The mighty, powerful state

2015-02-01 21:18

You are not incorrect if you had to blame Eskom’s current problems on the legacy of Apartheid – 20 years ago the Government must have been under some kind of pressure to electrify the whole country and at the same time provide basic electricity and keep electricity tariffs as low as possible for the "un-electrified" majority. It would not also be as easy as to blame Eskom’s current operational failures on mismanagement alone.

Back then Eskom was at its highest level of reliability (thanks to sanctions that created an energy surplus). With a capacity reserve of 40%, the utility was ‘instructed’ to expand access to electricity – spare generational capacity helped create energy-guzzling industries who were offered long-term below-cost tariffs, electricity tariffs were kept so low and did not reflect the cost of future investment, and generational capacity expansion was shelved. Electrification and a “developmental” tariff (which is not cost reflective) became the Government’s primary focus in its developmental agenda. Up until now, the triple digit increase in electricity tariffs since 2005, the failure to do routine maintenance, and the refusal to lower barriers to entry or even privatize may have reinforced the Government’s developmental pursuits.

Government meddling has been blamed for the failures at some strategic state enterprises, namely Eskom and SAA. Policy confusion, revision and uncertainty compounded by too many heads in a growing government have only served to disrupt (and corrupt) operational management, dampen skills and destabilize or ‘politicize’ boards and managements. The macroeconomic objective of greater access, full employment and localization continues to remain the catchall objective of Government as they set out to pursue equity and affordability at the expense of efficiency and cost-effectiveness, and at the same time unwittingly botching and delaying policy.

In a response to the 2008 financial crisis and the increased vulnerabilities in the global economy, Trevor Manuel had once said that we need to disillusion people of the idea that we can have “a mighty powerful developmental state” capable of planning and creating employment for all. It was he who also once called governments “impotent” when it came to creating jobs.

But, much to surprise, the Government’s increasing developmental role has been reflective in its size – the Government is playing a bigger role in the economy and we are seeing the biggest gains in employment in its workforce since 2008 and an ever increasing, complicated chain of command.

Then again you will always hear contestants in the private sector saying they will only come to the party when the Government decides to show some leadership. True. We expect this, but why should the Government pick up the pieces of private business? But it’s not exactly the private sector’s fault because the Government chooses to stay stubborn and persistent in pursuit of its “mighty powerful” developmental agenda.

The Government’s role, in my view is two-fold. Notwithstanding the social wage (and the consequent bungles in cooperative governance and service delivery), it is the Government’s responsibility to create an enabling environment for the private sector to thrive, and put a stop in illicit trade, unethical practices, self-interested and anti-competitive behaviour.

We don’t live in a fascist, authoritarian, state-controlled economy. There’s a role for the Government and the private sector, and there’s no time for one party to give a little and expect more. In the spirit of Ubuntu we need to work together, because what is good for all of us is good for the economy.

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