The Public Sector and the Working Class: Transforming the State and Building Socialism SOCIALISM

 

1: Key political issues

1. The state, capital and social transformation.

1: The Alliance adopted an important document, The State, Property Relations and Social
Transformation, as a common basis for discussion in 1998. The Party has held a number of
debates on the role of the state and the relationship of the state to capital. Resolutions
were adopted at the 8th, 9th, and 10th Congress and at the 1999 Strategy Conference. These
debates and positions form the basis of this contribution. At this juncture of the
National Democratic Revolution (NDR) the pressing issues of public sector reform dictate
the need for the Party to clarify its position on a number of issues relating to the
public sector. To do this the Party must have a clear theoretical conception of the
relationship between the capitalist system that is dominant in our country and globally,
and the state, which is under the political control of the National Liberation Movement
led by the ANC. The Party must also have a clear conception of the relationship between
programmes of the liberation movement and the Party, which seek to transform our society.
This transformation is to liberate the people from national oppression, gender oppression
and exploitation, and from capitalist exploitation.

2. Some key issues that have arisen and positions that have been arrived at by the
Party in these debates are:

1: Capital is not homogenous, particularly in this era of capitalist globalisation
there are differences, tensions and even conflicts of interest between domestic and global
capital, between financial capital and small business capital, and between capital
invested in the manufacturing industry or the information technology industry. Our
approach toward capital must therefore be a multi-pronged one. It is important to
recognise that capital can be privately owned and managed, can be owned and managed
publicly, through the state and public sector, or can be owned and managed socially, that
is through organised collectives of the people. In this phase of the revolution the
economy will be a mixed one, with private, public and social ownership and management and
various mixes of these. In a mixed economy it is natural to expect to find all of these
forms of capital and for government to have policies that allow for the promotion of all
these. There should also be co-operation between these forms of capital in situations
where there are non-antagonistic contradictions between them.

2: The Party has convincingly argued for the state to play a developmental role in
society. That means that apart from the state being a policy making and implementation
institution and fulfilling a regulatory function, the state must ensure it creates an
enabling environment for society to be progressively transformed in favour of the poor,
women, disabled people, youth and others discriminated against. In other words the state
must intervene in society strategically on behalf of, and with the poor and exploited
primarily and not only where the market fails, as some would suggest is its role. The
state can discipline, manage, encourage, and promote capital, the allocation of capital
and the distribution of surplus. The mix of policy that is adopted by the government will
determine which aspects of the relationship with capital are dominant and the extent to
which the agenda of the masses is exerted in relation to capital.

3: Social transformation, that is the development of a society characterised by
improving racial and gender equality and working class hegemony, requires economic
development to be achieved. It is the view of the Party that such development requires an
active, interventionist, strategic state that manages and leads the process of
development. The Party seeks to ensure that since the 1994 democratic breakthrough, and
non-racialism and non-sexism are agreed as objectives by the broad liberation forces,
socialisation becomes the dominant characteristic of social transformation and that the
power and influence of private capital diminishes over time.

4: Much as the government must, through the state, lead this process of development, a
political movement led by the working class, supported by the winning of state power, must
mobilise the people behind a transformative government programme and to make their own
efforts at economic liberation and transformation. The transformative programme must be
people-driven and people led biased in favour of the working class and the poor. This
requires vibrant political organisations, such as an independent trade union movement, a
rural peoples movement to mobilise in the interests of the landless or rural proletariat,
a co-operative movement that assists in the formation and building of co-operatively owned
and controlled enterprises, and other forms of progressive organisation such as
women’s, youth and disabled peoples sectoral formations. In this period of the
revolution such organisations must be led by a progressive national liberation movement
such as the ANC is, which is committed to non-racialism, non-sexism, and the
reconstruction and development of our society with the interests of the poorest sections
of society being the priority. The liberation Alliance needs an independent party of the
working class to ensure that socialism remains relevant, on the agenda and ultimately
achievable.

5: Our society is a capitalist one. The global capitalist system as well as a powerful
domestic capitalist class has successfully dictated that the policies of the Alliance are
contested at every level. In certain respects they have rolled back the propensity to make
gains in the NDR, by undermining and watering down the RDP, by supporting and promoting
aspects of GEAR that favour the interests of capital, and most significantly through a
sustained investment strike and restructuring of industry that has seen unprecedented job
losses, social under-development, and the consequent relevant drop in the living standards
of the poor in particular. Despite this situation the Party maintains an optimistic stance
on the possibility of an advance towards socialism in the NDR. This is precisely because
the masses of our people have not benefited from capitalism. Instead the living standards
of the average South African have fallen relative to the wealthy and privileged. Any
benefits or social advances have been derived from the effects of the policies of a
progressive ANC government. The key task of the Party is to build on these advances made
and to mobilise the working class in particular for an all round offensive on capitalism.

