Western Cape Business News

Send  Share  RSS  Twitter  10 Aug 2011

POWER SUPPLY: Business Just Can't Keep Up


Recent Western Cape Business News

THERE was reason to ask whether it was sustainable for business and ratepayers to continue to meet the municipality’s growing demands for funds with rates and tariffs increases that were well above the inflation rate, said Michael Bagraim, President of the Cape Chamber of Commerce.

Speaking yesterday at the annual “Business Meets the City of Cape Town” symposium, he asked the City to see the problem from the perspective of business. “The private sector has had a very tough time indeed,” Mr Bagraim said. “There have been bankruptcies, industries have been on short time, there have been wage freezes and retrenchments.”

While this was happening municipal staff had received generous increases and there was no hint of short time, wage freezes or retrenchments.

In the past public service salaries were generally lower but there was compensation in the form of better job security and excellent benefits. All that has changed and those in public service now get the best salaries, the best perks, the best pensions and the best job security.”

The private sector was under increasing cost and regulatory pressure, but it had to finance, through its taxes, an expanding force of better paid public sector bureaucrats and workers, Bagraim said.

In Europe one country after another was discovering that it was on an unsustainable path and drastic corrections and austerity measures were now essential. He said that in Greece the retirement age was 58 and this was a waste of talent, expertise and a poor return on the investment in education and training.

We must come to terms with the fact that improving wages and benefits for the public sector, financed by high rates and tariffs and paid by a shrinking, over-regulated private sector is just not sustainable.”

He said a good place to start tackling the problem was in the over regulated areas where red tape created expenses and compliance costs for businesses. At the same time they created administrative and policing costs for the City.

Does it make any sense to pay building inspectors to examine the work of much better qualified master builders?

Do we need officials to approve building plans by architects with better qualifications and more experience. Surely all that is required is a signed confirmation that the plans are in accordance with the national building regulations.

The whole V & A Waterfront was built to world-class standards without the help of City building inspectors or plan scrutineers. Sometimes all that has to be done is to get out of the way and leave the work to professionals who know what they are doing. It’s cheaper, too.”

Bagraim asked whether there were services that could be contracted out to private sector firms? “Some use is already made of refuse removal contractors and they provide a good and efficient service – even when municipal workers are striking. So let’s increase the use of private contractors.”

The City had already found that the payment of rates and utilities accounts at Pick ‘n Pay was cost effective and safe while it provided a superior seven-days-a-week service to residents. The system could also be used for traffic fines.

What about Feed-in tariffs for companies who are prepared to desalinate water and sell it to the City? The water may be more expensive to start with but it will be a cheap way to develop the technology and expertise. It could also be the start of an industry that will bring in orders from other parts of the country and the world.

In short, what we need is a City that maximises opportunities for the private sector. It is, after all, the private sector that pays the rates and keeps councillors and municipal workers in their well paid jobs,” Bagraim said.


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