User-pays approach on cost

For many of the country’s new infrastructural projects, the government seems to be adopting a user-pays approach, because they come at a significant cost and someone has to pay for them. Our taxes, they say, need to be used to maintain our infrastructure.

But, what happens when existing infrastructure fails? There is often a significant cost to the private sector. My question is: who is expected to carry these costs?

Take for example the fact that one of our local private hospitals recently endured a three-day electricity outage.

The first response to this statement will undoubtedly be: “don’t they have generators?”.

Sure, they have generators, but what nobody seems to take into account is that it costs significantly more to run generators than to work off electricity. Not only that, but generators can only be used to keep the lights on and essential equipment running.

The hospital is not permitted to allow any operations to take place when there is no electricity, which means that all people who were scheduled to have operations on those particular days could not be operated on.

That means the hospital and the doctors lost their income. In addition, they still had to pay their staff, who reported for duty every day, because nobody was certain how long the outage would be.

Never mind that some of these scheduled operations were life-saving procedures, and that it was not possible to transfer them to other hospitals, because of the severe shortage of hospital beds and because other hospitals didn’t have all the technology that this particular facility was able to offer.

Let’s not worry about the fact that all of the people who were scheduled to have their operations went through the, often arduous, process of getting medical aid approval, took leave from work, underwent hours of starvation in preparation for their procedures and mentally prepared themselves to have their scheduled operations.

They probably also had to make special arrangements for someone to do their work while they were away and someone to take care of their children, because they needed to be at the hospital at six in the morning.

They weren’t the only ones “inconvenienced” either. There was a whole central block affected.

While we are at it, let’s consider what it means when a similar power outage affects a factory that employs 500 people.

First, the factory is unlikely to be able to use generators to run their machinery, because of the enormous power requirements, and because it would simply be uneconomical to do so.

The factory has to pay their workers for four hours after declaring short time.

They are unable to produce their planned production for the day and hence fall behind in their deliveries.

Since most businesses are trying to go as lean as possible, and order goods just in time, the said factory stands to lose customers, and, hence, future orders, from their failure to deliver on time.

Non-delivery means that they can’t invoice, so cash flow is also affected.

The 500 people who work in the factory are going to earn less income this month and not be in a position to meet their obligations.

We’ve just considered two examples. Let’s face it, when there is a power outage, many businesses and people are affected, especially if it is a protracted one.

If one added up all the immediate and future costs to business, as well as the costs of inconvenience to everyone affected, I think that we would all do more than a double-take.

So far, businesses have been absorbing these costs, and no doubt, at the expense of job creation. I wonder how much longer they will be willing to do so?