts do not rule in their favour?

March 20: Regulatory barricade is suffocating our society – TEAR down this wall, Mr President! You and your ministers promised regulatory relief. Instead we got regulatory diarrhoea.

March 27: Cost to SA of unreliable power not easily known – SO, THE Eskom deal with BHP Billiton, through which the company pays a fraction of the standard electricity tariff for its Richards Bay aluminium smelters, must be disclosed. The Supreme Court of Appeal decision reveals the bizarre prices at which Eskom sells electricity to BHP and shows that deals with the government, in all its forms, should be transparent

April 3: Household solutions are the cure for the crisis – WITH Nobel Prize economists in profound disagreement about the cause of and the cure for the "financial crisis", ordinary folk regard it as too complicated to understand and uncritically accept popular rhetoric. However, everything significant is easy to understand

April 10: How the left tackles the man instead of the ball – TACKLE the ball not the man, they say. That’s true of soccer. Rugby, however, involves tackling the man with the ball. When it comes to public discourse, the message translates into "launch reasoned attacks on what is said rather than ad hominem attacks on the person who said it".

April 17: Thatcher’s policies could have made SA wealthier – WHY the gloating over former UK prime minister Margaret Thatcher’s death? Politicians usually do what gets votes, but those who benefited most from what she did loathed her and she was fired. Before visiting her, Nelson Mandela familiarised himself with facts beyond her inadequate support for “the struggle”.

April 24: Is business licensing bill just a bad dream? – SOME things are so bizarre that I assume I must be dreaming. In my nightmare, or reality if I am awake, the Department of Trade and Industry published a surreal draft Licensing of Businesses Bill.

May 1: Nothing special so far about new economic zones – FORTUITOUSLY, President Jacob Zuma’s visit to China coincided with the 30th anniversary of China’s special economic zones (SEZs). He was so excited by their spectacular success and embarrassed by the failure of our Industrial Development Zones (IDZs), that he decided to turn our IDZs into SEZs.

May 8: Big Brother Eskom has turned us all into culprits – “CURIOUSER and curiouser!" cried Alice in Wonderland. "Eskom has turned everything upside down," she could have added. Or maybe it is more like Orwell’s nightmarish 1984 with its "newspeak" and "doublethink" when words mean their opposites, where Big Brother remotely switches things on and off in your home and where citizens with "bellyfeel" enjoy blind, enthusiastic acceptance of misery.

May 15: Poverty is an intended effect of state policy – PROSPERITY has become a matter of choice, not destiny. Poverty and unemployment should be regarded as the intended consequences of government policies, unless, of course, we presume staggering levels of ignorance.

May 22: Yet another example of ‘rape by regulation’ – IMAGINE a gang of rapists whose victim begs for mercy. They tell her that if she co-operates, only the gang leader will rape her. She acquiesces. When charged with rape, the gang’s defence is that the woman agreed, that she was fully co-operative and even said thank you.

May 29: Environment an excuse to gain power over liberty – WHY are "greens" against a "greenhouse"? Are you a global warming junkie or a denialist? Why two camps: catastrophists and denialists? When capitalism triumphed over socialism and communism, environmental and religious fundamentalism became dominant excuses to gain power over liberty.

INTERVIEWS on radio and TV between January and May number 57, some of which are available as podcasts on our home page.

FMF has hosted 10 media briefings since January 2013 and plans to host two per month whenever possible. The briefings provide journalists with an opportunity to ask in-depth questions about the topic under review. Each briefing is followed by a media advisory to over 1,000 editors and journalists.

16 January:     Lessons from the Soviet Union – the savagery of socialism (see Luminary Award)
6 February:    Hear the facts behind the headlines: Post apartheid’s greatest failure: 37% unemployment in 2011 up from 13% in 1994
5 March:    Batting for the unemployed: Free Market Foundation challenges constitutionality of Labour Relations Act
20 March:    Open skies and black holes: Open skies, competition and a level playing field: What happened to government plans for SAA?
10 April:    "How will we protect ourselves from government’s protection?" Is South Africa sleep-walking into a 1984 Orwellian society?
24 April:    The FMF’s constitutional challenge to a section of the Labour Relations Act (LRA): “Just let me work” – the voice of the unemployed
15 May:     New business licensing law will cripple the economy’s job creating engine: the SME sector: DTI arguments in favour are already covered by existing laws – just enforce them
22 May:    Integrity in leadership (see Luminary Award)
5 June:    Solving SA’s power crisis: Bring in independent power producers (IPPs)
26 June:     The 2013 Expropriation Bill is better but still bad... 

See projects below for more information on project-specific media briefings this quarter.

Luminary Award

Having achieved democracy in 1994, South Africa is a country rich in potential with an unlimited future. The FMF wishes to identify those unique, one of a kind, individuals who have inspired others in a particular sphere of life. These individuals are elected as FMF Luminaries to commemorate their achievements as an example to all.

