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Umsebenzi Online

Volume 9, No. 17, 1 September 2010

In this Issue:


Red Alert

Funding the national democratic revolution: Harnessing our financial assets towards a new growth path

As we move towards the ANC’s NGC in Durban beginning on 20th September 2010, it is absolutely important that we review progress made towards the implementation of the 2007 Polokwane resolutions, especially those relating to the absolute necessity of moving our economy towards a more inclusive growth path. The main task facing our revolution at this point in time is that of urgently putting in place measures to bring about a new economic growth path that radically breaks away from the current semi-colonial growth path on which our economy rests.

The SACP is firmly of the view that one of the most important measures that needs to be adopted is that of directing both our public and private financial sector resources towards investing their funds towards this new growth path. It is therefore for this reason that once more, our own SACP campaigning must refocus energies on the accelerated transformaiton of the financial sector, both public and private.

The financial landscape has seen some changes since our launch of the financial sector campaign in 2000, though much still remains the same since then. Powerful resistance exists to the kind of transformation that would lead to meaningful improvements in the lives of the workers and the poor. Our major financial institutions - banks, insurance companies, investment and asset managers - are still largely owned and controlled by white capital, driven by profit maximisation for shareholders. We have gone some way, but not nearly far enough, in achieving our campaign goal to "make the banks serve the people", reducing the number of unbanked people by six million and increasing access to finance for low-income housing, small black businesses and farmers.

Regrettably, the financial sector by and large interpreted sector transformation and black economic empowerment as concluding once-off, narrow-based BEE deals with a small number of aspirant black owners who were politically well connected at the time. We have seen some progress in other areas of transformation - skills development, employment equity, procurement from small black businesses. However, we have not seen fundamental changes in how the financial sector as a whole contributes to national development initiatives that will benefit the majority of our people.

It is also important to note that our financial sector campaign launched in 2000 contained within it both ‘consumer issues’ (access to banking for all and regulation of the notorious credit bureaux) and much more fundamental issues about the ownership, investment priorities, and the radical transformation of the (class, race and gender) structure of the financial sector in our country. It is critical that we continue to focus on these two, but now with a much more increased focus on the broader developmental orientation and role of both the public and private financial sector.

Financing Development and Development Finance

One area that we identified in our original financial sector transformation campaign in 2000, but which we have in recent times neglected, is the transformation of the public Development Finance Institutions (DFIs) - those owned and controlled by government. The time is right to shine our transformation spotlight on the activities and investment mandates of the DFIs - the Public Investment Corporation, the Industrial Development Corporation, the Development Bank of Southern Africa (DBSA), the Land Bank, Ithala Bank, the Housing Finance Corporation, and a host of others. As we once more debate "Financing Development", we must have a special focus on DFIs.

Much as we need to intensify the pressure on the private sector to change the way it does business, we have a real opportunity at this juncture to succeed in our campaign to influence the way DFIs contribute to economic development. Indeed the transformation of the private financial sector is deeply interlinked with the role of the public finance institutions. Our efforts to force DFIs to play a more assertive and targeted developmental role are more likely to succeed in the wake of the global economic crisis, our own recession, the loss of over 1 million jobs and deepening poverty in our society that has shamefully become the most unequal in the world.

We must start the long-overdue national debate on whether the strategies and investment mandates of the DFIs promote the five priority areas of government`s development programme - decent jobs, education, health, fightin crime and corruption and rural development. Or are DFIs still locked in the pre-Polokwane paradigm of trying to mimic commercial lenders, ignoring their obligation to finance development that benefits all our people, but often applying even more risk-averse strategies?

A brief look at the role of the Public Investment Corporation (PIC) illustrates the kind of issues that a renewed campaign should highlight. The PIC is wholly owned by the government and manages assets of R740 billion (March 2009), mostly on behalf on the Government Employees Pension Fund (GEPF).

Opposition to the corporatisation of the PIC in 2004 by Alliance partners was overruled in the drive at the time to corporatise, agentification and to privatise state entities and to use DFI resources in pursuit of GEAR objectives. Consequently in articulating its mandate in 2010, the PIC says: "Corporatisation has enabled us to structure our investment activities and operations in a manner comparable to that of private sector investment managers" and "......we benchmark our investment performance against market-driven indices, enabling our clients and shareholder to compare PIC’s returns to those achieved in the marketplace."

