| By Gavin Chait,
on 05 September 2007
|
 Damn those foreigners! Imagine that government decides that coastal property prices are sky-high and that the reason is that Jo'burgers are driving up prices. It seems logical. Jo'burgers earn greater salaries than the rest of us and there are rather a lot of them. They visit Cape Town during their holidays, like the place so much and decide to buy a second home down here so they can visit whenever they like. However, since they are so much wealthier than the locals, they pay more and drive up prices. We should prevent any non-Capetonians from purchasing property in our exclusive province.
You probably think that this is a ludicrous suggestion. After all when Jo'burgers buy property in Cape Town they not only spend money here buying a nice expensive asset but they are also guaranteed to spend more time here supporting our restaurants and shops. It can only be considered a good thing and it would be silly to stop it. Yet this is precisely what government proposes to do. Not for Jo'burgers but for foreign nationals. According to Erwin Rode, a property economist, a report has been sent to government on the development of policy on foreign land ownership. Suggestions range from a total moratorium on the sale of all land to foreigners to the requirement of special ministerial approval for certain categories of land. Two other events, amongst others, give further indication to government's abhorrence of private capital. A tender being fought between state-owned Transnet and privately-owned iPayipi over the construction of a fuel pipeline which was originally to be decided by Nersa, the independent regulator, now appears to have been prejudged. Cabinet announced their unequivocal support for “the development of the Transnet Pipelines’ new multiproduct pipeline which is necessary to alleviate the identified constraints in the petroleum supply chain by 2010”. Government has also declared their unhappiness with Mittal Steel and decided that it is important to finance a state-owned competitor. Having sold off Iskor they want to have another go. The state is sending out the message that the economy is far too important to leave to private initiative. And all of this is being justified by the need to improve infrastructure in time for the football world cup in 2010. The reason we are spending R 416 billion on infrastructure, the Gautrain, and soccer stadiums is that the government hopes that, like Jo'burgers visiting Cape Town, foreigners will be so impressed by what they see they will want to invest. Who knows, despite the obvious failures of government strategy on AIDS and Zimbabwe, they may be right. Foreign tourists arriving in South Africa in 2010 will (all going well) see nice new roads and sparkling stadiums overwhelming nearby buildings and clearly very expensive. They will (crime aside) hopefully have a very nice time. All starry-eyed they may pull out their chequebooks and offer to invest. But what will they buy? Our energy industry is highly regulated. No competitors are invited to challenge the sterling services provided by Eskom (thanks for the power-failures last week) or Telkom (thanks for the phone-line-error) or the Post Office (thanks for losing my mail). Anything considered even slightly strategic is not for sale. The government may have confused taxation with investment. Government has made so much money off formal-sector privately-employed citizens that this may be their sole idea of revenue. But they can't tax foreigners (except tangentially through the extortionate rates we're all planning to charge for renting out our unused garages over 2010). While government is unleashing all this loot they need to keep in mind that investment cannot happen without private markets. The World Cup may get the foreign investors here but without obvious opportunities for that investment they'll simply have a nice time. And then go home. |