The first FMF Luminary Award recipient was Dr Yuri Maltsev “… for his tireless dedication to upholding liberty and the inspiration he brings to the people whose lives he touches”. The second FMF Luminary Award recipient was Dr Thabo Cecil Makgoba “… for his lifelong dedication to all the peoples of South Africa and for ceaselessly demonstrating the highest level of integrity”.

On January 16, Dr Yuri Maltsev, Soviet defector and former economics advisor to Russian President Gorbachev, spoke on Lessons from the Soviet Union – the savagery of socialism.

The FMF’s subsequent media advisory was entitled South Africa should pay heed to lessons from recent history and avoid mistakes made by failed socialist ideologies and outlined how: “Socialism produces poverty, slavery and mass murder on a scale beyond human imagination ... the USSR slaughtered 61 million people in over 30,000 forced labour camps, gulags, in a desperate attempt to force communism to work … China was the worst mega-murderer with over 78 million innocents killed … “Socialism is a war on human nature and character,” Maltsev said … the primary reason for the failure of communism is that it removes the human factor and suppresses all human endeavours and the need to strive to improve individual circumstances … No one is rewarded for hard work and idleness earns the same as effort … Today, under President Putin, Russian politics still centre on the Kremlin with increasing control of media and civil society … the USSR experience both past and present has grave and fundamental lessons for South Africa where there are dangerous tendencies of increasing state intervention and signs of moves to socialist ideologies.”

On May 22, Dr Thabo Cecil Makgoba, Anglican Archbishop of Cape Town and the Metropolitan of the Anglican Church of Southern Africa, spoke on Integrity in leadership.

The FMF’s subsequent media advisory was entitled FMF recognises Anglican Archbishop of Cape Town, Dr Thabo Cecil Makgoba, with luminary award for dedication and integrity, and outlined the following: “… Dr Makgoba acknowledged that religion and free markets do not always go hand in hand but that each has a part to play to work towards a nation of flourishing individuals within flourishing communities … integrity begins with its original Latin meaning of ‘untouched’, which conveys wholeness, completeness, soundness, coherence … the Constitution [is a] blueprint for government, business and policy makers … aspects of SA society which detract from this vision include the Gupta saga …; the Marikana tragedy …; the horror of Anene Booysen …; the scandal of undelivered text books … corruption is … so endemic and habitual in some sectors that it is hard to know how to begin to deal with it and that with this goes a wider loss of moral compass which creates an atmosphere in which all sorts of dubious practices become accepted … Government, in particular, needs to beware of promoting a culture where it is unacceptable to speak out … the promise of 1994 is in the collective commitment to integrity …”

Civil Liberties

The FMF remains concerned about the increased assault on civil liberties and individual freedom in South Africa.

Governments worldwide have found that it is easy to get support for state intervention on issues such as tobacco and liquor. And they have readily embraced the consequence that, once in place, such measures open the door for increased interventions in other areas that go far beyond the need to protect, for example, passive smokers, to the point of extreme erosion of lifestyle choices, freedom of association, property rights, basic liberty and personal dignity.

You may be aware that the FMF has been very pro-active about proposed tobacco regulations; we have broadened the discussion to include liquor; and in due course we hope to broaden it even further to include sugar, meat, salt, fat and other products. The product/health debate is, in our view, a red herring around which the passionate are willing to rally. We foresee that the greater danger is that it will not only impact on individual lifestyle choices, but that it will impact significantly and negatively on businesses, the fiscus and the economy.

The FMF’s stance is that freedom, property rights and choice underpin a democracy and are tampered with to the detriment of ordinary people; that tobacco (and similar) regulations are the thin edge of the wedge, already hammered home by a government ready and willing to split us and our freedom apart. Picking on an issue such as smoking that raises eyebrows and passions, allows the state to take the steps that eventually lead into our homes to determine what we eat,  what we buy (Local is Lekker), and perhaps with whom we sleep (as in the bad old days of apartheid).

In addition, since much of the proposed tobacco and liquor regulations are law by decree rather than parliamentary legislation, the FMF is concerned that bad laws will be ignored, not only by the public, but by the police. Societies that ignore bad laws become societies that ignore good laws as well. 