6: The broad definition of the public sector - The public sector is that sphere of
society where public interest dominates the manner in which resources are allocated. In
other words, the term public sector covers the sphere of the operations and maximum
influence of the national democratic state in society. This includes everything from
public enterprises, various autonomous bodies such as universities and the public
broadcaster, through to local government and the public service. For the SACP, the public
is numerically dominated by the overwhelming majority of our people who happen to be
black, working class and poor, whose interests will be served by the deepening of the NDR
and an eventual transition to socialism.

7: The leading role of the state, the relationship between the public and private
sector and the role of the market. The key issue in relation to the public sector is
whether this sector will play the leading role in society, particularly in the economy, or
whether the private sector will. It is the view of the Party that the public sector must
play the leading role and be the dominant sector in society. This is partly because of the
historical imperative in our country, a white minority control the private sector, the
socially owned sector of the economy is relatively under-developed, and because of the
Party’s objective of building socialism. If the private sector is left to play a
leading role the majority of South Africans will remain marginalised and to all intents
and purposes super-exploited. This does not mean that there is no role in society for the
private sector in the current period, or even more importantly a socially or
co-operatively owned and controlled sector. But these sectors must operate in relation to
the programme for reconstruction, development and social justice driven by the liberation
movement. The primary conduit for this programme is the public sector.

8: All societies in transition, including socialist ones, have need for markets in
which goods and services are exchanged. In relation to the market, the contentious issue
is not therefor whether there should be a role for the market in society or a relationship
between the public, co-operative and private sectors. The debate is rather about what are
the terms of that relationship and who is in control of the process. In the Party’s
view the market must be increasingly rolled back and the increasing decommodification of
public goods and services is its stated objective. At the same time we must acknowledge
that public management and administration theory and philosophy has developed
significantly in recent years. In many respects the problems we face in the public sector
are because we have not been innovative in relation to the management of the public
sector. Obviously, we do not want to mimic other countries, for example by privatising
everything in sight! But we must debate the role of the market in the provision of quality
and affordable public goods and services. This does not mean accepting capitalism as an
inevitable future, but is rather about using the market strategically to deliver more and
better services to the people. We therefore need to define the rules for contestability in
relation to the public sector.

9: The crude neo-liberal interpretation of this contestability is about contracting out
and privatising everything in the public sector. The view of the SACP is that such an
approach is neither desirable for obvious political reasons, we are after all Communists,
nor is it proven to be the way to extend and improve services. What we should be
attempting to do is use the market, efficient operation principles, measures of
efficiency, performance management and other relevant tools to ensure we develop, improve,
extend and strengthen the public sector and the public service as the core of that public
sector. In other words, we can keep publicly owned and controlled services but allow for
internal and external competition to ensure these do not tend towards the worst
characteristics of monopolies, such as inefficiency, overcharging of customers and
ultimately corruption.

10: Included in this approach is the need for a more rigorous and progressive cost
management system approached from, and informed by our development and transformation
objectives. At the moment the assessment of costs in the public service is at best an
educated guess. There is also a need for price determination and reform to ensure that
there is equity and equality of opportunity, flexibility and variation of billing, and
transparency. Our approach should rather be to effect overall transformation of the
economy to reduce and ultimately eliminate the numbers of unwaged and low waged citizens
and to ensure that while we are doing that they receive the basic services that are their
right.

11: A critical issue is to ensure that the public service focuses on its primary
functions; providing support to the government of the day though policy and regulatory
activities and provision of goods and services to the public. These should be clearly
defined so that we do not have to have endless debates about whether any service can or
cannot be outsourced, be managed through a public-private partnership or even privatised.
More capital can be mobilised for development if we utilise public resources through the
budget more effectively, and through developing policy to implement appropriate forms of
public-private and community-public partnerships. What is essential is for us to define
the appropriate framework for the relationship between the public and private sector and
to ensure that the public sector leads in this regard.

