White Elephant Country [Noseweek, 2008-10-01]

Publication	Noseweek, Issue 108
Date	2008-10-01
Web Link	www.noseweek.co.za

When politicians decide they want something, they don’t seem to care how much it costs. It’s the rest of us, the patsies who pick up the tab, who demand a number.

So they give us one – whatever they think they can get away with at the time. It need have nothing whatsoever to do with reality, but, to add credibility, that number is seldom completely round. It’s usually something like R2.3 or R8.7 or R48.2, followed by just enough noughts not to provoke mass resistance.

But as soon as the rubber is stamped, everything changes. And before you know it, the original estimate has doubled. Uh, tripled. Wait, quadrupled. No, decupled (we had to look that up).

And yet the government admonishes us to grit our teeth and tighten our belts and stop complaining. What cheek. If we ran our finances the way they run our finances, we’d all be in jail.

Compared to some of the other exploding budgets on these pages, the 66% increase in our weapons expenditure looks almost restrained.

But it’s still a massive chunk of cash. And since we had to borrow most of it, and credit is not as easy or cheap as it used to be, it will leave us in hock for years to come.

As it says in the government’s long-hidden 1999 affordability study: “Even expenditure of R16.5bn may create a situation in which government could be confronted by mounting economic, fiscal and financial difficulties at some future point.”

At R25bn, it says: “The additional arms spending is about the same as the current budget of the department of housing, about 50% more than the current investment in municipal infrastructure; and is roughly a third to half the budget of the department of education.”

Perhaps if the money had been spent on equipment we actually needed and knew how to operate, if the promised economic offsets had been delivered, and if millions of rands of taxpayers’ money hadn’t found its way into the pockets of fraudsters, we might not be so upset.

As it is, the cost to the country in terms of unity, tolerance, stability, international reputation and respect for the rule of law is likely to weigh even more heavily than the financial burden.

To call this a gamble is to be kind. It’s more like taking R30bn in notes and dumping it in the Athlone sewage works (see noses66,67,74,&105).

We have already spent more than R8bn on the experimental phase of this unproven technology, and not one bag of cement has yet been mixed. The reactor was supposed to begin producing electricity in 2003. Now they say 2015, but we bet their fingers are crossed.

Meanwhile the PBMR company, owned by Eskom and therefore by the public, boasts that it is paying the salaries of 1,700 experts – “one of the biggest nuclear design teams in the world”. Yet no-one has yet seen the final design.

All we know is that it doesn’t include a “secondary containment” shell, and, without one, the US government won’t license the plant (assuming it ever works). Without a US licence, we haven’t a hope of selling plants to other countries and making a return on our investment.

We will, however, be forced to build another 30 plants for sale to Eskom – costing something in the order of R100bn, which will find its way onto our electricity bills. Fortunately, things are unlikely to get that far.

Each plant, by the way, if it works, is expected to generate only 165MW of electricity. By comparison, the wind farm Eskom is planning to build near Vredendal will generate 100MW at an estimated cost of R1bn. It will take just a year to come on line, cost almost nothing to run, require no expensive safety systems or decommissioning and produce no hazardous waste. And the fuel is free, forever.

You have to laugh when you remember how gullible we were. Not only did we think R2.3bn (total national cost, according to Sport Minister Ngconde Balfour in 2003) was a lot of money, we thought it could buy us the “best-ever” football world cup and make us all rich in the process. We even believed our team had a chance of making it to the second round. Happy days. Now we’re paying 10 times that for an event which will leave us poorer – and our team’s presence on the pitch is more likely to be a source of embarrassment than pride.

Even the government is sounding worried. But it blames most of the problems on “unforeseen circumstances beyond anyone’s control”.

And yet, the signs were there. The day before South Africa’s name was pulled from the envelope, the oil price reached a 21-year high of $41.56 a barrel. Even the US department of energy was warning of an imminent fuels crisis. By the end of 2005, oil cost $70 a barrel and American banks were getting jittery about sub prime mortgages.

Unfortunately, no-one in authority, except Helen Zille, had the courage to call for a less grandiose plan before we’d spent most of the money.

Now we are faced with raising huge amounts of foreign capital to throw a massive party, just as the world is slipping into recession. Our great-grandchildren will not thank us.

Another badly thought-out initiative, which entrenches the place of petrol-driven, privately-owned, public transport.

Since the recap process was launched more than two years ago, fewer than 20,000 of the 120,000 skorokoros on our roads have been scrapped.

The plan was rammed through without public consultation or heeding the concerns of the taxi industry. In March the National Taxi Council suspended support until government addresses its concerns, including the inadequacy of the R50,000 scrapping allowance.

With high interest rates and fuel prices, only the richer operators will be able to afford the new vehicles – and then only by doubling or tripling fares. Small operators will just take 50 grand and run.

Besides which, there’s the whole question of the wisdom of pumping so much public money into an industry which is structurally dysfunctional.

The Coega Industrial Development Zone was meant to be bankrolled by enthusiastic private investors – but it’s now being funded by unenthusiastic taxpayers. Desperate for tenants the government agreed in 1999 to pay MAN Ferrostaal R4.5bn (now R8.1bn) for three submarines, on condition that the German company built a R6bn stainless steel plant in the zone. They didn’t. Numerous attempts were then made to attract an aluminium smelter, with promises of cut-price electricity and 10-year tax holidays – but when it became clear that there wasn’t enough electricity to go round, cut-price or otherwise, the only remaining party, BHP Billiton, suddenly lost interest.

The project involves so many government departments, parastatals and sweeteners, it’s difficult to pin the budget down. Officially, R8bn has gone on infrastructure, including a deepwater port, and salaries (Coega Development Company CEO Pepi Silinga earns more than the president). Tenants now include a yoghurt factory and an Absa call centre.

Otherwise, the zone still pretty much lives up to its local nickname “the ghost on the coast”.

No one can argue with the need to invest heavily in public transport, but does the Gautrain qualify?

It’s not going to help solve the region’s transport problems. It will serve only a tiny elite. It will make no difference to greenhouse gas emissions, nor will it save on fuel, since high-speed trains have the same fuel consumption per passenger as a car carrying four people.

And if 60,000 people aren’t prepared to leave their cars at home every day to spend at least R200 per day on train fares, Gautengers will end up subsiding the service to the tune of millions every year.

Like most such vanity projects, it’s not even proudly South African. The track is being built by a consortium dominated by the French and the Canadians, and the train itself was designed by a Canadian and built in Derby, UK. All we get to do is fit the pieces together.