Media briefings and advisories

On April 10, Leon Louw, FMF Executive Director, presented Government should abandon symbolic gestures and leave the nanny-state to Mary Poppins. He dealt with the following issues:

  1. Do South Africans really want to return to a prohibition style society where adults are not entrusted to make their own decisions?
  2. Where government decides on which day and at what time you can drink, whether and how you can view marketing material, and whether and where you can smoke outside?
  3. Should the government be allowed to use draconian laws to curtail freedom of choice and action without real consideration of the precedent it sets?
  4. Legislating for increased restrictions on the availability and sale of alcohol is unlikely to reduce consumption or improve public health and will damage small traders, especially those in townships.
  5. The US prohibition era showed clearly that bans do little to curb alcohol abuse and, instead, encourage illegal trading.
  6. These and the new tobacco laws set dangerous precedents for a free and democratic society.
  7. Such laws have unintended adverse consequences.
  8. South Africa already has comprehensive laws covering the abuse of alcohol aimed at reducing the socio-economic costs of alcohol abuse. It is enforcement which is lacking.
  9. Prohibiting legitimate marketing and promotion by private companies will not limit consumption but will raise the barriers to entry which will drive up prices and reduce consumer choice.
  10. Raising the age of consumption makes a mockery of the age of consent, marriage, driving and most bizarrely, creating the next generation.
  11. Disturbingly, an ANC government is using apartheid-style laws to control private citizens’ behaviour. Liquor laws were once a means of social control: the proposed laws are moving SA backwards.

The FMF’s subsequent media advisory was entitled Vices are not crimes: Liquor and smoking laws – a return to apartheid and questioned: “What kind of society do we want? One in which we are treated with respect as responsible adults; where the means used to change behaviour are education and persuasion? Or do we want to live in an Orwellian world? A society in which we merely exist as disempowered, submissive subjects with every aspect of our lives regulated by an authoritarian nanny state that passes draconian laws to force us to do what it thinks is ‘good for us’? … Louw drew alarming parallels between liquor laws used to control the behaviour of blacks during the years of apartheid and the approach being used by our current democratic government to curb ‘undesirable’ behaviour … Louw stressed that the FMF’s opposition to the proposed regulations is not about drinking or smoking per se – personally, he seldom drinks and has never smoked ... ‘It is the steady and pernicious violation of liberty and freedom that the FMF finds disturbing and South Africans need to wake up before it is too late. Government’s desire to ‘help’ people is no reason or excuse to curtail liberty. Where will it end?’”

Liquor-related research papers and articles

Our legal consultant, Gary Moore, produced three papers based on World Health Organisation (WHO) policies:

  1. Restricting the availability of alcohol: Legal, social and economic consequences
  2. Restricting the marketing of alcohol
  3. Increasing the pricing of alcohol

The papers were converted into three easy-to-read popular articles that were published in the Saturday Star on two consecutive Saturdays:

  1. Stricter liquor laws will not cure social ills
  2. Banning liquor ads not the answer
  3. ‘Sin’ tax does not curb drinking

Competition

Media briefing and advisory

On March 20, Leon Louw, FMF Executive Director, presented Open skies and black holes: What happened to government plans for SAA? He dealt with the following:

  1. "Strategic asset" or black hole sucking in billions of tax payer resources?  
  2. SAA bailouts are welfare for the well-to-do
  3. The poor are subsidising the rich and funds are diverted from other vital sectors
  4. State funding distorts competition, rivals are eliminated and the consumer pays in the end
  5. SAA's predatory pricing and excessive capacity have driven out the private sector
  6. 10 out of 11 private airlines have gone bust since 1991
  7. Government’s own official policy* states a level playing field and that SAA should operate on a commercially sound basis

*1990 Domestic Air Transport Policy (DATP); 1991 Addendum to DATP; 1995 White Paper on National Transport; 1996 Department of Transport Airlift Strategy

The FMF’s subsequent media advisory was entitled By subsidising SAA, government is taking money away from essential services like education, hospitals and policing and stated that: “… official government policy is not being implemented … bailing out state owned enterprises (SOEs) is “welfare for the well to do” … Official government policy can only be changed by following the process set out in S195 of the Constitution … Government bailouts … destroyed [private companies] deliberately by providing the means for SAA to use predatory pricing and excess capacity to drive out competitive private companies ... Louw told the audience that he did not believe that SAA or any SOE was capable of running on a sound commercial basis ... Instead of competitive market forces, SOE managers had to deal with political influences and agendas which were irreconcilable with private enterprise.”

Energy

Oral evidence and media advisory

On January 31, FMF Director, Eustace Davie, led evidence at the NERSA hearings, arguing that Eskom’s proposed tariff hikes were unaffordable and disastrous for the economy and that the figures should be robustly interrogated by technical and financial experts. The FMF’s earlier submission on the proposed tariff increases can be read here.