In pursuit of the above mandate, the PIC`s Property Portfolio has investments of R23,4 billion (March 2009 report) in properties all over the country. These include Sandton City, Cresta, Pavilion and other luxury shopping malls. Throughout our financial sector campaign we have argued that workers should get a return on the investment of their savings that allows them to live in dignity when they retire. But why should this prevent investment of their savings in infrastructure in their own communities during their working lives? Should the PIC be investing in Sandton City or should its resources be funding a national priority, our rural development programme or an affordable housing scheme for workers who neither benefits from the government’s housing subsidy or the private banks’ unaffordable bonds?

We also need to question the use of GEPF monies in funding narrow BEE deals through the PIC`s Isibaya Fund. Last year the PIC lost R1,3 billion of GEPF funds through financing the R6,8 billion purchase of shares in the Holcim cement company by the Eltie Links Afrisam consortium. Previously the PIC drew the wrath of workers when it funded billions to the infamous Elephant Consortium to buy shares in Telkom. Should the deferred wages of government employees - who, as I write, are on the streets fighting for a wage increase of 8,6% and a monthly housing allowance of R1 000 - be used to fund narrow-based BEE deals for politically connected consortiums? Is this not another form of tenderpreneurship that undermines development, stealing from the poor to give to the rich, and which we must expose and oppose?

Transforming the mandate of our public and private financial institutions: A call for an urgent national financial sector summit!

Our renewed focus this year and beyond must pay particular attention on these critical questions. One of our immediate calls for must be for an urgent convening of a national summit of both public and private financial sector institutions around the funding of the five priorities of government, a new growth path and the Industrial Policy Action Plan (IPAP) 2. At such a summit we should also call upon the private financial sector to report on progress since the signing of the financial sector charter in 2003.

DFIs, on the other hand should tell us of their funding activities since 1994, as well as their plans going forward. But going forward must be guided by the necessity to fund development in our country, principally linked to government’s five priorities. Culminating in a summit on "Financing Development", this should involve an intense debate on how our development priorities can be financed in a transparent and accountable way by both public and private financial institutions. It will mobilise both public and private financing towards agreed economic and other development goals. It will define how performance in financing development is to be measured, monitored and evaluated. 

Intensifying the struggle for a radical increase in the social wage

Linked to the above must be an intensified struggle for a significant increase in the social wage of the working class in South Africa, which should form part of the transformation and strengthening of our social security system to effectively cover both the workers and the poor. Such a social wage must include a housing financing programme, financing for access to higher education, and the implementation of the Nationa Health Insurance Scheme (NHI). But the fundamental logic behind ‘funding development’ must be investment into productive activity and sustainable support to government’s five prioriteis.

How is the above integrating our past campaigns? To link our funding of development and development finance to the government’s five priorities will integrate many of the SACP’s past Red October Campaign issues. This includes investment into infrastructure for decent jobs, developmental investment of workers’ retirement funds, funding of investments into rural development, including land and agrarian transformation, the establishment and funding of an NHI, as well as a housing subsidy regime for the workers and the poor, as well as mechanisms for funding higher education for the children of the working class, especially those who ‘fall through the cracks’.

What could a focus on the five priorities of government also practically mean for the working class? On decent work - which cuts across and must inform the rest of the other four priorities - this must include a revitalised and focused investment into infrastructure, including the extended public works programmes. Such investment into infrastructure must include a struggle towards the dissolution of the township/surburb contradiction, as well as significantly narrowing the developmental gap between town and countryside. But within the countryside itself we must seek to do away with the contradiction and gap between the ‘white’ countryside, and the former bantustan rural areas. Such investment into infrastructure must also include a renewed call for community re-investment legislation, reviewing the financial sector charter, and refocusing of DFIs into these priorities.

In addition we must intensify the struggle to address the situation of that section of the working class that does not benefit from government’s current assistance on housing and financing of access to higher education. It is perhaps only in South Africa - as compared to other countries at the same level of development - that an employed working class is unable to afford decent housing and access to higher education for itself and its children.

It is completely misleading to argue that such a focus would be elevating the status of a ‘labour aristrocracy’ against the poor, or the very poor. The fact of the matter is that children of employed workers in our country continue to swell the ranks of the poor because, amongst others, they do not have access to post-school education. A claim of a ‘labour aristocracy’ bias, would also ignore the deeply intertwined relationship between the employed working class and the poor. In South African conditions today, focusing on the employed working class simultaneously addresses the conditions that reproduces poverty in our country. This should by no means undermine specific measures to address the poorest of the poor, but that this cannot be effectively addressed unless we address, at the very least, the wages, housing and higher education needs of the working class. Addressing the needs of the poorest is ameliorative, whilst addressing just the twin challenges of housing and access to higher education for the working class, can be done in a manner that is transforming of the whole of South African society.