12: The need for accurate data and statistics to ensure rational debate and scientific
proposals on efficiency, spending patterns, size of the public service, wastage,
corruption, etc. is obvious. Without this data there can be no meaningful debate that
actually leads us in the right direction. At the moment debates about the public service,
the public sector, and indeed the economy, are bedeviled by the fact that accurate
information is not readily available and where it is it is usually not accepted by all as
relevant or accurate. For Marxists in particular, but for all serious cadres of the
movement, this is clearly a priority. If we do not have accurate data we will be simply
resorting to wishes and speculation, rather than attempting to be serious, scientific,
revolutionaries. This will open the door for neo-liberalism and private sector motivated
public sector transformation. We therefore argue for an audit of the public service,
current outsourcing and sub-contracting in the public service. Again, this audit must be
informed and shaped by our development and transformation objectives. In this regard, the
Alliance Task Team and the Party’s STC are crucial.

13: In addition to this dearth of reliable information, much of what is presented as
fact through the press and media is nothing but the interests of the well-off and of the
capitalist class in particular. There is no evidence that suggests that there is an
automatic or inevitable benefit to be derived from privatisation, contracting out,
public-private partnerships or reducing the number of public servants on the
government’s pay roll. A priority in relation to these debates is to present the
public, the voters, with enough relevant information for them to make up their own minds
on the need for certain decisions to be taken, including those that are hard decisions
with unpleasant consequences. In relation to the public sector in particular, the clients
of this public sector are severely disempowered in this respect. The trade-offs that must
inevitably be made in the drive to restructure and transform the state are ones that the
working class in particular should dictate. To do this it requires of government that the
facts are provided and the decision making process is an inclusive one.

14: The relationship between the government and the organised working class. We cannot
hope to run away from salary and wage bargaining in the public sector, or pretend that the
demand for a living wage makes workers in the public service and even generally in society
economistic, reactionary or a labour aristocracy. The real aristocracy in our country is
that section of the population, including those in the workforce who are still earning
higher salaries than even the new entrants into positions of power, those who own the
wealth of this country and have cushioned themselves from the vagaries of the market,
retrenchments, and from the poverty that is the key characteristics of our society. The
performance of politicians who have been assigned the task of leading in the drive to
restructure the public sector, and indeed more generally, should be an issue that is
openly debated in our structures so that these comrades are also subjected to performance
assessments. We cannot allow politicians to set up rules based on values and principles
for public servants that they themselves are not expected to adhere to.

15: The Party programme, adopted at the 10th Congress and further elaborated by the
Central Committee and the 1999 Strategy Conference, calls for a number of concrete steps
to be taken by Party branches and cadres in the first instance and by the ANC and COSATU
in the second. These are as follows:

• The public sector must be defended. The Party and its cadres must be in the frontline of
  the defence of the public sector, as the capitalist class in our country and
  internationally is driving an aggressive campaign to reduce the public sector to its bare
  minimum. The public sector forms an important base or building block for socialism and its
  continued existence is therefor of strategic importance for the Party.
• Defending the public sector does not mean accepting or condoning inefficiency,
  corruption or mismanagement. Inefficiency, corruption and mismanagement defeat the very
  argument for the extension, strengthening and deepening of the public sector and
  strengthen the drive for the minimalisation of the state. The party and its cadres must be
  in the forefront of the campaign to transform the public sector. This transformation
  programme must have as its objective and efficient, effective, sustainable public sector
  that will be a valuable component of the overall array of institutions that will ensure
  the achievement of the goals of the NDR and of socialism.
• The Party must lead in the drive to socialise the rest of our economy through extending
  or expanding the public sector into new areas, such as information technology and by
  building the socially owned sector of the economy, such as co-operatives and community
  owned trusts, associations and other forms of collective ownership and control of wealth.
• Party cadres must build strong, vibrant SACP structures that form the base from which
  ANC branches, COSATU locals, Community Policing Forums (CPFs), School Governing Bodies
  (SGBs), Local Development Forums (LDFs), consumer groups and other organisations can be
  built. These are key for ensuring the masses of our people are mobilised behind the
  programme to defend and expand the public sector.
• The key focus of the Party and its cadres must be the following areas of the public
  sector in this immediate period - Transforming local government; Transforming the public
  service and especially those sections responsible for the delivery of key services such as
  education, health, welfare and safety and security; and The restructuring of key,
  strategic state owned assets and enterprises, such as Eskom, Telkom, Transnet, state owned
  land, mineral resources and natural resources.

 

2: The Public Service

1: The public service is the section of the public sector that is directly involved in
assisting government develop and implement policy. It also assists government to carry out
administration, service delivery, support and other such activities which government is
directly involved in at a national and provincial level.

