Privatisation and consolidation required to boost SA’s growth
Alex Malapane’s postulate that South Africa requires macroeconomic policy rebalancing rather than additional taxation correctly identifies some symptoms of the country’s economic malaise, but stops short of confronting the underlying problem (“SA needs macroeconomic policy rebalancing, not more taxes”, August 17).
The country does not principally suffer from a shortage of economic policy. It suffers from a state that has become too large, too expensive and too deeply involved in activities that could be performed more efficiently by the private sector.
For more than two decades we have attempted fiscal consolidation, industrial policies, infrastructure programmes, state-owned enterprise (SOE) turnaround strategies and successive institutional reforms. Yet economic growth remains weak, unemployment extraordinarily high and public debt elevated.
The problem is therefore not simply how the government can derive more revenue but how much government South Africa can afford. We need a fundamental expenditure review. Every major government function should face three tests. Is it essential? Must the government perform it directly? Could the private sector provide it more efficiently while the state concentrates on regulation and protecting the public interest?
This should lead to a smaller cabinet, fewer departments, consolidation or abolition of overlapping agencies, a leaner public administration and a fundamental reconsideration of SOEs.
Regarding SOEs, for years they have been subjected to “turnaround”, “restructuring” and “governance reform”. The underlying assumption — that the government must remain the owner — is rarely challenged. It should be if there is no compelling strategic reason state ownership, privatisation or concessioning should be the default.
The government does not have to own an airline to regulate aviation, operate ports to regulate ports or run freight trains to own strategic rail infrastructure.
South Africa cannot resolve its unemployment crisis through the government and SOEs. Sustainable employment must ultimately come from thousands of businesses willing to invest capital, expand and employ people.
The objective should therefore be a smaller but stronger state: one that provides the rule of law, security, education, essential infrastructure, social protection and competent regulation exceptionally well, while withdrawing from activities better undertaken by private enterprise.
We must privatise what the government does not need to own, concession what it does not need to operate, close or consolidate institutions that cannot justify their existence, reduce public debt, open infrastructure to private capital and competition, and purge the corruption within.
John Catsicas
John Nicholas & Co
NSFAS funding model unsustainable amid rising unemployment
The latest investigation by the public protector into the National Student Financial Aid Scheme (NSFAS) debacle refers (“Manamela fails before MPs as NSFAS funding founders”, August 18).
Announcing free tertiary education for all of those whose families earn less than a certain amount was the ticking time bomb bequeathed to South Africa by Jacob Zuma just before he exited stage left. This was something the country could ill afford at the time and it was obvious that the situation would only deteriorate.
The chickens are now coming home to roost. Even if the NSFAS system were to be properly administered (which it certainly isn’t and never has been), the country cannot afford it in its present form. Families sending their children to tertiary institutions under the NSFAS scheme must be pretty happy because, apart from not having to pay fees, they no longer have to feed or accommodate them nor pay for transport, as these costs are now carried by the state ― that is, taxpayers.
I’m not against some form of assistance so those who cannot afford it can further their education in areas where the country requires their skills. However, far too many young people are attending tertiary institutions (mainly universities) to study courses that are too generalised to be of use in the South African or world economies. The proof of this is in the number of youths who have completed tertiary education but are unable to find employment.
The government must be honest with the youth and admit that the situation is untenable. The can can no longer be kicked down the road.
Derek Pryce
Via email
Business sector suffers workforce shortages as deportation policy backfires
Tara Roos’s article refers (“Who is paying for SA to deport more than 80,000 people?”, August 11).
Over and above the direct cost of repatriation, the process has cost the business community far more than R300m in lost skills and a shortage of people willing and able to work, affecting their production and their future.
Reports are streaming in about crops going rotten in the fields and production disruption in dozens of industries, leading to enormous wastage. We need to be very careful to not “throw the baby out with the bathwater”.
Michael Bagraim, MP
DA employment & labour spokesperson
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