By Themba Mbatha
We have all accepted that the state’s economic preoccupation in the coming years should be the pursuit of a developmental state. To that end, President Jacob Zuma announced in the State of the Nation address an unprecedented public infrastructure spending programme to achieve the objectives of a developmental state.
The estimated R800-billion to be spent on public infrastructure is the cost of being a developmental state. Included in this budget is Eskom’s build programme, Metrorail’s and Transnet’s rail fleet replacement and other infrastructural developments. All of these cost money, serious money, and someone has to pay at the end of the day. This is where the problem is.
It now appears that South Africa’s working class (I make no distinction between the working class and the middle class) is not ready to pay for their part in this developmental state. The recent ruckus over e-tolls was celebrated as a victory for civic participation and accountability, and rightly so. The negative consequences of the e-tolls delay, however, have not been fully accounted for, save only for a minuscule mention of a ratings downgrade.
There are also the incredibly noisy objections to Eskom’s tariff increase. When Eskom reported profits of R16.2-billion for 2012, most of the public objected to the profit despite the fact that Eskom has a power stations build programme valued at R320-billion. Not to mention, also, the adjustment on the proposed 2011 tariff increase of 24% to 15% by the energy regulator. In essence Eskom has raised less than they needed in 2012 to meet their funding requirements. This adjustment was done at the behest and to appease the very same working class.
What is at stake here, with this emergence of a culture of non-payment for public services by the working class, is that the economic viability of the public sector projects is questionable since the eventual users will most likely resist payment.
Data from Stats SA and the banks show that default rates remain manageable, indicating that the working class pays for services and repays their debt; it is payment for public services that seems to be contested. I understand that the working class is generally not happy with how they are currently governed, but they have picked the wrong proxy to wage war against the ruling elite.
I know that fingers will be pointed towards business. After all, with all the excessive profits they are making, business should be able to carry a large part of the expenditure, not the working class. Or so the thinking goes. But this is flawed on a number of factors. Even when ignoring the taxes collected by government from business, there is still a lot that business has done, and continues to do, to keep the wheels of this nascent developmental state moving.
A large part of the working class has pensions that are half-funded by business; it is the very same pensions that government is now arguing should be used to fund some of the expenditure.
We enjoy what has been called a first-world financial system, exclusively developed by the private sector. Most of us take for granted that our salaries will reflect on pay day and no later. We are oblivious to the complex systems, personnel, and regulations involved in making this happen.
We are nearing a mobile phone for every citizen in the country. We are nearing full coverage of basic telecommunication services to even the most remote parts of the country. The private investment in the enabling infrastructure is mind-boggling. Anyone who commutes around Johannesburg would have noticed the digging and laying of fibre-optic cable; that is another private sector company spending billions on our rapidly evolving telecommunications infrastructure.
These are some of the things that the private sector has done and continues to do for South Africa.
It is accepted that if South Africa is to live up to the title of being a developmental state, private participation in infrastructural development is important. This is reflected in all the planning commissions and policy documents. The prevailing ideology is that the state, as the leader of change in society, will partner with the private sector to achieve the goal of being a developmental state.
Business continues to invest in private infrastructure because all key indicators show that the consumers of the service will pay, where a need has already been justified. Will the private sector invest in public infrastructure when all key indicators show that the working class will resist payment? I think not.
What the working class is doing is sabotaging economic growth and, by extension, job creation just to make a point about governance in this country.
The working class needs to realise this very soon, and separate matters of political governance and economic sustainability. There is something called an election that resolves political governance, not misguided proxy battles that adversely affect the economy. The next march the working class has should not be about e-tolls, Eskom or NHI expenses, it should be directly about their unhappiness about how the state is governed.
Themba Mbatha is a typical citizen. He earns a living from 8 to 5 every weekday, and for all this effort he only get two days to live. He is part of the privileged working class. Follow him on Twitter: @themba_m
Maybe a bit of clarification from government about what thay are doing with the current fuel levy would help? Oh, hold on, I remember now, it goes into the general revenue pot. From there, well, who knows?
