Quarterly Review 2014.03

31 March 2014
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FMF

Quarterly Review

January – March 2014

 

FMF PROJECTS

The FMF’s projects for 2014 include: civil liberties, COMPETITION, energy, GOOD LAW, growth, HEALTH, job creation / labour, LAND REFORM, nationalisation, and RED TAPE, as well as ad hoc issues as they arise.

 

AD HOC FUNDING REQUEST FOR NGWATHE LAND REFORM PROJECT

Leon Louw: It is hard to think of a single idea that would boost South Arica more than this project … the unleashing of the wealth in land into the hands of the people, and, through them, into the economy at large. “Land reform” should focus on the 7 to 10 million council-owned township houses in urban areas where the vast majority of South Africans reside and not on 40,000 farms. Since 2010 when the Ngwathe Land Reform Project was initiated in Parys, Free State, the FMF has resolved numerous complex issues ranging from the conversion of property-related debt to civil debt, waiving electrical compliance certificates, and managing mismatched council and deeds registry records.

Having ironed out the problems and considerably simplified the process, the FMF has managed to reduce the cost per transfer to R1,650. In other words, for a mere R1,650 YOU can purchase an Ngwathe resident a title deed and help set a precedent for replication elsewhere in South Africa.

If you would like to fund one or more homes (or part of a transfer), please contact Leon Marincowitz on leonmarincowitz@fmfsa.org for more information; OR deposit your donation directly into our bank account: Free Market Foundation, Standard Bank Sandton 019205, Account 421066946 using as Reference: Your name + LAND.

 

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 four months (December through March), the FMF’s WEBSITE ARTICLES, sent to our mailing list weekly, were republished on 10 occasions. 145 ARTICLES that quote or mention the FMF or originate from interviews or were written specifically for the media were published since December 2013. These include Leon Louw’s weekly column in Business Day. The column is published each Wednesday and since December has dealt with the following:

  • March 26: Paradoxes of SA can be difficult to fathom
  • March 19: Nuanced observation beats binary imperative
  • March 12: Helping save power helps to keep us in the dark
  • March 5: Pistorius and the dubious certainties of fast thinking
  • February 26: Nuclear is safer than a banana or two a day
  • February 19: SAA’s new plan will not put an end to the farce
  • February 12: Onslaught on private healthcare is relentless
  • February 05: Inequality propaganda hides defeat of destitution
  • January 29: Dogmatic certainty is seldom justified
  • January 22: Polygraphs of politicians could save us billions
  • December 18: Does Santa’s red garb mark him as a communist?
  • December 11: Number of ‘I knew him’ tales suggest Mandela was superman
  • December 4: Sell-by date of alliance ended with apartheid

 

INTERVIEWS on radio and TV between December and March number 23, some of which are available as podcasts on our home page.

The FMF has hosted 2 media briefings since January 2013 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. Each briefing is followed by a media advisory to over 1,000 editors and journalists.

  • January 14: Banish South Africa’s mass unemployment: The free market is the only way
  • March 5: Energy plan ignores official government policy

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.

On February 19, Advocate George Bizos, a prominent human rights lawyer who, together with Arthur Chaskalson, represented Nelson Mandela, Walter Sisulu, Govan Mbeki, Raymond Mhlaba, Ahmed Kathrada, and other heroes of the struggle, and maintained a close relationship over many years with Nelson Mandela, in conversation with Judge Mervyn King, chairman of the King Committee on Corporate Governance in South Africa, spoke on a wide range of issues including the rule of law, and received the fifth FMF Luminary Award “…for his fearless defence of South Africa’s struggle heroes, his tenacious fight for freedom and justice and his dedication to upholding the constitution and the rule of law”.

George Bizos rose from being a wartime refugee from Greece to being South Africa’s leading antiapartheid lawyer. He was a close confidant and counsel, often pro bono, for many struggle heroes, including Nelson Mandela. After apartheid, he continued his tenacious fight for freedom, justice and the rule of law, even if it entailed conflict with former allies. He is the author of the book “No One To Blame?” a record of deaths in detention and an autobiography “Odyssey to Freedom”.

(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 was The Most Revd Dr Thabo C Makgoba “…for his lifelong dedication to all the peoples of South Africa and for ceaselessly demonstrating the highest level of integrity”.

The third was Dr Pauline Dixon “…for her dedication to researching and tirelessly promoting practical solutions to schooling challenges and education entrepreneurship in low-income communities”.

The fourth was Dr Sam Motsuenyane “…for outstanding individual enterprise excellence and leadership, consistently demonstrated over many decades in overcoming adversity and inspiring the people of South Africa”.)

