News in South Africa 2nd August:
1. Primary schools back in action:
Primary schooling is expected to take a step closer to normality as thousands of pupils will return to class on a daily basis from Monday.
The decision to allow full attendance of pupils from grades R to 7, as well as learners attending special education needs’ schools, followed extensive talks with the Basic Education Department, teacher unions and the National Coronavirus Command Council.
The department said that the return of primary school children would enable educators to recover teaching time that was lost due to the recently extended school break.
The return of learners at primary school level comes on the back of a successful vaccination programme for the education sector, with more than 517,000 personnel having received their vaccines.
As primary school pupils resume classes on a full-time basis on Monday, teachers have been advised to give pupils a mask break every two hours “to ensure they do not get carbon dioxide retention”.
This is the advice that the ministerial advisory committee (MAC) has given to the department of basic education.
According to the advisory by the MAC, all primary schools should open at full capacity and practise “maximum feasible physical distancing between pupils.
“Ideally, all children should be at least one metre apart within classrooms, but where this is not possible full capacity schooling should still be commenced,” teacher unions, school governing body associations and a principals’ association were told during different meetings with the department on Saturday.
The mask break “entails going outdoors and removing their masks, and breathing for approximately 5-15 minutes”.
High schools can also immediately bring back all pupils if the one metre physical distancing is maintained.
“Where this is not possible, attendance on a rotational basis should continue presently acknowledging the relatively higher risk of Covid-transmission and illness in children aged 15 to 19 years.”
2. One step closer to basic income guarantee:
The reinstatement by President Cyril Ramaphosa of the Covid-19 Social Relief of Distress grant and its extension to caregivers take us one step closer to a universal basic income guarantee.
The Covid-19 pandemic has placed the idea of a universal basic income guarantee (UBIG) back on the agenda, as can be seen from the numerous demands from civil society groups and community organisers. This recognises, in the context of a long-standing structural unemployment crisis, that poverty and inequality cannot be addressed only through expanding employment.
However, the SRD grant of R350 per month can, at best, cover only 60% of a person’s minimum required food intake. In the short-term, the SRD grant should be increased to at least R585, which is the Food Poverty Line. This would cost an additional R17 billion until March 2022. The inadequate amount and the delays in implementing this are reflective of a government whose social policies have become reactive and crisis-driven.
A permanent UBIG is a chance to close the gaps in South Africa’s social security net. The question is then not about whether a UBIG should be implemented, but rather how it should be designed and financed.
To answer part of this question, the Institute for Economic Justice (IEJ) has put forward a financing policy brief for a UBIG, outlining 19 recommendations that will allow South Africa to raise funds to tackle poverty. The Policy Brief serves as a supplement to an earlier one on UBIG published by the IEJ in March 2021 and a summary of further research produced for the IEJ by DNA Economics. The proposals include: adjustments to income taxes, consumption taxes, and wealth and property taxes; removal of corporate tax breaks; the reduction of wasteful and irregular expenditure; and the recoupment of expenditure on UBIG through existing value-added tax (VAT).
Responding to South Africa’s extreme levels of inequality, all financing proposals are progressive and therefore remove or limit fiscal measures that currently disproportionately benefit the wealthy.
3. Tax revenue exceeds expectations:
Treasury has published its updated monthly government revenue and expenditure data, showing stronger than expected tax revenue.
Gross government tax revenue amounted to R377 billion for the April to June 2021 period, up 56.2% versus the corresponding period in 2020.
Given lockdown effects in 2020, a better comparison is with April to June 2019. This still showed an increase of more than 19%, said economists from the Bureau for Economic Research (BER).
The revenue windfall mainly stems from strong mining corporate tax receipts amid elevated commodity prices. Corporate tax receipts from the financial sector have also been strong, the BER said. “We have flagged the potential for revenue outperformance for some time. Indeed, in financial result presentations last week, mining giants Anglo American Platinum (Amplats) and Kumba Iron Ore reported large tax and royalty payments.
