Economic review

RET: another acronym, representing the phrase radical economic transformation.

Some of the interesting things that emerge each year on budget discussions are statistics. Some of these which are disturbing are:

Our State debt to GDP ratio is currently around 50%. If one takes into consideration our state’s contingent liabilities for state-owned enterprises, one could add another 11 or 12% of GDP to that figure. It is said that state debt over 60% of GDP is indicative of a country being in a debt trap. To repay our national debt consumes just over 12% of our annual tax income, which amounts to R500m per day. Put this another way: this is the equivalent of 1000 RDP houses a day and 365,000 houses yearly, which is spent on debt repayment. If one considers that our Armed Forces are a shadow of what they were, that most of our fighter jets don’t fly, that the submarines we bought lie unused, then one must seriously question the wisdom of having spent past resources on defence and similar ventures which, with hindsight, were clearly vanity projects.
We are told that SAA (per our Minister: our national pride, revered around the world and which makes a remarkable contribution to the country’s GDP) will require another bail out. This is of a company which has just been punished by our High Court for uncompetitive conduct. Essentially what is happening is that taxpayers are paying an SOE to not only run at a loss but to undermine the private sector in doing so, and we are funding its fines also. Speaking of paying from one pocket into another….
Interestingly the shortfall in the collections by SARS more or less equal the deficit in our budget. From this perspective, the animosity between SARS and Treasury is understandable. If SARS collections had been as anticipated, most of the tax increases we face would not have been necessary.
A measure of the financial inequality in South Africa is the statistic that 6.6% of taxpayers contribute 50% of the country’s total personal income tax revenue.

Business review

Back to b….: Nudity is back, says Playboy. (Playboy had hardly become famous for its intellectual content. What were they smoking when they covered up?)

Tuks says that it is currently running at a deficit. This is the third major university warning that its current financial trajectory is unsustainable. The only result that can come of this is that changes to teaching style is made or that the quality of the education it offers will suffer. Most of us do not understand that our universities no longer produce top notch graduates. As an example, my son: he was awarded a cum laude honours degree in maths at Stellenbosch, arguably one of our better universities. Before admission into a Masters at Auckland he was forced to do a bridge year to bring him up to standard. Education is indisputably a way out of poverty. However, we have reached the point where we cannot academically compete with the developed world.

Not fair: malt beer is taxed at R4.30 per litre whilst African beer is taxed at 7.8c per litre. To h*ll with other taxes… this calls for a revolt!

Diesel discrimination: cities like Paris, London and Amsterdam have announced that all diesel vehicles will be phased out in the next four years owing to the nitrous oxide fumes that day release. This may well sound the death knell of especially small turbocharged diesel engines.

A self-proclaimed spiritual healer, life coach, reiki and crystal healer is seeking to crowd-fund a spiritual journey around the world to help people see the beautiful potential within themselves, learn self-love and express to soul expression. I believe we should all go.

I was most interested to see that the overseas Barclays shares rose the moment that bank signalled progress in its efforts to divest it of its African unit and sell off unwanted assets; locally it’s shares on the JSE dropped. This, of course, is an indication of how the market sees Absa/Barclays in Africa.

On a similar vein was an 8% rise of Shoprite, and a 4.9% rise of Steinhoff shares when the merger between them was called off. Clearly the market foresaw what Wiese had not.

That erstwhile icon of fashion stores, Stuttaford’s, has gone into business rescue.

Fedhasa has called for our Minister of Finance to remove structural barriers preventing participation of black people in our economy. It calls for the barriers to entry into food and fuel franchises to be dropped. What interested me is what they see as those barriers being: unencumbered cash requirements, a track record and high shopping mall rentals. One wonders how that union proposes to deal with what one would assume to be standard business requirements? After all, if you don’t have the business acumen and deep pockets you will simply not make it.

Property review

There was talk, this week past, of the EFF joining hands with the ANC in amending our constitution to provide for the expropriation of land without compensation. There are few who would argue against the unequal distribution of land in South Africa. Nevertheless, taking land without compensation is such a radical step that one trusts that these threats are merely part of the annual posturing that accompanies Sona.

The government plans to spend R 947bn in public sector infrastructure over the next three years. Of this R 63bn will fund public housing.

Practice review

Nothing much affecting practice came up this week. However, I have a wonderful video of counsel settling a matter on the steps of court. Ask me for a copy

Legal stuff

Weggooigoed is jakkalsp..: If I have quite an interesting article by prof Sonnekus (learned to the extent that I generally don’t understand what he’s saying) dealing with throwaway art objects which turns out to have immense value. Ask me for a copy – in Afrikaans.

If a child is brain-damaged after almost drowning in your fish pond, are you liable to pay for the future care of the child? Would your answer to change if those present were warned and knew about the fish pond? In essence, the question is whether there was a legal duty on the house owner to prevent harm to the child concerned and whether the steps taken were reasonable in the circumstances. I hold a very interesting article by Neethling which serves as an excellent exposition of our law of delictual liability on this topic. Ask me for a copy

Quotables

On democracy:

Democracy is no solution – it’s just 51% bossing the other 49% around. For G*d’s sake, Hitler was democratically elected! Democracy is just mob rule dressed up in a coat and tie.

Doug Casey

Democratic decision making is a means for finding and implementing the will of the majority; it has no other function. It serves, not to encourage diversity, but to prevent it.

David Friedman

Liberty is a well-armed lamb contesting the vote. The one pervading evil of democracy is the tyranny of the majority, or rather of that party, not always the majority, that succeeds, by force or fraud, in carrying elections. It is bad to be oppressed by a minority, but it is worse to be oppressed by a majority.

Benjamin Franklin

Comment

RET: we are told that without a radical economic transformation our democratic transition towards the vision of a non-racial non-sexist democratic and prosperous society cannot be achieved. I read a write-up on the subject by the SACP second general secretary and found that we agreed on the social issues in South Africa and, indeed many of the suggested solutions. Where we differ is on the reasons for the inequality.

Predictably Manyi, that seemingly ever present apologist for radicalism, has called for Molefe to become our new finance minister, saying that he has the requisite credential skills and so on. Whilst this may be true, he ignores the fact that serious, and, as yet unanswered questions have been asked regarding Molefe’s integrity. The mere fact that he has not been prosecuted does not make him clean; but perhaps this is of no consequence.

Lighten up

We will shortly be filling in tax forms to deal with our most expensive dependant – the government: a few thoughts:

Ambition in South Africa is still rewarded…. with high taxes.

Children may be deductible, but they are still taxing.

The guy who said that truth never hurts never had to fill out an ITR12.

Of course you can't take it with you, and with high taxes, lawyer's fees, and funeral expenses you can't leave it behind either.