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Nest egg raid or tool for development? Your guide to prescribed assets

Appearing before Parliament on Thursday, President Cyril Ramaphosa called for a “broad and wholesome” discussion around prescribed assets, which could oblige retirement funds to invest in state-owned enterprises.

The term ‘prescribed assets’ refers to a policy where the state obliges institutions such as pension funds and insurance companies to invest a part of their funds in state institutions or bonds.

For detractors, prescribed assets are a way for the state to raid retirement funds to prop up unattractive investments, such as heavily indebted state-owned entities. They warn that obliging funds to invest could artificially distort the market by diverting funds away from more appealing investments.

For supporters, the requirement to invest in specific state institutions or bonds is a quick way to boost the flow of funds to important entities, which can help grow the economy and create jobs.

2. Why are they in the news now?

The ANC resolved at its 2017 national at Nasrec – where Ramaphosa was elected ANC president – to investigate a “new prescribed asset requirement” to ensure that a “portion of all financial institutions’ funds be invested in public infrastructure, skills development and job-creation”. This call was renewed in its 2019 election manifesto.

The inclusion of the resolution – one of many in the party’s 2017 report – was an important new development. While prescribed assets had been floated in the past, there had not been serious moves to investigate their reintroduction after the apartheid-era Act on Prescribed Assets was done away with in 1989.

In June 2013, for example, in response to a Parliamentary question, then-Minister of Finance Pravin Gordhan said it was “not government policy to tell pension funds how to invest”.

Prescribed assets were not mentioned in resolutions from the ruling party’s 2012 Mangaung conference or in its 2014 election manifesto.

3. Does the government have an official prescribed asset policy?

No. This is why the ANC’s 2019 election manifesto is referred to so often.

In a speech before Parliament on Thursday, President Cyril Ramaphosa called for a “broad and wholesome” discussion around the issue.

Ramaphosa said the question should be how “various resources in SA” could be utilised to “generate growth in a purposeful manner”.

“In the end we will pursue policies that advance the interest of our people here in South Africa and also advance the interest of pension fund holders,” he said.

Opposition party the DA, in response, said that Ramaphosa’s answer was the “closest we have yet come to an official confirmation that asset prescription will be introduced.”

“This is an unacceptable and reckless policy proposal, shamefully taken straight from the apartheid government policy playbook,” said DA MP and the party’s spokesperson on finance, Geordin Hill-Lewis.

4. What are asset managers and economists saying?

Janina Slawski – principal investment consultant at Alexander Forbes Investments – noted in a report in June that if investors have to invest in specified assets, this will generally lead to “sub-optimal” investment outcomes.

Investors won’t be able to negotiate better terms for investment or “walk away” if they don’t think terms are favourable, she said.

“The introduction of prescription and the potential reduction in investment returns would leave members poorer, contrary to the positive changes achieved to date through the Retirement Reform initiatives,” Slawski warned.

“Trustees of retirement funds have a fiduciary duty to act in the best interest of members, and prescribed assets will limit the extent to which trustees can fulfil these roles.”

Slawski said that there should be a process of extensive consultation before requirements for the prescription of assets are enforced through legislation.

Magda Wierzycka, the CEO of Sygnia, said earlier in the year that prescribed assets were a “blunt instrument”.

She said that while they could fill the “immediate gap in the funding of bankrupt SOEs”, they would also “divert investments away from the funding of corporates that create jobs and contribute to growing the economy”.

“It will also affect the revenue derived from the taxation of such corporates, so what is taken to fill one bucket empties another,” she said.

Investec chief economist, Annabel Bishop, in a report released in July, said the prescription of assets could have implications for government debt and the country’s credit rating.

“A prescribed asset policy is dangerous in an environment where government and SOE finances have been materially deteriorated, as pensioners can risk losing their pensions, especially if further financial deterioration occurs,” Bishop warned.

“The persistence of pursuing prescribed assets as a government policy should be examined, as such a policy could have unintended consequences over and above that of further expanding SOE and state debt, and so engendering a credit rating downgrade for the country from Moody’s,” she added.

5. When will we have clarity?

With government calling for more discussion, and no policy papers out yet, it is too early to say, how, when, or if the state will proceed with prescribed assets.

