Economy
Boundaries: economic buzzwords abound. Last year’s fiscal cliff is so…last-year: we are flying; the mere fact that this is a fly-now-pay-later scheme (like the wills Banks give us “for free”) shouldn’t hold us back. Today’s boundary (i.e., thou shalt not cross) term is tax wall: the phrase that accompanies this is tax buoyancy – meaning thereby revenue mobilisation (you must love the term) in response to GDP growth. Those in the know predict that tax increases (to pay for basic income grants, vaccines, and the like) will result in negative tax buoyancy: heck, speaking for myself this would go down like a lead balloon! Oh yes – so busy going sideways I almost forgot – the gurus say we have hit the tax wall and negative tax buoyancy will result.
In response to our brokeness, evidenced by the euphemistic boundary terms all around, the IMF has just said that South Africa needs to retract state support for SOEs, cut public employee salaries, deregulate the labour market, and move away from the Developmental State (only the ANC understand what this means) to a free-market system. The standard Treasury response mantra overflows with wonderful-sounding phrases such as stabilise debt levels, recovery, consolidation; and repeat. It is not what one says but what one does that counts: are already seeing union resistance to salary freezes, the extension of short-term assistance to all and sundry and the resuscitation of the basic income grant idea. I believe that Ramaphosa has indeed ushered in a new era, but implementation of the sea-change needed by our current government? Not on your nellie!
Coming short: a wonderful illustration of shorting shares gone wrong is to be found in hedge funds shorting shares in a company they thought would go down. It did not, quite the contrary; the result is a salutary lesson to those gamble – look: Reference
Kiss the frog: Ithala reportedly wants full bank status. Sure, like the Land Bank? Ithala is light years away from the efficiency required for a properly functioning bank. Why would the state want to enter the financial market? Would it lend at lesser rates or more favourable terms than commercial banks? What it will need is substantial capitalisation by the state…see above. Kiss that money goodbye: frogs don’t princes make.
Business
Immunisation: South Africans do not need any immunisation against corruption, inefficiency, and stupidity. Yet, we do need a shot against CV19, and we do need effective medication against that virus while we await our shots. As regards the first, under pressure from society, the roll-out plan for mass immunisation is becoming clearer with come-all immunisation being projected at R40 a shot (oh yes, Treasury does have the money for this, we must just borrow it first or tax it from our population…). As regards the latter, Invermectin has been approved for compassionate use – provided your quack fills in an eight-page form to explain why he allowed you to take cow muti (presumably someone out there will be keeping tabs on the efficacy of this remedy – free lab rats).
Speaking of such, the Prez has called for a fair distribution of vaccine: on last week’s topic: why should those, who produce vaccines, distribute it fairly? Possibly because humankind is hard-wired to maintain society? Economically speaking (Is an economic approach to such an issue contra to the former?), South Africa has made no contribution at all to the generation of these vaccines other than to offer its citizens as subjects to test vaccines on (which, I understand, gives one some claim to precedence of distribution): lab rats? (Isn’t cynicism wonderful!).
It is wonderful to know that we still compete with the best: Transparency International ranks us at 69th out of 180 states on its corruption scale. Fortunately, our free press has saved us from the worst: free press my ass. True or not, the debate around the conduct of Dr Survé currently deals with his siphoning off PIC funds, and more interestingly, his ANA’s acceptance of SSA agents for multi-media training (spies just aren’t what they used to be) and polishing our government’s image. SANEF is saddened and worried…oh yes, IOL, the Star and the Sunday Independent (an oxymoron if ever) are no longer regarded as signatories to the code that conflict-of-interest should be avoided by the public print.
Unfortunately, the fun news is dire:
Stellar no more: Ster-Kinekor has gone into business rescue.
Pay what it owes or lend it money: our state owes the SABC R57m.
The capital of KZN needs R5bn to fix its electrical and R2.5bn to fix its water reticulation systems; one can fairly ask how any management (to dignify non action with this term is probably inappropriate) can come to this – this is a one-horse town and in our neck of these woods we have burst water pipes a couple of times a week. Eish!
More usable is the following:
When you buy new car after 1 July, full disclosure must be made of the price of the car and cost of service and maintenance plans. Furthermore, if you write off that car, that part of the unused service plan, must be transferred to the replacement vehicle you purchase.
