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SA must do away with Dept of Public Enterprises to address SOE ills - DA

May 22 2018 20:52
Khulekani Magubane

Cape Town – The Democratic Alliance on Tuesday advocated for the privatisation of some functions within state-owned enterprises and the eventual collapse of the Department of Public Enterprises.

Addressing media during a briefing in Parliament, the official opposition said that too much in the performance of state-owned entities (SOEs) depended on the minister deployed in the public enterprises portfolio and executives appointed at parastatals.

Minister of Public Enterprises Pravin Gordhan has hinted at introducing legal amendments which would allow the minister to intervene in entities where boards are neglecting their duties or are unable to fulfil their mandate.

Minister of Finance Nhlanhla Nene earlier told Parliament that entities must be in prime shape to serve South Africa and ensure the investor community that they will operate by the book henceforth.

SOE allocations 'often misspent'

DA MP Phumzile Van Damme said these entities present a major risk to South Africa’s economy as they continue to extract billions from the fiscus just to allow them to function; worse yet, the allocations they receive are too often misspent.

“In the 2016-17 financial year 38% of all SOEs made losses totalling a staggering R53.7bn. Among the biggest offenders are PetroSA, Prasa, SAA, SABC, Sanral and Sapo, which made a combined loss of more than R15bn, nearly 28% of all losses,” said Van Damme.

“SOEs shouldn’t be operating to get profit from the public but to give good service. The department of Public Enterprises should not exist. It was formed with a long-term view of privatisation.

"The first thing we will do in 2019 is to get rid of the department and put entities where they belong,” said the DA's Manny de Freitas.

DA MP Natasha Mazzone said even though the DA’s proposed reforms would take years to steer entities towards the right path, they represent the best bet to get parastatals to function optimally.

“It’s gotten to the point where you turn around a massive tanker. It will take time and a lot of money is being presented in a turnaround plan. If the new deal comes in as Cyril’s (President Cyril Ramaphosa's) plan, he needs to show South Africa that he is serious by showing the people implicated the might of the law,” said Mazzone.

She said Gordhan’s proposed powers of intervention are potentially a short-sighted answer to a challenge which stems from cadre deployment, poor governance and financial mismanagement.

“Even under Lynne Brown’s tenure we asked her to intervene and she did not. Ministers’ hands were often tied. But we have come to find that this was done deliberately so that the minister of finance cannot get their hands into entities,” she said.

Mazzone recommended that entities should be restored to their line portfolios,and that the Department of Public Enterprises should be done away with altogether.

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