Category: dearSA

JOHANNESBURG – SAA business rescue practitioners have approached the Unemployment Insurance Fund (UIF) to discuss the possibility of using the R100 billion surplus that the UIF controls to fund inevitable retrenchments at the troubled state-owned airline.

The rescuers, Les Matuson and Siviwe Dongwana, on Wednesday confirmed that they had held numerous meetings with the UIF to seek ways to handle the retrenchments, which were expected to be finalised within the 60-day consultation process stipulated in the Labour Relations Act.

On Wednesday, the rescuers were locked in meetings with the trade unions that represent SAA workforce to discuss the process.

An insider with deep knowledge of the happenings within SAA said retrenchments at the airline had become inevitable.

“There is just no way that the SAA workforce cannot be cut if we are serious about turning the airline around,” the insider said.

“The question now is the numbers (of those who would be retrenched.”

SAA first flagged retrenchments during the presentation of its restructuring plan in November, charging that it would need to cull more than 900 jobs to save about R700 million a year.

The airline started section 189 consultation processes with the unions, but the discussions were scuppered after workers went on strike demanding higher wages.

Matuson and Dongwana said they would continue to have discussions with other parties to seek solutions to alleviating financial challenges to both SAA and its employees “that may result from retrenchments during the business rescue proceedings”.

However, they said “no agreement whatsoever has been concluded with the UIF to make any funds available for the retrenchments of any SAA employees” at this stage.

The rescuers’ spokesperson, Louise Brugman, confirmed the meeting with the trade unions, but refused to comment further.

“We are not commenting on that at this point,” Brugman said. “But I’m thinking we are going to put out something this week, not so much on the UIF. We are not commenting on that UIF and DA (press) release.”

Another source said the business rescue practitioners were busy with their restructuring plan that had identified an extensive workforce that was not compatible with the airline’s operational requirements.

“The plan is still being workshopped internally, and the worry is that if they start communicating it in a public platform, they would have problems, especially with trade unions,” the source said.

“The timing is just not right. At a board meeting yesterday they were still working on the plan. This is Les’s plan, and if he says so many people must go, he would know the technical reasons for saying that.”

SAA employs 5 146 workers. In December, the airline was placed in business rescue following a shortage of funding for its operational expenses.

The national carrier has failed to submit its audited financial statements for two successive financial years. It posted a loss of R5.67 billion for the year to the end of March 2017.

Last month, SAA received R3.5bn from the Development Bank of Southern Africa to fund its operations.

The National Union of Metalworkers of SA and the South African Cabin Crew Association, which together represent about 3000 SAA workers, say SAA’s financial problems stem from its failure to manage its R25bn procurement budget, rather than excessive wage costs.

The unions have requested a meeting with SAA’s creditors so they can understand the rationale for their demands to cut jobs.

The UIF has a R100bn surplus that it wants to use to create jobs and train retrenched workers.

DA spokesperson Alf Lees said the discussions between the rescuers and the UIF were unwarranted.

“There can be absolutely no special deal between the bankrupt SAA and the UIF in order for the national carrier to get access to the UIF’s coffers,” Lees said.

BUSINESS REPORT

South Africa’s new Administrative Adjudication of Road Traffic Offences (Aarto) Act will be in full effect from June next year (2020), says Transport minister Fikile Mbalula.

Speaking at the launch of Transport Month in Gauteng on Saturday (5 October), Mbalula said that the new system will greatly improve safety on the country’s roads and help reduce fatalities.

Signed into law by President Cyril Ramaphosa in August, the act will introduce a new demerit system meaning all traffic fines across the country will now carry the same penal values.

However, not all infringements will carry demerit-points with roughly half of the infringements contemplated in schedule 3 of the Aarto regulations carrying no demerit points at all, according to Justice Project South Africa’s Howard Dembovsky.

“You may incur no more than 12 demerit points without your licence being suspended,” he said.

“On the 13th point, and for every point thereafter, your licence, operator card or permit issued in terms of road transport legislation will be suspended for three months for each point over 12.

“For example, if you incur 15 demerit points, the suspension period will be nine months.”

