Deputy Speaker, in the Public Service, where government is considered to be both shareholder and regulator of market activities, it should come as no surprise that we are in the midst of a Public Service remuneration mismatch. Nowhere is this more evident than when one looks at the excessive increases in salaries paid to executives of inefficient state- owned enterprises.
A glance at the figures reveals an economically unsustainable trend. Eskom's recent submission to the National Energy Regulator of South Africa calling for a further 16% electricity tariff hike each year for the next five years comes on the back of R36 million spent on staff parties, a 20- month schedule overrun of an additional R60 billion in the construction of the boilers for Medupi and Kusile; and R26,9 million in fruitless and wasteful expenditure.
Despite these inefficiencies, Eskom executives have seen generous pay increases in the 2011-12 financial years. Eskom paid executive members 109% more than they were paid in the previous year. In recent years, executive pay has risen from R8,8 million in 2010-11 to R18,5 million in 2011-12 to the latest projected figure of R34 million. The Eskom Chairman earns R113 500 for every board meeting he attends.
This year, another state-owned enterprise, SAA, announced another annual loss - this time to the tune of R1,3 billion, which included R4 million in fruitless and wasteful expenditure, bringing its total losses over the past decade close to the R14,7 billion mark. The usual granting of a bail-out followed, taking its total bail-out package to R16,8 billion over the past 20 years. The subsequent resignation of the chief executive officer and six board members before the conclusion of their terms reveals an organisation in complete disarray.
Nevertheless, the failure of the state and SAA executives saw the CEO taking home R4,1 million over the past financial year. In the case of the Transnet group, only two-thirds of its objectives in key performance information targets were met last year. Furthermore, four instances of irregular expenditure amounting to well over R100 million were recorded.
Yet again, executives were handsomely rewarded. Non-executive directors were paid R8,1 million, up by 40% from the previous year. In the last financial year, the Chairman earned R125 000 per board meeting attended, whilst the CEO took home R6 million. Clearly, something is going horribly wrong with our state-owned entities' remuneration framework.
Adcorp's labour market navigator released earlier this year found that 99% of the variation in executive pay is explained by factors other than profitability. This suggests a perverse mismatch between executive performance and pay. [Time expired.] [Applause.]