Bailout by Stealth
Geordin Hill-Lewis, DA Shadow Minister of Finance – 8 December 2020
The agreement signed today at the National Economic Development and Labour Council (Nedlac) between labour, business and government, initially proposed by Cosatu, amounts to a betrayal of workers and the public at large, who will end up paying when government can no longer afford public pensions.
Importantly, the agreement ignores the only role-player who can actually decide on such a scheme – the Government Employees Pension Fund (GEPF). Without GEPF approval of this irresponsible scheme, the Public Investment Corporation (PIC) cannot proceed.
The GEPF is unlikely to ever be able to approve such an obviously bad investment, because this will be contrary to their fiduciary duty to their members (who are current and future pensioners) and will therefore be illegal.
Without the GEPF’s agreement, today’s signing ceremony was an irrelevant exercise in futility.
The Democratic Alliance (DA) will fight to stop this ‘bailout by stealth’. We stand with all public sector workers across South Africa who want their pension savings protected, and who oppose using their savings to pay for ANC failures. We call on public sector workers to reject this plan out of hand. We believe that any attempt by the GEPF to essentially write off the R104 billion in Eskom debt they currently hold, and to add even more to this figure (an additional R100 billion), would be illegal. We will not hesitate to oppose this through legal action if needs be.
The proposed “conversion” of more than R280 billion in Eskom debt to “equity” is a sham. There is no prospect of the PIC ever earning a return on this investment from Eskom. This means there will be a giant hole left in GEPF funds, which in turn means the GEPF will have to be bailed out by the government down the line. This is why it is a ‘bailout by stealth’ – the GEPF bails out Eskom now, the government bails out the GEPF later. However, all of this rests on the assumption that the government can afford to bailout the GEPF later. Given the precarious state of our national finances, this is far from assured. Indeed, it looks more and more certainly not possible.
And that is why workers should not take the risk, and why this scheme should be stopped now.