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  • Sell parastatals, says DA


    The Democratic Alliance on Monday proposed partially privatising state enterprises to boost infrastructure spending to 10 percent of the national budget.

    Presenting the DA's alternative budget, finance spokesman Tim Harris said government should follow the example of Brazil, which this month raised some R70 billion by privatising operations at its three biggest state-owned airports.

    The deal saw the state retain a 49 percent stake in the operations and a Brazilian-South African partnership secure a contract to run Sao Paulo's Garulhos airport for the next 30 years.

    Harris said South Africa's infrastructure drive could be boosted by R55 billion a year by partially listing state-owned enterprises and selling off their existing assets and investing the proceeds into build projects.

    This would add more than two percent to the 7.8 percent of the budget President Jacob Zuma pledged last week to invest in infrastructure, without introducing new taxes or increasing the forecast deficit of 5.2 percent.

    The DA's budget proposals, made two days before Finance Minister Pravin Gordhan tables his annual budget, foresees a slightly lower deficit and is part of policy changes the party is advocating to achieve sustained economic growth of eight percent.

    Harris said the DA's main concern was job-creating growth and the first step towards this was the urgent implementation of Gordhan's plans for a R5 billion youth wage subsidy, that ran into opposition from the trade union movement.

    "That has to be implemented on the first of April. If the president and the finance minister lack the political clout to push it through, then that is a serious problem for the three plus million unemployed young people in South Africa today."

    The DA proposed reimbursing the private sector for job training, cutting the state's wage bill by limiting salary increases to inflation levels and saving more money by doing away with several national departments, including public works.

    It said it would create a single ministry of education and a single one for national resources, grouping minerals, energy, the environment, water and tourism.

    A raft of such measures to streamline government could save about R3.3 billion, freeing up more funding for education and projects that would stimulate growth and job-creation.

    Harris conceded that the DA's call for limited privatisation ran directly counter to current government thinking, and that it would take more than a single budget cycle for any profits from such an exercise to reach the state coffers.

    "There is a serious divergence between the ANC's programme and ours. The state is following a form of state capitalism and we believe that this isn't going to work in South Africa because frankly we don't have the capacity to deliver even the most basic services at national level."

    DA parliamentary leader Lindiwe Mazibuko said the party's economic policies were compatible with the national development plan released in November, but added that with the new growth path the government had regrettably set off in a different direction.

    "The new growth path... has a very different premise on how the state should be involved in the economy. We think that the aim of creating five million jobs is very admirable, but it is based on a flawed assumption of the role of the state."
    Comments 33 Comments
    1. rpm's Avatar
      rpm -
      The Democratic Alliance on Monday proposed partially privatising state enterprises to boost infrastructure spending to 10 percent of the national budget.

      Presenting the DA's alternative budget, finance spokesman Tim Harris said government should follow the example of Brazil, which this month raised some R70 billion by privatising operations at its three biggest state-owned airports.
    1. The_Librarian's Avatar
      The_Librarian -
      Cosatu's gonna have a hissy fit
    1. daveza's Avatar
      daveza -
      Who would want to buy these parastatals ?

      SAA can't survive without constant hand-outs, Eskom - pass, Telkom - hell no.
    1. Hemi300c's Avatar
      Hemi300c -
      No one in their right mind would buy/invest in a parastatal of RSA - not with the work ethic, BEE, EQ, Cosatu and all that cr@p.

      There is no way a company could function properly in this country with all the above and still hope to make a profit because you will be forced to keep all current people, positions etc etc and then you will be doomed.
    1. daveza's Avatar
      daveza -
      Sasol - are they parastatal ?
    1. Nod's Avatar
      Nod -
      It would actually make perfect sense for an overseas company to by one of the parastatals, as they would get a company, although currently mismanaged, with basically a monopoly on that service for next few years until competition can get up to speed. For example Eskom could be a winner, if managed correctly.
    1. chris2.0's Avatar
      chris2.0 -
      No, but they used to be...

      It's pretty easy to see the diffs between a parastatal and private...

      If they are making a profit without any large-scale theft or corruption, then it's NOT a parastatal...