ANC Alliance partner Cosatu has said that, in principle, both public and private funds should be required for investment in government bonds for the development of the state, with the caveat that there should be conditions attached to the investments to prevent looting and ensure depositors are protected.

Old Mutual, meanwhile, has said that the “devil certainly will be in the detail”.

“The definition of prescribed assets and the practical implementation thereof will be crucial to assure South Africa’s savers that their savings will remain secure. Until we have more clarity, we at Old Mutual Corporate Consultants do not believe that there is any reason to panic.”

Articel by News 24

Special advisor to the president answers 6 burning questions about the new NHI in South Africa

Dr Olive Shisana, the social policy special advisor to president Cyril Ramaphsoa, has addressed some of the key issues around the incoming National Health Insurance (NHI).

Shisana said that the NHI will not require mass sums of money, as some critics have claimed, and that any additional taxes will be far lower than medical aid premiums.

The public health specialist has also commented on questions around the potential for corruption within the new bill.

Shisana moved to answer several questions raised by think tank, the Institute for Race Relations (IRR) after the bill was published earlier this month.

How will it be funded? 

The IRR has stated that current costs for healthcare in South Africa exceed R450 billion, based on both public and private healthcare spending – for true universal healthcare, costs could at least amount to that.

Shisana said that the cost of NHI will require an additional R33 billion a year by 2025/26, and at most R55 billion over and above the R220 billion currently spent in the public health sector.

“This is because the state is already spending on the provision of comprehensive services in several facilities, however, there are gaps that need to be filled to optimize the services,” she said.

“The demand that the NHI Bill should indicate costs is unfair because costs change over time.”

A director-general in the Department of Health, Shisana said that the scheme will be funded by:

  • General tax revenue;
  • Reallocation of funding for medical scheme tax credits;
  • A payroll tax (employer and employee);
  • A surcharge on personal income tax.

“Only the minister of finance can pronounce on taxes, not the ministry of health. Therefore, it will be unconstitutional to indicate the tax levels in a health bill,” she said.

However, she said that the notion that the NHI needs large sums of new money is unfounded.

“The assumption made is that the NHI will not build on the current budget. What is expected to happen to the current budget?

“The additional tax will be far lower than the current amount paid on medical aid premiums. NHI will introduce efficiency gains that will expand health care to all,” she said.

What benefits will it cover?

The NHI Bill is not expected to provide an itemised list of thousands of services that will be provided, Shisana said.

“The services will be comprehensive. The state currently provides comprehensive services.”


Will the emigration of doctors impact the NHI? 

Shisana said that the migration of doctors is a global phenomenon and not limited to South Africa. “We value our health professionals and want to retain them,” she said.

“The health professionals are committed to improving this health system. This is why we involved them in designing the blueprint for improving the health system.

“Just like we have managed to get consensus with them on the Presidential Health Compact, we will find a fine balance that ensures their practice is sustainable while they provide quality services to all.”

Shisana said this is enforced in the NHI Bill which requires that services contracted should include both quality and acceptable price.

Will the health sector be able to administer the NHI?

The assumption that problems with the management of some of the state-owned entities (SOEs) will automatically transfer to the NHI Fund is incorrect, said Shisana.

“Many public entities are functioning very well, such as the Medical Research Council, Council for Industrial Scientific Research, National Research Foundation, and Council of Geoscience, Water Research Commission,” she said.

“They obtain unqualified audits, some of them clean audits. To assume that because Eskom, Prasa, Denel had problems, therefore, NHI will have a problem is not founded.

“This is because NHI will not be a state owned entity, but more of a public entity that operates under the Public Finance Management Act, audited by the auditor general.”

Shisana said that the NHI will also be much simpler to administer than medical schemes as the payment mechanisms are streamlined.

While medical aid requires submission of individual claims, the NHI Fund pays providers a capitation rate, which is a flat amount per person served by that provider, which may be adjusted for factors that affect the need for health services (such as age), the specialist said.

“The cost of administering NHI at national and regional levels is calculated at less than 2% compared to 10-12% in medical schemes on average.

“All the administrative savings that NHI Fund gains as a result of changing the payment mechanisms will be applied to improve the quality and quantity of the health services.”

