BY DR LPHM MTSHALI MPP
LEADER OF THE OFFICIAL OPPOSITION KWAZULU NATAL PROVINCIAL PARLIAMENT

PIETERMARITZBURG: 13 SEPTEMBER 2007  

Honourable Speaker, 

South Africa has since 1994 achieved a considerable degree of macroeconomic stability. A great deal of the credit for this goes to the Minister of Finance and the IFP does not shirk from saying so. Conventional wisdom informs that such advances - as we have made during the past decade - create opportunities for real increases in expenditure on social services and reduce the costs and risks for all investors in the economy.

While the ANC government has increased social expenditure quite steadily, these additional resources have not been utilised effectively and efficiently precisely because the ruling party has failed to reduce the costs and risks for all participants in the economy, whether domestic or foreign. What still impedes economic growth and foreign investment in South Africa today are restrictive labour laws, the slow pace of privatisation, and the unreasonable cost of government.

Overall government expenditure for infrastructure spending will total some R410-billion between 2007 and 2010. Of this, about 40% is to be spent by public enterprises. The list there is topped by Eskom with R84-billion to cover energy generation, transmission and distribution, and Transnet with R47-billion to go towards harbours, ports, railways and petroleum pipelines.

We in the IFP have no doubt that such a vast amount would be spent more effectively and efficiently out of the hands of our notoriously unaccountable state parastatals. The kind of development the Minister envisages in his address would be more realistic and indeed more secure in the hands of privatised enterprise with the lines of accountability, so precious to the Minister, more clearly defined and enforced by the market, rather than party-political forces.

This brings me to the most significant - and also most worrying feature of the Minister's address - namely his institutional approach to democracy. The Minister maintains that our democracy is functional merely because our democratic institutions are in place. This is a dangerous fallacy. The ANC is clearly indifferent to the individuals who man our democratic institutions and, so to speak, bring them to life.

Honourable Speaker, the countless civil servants who now staff government departments without the required qualifications, experience and work ethics are where they are courtesy of this government's failed employment policies. They represent the greatest risk to our democracy and economy, both of which they continue to discredit and mismanage.

Another disturbing phenomenon we are currently witnessing is a wholesale transfer of competencies from provincial to national level. It is against this backdrop that a debate is raging inside the ruling party about the future of South Africa's nine provinces. So far the debate has been inconclusive. The Honourable Minister may be interested to know that despite an uncertain future this very Legislature faces, the ANC in KwaZulu Natal has gone ahead with plans to build for it an additional new multi-million rand venue!

The latest example of centralisation is a new service delivery agency, mooted by the national Department of Education, with responsibilities for building classrooms and other infrastructure. I, personally, have a lot of time for the Minister's frustration with the snail pace of provincial infrastructure delivery. Some provincial government departments are, admittedly, hopeless.

But their inefficiency and ineffectiveness stem largely from the inadequate human resources at their disposal, rather than from the internal structure of South Africa's three tier system of government. Incompetence is certainly not restricted to our provincial departments where it may be merely more visible. It originates from the government philosophy which underlies recruitment.

Any system that entails such a wide-ranging distortion of the market forces as affirmative action, racial quotas and political appointments, opens an additional door to corruption. A most perfunctory survey across the civil service, provincial or national, will indicate that corruption is pervasive. Take housing subsidies - of all places in the KwaZulu Natal Department of Housing.

Of the 314 audited instances of applications for a housing subsidy in the 2004/2005 financial year, 239 applicants declared that they and their spouses were unemployed when, in fact according to PERSAL, they or their spouses were employed by the state and received a joint income of more than the threshold amount of R42,000 per annum at the date of declaration. The fraudulent subsidies awarded on this basis, amounted to roughly R3.5-million.

Honourable Speaker, let me give you an even better and more recent example. A sample survey conducted last year by the Auditor-General revealed that during the ten months between March 2004 and January 2005 as much as R300-million had been paid in housing subsidies to 50,000 fraudulent beneficiaries across the nine provinces. This was no doubt merely the tip of the iceberg.

It was also revealed that more than 25,000 duplicate subsidies - that is more than one subsidy to the same applicant - had been approved. As many as 6000 subsidies had been granted to applicants younger than 21, which, at the time, was against the regulations. If this is not a monumental and cynical waste of the taxpayers' money, then I do not know what is!

And this is not even the whole picture. In five provinces alone since 1994, a total of 2,554 people died while waiting for their housing subsidies to be approved. Apparently thousands of legitimate applicants do not live long enough to see their housing subsidies approved while thousands more are granted the same subsidies on fraudulent grounds.

This assessment leaves us with a definite Orwellian aftertaste. The Department of Housing, which is supposed to see to the country's housing needs, is itself awash with housing subsidy fraud. The Department of Public Service, which is supposed to oversee the proper functioning of our civil service, has itself one of the most alarming vacancy rates. Similarly, a string of self-proclaimed "pro-poor" budgets have left us, in KwaZulu Natal and elsewhere, with what appear to be pockets of development in an enduring sea of poverty.

Honourable Speaker, I feel obliged to draw comparison between the past and present allocation and utilisation of the state resources in the context of economic development in KwaZulu Natal. Seventeen years ago, in 1990, KwaZulu Natal was home to 23% of South Africa's population, the region had the highest dependency ratio, that is the ratio between the employed persons and their dependants, in South Africa, and also one of the lowest levels of urbanisation in the country.

* Yet, during the years 1970 to 1990 KwaZulu Natal had the second fastest level of economic growth amongst the country's nine regions.

* Yet, manufacturing grew faster in KwaZulu Natal during this time than anywhere else in South Africa.

* Yet, KwaZulu Natal's strong performance in GDP per capita growth relative to the other regions was achieved through strong growth in manufacturing output and in community health and education services output.

All this was achieved under a financial regime of gross under-funding. Having achieved so much with such limited resources, the erstwhile KwaZulu Government, led by Prince Mangosuthu Buthelezi as Chief Minister, must have done something right. I will tell you what it was. Over-spending, fruitless and wasteful expenditure, mismanagement and fraud as we know them today, were virtually unknown then.

Inkatha understood governance as a selfless service to the community. This government - for all its noble efforts and there are many of those - is, by comparison, more interested in self-promotion at the expense of service to the community.

All this suggests that the bulk of available state resources is secondary to the way these resources are used. Given the disproportionately higher level of state resources available to this government, this comparison, based on a 1992 study by Deloitte & Touche, further shames this government as largely inefficient and ineffective.

I thank you.