      Quote Originally Posted by daveza View Post
      Sasol - are they parastatal ?
    1. Hemi300c's Avatar
      Hemi300c -
      Quote Originally Posted by chris2.0 View Post
      No, but they used to be...

      It's pretty easy to see the diffs between a parastatal and private...

      If they are making a profit without any large-scale theft or corruption, then it's NOT a parastatal...
      LOL but too true.
    1. WilD_CaT's Avatar
      WilD_CaT -
      Hey, go DA.

      Good move, rather let private citizens use their money to buy these companies so that cash is returned to state coffers and they stop becoming a drain on the taxpayers.

      Then the private companies can restructure and attempt to become profitable without taxpayer subsidies.

      Good move.
    1. Fudzy's Avatar
      Fudzy -
      If the goverment sells the parastatals where does the money go? Or at least where SHOULD the money go?
    1. Mike Hoxbig's Avatar
      Mike Hoxbig -
      Quote Originally Posted by Fudzy View Post
      If the goverment sells the parastatals where does the money go? Or at least where SHOULD the money go?
      Towards funding a more competitive environment in that particular sector, and possibly towards funding an effective regulator to ensure that it stays that way. But this is where it probably will go:

    1. Nicodeamus's Avatar
      Nicodeamus -
      Well done DA.
    1. Alan's Avatar
      Alan -
      Quote Originally Posted by WilD_CaT View Post
      Hey, go DA.

      Good move, rather let private citizens use their money to buy these companies so that cash is returned to state coffers and they stop becoming a drain on the taxpayers.

      Then the private companies can restructure and attempt to become profitable without taxpayer subsidies.

      Good move.
      Really only partial privatisation gets such an enthusiastic encouragement
    1. noxibox's Avatar
      noxibox -
      Quote Originally Posted by Fudzy View Post
      If the goverment sells the parastatals where does the money go? Or at least where SHOULD the money go?
      Well it's usually a useful cash injection that can be put to good use, but once that money has been used it isn't always clear the public has gained much. So for a train service those who can afford cars still drive them and pay less tax and those who use the trains get charged R50 a ticket instead of R8. The only way to reign in the problem is then price controls from government. Privatisation was once believed to be a panacea and is still pushed by certain organisations, but it can and has gone badly wrong.
    1. OrbitalDawn's Avatar
      OrbitalDawn -
      Quote Originally Posted by Mike Hoxbig View Post
      Towards funding a more competitive environment in that particular sector, and possibly towards funding an effective regulator to ensure that it stays that way. But this is where it probably will go:

      You think they'd be caught dead in a previous model X5? Puh-lease! They've got reputations to uphold.
    1. Fudzy's Avatar
      Fudzy -
      So selling them would benefit the bad guys rather than the country?
    1. Hemi300c's Avatar
      Hemi300c -
      Quote Originally Posted by WilD_CaT View Post
      Hey, go DA.

      Good move, rather let private citizens use their money to buy these companies so that cash is returned to state coffers and they stop becoming a drain on the taxpayers.

      Then the private companies can restructure and attempt to become profitable without taxpayer subsidies.

      Good move.
      And the money that is paid for the companies can fill the ANC's corruption and coffers needs till the next plan is made?
    1. bekdik's Avatar
      bekdik -
      Nice idea, but it would totally depend on how and to whom the sale takes place.

      Selling to a Comrade for R0.01 who then goes JSE and sells off their shares at huge profit isn't going to work.

      Maybe a better solution is to place them under Judicial management while selling off their assets to going concerns capable of running them would be a better solution. Always providing that the buyer is allowed to employ competent people rather than "politically connected".
    1. Apache's Avatar
      Apache -
      Sell them? Hell no. You are basically buying a monopoly. They will charge us more and there is nothing we can do about it.

      Rather break them up and then sell them so they are forced to compete with each other and the prices will go down.
    1. sox63's Avatar
      sox63 -
      The last time a Private company (The americans from SBC) ran a former "parastatal" (Telkom), South African consumers were ripped off royally. So imagine an company running the ONLY power generation source around?

      Very scary thought to me...
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