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Malema damages necessary debate
A debate about inherent flaws in the way the South African economy functions in its delivery of results for the majority of the country’s population is probably more important than most people realise, and is of wider international interest. But the tone that the ANC Youth League (ANCYL) and its leader Julius Malena are trying to set this debate is causing more damage than good to the case for finding a more sustainable economic dispensation.
In a statement issued under the heading So, what is your alternative? at the end of last week Malema, apparently fresh back from a holiday in Italy, challenges everyone that disagrees with the ANCYL’s stance on nationalisation and expropriation to engage with it on the subject of economic transformation.
He however, immediately goes ahead in the statement to heap insult and abuse on everyone that has dared to differ from him and the Youth League. It is quite clear that they have made up their mind and are not really interested in hearing what anyone else has to say, and who will engage in a debate when you know the only result you can expect is insult and abuse.
In the process the ANCYL and Malema are poisoning a debate in South Africa which is also raging in many other parts of the world and already led to serious social upheaval in Greece and elsewhere in the so-called developed world and even revolutions on our own continent.
In South Africa the main symptoms are poverty, extremely high levels of unemployment and the fact that it is reputedly the country with the largest income disparity between rich and poor in the world. In Greece and other developed countries, including America there are high levels of resentment because of the perception that it is expected of ordinary citizens to pay the price for the mistakes rooted in the greed of the super rich and financial institutions that caused a financial crisis and recession.
To this can be added that across the globe these captains of the financial industry not only still rake in almost obscenely high remuneration packages and even extremely lucrative bonuses. In South Africa the massive salary increases and bonuses of the executive cadres of large corporations and state enterprises (81% in the case of Sasol for instance) lend a cynical ring to calls by this very same group that ordinary workers should moderate wage and benefit demands.
When the costs of very basics like electricity rise in percentages in the hundreds above the inflation rate it makes for an extremely volatile situation that can easily lead to violence – as was evident recently in the streets of South African townships.
Did the chief executive of Eskom, Brian Dames, whose mult-million-rand remuneration package was in the news just days before, ever contemplate the inflammatory currency of his warning in public that the burden of government's planned carbon tax “would have to be passed on to the consumer.” And, it happened even as parts of Soweto were in flames over the cost of electricity!
What Dames said is probably factually correct, not only did his timing stink, but a public platform was not the best of places to air his concerns. He after all has, or should have, a direct line to a member of the cabinet who represents his sole shareholder.
While there has to be appreciation for government’s need and desire to lower South Africa’s carbon footprint, the short cut solution of a carbon tax that increase the pressure at grassroots consumer level, where it is already at breaking point, looks like a dangerous one.
Likewise the ANCYL’s insistence on nationalisation and confiscatory land redistribution policies amounts to shortcut once-off type solutions instead of process-based restructuring, which seems to be shortsighted and could be counter-productive. To this can be added a racialistic approach as evident in Malema’s inflammatory, and historically questionable statement that “land is still owned by descendants of settlers who violently and murderously stole from our forefathers".
It might be a legacy from the days of apartheid, but it sis also however an inescapable reality that the white component of the population provides skills that are indispensable in the economic development of a modern state. What is needed is process-driven restructuring over time in terms of a comprehensive and integrated strategy that, among others includes dramatically improving the education system in the country.
The shortcut and highly interventionist policy of capping annual salaries across the economy at R500 000, as suggested at the end of last year in New Economic Growth Path, also seems to be out of touch with both global and domestic realities:
· There is a global shortage in and competition for skills required at corporate management levels;
· The cap would be below the South African top personal income level, which yields close on 50% of Treasury’s personal-tax income from about 6% of the country’s more that four million taxpayers. The cap would amount to a substantial blow to budget revenue with major implication for among others, welfare payments to some 14 million-plus poor people; and
· In reality it would be private businesses and their shareholders that would benefit most from such a salary cap in the form of improved profits.
The latest example of policy decisions and legislation that does not properly take the implication on ordinary South Africans into account, is a proposed new property tax dispensation for rented residential units in the Municipal Property Tax Amendment Bill. The Bill proposes that rented residential properties should be taxed at a much higher rate thanhose occupied by the owners.
According to some experts the implication of the proposal will be that property tax on properties being rented out in some instances could go up by more 200%. Apart from the impact on people who invested or planned to invest in rental property as part of their retirement plan, it could also adversely affect the affordability of rental property.
What is more than likely to happen, is that the increased property tax would be added to rents and effectively be paid by tenants. These people, who mostly could in the first instance not afford to buy their own, would be forced to dramatically down-grade or even be forced onto the street.
Maybe the time has arrived for a Treasury rule forcing government departments and ministries to consider the cost implications of all proposed legislation for consumers and to report on that in accompanying memorandums to cabinet and parliament.
It is true that the situation reflected in a recent report by accounting and consulting firm PwC that the median pay of executives of the top 40 JSE-listed companies increased by 23,3% to R4.8 million last year and bonuses by 56%, while ordinary workers at the bottom of the ladder are asked to settle on increases of below 10%, is creating a dangerously unsustainable economic environment.
What seems to be needed is not a racially loaded and threatening shouting match, but a rational debate aimed at building national consensus about the economic development path that is to bfollowed.
To look for shortcuts in this most important of debates, so desperately needed to ensure long term prosperity and stability in South Africa is dangerous and is likely to cause more damage than anything else.
Willem du Toit
The real damage is the notion to think that the African majority desrves nothing in the land of thier own.
The real damage is to avoid the continued existence of racial oppresion of the African masses by by white minority in South Africa.