The FMF’s subsequent media advisory was entitled: Nersa hearings: FMF questions the role of Eskom as primary energy supplier and asks serious questions about the financial basis of the MYPD3 application and argued: “… that Eskom should not be solely responsible for supplying the nation’s electricity … Providing all new generating capacity should be the job of the private sector … SA has an outdated vertical monopoly owned and managed by the state which is a system that has been discarded by most developed and growing economies … Eskom pricing is determined by a regulatory committee (NERSA) subject to political oversight rather than a free and competitive market … the average electricity price has increased from 22.1 cents per kWh to 60.67 cents in the four years since 1 April 2009 (almost trebling) and is 148% above the inflation rate … If the MYPD 3 application is adopted the price will increase to 128 cents per kWh (an above inflation increase of 406% in nine years and a multiple of 5.79 times) … the [solution] is to immediately open up the transmission grid for wheeling from IPPs to customers … [and] to make the transmission grid owned and managed by an independent SOE to facilitate the entry of IPPs, competition, and the establishment of a market for electricity…”

Media briefing and advisory

On June 5, FMF Director, Eustace Davie, presented Solving SA’s power crisis: Bring in independent power producers (IPPs). He outlined the crisis (shortage of estimated 5 000 MW, large industries paid to reduce usage, new developments on hold, large maintenance backlog on distribution grids) and suggested the following: Facing a winter of discontent, as Eskom warns of blackouts, the solution is clear: follow international trends: open up the electricity market; introduce real competition through an independent transmission grid; change the ISMO Bill to an ITSMO Bill and let it own the high voltage grid; let IPPs finance, build and operate all new generating plants; take the pressure off Eskom, the government and taxpayers.

The FMF’s subsequent media advisory was entitled Why is South Africa so backward in looking towards the future for electricity supply? and stated that: “Keeping the lights on is bad for the SA economy … The real cost to the economy is staggering, not least the cost of burning diesel at peak rate for four hours every day in gas turbine plants which should be considered as emergency back-up only … Large industries are being paid by Eskom not to produce their products ... The distribution grid maintenance backlog is estimated at R50m ... Eskom’s solution is to implore users to use less … The sooner independent power producers (IPPs), other than renewables, are enabled to start producing the additional base-load electricity that SA so desperately needs, the sooner the country will be free of the constant fear of imminent back-outs … Neither the government nor Eskom can afford to provide the capacity for the country’s immediate and future needs, but they do not have to ... IPPs should finance, build and operate all future electricity generation…”

Growth

In-house events

On February 20, Frans Cronje, Deputy CEO, South African Institute of Race Relations (SAIRR) / Unit for Risk Analysis presented Why the ANC could lose the 2024 election: An analysis of South Africa in 2013 and beyond.

Frans reviewed what is actually happening in South Africa in terms of people’s living standards and experience of the country after almost 20 years of democratic government. He tracked major political, economic, and social trends. He argued, among other things, that:

  1. the ANC is set to lose the 2024 election
  2. service delivery is an enormous success
  3. the matric pass rate is actually 30%
  4. despite not having much of an education system living standards took off as we became the developing world’s biggest welfare state
  5. South Africa does not have a labour market
  6. job creation cannot happen in an economy that grows at less than 5% of GDP
  7. the government is running out of money, and
  8. South Africa could learn a whole lot from investment and growth trends in Africa.

On April 25, Dawie Roodt, Chief Economist, Efficient Group, presented A GIANT LEAP in economic time. Dawie outlined:

  1. why and how decisions made 100 years ago still affect us today
  2. why the shortest route isn’t always the fastest
  3. why “no pain no gain” needs to be the war cry all the way from the athletics track to the economic frontier
  4. why BEE “just ain’t buzzing anymore”
  5. what the “demographic dividend” means
  6. why size counts, and
  7. why he chooses a giant leap over a small step any day.

On June 25, H.E. Mr Beka Dvali, Ambassador of Georgia in the Republic of South Africa, presented Georgia: The story of an extraordinary transformation.

  1. Throughout history, Georgians had to struggle to preserve their national identity, their faith and their political independence. In 1991, Georgia broke free from 70 years of Soviet domination. The next two decades saw periods of ups and downs, trials and errors, and a continued struggle against the attempts of the Kremlin to subdue the country. However, Georgians have shown exemplary resilience and have remained true to the values of freedom.
  2. Beka Dvali, the first Georgian Ambassador in Pretoria, reflected on those experiences and especially on the extraordinary transformation of the country from a Soviet planned and state-owned economy towards a liberal, market economy; and its continued reforms to transition to liberal democracy and free markets. The establishment of exemplary state service and persistent implementation of anti-corruption measures have been seminal in this important effort.

Tax Freedom Day

On May 9, the FMF sent out a media release entitled: Your freedom begins today! Tax Freedom Day falls on 9 May this year – four days later than in 2012, which explained: “Today … South Africans start to work for themselves … From 1 January through 8 May South Africans have been working to pay for government … The money they have earned to date is equivalent to the amount of money needed to pay for government for one year … Tax Freedom Day 2013 is four days later than in 2012, and seven days later than in 2011 … In other words, taxes have increased … Higher taxes result in less disposable income; less disposable income means less saving; less saving means less capital formation; less capital formation means lower labour productivity; and lower labour productivity means lower real wages … Estimates of optimum total government spending for maximal productivity place it at 20%-23% of GDP … South Africa’s government spending is well above this level, placing SA among the worst ranked countries worldwide at our level of development … One of the best things government can do is to spend less and tax less so that Tax Freedom Day occurs much earlier in the year and all South Africans can start to enjoy the rewards of their hard work earlier in the year.”

