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Cape Town - Executives who run parastatals should not be paid salaries equivalent to those of their peers in the private sector, Business Unity South Africa (Busa) told parliament on Wednesday.
Lobbying government to overhaul the business and funding models for state-owned enterprises, Busa said executives who eyed earning millions should rather work in the private sector.
"Executives at state-owned enterprises have a very different mandate and role," Busa economist Simi Siwisa told parliament's finance committee.
"We can't argue they would be poached by the private sector. If we do, where are we going to draw the line? We have to have a debate about what drives people [to work at state-owned enterprises]."
Busa also said government had to get better at measuring executive performance, only approving "little presents" if they delivered.
Busa deputy director Professor Raymond Parsons said remuneration was one issue in a wider problem that went to the heart of the way state-owned enterprises were run and funded.
Outdated model
Using the example of Eskom's application to the National Energy Regulator (Nersa)for a 45% hike in electricity tariffs every year for the next three years, Parsons said that similar to other parastatals, Eskom is run according to a model that was no longer working. As a result, the power utility was swinging "from one tariff crisis to the next".
Busa's submission to Nersa on the Eskom tariff hike application will make suggestions on alternative funding models.
"If [the increase] is implemented, in a year we will be saying the programme was a success, the patient is dead. It will be a shock that the economy can't absorb."
Parsons flagged an increasing tendency for state-owned enterprises to solve their funding issues by slapping new taxes and administered prices on consumers.
For instance, he slammed the department of communication's proposal to impose a 1% tax to fund public broadcasting.
"Once you go down that road, I don't know where you are going to stop," Parsons said.
- Fin24.com