2: The public service as an integral component of the national democratic state and the
role of the public service in transforming society. The public service should be the
government’s primary set of tools and human resources, indeed cadres, for
implementing its policies. Within the public service, there is a strong argument for the
separation of the management cadre of the public service from the rest of the personnel.
Would this separation change the nature of this relationship to the government by making
the managers of the public service more politically accountable to the government? Is this
separation possible, desirable and appropriate?

3: The Party has to ensure that the overall political orientation of public servants is
that of a working class bias and in the longer term of cadres who support and will
implement for socialism. The ANC would not necessarily see the need for this bias at this
point, but does want public servants that are cadres who fight for the interests and
champion the poor. This does mean that we can at least agree that we need to deal with the
current ethos, culture and conduct of public servants and change this to align it with
those of the national liberation movement. The problems in this respect are myriad and we
know them. They range from a lack of work ethic to corruption, racism and sexism, to a
lack of motivation in favour of government and even actual sabotage of the government. In
addition, the Party must target public servants for recruitment to its structures, for
political education and advanced theoretical training.

4: Remuneration in the public service. We need to ensure that we do not allow the
public service to become a place to accumulate wealth to the extent that individuals can
and do in the private sector. But equally there has to be some correlation between the
market and the salaries earned by public servants. One of the most effective ways to deal
with this is to ensure such people who can earn significantly higher incomes in the
private sector are appointed on contract and are mobile in the sense of the ability to
move in and out of the public service. In return for their performance being what the
government desires, such cadres can be rewarded in the form of material bonuses, as well
as in terms of further opportunities. In other words we need to emphasise that working in
the public service is a calling and does entail sacrificing as a service to the people of
our country. The rewards must be clearly defined, such as training, work experience, job
security and equitable conditions of service.

5: Linked to this is the need to give all public workers a living wage and closing the
apartheid wage gap. A living wage is part of transformation even more so in the absence of
a substantial social wage in South Africa.

6: One of the main drivers of the demand for higher wages in the public service, apart
from the actual desire to preserve the perks and overly generous aspects of public service
employment such as rank and leg promotions, pension fund arrangements and accumulated
leave, for example, are structural. (Perceived) Higher incomes, recent salary increases
and perks of public service managers and politicians, all add pressure for higher salaries
and wages in the public service. To create the right ethos, culture, discipline and
loyalty means ensuring we give the correct leadership to workers in the public service. Of
course, we must define appropriate remuneration and reward for work and performance. In
this instance a key issue is to ensure a proper and effective bargaining structures and
processes.

7: There is a trade off to be made between higher pay for public servants and higher
levels of employment in the public service. In this respect the Party is of the view that,
notwithstanding the need to improve the pay of public servants, particularly the
professionals and skilled personnel who may be attracted to the private sector more
easily, the emphasis should be on ensuring higher levels of employment at this period. The
unprecedented levels of unemployment demand that this policy be adopted.

8: The current deployment of public servants. It is true that the deployment of
personnel in the public service is not optimal. But this does not mean there are too many
public servants. We need to ensure that consideration is given to transferring workers to
where they are needed most, and that they are in turn resourced to provide the services
required. We must ensure that performance management systems are put in place so that
those who do not work are identified and dealt with accordingly and those who work hard
are rewarded. This will require reforming the current salary and benefits structure in the
public service. The government has identified a number of areas in this regard and we need
to ensure we discuss them as the Alliance and take the necessary decisions to do away with
archaic practices and procedures. Some of these issues are:

• Rank and leg promotions
• Excessive or generous medical aid and pension benefits
• Excessive accumulated leave provisions
• Overly generous car and other allowances
• The excessive income gap between higher and lower paid public servant

9: There is also a need to ensure that the public service is a model in terms of worker
participation and empowerment. This does not mean taking away (transformative)
management’s power and authority, but ensuring the public service is managed in a
progressive manner which ensures workers are not treated as mere hewers of wood and
drawers of water. Similarly, a great deal of emphasis needs to put on training and
skilling public servants. This can help to create a more flexible, mobile, and productive
workforce.

10: If there will be retrenchments in the public service, and this does seem
increasingly likely, the Party is of the view that this should be carried out as a measure
of last resort after a thorough, consultative and scientific audit and consideration of
other alternatives such as redeployment, reskilling and the building of alternative forms
of social and collective ownership which could absorb public service workers. In addition,
a social plan must be agreed upon between the employer and trade unions to ensure that
retrenched workers are given the opportunity to re-skill and move into other, growing
areas of the economy.