Oral evidence

In May, FMF Director, Temba Nolutshungu, led oral evidence to the Trade & Industry portfolio committee on the Special Economic Zones Bill and Policy, which was based on the FMF’s written submission, which can be read here.

Health

Field trips

Chicago: BIO Conference

In April, newly appointed FMF Director, Jasson Urbach, attended the BIO 2013 conference in Chicago, USA as part of a South African delegation tasked with observing and reporting on the activities and policies adopted by countries that have successfully attracted significant amounts of investment in their life sciences sectors. Since Intellectual Property forms the cornerstone of IP investment, many companies were eagerly awaiting the release of the DTI’s new Draft Intellectual Property Rights Bill. Some SA delegates at BIO 2013 were unaware of the impact that any erosion on IP rights would have on the attractiveness of South Africa as a suitable investment destination. Other countries are investing heavily in the life sciences sector and trying hard to attract potential investors, yet SA didn’t even have an official stand at BIO 2013. Our government officials need to understand that in addition to IP forming the cornerstone of the pharmaceutical sector and other life sciences sectors that we are not living in a silo – there is significant competition from other countries (including our BRIC partners) for this investment. Historically, South Africa was one of the premier destinations (certainly in Africa) and also amongst many other developing countries for this investment because of our favourable operating environment (a strong rule of law, strong IP, a diverse population to conduct clinical trials etc), but now we are seeing the reverse. There have been significant outflows of FDI, particularly in the pharmaceutical sector and a stagnation in investment. Urbach suggests that South Africa work on getting a favourable policy environment and encouraging more coordination between departments in South Africa and between pharmaceutical companies and government officials.

Geneva: Stockholm Convention – COP 6

In May, FMF Director, Jasson Urbach, attended the Stockholm Convention’s sixth Conference of Parties (COP-6) held in Geneva, Switzerland. The Convention oversees the banning or control of various chemicals, known as persistent organic pollutants (POPs) that are either used in industry or agriculture. In the run up to COP-6, a radical Swiss anti-DDT environmental group, Biovision Foundation, hosted a meeting of several African Environment Ministries, including South Africa’s, to develop an “Africa Position” on DDT. Given the fact that few if any representatives from African Health Ministries were in attendance, the position sought to impose a deadline of 2020 to halt all DDT use. Previously, at COP-5 held in 2011, the European Union and Swiss governments, aided and abetted by several environmental NGOs and manufacturers of alternative insecticides, had also attempted to impose this arbitrary deadline. Fortunately, it was rejected then, and once again at the most recent COP, thanks to the leadership of the South African Ministry of Health officials and the Indian Government. Urbach wrote an opinion editorial piece on the proceedings and more generally the anti-insecticide bias of the United Nations, which was published in the Business Day (see Threat to key tool in the fight against malaria below).

Research

Jasson Urbach co-authored a journal article entitled Vector-control personnel’s knowledge, perceptions and practices towards insecticides used for indoor residual spraying in Limpopo Province, South Africa which was published in the journal Parasites & Vectors. Contradictory arguments regarding the benefits and harm of insecticides, especially DDT, have caused concerns in different societal circles, threatening to undermine the achievements of the indoor residual spraying (IRS) programme in South Africa. These concerns were exacerbated by the screening of a documentary on SABC TV with anti-DDT sentiments. Consequently, Limpopo Malaria Control Programme (LMCP) Management advocated for an investigation to determine the potential effect of such campaigns on vector-control personnel’s knowledge and perceived effects of insecticides on human health, with a view to improving the educational materials designed for use in training vector-control personnel. The study concludes, “Vector-control personnel faced health and ethical dilemmas, in that, while they perceived insecticides used for IRS in Limpopo to be potentially harmful to the health of users, as purported through media, they also viewed IRS using insecticides to be effective in controlling malaria”.

Medical Chronicle

Since July 2012, the Health Policy Unit (HPU) has secured a monthly column with the Medical Chronicle. The HPU’s Directors, Eustace Davie and Jasson Urbach, alternate on publishing articles based on contemporary issues within the health care policy environment. The Medical Chronicle is circulated to over 14,500 individuals including: GPs, specialists, medical schemes, the Department of Health, private hospitals and the pharmaceutical industry. Each article appears in the lead area of the opinion editorial section.

