Raiding pension funds not the answer

Jacques Moolman, deputy president of the Cape Chamber of Commerce and Industry

When the largest trade union in a country seriously suggests that failing state-owned enterprises (SOEs) should be the recipients of savings in pension funds, one could be forgiven for thinking that magic rather than logic has taken over.

If such a country were a family, it would be tantamount to a father raiding his child’s college fund to pay his gambling debts, or cashing in his pension to do the same. Yet, that is what Cosatu has suggested.

This is so obviously a bad idea that it is extraordinary how many intelligent people have decided it is worth trying to rescue Eskom by raiding pensions –and those of many Cosatu members to boot.

Even if this madness prevails, most economists seriously doubt it will do more than put off Eskom’s inevitable death in its present form and only temporarily relieve its parlous financial situation.

What makes raiding pension funds even more terrible is that Eskom’s shambolic situation has been of its own making – not brought about by a run of bad luck. It will be rewarded for its incompetence by dollops of cash taken from other people who had nothing to do with the mess.

The cause was more than a decade of bad managers who aided and abetted criminal looting either through highly suspect purchasing practices or vast expansions of their own and their staff’s salaries.

This national catastrophe would not have happened without the financial hole dug by the forced early retirement of competent people to make room for those with paper qualifications of some sort or other but little or no experience (a doctorate in sociology does not a manager make, nor does it equip anyone to run a power station).

The final Eskom hole was the one into which plant maintenance schedules were hurled “to save money”.

Long-suffering taxpayers must wait with baited breath for the final decision on financing the Eskom catastrophe, fervently hoping that the opinions of the asset managers of the Public Investment Corporation will not prove decisive – last year they wrote off R1.4 billion on a single bad loan.

As for Eskom, throwing more money into the pit will not fill it up. It will just be robbing Peter to pay Paul. In other words, it would be a futile, wasteful gesture.