11: Batho Pele - The people and the public service. The key to ensuring that the public
service plays the role it should is to understand the relationship between the people and
the public service. The people are not simply the clients or customers of the public
service. They are also the constituency of the government and therefor the public servants
of the national democratic state must be defenders of the poor, fighters against
corruption, and a key force for transformation. They must be the revolutionaries that will
ensure the NDR succeeds. At the same time the Alliance organisations and their structures
and cadres need to play a more active and interventionist role in relation to the public
service. There must be clear ways in which the structures of the movement monitor the
public service, ensure the people are treated fairly, with respect, and not exploited or
ripped off by unscrupulous public servants. The role of ANC and SACP branches as well as
COSATU and affiliate locals in this respect is crucial. Just as our structures have
intervened in relation to Safety and Security through CPFs so can they in relation to the
public service generally. Also important is the point made earlier about actively
recruiting public service workers and managers into the SACP and COSATU unions.

12: Emerging trends. There is already much outsourcing, contracting out and
privatisation taking place in the public service. This needs to be halted or carefully
monitored and controlled until the agreed policies are in place to effect the
transformation of the public service more strategically. There is also an increasing
fragmentation of the public service e.g. SARS drive for autonomy, increased outsourcing
e.g. of security functions which need to be discussed at strategic and policy level. The
SACP argues for a thorough and scientific audit of current outsourcing, contracting out,
privatisation, fragmentation of the public service and local government transformation.
Again such an audit must be informed by our developmental and transformative agenda and
the Alliance Task Team and the STC are crucial.

 

3: Restructuring State Owned Enterprises and Public Assets

1: The current state of SOEs and Assets - Due to the past policies of the apartheid
regime the ANC led government inherited a vast array of publicly owned assets and
enterprises. These are mostly in various stages of decay, under-capitalised, inefficient,
or poorly managed. They do however constitute a strategic asset base to work from to
assist the promotion of sustainable economic development. For example through Transnet,
Telkom and Eskom, enhanced and equitable service delivery can be promoted. Affirmative
action and procurement that promote economic empowerment of black people (the overwhelming
majority of who are the working class and the poor) can be driven through most of these
entities. These entities may also be catalysts for human resource development and
management policies and strategies that could improve productivity and help more rapidly
skill labour in our economy.

2: To achieve these objectives these entities must be restructured, managed effectively
and strategically and should be subject to the ongoing test of their performance,
including their profitability, efficiency, the quality of their goods and services, and
importantly, of their strategic capability in terms of assisting the movement achieve its
objectives in the NDR.

3: Restructuring - some important principles. The current focus on the restructuring of
publicly owned enterprises arises therefore out of the need to ensure that public
resources are not utilised to subsidise inefficient and unproductive enterprises and
assets. There is sufficient justification for the state running subsidised services, where
there is an overwhelming strategic need. Important in this is the need to link measurable
costs of subsidising services to our transformative agenda. An example of this would be
the manufacture of weapons in a war effort, or could be a public transport service. In the
first case this subsidy would be to preserve national integrity and security. In the
second it could be to overcome a structural problem in the economy. The former would last
as long as the war. The latter would need to be overcome in time and would need to be
planned for.

4: Government has identified a number of objectives it wishes to achieve through the
restructuring of SOEs. These are:

• Mobilising private sector capital and expertise
• Attracting foreign direct investment
• Reducing the public sector borrowing requirement
• Ensuring wider participation in the economy
• Enhancing the efficiency and effectiveness of SOEs
• Accessing globally competitive technology
• Creating competitive markets in sectors where monopolies currently exist
• Financing growth and requirements for competitiveness

5: Some of these principles can be interpreted to mean different things. And in
themselves, they are not adequate to inform the kind of restructuring required at this
phase of the NDR since there are important transformative principles missing. These
include: -

• The subordination of restructuring state assets to, and alignment with a major
  infra-structural growth and development programme in the country and the region which will
  require much greater industrial policy clarity and purposiveness in implementation, fiscal
  and monetary policies that are better aligned to this objective and much greater strategic
  coordination of public capital resources (state departments, and key parastatals)
• The role of state assets in service delivery and poverty eradication
• How the restructuring process can contribute to the development of alternative forms of
  social and collective ownership
• The re-negotiation of the National Framework Agreement with the intention to improve it
  and make it enforceable
• A clear assessment of what has happened to state assets since the old regime’s
  privatisation programme in the early 1990s
• An assessment of how current resources and profits of state assets are used and broad
  proposals on how they can be used to support our transformation agenda
• The development of new public assets in areas such as housing, information technology,
  local government service delivery and development finance
• Fully elaborating the long term aims and objectives of the restructuring of state assets
  with an emphasis on maintaining public ownership
• An assessment of what assets have been sold off, who actually benefits from current
  restructuring and who is likely to benefit from continuing restructuring
• Financing growth and requirements for competitiveness

6: Presumably these objectives and principles, once finalised and agreed upon by the
alliance first, could apply across the board to publicly owned assets such as land and
buildings as well.