Such a focus will also complement and strengthen COSATU’s planned re-launch of an intensified campaign for a living wage. It is our duty as the SACP to also factor into such a campaign the possibilities and necessity of an increased social wage, rather than a one-sided emphasis and reliance on direct wage and salary increases. For instance, use of new funding models and methods to finance housing for the workers and the poor, as well as viable methods for financing the higher education fees for the working class, will go a long way in relieving worker’s ordinary wages from paying for these essential social services.
As we move towards the ANC’s NGC, it is of absolute importance that we heighten and escalate working class mobilisation towards the funding and financing our key developmental objectives.



Statement of the SACP Central Committee

The Central Committee of the SACP met in Johannesburg over the weekend of 27th-29th August. The public service strike and the SACP’s position and responsibilities in this regard were discussed at some length. The CC also engaged with some of the ANC’s discussion papers for its forthcoming National General Council, and the challenge of media transformation.

The public service strike

The CC calls on government and the unions to ensure that there is a very speedy resolution to the strike. It is about to enter its third week now and the longer it is prolonged the more everyone suffers and the danger of unbridgeable positions becoming entrenched increases.

The SACP once more reiterates its conviction that the demands of the public service workers are legitimate and we support them in their struggle for just remuneration. In particular, we note that the wage gap in the public sector between the highest paid echelons and the lowest is 91 to 1. Although the gap in the private sector is even wider, we cannot deny that the public sector wage gap is shameful, and every effort must be made to progressively close this unacceptable gap.

In this regard, the CC calls on government to set an example by ensuring that there is a collective moratorium on salary increases in the upper echelons of government.

The SACP also joins COSATU in condemning acts of indiscipline on the part of some striking workers. Neglect of ICU patients, including new-borns, the turning away of ambulances, threats of physical attacks against students and fellow teachers by teachers - all of these acts punish fellow workers, the children of workers, and the poor in general. These forms of gross indiscipline detract from the legitimacy of the struggle, and divide, rather than unite working class communities.

The public sector is absolutely critical to the developmental state we are seeking to build. We cannot allow relationships within the public sector to be reduced to narrow employer-employee stand-offs. From all sides, government and unions, we need to recognise, foster and affirm the professional vocational responsibilities of those in key sectors like health-care, education and policing.

Indeed, none of us can afford to continue conducting public service negotiations in this way. Whatever the outcomes of the present strike, the ANC-led Alliance partners need to sit down, engage frankly with each other, and analyse the reasons for these destructive and all too frequent stand-offs in which neither the unions nor government necessarily emerge with enhanced popular credibility.

Among the issues that need to be discussed is the vexed issue of public sector bargaining. Unlike a private sector wage strike, where the battle is over how to apportion surplus between profits and wages - in the public sector, the budget is predetermined and adjustments mean reallocating out of other priorities. Whether these other priorities are legitimate priorities or not is a matter for debate, but it does mean that there is a degree of inflexibility built into the process. Public sector wage bargaining should precede the passing of the budget, and we need to find means for doing this, which must also involve measurable commitments to enhanced productivity and public service. Another area that requires urgent attention is the effective definition of and consensus upon what constitutes “essential services”.

The strike and the housing question

It is no accident that in both the current strike, and in the previous parastatal sector strikes, the demand for an improvement in the housing allowance has loomed large. Most categories of formal sector workers, including public service workers in key areas like education, health-care and policing, fall into a housing limbo. They do not qualify for government subsidised RDP housing on the one hand, but they cannot afford private bank mortgages on the other. The problem has been greatly aggravated by South Africa’s housing price inflationary bubble - among the worst in the world. According to this year’s The Economist house-price indicator, SA’s average house prices increased by a massive 389% between 1997 and 2008, making SA the worst performer among the 19 countries surveyed (the next worst were Ireland 193% and Spain 184%).

Increases in the housing allowance paid to public service workers might help alleviate some of their problems at an individual level, but the housing crisis requires a much more comprehensive approach. The housing price bubble is driven considerably by property speculation and very weak urban planning and regulation. The state must exert much more effective land-use management, and the state must drive more equitable human settlement patterns - involving mixed-income and mixed-use development, and the abolition of the physical and social chasm between townships and suburbs. Our development finance institutions, the PIC and the private banks must invest in this effort to transform our towns and cities. The SACP’s long-standing call for a publicly-owned housing bank must be implemented.