In the middle class suburb where I live, I pay monthly rates to the Council. Some of this is supposed to come back to me in the form of road maintenance, painting lines in the road & making sure the STOP signs are visible, looking after the local park, trimming the trees, etc. etc…………. In our suburb, the resident’s association performs the majority of the above tasks. In addition to the rates, I pay a levy to the resident’s association. Only about 50% of the residents pay this ‘local’ levy, but they enjoy the fruits of those who do pay. Sound familiar? The reason the RA does all of the maintenance is because the council does not.
@Oscar, you are priviledged, in fact you are extremely priviledged. Some of us, do not have sharks operating as residents/homeowners associations. And yet, you argue that you are quite happy to pay them than pay for services. Also let me point out to you, and here I refer to the Codesa Talks once again. We were fooled into accepting this model of local govt by the Nats simply because they knew that local govt would benefit YOU only. Local govt does not and is not designed to deliver to poor and impoverished areas. Our govt, can do all kind of tricks, but it is becos of the structure of the 3 spheres of govt and the laws that are impeding them from delivery to the citizens. Also let it be said that it is NOT the implementation of policies but the grip the laws has on implementation. The Nats knew that you and your ilk enjoyed all the infrastructure, ie roads, hospitals, schools, sports amenities, sewerage, water, electricity etc hence thats why you would always be protected by a right-wing councillor only becos what else has he got to offer other than politics whereas in our township our councillors would surely bear the brunt of service delivery so designed so that he is UNABLE to deliver. In fact, our municipalities cannot because there is NO infrastructure to begin with. Unlike you and your ilk who enjoys the best of the best. I suggest that levies should be imposed on the people who live in leafy suburbs and ensure they carry the burden becos of past benefication.
Public sector projects are per definition not economically viable. If they were, some entrepreneurial spirit would be cashing in on the opportunity.
I think it shows problems with the developmental state idea. One thing to claim ‘we’ve all accepted a developomental state’, quite another when the chickens come home to roost and we see it’s not really what we want.
Quick illustration: We pay the around the same taxes as Australia. However, in Australia, education is free, healthcare is free, rebates of around R150 000 are paid on your first property (to name a few).
The reason they are able to offer these services – low unemployment.
My view is that our taxes should be directed at two areas – education and employment. Simple economics says the more people employed, the more taxes the government receive (and fewer people on state welfare). This should have a snowballing effect.
I have no problem paying tax, as omg as it is used effectively. The areas which could do with major government spending seem to just remain year after year.
I understand we don’t receive the same benefits for our tax money as in other countries, but in return the government should have a game plan in place for this to be the end goal.
In SA sadly, it seems to be a competition to see how long you can remain at the top.
@Tofolux
‘quite happy to pay them than pay for services’ Yes Tofolux, I am quite happy to pay the residents association. This is because I get NOTHING in return for my rates, which I also PAY EVERY MONTH…….
Finally, our residents association are definitely NOT ‘sharks’. They all work VOLUNTARILY, and make our suburb a pleasant place to live……..they are ordinary citizens who go out of their way to do what the council SHOULD be doing in return for the rates that we pay them every month.
‘Me and my ilk’? You know NOTHING about me, or my circumstances.
@ Tofolux: “Local govt does not and is not designed to deliver to poor and impoverished areas. Our govt, can do all kind of tricks, but it is becos of the structure of the 3 spheres of govt and the laws that are impeding them from delivery to the citizens.”
The current government has been in power for some 17 years. They have been re-elected several times. They have not found sufficient reasons to change the 3 level structures.
I live in a rural community, most services work promptly, rubish collection is promt..etc. The population keeps it generally tidy when municipal service is interupted. But then……we are in Northern Cape and municipality is DA in a non ANC coalition. (…where there are too many coloureds, you remember? …mr Manyi)
What do you propose to do? And when are you going to do it? You might get some help!
Being angry and jealous, accusing people, who look after themselves, of being privileged does not get you anywhere.