“Kumba said that it paid R9.2 billion in taxes and royalties in the first half of the year, more than double the R4.3 billion in the same period a year ago. On Monday, Amplats said it had paid R16.6 billion in taxes and royalties during the first half of 2021, up significantly from the previous year.”
While this windfall is set to help pay for the government’s recently announcedCovid-19 and looting support, concerns lie beyond the current fiscal year.
It is unlikely that the mining sector tax windfall will be repeated much beyond 2021, at least not to the same extent, the BER said.
4. Medupi power station complete:
After years of delays and overrunning the budget by billions of rands, the Medupi power station is now officially complete.
Six years after the first unit began supplying power to the grid, the sixth and last generating unit at Eskom’s Medupi coal power station in Lephalale, Limpopo has finally reached commercial operation.
It is the fourth largest coal-fired plant and the largest dry-cooled power station in the world, and has been beset by cost overruns and significant design issues that led to major delays in the project. Breakdowns of units had often contributed to the recent spate of load shedding.
Eskom said on Monday morning that commercial operation on Unit 1 “marks the completion of all building activities on the 4 764MW project”.
“This is an investment that will serve generations of the people of South Africa and power the economy for at least the next half-century,” Bheki Nxumalo, group executive for Eskom’s group capital division said in a statement.
“What remains for the Medupi project is the last part of implementing the agreed technical solutions related to the boiler design defects on the balance of plant. Once these repairs are completed during the next 24 months, Medupi will reliably deliver power to the national grid at full capacity, helping increase energy security for the country,” said Bheki Nxumalo.
The station had an initial expected cost of R80 billion, which was revised several times, reaching an estimated cost of R234 billion in 2019.
5. International cruise liners return:
After a lengthy pandemic-induced absence from South African waters, international cruise liners are expected to return in November, just in time for the summer season. But before setting sail, ships need to clarify their position on unvaccinated passengers.
South Africa’s cruise industry was reaching new heights before the global swell of Covid-19 and associated travel restrictions halted passenger ships. In 2012, some 6,000 passengers arrived in Cape Town. This grew to more than 50,000 passengers by 2018, with a dedicated cruise terminal at the V&A Waterfront providing a significant boost to the city’s tourism sector.
Construction on a new Cruise Terminal Facility in the Port of Durban – worth around R200 million – started just six months before South Africa was plunged into hard lockdown.
The world’s largest cruise company, Carnival, lost more than $10 billion (R145 billion) in 2020. This year hasn’t been much kinder, with MSC Cruises – dominant in the local market – cancelling its plans for the 2020/21 season in February.
“We remain actively engaged with all the relevant government departments and we look forward to receiving go-ahead to restart soon,” Ross Volk, the managing director of MSC Cruises South Africa, told Business Insider SA.
“We’ve seen that South Africans are eager to travel based on the strong advance trends. This is also evidenced by the spike in guest demand as we’ve introduced exciting promotions with our early booking special offers.”
And before South African passengers board these cruises, they’re urged to make themselves familiar with health and safety policies – including potential mandatory vaccination – which are still being developed.
Some cruise liners have already opted for a controversial two-class system – one for vaccinated passengers and the other for those unvaccinated – which limits interactions between those on board. Royal Caribbean’s 4,275-passenger Freedom of the Seas is one such ship, which allows fully vaccinated passengers – identified by a wristband – to enjoy all facilities onboard, while unvaccinated passengers are barred from entering the sushi bar, casino, or spa, according to a Bloomberg report.
Other ships, like those operated by Norwegian Cruise Line, have a strict policy of only allowing fully vaccinated passengers – and staff – to be onboard.
“Whilst each cruise lines have different policies, at the moment most cruise lines, like Oceania Cruises and Holland America Line are planning to sail with fully vaccinated crews and passengers only, for now,” said Davidson.