We will be re-invigorating our Financial Sector Campaign, with a key focus on these issues. The SACP launched the Financial Sector Campaign ten years ago, and it is time to bring stakeholders back to a national summit, not only to assess and critique progress made, but also to plan how the financial sector should contribute to our national developmental goals in the next ten years.

There are other respects in which the plight of workers, including public sector workers, needs to be addressed beyond just basic wage increases. There are a number of social wage measures apart from housing that must be addressed - including the affordability of health-care and access to higher education for children from the working class. Even for those workers who may befortunate enough to have access to medical aid, typically funds run out long before the end of the year. In this regard, the SACP calls on government to now move rapidly with the implementation of a National Health Insurance scheme. Let implementation of an NHI be one of the key outcomes of the present strike.

The ANC’s National General Council discussion papers

The CC received inputs on and debated some of the ANC’s NGC discussion papers. In the coming weeks the SACP will consolidate its comments and perspectives on these papers with a view to engaging in the broader public debate in the run-up to the NGC and indeed in the NGC itself.

A few preliminary remarks on these papers are, however, required. In the first place there are several issues that the CC welcomed. Some of the papers dealing with challenges of factionalism, ill-discipline, corruption and tender-preneurship within the ANC are to be commended for their candour. Also to be commended and supported are new recommendations on how to tighten up on disciplinary sanctions against those engaged in factionalist activity.

Missing, however, in this particular discussion is the link between these problems and some existing government policies - notably BEE codes. Yet, here again, the CC noted positively that across several NGC discussion papers, the hugely destabilising impact of narrow BEE practices, codes and statutes is picked up - but without really drawing together the obvious consequences. In the course of the run-up to and in the proceedings of the NGC, the SACP intends to engage with what we believe is a very wide consensus that narrow BEE (essentially equity hand-outs), is not only perverse and non-transformational, but also at the root of many of our own movement’s internal problems.

One recent study by Jenny Cargill estimates that some R500-billion has been diverted from both private banks as well as public funds like the PIC and the IDC in order to enrich a small handful of well-connected individuals. Not only is this a tax on growth and development, it is also the very money that then comes back into our organisations in order to support disruptive factional activities. We need to use the NGC to build a wide consensus in favour of genuine broad-based empowerment and affirmative action and against the current perverted narrow BEE practices - much of which is written into law.

In taking up a struggle to abolish narrow BEE, we underline that our stand is a principled one. It should absolutely not be confused with current factional attacks on leading ANC and government comrades, attacks that are paradoxically being led and funded by elements who themselves are the beneficiaries of exactly these kinds of narrow BEE deals.

The CC also noted with some concern that the quality of many of the NGC documents is uneven. For instance, the economic discussion document falls behind the resolutions of the ANC’s 52nd Polokwane National Conference and on significant progress made by government on the basis of these resolutions in developing the pillars of a new growth path - not least the Industrial Policy Action Programme 2.

The SACP will be participating in the ANC’s NGC in order to help strengthen the collective leadership and unity of the ANC and our Alliance. We will vigorously struggle against all attempts to divert the NGC from its critical policy consolidation role, by diverting it into factional power plays and unseemly and premature 2012 electoral battles.

Media Transformation

The CC reaffirmed the Party’s position that we want to work together with our colleagues in the media to help to build an even more vibrant, dynamic and diverse media. This task is integral to the overall struggle to advance, deepen and defend our democracy.   

There are many challenges confronting our colleagues in the media. The dominance of the print media by three powerful capitalist corporations (Newss24/Naspers, the Independent Media Group, and Avusa) is one challenge. This often places substantial commercial pressures on journalists. In the case of one of these near monopolies, the Irish-owned Independent Media Group, some 40million Euros have been siphoned out of SA each year in the recent past. There have been resulting retrenchments of senior journalists, the juniorisation of newsrooms, and impossible work-loads placed on reporters. This has had a tangible impact on the quality of reporting.

Our public broadcaster has suffered from years of under-funding and an over-dependence on commercial advertising revenue. It has also been the victim of political manipulation and financial plundering in recent years.

The media also faces threats from a growing anger and intolerance on the part of some in government and the ruling party. There may well be those who want to see the media curtailed in order to suppress information about corruption and incompetence. However, the media needs to ask itself to what extent it is unwittingly playing into such an agenda by often assuming the role of official opposition, and by giving acres of love-hate coverage to the very forces who are running with a demagogic anti-democratic and anti-media agenda. All of this can lead unwittingly into a self-confirming paradigm about a majority party and its government hell-bent on suppressing the media. Together, we need to work to avert this kind of outcome.

