PETER ATTARD MONTALTO: Too much time and energy spent on things that will never happen

It’s funny how there can be complete obsessions with things that will never happen.

One might argue that it’s better to keep politicians busy with things that aren’t going to happen than making worse the situation with things that could. But such an argument — given the state of the country at present — seems to miss the mark.

More and more stories seem to fit this mould of things that will never happen. Much time is then spent calming investors and others over things that won’t happen. I seem to spend much of my life doing such firefighting when really there should be better uses of time. It would be useful for policymakers to understand that things that aren’t going to happen sap goodwill and sentiment hugely for no apparent upside.

Reserve Bank nationalisation for direct control of policy by the ANC and extreme expropriation without compensation scaremongering were probably two of the most famous historic examples. But have both finally been put to bed.

The list is long, however.

Near the top in the short term might well be that it will never happen that SA will really persuade anyone that it is actually nonaligned when it comes to a balance of relations between the West and Russia. Or that the electricity minister’s predictions of load-shedding coming to an end would be worth anything. Similarly, quite mad examples at subnational level such as that Gauteng could somehow refund everyone for their e-toll payments over years despite no money and no agreement from the National Treasury to do this. But these are trite examples.

Two more meaningful to study are National Health Insurance (NHI) and a state bank.

The debate on NHI has thankfully moved on somewhat in recent months. It’s now quite clear that no-one is against a broad high-quality minimum standard for universal healthcare access. The problem is this NHI, not NHI in general — and in particular the implications for the existing world-class private healthcare sector, provincial powers and individual rights.

The arguments against this NHI have been rehearsed in this paper many times. The more interesting perspective is that the current plan has charged forward despite conflicting legal advice to parliament’s health committee, which opposition parties have highlighted, despite no funding plan or detailed implementation plan presented with the legislation. A recent fact sheet released by the government on the NHI bill relied heavily on eight-year-old costings and tax proposals from the Treasury, giving an air of certainty that is not really the reality for where the health department or other parts of the government are at.

NHI secret

The situation has become bizarre with the media calmly reporting that the health department had said that the WHO had advised to keep details of NHI secret at this stage. The reason, strategy or upside from this course of action seem absent and indeed it has bred this bizarre feeling that this is all a sleight of hand.

The obsession with this unworkable NHI in its present form — which the health department will take years to devise any real implementation of, and then the Treasury will stall for years after and then cabinet will be unable to agree on any kind of funding that it accepts in terms of tax hikes — means that nothing will happen in any reasonable time period, while the underlying issues in the public sector continue to worsen year by year and the need for a real NHI become ever greater.

The concern of course is the monumental amount of wasted time in the government on the issue rather than it devising an actual workable model that leverages the existing strengths in the system, including in the private sector, for the whole population’s advantage. The recent pilot studies showed no particular sense whatsoever of what a real NHI could be, despite much money and departmental time.

This isn’t to say the alternatives would happen quickly or easily or necessarily cheaply, but the point here is viability — what can actually happen within the funding and logistical constraints of the system to enable an end goal of a sustainable quality universal healthcare model.

The issue of state banks is similarly infuriating. The law was changed a few years ago to tighten the rules about state banks which must be national state-owned enterprises and must therefore have national reporting lines. The ANC has resolved it wants more state banks at national and provincial level — Gauteng champing at the bit the most.

Yet the Gauteng bank is impossible under existing law or in terms of how it could be financially capacitated to the satisfaction of Prudential Authority (PA) rules while Postbank is such a monumental mess that it will remain in purgatory of PA assessments for years to come unless a government is willing to pump unseemly amounts into it.

These new examples ignore the wealth of existing expertise and capacity in the state banking space that could be better honed working with private sector banks to de-risk, for instance. This is where efforts should be focused — to achieve scale for interventions such as the Development Bank of SA’s (DBSA) development labs or make access to Industrial Development Corporation financing easier and less cumbersome, which is often a complaint of many attempted borrowers.

According to the DBSA’s website, “the development labs precinct model is an unprecedented SA approach to addressing socioeconomic needs, in a manner that is inclusive, builds resilience, fosters social cohesion, drives community-based solutions and stimulates economic development”.

Energy issues are probably the most dramatic set of examples of things that will never happen.

A coal procurement round in the past Integrated Resource Plan failed spectacularly and banks have closed the taps continually. Money from Russia or China to mysteriously finance a coal power station will not be forthcoming, given carbon tax and insurance problems for any such projects — the underlying maths simply doesn’t add up even if the money was technically available.

Lack of accountability

I used to be of the view that attempting to do such impossible things was a useful way of showing the political economy it was barking up the wrong tree and that they were not being tricked into a conspiracy — yet the lack of accountability means that I am more sceptical of this view now.

The same can be said of Karpowerships, which will both be bogged down in endless legal cases and environmental impact assessment problems for the foreseeable future, and take up valuable policymaker bandwidth continually trying to find ways of keeping the undead alive.

Issues that will never happen are not the same as most issues which are delayed and bogged down. The latter need to be supported and reinforced with capacity, and so on. The former, however, need to be killed off swiftly and replaced by better alternatives. They have in common that they have political imperatives and supposed (normally wrongly conceived) optics or PR on their side. Add in bureaucratic inertia and ideology and one gets a toxic mix.

These issues distract from the very positive reforms that are happening and give the continual impression of two steps forwards being offset by two steps back, when really those backwards steps might be more illusory in some cases.

Business and investors need to get better at identifying and calling out the things that will never happen.

• Peter Attard Montalto leads on political economy, markets and the just energy transition at Krutham.

This article first appeared in Business Day.