July – September 2015
The FMF’s projects for 2015/16 include: consumer rights, ECONOMIC FREEDOM / GROWTH, education, ENERGY / INFRASTRUCTURE, financial issues / tax, GOOD LAW / RULE OF LAW, healthcare, JOBS CREATION / LABOUR, land reform, PRIVATISATION / OUTSOURCING, red tape review / laws affecting small business, and TRANSFORMATION INDEX, as well as ad hoc issues as they arise.
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 three months, the FMF’s WEBSITE ARTICLES, sent to our mailing list weekly, were republished on 13 occasions.
182 ARTICLES that quote or mention the FMF or originate from interviews or were written specifically for the media were published this quarter. These include Leon Louw’s weekly column in Business Day. The column is published each Wednesday and since July has dealt with the following:
8-Jul: Smart Tesla electric car poised to be disrupter
15-Jul: Liberty works everywhere
22-Jul: Problem is too many people are employed
29-Jul: Turn on your heaters and geysers
5-Aug: Cecil: fiction trumps fact, logic loses to hysteria
12-Aug: The curious case of Cosatu’s protest
19-Aug: Consumers choking on misnomers of control
16-Aug: SA’s bizarre transformation denialism
2-Sep: Consumer choice lost in tsunami of twaddle
9-Sep: Kafkaesque reality has been allowed to intrude on us in form of FSB
16-Sep: SA robust despite the enemies of prosperity
23-Sep: Anti-smoker shows his true Big Brother colours
30-Sep: Why state enterprises will never get it right
INTERVIEWS on radio and TV number 29 over three months, some of which are available as podcasts on our website.
The FMF has 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. Each briefing is followed by a media advisory to over 1,000 editors and journalists.
The FMF has distributed 14 media advisories this quarter.
On August 28 in Cape Town, FMF invited journalists for one-on-one interviews with directors Leon Louw and Temba Nolutshungu on a variety of policy issues.
See projects below for more information on project-specific media briefings and media advisories.
The FMF is very 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, personal dignity and consumer rights.
Five key aspects of the DTI’s proposed National Liquor Policy need to be reconsidered:
- Vicarious liability: Suppliers will be liable for the actions of customers over the legal limit.
- The 500m rule: Whereby a business will not be able to sell liquor within 500m of a comprehensive list of suburban places.
- Legal drinking age: Raising the drinking age from 18 to 21.
- Trading and zoning: Restricting trading hours and introducing onerous zoning requirements which will severely impact township liquor trade.
- Advertising and sponsorship: Banning manufacturer sponsorship and restricting the advertising and marketing of alcohol.
The Department of Health plans to introduce “plain packaging” in 2016. The FMF opposes this proposal as well as limitations already imposed on consumer rights and dignity.
On July 23 FMF hosted a media briefing entitled Consumer rights slip sliding away.
Leon Louw argued that the DTI’s proposed National Liquor Policy…
- discriminates against and harms the poorest in society, predominantly black;
- makes more activities illegal, leading to more illegal activities taking place;
- multiplies existing capacity and enforcement constraints;
- transfers law-making functions to the executive rendering the legislative branch of government increasingly redundant.
As DTI and Department of Health bureaucrats advance toward the “Nanny State”, they are gradually and surreptitiously removing individual rights and freedoms. The real question is: where will it end?
Leon’s address can be viewed here: https://www.youtube.com/watch?v=usM1HPJXTug.
On September 29 FMF hosted a media briefing entitled Why YOU should stand up for tobacco (it’s controversial we know).
Francois van der Merwe, CEO & Chairman, Tobacco Institute of Southern Africa (TISA); CEO, ITAG1 – provided an update on the tobacco sector and the important role it plays within a socio-economic context; and outlined some of the challenges facing the industry, including a punitive regulatory environment and the damaging impact of a growing global and local trade in illicit tobacco.
Jeremy Sampson, founder & former CEO, Interbrand Africa – focussed on proposals to introduce cigarette “plain packaging” into South Africa and talked about: packaging – its role; trademarks – their purpose; brands – their place in our lives; the difference between trademarks and brands; the financial value of brands/trademarks.
Temba Nolutshungu, Director, Free Market Foundation (FMF) – explained why the FMF thinks this is an important issue, even for those opposed to smoking.
23-Jul: Proposed DTI National Liquor Policy will effectively ban liquor sales in townships
29-Jul: New liquor policy makes suppliers liable for accidents and crimes committed by customers which are linked to their intake of alcohol
4-Aug: New liquor law’s 500m rule will make most licensed township taverns illegal
12-Aug: Unjust to prevent young adults from drinking responsibly until they turn 21; 18 – Old enough to marry but not to drink the champagne toast!
30-Sep: Plain packaging – tamper with brands at your peril, warns brand expert; It would prejudice new market entrants
Both FMF and our associate organisation, the Law Review Project, submitted comments on the DTI’s proposed National Liquor Policy.
