The non-payment threat of the working class

By Themba Mbatha

We have all accepted that the state’s economic preoccupation in the coming years should be the pursuit of a developmental state. To that end, President Jacob Zuma announced in the State of the Nation address an unprecedented public infrastructure spending programme to achieve the objectives of a developmental state.

The estimated R800-billion to be spent on public infrastructure is the cost of being a developmental state. Included in this budget is Eskom’s build programme, Metrorail’s and Transnet’s rail fleet replacement and other infrastructural developments. All of these cost money, serious money, and someone has to pay at the end of the day. This is where the problem is.

It now appears that South Africa’s working class (I make no distinction between the working class and the middle class) is not ready to pay for their part in this developmental state. The recent ruckus over e-tolls was celebrated as a victory for civic participation and accountability, and rightly so. The negative consequences of the e-tolls delay, however, have not been fully accounted for, save only for a minuscule mention of a ratings downgrade.

There are also the incredibly noisy objections to Eskom’s tariff increase. When Eskom reported profits of R16.2-billion for 2012, most of the public objected to the profit despite the fact that Eskom has a power stations build programme valued at R320-billion. Not to mention, also, the adjustment on the proposed 2011 tariff increase of 24% to 15% by the energy regulator. In essence Eskom has raised less than they needed in 2012 to meet their funding requirements. This adjustment was done at the behest and to appease the very same working class.

What is at stake here, with this emergence of a culture of non-payment for public services by the working class, is that the economic viability of the public sector projects is questionable since the eventual users will most likely resist payment.

Data from Stats SA and the banks show that default rates remain manageable, indicating that the working class pays for services and repays their debt; it is payment for public services that seems to be contested. I understand that the working class is generally not happy with how they are currently governed, but they have picked the wrong proxy to wage war against the ruling elite.

I know that fingers will be pointed towards business. After all, with all the excessive profits they are making, business should be able to carry a large part of the expenditure, not the working class. Or so the thinking goes. But this is flawed on a number of factors. Even when ignoring the taxes collected by government from business, there is still a lot that business has done, and continues to do, to keep the wheels of this nascent developmental state moving.

A large part of the working class has pensions that are half-funded by business; it is the very same pensions that government is now arguing should be used to fund some of the expenditure.

We enjoy what has been called a first-world financial system, exclusively developed by the private sector. Most of us take for granted that our salaries will reflect on pay day and no later. We are oblivious to the complex systems, personnel, and regulations involved in making this happen.

We are nearing a mobile phone for every citizen in the country. We are nearing full coverage of basic telecommunication services to even the most remote parts of the country. The private investment in the enabling infrastructure is mind-boggling. Anyone who commutes around Johannesburg would have noticed the digging and laying of fibre-optic cable; that is another private sector company spending billions on our rapidly evolving telecommunications infrastructure.

These are some of the things that the private sector has done and continues to do for South Africa.

It is accepted that if South Africa is to live up to the title of being a developmental state, private participation in infrastructural development is important. This is reflected in all the planning commissions and policy documents. The prevailing ideology is that the state, as the leader of change in society, will partner with the private sector to achieve the goal of being a developmental state.

Business continues to invest in private infrastructure because all key indicators show that the consumers of the service will pay, where a need has already been justified. Will the private sector invest in public infrastructure when all key indicators show that the working class will resist payment? I think not.

What the working class is doing is sabotaging economic growth and, by extension, job creation just to make a point about governance in this country.

The working class needs to realise this very soon, and separate matters of political governance and economic sustainability. There is something called an election that resolves political governance, not misguided proxy battles that adversely affect the economy. The next march the working class has should not be about e-tolls, Eskom or NHI expenses, it should be directly about their unhappiness about how the state is governed.

Themba Mbatha is a typical citizen. He earns a living from 8 to 5 every weekday, and for all this effort he only get two days to live. He is part of the privileged working class. Follow him on Twitter: @themba_m