Shisana said that the NHI will also pay hospitals using a fixed amount based on the diagnosis of the patient rather than on the basis of itemised fee-for-service bills.

“Instead of each patient submitting an individual claim, the hospital will submit a single consolidated claim, at the end of the month, listing the patients treated and their diagnoses,” she said.

“The NHI Fund, similar to the tried and tested United States Medicare, will use the Diagnostic Related Grouping (DRG), which categorises hospitalisation costs and determine how much to pay for a patient’s hospital stay.”

How will corruption be curbed?

Shisana acknowledged that corruption exists in both the public and private sectors, and that it needs to be rooted out and prevented while perpetrators are prosecuted.

“The presidential health Compact signed by the president, the minister of health and key stakeholders in health including the health professionals, labour, business and civil society has called for setting up a particular anti-corruption unit in the Department of Health,” she said.

“This unit will be backed by the Health Sector Anti-corruption Forum which includes the SIU, Corruption Watch, Section 27, NDOH, Hawks, Financial Intelligence Center, NPA, Council of Medical Schemes, etc.

“This latter body will ensure that a risk engine is established to detect and prevent corruption of the NHI Fund and use special court tribunals to try suspects. These measures will go a long way to deal with this scourge.”


Why are medical schemes being so drastically limited?

For NHI to be affordable, efficient and equitable, it needs a national resource pool that will be used to provide health services to all, said Shisana.

“This is an instrument to end the race, class, gender divisions that continue to plague South Africa. For example, 76% of medical scheme members are white, and only 10% are black africans.”

She said that if medical schemes are allowed to offer the same services as NHI, most of the specialists, doctors, dentists, and allied health professionals will simply provide care to the mostly white people and leave black African people with under-resourced providers.

“This maldistribution of human resources is at the root of the health care crisis,” Shisana said.

Article by BusinessTech

Government must look at using pension funds to generate growth: Ramaphosa

South Africa should investigate using worker pensions to fund finance development and infrastructure projects, president Cyril Ramaphosa said on Thursday.

Speaking in a parliamentary Q&A session on Thursday (22 August) Ramaphosa said that the proposal had the backing of the Congress of South Trade Unions(Cosatu), Reuters reported.

“We need to discuss this matter (prescribed assets) and we need to discuss it with a view to actually saying what is it we can do to utilise the various resources in our country to generate growth in a purposeful manner,” Ramaphosa said.

“We are facing a situation where our developmental needs are enormous, and in a number of other places pension funding is utilised for developmental purposes, for infrastructure and quite often those pension funds make good returns out of infrastructure developments.”

In an interview with the Sunday Times earlier this week, a top ANC official said the party is looking at the possibility of using private and public pension funds to rescue the country’s struggling state-owned enterprises.

Enoch Godongwana, head of the party’s economic transformation subcommittee, said that the asset management industry currently has R6 trillion under management which should be borrowed by government.

Godongwana said using this approach to gather funds is better than going the International Monetary Fund (IMF) for a bailout.

“Why would you go to the IMF and the World Bank and go and raise money when we have sufficient savings in the economy which you can borrow, probably far cheaper, and probably with little exchange rate risk?”

Godongwana added that while the ANC is also currently investigating the use of prescribed assets, this is separate from raising money through pension funds.

“Borrowing from domestic markets is not prescribed assets, that is a separate investigation,” he said.

In its election manifesto published in January 2019, the ANC announced that it planned to investigate the introduction of prescribed assets on financial institutions’ funds to ‘unlock resources for investments in social and economic development’.

Article by Business Tech

Draft by-law to prohibit undesirable conduct on beaches ‘doesn’t make sense’

Cape Town – The City of Cape Town’s draft coastal by-law has Capetonians questioning how it would be implemented and pointing out that pre-existing by-laws need better enforcing.

The proposed by-law seeks to prohibit undesirable conduct, which includes that no person may in the coastal zone indecently expose their body, perform an indecent act or use foul language. It also states that no person may behave in an improper, indecent, unruly, violent or antisocial manner or cause disturbance.

It also gives the City more power over coastal facilities, including beaches, pools, promenades, showers, toilets, pavilions and tidal pools. It states that the City may regulate the number of people entering and using a coastal facility.

