Five preconditions for national coalition – FMF

Federalism, privatisation, labour market liberalisation, private property rights, and healthcare reform should be preconditions

The FMF’s five preconditions for national coalition

11 June 2024

The Free Market Foundation (FMF) has released its five non-negotiable terms in the formation of a national coalition government or ‘government of national unity,’ should the parties reject a confidence-and-supply option.

‘The FMF remains committed to a confidence-and-supply “no-alition” arrangement as the best way forward for the country,’ says David Ansara, CEO of the FMF. ‘However, if the political parties do decide to go the formal coalition route, they must embrace federalism, privatisation, labour market liberalisation, private property rights, and healthcare reform as preconditions for any such arrangement.’

These preconditions should be given legislative effect within the first month after Parliament’s first sitting on Friday, 14 June, to ensure the new administration is legally bound to grant the concessions.

1. Federalism

The rapid economic and political decline which South Africa has faced in recent decades has primarily been a symptom of the over-centralisation of political authority. Consequently, the single most important element of reform should be a radical decentralisation of political authority to provinces, municipalities, and communities to empower them to fix the myriad problems facing their constituencies without undue interference from central authorities.

By recognising the legitimate sovereignty of these spheres of government, they will be empowered to act more independently, with both the authority and the means to manage matters such as policing, transport, and energy.

To this end, the FMF recently launched its Campaign for Home Rule to encourage a more federalised approach to governance.

2. Privatisation

South Africa’s economy is characterised by high levels of state ownership, particularly in the so-called ‘network’ industries, such as electricity, ports, and rail. Underperforming state-owned enterprises act as a chokepoint on the South African economy by disrupting supply chains and increasing costs through inefficiencies. Moreover, their persistent financial losses have acted as an additional burden on the already overburdened South African taxpayer.

Chronic mismanagement of crucial industries cannot be allowed to persist if we hope to generate tangible reform and move towards greater prosperity. Key state-owned enterprises such as Eskom, Transnet, and PRASA, should be privatised in whole or in part.

3. Labour market reforms  

At over 41% South Africans face one of the highest rates of joblessness on the planet. Chronically high unemployment is the consequence of the government’s overzealous labour regulation which locks millions of South Africans out of the formal job market.  

The FMF has long championed the Job Seekers Exemption Certificate, which would enable prospective employees to voluntarily exempt themselves from rigid labour laws. In doing so, those that are unemployed can finally take their first step on the employment ladder. Employers will also benefit from a more dynamic and flexible labour environment. 

4. Strengthen private property  

The right to private property is the foundation of a free and prosperous society. It is therefore essential that legislation which undermines this institution be promptly and unreservedly repealed. Chief among these are the recently adopted Expropriation Act, the Land Court Act, and the disastrous Mineral and Petroleum Resources Development Act (MPRDA). 

Repealing these laws would enhance investors’ security of tenure and reassure citizens that their rights to liberty and property will not be unduly and unjustly infringed upon.   

5. Health 

The National Health Insurance Act must be repealed and the prohibition placed upon private healthcare funders to provide low-cost benefit options must be lifted.  

The freedom of South Africans to decide their own medical affairs should not be infringed. 

To build a vibrant and accessible healthcare system in South Africa, there must be a renewed focus on incentivising broader access to our world-class private healthcare system as opposed to having these excellent institutions be commandeered by the very authorities which facilitated the decline in their public sector peers. 

‘Given the inherent risks associated with coalition politics, any such arrangement which does not proceed under these preconditions would weaken opposition to the ruling party without guaranteeing any corresponding benefit,’ concludes Ansara. 

Issued by David Ansara, Chief Executive Officer, Free Market Foundation, 11 June 2024