Articles this year

Do we need a new MCC? (Medical Chronicle)

Is Ugandan malaria really attributed to global warming? (Africa Fighting Malaria)

Time to reconsider the command and control strategy (Medical Chronicle)

NHI foundations planted in quicksand (FMF)

“Super fund cleanup” – Super waste of money (Africa fighting Malaria)

SOUTH AFRICA students flee Cuba, next time it will be Russia (Medical Chronicle)

Patents and patent laws are not a major barrier to access to medicines (Drug Info Digest)

Threat to key tool in the fight against malaria (Business Day)

Government – the culprit behind high private healthcare prices (PoliticsWeb))

What is good for the goose... (Medical Chronicle)

Job Creation / Labour

Media briefings and advisories

On February 6, Loane Sharp, Economist, Adcorp Analytics, presented Reality check: Update on SA’s labour market. He detailed the facts behind the headlines:

4.4m South Africans currently unemployed; 61% unemployed for over 1 year; 74% under the age of 24; 15 million receiving social grants; 7.7 million tax payers.

The causes: Restrictive labour legislation – rated 138 out of 142 by World Economic Forum; Wage inflation decoupled from labour productivity; Militant trade union activism; Education and training not delivering; Regional conflicts resulting in unchecked immigration.

The facts:

  1. Since 1995 Employment Act, job creation declining even as economic activity rising;
  2. Real (after inflation) wages rising;
  3. Skilled worker wage increases running far ahead of inflation;
  4. Shortage of skilled workers; over-supply of manual and unskilled;
  5. Typical (permanent) employment declining; a-typical (temporary) rising;
  6. Far fewer entrepreneurs trying to start own business: 20% in 2011 of 2001 number;
  7. No increase and no real change in number of small businesses since 2001;
  8. Use of capital versus labour intensive processes far ahead in 2011 from 2001;
  9. Labour productivity in negative territory in 2000s while capital productivity very positive.

The FMF’s subsequent media advisory was entitled: One of post-apartheid’s greatest disappointments is the failure to create jobs and the destruction of existing ones and contended: "Nearly half (46 per cent) of the economically active population is idle and a staggering proportion (74 per cent) of these under the age of 24 ... From 13 per cent in 1994, today 37 per cent or 6.4-million of the working population are unemployed … by any measure, this is easily South Africa’s most pressing socio-economic problem … The impact of the 1995 Labour Relations Act (the first labour legislation) was a steep decline in employment despite healthy economic activity … At the same time labour productivity has declined significantly while capital productivity rose … Real wages have risen markedly since 1994 without a corresponding increase in productivity … since 1994 formal employment has been decimated … in 2012, 4 million workers had temporary jobs out of the 13 million in employment compared with 1 million in 2000 … these alarming trends [can be attributed to] the introduction of restrictive labour legislation and the increased focus on tax collection which has seen many small businesses move into the informal sector and away from official eyes.”

On March 5, Herman Mashaba, Chairman, Free Market Foundation, Jonathan Goldberg, legal team member, Kirchmanns Inc, and Neil Rankin, Economics Professor, University of Stellenbosch, presented Batting for the unemployed, FMF challenges constitutionality of Labour Relations Act. It was at this media briefing that the FMF announced it was challenging the constitutionality of South Africa’s Labour Relations Act 1995 (LRA), specifically related to sections dealing with the bargaining council process and collective agreements.

The FMF’s subsequent media advisory was entitled FMF instigates legal action against restrictive labour laws and outlined the FMF’s principle concerns: “… private parties set wages and conditions of employment and these are being extended to competitors and other groups that are not in the bargaining process at all. Under the LRA, these private parties can, under certain circumstances, compel the Minister to publish and extend these agreements to parties who were not in any way involved in these agreements … It is in the interest of these private parties, who negotiate the terms, to extend their agreement to non-parties as it eliminates competition … Comprehensive economic research indicates that this has a severe impact, not only on current and future jobs, but also entrepreneurs who are then discouraged from starting up enterprises within these sectors." 

On April 24, Craig Kirchmann, Attorney, Kirchmanns Inc, and Herman Mashaba, Chairman, Free Market Foundation, presented The FMF’s constitutional challenge to a section of the Labour Relations Act (LRA): “Just let me work” – the voice of the unemployed at which they presented an update on the legal case and process, and a discussion on some of the questions asked over the last few weeks, for example:

  1. Does the FMF want all bargaining councils scrapped?
  2. Does the FMF want to drive wages down to inhuman levels in a race to the bottom?
  3. Is the FMF in favour of exploitation and abusive conditions of work?
  4. Does the FMF speak for big business?
  5. If the FMF is successful, what will the impact be on the seven million unemployed, small business, profits and prices?
  6. How does the Newcastle judgement and recent developments affect the FMF’s legal challenge?