7: In effecting this restructuring there are some important issues to bear in mind. The
first is that current public enterprises must be treated differently depending on their
nature, that is, their strategic importance for the RDP, the NDR and the building of
socialism. This principal is widely accepted and informs government policy, but there is
yet to be a discussion on what this means in practice. There are certain core public
enterprises that are central to the economy, such as Eskom, Telkom and Transnet. Others
are important for their developmental potential, such as Denel. Others still are of little
or no strategic value, such as Aventura, but might be of significant economic value if
managed properly.

8: In the restructuring all of these enterprises and assets the key issue is to decide
on what the relationship is between market principles and economic realities in relation
to the enterprise and to the expected or possible outputs of the enterprise or asset. This
is important because the number of people within whose interest decisions are taken will
be affected by the position of the government in this regard. At the moment this issue is
frankly speaking fudged in the Alliance. We all agree on a mixed economy, but it is not
clear whether this is an economy that will be managed in the interests of the masses, or
one whose agenda is driven by the interests of private capital or a even a fraction of
capital, namely monopoly finance capital. Clarity with respect to this issue will mean
that choices can be made on what public enterprises or assets are strategic for achieving
the goals of the NDR, what criteria will be utilised to measure the performance of the
entity and what will be expected of private capital in relation to the entity. In this
regard, our 1999 Strategy Conference resolution states that, amongst other things,
municipal services, development finance, transport, electricity supply, energy, mineral
rights and housing, water, health and education must remain in public hands. For the SACP
restructuring of state assets must not just mean privatisation. We recognise that there
will be trade-offs in the restructuring process. But these must be made in the context of
an improved and better NFA, our development objectives and the retention of strategic
public ownership.

9: If the state is to lead in the interest of the people, then a number of consequences
follow. No decision in relation to public enterprises will be taken simply because of the
logic or interests of private capital. This will be one factor informing decisions, with
the broad objectives of the programme of the movement and social equity being others, for
example. The logic or interests of private capital may be considered where this is
congruent with the interests of the masses. But the state can and must play a role in
building public capital by improving the efficiency and scope of public enterprises, as
well as the public sector generally. It can build social capital by allowing collective
ownership of a stake in these enterprises as well as promoting other forms of social
ownership such as co-operatives. But it can also build private capital by privileging the
relationship of certain capitalists with the state. This will result in a class of rentier
capitalists who are essentially parasitic on the state. It could also conceivably
entertain a mix of these policies and ensure a fair opportunity for capital in all its
forms to be developed. This would seem to be the most desirable in the context where the
state clearly leads in terms of development.

10: There is a difference between the discipline of the market and the logic and
interests of private capital, which is often not distinguished in our policies. For
instance, a case can be made for subjecting SAA to the need to run efficiently, generate a
surplus, etc., but this does not mean the sale of a stake in SAA to a private investor
should be subsidised by the taxpayer, for example. This example of a sale of a stake of a
public enterprise raises the issue of the relationship between the public as shareholders,
the government as trustees of the interests of the shareholders and the managers who run
the public enterprises. It is often the case that in public enterprises these
relationships get blurred. A clear distinction needs to made in this regard and proper
corporate governance procedures put in place as well as principles adhered to. There is
significant evidence to show that the key issue in relation to the restructuring of state
owned enterprises is not their privatisation but their corporatisation, that is,
subjecting these companies to proper corporate governance, clear performance assessment,
fair pricing, cost recovery, ensuring competition and protecting consumers from
monopolistic tendencies and practices.

11: A possible unintended consequence of the restructuring of public enterprises may be
job losses. In this regard, the Party argues for consideration of a range of options
including job guarantees for a specific time-frame, development of social and collective
forms of ownership of restructured state assets with the involvement of affected workers
and communities and the development of a social plan. The Party cannot accept that the
masses of our people, who have borne the brunt of apartheid, colonialism, and imperialism,
must be expected to bear the brunt of capitalist restructuring for neo-colonial and
neo-imperial relationships of domination. This is especially true of the process and
outcomes of the restructuring of the public sector.

