ANC echoes failed Nats policies with raid on pension funds
Budget shortfalls are result of unworkable nationalisation project
● If there’s one valuable takeout from the past quarter of a century in SA, it’s that the grand project of nationalisation has failed. This much is clear from the perilous situation at all our troubled SOEs. Placing the state at the centre of the economy, in control of all the “levers of power”, has also meant funding the various wasteful, inefficient and corrupt extensions of the state through any means possible until the country is bankrupt. We’re almost at that point.
The ANC likes to think of itself as the antithesis to the apartheid government of the National Party, and in many ways it is. But when it comes to this firmly held belief in a state-dominated economy, they are birds of a feather. So when the ANC starts talking of forcing pension funds to invest in the worst-performing companies in SA — our beleaguered SOEs — it’s hard not to have a bitter sense of déjà vu.
Forty years ago the Nats did the exact same thing. They had also run out of money and the economy had stalled, and their only solution to fund the country’s harbours, airlines and railways was to raid the pension savings of ordinary South Africans. They justified this as a kind of enforced patriotism — a noble and compulsory sacrifice for party and state.
To see the ANC now going down this same route is one of the biggest indictments of their ability to lead this country towards a better future. If the best they can do is a failed second-hand policy out of the National Party playbook, then you know they are scraping the very bottom of the barrel.
There is no doubt that SA is heading for extremely turbulent waters and that we are on the verge of running out of money altogether. The three big-ticket items on our budget — the social welfare bill, the public sector wage bill and the cost of servicing our enormous SOE-driven debt — are constantly increasing, while our tax revenue is heading in the opposite direction. No-one is arguing with these facts.
But it is also clear that President Cyril Ramaphosa can do little to change any of this. The reforms our economy desperately needs to grow and create jobs, the cuts that have to be made in the public sector and the changes that must take place at our SOEs will all place him on a collision course with his allies — the union bosses. He won’t stand up to them, even in the interests of the country, and so instead he is prepared to dabble in the dangerous policies of quantitative easing — that is, printing money — and prescribed assets.
The state is not willing to adjust but it expects its citizens to make the sacrifices through increased taxes and now also with their pension returns.
This is a betrayal of poor and working-class South Africans. The bottomless hole into which these pension savings will be thrown will not improve the lives of South Africans. Without wage cuts and retrenchments at Eskom, along with an unbundling of its operations, this money will simply be wasted. And why should poor South Africans underwrite the cost of someone’s SAA airline ticket when they don’t even have functioning trains and buses themselves?
But the biggest betrayal will be felt by SA’s millions of pensioners. Hard-working South Africans trying to plan for their retirement have to make very careful decisions about their money. Most monthly pension incomes are so small, there is no wiggle room at all. They certainly can’t afford risky investments, and they need the fund managers of their pension savings to act in their best interests to make sure they will be OK throughout their old age.
What the ANC government is now advancing in the form of asset prescription to fund failing SOEs like Eskom, the SABC and SAA is as risky an investment as you can get. There is no way any responsible pension fund manager would follow that route if the government was not holding a gun to their head. The sole obligation of a fund manager is to the people whose precious savings he or she has been entrusted with — people who are at the end of their working lives and simply cannot recover from an investment disaster.
The answer to our country’s budget shortfall does not lie in raiding the life savings of ordinary people. What the ANC is proposing here is both reckless and unjust, and the DA will fight this with all we have.
At the same time we will continue to fight for the economic reforms that will put SA back on the right track. This means building an economy that does not revolve around the state. An economy where the role of the government is not that of primary job provider but rather to attract investment, to enable growth, and then to get out of the way so that businesses large and small can do the heavy lifting in creating jobs.
In this economy our public sector will be opened up to far more competition and privatepublic partnerships. The result of this will be better-quality services at better prices and the ability to spend our budgets where they are needed most. This reformed economy will also see the rise of the micro enterprise as a driving force in job creation and a way for millions of excluded South Africans to enter the economy and earn a living. If we want to embrace this future, then we must stop looking to the past for ideas. We must stop clinging to 20th-century notions of a Big State controlling the economy and telling its citizens where and how to spend their money. And we must stop borrowing failed economic ideas from failed nationalist governments.
Forty years ago Nats did the same thing — they’d also run out of money