 

CIVIL LIBERTIES

 

FMF’s sister organisation wins Constitutional Court case for street traders

In 2012, the Law Review Project (LRP) was approached by Jo’burg and Lenasia-based informal traders as well as by the SA National Traders and Retail Association (SANTRA), a body that promotes the interests of legal informal traders within the inner city of Johannesburg, because informal traders were being prevented from trading in several areas and their stock was being confiscated by the metropolitan police. LRP approached Hogan Lovells for legal advice and three damages claims were brought against the City of Johannesburg and the Johannesburg Metropolitan Department.

While these matters were pending, the City of Johannesburg commenced “Operation Clean Sweep” whereby all informal traders were prohibited from trading within the City of Johannesburg, which was enforced by the Johannesburg Metropolitan Police Department.

Urgent court proceedings were launched in the High Court in terms of which SANTRA and the South African Informal Traders Forum (SAITF) sought a review of the decisions taken by the City to:

  • demolish existing stalls erected by the City for the use of informal traders and which had been leased by SANTRA’s members for that purpose;
  • relocate informal traders from the Johannesburg CBD;
  • and declare certain areas in the CBD restricted or prohibited for the purposes of informal trading.

And applied for interim relief to:  

  • interdict the City from demolishing any further stalls from which the informal traders had been trading compel the City to allow informal traders who were lawfully entitled to trade to return to the areas previously allocated to them so that they could continue trading compel the City to re-erect the stalls that had been demolished;
  • alternatively to allow those affected informal traders to trade from the sites where their stalls had stood;
  • interdict the City and the JMPD from interfering with the informal trader's right to trade;
  • and compel the City to give reasons for its decisions to relocate the informal traders and prohibit trading in the CBD.

The High Court dismissed the urgent applications and the matter was taken to the Constitutional Court, which heard the appeal and granted interim relief allowing 2,000 traders to return to their original trading spots.

 

ENERGY

 

Media briefings and advisories

On March 5, Doug Kuni, Chairman, South African Independent Power Producers Association (SAIPPA) and Eustace Davie, FMF Director, presented Energy plan ignores official government policy. They argued that the Integrated Resource Plan (IRP) is an exercise in outdated central planning that ignores official government policy and added that it will not deliver on its objectives of security of supply, reduced costs or increased access to electricity.

 

The FMF’s subsequent media advisory was entitled The IRP 2010-2030 update plan heralds a potential disaster and an exercise in speculative central planning and outlined the key problems:

  • a lack of an independent transmission grid;
  • no independent distribution grids;
  • no competing generating companies;
  • no electricity trading;
  • no competing retail suppliers and no consumer choice.

Quoting economist Friedrich Hayek, Eustace Davie said … central planning cannot even attempt to 4 replace the efficiency of the market and the price mechanism in the use of resources … If the private sector plans ahead and gets it wrong, shareholders pay; if the government IRP planners get it wrong, taxpayers pay … The 1998 government White Paper, which is still official government policy … provides for private sector participation and competition to be introduced into the energy industry. Davie ended by saying, “SA consumers will know their electricity supply system has entered the 21st century when residential consumers can choose between competing suppliers. In New Zealand it takes 24 hours to switch from one to another”.

 

Ad hoc media advisories

  • January 30: Every day that Eskom’s outages exceed 20% is bad news for SA
  • February 17: Why isn't Eskom claiming liquidated damages from contractors Hitachi Africa and Alstom for Medupi debacle?
  • February 26: The FMF applauds Energy Minister Martins and supports his vision for the ISMO and the future of the energy sector
  • March 5: Crisis? What crisis? Questions Eskom and NERSA must answer on recent load shedding

 

GOOD LAW

 

In-house events

On January 29, Jim Powell, Founder, Direct Democracy South Africa, presented Politicians are the employees of the voters. He argued that when you vote, you decide which politicians are employed and how many are employed; that when you pay tax (PAYE, corporate, VAT), you pay the salaries of politicians; that this defines you as the employer of politicians. With your vote, you are also the shareholder of your Local Council, Province and South Africa. Jim asked: “How did we get it wrong?” stating that politicians decide on the rules for the benefit of politicians. He presented FMF guests with a solution – the introduction of direct democracy.

 

On February 26, Judge Johann Kriegler, Chairperson: Freedom Under Law, presented The role of the Rule of Law in safeguarding our new democracy. He made the following points:  

  • Freedom Under Law has recently had some singular successes.
  • But there is no room for complacency; we cannot rest on any laurels.
  • Tactical victories such as blocking the Simelanes, Mdlulis and Hlophes are not enough.
  • The root causes of these phenomena remain in place.
  • There is ongoing evidence that power corrupts and absolute power corrupts absolutely.
  • For example, legislation such as the Legal Practice Bill has ominous long-term implications.
  • So, too, the siren call for “transformation” of the justice system.
  • Ultimately only adherence to the Rule of Law can safeguard our democracy.

