By Leon Louw
In tomorrow’s State of the Nation Address (SONA) President Ramaphosa has an historic opportunity to lament the State of the Nation, and promise fundamental changes that would ensure freedom, security and prosperity for all.
If he repeats the pattern of SONAs over the past decade, he will do the opposite. Instead of recent SONAs defining the State of the Nation, they degenerated into putting a positive ‘spin’ on failure.
If President Ramaphosa fails to seize the day – carpe diem – positively, tomorrow’s SONA could go beyond the usual ‘spin’ by evading and bragging about failed policies as if they had not been caused by harmful, even shameful, policies that followed past SONAs.
The President will make much of South Africa (SA) being centre stage in the International Court of Justice (ICJ) case against Israel. Whilst it might be a blessing that someone brought the case, that South Africa has a history of flouting ICJ rulings showcases hypocrisy.
The international relations manner in which the case is being handled gives the impression of a move away from our greatest source of freedom and prosperity, the largely free, rich and democratic ‘West’, towards largely authoritarian, poor and undemocratic regimes. Jews and South African black people have suffered gross injustices, for which most of the world has been compassionate, but Israel and SA have been testing that compassion to the limit.
It has become customary for SONAs to promise policies that would boost economic growth, and would reduce unemployment, crime and corruption. For over a decade these have are not achieved. Typically, the plans and policies are not those which would have those benefits, and those that might are seldom even implemented.
Virtually every SONA since President Mbeki promised a more enabling business environment, with special emphasis on small business. Recurrent ‘red tape reduction’ promises have coincided with the opposite before the President in parliament as he speaks. Multiple measures in and out of parliament invariably do the opposite of what is promised. They drown the country beneath a perpetual deluge of anti-business and ani-employment controls and taxes. So-called National Health Insurance (NHI), for instance, will be accompanied by devastating prohibitions and punitive taxes.
Tomorrow’s SONA should admit how badly promised intentions and unfounded forecasts have matched outcomes.
Corruption kills economic growth. Since what can be achieved depends on available resources, the time has long past for the government to discontinue corruption. Instead, our country has fallen two points in Transparency International’s Corruption Index. Recent revelations of serious corruption at every level, from ministers down, along with day-to-day experience of police and officials soliciting bribes, reinforce the impression that the government does not care. As always, the President will promise anti-corruption action. But will he do the obvious, and ensure that Chief Justice Zondo’s recommendations are implemented at last?
Serious crime is increasing. Murders, attempted murders, carjacking, truck hijacks and cash-in-transit heists are increasing. Not only are murders increasing but 70% of murders are getting away with it. Mercifully, sex crimes are down in the most recent year on record, but still more than in 2018. Clearly our crime prevention and justice institutions are failing to protect citizens and investors from criminal parasites and predators. Will the President promise and take concrete action this time? New measures likely to increase corruption and crime, such as NHI, suggest that the government does not want to redress the problem. It would be wonderful were this SONA to break from the past by promising and being followed by something positive.
The President will brag about NHI. He will say that it will ensure improved universal healthcare for all despite the fact, according to most experts, that it can neither be funded nor implemented, and will cause deteriorated healthcare. Though this has been made clear, NHI will deny patient choice and quality care, even for its politically privileged promotors. They seem to be motivated more by malice towards beneficiaries of self-funded quality care than concern for the Nation.
The SONA will refer to the draft Integrated Resource Plan (IRP2023) which promises the supply of reliable electricity. Although much in it is excellent, it, like NHI, has a potentially fatal flaw. Instead of liberating electricity markets as in advance economies, it envisages an apartheid era nationalised monopoly. The burden of this, with NHI and other costly ideas, would impose on the fiscus render them impossible. Will he admit this and promise something more realistic? The fiscus is already so bankrupt that SONA should promise cutting rather than adding burdens, especially the elimination of failed State-Owned Enterprises (SOEs). The prospect of adding more than one trillion rand to the budget is manifestly ludicrous.
Will the President address the parlous ‘State of the Fiscus’ (SOFA), or hope that magical solutions will appear in the 2024-2025 Budget Speech on Wednesday 21 February?
Despite the fact that South Africa has the world’s highest enduring unemployment, which includes two thirds of young black women, the government is intensifying its causes, especially through labour and minimum wage laws. This SONA will, like every SONA, promise job creation. It will, like every SONA, be followed by measures guaranteed to destroy jobs. Will the President admit that previous promises were not kept, and that failure should have been expected?
Government job creation schemes generally result in fewer jobs simply because governments cannot create productive jobs. Before governments can spend on jobs they must impose taxes that destroy jobs. Real new jobs are created by a growing economy and the removal of regulatory obstacles.
What should the President say? Instead of more ‘spin’, he should have the courage to lament the State of the Nation honestly. He should say that he and the government finally care enough about the Nation to replace patronage and ideology with the honest pursuit of wealth, security and welfare for all. He should apologise for and promise an end to what fails. He should set hight economic growth as the top priority. He should promise an end to corruption, and mean it. Since corruption is a function of excess discretionary power, he should promise objective criteria with the checks and balances of the kind that ensure the relative absence of corruption withing the private sector. He should announce the roll-back of anti-labour regulation.
In short, he should emulate Argentina’s President Javier Milie in a country with similar problems, by liberating the economy from government shackles.
Leon Louw has been a guest speaker in over 50 countries, including some of the world’s leading forums such as the UN Committee on Apartheid, US Congressional Committees, and the Chinese government’s Committee on the Basic Law. He has interacted with many of the world’s leading intellectual and political luminaries. Leon founded the Free Market Foundation (FMF) in 1973.