Unions are betraying their members

10 Sep 2019

The following speech was delivered in Parliament’s Debate on Prescribed Assets today.

Honourable Speaker,

The government’s proposition is quite simple.

They have run all of the state-owned entities into the ground.

Those companies now need enormous bailouts just to stay afloat.

But there is no more money for bailouts, because debt is unsustainably high, taxes are maxed out, and we’re running record deficits.

Borrowing is expensive, with 10-year bonds costing around 10%, which only makes the problem worse as interest payments climb.

So, what to do?

The government could do the hard work of fixing the state-owned entities.

But that requires real leadership and real, tough decisions.

It requires a confrontation with unions, and an honest admission that the central dogma of state control has failed.

Those things are just too difficult for the ANC to do.

So instead, the government has reached back in time and plucked a policy straight from the National Party apartheid government of the 1980s.

When that apartheid government was in the final phases of burying itself in the junkheap of history, PW Botha also told the country that pension funds needed to be patriotic.

And so, we come back to the present, with the ANC’s 2019 election manifesto promising to investigate a regime of so-called “prescribed assets”.

This was confirmed by the President during Question Time in this House just two weeks ago.

After a mealy-mouthed obfuscation at first, and after being pressed, he confirmed that prescribed assets are definitely coming.

I could quote you the Hansard, but the President is so verbose, and so slow in coming to the point, a bit like his Presidency really, that you’ll have to go read it for yourselves.

The ANC is reduced to copying the desperate policies of a failing apartheid government. How low they have fallen?

Some may call that moral and political bankruptcy. Others call it the “New Dawn”.

They may euphemistically refer to “prescribed assets”, but let’s be absolutely clear what we are talking about:

They are proposing to force every pension fund, public and private, to lend money to the government and to the state-owned companies.

Normally the interest rate should compensate the lender for the risk of extending the loan.

But if the lender is forced by law to make the loan, then it is the borrower (in this case the government) who dictates the interest rate.

This simply means lower investment returns for hard working South Africans for the rest of their working lives, and smaller pensions for hard working South Africans when they retire.

I did a rough calculation. Assuming the government starts off taking 3% of pension funds, a number that has been bandied about. A 35-year-old South African who is saving R2000 a month in their pension, and who does so diligently until retirement, will lose R1.4 million in savings.

So, let’s cut the nonsense and call it what it is: Pension theft!

This government is proposing to steal from the pensions of hard-working South Africans to pay for their mismanagement.

And don’t be persuaded by the argument that 3%, if that is where it starts, is where it will end.

Once the principle is established that it’s okay to steal, the quantum will be ratcheted up year after year.

The DA warned, in the debate over the amendment to S25, that you cannot compromise on the principle of private property ownership. And that when you do undermine property rights, this doesn’t only affect land, it affects all kinds of property – even your future pension.

I didn’t imagine at the time that this warning would come to pass so soon.

Stealing from people’s future pensions is still theft, plain and simple, and should be fought by every South African who has diligently saved for their retirement.

I do not think the message has even begun to get out there about how dangerous this is.

Let the word go out that the ANC, the self-proclaimed vanguard of the working classes, is coming for the workers’ pensions.

The government doesn’t need to change any law to do this.

This can be done with a simple regulatory change.

We believe such a change would illegally and unconstitutionally deprive people of their own savings without their express permission.

So if the ANC does go ahead with this mad idea, we will table private members legislation to allow South Africans to withdraw their pensions without having to resign first.

And our legislation will allow them to opt out of compulsory pension contributions.

If we don’t do this, you will see thousands of workers resigning from their jobs to save their pensions.

And government employees must not think they are safe.

In fact, the ANC’s proposal is most absurd when applied to civil servants.

The state pays their salaries, and guarantees their pensions, then uses those pensions to buy government guaranteed debt in bankrupt SOEs.

All of these guarantees only last as long as the economy is growing and there is money available to pay for it all. And there isn’t any.

When the money runs out, the “defined benefit” pensions will be the first guarantee to go.

So nurses, teachers, police officers, social workers, doctors, every public employee must also support the DA in fighting this theft of their pensions!

And this brings me to the ANC-aligned trade unions.

Where is Cosatu and its affiliates?

Where are their representatives in this House?

These unions haven’t said a thing, and Cosatu has offered cautious “in principle” support.

Why aren’t they speaking for their members?

Every member of these unions should ask what they pay their membership fees for.

Does Cosatu represent their members to the ANC, or do they represent the ANC to their members?

Cosatu’s slogan is “an injury to one is an injury to all”. But this proposal is an injury to all, and they have not mustered the voice to speak for even one of their members.

Possibly worse than the silence of many unions, is the sickening sycophancy of some in the asset management industry.

Asset prescription is inimical to efficient capital allocation, and is clearly not in the interests of their clients.

Yet these asset managers have shown they are prepared to accept almost any outrage, so long as it is presented in a New Dawn wrapper.

And so now we have the grotesque spectacle of asset prescription proudly endorsed by Colin Coleman of Goldman Sachs, Magda Wierzycka of Sygnia Asset Management and Wayne McCurrie from FNB wealth.

Honourable Members,

Here again we have the alliance of big state, big unions, and big business working together, with no regard for the best interests of ordinary South Africans.

Only the DA is fighting for the working man and woman.

Only the DA is protecting the family, and creating work for the jobseeker.

You don’t get to pilfer people’s pensions without a fight.

And we will lead the fight to stop this theft.

Issued by Geordin Hill-Lewis MP, DA Shadow Minister for Finance, 10 September 2019