The City’s Mayco member for spatial planning and environment, Marian Nieuwoudt, said: “The intention of the by-law is not to be punitive with regard to foul language, but rather to create provisions that will enable the City’s law enforcement officers to intervene when necessary and to prevent any person from being verbally abused in public spaces on our coastline.”

She said it was to ensure that the public’s right of access to, and use of beaches as public spaces, was entrenched.

“The draft by-law is intended to create safer and cleaner beaches, free from litter and pollution, to protect sea life, improve safety and enforce the public’s right to access and enjoy beaches and sea indefinitely.”

Residents have weighed in, criticising some saying aspects presented in the proposed by-law “won’t work”.

Thabang Malebese: “No, it’s just stupid, they going to hire cops to sit and wait for someone to swear?”

Denise Thompson Schmidt: “There are many many other laws needing one could implement!”

Nicole L Jacobus: “More by-laws but nobody to police it doesn’t make sense. You just about see a law enforcement officer or metro police in our communities. Who comes up with these silly ideas… Already officials can’t even police cars parking on pavements where blind people walk. What a damn joke. When you call officials for people dumping they come three hours later so unfortunately this new by-law won’t work. Take the money, time and effort and strategise how we can get more passionate officers into the communities rather.”

Cynthia Bredenkamp: “Lol, is this the job creation Ole Pinocchio was talking about?? Because for just about every person on the beach you are going to need a monitor.”

Lynn Govender: “What BS.”

Chris Sebastians: “Another bylaw that no one will be able to police or successfully prosecute.”

Martin Badenhorst: “When the city council need to make money cause they have to drop water tariffs and water restrictions. So pathetic. Makes me want to go to the beach just to swear.”

Neilan Adams: “Insane. Too often people want their bread buttered both sides. Anti-poor? So you are saying the poor are foul-mouthed and ill-mannered?”

Aasiyah Adams: “When we at the coast, we will upload posts with foul language and our bikinis to your Facebook page and tag you with our location. It will make us feel better.”

Articel from IOL

Jail time for lying on CVs

Johannesburg – President Cyril Ramaphosa has signed into law tough new rules criminalising the submission of fraudulent qualifications or misrepresentation of education credentials.

Job seekers and prospective students who submit fraudulent qualifications or misrepresent them will now face up to five years in prison in terms of the National Qualifications Framework (NQF) Amendment Act 2019.

SA Qualifications Authority (Saqa) chief executive Joe Samuels told Independent Media on Tuesday that Ramaphosa signed the Act into law last Tuesday. The new law was published in the Government Gazette on Monday. According to Samuels, Saqa, which is responsible for advancing the NQF objectives, will study the Act and look very seriously parts that can be implemented immediately and do preparatory work for other aspects of the new law.

The Act is expected to come into effect on a date determined by Ramaphosa by proclamation in the Gazette and its provisions may have different commencement dates.

Five-year sentences, unspecified fines or both will be handed to people found guilty of making false entries in the national learners’ records database or are party to the falsification, dissemination or publication of a qualification or part-qualification of any person. Owners of bogus education institutions will also face jail time for awarding fraudulent qualifications.

”A person, an education institution or sk ills development provider is guilty of an offence if a person, the education institution or skills development provider claims to be offering a qualification or part-qualification registered on the NQF whereas that qualification or part-qualification is not so registered,” reads the statute.

Jail time also looms for those who falsely or fraudulently claim to be holding qualifications or part-qualifications registered on the NQF or awarded by an education institution, skills development provider, quality council or obtained from a lawfully recognised foreign institution.

The Act also provides for the establishment of a separate register of misrepresented or fraudulent qualifications or part-qualifications, which is expected to be published periodically and act as a deterrent. Local and foreign education institutions, their directors or board members falsely claiming to be registered and accredited may be ordered to close and be declared unfit to re-apply and re-register in the country or offer any qualification or part-qualification for a period not exceeding 10 years.

All organs of state, employers, education institutions, skills development providers and quality councils will be required to authenticate, before appointment or registration, all qualifications or part- qualifications presented to them for hiring or study.

