Jun 15, 2012
The intriguing silence of business on user-pay principleBack
Africa|Defence|Environment|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 (150 word limit)
Other Editorial Insight News
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
Forest products group Sappi has confirmed the selection of its 25 MW biomass-to-power project, to be erected at its Ngodwana mill, in Mpumalanga, as a preferred bidder under the South African government’s Renewable Energy Independent Power Producer Procurement...
Information and communications technology (ICT) distributor DCC is making Windows- and Android-operating systems tablets available through retailers and education equipment suppliers to provide school children with affordable, high-performance education tools. The...
Another cement manufacturer is set to enter the Ugandan market, raising hopes that prices will come down and spur growth in the construction industry. National Cement, a Kenyan manufacturer, has unveiled plans to invest $195-million in a new manufacturing plant in...
With growth rates exceeding that in the developed world – at an average of between 4% and 5% between 2002 and 2014 – African countries provide investors with ample reason to tap into booming consumer demand says Manufacturing Circle executive director Coenraad...
The South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) decreased by 3.7 index points month-on-month to 89.1 in March.