I think we are all struggling, but there is some wonderful logic coming from my colleague at the back here. [Interjections.] Like the Deputy Minister and I, our colleague here is a simple boy from the farm. The Deputy Minister and I are products of the East Rand, and the East Rand, for those who know the East Rand, was at the centre of a major industrial strategy by the previous government, to transform South Africa from a mining-dependent economy to a manufacturing base. I don't want to say I was privileged, because it was not a privilege to live during apartheid, but during the period of the sixties, those of us who were alive then were able to see what benefits could be derived from an economy that was going at full steam: the jobs that it created, the skills that it gave, the empowerment, the wealth, the benefits that we got out of this country during that period.
With respect, we need to be moving into that vision. We don't have time to be say "let's decrease unemployment", "let's do this", "let's do that", "let's be nice to everyone". We have to get down to brass tacks, these next five years, as a new government, regarding how we are seriously going to change this economy, how we are seriously going to get it on track and moving full steam to derive the benefits that those of us who were living during the sixties certainly benefited from.
I fully hear what people are saying when they say: Why don't you sell off an enterprise because it's not performing, because it's doing this or doing that? Firstly, I want to say that sometimes when we throw out notions that this or that is not performing, we must be careful that we are not just dealing with conventional wisdom. For instance, we are told that SAA is now almost bankrupt, and is not producing anything. The recent turnaround programme at SAA has generated cost savings of R2,6 billion. SAA is now generating operational profits. What is going to bedevil it still, is the legacy that we have inherited around the Airbus contracts and whatever.
But let us not underestimate the pain of what that SAA turnaround did, getting rid of 2 000 workers. It is easy for you and I, sitting in the comfort of these benches, knowing that we are going to get pensions and knowing that we are going to be looked after, to disregard what it means to 2 000 people to lose a job. And SAA did that, and the union worked alongside SAA. Of course the union did not agree, but in the interests of creating a national service, which we all need commercially, both in this country and Africa, that was a sacrifice. Let us not underestimate the sacrifice that is required in this country, that is going to be required for the turnaround, and let us not talk glibly about it. Are we saying to those people who lost their jobs that it was all in vain? It wasn't.
I think that is what we need to be looking at. We need the social compact going forward. People are going to take pain. It is no joke. If we are going to take this economy from where it is, there is going to be pain and we are going to have to create reward for that as well.
What we are asking from the state-owned enterprises in this period, particularly, is to understand that we are not in the boom era of the last ten years where the economy just flourished. We are in the worst recession this country and the world have faced. And as I said in my speech, we are in a time when we do not have money for the bare essentials for the poor of today, and that is why every time a state-owned enterprise registers a loss and we have to bail it out, there's an opportunity cost involved, a serious opportunity cost. Let us not underestimate what that cost means to ordinary people out there in the streets.
But at the same time, to say that because this is happening or because it's not optimal production, let's just get rid of them, let's just look at that concept, let's just privatise ... If you're going to privatise a company, you have to recapitalise it. You have to spend as much money as you are recouping losses, in order to make it an attractive company to be bought. If we were now to privatise Eskom, how much would it have to be recapitalised, and how much of the impetus that we have now generated in Eskom going forward would we lose simply because of an idealistic wish to privatise? I say so with respect.
Privatisation is not just something which we should use to solve problems. It can succeed, and at times it does not succeed. What we have learnt from Telkom was how that very privatisation process actually held back competition in the telecommunications field. Privatisation, if you do not take into account the competitive environment in which it happens, can actually be a worse thing than if you leave it where it is at the moment.
But let us also just confront some of the misgivings people have had about some of these enterprises. Denel, for instance, has come up, and rightly so, for the love of debate. Denel has seven subsidiaries, only two remaining loss-making, and we have plans to turn these around. We have brought in strategic equity partners. It hasn't just been a thing of saying, let the state deliver, let it be committed to our policy. If there is an opportunity to bring in a strategic equity partner who can really provide value, then we will do it, and that is what we have been doing there. We have to ensure that Denel is appropriately capitalised. Government has to start coming to the table, and that is why the discussion around the funding model becomes very important.
I want to address, too, the question of renewable energy. The Department of Public Enterprises is not responsible for policy; the Department of Energy is. But the renewables target has been set by the policy department, and this is at 4%. On 31 March 2009 the Regulator announced the tariffs for renewables, which are much more expensive than at the moment for even conventional coal. However, Eskom is now in a better position to progress investment in renewables, and we do have to look at that. I think there has to be an appropriate mix around our energy sources. No country going forward can be reliant on one source of energy.
Eskom's coal burn rate is a great concern to all of us. It has decreased since 2000, when it was 61 days of burn, to 44 days, and the current levels are now at 42 days. We would like it to decrease, and obviously we need to be going forward.
But I want to address just one issue about the role of state-owned enterprises. I heard someone say "state-owned enterprises are here to generate dividends" and that government can get them. I heard some people say that state-owned enterprises must be sold off to assist the fiscus. Now, implicit in that is that state-owned enterprises are there to "fund" government. Now that is not our vision. State-owned enterprises are not here to fund government. They are here to drive an economic programme. We expect them to break even. We expect them to have retained earnings to decently be able to do expansion programmes, and that is what we are saying to all of them sitting here in this room, that is what we expect. But we do not expect them to be subsidising the fiscus. That is not our programme. That makes it very different from a commercial company, which does, through its taxes, subsidise the fiscus.
We are going to be engaging ... And I want to thank all my colleagues here, both from the benches across from me and from the benches over here. We are moving into an era in which we have to succeed. If this country is going to go somewhere, we are going to have to succeed. I have enjoyed the robust debate here. I am not one who doesn't like to be criticised; I think criticism is good. But as our member from Cope said, in the interesting debates that we were having yesterday, all of us have a contribution to make around these debates, but I think we must all try to reach a stage where we do not have just reflex responses, but we really start engaging seriously in these debates. And I look forward to five years of these serious engagements. I mean, Mr Ambrosini was saying to me last night: Why do we need a national airline? That is a debate we need to have. We obviously see a reason for it; he doesn't. But we need to be debating this in the interests of going forward in this country to reach consensus.
Because, Madam Chair - and this is the last thing I will be saying - we have to move together going forward; ourselves, the unions, our industries. Our position is that we are all South Africans, we are in this together. We have seen the role that state-owned enterprises played during apartheid here - it was phenomenal. Okay, they played into an apartheid agenda, but what they were able to achieve was astonishing. And I always say that the transformation, the fact that the South African economy is one of the most advanced economies on the African continent, is due to this strange confluence of black oppression and exploitation, the affirmation of what the state-owned enterprises were able to bring, and what the private sector was able to bring to that mix. It was a deadly and toxic mix and we never have to do it again, but we are saying here as government, we still believe that state-owned enterprises have a major role in this economy.
And, therefore, I thank everyone. I thank the chair of the portfolio committee for her leadership and for our members here. I thank my Deputy Minister for being a soulmate, an East Rand soulmate, who is passionate about steelworks, smelters, freight rail. The two of us are at one in these things, and I thank him for his enormous support in these first couple of weeks, and we look forward to moving forward.
The ANC supports this Budget Vote. We have our CEOs and chairpersons of all of these corporations sitting here. I want to thank them for their commitment and for having to take the flak on many occasions. And then I thank my department, under the extremely able leadership of the senior management and Portia Molefe, the director-general. It has been quite salutary to come into a department that has such high levels of professionalism, and I want to thank them for steering us through this difficult period of initiation and orientation. I think we are on a good road going forward. Thank you. [Applause.]
Debate concluded.