ECONOMIC FREEDOM / GROWTH
8-Jul: Economic freedoms of South Africa – the contradictions with Herman Mashaba
14-Sep: Johannesburg launch of Economic Freedom of the World 2015 Annual Report with Temba Nolutshungu and Eustace Davie
19-Sep: Cape Town launch of Economic Freedom of the World 2015 Annual Report with Temba Nolutshungu and Ineng
Herman’s address can be viewed here: https://www.youtube.com/watch?v=wyjOI70CfXE
Temba and Eustace’s address can be viewed here: https://www.youtube.com/watch?v=8usYe_8_AD8
14-Sep: Global economic freedom up slightly; South Africa ranks 96 among 157 jurisdictions
South Africa ranks 96 out of 157 countries and territories included in the Economic Freedom of the World: 2015 Annual Report, released by the Free Market Foundation (FMF) in conjunction with Canada’s Fraser Institute. Last year, South Africa ranked 89.
“The persistent decline in South Africa’s ranking and rating from 42nd (7.08) in 2000 to 96th (6.74) in 2013 is distressing and reflects what people can see happening around them” said, FMF director, Temba Nolutshungu. “The decline in economic freedom is the result of government’s insistence on dominating the economy and crowding out the private sector, which has a negative impact on growth, employment, poverty reduction and individual liberty”.
Hong Kong again tops the index, continuing its streak of number one rankings, followed by Singapore, New Zealand, Switzerland, United Arab Emirates, Mauritius, Jordan, Ireland, Canada, and the United Kingdom and Chile tied for 10th.
The 10 lowest-ranked countries are Angola, Central African Republic, Zimbabwe, Algeria, Argentina, Syria, Chad, Libya, Republic of Congo, and Venezuela. Some despotic countries such as North Korea and Cuba can’t be ranked due to lack of data.
Countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives. For example, countries in the top quartile of economic freedom had an average per-capita GDP of US$38,601 in 2013, compared to US$6,986 for bottom quartile nations.
Moreover, the average income in 2013 of the poorest 10 per cent in the most economically free countries (US$9,881) dwarfed the overall average income in the least free countries (US$1,629). And life expectancy is 80.1 years in the top quartile of countries compared to 63.1 years in the bottom quartile.
ENERGY / INFRASTRUCTURE
See Leon’s Business Day column: Turn on your heaters and geysers.
FINANCIAL ISSUES / TAX
Davis Tax Committee
You may remember that 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) was to “take into account recent domestic and global developments and, in particular, the long term objectives of the National Development Plan (NDP)”. The committee was to make recommendations to the Minister of Finance. Any tax proposals arising from these recommendations are to be announced as part of the normal budget and legislative processes.
In 2014 FMF made written submissions on four of six themes announced by the committee (Macro, Small business, Base erosion and profit shifting (BEPS) and VAT). In addition, FMF led oral evidence to the committee on the flat tax.
The DTC this year released interim reports on five of the six above themes and called for public comment on these. The FMF has commented again on the following:
- 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”.
- 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)”.
- VAT – “Value added tax with specific reference to efficiency and equity”. [Davis Tax Committee proposals include raising VAT to 17% to cover National Health Insurance.]
- Estate duty – “The role and continued relevance of estate duty”.
FMF has proposed a simple flat tax rate with an exemption for the lowest incomes, with the same rate for Employments Tax and Business Tax, and tax deductibility for all money spent on plant and equipment. Our submissions can be viewed here: http://www.freemarketfoundation.com/Publications.
Financial Advisory and Intermediary Services (FAIS)
Thirteen years ago when the Financial Advisory and Intermediary Services Act No.37 of 2002 (FAIS) was passed, it was subjected to a cost-benefit analysis (CBA). None of the benefits promised have materialised. In addition, the Financial Services Board (FSB) which administers FAIS has acquired an expensive life all of its own – the FSB employs around 500 bureaucrats, up from just 17 in 1985. (See Leon’s Business Day column: Kafkaesque reality has been allowed to intrude on us in form of FSB.)
This enormous waste of resources is about to be compounded with additional legislation: The Financial Sector Regulation Bill and the Insurance Bill, the intention of which, inter alia, are to specify insurance policy contract wording, interpretation and pricing, and to ‘regulate and control’ product and service innovation.
The proposed legislation is not directed at applying remedies to any known or stated problem; it merely creates new bureaucracies. In addition, it violates the principles of the rule of law and the separation of powers, allowing the FSB to legislate, execute, try “offenders”, fine “offenders” and keep the money.
On July 31 FMF briefed MPLs in Cape Town on its concerns regarding existing and new financial legislation and regulators.