While the points and fines may change as the system prepares for a national roll-out, the tables below give an overview of how the points may be allocated as currently set out by the Road Traffic Infringement Agency (RTIA):

Effective land reform is still required, but the Draft Constitution Eighteenth Amendment Bill of 2019 (the Draft Bill) will needlessly undermine the property rights of all South Africans: from the 1 million whites with home ownership to the 8.5 million black, ‘coloured’ and Indian families who own houses too. It will also hurt the 17.5m black people with customary plots, and the thousands of black South Africans who have bought more than 6 million hectares of urban and rural land since 1991.

The Draft Bill has two key clauses. The first allows the courts to decide that ‘nil’ compensation may be paid for land and ‘the improvements thereon’ if these are expropriated for land reform purposes. Improvements include all fixed structures: from houses and office blocks to shopping centres, factories, hotels, and hospitals. The ANC has thus reneged on its earlier promises that expropriation without compensation (EWC) would be confined to land alone.

The second key clause gives Parliament the power to adopt, by a simple (51%) majority, any number of new statutes setting out ‘the specific circumstances’ where the courts may decide that ‘nil’ compensation should be paid.

This will vastly expand the instances in which EWC may apply. It will clearly pave the way for the enactment of the Expropriation Bill of 2019, with its vague and easily expandable list of six instances (already up from the original five) in which nil compensation may apply.

This second clause could also pave the way for a new statute vesting the custodianship of all land and improvements in the government – and stating that this vesting falls within ‘the specific circumstances’ where nil compensation may be paid. Under such a law, title deeds would ‘mean nothing’ (as the EFF has put it) and every individual and business would need a revocable land-use licence from the government for the homes or buildings in which they live or work.

The Draft Bill paves the way, in short, for the custodianship option that both the EFF and the ANC have long desired.  Two stages will be needed – first this Draft Bill and then an ordinary statute – but the custodianship goal will then have been achieved.

The Draft Bill has many other disturbing ramifications. For example, the ANC has repeatedly claimed that EWC will ‘return’ the land to ‘the people’, but this is not so. Land and improvements taken without compensation by the state will be kept in the ownership or custodianship of the government. Ordinary people will not gain individual title, but will at most be given ‘access’ to land on the terms set by the state.

In addition, the Draft Bill will do nothing to cure the ills afflicting land reform. As the Constitutional Court noted in the Mwelase case in August 2019, ‘it is not the Constitution, nor the courts, nor the laws of the country that are at fault’, but rather the massive administrative inefficiency within the state.

Other key constraints, according to the 2017 report of the High Level Panel of Parliament, include ‘increasing evidence of corruption by officials, the diversion of the land reform budget to elites, lack of political will, and a lack of training and capacity’. Important too is the state’s refusal to transfer ownership to emergent farmers, as this bars them from borrowing working capital from banks.

In the urban context, moreover, the Draft Bill will not address the inefficiency, corruption and poor policy choices that underpin persistent failures in state housing delivery. Municipalities lack the skills to service vacant land, while RDP houses are small, poorly located, and often so badly built that people have long been urging the government to transfer the housing subsidy directly to them, as they could do a better job of meeting their housing needs.

The economic fall-out from the Draft Bill is likely to be severe. Even without EWC, the growth rate in 2020 may be a paltry 0.5% of GDP, well below the population growth rate of 1.6%. Public debt already stands at some R3.2 trillion (61% of GDP) and is set to rise to R4.5 trillion (71% of GDP) by 2022. The budget deficit is likely to average 6.2% over this period, while tax revenues will be R250bn lower than projected. Business confidence is at a 35-year low, and capital and skills are fleeing.

The Draft Bill could also trigger a 10% reduction in fixed capital investment (capital formation), which is the life blood of the economy. Such a reduction could tip the country into lengthy recession, further reduce tax revenues, increase public debt, trigger additional ratings downgrades, push up interest rates, and cost tens of thousands of jobs.

Despite the enormous damage likely to result from the Draft Bill, its economic consequences have yet to be evaluated, as required by the government’s Socio-Economic Impact Assessment System (SEIAS). The Draft Bill should, at minimum, have been accompanied by a final SEIAS report setting out its likely costs and consequences – but this has been omitted.

