Jun 15, 2012
The intriguing silence of business on user-pay principleBack
Africa|Defence|Projects|System|Waste|Africa|China|India|South Africa|United States|E-toll|Media Briefings|Infrastructure|Pravin Gordhan|Waste
© Reuse this
Finance Minister Pravin Gordhan has been left to lead the defence through court papers, as well as during media briefings relating to the proposed implementation of an electronic toll collection system to secure fees from users to pay for Gauteng’s upgraded motorways.
For him, it is about ensuring that the country does not foreclose on any of the possible options available to fund an investment programme that is arguably emerging as South Africa’s main growth engine in a context of serious global economic uncertainty.
Without doubt, the outlook in many European economies, which remain key trading partners, appears to have worsened materially over the past few months and many believe any economic recovery could involve five to ten years of painful convalescence. Growth rates in countries such as China and India are also slowing and there is also rising concern that the so-called 2013 ‘fiscal cliff’ in the US could put that vital economy, and by extension the rest of us, even further on to the back foot.
Gordhan has, thus, called for the e-toll emotion to be set aside and for South Africans to grasp that there are only “limited sources of funding from which we can pay for the things we desire”. User charges, he asserts, are a crucial element and have to be included in a mix that also comprises direct fiscal allocations, debt raising and public–private partnerships (PPPs).
“It is very important that the principle of user-pay and of user chargers is not undermined through this process and through the emotion, and that we are able to sustain our ambition to provide the kind of infrastructure that will impact positively not only on our economic potential, but also on the environment in which our people live,” Gordhan has argued.
One would have thought that organised business would have jumped to support Gordhan in this, particularly given that business is the champion of the PPP concept and PPPs can generally only take place in an environment where a user-pay ethos prevails.
Instead, business has been all but silent, having been seemingly swayed by those elements within its structures that prefer a payment method premised on adding to the overall tax burden.
Such a reaction is arguably only natural, given the vitriol surrounding e-tolling. But business organisations should not be surprised by future backlashes against PPP projects that will, no doubt, be premised on the user-pay principle.
Possibly, business has reached this seemingly contradictory position owing to the breakdown of the trust relationship between it and govern- ment.
Business has lost faith in government’s ability to deliver on its policy, is frustrated by the lack of PPP progress and is angry at the high level of waste and corruption surrounding the public sector and its projects.
In other words, a mist of mistrust has descended and instead of seeking to see through it, business has opted to settle into an oppositional stance that may well undermine its long-term interests.
Edited by: Terence Creamer© Reuse this Comment Guidelines
Other Editorial Insight News
Updated 7 hours ago Responding in writing to a recent Parliamentary question by the Democratic Alliance, Transport Minister Dipuo Peters has provided an update for each of the country’s 13 bus-rapid transport (BRT) systems, noting that each network is at a different stage of...
Updated 7 hours ago The South African Real Estate Investment Trust (SA Reit) Association has called on the Competition Commission to intervene in undesirable exclusivity clauses in retail leases that were allowing retailers to stifle market share. The association’s members, which...
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
This Week's Magazine
Multinational semiconductor chipmaker corporation Intel announced its national campaign to further acquire partners to drive its She Will Connect programme, an initiative that aims to expand digital literacy skills to young women in developing countries, further into...
South Africa's MeerKAT radio telescope array programme should get back on schedule within a few months. This assurance has been given by SKA South Africa (SKA SA) associate director: science and technology Prof Justin Jonas. Early last month, Science and Technology...
The Passenger Rail Agency of South Africa’s (PRASA’s) Metrorail service will remain a subsidised service following its current multibillion-rand rolling stock, station, depot and signalling upgrade programme. PRASA group CEO Lucky Montana has allayed fears that...
The uncertainties around the remediation of affected areas as addressed in the Contaminated Land Provisions in the National Environmental Management: Waste Act No 59 of 2008 will possibly spark litigation and disputes between landowners and businesses, contractors...
South Africa is currently the largest component of the African Development Bank’s (AfDB’s) active portfolio in Southern Africa, comprising 62.5% of the bank’s $7.9-billion exposure to the 12-country region – the second largest beneficiary is Mauritius, which...