John Kane-Berman
Many people who would not normally vote for the African National Congress (ANC) will do so on 8th May in the hope that Cyril Ramaphosa will lead the country into his promised "new dawn" of investment, growth, and jobs. Does the track record of his government substantiate this hope?
Mr Ramaphosa's actions against corruption are essential to pull the country back from the abyss. But they are not changes in policy (other than stamping out rather than participating in corruption). On the policy front, his government has made three promising shifts. One is to relax the moratorium on oil and gas exploration. The second is to exempt mining prospecting from black economic empowerment (BEE) demands. And the third is to require ballots before strikes are called. It also looks as if the government will refuse to bar the future use of coal for generating electricity.
These measures should encourage investment and growth. But they are outweighed by measures likely to do the opposite.
Topping the list is expropriation without compensation. Helping to prepare the way for this are regulations gazetted last November refining the extensive (and arbitrary) powers of the new valuer general. A Copyright Amendment Bill now awaiting signature provides for the expropriation of intellectual property. Draft regulations aim to increase the power of bureaucrats to override patent rights over medicines.
Property rights are further threatened by the ANC's proposal to investigate "prescribing" the use of private savings for government-dictated investments. Yet another threat arises from the diminution of foreign investors' rights by the misleadingly named Protection of Investment Act brought into operation last year.
Earlier this year Mr Ramaphosa signed the Competition Amendment Bill, which gives the government regulatory powers far beyond those necessary to promote competition. A draft Conduct of Financial Institutions Bill will give regulators extensive powers over financial institutions, including power to cancel licences and impose fines. A Financial Matters Amendment Bill will give regulators powers of search and seizure over auditing firms. Proposed amendments to the National Credit Act provide for the extinction of debt, so eroding the powers of credit providers to recover loans (and therefore their willingness to lend).
Mr Ramaphosa's government is also extending state ownership. Legislation empowering state-owned enterprises to establish banks has gone through Parliament, while the South African Reserve Bank is to be fully nationalised – a possible first step towards subordinating it to Luthuli House.
Other examples of the ANC government's appetite for more regulatory powers are proposals enabling car owners to have their vehicles serviced wherever they like instead of with the dealer who provides their warranties. Proposed amendments to tourism law will give the government regulatory powers over such entities as Airbnbs. The environmental affairs ministry wants to declare trout an alien and invasive species. Private adoption agencies risk being crippled by plans to forbid them from charging for their services, so encouraging a virtual state monopoly in the arranging of adoptions.
Although the third version of the mining charter recognises "the once empowered always empowered" principle, this falls away if mining companies want to sell their rights to others or need to renew them. Also, the black ownership threshold for the granting of new rights has been increased from 26% to 30%. Mining companies must also adhere to tougher procurement and other requirements. As from April last year, a great many more companies doing business with organs of state have been subject to more stringent procurement demands. Mr Ramaphosa has also said that the government's "localisation programme" will be extended.
BEE and employment equity demands are being widened and made more onerous, for example by recent declarations by regulators that various broad-based community trusts are no longer regarded as compliant with ownership rules and risk prosecution for "fronting".
Among other intrusions, a Medical Schemes Amendment Bill seeks to prevent medical aid schemes from offering different benefit options, in accordance with the health minister's aim of collapsing all medical schemes into a "state-run medical aid plan". This is designed to pave the way for the National Health Insurance system.
In education and skills, regulations have been gazetted in Gauteng reducing the powers of school governing bodies to determine admissions, while increasing the powers of the provincial education authorities. The list of skills for which the Department of Home Affairs is willing to grant visas is being narrowed (probably to limit white immigration). A carbon tax will come into operation later this year. Mr Ramaphosa's new national minimum wage is already in force.
Last week Thabo Mbeki said the ANC had "veered off course" – his euphemism for corruption. But, in extending the regulatory, arbitrary, and intrusive powers of the state wherever it sees an opening, the ANC is in fact keeping a steady course. Little that Mr Ramaphosa has said suggests that he intends to alter course to any significant degree, or even that he wishes to. To vote for his party in the hope that he will lead it on a liberalising change of course to encourage investment and growth is a triumph of wishful thinking over evidence.
* John Kane-Berman is a policy fellow at the IRR, a think-tank that promotes political and economic freedom. Readers are invited to take a stand with the IRR by clicking here or sending an SMS with your name to 32823. Each SMS costs R1. Ts and Cs apply.
https://www.politicsweb.co.za/opinion/the-ancs-python-policies