The FMF’s subsequent media advisory was entitled Serious misconceptions about the FMF’s legal challenge to the Labour Relations Act have caused misplaced hostility and argued that: “… Critics are missing the point. It is not an attack on bargaining councils or collective bargaining or unions. It is not about the minimum wage or a race to the bottom. It is a narrow challenge to amend the law to prevent the minority from dictating to the majority and to give the Minister appropriate discretion to take into account considerations other than sufficient representation ... [this amendment] will have a major impact on the unemployed … some bargaining council agreements impose inappropriate and unaffordable wages and conditions on smaller employers …”

For more on the FMF’s Labour Law Challenge (LLC), visit:

http://www.freemarketfoundation.com/about/press-room.

 

Ad hoc media release
In a statement entitled Unemployed people need the services of labour brokers, Herman Mashaba said: “Instead of destroying jobs through unwise labour legislation, the government should be exploring every possible way to increase the demand for labour … South Africa needs high economic growth … from small and large businesses finding new markets and increasing their efficiency … Any ban on labour brokers will destroy jobs and increase the desperate situation of people who cannot find jobs … A part-time job through a labour broker might not be the most favoured option of a job-seeker but it is certainly a great deal better than long-term unemployment, which results in a loss of earnings, self-confidence, employability and an opportunity to learn on-the-job skills.”

Land Reform / Property Rights

Submission

In May, FMF made a submission on the Department of Public Works proposed Expropriation Bill, which can be read here.

Media briefing and advisory

On June 26, Dr Anthea Jeffery, Head of Special Research, South African Institute of Race Relations (SAIRR), presented The 2013 Expropriation Bill is better but still bad... Anthea made the following case:

The new Expropriation Bill of 2013:

  1. is better than its predecessor in one key way
  2. is worse in many ways
  3. gives hundreds of organs of state wide-ranging powers to expropriate
  4. limits the compensation payable
  5. opens the door to abuse
  6. extends far beyond farming land to encompass property of all kinds, and
  7. unsettles all property rights.

In addition, the Bill:

  1. is not needed for land reform
  2. contradicts its supposed rationale, and
  3. seems just as unconstitutional as the 1975 Act.

The FMF’s subsequent media advisory was entitled The Expropriation Bill of 2013 is better than its 2008 predecessor in one key way: it allows the courts, rather than the state, to decide the compensation payable for expropriated property, but contended: “Although this seems like a major advance, in practice the gain is likely to be negated by other aspects … the Bill … allows hundreds of organs of state to take ownership and possession of property by simply giving notice to the owner and before any compensation has been paid … allows expropriation to take place before the state has shown that all relevant constitutional requirements have been met … fails to recognise that, where expropriated property includes a person’s home, any eviction requires the express authority of the courts … By its own admission, the government has spent billions in taxpayers’ money to take hundreds of farms out of production, costing thousands of jobs and billions more in lost revenue … The 2013 Expropriation Bill must be read in the light of two further bills … the Property Valuation Bill allows for a state official to decide the compensation payable on expropriation, and that disputes over compensation may not delay expropriation … the Restitution of Land Rights Amendment Bill allows the lodging of thousands more land restitution claims by changing the earlier cut-off date from 1998 to 2018…”

Red Tape

Submissions

In April, both FMF and Law Review Project (LRP) made submissions on the latest regulations proposed by the Department of Trade & Industry, the Licensing of Businesses Bill. Our submissions can be read here.

Also in April, LRP made a submission on the Financial Services Laws General Amendment Bill.

Media briefing and advisory

On May 15, Edmund Elias, Exco Member, South African National Traders Retail Alliance (SANTRA), and Leon Louw, Executive Director, Free Market Foundation, presented New business licensing law will cripple the economy’s job creating engine: the SME sector and argued that DTI arguments in favour are already covered by existing laws which should simply be enforced. The proposed business licensing laws will…

  1. disadvantage the already disadvantaged by creating barriers to entry;
  2. reduce competition;
  3. increase unemployment;
  4. increase consumer prices (by about 15 per cent: 2010 study Minnesota);
  5. inhibit economic growth;
  6. impose financial costs and administrative burdens on small businesses;
  7. criminalise businesses;
  8. create opportunities for corruption;
  9. burden already over-burdened municipalities;
  10. undermine the rule of law;
  11. and, above all, are unnecessary (existing laws deal with counterfeit-goods, tax, food-safety, money laundering, and immigration and should simply be enforced).

