That our government is quick to legislate and regulate, that they themselves often do not pay their bills on time, or in the case of the South African Post Office, their taxes are well recorded. The most recent mind-boggling announcement was by National Treasury regarding Eskom’s non-requirement to report wasteful, fruitless, and irregular spending in its financial systems
This will be accepted by Treasury (as imposed by Section 55(2) (b) of the Public Finance Management Act and Treasury Regulation 28.2.1 for a period of three years). Treasury's reasoning was that it would protect Eskom’s Credit Rating! I am convinced the rating agencies, the World Bank, the International Monetary Fund and other Institutions have always held Treasury and the SA Reserve Bank as the saving grace of this country. The place where the buck stops. Literally.
This may now change. It is like children playing a game of Monopoly and then midway, changing the rules to enable the weakest player to catch up. If there is a clear indication of a political party prepared to sell its soul to remain a powerful force in an election, it is this slap in the face of voters and consumers.
The ANC blocking the investigation of corruption at Eskom was a clear indication that they would cover up much bigger controversies than a sofa full of US dollars.
There is a movie called “For a Fistful of Dollars”, and is described as “a wandering gunfighter who plays two rival families against each other in a town torn apart by greed, pride, and revenge.” It reads all too familiar in our own context. Let us not forget the middle and senior echelons of government employers, who once again received huge salary (unsustainable) increases. They still have high hopes that their current exorbitant salaries will also translate into lifelong pensions based on the exorbitant salary levels as it is guaranteed by the State.
The State, they believe naively, will be able to extract enough from the dwindling taxpayers to afford the pensions. All we need is for SA Revenue Service (Sars) commissioner Edward Kieswetter to make a similar statement relating to the transgressions of taxpayers.
South Africa’s public-sector wage bill is substantially higher than that of its peer countries and one of the highest among emerging markets. High average compensation levels are mainly responsible for South Africa’s high public-sector wage bill rather than headcount growth. It will be naïve to hope taxpayers will not revolt against this abuse of power.
The Reserve Bank, once again, showed its disregard for the poor and the middle class, not to mention the millions of unemployed, by raising interest rates by a further 50 basis points recently. Once again, the consumer laden with debt up to their eyes is punished, and more of their hard-earned cash is transferred to the banks and other capital providers. Do the authorities really think that you can sustain a delicate capitalistic democracy when you keep on transferring wealth to already rich capital providers? Little wonder we have made no progress in narrowing the gap between the ultra-rich and the rest.
The Reserve Bank state that they raise interest rates to stem inflation. Yet, the government allows an 18% increase in electricity tariffs in the same week. Nersa, this week, proposed a 15% hike in municipal electricity tariffs. That will fuel inflation while small and medium enterprises have reached their tipping point from despair to folding under the pressure of higher interest payments, even less access to capital and debilitating electricity bills.
Not even a 50-point rise in interest rates will bring down electricity prices. In fact, the way we are going is that Eskom will have no customers left, much the same as Prasa - all dressed up and nowhere to go.
According to The Consumer Protection Act, several regulations are blatantly abused on a regular basis. One such is the following: “(1) For purposes of section 14(4)(a) of the Act, the maximum period of a fixed-term consumer agreement is 24 months from the date of signature by the consumer - (a) unless such longer period is expressly agreed with the consumer and the supplier can show a demonstrable financial benefit to the consumer.”
Cell phone operators and other service providers, such as fibre networks, have the ability and religiously make use of their ability to suspend their services should they not receive payments on time. However, they keep on billing the consumer for a service not provided. Irrespective of the term of an agreement, if the service provider can suspend the service, the payment obligation should also stop as there is no demonstrated benefit to the consumer.
We are near the point where consumers will defend themselves against Eskom on the same grounds. The little electricity that trickled through did not keep the food fresh in the refrigerators, and Eskom’s failure was the reason for the failure of the company to keep its doors open. Yet, Eskom approaches the Treasury for relief on reporting on irregular and wasteful expenditures to attract an audience after providing billions in the bailout in the budget review as well as taking over a large portion of its debt. This does not even happen in a fictional movie, as it would just not have any credibility in the eyes of movie-goers.
The explanation from Treasury is nothing more than a capitulation of having lost control. The last Eskom financials that were reported this year was in respect of annual financial statements for the year ended 31 March 2021. It is, therefore, obvious that the results for the year ending 31 March will not be available before the next general election but way later in 2025. The entire world has moved to real-time reporting as we now live in a digital world.
But Eskom continues to hole the strings of the South African National purse. The latest face-saving exercise by Ismail Mononiat, the acting director-general of the Treasury, stated that although the Treasury acknowledged the public’s desire for strong measures against corruption, they will likely grant the exemption again following discussions with the Auditor-General and Deloitte, who audits Eskom, as reported in the Business Times.
“We are just withdrawing the exemption, for now, to allow us to engage further with the concerns that have come to us and to engage with the AG and auditors of Eskom,then we will finalise (our) position,” said DG. Issuing a such serious statement, then withdrawing it only within a week, and then threatening to reintroduce it reminds South African taxpayers and voters so much of the appointment of the former, short-lived Minister of Finance, Des van Rooyen.
Perhaps it is time to have a chat with tax experts and gauge how close the taxpayers are to a revolt and gauge what I expect to be: a waning tax morality in the country.
Overall, the decision-making process that the Treasury adopts should be designed to ensure that decisions are made in a fair, transparent, and evidence-based manner and that they serve the public interest.
They will be well advised to watch the taxpayer’s response and not only investors in bonds that may place too much reliance on milking the cow.
Kruger is an independent analyst.
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