Department of Public Enterprises

The discussion of the 2012 Budget vote for the Department of Public Enterprises raises some interesting thoughts. 

Eskom claims that it is not load-shedding, but that the blame for the frequent black-outs lies with the distributors.  It is good news that Eskom is not load-shedding, but the blackouts have a dramatic effect on the productivity of industry, and the Government as a whole has responsibility to maintain a reliable supply of power.  The Minister admitted that, until 2008, no investment had been made in this electricity generation monopoly.  That shortfall must now be made up by funding investments in new capacity from tariff income and by borrowings.  He praised Eskom for saving enough to be able to reduce its tariff.  The questions raised here are obvious:

-          does an average increase in electricity bills of 16% qualify as a reduction?  Perhaps in the contorted thinking of the ANC cadres this is a whole lot better than a 25% increase, but even those people can surely not believe that the massive increase in electricity costs is a ‘reduction’!

-          are the Minister and his colleagues in Government aware of the narrowly-avoided collapse of Greece, Ireland, Portugal and Spain as a result of over-borrowing by their Governments?  The Minister speaks blithely of ‘issuing bonds’, seemingly not aware of the fact that a Government Bond is nothing more than borrowing!  The huge amounts of money that South Africa has borrowed and will continue to borrow to fund its corruption-generating projects, against the background of a rapidly-growing population, a very high degree of incompetence and illicit diversion of funds in those projects and the inability of the Government to create even sufficient jobs to hold the growth of the unemployed at the current rate, not to mention to gain against that tide, places this once-powerful country in to jeopardy of joining the ranks of those failed economies.

-          are any effective steps being taken to put competent people in charge of the organisation, to cut the high bonuses that reward the top management for their failures?

-          Is the Minister aware of the significant contribution that the coal-fired power stations to be built will make to the imminent threat of global warming and the termination of our civilisation, and, if he is, what is he doing about it?

South African Airways is to be handed another large sum to bail it out of its continuing difficulties.  This is merely another chapter in the saga of ANC control of the airline, a story that started with the appointment of a man who had been thrown out of another airline for his role in plunging that business into huge losses and then went on to sell the aircraft owned by the airline in order to justify a profit-based bonus of R600 million (a share of which, according to unsubstantiated rumours at the time, went to certain ANC favourites – the rumour is reported, but no allegation is made in this regard), and has continued apace.  The Minister claims that it is necessary to ensure that South Africa can ensure its air links with other parts of the world!  One wonders whether the Minister has ever considered that SAA is bound by the laws of supply and demand – if there is a demand, other airlines, even a privatised SAA, will meet it, if there is no demand, even a Government-owned SAA cannot afford to operate the route.  SAA is reported to suffer from the poor management capabilities of the cadre-based employment policies and the incompetence of the ANC-selected Board.  This will never change until a new policy is adopted by the Government, a policy of appointing competent people to key posts, regardless of Party affiliation and race.

Transnet is another example of ANC incompetence and corruption.  Spoornet, as the prime, and only, heavy long-distance transporter, has worked hard at dismantling its capacity, closing lines and selling the rails for scrap to China (more on these sales later!), selling of rail wagons (3 000 wagons by one report) to China as scrap, then buying new wagons from China (of inferior quality to those scrapped!) when they discovered that they did not have sufficient wagons (!), enforcing a form of corruption under the guise of promoting BEE by failing to supply wagons unless they are arranged by a Black-owned company (see an earlier blog), closing off supply of rail transport to industries that are not able to pay the extortionate transport costs enforced by it, in complete ignorance of the significant role that a national rail transport network plays in developing and supporting rural and job-creating industries such as forestry and mining, and contributing massively to the degradation of South African roads by forcing the use of truck transport.  In the case of transport, it is urgent that a professional and competent body of management is brought in to rescue the country from this monopoly.

