Craig Dodds

Political Bureau

THE SABC’s plan for a 24-hour news channel appears to have hit the skids in the form of hard times and Finance Minister Pravin Gordhan.

A week before he is to present his Medium Term Budget Policy Statement in Parliament, outlining spending plans for the next three years, Gordhan put the SABC on notice yesterday.

He said in a written reply to a parliamentary question on the planned news channel that the broadcaster’s management must “take credible measures to stop wasteful and ill-considered projects and expenditure”.

Leaving little hope that the 24-hour channel would launch any time soon, Gordhan added: “This is not the time for vanity projects. Not when this country faces fiscal constraints.”

Gordhan is expected next week to keep government departments on a tight leash against the backdrop of a widening deficit on the country’s current account, now at 6.4 percent of GDP, and downgrades in its credit rating by two ratings agencies, set to drive up the cost of borrowing.

The SABC had announced the channel would launch last month, but has been silent on it since.

In its annual report presented to Parliament last week, the SABC reported fruitless, wasteful and irregular expenditure of R22.1m for the 2011/12 financial year.

Though it converted a R129m loss last year into a R343m net profit this year, employee costs soared by 8 percent to R1.75 billion – breaching a target set under a R1.4bn government loan guarantee granted by the Treasury in 2009.

Gordhan said in his reply that the target for employee costs was R1.48bn, indicating the broadcaster was wide off the mark by R227m.

Of the four main conditions attached to the loan guarantee, the SABC had met two, partially achieved one and failed to meet another. They were:

l Develop a turnaround plan – partially achieved. Gordhan said the broadcaster’s corporate plan encompassed an “integrated turnaround plan”, but the corporate plan was being revised to align the budget with the loan guarantee targets;

l Implementation plan for addressing issues raised in the report of the auditor-general – achieved. The SABC had set up a team focusing on the AG’s recommendations and it had been implementing these.

l Cost cutting and revenue enhancement measures to be captured in the shareholder’s compact – not achieved. The compact had yet to be finalised.

l Monitoring Task Team established – achieved. The task team held monthly meetings with the SABC to discuss progress.

The SABC had asked the Treasury in March to relax the conditions of the guarantee, but it had been refused because the problems that had given rise to financial instability in the first place – cost escalations in excess of revenue growth – had not been adequately addressed.

Any relaxing of the targets would increase the risk to the government in relation to the guarantee, Gordhan said. The SABC had been successful in some cost-cutting and revenue enhancement initiatives, but had failed to meet the target for reducing employee costs.

Responding to the parliamentary question from Cope’s Juli Kilian on whether a business plan for the proposed 24-hour news channel had been presented to the Treasury, Gordhan said such a plan had been “shared”, but the financial aspects were still being considered.

Communications Minister Dina Pule has said the projected operational cost of the channel would be R180m a year, rising to R240m in the fifth year. The SABC would also need R75m for capital expenditure.

SABC spokesman Kaizer Kganyago said plans for the launch of the channel were “on track” but could not give a launch date.