Tofolux, you impress me as someone who is highly uneducated.
Quite right Themba. There really is no such thing as a free lunch. The consumer of government services needs to pay, but the government needs to ensure all funds are spent wisely, and for the benefit of those who pay into the coffers, and NOT used to purchase votes, line pockets, nepotise a department or Affirmatively Actionise a once well run parastatal. Creating a new Ministry of Flower Arrangement does nothing but hand an old comrade a cushy little number with the obligatory German luxury vehicle and a nice little corner office you can snooze in. And we all know it.
But, I must side with the consumer with the tolls strumash. It was plain for all to see that this was nothing more than an exercise in pocket-lining for some broad-based buffoons. And the people reacted as they should have. Those roads have already been paid for and are maintained by the road fund which collects most of it’s revenue from fuel taxes. Anything else on top of this was nothing but an abuse of the consumer’s trust. Which is what it was.
@Tofolux
You are right to point out that the local government funding model is not capable of supporting service delivery in poor areas where rates income is close to zero (impoverished and unemployed residents coupled to a culture of non-payment by those with the abiity to pay).
In many of these municipalities, wages, salaries and other operating expenses make up close to 100% of income, leaving nothing for infrastructure maintenance and development.
Middle class taxpayers receive 9 cents of government services and transfers for every rand of taxes paid. Poor South Africans receive R2.66 back in services and transfers or every rand of tax money (some VAt is paid, plus fuel levies and taxes).
The levies that you propose and restituive taxes are ALREADY in place.
There are 5 million registered individual taxpayers in SA of whom 1.8 million contribute 85% of the tax money collected.
Juxtapose this against the 15.5 million welfare recipients.
The restitution and levies that you propose are already firmly in place – perhaps you should just argue about the quantum?
Interesting conclusions. However, is it fair to say ‘What the working class is doing is sabotaging economic growth and, by extension, job creation just to make a point about governance in this country.’ One might rather ask what the political class is doing about economic growth. The developmental state model has led to growth in China, but in much of Africa it led to a vampire state of rent-seeekers, and by consequence a bloated civil service extracting value from the ‘working class’, which directly led to greater unemployment, high inflation, zero growth, the crumbling of entire industries, and the reliance on basic commodities and foreign aid as beneficiation ended and factories closed. One might argue that few developmental state policies address these real challenges and explain how to create real growth and grow the working class, rather than doing exactly the opposite of what is needed.
It is in fact in the economic sphere that SA’s greatest challenges lie. SA has among the lowest growth in Africa, and its share of the world economy has been dropping every year since 1980 – a worrying trend. However the developmental state policies are not likely to help – more red tape, a bigger and more bloated public sector, high spending on wages and low investment, high tax, trade barriers, protectionism, state interference in every industry, large state ‘commissions’ on every deal, loose monetary policy with expansive deficit spending, anti-business policies that discourage investment, very little concern with getting inflation and unemployment down, a fixation on social engineering and wealth transfer rather than wealth creation, and some quaint 1970s Marxist thinking about the importance of transitions rather than the importance of free people being allowed to work freely without the interference of a Big Brother state. Unless this changes, SA will continue its gentle, gradual economic decline.
A thought: ‘The estimated R800-billion to be spent on public infrastructure is the cost of being a developmental state’. Two economic questions. Rather than looking at the price tag, look at what is delivered. It is the power station built, and the quality of the infrastructure and the people who maintain it, that tells you the value, not the inflated price tag. Second – compare the 800 billion now with what the same infrsatructure would have cost in rands 5 years, 10 years, 15 years and 20 ago. The conclusion will be either that the power stations are grossly overpriced, or that there has been massive inflation in SA, or both. The net result of this spending will be pumping of more money for less value into the economy – resulting in even higher inflation, and the generalised devaluation of the rand and the buying power of wages, directly impacting the lives of both the poor and the working class. This kind of spending is not the solution. It is part of the problem.