There are three quality councils in the country and they are sector-based structures responsible for the development and quality assurance of qualifications. The Council on Higher Education is the quality council for the Higher Education Qualifications Sub-Framework, Umalusi (general and further education and training qualifications sub-framework) and the Quality Council for Trades and Occupations, which is responsible for the occupational qualifications sub-framework.

Article by LOYISO SIDIMBA and IOL

Draft by-law to prohibit undesirable conduct on beaches ‘doesn’t make sense’

Cape Town – The City of Cape Town’s draft coastal by-law has Capetonians questioning how it would be implemented and pointing out that pre-existing by-laws need better enforcing.

The proposed by-law seeks to prohibit undesirable conduct, which includes that no person may in the coastal zone indecently expose their body, perform an indecent act or use foul language. It also states that no person may behave in an improper, indecent, unruly, violent or antisocial manner or cause disturbance.

It also gives the City more power over coastal facilities, including beaches, pools, promenades, showers, toilets, pavilions and tidal pools. It states that the City may regulate the number of people entering and using a coastal facility.

The City’s Mayco member for spatial planning and environment, Marian Nieuwoudt, said: “The intention of the by-law is not to be punitive with regard to foul language, but rather to create provisions that will enable the City’s law enforcement officers to intervene when necessary and to prevent any person from being verbally abused in public spaces on our coastline.”

She said it was to ensure that the public’s right of access to, and use of beaches as public spaces, was entrenched.

“The draft by-law is intended to create safer and cleaner beaches, free from litter and pollution, to protect sea life, improve safety and enforce the public’s right to access and enjoy beaches and sea indefinitely.”

Residents have weighed in, criticising some saying aspects presented in the proposed by-law “won’t work”.

Thabang Malebese: “No, it’s just stupid, they going to hire cops to sit and wait for someone to swear?”

Denise Thompson Schmidt: “There are many many other laws needing one could implement!”

Nicole L Jacobus: “More by-laws but nobody to police it doesn’t make sense. You just about see a law enforcement officer or metro police in our communities. Who comes up with these silly ideas… Already officials can’t even police cars parking on pavements where blind people walk. What a damn joke. When you call officials for people dumping they come three hours later so unfortunately this new by-law won’t work. Take the money, time and effort and strategise how we can get more passionate officers into the communities rather.”

Cynthia Bredenkamp: “Lol, is this the job creation Ole Pinocchio was talking about?? Because for just about every person on the beach you are going to need a monitor.”

Lynn Govender: “What BS.”

Chris Sebastians: “Another bylaw that no one will be able to police or successfully prosecute.”

Martin Badenhorst: “When the city council need to make money cause they have to drop water tariffs and water restrictions. So pathetic. Makes me want to go to the beach just to swear.”

Neilan Adams: “Insane. Too often people want their bread buttered both sides. Anti-poor? So you are saying the poor are foul-mouthed and ill-mannered?”

Aasiyah Adams: “When we at the coast, we will upload posts with foul language and our bikinis to your Facebook page and tag you with our location. It will make us feel better.”

Your pension fund is being eyed as SOE debt relief

Looting private pensions, whether under the guise of ‘prescribed assets’ or any other terminology, will be disastrous.

President Cyril Ramaphosa and the ANC are creating an environment unfriendly to business.

After punting the unaffordable national health insurance scheme, Ramaphosa has signed into law the National Credit Amendment Bill, or debt-relief Bill. And the ANC has revived plans to use your pension money to bail out failing state-owned enterprises (SOEs) such as Eskom, SA Airways and the SA Broadcasting Corporation.

These are just some of the reckless options touted. Don’t forget expropriation without compensation.

Ideologically, the ANC is allergic to the International Monetary Fund (IMF). A likely downgrade by Moody’s in November will make SA a candidate for an IMF bailout, with stringent conditions.

You’d think there would be some attempt to show we are serious about fixing the economy. Yet the remedies trotted out will make things worse. For example, ANC economic policy head Enoch Godongwana told the Sunday Times it would be better to tap into R6 trillion assets now being privately managed than to approach the IMF or World Bank.

That’s a scary prospect not only for pensioners, but also for anyone contributing to a pension fund. Our badly managed SOEs have voracious appetites for taxpayers’ money. Despite much talk, none of them is turning around.