12: The government and labour have negotiated and agreed a useful tool for the managing
of the restructuring of state owned assets in the form of the NFA. There are however
problems in the non-compliance with the NFA and the lack of capacity of unions to engage
effectively and timeously in relation to the government agenda for restructuring. This
creates bottlenecks and forces the management of these assets to proceed without the
involvement of workers in many instances. There is also a perception of and in some cases
clear evidence of managerial duplicity with regard to the NFA, where unilateral
restructuring proceeds and where the issue of consultation and negotiation are simply
avoided, leaving workers to be effected by the often poor judgement of the often less than
capable management who have been responsible for the state of these assets as we find them
today. What is clearly needed to overcome these problems is a political discussion and
agreement in the Alliance on the vision and strategy to guide the overall restructuring of
state enterprises and assets. The government has initiated a debate that allows for this
input. There also needs to be a clear commitment to a simple, effective, and practical way
of implementing the NFA and the monitoring of this process.

13: It is a sad fact that the previous government mismanaged public enterprises and
assets to the point where the current debt of these entities is a real burden on the
government and ultimately the taxpayer. A debate needs to take place as to how to best
restructure this debt. We need to know the extent and nature of this debt burden. The
recent decision to pass some of this debt on to the fiscus directly is problematic, not in
the sense of that it should not be done, but in the sense that it represents a double
standard. To refuse to increase government debt to improve services and infrastructure
while agreeing to increase it to subsidise private capital which purchases such companies
or parts of them, is clearly a choice in which the interests of the wealthy are put before
those of the poor.

14: Where additional capacity, skills, capital and technology are required and cannot
be obtained from the public sector, the route of finding strategic equity partners while
government keeps control of enterprises is the most favorable one for maintaining a
leading role for the state. However, the value of such enterprises is always lower before
restructuring and repositioning. A balance needs to be struck to ensure shareholder value
can be maximized for those who have carried the burden of funding and building these
enterprises over the years, namely the working class.

15: An important cautionary note should be borne in mind in relation to the
restructuring of state owned enterprises. There are limitations to the benefits that can
be received from privatisation. Privatisation is actually not always a cash cow as the
case of SAA debt has shown that government may actually be required to contribute
resources for privatisation! The benefits, both macro and micro are hard to determine, may
not be of a sustainable nature and may in fact constitute the subsidisation of existing
capital, in the sense that these are invariably the new shareholders of any interests sold
off by the state. Secondly, if the state manages these assets effectively, and there is no
reason why it should not with the correct policies and structures in place, the future
benefits may be available to a broader section of society. Thirdly, the social impact of
restructuring, including job losses, potential private monopolies, and the entrenchment of
existing power and privilege will all have a future cost. When measuring the impact of any
existing situation and possible futures, we must as a society avoid the temptation to be
economistic about the need to take important economic decisions.

Autonomous state funded institutions

1. The Party needs to consider its position on institutions which currently receive partial
   or full funding from the government but which operate autonomously. Given the experience
   with so-called liberal universities, the public broadcaster and various regulatory bodies
   and commissions, the question needs to be asked as to when it is appropriate to have such
   autonomous institutions and if they are deemed necessary what are the rules for their
   continued autonomous functioning?
2. The challenge for the Party and the movement as whole s to ensure that these
   institutions advance and serve ongoing transformation in the interests of the working
   class and the poor. In this way, their autonomy cannot be used to undermine the NDR.
3. A code of good practice may well need to be adopted by government for such entities to
   ensure that they are operationally independent of government but not goal independent.
4. The SABC needs close attention by the Party, unions and broader working class forces. In
   the context of a hostile and anti-worker media, the public broadcaster is a strategic tool
   for the working class and the poor to communicate their experiences and transformative
   perspectives. For example, the majority of our people depend on radio for information
   about the world. The Party should approach the commercialisation of the public broadcaster
   with the intention to ensure that it remains in public hands and is biased towards the
   working class and the poor in its orientation.