@Tofolux:
“We were fooled into accepting this model of local govt by the Nats simply because they knew that local govt would benefit YOU only.”
No. That statement is incorrect. This model is based on ACCOUNTABILITY, and maybe the Nats forgot that the ANC does not understand accountability.
“Local govt does not and is not designed to deliver to poor and impoverished areas.”
No, another incorrect statement. let me fix it.
“Local govt should, but is not properly staffed to, deliver to poor and impoverished areas.”
Last year, national government took back RDP housing money from KZN because Ethekwini municipality was too broke to lay services where they were needed for new housing. The stadium was blamed. The required services are probably still not laid: power and sewerage. The stadium is still definitely a drag on the city’s fiscal: the debt and ongoing maintenance of the stadium.
But now the municipality is planning to send five councillors off to Asia to ‘support’ an Under-15 sports team. Five joy rides, for what? I think even JZ would agree that infrastructure should come first (as long as it doesn’t inhibit his own lifestyle).
This example extrapolates to describe every government-run project in the country. Why do they always cost so much more than necessary? Why are the details so carefully guarded?
Answer those two questions and you may begin to understand the difficulties the working class has.
This piece was written by someone who doubtless has money in his pocket come his regular pay day. Many don’t. Many have no regular pay day. They are expected to pay exorbitant levies and taxes that they cannot afford by companies and organisations that, instead of planning and saving their profits over the years for exactly this situation, have been throwing money around as tho’ there is no tomorrow; particularly on bonuses their staff didn’t deserve.
Why is there an unwillingness amongst the working classes to pay for public infrastructure ?
Because governments in general and particularly our own squander public funds on a grand scale.
It a question of trust. If national, provincial and local government would just focus on delivery and stop wasting money paying themselves outrageous executive salaries and raking off benefits then their credentials would grow and there would be less dissatisfaction.
Incidentally the so called working class does actually extend to the wealthy . Many wealthy people work their butts off and provide employment to others.
Its often forgotten that a progressive tax system means the more you earn the more tax you pay.
Its not wise to over tax business as their tax burden is merely passed on to the consumer.
Sigh.
“The working” class this and “the working class” that. You left wingers just don’t get it. “The working class” consists of millions of individuals, each with his or her own opinions and thinking and inner lives. “The working class” is not a single unit moving in unison. Never has been, never will be. That is a left wing fantasy to try to legitimize what comes down to a dictatorship in the name of “the working class”.
Yes, there are cultural trends, and yes there are thing that move masses. But you are kidding yourself if the”working class” or any other class actually thinks as a unit of complicated political or cultural issues.
“The working class” is certainly not sabotaging economic growth, they are not fighting a proxy war and they are not going to “realize” the error of their ways. These things require coordination, and rankly the political term for “coordination” is “dictatorship”.
Here is the deal. “The working class” votes and thinks with it feet and is usually prone to emigrate to places where is no intellectual vanguard that tries to force march their mental lives to a destination that suits the fantasies of said intellectuals.
@M Schmidt:
You make a good point. It’s not the middle class (regardless of how we are composed) that is sabotaging the government with our tax revolt. It’s rather the government that is saboting the middle class with their taxes.
Most of us are more than willing to pay our fair share, but we want to see return on investment.
@Bernpm:
You hit the nail on the head. Rather than a Robin Hood parasite, government should be an enabler that allows communities to stand on their own feet and take care of themselves. We shouldn’t castigate communities that are functional, we should rather emulate them.
@Jandro, you knw sometimes when you make a counter-argument do not make it based on your own priviledged circumstances thinking that every citizen in this country enjoy those ill-gotten priviledges. The nats introduced the local govt concept because YOU people enjoyed service delivery without much ado. The major difference is the fact that your infrastructure that was built by those who live in townships was state of the art, first world, whilst WE who paid for your infrastructure DID not have toilets, running water, electricity, roads TO enjoy the concept of local govt (duh). So instead of trying to ”correct or fix” my statement, we KNOW that you enjoy the unwarranted fruits of priviledges that you are constantly defending at the expense of poor black people. Secondly your counter is a bit comical and does not warrant engaging.