Media Appeals Tribunal

The CC discussed the ANC’s Media Appeals Tribunal proposal. The CC expressed its support in principle for the proposal and makes the following specific recommendations about its role and composition:

  • The proposed tribunal is an appeals tribunal - i.e. it is not about pre-publication censorship.
  • It needs to be an independent body - independent of party political, governmental, and narrow commercial media interference.
  • While the current proposals suggest that the tribunal should be appointed by Parliament, the SACP agrees that we need to guard against the danger of political manipulation of the process. (During the last year of Mbeki’s presidency, for instance, a sound multi-party consensus in committee on a new SABC Board was undermined by presidential interference.) For these reasons, the CC proposes that a selection panel for the tribunal should include a range of representative structures from the media itself.
  • The key role of Parliament should be less in the appointment function, and more in the possibilities Parliament offers for creating a public space in which to have an ongoing national debate about progress in developing and democratising our media and setting standards for reporting. For this reason, the CC proposes that the tribunal should be required to table six-monthly reports to Parliament on appeals submitted to it and on the rulings that it has made.

The CC further noted and commended the recent flurry of attempts from within a number of publications to improve their own self-regulatory standards. An independent media tribunal and self-regulation should not be seen as polar opposites but as complementary endeavours to improve the quality of journalism and therefore the vibrancy of our democracy itself.

The Protection of Information Bill

The CC noted and welcomed the Parliamentary Portfolio Committee’s indication this past week that it will not rush this Bill through Parliament and will seriously consider the many concerns raised about it.

In particular, the SACP agrees with many in the media and elsewhere that we need to ensure that there are effective mechanisms to ensure that the classification of government information is not abused to cover up corruption and incompetence. In noting that the current version of the Bill does seek to criminalise such abuse, we agree that the safe-guards for ensuring that this kind of abuse is detected are not sufficiently entrenched within the Bill in its present form.

In noting all of this, we should now seek to have a calm and considered discussion around how sensitive information should be handled within our democracy. One of the factors undermining the possibility of such a considered discussion has been the media’s deliberate conflation of the appeals tribunal and the Bill.

What often passes for “investigative” journalism is really the whole-sale leaking of sensitive, often unprocessed intelligence and criminal investigation material. We cannot blame the media for using this material - although often there is little attempt to double-check or seek balance. The prime blame must rest with those involved in making these leaks. We accept that there have been occasions in which genuine whistle-blowers in government, frustrated at political interference and the blocking of investigations, have made material available to the media.

However, what has happened in the recent past has had very little to do with genuine whistle-blowing, and rather more the very dangerous political factionalising of our country’s intelligence and wider criminal justice institutions. This holds out enormous dangers for our democracy and needs to be nipped in the bud. Any protection of information legislation needs to be directed primarily at political and corrupt business abuse of sensitive government information - and not at the media. While dealing with these dangerous tendencies might deprive the media of some apparently juicy stories, we call upon our colleagues in the media to recognise that ultimately all of our freedoms, including media freedom, are threatened by rogue elements within the state.

The state moves against corruption

The CC welcomed President Zuma’s announcement of a dedicated investigation of several government departments by the Special Investigations Unit. The CC also saluted the recent arrests of several prominent individuals and the seizure of properties by the Hawks and other organs of the state. The CC believes that there are connections between these events and serious challenges of corruption in Ithala Bank. The CC commended the role played by the SACP’s KZN provincial structures in spearheading the campaign to expose corruption in Ithala Bank, and we trust that the past week’s arrests are just the beginnings of a much wider investigation into corruption.

African Left Network Forum

The CC received a report on the SACP’s successful hosting of the African Left Network Forum on the 19-21 August in Johannesburg. The meeting was attended by some 70 organisations, including 28 left political parties from across the continent. 2010 marks the 50th anniversary of the beginnings of the decolonisation process in our continent. The Forum agreed that some important advances had been made in parts of our continent, but everywhere the hand of external forces supported by their local agents is at play, undermining democracy and development. Many of the parties we were meeting with, from Swaziland to Rwanda and Tunisia and Morocco are forced to operate either in the underground, or in a grey area of semi-legality.

The CC saluted the people of Kenya for the adoption this past week of a progressive new Constitution. This Constitution has been won on the ground in struggle, once more confirming that democracy is not something that can be bestowed from above. It always has to be won and defended by the people themselves.

Hamba Kahle cde Mthuthuzeli Tom

The CC conveys its heartfelt condolences to the family, friends and comrades of cde Mthuthuzeli Tom, the former NUMSA president. 

Issued by the SACP