Not a hollow victory

In his piece about labour’s role in the government’s decision not to privatise large portions of Spoornet (“A hollow victory?”, May 31), Reg Rumney displays a puzzling ignorance of the details of the agreement reached. Puzzling, because, as with other serious economic journalists, Rumney was fully briefed at the time of the announcement in February.

Instead of informing readers of the real content of the agreement, he introduces the red herrings of “forcing business to use rail ...” and reverting to “an economy of the 1930s”.
He also wrongly suggests that no consideration was given to the need to invest in infrastructure and that Spoornet is not working to expand its market share of freight.

Let me inform readers about details of the agreement, so they can judge whether the reversal of rail privatisation plans was a “hollow victory”.

The government, labour and Spoornet management spent nine months investigating the option of concessioning the profitable coal and iron ore lines of Spoornet. The tripartite team made projections of investment, revenues and employee requirements of the business units of Spoornet over a 20-year period.

The outcome proved conclusively that it would be economically and socially disastrous for the concessioning route to be pursued. Even if all the financial proceeds from the concessioning of Coallink and Orex had been transferred directly into the general freight operations, this side of the business would have remained financially unviable over a 20-year period.

The government would have had two choices: grant general rail freight a subsidy for the first time ever or close lines and reduce general freight volumes. The closure of lines and reduction in volumes would have had the consequence of major additional job losses, 12000 to be exact, as well as additional costs to the fiscus in road maintenance.

The option of selling off the cherries and leaving the rump of the business was therefore found to be a very poor business option both for Spoornet and the country as a whole. The levels of financial risk for management and for the government were simply too high.

This major finding was in keeping with international experience. Almost every rail system in the world, whether privately or publicly owned, integrates its bulk and general freight operations in order to keep the whole system financially viable.

Built into the main conclusion of keeping Spoornet freight operations integrated in one state-owned company, are major investments over the next 20 years. More than a billion rand of the income derived from revenues will be spent every year for 20 years on infrastructure improvements, wagons and locomotives.

Processes for increasing rail-freight volumes in ways that are rational and that promote intermodal cooperation between road-freight haulers and rail are also built into the conclusions. Achievable targets for volume increases have been set for 2020 for Coallink, Orex and the general freight business.

In addition, efficiency drives, including major improvements in the turnaround time for wagons and locomotives, the key to efficiency in rail, are at the centre of the agreement reached.

Rumney is right to point out that outsourcing is a form of privatisation by stealth, but he fails to mention that this argument has been made over and over again by labour in all sectors, and is therefore nothing new.

Indeed the South African Transport and Allied Workers’ Union (Satawu) is negotiating with Spoornet over its outsourcing policy. It is under no illusion that the agreement reached with the government over the ownership of Spoornet is the end of the road. The agreement is only the beginning.

There is much work to be done to ensure that the agreement reached is implemented to its full effect. Half a dozen committees and processes still have to be put into place to deal with issues ranging from mitigating job losses to analysing the potential for the growth of volumes on the low-density lines.

It would be nice if Rumney and other commentators could support the government, management and labour in their endeavours to make our railways work better for everyone. This would be much more helpful than the repetition of the platitudes of the pro-privatisation lobby. It would also ensure that the victory for labour that Rumney refers to, becomes a victory for the nation in the form of an efficient, safe, growing railway system that provides a large number of good jobs.

Given that the Spoornet process has averted the wretched experience of rail privatisations elsewhere in the world, why not support our efforts in developing a new dynamic approach to state-run infrastructure and service delivery? Can anyone tell me that this is a reactionary and backward-looking project?

Encouragement by the media of the Spoornet process might also help create an environment where the government does not make the same mistakes in other sectors. Satawu is now fighting Cabinet’s unilateral decision to concession port operations before any analysis of the root causes of port inefficiencies.

Having run roughshod over both the transport trade unions and the transport portfolio committee of the National Assembly on this matter, the government may yet again have to pay the price for ill-conceived populist decision-making.

One last word, we are pretty tired in the trade union movement of being encouraged to take the “respectable” route of engagement, and then having the outcomes rejected. You can’t have it both ways!

Jane Barrett is policy research officer of Satawu

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