@Peter L. I think you need to relook at your response. When we speak of restitution we should be honest about what we mean when we say restitution. The 3 spheres of govt is a waste. There should on be one sphere of govt. The reason why service deliver is so difficult is BECAUSE of legalative LAWS, Peter. LAWS. If those irritating laws are scrapped, service delivery WILL be quicker. But then again,hindsight teaches us about the NATS and sheltered employment. You know that lovely concept of the railways who employed youth from a certain section of SA’ns because they didnt have enough brains to do anything else. Also, they received free everything. But that aside. Restitution means that you owe us something. Your ill gotten gains needs to be paid for even if its one or three generations down the line. How can you be a beneficiary and enjoy a priviledge from a crime? That is restitution and in fact, you should willingly agree to this because it is the right thing to do. There is no negotiation or dialogue. Also I can see that you have not looked at the material conditions on the ground (honestly) and interrogated how a model, has failed and what alternative there could be, ie in the interest of those who deserve to have a decent life. Maybe a little less priviledge, would open your mind to the reality around you.
The working class doesn’t have much money, and wonders why it is being expected to pay vast sums (closer to 3 trillion than to 800 billion) into the pockets of rich people to further enrich them forever.
Virtually none of the infrastructure programme, with the doubtful exception of the Medupi power plant, has any potential benefit for the working class. It’s not about creating jobs or furthering economic growth. It’s about allowing the fat cats to exploit the situation.
I think Tofolux’s Malemaish tendencies that are hopelessly short on facts have been addressed by the replies to his comments. But Themba I want you to think about something else. I think the real handbrake on SA’s growth is that all the beenfits you describe such as banking, cell phones, electricity etc ignore the fact that these are either clear monoploies (Eskom) or licenced ones (tollroads, banking and cell phones) so they provide a good service but charge exorbitant rates for them. Quite a bit of the loot goes to owners and shareholders (including government and connected ANC tenderpreneurs) or trickles into ANC pockets but a lot of the rest is wasted on innefficienies. Bring in clear, open and honest competition and I think we would get better services at lower cost.
@Tofolux – Government does not drive the economy. It monitors and should facilitate it. The drivers of the economy are the people who get out of bed early to open their businesses, who have sleepless nights worrying about cash flow and red tape, who employ people and pay the taxes. Without these people you have nothing! Our government fails to see that it’s role is as facilitator. Our Lords and Barrons (not the imperialistic titles) in government are a joke andd you wish them more power?
er, that should be ‘note’ not ‘not’
@Rich, citizenry cannot wake up like headless chickens every day, hoping that their hard work all comes together under some pie-in-the-sky or thoughtless strategy. eg India didnt become the world’s leading IT specialist because the govt played facillitator. The Indian govt became the role-player, the motive force to ensure that they are No 1 in the world when it came to IT. So this notion of that govt should not drive economy is selfish and capitalist driven noting that capitalism is a failed concept. I think if you look at all the major successful economies today, it is successful because govt’s became the drivers of those economies. Hence the truth clearly challenges your proposals.
@Tofolux – capitalism is not a failed concept. We are all intrinsically capitalist by nature. Did capitalism die after the Great Depression? Just because there is a bump in the road does not mean there is no road!
If you wish to note a failure then look at too much state intervention i.e. communism…
@Rich, please do not confuse states which have mixed economies, But noting that you are a staunch supporter of capitalism, please can you give me a few examples where it works?
@ Tofolux – capitalism is simply where profit is the main motivator. It comes in various guises of which mixed economy is one of them. My point is just as simple – if there is no profit there is nothing. You can do no good as doing good requires resources and those resources come, directly or indirectly, from profit.
The human condition and its history of survival, from pre homo to date, is based on power (or profit). Animals do it and we do it…it is how we got to what we are.
To deny this and place a construct in its place is to deny what we are and is destined to fail.