 

GROWTH

 

Davis Tax Committee

In mid-2013, Minister Gordhan named the members of the tax review committee, giving effect to government’s promise to initiate a review “to assess our tax policy framework and its role in supporting the objectives of inclusive growth, employment, development and fiscal sustainability”. Chaired by Judge Dennis Davis, the Davis Tax Committee (DTC) will “take into account recent domestic and global developments and, in particular, the long term objectives of the National Development Plan (NDP)”. The committee will make recommendations to the Minister of Finance. Any tax proposals arising from these recommendations will be announced as part of the normal budget and legislative processes.

According to Moneyweb at the time of the announcement: “Sceptics have already expressed concern that the overview is aimed at finding more ways to fleece the country’s rich individuals. This is unfortunate, but understandable, given the squeeze on tax revenues that has occurred due to the effect the economic slowdown has had on corporate profits and consumption levels. Mr Gordhan has chosen an impressive committee, supported by technical experts from the National Treasury and SARS, and Judge Davis is on record rejecting the suggestion that the committee has been told by the government to ‘find more money’.”

The FMF, to date, has made written submissions on the first three of six themes announced by the committee. In addition, the FMF led oral evidence to the committee on the flat tax.

  1. Macro – “An examination of the overall tax base and tax burden including the appropriate tax mix between: direct taxes, indirect taxes, provincial and local taxes”.
  2. Small business – “The impact of the tax system in the promotion of small and medium size businesses”
  3. Base erosion and profit shifting (BEPS) – “Tax avoidance (e.g. base erosion, income splitting and profit shifting, including the tax bias in favour of debt financing)”.
  4. Mining – “Whether the current mining tax regime is appropriate”.
  5. VAT – “Value added tax with specific reference to efficiency and equity”.
  6. Estate duty – “The role and continued relevance of estate duty”.

 

Ad hoc media release

On January 15, the FMF’s media release entitled South Africa’s modest gains in economic freedom have not made up for decline over past decade, pointed out that “… South Africa continues to enjoy moderate, but improving, levels of economic freedom according to the 2014 Index of Economic Freedom published annually by The Heritage Foundation and The Wall Street Journal … South Africa’s economic freedom score is 62.5, making its economy the 75th freest in the 2014 Index … South Africa is ranked 6 out of 48 countries in the Sub-Saharan Africa region, and its score is above the regional and world averages. [However] … “South Africa is in danger of falling away from economic freedom and prosperity. The labour market remains rigid, exacerbating high unemployment throughout the country. The government should turn to economic freedom to jumpstart growth in the wake of falling commodity prices.”

 

Innovation and growth

On March 14, the FMF, Innovation Hub and Microsoft co-hosted a colloquium on Driving innovation and unleashing the power of cloud computing.

Leon Louw, FMF Director, spoke on The regulatory environment: Does it help or hinder cloud services in South Africa?

Mark Heyink, Information Attorney and Member: Cyber Security Advisory Council, presented POPI (Protection of Personal Information Act): What are its implications for cloud services in SA?

Uriel Rootshtain, Office Division Lead, Microsoft South Africa, spoke on Securing data and resolving privacy concerns.

Happy Sithole, Director, Centre for High Performance Computing: CSIR, presented The importance of innovation and the benefits of cloud computing.

And Stanley Simpson, General Manager, ServerAlliance, dealt with the Impact and benefits of cloud computing on small business – a case study.

 

JOB CREATION / LABOUR

 

In-house event

On December 4, 2013, Loane Sharp, labour economist at Adcorp, presented Reality check: Update on SA’s labour market. Adcorp is South Africa’s leading employment services company. Loane is an international award-winning researcher who has published widely in books and journals. He is an expert in the fields of labour productivity and workforce optimisation. Previously, he was an investment strategist at Investec, South Africa’s leading investment bank, where he was one of the country’s highest-rated analysts. He has a MCom specialising in economics and statistics from the University of Cape Town. He has received scholarships from the National Research Foundation, among others, and he has been awarded prizes by the Natale Labia Society, among others. In competition with companies such as Sony, IBM and Vodafone, his work has won coveted international awards. He is a director of Productivity South Africa and a member of the Economic Society of South Africa.