Local government

1. There are separate documents on this. However, one overarching issue, that of
   intergovernmental relationships and co-operative governance requires some consideration.
2. The relationship between national, provincial, and local government and administrations.
   There is a need to consider whether the current structure of the country’s public
   administration system is appropriate. The notion of co-operative governance is one all
   should support, but the issue of power being devolved to provincial and local government
   is a complex one. It is not clear to what extent this is assisting the transformation
   process. It is also not clear to what extent provincial government is desirable or even
   necessary in a system where powerful local government exists. Essentially the key
   contradiction is that of the tendency of decentralisation of the management of services to
   be an entry point for federalism. The overall duplication of services and functions is
   also worrying. Many of the debates around perceived overstaffing, redeployment and
   restructuring are bedevilled by the lack of scientific assessment of what services are
   needed where and what currently exist. There also needs to be a debate on what level it
   would be appropriate to deliver services from, manage these and make policy from. This is
   clearly a priority.
3. The Constitution clearly defines our country as a unitary state with certain concurrent
   powers devolved to provinces. Local authorities have limited powers in relation mainly to
   certain traditional municipal services. It would seem that a discussion on the need to
   decentralise as much service delivery and the immediate management thereof to local areas
   that is to ensure they are under community supervision is an important one. The policy
   making process, setting of norms and standards and the allocation of resources should be
   done at a central level to ensure equity can be promoted.
4. This does not answer the question of the size of the public sector and specifically of
   the local government administrations and public service. But it does assist in creating
   the conditions for a rational debate about the most efficient manner in delivering public
   goods and services. This is clearly a debate we urgently need to have.
5. In this regard, the Party must lead in working for an audit of public-private
   partnerships and local government restructuring and the implementation of the local
   government NFA. In local government restructuring, there have been many instances where
   transformation objectives have been undermined with emergency rescue programmes, as was
   the case with the original iGoli 2002 plan for the restructuring of Johannesburg. Also,
   some local governments have already privatised key assets and services.

 

Questions for debate

Definition of the public sector

• From a Party perspective, who is the public? What should be the dominant class interests
  of this public?

Primary functions of the public service

• What should be the primary functions of our public service? What should be the public
  goods and services provided by our public service?
• Is the separation of public service functions into core and non-core a scientific and
  ideological method? Is this appropriate language in the context of a national democratic
  state and our agenda for socialism?
• Is there any role for the private sector in the provision of public goods and services?
  If so, what is the appropriate framework for the relationship between the public and
  private sector?
• Are there any benefits from bringing the private sector into public service provision?
  And in outsourcing and privatisation?
• What is the experience and assessment of current outsourcing and privatisation of the
  public service?
• What are the possibilities of building social and collective of ownership of public
  capital in the transformation of the public service?

Data and statistics on the public service

• What is the size of the current public service? What are the parameters we should use in
  determining the appropriate size of the public service?
• What are the spending patterns in the public service? How do they relate to our service
  delivery agenda? What is the extent of corruption and wastage in the public service?
• What are the levels of experience, education and skills in the public service?

Efficiency in the public service

• How do we improve the efficiency and performance management of the public service? How
  do we avoid the worst characteristics of monopolies, such as inefficiency, overcharging of
  customers and ultimately corruption?
• Are there any tools and methods we can learn from the market? Is there any role for
  internal and external competition?

Inefficiency, corruption and mismanagement in the public service

• What is the extent of corruption and mismanagement in the public service?
• What causes this?
• What should be the Party response and proposals in addressing these? What is the role of
  Party members in the public service?
• Is the separation of the management cadre from the rest of the public service possible,
  desirable and appropriate?

Remuneration and wage levels in the public service

• What is the current remuneration policy in the public service? How can it be
  restructured in line with our developmental and transformative objectives?
• What is the current wage gap in the public service? How does it relate to closing the
  apartheid wage gap?
• What are the appropriate levels of remuneration for public service managers and other
  public servants?

Batho Pele

• How do the people partner the public service?
• What is the role of Party members in the public service and Party branches?

Restructuring of state assets

• What are the aims and objectives of restructuring state assets? What is the policy
  framework? What is the Party response to this policy framework? How should the Party
  engage it?
• In restructuring state assets, what should be the relationship between the private
  sector and the state? What could be the role of private capital? Does restructuring equal
  privatisation?
• What is the relation between restructuring state assets and job losses? In the event of
  job losses as a result of restructuring what should be the Party response?
• What is the current performance of state assets? What criteria are used to measure
  performance? How are resources and profits of these assets utilised?
• What is the extent of the debt of state assets? Who is this debt owed to and what for?
• At which stage is restructuring of state assets? What has been privatised? What remains
  in public hands? Who has benefited and who is likely to benefit from continuing
  restructuring? What is the status of the National Framework Agreement?
• What is the strategic location of state assets? What is the actual input of these to
  GDP? How much do they cost the state currently? How much do or can they bring to the
  state?
• How does restructuring affect costs to the state and income to the state from these?
  What is the social impact of restructuring?
• Does current restructuring include the identification of new areas for strategic
  intervention through new parastatals (e.g. development finance. Local government service
  delivery and information technology)? Can the SACP identify any such areas? How and where
  should the state mobilise resources from for this?
• What are the possibilities of building social and collective of ownership of public
  capital in the restructuring of state assets?