GOOD LAW / RULE OF LAW
Rule of Law Project
The rule of law is a founding provision of South Africa’s constitution. The FMF’s Rule of Law Project is entirely positive in its objectives. These are:
- to promote a climate of appreciation throughout the country for the rule of law;
- to identify problematic provisions in existing and proposed laws and, where feasible, work towards correcting them;
- to inculcate in all public officials and the public in general a true appreciation of what the rule of law means and why it is important;
- to challenge legislation that is in conflict with the rule of law in the Constitutional Court.
On September 9 Prof Robert Vivian presented 30 years of centralised bureaucratic failure. “For the best part of the history of society business has essentially been unregulated. To the extent that regulation was introduced it was via and operated in accordance with the rule of law – parliament passed specific laws to deal with specific problems. This changed in the UK in 1986. Since then, creeping centralised bureaucratic regulators have taken over. This has intensified in recent years and now applies to most countries around the world, including South Africa, especially with regard to the insurance industry.” In his presentation Robert Vivian examined the rise of and track record of centralised bureaucratic regulation and illustrated how it has failed – spectacularly!
In September FMF Director Jasson Urbach attended the Intellectual Property (IP) in Healthcare conference hosted by the Fraser Institute, Vancouver, Canada. The aim of the programme was to bring together a small group of scholars from strategically important countries including Australia, Brazil, Canada, India, Mexico and South Africa. Internationally recognised scholars presented their ideas on a range of topics that covered a number of critically important policy areas relating to IP including an overview of the nature and importance of IP protection in the health care sector, the current state of IP regimes for pharma and medical devices, IP implications from the emergence of biologics, and IP challenges in emerging economies.
JOBS CREATION / LABOUR
Labour Law Challenge – “Just let me work”
Key unemployment statistics:
- 4.7 million people are actively looking for work.
- 2.3 million are discouraged from seeking jobs.
- 2.1 million are under-employed.
- Only 12% of people between ages 15-24 have a job.
- According to Stats SA, long-term unemployment among the youth is pegged at 61.9% this year, up from 54.9% in 2008.
What is the FMF’s labour law challenge launched on 4 March 2013?
The Labour Relations Act allows for bargaining council agreements, reached usually between big unions and big business, to be extended to non-parties to those agreements. We believe this to be unconstitutional. Please note: The FMF is not challenging the constitutionality of bargaining council agreements entered into between labour unions and employer representatives. It is challenging agreements entered into between private parties (large unions and employers) being extended to non-participating employees and their employers. And it is doing so on behalf of the unemployed. Our campaign is called “Just let me work”.
Please note also that the FMF does not oppose unions. To the contrary, we believe in freedom of association and that the role of unions is essential. We merely wish to see more people employed and, in our view, so should the unions since they stand to gain from increased membership.
The FMF reaffirms its position on the following:
- We are for the right to work.
- We are for central bargaining.
- We are for bargaining councils.
- We are for the right of the minister to apply her mind to the extension of agreements to non-parties.
- We are for trade unions.
- We are for the rule of law, access to justice and equal rights.
- We are for decent working conditions.
- We are for higher wages and rising living standards.
- We are for work opportunities for all.
- We are for constitutional democracy and an independent judiciary.
- We are against bargain councils forcing the minister to extend agreements.
- We are against intimidation.
- We are against violence.
- We are against unlawful threats.
- We are against unfair labour practices.
- We are against unfair discrimination.
- We are against laws and practices that victimise small business and the unemployed.
- We are against the constitution being undermined.
- We are against the judiciary being undermined.
- We are against violation of the rule of law.
Media advisories (available on our website)
13-Jul: Cosatu threatens to boycott Herman Mashaba’s Black Like Me and more intimidation
7-Aug: FMF invites Cosatu to take part in joint media event while they picket FMF office
11-Aug: Cosatu declines FMF offer to speak to the media and pickets office
21-Aug: FMF thanks Cosatu picketers for publicising S32 of Labour Relations Act constitutional challenge
24-Aug: FMF’s constitutional challenge to labour law to be heard November 09-12
22-Sep: Cosatu again ducks their day in court and delays FMF bargaining council legal case until 2016
(postponed by the High Court to end February 2016 at COSATU’s request)
See Leon’s Business Day column: The curious case of Cosatu’s protest.
Finalist for the prestigious Templeton Freedom Award
“We’re delighted to announce the Free Market Foundation as a finalist for the Templeton Freedom Award,” said Atlas Network CEO Brad Lips. “Many believe the struggle against injustice ended with apartheid two decades ago. To its enormous credit, the FMF has not let up. Its Khaya Lam project is having a tangible effect on individuals’ lives and is laying the groundwork for a freer society.”