The absence of a final SEIAS report makes it harder for the public to ‘know about the issues’ raised by the Draft Bill and to ‘have an adequate say’. The time allowed for written comments (from 13^th December 2019 to 31^st January 2020) has also been too short, given the four-week festive season when most people were away from work and home.

The ANC has now further undermined the public participation process by declaring that the Draft Bill must be amended to give the power to decide on compensation to the executive, rather than the courts. Judicial review of the executive’s decisions cannot be excluded, given the Constitution’s guarantee of administrative justice. But the power to review is more limited than the power to decide – which the ANC now wants to reserve for its own cadres.

The ANC’s demand seems calculated to demoralise people and make them question the value of making written comments on a text that may soon change. However, little could be more important than for all South Africans to use the little time remaining to voice their strong objections to the Draft Bill and the massive damage it is sure to cause.

Article by Daily Friend

The public enterprises minister is looking to save the 16,000 jobs dependent on the power utility.

Although not explicitly stated, the problem is that retrenching people from the power utility would be extremely difficult politically. The minister therefore appears prepared to consider the Cosatu proposal, which suggests that the PIC together with the Industrial Development Corporation and the Development Bank of South Africa should take over Eskom’s debt.

“Cosatu is saying: use the workers’ pension money to mitigate the debt burden that Eskom has,” said Gordhan.

“That is a great move on the part of labour to say we are part of the solution, not just antagonists to any change that is happening,” he added.

“Over the next month or two we are going to see fascinating exchanges, helping to get all the resources available in the country to save an important institution like Eskom and get it back to the levels of effectiveness and efficiency required.”

The rotters

Gordhan began his comments about the power utility by emphasising the extent to which Eskom has been hollowed out by state capture, and the size of the challenge faced in managing its recovery.

“Eskom was one of the institutions what was severely damaged by corruption,” he said. “From the outside, one often hears the narrative: replace the board and CEO, put in a few new managers and you’ll get it right.

“However, simply replacing the leadership at the utility is not enough. Expertise, processes and experience all need to be restored.

“What we’ve learnt in the last 18 months is the systemic effect of corruption is huge,” said Gordhan.

“In the case of Eskom, it breaks down the engineering disciplines – what the engineers call their engineering rhythms – and it gets the operations to decline to a point where basic disciplines are not followed any longer and need to be reintroduced.

“And in the process of corruption, the good people either leave or the good people are marginalised, and the rotters rise to the top.”

Prepare for long-term load shedding

Gordhan also indicated that part of the plan for turning Eskom around would likely involve ongoing load shedding.

“We need a clearer idea – and it’s being discussed quite intently – of what kind of rigorous maintenance plan we can put in place that is both sustainable and lasting,” the minister said.

“What we’ve had in the recent past is lots of money spent, but a decline in Eskom’s effective output.

“So who is making money out of all this maintenance work, and what kind of quality of maintenance are we actually getting?”

Part of the solution, Gordhan suggested, would be long-term load shedding to take pressure off the system.

“We are likely to go through a period when we are going to have load shedding,” he said. “But we want to be in a position where the calculations that we are making at an Eskom level are as accurate as possible, not speculative, and substantiated with proper data and statistics.

“When that is ready, a proper and formal announcement will be made so that businesses can prepare appropriately.”

The split is coming

The minister added that the process of splitting Eskom into three separate entities – generation, transmission and distribution – is underway.

“The decision has already been made and the process has already started,” he said. “The transmission entity will be a self-standing entity in one form or another within the next month or so.

“That is the beginning of the structural change that we need to undertake as far as Eskom is concerned.”

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Victory for participative democracy as Parliament extends deadline for public submissions on land expropriation amendment

24 hours after non-profit organisation DearSA announced Parliament’s IT servers were blocking public submissions on the proposed change in the Constitution to allow land expropriation, the Parliamentary committee responsible for the issue extended the deadline for comments to 29 February.

Earlier in the week, Parliament was adamant that there would be no extensions beyond the previously agreed deadline of Friday 31 January 2020 – despite requests from many other organisations and parties.

After much consultation with parliament, DearSA on Thursday morning received notification from the committee that it had changed its tune, giving the public another month to make submissions.

Within the last ten days, reports began surfacing of submissions that were being rejected by Parliament’s IT servers for “unacceptable content”. This triggered a public outcry and prompted participative democracy organisation DearSA – which offers a web-based platform for citizens to make official submissions – to approach Parliament to explain why certain submissions were being rejected.

