Tag Archive | economy

Parliament goes into winter recess

….Flat battery problems

…Parliament, unexpectedly, has become the stage for enquiries into corruption; poor governance; downright theft and for having to call to account a whole clutch of government heads for achieving absolutely nothing on service delivery, the last issue now emerging as a major headache for MPs on the ANC benches for the 2019 elections.

It’s all a bit like pushing a car to make it start.

The Parliament we know and understand has somewhat changed in nature. An overhaul of who does what is needed.  It now needs a stable, successful and vocal Speaker of the House who appears more conscious of the need for change, not only with national government issues but not so divorced from provincial and local needs across at the NCOP, where most of issues of the day seem to be occurring.

Pyramids that work

Parliament is clearly at a stage where good leaders with better communication skills are needed.  Talk is amongst the economics fraternity to consider some sort of constitutional change whereby the message and the money from the top to travels down correctly through the tiers of government below; monitored on how policy on service delivery is acted upon; subsequently audited for its correct application and with report backs on achievements provided in terms of the money’s original purpose. 

An example would be Eskom.  Despite its many problems, as a self-contained entity it is always way ahead in numbers in creating new electricity connections in far flung rural areas, more so than municipalities and larger towns nearer to their communities.  However, when local governments and entities are asked to pay their Eskom bill, the money allocated from the consumer either has been used for something else, or the debt is paid out of money allocated by national government for a service delivery item, say, housing. 

The few

For some reason few Ministers and parliamentarians stand out as good administrators, leaving straight-talking persons such as Minister Pravin Gordhan, Bantu Holomisa of the UDM, Themba Godi on the Standing Committee of Public Accounts, Yunus Carrim of the ANC and Chair of the Finance Standing Committee and Joanna Fubbs on the Portfolio Committee of Trade and Industry as lone voices of reason.

Clearly the country should be training more young Pravin Gordhans who are just as good on spending the money as the Minister was on collecting it and allocating it.

Whilst much of the debate in the National Assembly, which we do not report on because of its political nature, is deteriorating Portfolio Committee work, which we do attend since this is the “engine room” of Parliament, is belatedly being led in many instances by unsteady hands at the helm where “the new dawn” is not being reflected or respected.  

Biding time

Something must happen, since this mixture of indecision, bickering and with angry voters at the door is explosive.  Nobody, it seems, is coming on strong as to what the new direction should be.  Some analysts say that the new President is not biting the bullet. Then one hears in parliamentary corridors that ANC infighting remains intense and the baton remains not properly handed over to the new team.

State salary and wage allocations are sitting at R587 billion, representing some 38% of the annual budget and therefore the largest public service in Africa employing over 2 million people.    However, ANC MPs are struggling to come to terms with the fact that 47 ministers and deputy ministers who lead this massive machine are just not achieving what they say they are setting out to do.

Nothing happening

Whilst the democratic process in theory seems to be working better in Parliament, getting things done seems rather like the task the salmon has when swimming upstream. It’s all hard work.  The parliamentary committee “to do” list is building up, with deadlines on international agreements not being met, matters being continually referred to courts and MPs sitting on their cell phones catching up on the infighting within their own parties.

The price for realignment of committee tasks and the calling of President Zuma’s acolytes to answer for past incoherent and dubious decisions are taking up hours of parliamentary time in enquiries and investigative meetings.   If this were to be costed out on a business basis, it would amount to millions of rands.  The shadow of Zuma, still a force within the ANC, hangs over many parliamentary meetings like a storm cloud.

Not working

However, in our view, being voiced at last in Parliament is probably the real reason for getting nowhere. It’s not just a Zuma problem. It has much to do with the three-tiered government structure that we live by that has become dysfunctional.

National Government, who receive tax payer’s money and allocate it on a policy basis to all nine Provincial Governments, are just not talking to each other properly.  The Minister of Co-operative Governance, put there to co-ordinate by Jacob Zuma, was none other than Des van Rooyen but President Ramaphosa has now appointed Minister Zweli Mkhize to the post wgich may assist.

 Bad showing

In the meanwhile, the outcome of a time-consuming parliamentary process of studying what went wrong in the last ten years, who stole what, who is to blame and who the crooks are, is seriously detracting from the main task of Parliament, that of debate on new legislation and coherent oversight on government departmental performances.