Ramaphosa is unable to ensure tough measures are taken. Looting private pensions, whether under the guise of “prescribed assets” or any other terminology, will be disastrous.

Politicians enjoy spending other people’s money, whether it comes from taxpayers or from private sector assets, such as pension funds. Yet money is not the solution to our SOEs. They all require restructuring to become sustainable.

If we get that right, investment will flow in. However, instead of allowing business to flourish, the governing party is trying to impose its uneconomic views. Banks, in particular, are feeling the squeeze.

According to Business Unity SA president Sipho Pityana, banks already have about R1 trillion invested in SOEs. He told Business Times there is a risk that banks may stop lending, or they may increase interest rates on loans to government.

The new law on debt relief will also increase pressure on banks. The National Credit Amendment Act allows for consumer debts to be scrapped if the person’s gross monthly income is not more than R7,500, and they have unsecured debt of R50,000, and the National Credit Regulator has found them to be critically indebted.

The number of people whose debt is written off may turn out be minuscule, given the hurdles. However, the negative implications include fewer loans to those most in need – the poor.

In addition, debt write-offs may make it more difficult to encourage a culture of payment for municipal services. The finer details of applicable conditions are already blurred amid a clamour for debt, in the expectation that such debt will be written off.

Through bailouts, SOEs have, in effect, had their debts repeatedly written off. So, too, have many folk who refuse to pay for services.

Yet, ultimately, debt must be paid somewhere. That’s why the ANC is eyeing your pension fund.

Prescribed assets: What government could do with your retirement savings

  • The ANC’s economic policy head said the party is investigating using prescribed assets to avoid an IMF bailout.
  • Prescribed assets will force SA asset managers and pension funds to invest in the country’s bonds and state-owned-enterprises.
  • The last time South Africa had prescribed assets, the apartheid regime forced retirement funds to invest half of all savings in government bonds.

ANC economic policy head Enoch Godongwana made headlines over the weekend when he said the party is investigating the use of prescribed assets for pension funds – as a way of avoiding getting an emergency loan from the International Monetary Fund (IMF).

Godongwana told the Sunday Times that the government could use this option to help fund, among others, embattled state-owned entities (SOEs).

The South African state is struggling with a growing debt problem, which now accounts to close to 60% of the country’s GDP.

Here’s what you need to know about prescribed assets:

What are prescribed assets?

It’s just a way of saying that percentage of your retirement savings will have to be invested in bonds issued by the South African government and state-owned enterprises like Eskom.

This will give them a reliable stream of money to fund their activities and help them repay their debts.

Old Mutual, one of the country’s largest asset managers, said assets are often prescribed where “there isn’t sufficient demand for them based on their investment merits”.

The ANC mentioned prescribed assets in its 2019 election manifesto in January, saying it will “unlock resources for investments in social and economic development”.

The ANC’s Godongwana estimates that there is over R6 trillion worth of assets held by assets managers in the country.


How will it work?

Current legislation already stipulates that 60% of retirement savings (retirement funds, pension schemes, provident and preservation funds) have to be invested in South African assets, 30% should be invested offshore and a further 10% elsewhere in Africa.

Only 75% of your savings may be invested in the shares of companies. The rest must be in “safer” investments like cash or bonds.

But there are no rules about which bonds or companies your asset manager has to choose. This will change with the return of prescribed assets.

The last time South Africa had prescribed assets, between 1956 and 1989, half of all retirement savings had to be invested in government and parastatal bonds.

How will you be affected?

Petri Redelinghuys, a trader and the founder of Herenya Capital Advisors, says prescribed assets will take a “small haircut” off the retirement savings of someone currently working. This means their retirement savings will be worth slightly less, and they may be able to recover.

“However, if you are already using your pension and get a small haircut on the R2 million you have in pension funds, it might mean that you don’t have enough money left to live from,” Redelinghuys said.

“And, if SOEs do default it will mean that your entire pension savings might disappear.”

An IMF bailout, of course, could also wreak havoc on your finances. It will have devastating effects for the country, including higher taxes, privatisation and widespread public retrenchments.

