Stop bailing out SOEs, ease VAT pressure on poor, urge Cosatu, Outa

COSATU and the Organisation Undoing Tax Abuse have urged National Treasury to stop bailing out ailing state-owned enterprises, and to consider privatisation instead.

During his maiden speech, Finance Minister Tito Mboweni announced that SAA would receive a bailout to the tune of R5 billion to help it settle its debt.

Appearing before Parliament’s portfolio committee on finance and select committee on finance yesterday to respond to the medium-term budget, Outa’s Matt Johnson said government could no longer afford to put more money into SAA while it made losses.

“SAA is no longer an asset, in simple terms. In the past five years, it is safe to say that it is almost beyond repair. Privatisation is a better option.

“Government has a lot to deal with already in terms of SOEs. SAA is the worst, despite the new leadership, too much damage has been done,” said Johnson.

The airline’s irregular expenditure came to R125.9 million and fruitless and wasteful expenditure amounted to R40.4m according to the AuditorGeneral’s report for the previous financial year.

The entity had failed to make a profit since 2011. The airline revealed a R5.6 billion loss for the year to March 2018, with revenue dipping R1bn below its forecasts for the period.

Cosatu’s parliamentary co-ordinator Matthew Parks told Parliament that the government needed to have a clear plan on how SOEs that are bailed out will continue to operate, and make revenue.

“The SOEs Eskom, Prasa, SAA, SABC and Denel pose a massive threat to the survival of the state.

“We simply cannot afford to continue bailing them out, and neither can we afford to allow them to collapse.

“Besides changing boards and bailouts, we have yet to hear a clear plan to sort the SOEs out; we have not seen forensic audits, business plans or funding models that will ensure the turn-around and survival of these SOEs,” said Parks.

He said the Mid-term Budget Policy Statement should have given a way forward to deal with battling SOEs, and Eskom’s plans to increase tariffs above inflation.

Cosatu also said it was disappointed at the efforts by the government to lessen the impact of a VAT hike on the poor.

In his speech, Mboweni said that the government would zero-rate sanitary pads, bread flour and cake flour.

However, Parks said the union was disappointed that this was the only effort made by government to assist the poor to cope with the VAT hike.

“Other tax hikes, petrol increases, declining public services, economic recession and rising unemployed were not addressed in the budget speech.

“Government cannot say it does not have money while it allowed millions to be looted. “Cosatu is compelled to reject government’s VAT concession as inadequate. There is money in the budget that can be redirected towards helping the poor,” said Parks.

Cosatu is compelled to reject government’s VAT concession as simply inadequate