Thank you House Chairperson, "state-owned entities, SOEs, pose a very serious risk to the fiscus," Finance Minister Tito Mboweni said. Allow me to quote from a section of the Budget Speech delivered earlier this year:
Funding requests for the SA Airways, SAA, the SA Broadcasting Corporation, SABC, Denel, Eskom and other financially challenged state- owned enterprises have increased, with several requesting state support just to continue operating. Isn't it about time the country asks the question: Do we still need these enterprises?
Mboweni asked the National Assembly. Indeed Minister, do we still need these enterprises?
Government guarantees to state companies are at more than
R450 billion, that's just over $36 billion; this is according to the National Treasury data. The state's exposure to this increased to 64,5% in the past fiscal year from 54,4% as companies drew in on their guarantees.
According to a statement made by the SA Reserve Bank, and I quote:
Financial stability centres on the ability of state-owned entities to rollover debt and achieve financial consolidation, should state-owned entities fail to roll over debt, the government would be liable and might not be able to honour such debt.
The Minister of Public Enterprises, Pravin Gordhan, announced in Parliament in June, this year that a lender would pay the remaining 15% of salaries, owing to Denel employees as Denel was only able to pay 85% of salaries to its staff that month. This is merely a temporary bandage for an entity that, quite frankly, is on the brink of collapse.
This unidentified lender is not a get-out-of-jail-free-card but a temporary reprieve.
Today, I sat in on the Standing Committee on Appropriations. The Chairperson of Eskom, Mr Jabu Mabuza, said something that I found astonishing. He said: "Pray for luck to keep the lights on." This is from an entity that has been hollowed out by state capture and wait for it, it has a debt of over R440 billion and counting. Now someone said to me one day; you know, we are so used to talking about billions that we forget the concept of how much a billion is. Well, to put it in context, if you started counting the seconds now, it would take you over 32 years to count to a billion; let that sink in.
South Africa has hundreds of SOEs, many of them are either completely dysfunctional, bankrupt, or frankly serve no purpose whatsoever other than the lining of the pockets of the connected few. Many of the hundreds of SOEs also duplicate functions and should simply not exist. They are sucking money from the fiscus and pose a great threat to the South African economy. From bailouts to guarantees; here is just a slight glimpse at the
frightening state of SOEs: the SAA's debt is R21,7 billion; Denel's debt is R3 billion with two bonds due in September totalling R2,7 billion; and Eskom's debt is R440,6l0 billion.
State-owned entities are archaic in their design and they should not be used for economic development, it simply does not work. The economy should be growing through supporting a free market system which gives South Africans a choice, which gives South Africans opportunity and would create a conducive environment for national and international investment.
When the money is finished, it is finished. It is very easy for billionaires to make bold statements that the Government Employee's Pension Fund is taxpayer's money anyway. Three and a half million South Africans have worked diligently their whole lives as civil servants and now face the risk of utter destitution in their old age because the government wants their pensions to bail out failing SOEs.
It is very easy to be a socialist with other people's money. It is very easy to have communist leanings when you have millions
of rands that you deal with are not your millions. The fact of the matter is this; it is our job to be the custodians of the South African coffers. Simple economies dictate that you cannot spend more than you have without dire consequences. You cannot grow an economy when you are held ransom by unions who cripple SOEs when they feel their demands are not met. You cannot grow the economy when your energy supply is not completely secure, and you cannot grow the economy by pouring billions and billions of rands into failing entities.
Now is not the time to throw money at the problem, now is the time to trim the fat. We cannot afford to continue with the status quo, where a government spends billions on bailing out SOEs instead of spending money on job creation initiatives and service delivery.
It is time to be pragmatic, and to stop playing politics. It is time to set political ideologies aside. State-owned entities represent some of the biggest monopolies in the South African economy, and by conducting a comprehensive review; government would be providing citizens with a clear indication that they
are willing to start the process of structural change to protect our economy from further financial losses.
We simply cannot be sentimental about SOEs. The country is in crisis, it therefore requires urgent reforms, and the absolute protection of pension funds. This is nothing more than the new potential state capture. Mark my words; this battle too shall be fought and shall be won. [Time expired.] [Applause.]