It had been reported last year that the Compensation Fund would be extended to cover domestic workers: many doctors work on the basis that they cede their fees to an administrator in exchange for a percentage of the fees raised, rather than administer their accounts themselves. This practice is prohibited by the proposed amendments to the governing legislation, which means doctors must recover such fees themselves – from a dysfunctional Fund? Think doing RAF work and being paid late repeatedly. The state certainly intends testing the Hippocratic oath taken by these guys!
Property
Very little is new on the property news-front:
Home-sales were up in the lower mid-price ranges in Q4, which resulted in a 36% increase in Ooba and 53% in Betterbond loan applications.
This resulted in price stabilisation across that range of home prices at some 3.5% price growth in December.
Overall vacancy rates of homes-to-let stand at 12.9% (up 4% from the previous quarter) whilst one fifth of R25k+ rental homes are vacant. Sandton and the Atlantic seaboard are hardest hit.
Commercial property seems to be turning the corner, but office space vacancies is set to increase further (think a move to remote-working).
Judging from our experience in Pietermaritzburg, my prediction is that home-sales will slow – I suspect owing to those able to buy at favourable rates, having done so already.
More interesting is a note on the obligations of landlords: if your tenant does not pay rental, may you cut off his electricity and water? Reference No!
Practice
Shorts:
Just deserts – the erstwhile saviour of the SABC, Mr Motsoaneng, must repay some R900k of the sums spent by the SABC on his personal legal costs.
Really? A senior cop, who had taken R500k from the Rev Bushiri as bribe, has been suspended for two months as punishment. Who said crime does not pay?
Conveyancers often struggle with the marital status of blacks, married by way of customary union prior to 1988. The Constitutional Court will be hearing two cases on this topic this year, one referred from KZN and another from the Johannesburg High Court: a lemon if ever there was one – how does one with the status of marriages entered into decades ago?
Whilst on the topic of marriages – judging by the latest SCA judgement on Muslim marriages, it is high time that this issue also be put to bed. Read: Reference
Is the right of recourse of a surety affected by the principal debtor going into business rescue? Reference
The Consumer Protection Act applies to fixed term leases and not to month-by-month leases; therefore, a forfeiture clause in such an agreement is valid: Reference , courtesy of Allen West.
STBB has written an article on how one is to view the requirements set by municipalities requiring all manner of compliance for existing properties outside of the direct municipal boundaries, prior to the issue of rates certificates. Read this: Reference
The backlog in the Pietermaritzburg Deeds Office has resulted in a great many lapses of eThekwini rates certificates. That entity has undertaken to expedite requests for the extension of these – ask me for a copy of the notice.
An interesting note by West, on the registration of a condition, in a title deed, that a property will not fall into the joint estate of spouses married in community of property, should be a read by all property practitioners. Ask me for a copy.
An interesting shlenter found its way across my desk this week past (yes, presumably old hat to Gauteng practitioners, Maritzburg being a bit behind): some years ago, it was very fashionable to sell properties, owned by a trust founder, to (his) trust but to withhold a usufruct in favour of the seller. This was cheap and resulted in the free transfer of the balance of the property rights to the trust on the founder’s death. A new version has presented itself – I extrapolate because I do not hold the full particulars: you buy the nude property rights to an expensive property with the owner retaining the usufruct to that property. You then presumably enter into an underhand agreement that you will have the use of that property (at a cost?).
The result is a cheap transfer and, once the usufruct-holder dies, you become the owner of the full property. There are a few difficulties with this: you cannot resell or bond readily. The Seller, if SARS twigs this, will be taxed on the cost of your usufruct use as income rather than capital.
Quotables
A question by a parent: Should government not advise parents to no longer buy expensive uniforms and needless stationery and rather invest in online resources such as data and devices? – Give that person a Bells!
I am really not a Facebook person but the following link to punishment meted out to a corrupt judge attracted my attention (you will recall the recent scandal of SSA funding the corruption of judges): Reference
Comment
If you need to persuade someone, the more reasons, the better? Perhaps not: Reference
Rise of the parallel state: we have become habituated to buying security, health, public transport, backup electricity, and many more such examples as our state either under- or mis-supplies these. This jeremiad will not end: a crisis does not suddenly make a dysfunctional state competent.