 

Media briefing and advisory

On January 14, Dr Yuri Maltsev, Soviet defector and former economics advisor to Russian President Gorbachev, presented Banish South Africa’s mass unemployment: The free market is the only way. He made the following statements:  

  • Yes, there is a crisis: 13% unemployment in 1994; 25% unemployment in 2014
  • Almost 8 million South Africans are unemployed or have given up all hope of finding a job
  • South Africa should learn the lessons of history and abandon policies of state control, intervention and ownership
  • Job security for the employed prevents the jobless from getting jobs
  • The free market can solve South Africa’s unemployment crisis

 

Biography  

Before defecting to the United States in 1989, Dr Maltsev was a member of a senior Soviet economics team that worked on President Gorbachev's reforms package of perestroika.  He is renowned as one of the few economists in the West with direct first-hand knowledge of the inner workings of the Soviet economy and Soviet government policies.  He is one of a very few to have briefed senior leaders on both sides during the last stages of the Cold War.  Dr Yuri Maltsev holds an MA in History of Economic Thought from Moscow State University and a PhD in Labour Economics from the Institute for Labour Research of the USSR State Committee on Labour and Social Affairs.  He is now a Professor at Carthage College in Wisconsin, teaching courses in international economics, international trade and finance, comparative economic systems and international political economy.  A prolific author and world-renowned speaker, Dr Maltsev consults regularly with business leaders, policymakers, and members of the academic community on international trade and economic development.  Dr Maltsev has met with many heads of state and government in the post-Soviet era and has built a reputation for accurately identifying economic trends and political developments.  Before settling in the Midwest, he was a Senior Fellow at the US Institute of Peace in Washington, DC. His work involved briefing members of Congress and senior White House officials on issues of national security, and foreign economic and military assessment.  At the International Center for Development Policy (Washington, DC), he was a Program Director, lecturer and researcher on the problems of international economic relations, working with several US Congressmen on issues of US-Russian relations, and Russian policies towards the “Near Abroad”.

 

Ad hoc media advisories

  • February 6: Minister of Labour obstructs legal process
  • February 12: Ten months after the FMF filed papers challenging S32 of the LRA, the Minister of Labour’s lack of response is in contempt of the rule of law
  • March 13: One year on, FMF disappointed by respondents’ delays but not deterred in its legal fight to change S32 of the Labour Relations Act
  • March 27: SACTWU’s proposed Bargaining Council agreement seeks to destroy the FMF illegally

 

LAND REFORM

The FMF continues to argue that secure property rights represent one of the most important requirements for the protection of both economic freedom and civil liberties. The FMF remains 7 concerned about the slow pace of land reform, especially as the solutions that exist require only political will to implement. The FMF proposes that:

  1. All black occupied council-owned urban plots be converted to full ownership (“freehold”) – FMF is working with Ngwathe municipality to convert 33,000 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.

 

See ad hoc funding request for FMF’s Ngwathe Land Reform Project at beginning of this Quarterly Review.

 

RED TAPE

Excess regulation remains a major concern. Instead of having benefits for consumers, red tape is proven to make things worse. In every case objectively measured consequences have been the opposite of what was promised or envisaged. Instead of insurance miss-selling and premature surrenders being halved as promised, they doubled in the wake of FAIS. Instead of consumer over-indebtedness and unsecured lending declining as promised, they skyrocketed after the introduction of the NCA. The tsunami of measures is effectively nationalisation by regulation.

 

Ad hoc media advisory

March 11: Indigenisation a reality for SA business

 

OTHER

 

Ad hoc media advisory

December 6: Mandela: Lest we forget

 

FMF ranked among the top think tanks worldwide in Global Think Tank report

The FMF has been ranked once again among the top think tanks in the world in the 2013 Global Go To Think Tank Index. The FMF is listed 94th out of the 4,998 non-US Think Tanks, 119th out of the total of 6,826 worldwide Think Tanks (including those in the United States) and 22nd out of the 612 Think Tanks in Sub-Saharan Africa.
The Index, released on 28 January 2013 at a function hosted by the World Bank in Washington DC, is compiled annually by the Think Tanks and Civil Societies Program (TTCSP) at the University of Pennsylvania, USA. According to the researchers, the calls for nominations for the 2013 index were sent to 6,826 think tanks and thousands of journalists, public and private donors, and policymakers worldwide.
The programme “conducts research on the role policy institutes play in government and civil societies around the world”. The TTCSP conducts the annual survey with the assistance of “a panel of 1,900 peer institutions and experts from the print and electronic media, academia, public and private donor institutions and governments around the world.
The think tanks are ranked in the categories Top Think Tanks in the World, Top Think Tanks by Region, Top Thinks by Areas of Research, and Top Think Tanks by Special Achievement.” Many of the think tanks included in the study are private organisations while others are affiliated to political parties, governments, universities and other public institutions and therefore cover a wide and comprehensive spectrum of activities such as defence and national security, foreign policy and international affairs, economics and politics, health care policy, and many others.


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