The FMF’s subsequent media advisory quoted both SANTRA: “Theft by the aid of the law” and the FMF: “Arbitrary discretionary power equals corruption” and made the case: “… that the business licensing bill … pays scant regard to our constitutional mandates and values … allows discretionary power in almost every paragraph without a clear purpose or specific criteria … applies to anyone who supplies anything, anywhere and anyhow ... provides for unlimited fines and up to 10 years imprisonment without due process or judicial appeal … replaces the rule of law with the rule of man and follows an alarming trend in South Africa whereby judicial and legislative functions are being replaced with law by decree … in a competition for the best idea to maximise corruption and extortion, the Licensing of Businesses Bill would be the clear winner. This echoes the views of street traders [for whom] … corruption is a daily reality with officials confiscating goods and demanding bribes called “fines” under the guise of municipal by-laws … ‘Our main concern is the punitive measures which will deprive an ordinary citizen of his livelihood without even a court appearance and will criminalise millions of non-criminals.’”

Other

In-house event

On March 19, Paul Hoffman, a former senior member of the Cape Bar and now a director of the Institute for Accountability presented Searching for Seritiman – where is the arms deals inquiry going? Paul spoke about the recent postponement of the arms deals inquiry hearing and the possible outcomes of its work, covering both the criminal law implications and the possibility of cancelling the arms deals, returning the armaments to Europe and obtaining a refund.

Cloud computing colloquiums & publications

The FMF hosted two colloquiums on cloud computing entitled Potential economic impact of cloud technology on emerging markets and the importance of the policy and regulatory environment: One in Johannesburg on June 12 and one in Cape Town on June 13.

A colloquium is a “talk shop”; an informal meeting for the exchange of views; an end in itself. To encourage openness and the sharing of information, the FMF’s cloud computing colloquiums were held under the Chatham House Rule, which reads as follows:

When a meeting, or part thereof, is held under the Chatham House Rule, participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed.

In Johannesburg there were 38 attendees and in Cape Town, 36. Participants ranged from academics and business leaders through government officials and IT experts.

Three speakers initiated the in-depth discussions that made up the bulk of the colloquiums: Economist Mike Schüssler spoke on The economic impact of cloud computing: What are the job creation and economic benefits for government and business? FMF legal consultant Gary Moore focussed on The regulatory environment: Does it help or hinder cloud services in South Africa? And information attorney Mark Heyink discussed POPI (Protection of Personal Information Act): What are its implications for cloud services in South Africa? Each colloquium was facilitated by FMF Executive Director, Leon Louw.

The colloquium presentations were based on three publications produced by the FMF:

  1. The Economic Impact of Cloud Computing in South Africa by Mike Schüssler & Jasson Urbach
  2. The Regulatory Environment Affecting Cloud Computing in South Africa:
    Legislative and Policy Measures Influencing the Implementation of Cloud
    by Gary Moore
  3. Guide to Laws and Regulations Affecting Cloud Computing in South Africa (compiled by Terence Davie)

FMF printed 500 copies of each publication; participants received a set; the others will be distributed to appropriate recipients.

The free-ranging discussions that followed the speaker presentations covered the role cloud computing can play in improving education and the lives of the poor; the job creation and growth potential brought about by technology and innovation; concerns about trust, privacy and security; and the importance of government’s role in ensuring effective infrastructure and a conducive regulatory environment.

It was clear from the discussions that despite a great deal of interest in the topic, there is insufficient knowledge about the functioning and economics of cloud computing, and the laws that impact cloud computing in South Africa. The existing “neutrality” of the South African government may be as a result of officials not knowing what to do and therefore allowing policy and legislation to lag behind the technology, rather than a conscious decision to leave well alone.

If cloud computing is to benefit South Africa in the way it can, it is essential that government policy remains neutral, that concerns about privacy and security are addressed, and that infrastructure is upgraded. To this end, it is clear that the private sector should continue to engage with government to explain and promote the benefits to the economy of cloud computing and to ensure a favourable regulatory environment.

 Notable Presentations

Herman Mashaba

On May 17, FMF Chairman, Herman Mashaba presented one of six  papers at the European Centre of Austrian Economics Foundation (ECAEF) during the 9th International Gottfried von Haberler Conference in Vaduz, Liechtenstein, an event established to honour Gottfried von Haberler, a citizen of Liechtenstein and a leading member of the Austrian School's famous 4th generation. Herman spoke about launching his successful business “Black Like Me” in apartheid South Africa and how he succeeded against all odds by applying free market principles.

On May 22, Herman presented the same topic at a meeting with Prince Philipp of Liechtenstein, chairman of the board of the LGT bank and a brother to the Fürst, the sovereign of Liechtenstein. Invited guests included the CEO of the bank in Vienna and prominent members of Austrian society and customers of the bank.

Temba Nolutshungu

On April 5, FMF Director, Temba Nolutshungu, debated Zwelinzima Vavi on Minimum wages or no wages at Cosatu House Vavi argued that minimum wage laws do not result in unemployment and that the “developmental state” was the route to go in South Africa. Temba argued that unemployment was a consequence of government policy; that the challenge was to embrace policies that would absorb as many as possible of the unemployed; that evidence shows that minimum wage laws disadvantage the young and unskilled and negate policies that might result in growth.


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