DearSA founder Rob Hutchinson says Parliamentary IT servers may have spam filters set too high, but in other cases, certain email domains appear to have been blacklisted.

“We are pleased that the comment period has been extended. It may have been technical issues blocking submissions, but either way, it is unacceptable. When we inspected the blocked emails, we could not find anything offensive or unacceptable about the content. Parliament cannot appear to be censoring views – consciously or otherwise – on such a vital national issue,” says Hutchinson. “All of the blocked submissions we have seen have one thing in common: they are opposed to the Constitutional amendment allowing land expropriation without compensation”.

“This is, without doubt, the most serious Constitutional issue facing South Africa since the birth of democracy in 1994. It is vital that as many voices as possible are heard from all points of view on this issue,” says Rob Hutchinson, founder of Dear South Africa, who has so far facilitated more than 160,000 public responses to this amendment. 

More than 80% have come out against the amendment to the Constitution that would allow expropriation of land without compensation.

This compares with 57% who were against the proposed amendment when DearSA ran a similar campaign last year.

The web page for submissions can be accessed here: https://dearsouthafrica.co.za/constitution-eighteenth-amendment-bill/

Human rights advocate Mark Oppenheimer says Parliament must be seen to be observing the utmost transparency around this highly sensitive issue. He says it is well known that all embassies in South Africa are closely watching the manner in which Parliament is handling the land expropriation issue, and reporting back to their governments. 

Various groups have already threatened legal action over the land expropriation issue. “If Parliament is seen to be trying to smuggle the issue through without giving citizens a proper opportunity to have a say in the matter, this opens up new potential avenues of legal challenge,” says Oppenheimer.

–ENDS– 

Issued by: Dear South Africa

Contact: Rob Hutchinson: 0845574828

Email: rob.hutchinson@dearsouthafrica.co.za

DearSA is a registered South African non-profit which operates independently of government and free from any political party influence.

Johannesburg – The National Energy Regulator of South Africa (Nersa) has defended its decision to grant Eskom an increase of 5.23% instead of the 19.9% the power utility has applied for, saying it was acting for the interest of customers.

Advocate Rafik Bhana – legal counsel for Nersa – made these submissions when replying to Eskom’s submission that the Nersa’s determinations for 2018/2019 were invalid.

Nersa granted Eskom considerable revenue of R190 billion – which is R29 billion less than the R219 billion it wanted.

Now, Eskom has asked Judge Jody Kollapen to remit the issue to Nersa and within 60 days the energy regulator must allow the power utility to make fresh submissions.

Nersa, however, on Tuesday boldly rejected the proposal and asked the North Gauteng High Court in Pretoria to dismiss the application with costs.

Justifying his client’s submission, Bhana said: “Nersa carefully weighed the interests of Eskom and customers in this decision.

“Eskom does not seem to dispute that this balancing exercise is required. For example, Eskom accepts that it cannot apply for a full return in one year because its analysis implies a price increase of 63% which would (negatively) affect customers.”

He further highlighted that Nersa’s decision on the determinations was prepared by a group of highly skilled experts, after detailed and careful consideration and following rigorous public consultation processes which resulted in comments by an excess of 23000 stakeholders from private individuals, small energy users, intensive energy users, NGOs and environmental activists.

He said Nersa considered audit reports, management accounts, additional information from the power utility.

Bhana pointed out that Nersa sought and obtained external advice on the impact on the economy of various tariff scenarios and took into account customer comments that “Eskom risked a utility death spiral.”

“Eskom has been operating inefficiently and is grossly maladministered. It seeks to make the South African consumer to carry the burden of its maladministration and gross inefficiency.

“Nersa was not prepared to countenance this as it would have grave consequences for the South African public and economy,” Bhana said.

He said the inefficiencies in Eskom’s expenditure for its new build programme exceeded Nersa’s allocation of 241% in 2016/2017 financial year.

Bhana further submitted that Eskom’s consistent over-expenditure on what was allowed by Nersa had shown a lack of cost control measures by the power utility.

