Fellow South Africans,
The annual State of the Nation address is an opportunity for me and my government to report back on previous commitments and set out our task for the coming 12 months.
Many of you have, quite rightly, become impatient at the slow pace of progress made on our promises of a “new dawn”. After serious introspection, I realised that to resolve the many crises facing us — record unemployment, mismanaged and corrupt state-owned enterprises, collapsing municipalities acting with impunity, a failing education system and epidemic violence against women and children — require a different style of leadership. I am a consensus seeker. I like to let all around the table feel like winners after our negotiations.
This leadership was good for the transition to democracy in 1994 and for the constitution-writing process thereafter. But I realised that the very nature of a “crisis” is that it requires immediate and effective action.
I am reminded of the fact that former president FW de Klerk — present here tonight — did not consult his party and try to reach unity on the radical decision of February 2 1990 to unban organisations and set political prisoners free. He acted on his conscience and risked the unity of his party for the sake of the greater good of all South Africans.
I therefore announce tonight that the time has come to take decisive actions despite disunity on many matters in my own party and among alliance partners.
A wounded and dying patient needs urgent surgery. The pain inflicted in the short term by the sole decision-making surgeon, working in a trusted team, is the only chance for a longer-term return to health.
Despite all our ideological and lofty statements about a “developmental and competent state”, we have to confess tonight: under the ANC we have become a failing and corrupt state, inflicting pain on the most vulnerable whom we claim to represent, and causing economic hardship instead of growth. It is the ANC that protected a corrupt regime for almost a decade. We were blinded by party loyalty.
It is now time to act.
Our public service at all three levels of government is bloated, inefficient and in some cases incompetent. Using international benchmarks appropriate for emerging economies, we will — with rare exceptions — immediately freeze the filling of vacancies and reduce the public sector wage bill by 8% a year over the next three years.
There are more than 750 enterprises owned and managed by the state. We have drawn up strict criteria for the retention of sole state ownership. The most important question is whether an enterprise provides an essential public service and is able to stand on its own feet financially. Those that fall outside this narrow scope — including SAA, SA Express and Denel — will be disposed of in a rational manner and might include a minority state ownership where it makes financial sense (as with Telkom). We will, as the law stipulates, not interfere with business-rescue decisions.
Eskom is a special case because it does provide an essential public and economic service. We all know the risk it currently poses to our entire economy. We have reached the end of bail-outs. Five interventions will now start.
(i) To diminish overhead cost, a rational and legal staff reduction process for a company of this nature and size will take place within 24 months.
(ii) Proposals for sustainable energy projects — in line with our Paris Agreement commitment — will open next month with additional electricity capacity added to the grid within 15 months.
(iii) The unbundling process will be accelerated and equity partners will be sought for the generation unit.
(iv) A broad agreement between business, labour and government will be signed next month to deal with Eskom’s debt in a decisive and sustainable manner. It will require extraordinary once-off actions, which the minister of finance will explain in his budget speech.
(v) Non-payment of electricity will be dealt with decisively. I warn many middle-class township citizens, state departments, and municipalities that the culture of free-riding is over. There will be two forms of load- shedding in future: those necessitated by capacity constraints and those invited by non-payment.
The scope and depth of state and corporate capture emanating from various commissions and reaching headlines on a daily basis are beyond normal legal pursuit and prosecution. I therefore announce that the Zondo commission of inquiry into state capture will cease to work in its current form. It will be replaced by a Truth and Recompensation Commission (TRC) over the next two years. All persons involved in corruption since April 27 1994 are invited to make a full disclosure of their misdeeds with an agreement to repay whatever amount is possible. They will then receive amnesty. Those who hide or make partial disclosures will be liable for prosecution under existing law. All legal processes related to corruption that are currently under way, will continue and are excluded from the new TRC.
My government is committed to a deeper and more efficient land reform programme. The constitutional amendment will continue, but any suggestion that decisions about compensation because of expropriation be taken by a political office bearer, will not be supported. We must respect the rule of law and we must start the land reform process with granting title deeds to those living on state land and by accelerating state land allocation for urban areas. I state this clearly: we do not foresee expropriation of active industrial areas or productive agricultural land and are encouraged by the growing co-operation and joint ownership between commercial and small-scale farmers.
Our economy is not growing fast enough and our tax revenue falls short of set targets. To get us over the fiscal cliff we face, we have agreed with listed companies that government will raise a tax on JSE share transactions. This revenue will be paid into a separate treasury account and only be used for capital projects and job creation executed in a public-private partnership. This will increase accountability and efficiency and business will see where their money goes.
These are some of the actions we plan. There will be resistance, but I have a duty to lead according to my conscience and for the sake of all South Africans.
Let us take hands. Tuma mina!
Your public servant,
Professor Piet Naudé is the director of the University of Stellenbosch Business School