Editorial: Give privatisation a fair hearing

It may have made sense to have a “national carrier” in the days of much less air travel to the southern tip of Africa, but today SAA simply cannot compete with privately owned commercial airlines. (Delwyn Verasamy, M&G)

It may have made sense to have a “national carrier” in the days of much less air travel to the southern tip of Africa, but today SAA simply cannot compete with privately owned commercial airlines. (Delwyn Verasamy, M&G)

  It has been impossible to mention the P-word – privatisation – in South African political discourse for many years now. If spoken at all, it is in a whisper. As we write in the Business section this week, however, it is putting a foot out of the closet if the mention in the presidential committee’s 2013 report on state-owned enterprises in President Jacob Zuma’s State of the Nation address last week is anything to go by.

The main reason privatisation can’t be mentioned aloud in government circles is because of the left’s relentless opposition to it since the 1970s.

Its opposite term, nationalisation, is the one on the lips of a radical and/or populist left, but in South Africa that has to be toned down because, rightly, it scares investors.

The middle position taken by a government that talks left but generally walks right is to hang on to the parastatals left over from the apartheid state (SAA, Telkom, Eskom, and so on) and to try to turn them into desperately needed drivers of development.

Unfortunately, it has not been able to do that. Parastatals largely work when they are monopolies and when they supply basic services. If, like Telkom, they are outstripped by private business’s provision of services, they begin to die – and the state can only support them at great cost to the taxpayer. SAA is another example: it may have made sense to have a “national carrier” in the days of much less air travel to the southern tip of Africa, but today SAA simply cannot compete with privately owned commercial airlines. Even if it wasn’t horribly mismanaged, as it is now, it would find it very hard to keep up.

So perhaps it is right that we get over the old leftist hostility to privatisation and see what it may be able to do for the state’s finances. Why pour more billions down the drain to try to keep alive a company that should, in a capitalist world, be put out of its misery by the competition?

For we do live in a capitalist world, and there is no sense in trying to impose socialist solutions that barely worked even in the advanced industrial countries. South Africa is still developing, and that process isn’t exactly advancing at lightning speed.

The state is increasingly strapped for cash – the cash it could use to provide social welfare, for example, to people who can’t find employment in our underdeveloped economy.

The budget for 2016, to be tabled by the finance minister next week, will undoubtedly show the desperate need for more money in the public kitty.

The economy is in a bad way, and government has overspent on items such as public service salaries. As we teeter on the brink of junk status, from the perspective of investors, surely we could consider even those measures that until now have been taboo?

 

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