State intervention is needed as there is a tendancy to screw all for profit; balance is needed. But to give this power to our (of late) morally bankrupt politicians and government will just result in them screwing the public for their personal gain (now ain’t that ironic?).
@Tofolux
Ah so you know all about my background of privelege and ill-gotten gains, hey?
FYI I was orphaned before the age of 9 and had the character-building expereince of discovering my mother’s dead body shortly after my 8th birthday.
I attended a poor state primary school, but was a top student and succcessfully applied for a scholarship to attend a decent high school in the Cape.
My guardian could not afford to send me to University so I learned a trade and worked for 4 years to save up enough money to study part-time.
I have four Degrees (two undergraduate, honours and a Masters) all paid for myself (received a partial academic brusary for honours and Masters) and all earned with part-time study.
My wife has retired from gainful employment, and works (unpaid) for a Christian aid organisation in our township.
I am rather well acquainted with the “reality all around me”.
Everything I own my wife and I have worked our butts off for.
I paid over R200,000 per annum in taxes last year and get very little in return.
I am a beneficiary of nothing but the results of my own hard work. I owe you or anyone else absolutely nothing.
By all means engage in rigorous debate with me based on facts and reasoned argument, but please do “not assume facts not in evidence” about me, as one of my law profs might have said.
@Peter L. Let me make this obvious point to you. The ”poor” state schools that you experienced is no where near the poor state schools my brothers and sisters experienced during apartheid or today. Also, I have indicated in previous forums, that companies do not upskill those who deserve to be upskilled. Instead they use govt money to upskill those who are already advantaged. I also notice that you referenced your retired wife working in a township which means that you live in a suburb. Now Peter, there has got to be some point, where honesty reigns supreme. And yes that is purely a case for conscience because at some point one has to be honest with oneself. Did I or did I not benefit from a system that advantaged me only because of my skin colour? Its totally whack to put it mildly, that you cannot acknowledge that obvious fact.
@Tofolux – and are certain people now advantaged by virtue of their skin colour through PPA and/or BBBEE?
Lets be honest here – answer with a simple yes or no!
@Tofolux
My point was that you actually know nothing about me and by most reasonable measures, I experienced an extremely disadvantaged childhood.
Were there people worse off than me, mostly black? Undoubtedly.
I know what it means to go to bed hungry and cold from first hand experience, so I find it difficult to reconcile that with any concept of “privelege”.
Back on point – you argued that “levies should be imposed on the people who live in leafy suburbs and ensure they carry the burden becos (sic) of past benefication.”
The fact is that THEY ARE!
They are called rates and taxes.
Rates are a wealth tax based on the assessed value of the property.
A very small portion of the total sum levied each month is actually a “user” charge for services rendered.
Anyone looking for a helping hand will find it at the end of their own arm.
According to recent SARS communique’s SA now has some 10.3 MILLION individual taxpayers.
Many are no doubt, like me, bottom feeder taxpayers.
I have to assume that since the white population is, in general meltdown: probably about three MILLION ish persons now [compared to about 5 MILLION ish 20 years ago] and that only a small part of that number actually work in tax paying jobs: that therefore about 9 MILLION of those taxpayers are from … the new formerly disadvantaged and oppressed majority…
And i say mazel tov to that, because it is cool that at last there are all these other people contributing to the [individual] tax base [we all contribute to VAT]. In 1994 i suspect you could could count on one finger the number of disadvantaged citizens who paid income tax, [at least if ANC comment and general mythology is correct].
So what i’m unclear about is who this ‘working class’ are that are not paying for things. i consider myself working class since i work in a bottom feeder job as a much despised and routinely abused schoolteacher in a ghetto high school, earn a below average income for Gauteng and certainly earn way, way below what a class other than “working” would expect… like say a politician or city manager… maybe about 10% of their pay-plus-perks.
SAFM radio said recently that about 20% of private electricity usage is “stolen” and that as a result the price has to go up to compensate ESKOM.
So i pay more.
Thus: Being free is…