Awarded since 2004, the Templeton Freedom Award is named for the late investor and philanthropist Sir John Templeton. The award annually honours his legacy by identifying and recognizing the most exceptional and innovative contributions to the understanding of free enterprise, and the public policies that encourage prosperity, innovation, and human fulfilment via free competition. The award is generously supported by Templeton Religion Trust and will be presented during Atlas Network’s Liberty Forum and Freedom Dinner in November. The winning organization will receive a $100,000 prize and the runners-up will receive $5,000.
It is hard to think of a single idea that would boost South Arica more than this project, which unleashes the wealth in land into the hands of the people, and, through them, into the economy at large. – Leon Louw
The FMF’s Khaya Lam (My House) Land Reform Project is truly historic. If successful, it will be the first ever large scale substantive project to undo the land disempowerment of apartheid still endured by millions of South Africans. It will set a precedent for reform of its kind to continue in South Africa. Most of all, it will unlock the economic potential of thousands of householders.
The pilot project in partnership with the Free State’s Ngwathe Municipality, has seen over 600 deeds transferred to unrestricted fully tradable title. This simple act is transforming the lives of black families, many of whom have lived as tenants or with restricted ownership for generations.
The project is gaining momentum, with interest being shown by other municipalities and a Memorandum of Understanding recently signed with the City of Cape Town.
22-Sep: Cape Town City Council partners with Free Market Foundation & in Parys 54 additional freehold titles handed to Free State tenants
Watch these Khaya Lam videos on ChannelFMF
PRIVATISATION / OUTSOURCING
See Leon’s Business Day column: Why state enterprises will never get it right.
FMF is in the process of drafting a Transformation Index that will document black advancement post-1994.
On August 19 Leon Louw, Executive Director of the FMF, in his State of the Nation Address delivered after the FMF’s AGM, considered the nuanced complexity of the real world.
“Rarely has there been more pessimism about South Africa – not even during the daunting transition years. Such distress is justified by many facts and figures and compounded by concerns regarding the competence and integrity of leadership, including or especially President Zuma, by the emergence of hysterical radicalism in organised labour and politics, and by the catastrophic state of almost everything in government hands” said Louw.
“When assessing the state of the nation, and because we are hard-wired to reduce everything to one of two and see things in black and white, in both senses of the term, the easiest thing would be to itemise and lament the gloomy status quo and outlook. But the world is not binary…”
It is easy to be negative because there is much to be negative about. The question Louw asked – and answered – is whether there is also much to be positive about. His view is that there is, and that the self-interest of most role-players (government, opposition parties, beleaguered whites, avaricious blacks, radical activists, etc) renders them incapable of recognising or acknowledging it. Louw is neither a Jonah wallowing in misery, nor a euphoric Pollyanna. He has considered the facts dispassionately with a view to a realistic assessment of where we are and what lies ahead.
Leon’s address can be viewed here: https://www.youtube.com/watch?v=9yLrBxxflbI.
See also Leon’s Business Day column: SA’s bizarre transformation denialism.
Study tour to Europe
Between August 28 and September 6, Jasson Urbach attended a study tour to Berlin and Brussels sponsored by the Friedrich Naumann Foundation for Freedom. The purpose of the tour was to establish connections with free market European think-tanks and share best practices around the communication of liberal ideas and policies. Representatives from the Helen Suzman Foundation (HSF), the South African Institute of Race Relations (IRR), and Politicsweb were also present on the tour. The tour not only provided invaluable insights as to how think tanks operate in Europe but also assisted in fomenting solid relationships amongst the liberal institutions operating out of South Africa.
Organised by FMF Youth Coordinator Phumlani UMajozi and our videographer Terence Davie, FMF Youth hosted South Africa's renowned economist, Dawie Roodt, on September 19. Dawie presented The world we live in, during which he outlined the socio-economic challenges South Africa faces and suggested how we as citizens can overcome them.
“Currently we are living in a surreal economic world, akin to Alice in Wonderland. In this world of make-believe, normal economic rules and laws have lost their meaning and their purpose. In this surreal world, fundamentals like supply and demand, wealth and poverty, and value and savings, are all replaced by the benefits of wealth destruction, the convenience of price fixing, the circumvention of productivity improvements, and the folly of a command economy. We live in the world of the Queen of Hearts, the world of Winnie the Pooh's honey pot and the omnipotence of Central Banks; unfortunately one day we will wake up.”
Dawie’s address can be viewed here: https://www.youtube.com/watch?v=vp8Yw_iZeBA.
Website and social media
It is now easy to see what is happening on the FMF’s social media whether you have a social media account or not. The FMF’s new website has three “windows” to our social media. Simply go to the website www.freemarketfoundation.com and take a look at the right-hand panel on the home and other pages. This panel has a live feed of Twitter, Facebook and YouTube. It is a very quick and easy way to get an overview of the latest social media postings. There are now 57 videos on the FMF’s YouTube Channel: https://www.youtube.com/user/ChannelFMF/videos.
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