“It showed reckless disregard on Eskom’s part for fiscal discipline and in reaching its decision, Nersa considered Eskom’s unwillingness to implement stringent measures to contain costs. In light of this, Nersa has adjusted the expenditure taking this into consideration.

“Eskom also failed to self-correct, as it continued to pay bonuses amounting to 42% of its net profit despite the prevailing conditions, such conduct on its part shows an intolerable and selfish disregard for the public at large,” he said.

Nersa also applied to strike out Eskom’s main application saying the power utility had claimed in its papers that the energy regulator’s decision was made in bad faith.

Judgment has been reserved in both matters.

Political Bureau

South Africa’s new Administrative Adjudication of Road Traffic Offences (Aarto) Act will be in full effect from June next year (2020), says Transport minister Fikile Mbalula.

Speaking at the launch of Transport Month in Gauteng on Saturday (5 October), Mbalula said that the new system will greatly improve safety on the country’s roads and help reduce fatalities.

Signed into law by President Cyril Ramaphosa in August, the act will introduce a new demerit system meaning all traffic fines across the country will now carry the same penal values.

However, not all infringements will carry demerit-points with roughly half of the infringements contemplated in schedule 3 of the Aarto regulations carrying no demerit points at all, according to Justice Project South Africa’s Howard Dembovsky.

“You may incur no more than 12 demerit points without your licence being suspended,” he said.

“On the 13th point, and for every point thereafter, your licence, operator card or permit issued in terms of road transport legislation will be suspended for three months for each point over 12.

“For example, if you incur 15 demerit points, the suspension period will be nine months.”

While the points and fines may change as the system prepares for a national roll-out, the tables below give an overview of how the points may be allocated as currently set out by the Road Traffic Infringement Agency (RTIA):

Aericle by BusinessTech

JOHANNESBURG – The governing ANC party is making a stunning about-turn on the issue of land expropriation without compensation.

The party is ditching a key clause in the proposed bill it previously supported in Parliament.

The clause as it currently stands gives the judiciary power to decide on instances when no compensation should be paid.

Now suddenly, the ANC no longer supports that proposal.

Instead, the party now wants those powers given to the Executive led by the President and cabinet.

The Chairperson of Parliament’s ad-hoc committee on the constitutional amendment, Mathole Motshekga said there will be public hearings on the matter.

“We are saying that this is not an ANC process, other political parties must make their inputs. The people of South Africa…must make their inputs…,” Motshekga.

“We have the experience that the court processes are arduous. They take time, they require resources but the executive is a democratic government, elected by the people of South Africa, they represent the people of South Africa and they must govern but we are not excluding the role of courts but we are not giving the courts the first opportunity to decide, because that will last another 25-years and the people of South Africa cannot wait for another 25-years to get a resolution to this matter,” he added.

Article by ENCA

The ANC wants to ‘de-racialise our towns and cities and transform apartheid-era spacial patterns’, its secretary-general said.
At a press briefing on Wednesday at Luthuli House, African National Congress (ANC) secretary-general Ace Magashule outlined what was agreed upon at a lekgotla held on 19 and 20 January, following a meeting of the ANC’s national executive committee (NEC) on 17 and 18 January.

Magashule listed a number of the resolutions taken, which included the “strengthening of BEE and other policies to transform racial, patriarchal and monopoly ownership patterns in our economy,” as well as the endorsement of moving ahead with amending the constitution to allow for land expropriation without compensation.

The ANC secretary-general also discussed the ANC’s standpoint on the nation’s struggling state-owned enterprises, hinting that the party planned to fight privatisation of these companies, including national carrier SAA, which is currently under business rescue.

The Land Bank has become the first big state-owned company in SA to be relegated to junk status by Moody’s rating agency. The New York-based agency, which is the last remaining among the big three to rate SA as investment grade economy, said given government’s fiscal challenges, it expected less financial support for the Land Bank from the state.

The agency downgraded Land Bank’s long-term issuer ratings to Ba1 from Baa3. This is a notch below investment grade. It’s also a notch below SA’s sovereign rating, which the agency affirmed at Baa3 with a negative outlook in November, and also below Transnet and Eskom, who continue to enjoy a Baa3 rating from Moody’s, despite the latter’s debt and solvency woes. Land Bank’s short-term issuer ratings were downgraded to “Not Prime” from P-3.