Bailout of public entities is a waste of public funds

Manie van Dyk, DA Spokesperson on Public Enterprises
16 April 2009

An analysis of the history of bailouts into nine public enterprises reveals that an estimated R100-billion of public money was spent on propping up failing state institutions between 2004 and 2008.
 
Despite the fact that these institutions continue to be run at a loss, their executives are paid handsomely and receive performance bonuses when in fact there is no performance to be shown. An example of this is the SAA, Chief Executive, Khaya Ngqula who received more than R20 million during his tenure, when the national airline was being run at a considerable loss. Another case is Eskom, which despite immeasurable hardships it caused to millions of South Africans through electricity black outs, awarded generous bonuses to its executives.
 
The bailouts come either as cash injections or loans guaranteed by the state. The history of these bailouts shows the following:
 

The Democratic Alliance (DA) has concrete proposals to turn these public related entities to profitability, some of which are owned and controlled solely by the state. SAA should be privatised and there need to be policy changes to Eskom's monopoly over power generation and distribution. Others, like the Land Bank should be run by executives with the necessary skills and experience.

Finally the Road Accident Fund currently employs more lawyers than it is necessary for its operation and this in turn increases its operational costs when its paper work can be done administratively.