Treasury undermines the Constitution with SAA appropriation bill

BailOut

With a national consensus developing around the needless existence of an unprofitable national airline, Treasury wanting to steamroll a ‘special’ appropriation bill through Parliament a month before the end of the parliamentary session, and less than a month before SAA’s R6.8 billion debt matures, is a slap in the face for South Africans.

You would be forgiven for thinking that South Africa is an economically-prosperous society the way state-owned enterprises ask for humongous amounts of money from the prodigal agent of the taxpayer, Treasury. Economically-prosperous, South Africa certainly is not.

Treasury’s bill is to authorise a R10 billion bailout to recapitalise South African Airways (SAA). SAA has a total of R6.8 billion worth of loans which mature on 30 September, and Parliament’s session ends in mid-October. Treasury is thus in a hurry to have the legislature pass the bill, so that the lenders can be repaid and so the company has “working capital” until March 2018.

Treasury director-general Dodo Mogajane recently said the department will approach Parliament “cap in hand”. But, for how long have South Africans been standing cap in hand in front of Parliament begging for relief from government’s insatiable thirst for more tax, more spending, more bureaucracy, and for it to reign in its compulsive misallocation of resources? If the taxpayer’s humble request for prudence is not readily acceded to, why should SAA’s?

Treasury has also been approached by the South African Broadcasting Corporation (SABC) seeking a R3 billion guarantee. Is this the radical economic transformation South Africa was promised – radically propping up failing companies?

Treasury’s hope that the SAA appropriation bill will be voted on and passed “on an urgent basis” is completely at odds with our constitutional commitment to participatory democracy, which requires giving the public sufficient time to formulate and deliver comments on proposed bills. Section 59 of the Constitution requires Parliament to facilitate public involvement in its legislative business. For this, section 57 provides that Parliament may make rules which give effect to participatory democracy.

This appropriation bill is economically-devastating, considering that R10 billion could be used to build a great number of homes, clinics, or even several Nkandla palaces. More pertinently, the taxpayer could even receive some of their money back. The opportunity cost is immense.

Treasury’s tone implies that passing this bill immediately is imperative. But it is not ‘emergency’ legislation, such as one would expect during a time of war. It is to bail out a corrupt remnant of the Apartheid era that has leeched the public purse for decades. Treasury’s haste is unjustifiable. Should SAA happen to die a painful death while Parliament is not in session, it would be no great loss to South Africa. The great loss would be reinforcing the idea that legislation can be enacted on a whim without the South African people being given a real chance to have their voices heard.

Government’s clinging to SAA is highly irrational. Our growth prospects remain poor and government is routinely unable to meet its tax revenue targets. Even if SAA gets the R10 billion, it is too late for any turnaround strategy to ever work for this ailing airline, and highly probable that, next year, Treasury will be back at Parliament, “cap in hand”, asking for more. Indeed, of the R10 billion, R6.8 billion is due to lenders and R2.2 billion is due to Standard Chartered from June. The R1 billion left over for working capital won’t get them far, in light of SAA losing R370 million every month.

It is time for government to start respecting the taxpayer’s money and the taxpayer’s intelligence. SAA is a company: let it succeed or fail on its own merit.

The money of the South African taxpayers is all SAA and the SABC are after – there are no two ways about that. Here, the Latin proverb, ‘Nihil de nobis, sine nobis’ (nothing about us, without us), is key. Public participation in and engagement with both the SAA appropriation bill and the SABC guarantee are not only constitutionally-mandated, but the natural right of the people.

This article was originally published in The Free Market Foundation and has been published with permission.

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