Portnet is another example of incompetence.  Any conversation with exporters results in a long litany of complaint about high costs (apparently one of the highest in the world) and long waiting times for the (very expensive) ships parked offshore while they wait for Portnet to get its act together.  Companies involved in loading ships are constantly under attack by Portnet in its attempt to gain control of these activities, which are profitable only because they employ competent and efficient management.

When asked how the Government planned to fund the huge investments it will undertake, the Minister stated that it is not possible to say in advance how this will be done.  The process, he explained, is to ‘plan the project, and then to find the funding’.  Any competent project planner will take into account the question of how the funds are to be arranged, and the timetable for that, before making grand public announcements that the Government has committed itself to the projects.  One must assume that at least that fundamental consideration has been made.  The remaining conclusion is that the Government is planning to do what SANRAL did with the e-toll system – take the corruption money and then spring the surprise on the ‘unsuspecting public’ that it will have to pay!  As the public will have to do, in any event!  Bear in mind that the last Budget appropriated over one trillion Rands from the very small base of taxpayers in the country.  The planned infrastructure spend amounts to over three times the annual Budget of the country, and any Minister who would have us believe that the source of the funding has not yet been given consideration must be either stupid beyond comprehension, or lying through his teeth, or, probably, both.  There is a very real risk that South Africa is galloping into the same debt trap that Greek and the other profligate States of Europe are in, but the real problem that South Africa faces is that it does not have a Germany and a France to bail it out!  The tax and other burdens placed by the Government on the taxpayers who have invested in the country is already such that they are seriously considering moving to more congenial places, and it is driving away those who might consider joining the ranks of taxpayers in South Affrica.

The Minister stated that ‘South Africa is blessed with the largest transshipment harbour in sun-Saharan Africa, the largest coal-loading harbour, the largest deep-water harbour”, but he failed to mention that these massive investments were made by the Apartheid Government in conditions of world sanctions.  He failed to mention any substantial infrastructure construction projects undertaken in the eighteen year rule of the ANC.  Although most thinking people believed that the Apartheid Government was corrupt, the investments were made from capital flows without bankrupting the country as the planned R3,4 billion infrastructure planned by the present Government threatens to do, and they were made in a relatively efficient manner.  The ANC cannot claim that the costs of rescuing the country from the damage wrought by Apartheid have placed an additional financial burden on the country.  The recovery of the education system would have been a good excuse, if any such recovery had been made.  The education system, and the performance of it, is, if anything, worse than during Apartheid times.  The development of the country’s infrastructure would have been a good excuse, if it had happened.  It did not.  Eskom is in a worse state now than during Apartheid times.  Spoornet performs worse and has less infrastructure than when it was taken over by the cadres.  SAA has gone from bad to worse under ANC guidance.  The public health system has declined, with once-effective hospitals, such as Baragwanath deteriorating to small shadows of what they used to be and requiring massive capital injections to bring them back to something approaching the standards they used to offer.  A visit to any public hospital in Mpumalanga will convince you that the standards applied cannot, by any stretch of the imagination, be considered to be first world standards.  The roads system has, in many areas, become a string of potholes, and the upgraded roads system in Gauteng, planned to bring in massive profits to ANC-connected investors at huge cost to the public and the economy, has put the South African National Roads Agency into financial jeopardy, with the possibility that the debt crisis it now suffers spreading to other South African public bodies.  And all of this has happened against a ballooning Public Service, in terms of numbers and of cost.  It is necessary to find another reason, and not just the scapegoats of the past eighteen years - Apartheid, the Capitalistic System and the greedy Whites who are not willing to share their wealth with the ‘poor class’ that the ANC Government has created.  This time, let us try to find the real reasons.  A good place to start will be the incompetence of the leaders of the publicly-owned bodies who have been placed in those positions, not for their capabilities or proven management skills, but as a reward for their allegiance and service to the ANC, and the absolute corruption of the rapidly-developing organised criminality of the State.