OPINION

ConCourt throws ANC a life jacket

William Saunderson-Meyer |

04 March 2022

William Saunderson-Meyer says govt has just been saved from having to stump up a vast sum of money

JAUNDICED EYE

The government has just been saved from having to stump up a vast sum of money it doesn’t have, to give to people who don’t deserve it. Cue a government sigh of relief, as well as delight among the majority of South Africans who struggle to make ends meet.

The Constitutional Court, endorsing an earlier Labour Appeal Court decision, has delivered what Business Day describes as a “huge win” for President Cyril Ramaphosa’s government. A supposedly cash-strapped Treasury — which just a week ago was disposing of a R200bn tax revenue windfall — has been excused from having to implement the last leg of the three-year public service wage agreement, which would have cost R29bn. 

The unanimous full-bench Constitutional Court judgment lashes the public service unions for greed and “unjustifiably enriching” themselves for two years from “illicit increases” procured at the expense of the poor. Acting Justice Mjabuliseni Madondo said that if implemented, the collective agreement would “precipitate a fiscal crisis” that would detract from the state’s ability to alleviate the plight of the “poorest of the poor”.

In the light of the unexpected fiscal demands caused by the pandemic, the deal would have plunged the government into “substantial excess debt”. The nub of the state’s argument was, first, the Public Service Act stipulation that the government could enter into an agreement only if there was a “realistic calculation” of costs in both the current and subsequent fiscal year, as well as that it didn’t conflict with Treasury rules. Second, that it had to have the resources to meet the terms of the agreement.

“The state contends that these mandatory requirements were not satisfied before it entered into the impugned collective agreement, and it is therefore unlawful and unenforceable,” said Madondo. The state also contended that enforcing the agreement would cost R29bn, which it did not have because of worsening economic conditions precipitated by the Covid pandemic. 

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In other words, the government wanted the courts to vindicate its reneging on an agreement it had negotiated because it now realised that it hadn’t properly considered the financial implications of what it was doing. It is an astounding admission of the incompetence of the ministers who negotiated the deal and of the Cabinet that approved it.

The second leg of the state’s case was that even if the agreement had complied with regulations, it then became unaffordable because Covid damaged the economy. It’s an opportunistic argument.

Try selling that line to your bank when you renege on your bond agreement. In the commercial world, an unexpected global calamity might buy you some leeway, but not the right to tear up the agreement.

In any case, the South African government was not plunged by Covid into financial trouble only in the final year of the agreement. As much of the ConCourt judgment recounts in detail, in 2017 when it started negotiating the agreement and in the following year when it signed it, the Treasury was already in the financial dwang and everyone in government knew that there weren’t the funds required.