Now, with Parliament about to close for its winter recess, looking back on Cyril Ramaphosa’s first parliamentary session, because of this internal political bickering we have to say this session ended in an atmosphere of overwhelming disappointment.                                                             

Posted in cabinet, Cabinet,Presidential, Finance, economic, Home Page Slider, Justice, constitutional, Trade & Industry0 Comments

DTI gives warning on investment climate

High administered prices a threat…

42X90693In an apparent warning to the economic cluster, a deputy DG at department of trade and industry (DTI), Garth Strachan, warned that South Africa was reaching “a tipping point” where administered prices, either levied or taxed by the various state departments, were so high that it was making the cost of doing business in South Africa totally impractical.

 

There was neither an attractive climate for investors because of high state administered prices, he said, nor did it make any easier DTI’s developmental programme in support of the NDP and attracting investors.

In a frank presentation to the portfolio committee on trade and industry, he qualified DTI’s position during his candid commentary with the caveat that as far as the regulation of administered prices were concerned, such as electricity, port and rail freight charges, road transport costs and water tariffs, that these were not the core competencies of DTI although they were adversely affecting DTI’s current IPAP 6.

Undermining investment climate

He noted later in his talk that in the successive implementation of various IPAPs, including the current industrial plan, DTI had found that administered prices constituted a total impediment to economic development.   In fact, now in 2014, they were providing a “serious economic shock”, as he put it, to the viability and competitiveness of the manufacturing sector.

Garth Strachan commented that the addition of carbon tax could push South Africa to the ‘tipping point’, unless the proposals were with “carefully calibrated policy interventions.”

As far as electricity was concerned, it was DTI’s view that the actual problem lay in the funding structures of local government, especially where no allowance was made for infrastructure upgrading and maintenance. Water shutdowns were also an increasing problem, he said.

He told parliamentarians that in one instance a global investor had experienced 140 electricity and water shutdowns. He did not indicate over what period.

International comparisons

He said that on electricity tariffs, whereas in 2009 when compared to China, the USA, Canada/Quebec, Abu Dhabi, Kazakhstan, India and Russia to give a fair geographic spread, South Africa had been with a group that had the lowest in prices, it now had the “gold medal” for being the highest of all and by 2020 the situation would be exacerbated unless something dramatic took place.

Strachan said that in the World Bank Report of 2013, SA port charges were amongst the highest in the world; container charges being 710% more than the global norm and automotive cargoes costing a premium of 874% more than the global norm. This detrimental fact was compounded by port and rail freight inefficiencies to local destinations.

He told parliamentarians that in DTI’s view it was extraordinary that exports were virtually subsiding raw material exports such as iron and coal.  In the case of coal, this was 50% below the global norm and iron ore approximately 10%, according to 2012 figures, these being the latest DTI could get.

This led, Strachan said, to the unfortunate situation where the country exported iron ore at a net loss to the country but imported girders, cranes and containers, for example, at possibly the highest in the world.  It was impractical to have subsidies passed on to exporters of primary products penalising importers of necessary needs, he said.

On carbon tax, he dismissed any “one size fits all” programme as contributing to the overall problem by making things worse and on climate change generally, he said that DTI was already working towards the protocols agreed by South Africa “through a range of measures to support energy efficient systems and investment in energy.”    These were part of DTI’s manufacturing enhancement programme, he noted.

He said there should be a shift in pricing “in favour of less carbon intensive sectors which are more labour intensive and value adding”. He quoted particularly steel, polymers and aluminium, which he said should be considerably below import parity levels.

Nullifying NDP objectives

Garth Strachan concluded that with manufacturers already going out of business, the issue of administered prices was probably the most important issue facing South Africa at the moment in the search to create more jobs.

Parliamentarians noted with concern what DDG Strachan had illustrated in his review. Many called for a joint portfolio meeting on the subject with public enterprises, transport and energy, despite the subject of administered prices also not being a core function of the trade and industry committee. For example, it was noted, they had no parliamentary right to influence such bodies as Transnet and Eskom, nor deal with treasury on tax and tariffs.

 

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