“For the investment community, prescribed assets, however, creates a lot of uneasiness which might reflect in reduced foreign direct investment and see capital leave the country.”

“An IMF bailout will be bad for South Africa, but prescribed assets will be equally as bad.”

Articel by James de Villiers , Business Insider SA

Civic organisation elated Nersa’s probing City’s electricity tariff increases

Cape Town – The National Energy Regulator of South Africa’s (Nersa) investigation into the City of Cape Town’s electricity tariffs has been welcomed by civic organisation Stop CoCT, which had lodged a formal complaint on the metro’s current charges structure.

Nersa spokesperson Charles Hlebela said the regulator had received numerous complaints over the tariffs and “is looking into the matter”.

Stop CoCT had laid a formal complaint with Nersa about the City’s electricity tariff structure and the changes made to it since 2016, the body’s Sandra Dickson said.

According to Dickson, the complaint was lodged by Stop CoCT on behalf of more than 13 200 members of the group.

“The City claims an 8.88% increase for the respective blocks, but the effect of the General Valuation (GV2018) property valuation is not reflected in this increase. The effective increase to a vast number of households is well over 8.88%,” Dickson said.

“People whose properties are now valued over R400 000 as a result of GV2018 not only lost their free units, but their tariff jumped from R1.10 to R1.99 overnight. This represents an increase of more than 80%,” she added.

“In the Home User category, the increase implemented is 15.4% higher than approved by Nersa. In the Life Line block, (the City) implemented 10.7% higher than what Nersa approved.”

Nersa confirmed that it had approved the tariff hike, which has seen consumers pay up to R1.8532 per kWh since the start of the month. City spokesperson Luthando Tyhalibongo said: ‘‘The City’s tariff increase is 8.8% vs Eskom’s more than 15%.

“All money goes towards service provision and to assist indigent residents. The City’s increase has remained below that of Eskom’s consistently.’’

Artilce by LISA ISAACS and IOL

Dipping into state savings for NHI a risky gamble, pundits say

Also, ‘the constitution does not empower government to set aside South Africans’ healthcare choices in favour of its own preferences’.

Pundits have highlighted several legal stumbling blocks likely to arise from the enactment of the National Health Insurance (NHI) Bill.

The various funding streams the Bill proposed included some which could raise constitutional problems as the law refers to property rights, according to Intellidex analyst Peter Attard Montalto.

The Bill would likely see private medical aid reserves expropriated to the benefit of a National Health Fund and would also reallocate funding for medical scheme tax credits.

“It raises the property rights question and the fear that it would in effect be expropriating funds from bond savings. Ultimately, Treasury would probably block this. It would probably be viewed as unconstitutional,” said Montalto.

He added that such a move would also be seen as a risky gamble.

“The understanding that we have is that wherever you have a stack of savings like that, they are somewhat ripe for the taking. But it is considered a huge risk … it is a one-off source of money.”

The Free Market Foundation (FMF) raised the issue of one’s constitutionally enshrined right to choose whether to receive private or public healthcare. This was because while the NHI would not preclude the use of private healthcare, it could result in this being too expensive an option, thus forcing South Africans to seek care under NHI.

Martin van Staden, the FMF’s head of policy, argued that the right to healthcare as given in Section 27 should also be read in the context of Section 1(a) of the constitution, which dealt with freedom of choice.

“The constitution does not empower government to set aside South Africans’ healthcare choices in favour of its own preferences.

“Indeed, the best interpretation one can assign to Section 27 is that government must fund the healthcare services of the poor, something the NHI assuredly does not do,” he wrote in a statement.

The NHI made it impossible for South Africans to continue to have comprehensive medical aid, van Staden lamented.

The NHI also left it up to healthcare providers to deny patients treatment should they decide there was no medical necessity or if there was “no cost-effective intervention” for the condition.

According to DA leader Mmusi Maimane, NHI’s centralisation of healthcare provision removed the freedom of choice as well as competition. He said it effectively created a new state-owned enterprise, the NHI Fund.

In the context of an estimated R1.4 trillion worth of state funds lost through looting, mainly from other state entities, he suggested that the NHI Fund would be vulnerable to state capture.

Articel by Simnikiwe Hlatshaneni and The Citizen