R1.13bn lost to higher education to keep airline afloat

Perennial bailouts won't solve problem of SAA

05 November 2020 - 09:24
By Kgaogelo Ntlhane

It was expected that finance minister Tito Mboweni would focus on repairing the damage done to our economy by lockdown during the medium-term budget policy statement (MTBPS) last week. But listening to his words it makes one wonder whether the debt-related hikes and perennial South African Airways bailout will continuously hit the pocket of taxpayers.

Now, to keep SAA flying, state department budget cuts are used as a solution. The government has tried to soft pedal on the state-owned enterprise bailout to placate business and investors but the situation is now out of control. The exposure of using taxpayers' money for SAA came at the time the government is fighting crime and there is high demand for skills and expertise in the SA Police Service to combat corruption.

We should not treat this as yet another bailout but look at how the money is generated to resuscitate the ailing airline.

A list in the supporting document to the MTBPS shows it was difficult to find R10.5bn, with Mboweni eventually having to shift paltry amounts from state departments to find money. The bulk of cash now going to SAA, following R3.5bn set aside in the 2020 budget, was taken from the police. The SAPS budget was cut by nearly R1.2bn.

The health department will have to do with R694m less; transport with R681m less and higher education and training lost R1.13bn. Basic education lost R267m; human settlements lost R345m; women, youth and people with disability was forced to contribute R7.5m while the office of the president was hit for R6.6m.

By some estimates, the airline has received more than R60bn in bailouts over the past two decades and this merely explains that cutting costs in state departments is not sustainable to stop the drain and strain on government finances. This shocking amount of taxpayers' money could otherwise have gone to improving the lives of poor people. In the next MTBPS, Mboweni will have to continue plugging holes and prevent defaulting on debts as long as SAA needs bailouts. Throwing good money after bad is not a panacea.

The question is: does the government take SAA's bailouts seriously?  Do we have brave leadership to engage in a meaningful way on its future? If so, why do they allow the shift of money from their departments to SAA?  For instance, higher education and training lost R1.13bn. This cut came at the time when universities and other tertiary education centres are concerned about their financial viability. Surely minister Blade Nzimande knows very well that education is more important than middle-class transport and moving money from his department to SAA is the antithesis of socialism.

Most people want to know whether the government is capable of running state-owned entities or will it always be tripped up by politics of the ruling party. The hard truth is that nobody in the government is in position to engage meaningfully on the future of SAA because they are held hostage by politics. Political office bearers are increasingly cautious in the work of government as nobody is willing to entertain SOE issues.

The awful reality is that the majority in parliament are unwilling to defy the bailout because it is their mode of transport and it suits them. Our compromised value system means SAA is doomed to remain a burden on government finances.

If the government wants to regain trust from the public that it can run SAA, it must not only ditch the perennial bailouts but put capable leadership in to oversee a far-reaching and urgent restructuring of the airline that could salvage what is worth saving and get rid of the rest. For more guidelines they can solicit advice from successful airlines such as Emirates and Ethiopian. These airlines have expressed interest in doing deals with our government and the option must be seriously and urgently considered.

Ntlhane is a Sowetan reader and regular letters contributor