GOVERNMENT SPENDS EXCESIVELY ON LUXURY CARS

UNCLAS SECTION 01 OF 02 CAPE TOWN 000204

SIPDIS

E.O. 12958: N/A
TAGS: PGOV KDEM SF
SUBJECT: GOVERNMENT SPENDS EXCESIVELY ON LUXURY CARS

1. (U) In recent months government Ministers and senior officials
have spent roughly 4 million USD on luxury vehicles. Although the
spending is in accordance with the Ministerial Handbook and no

regulations have been broken, the public outcry has been enormous.
(Note: Ministers are entitled to a state-purchased car equivalent
to the value of 70 percent of their annual salary End Note.) In
light of the global economic crisis, and the fact that many South
Africans lack access to basic services such as water, sewage,
electricity and garbage removal, there is a renewed public awareness
and discontent over excessive government spending.

2. (U) In August, President Jacob Zuma stated that newly sworn-in
Ministers were thinking about the recession and no longer spending
large amounts of public money on luxury cars. However the spending
spree continued throughout August and September leading to
opposition parties raising the issue in Parliament and trade unions
weighing in on the matter. The Congress of South African Trade
Unions (Cosatu) went so far as to urge those Ministers who bought
extravagantly expensive cars to give them back, leading to a war of
words between the trade union and Communications Minister Siphiwe
Nyanda. Nyanda, who himself purchased vehicles totaling several
thousand dollars, the most spent by anyone in the Cabinet, said it
was absurd for Cosatu to suggest that the Ministers should return
the official vehicles because vehicles are needed to deliver on
their mandate and meet the expectations of the public. It is,
however, the expenditure incurred by Blade Nzimande, Minister of
Higher Education and Training and leader of the South African
Communist Party (SACP) that has caused the most strident public
backlash. Nzimande's vehicle purchase has evoked the most criticism
as it highlights the double standards at play in government. In
June this year while endorsing the principles and values behind
Nelson Mandela Day, Nzimande stated it was necessary to reaffirm the
values Mandela represents and "roll back the greed, corruption and
selfishness of capitalism." However, two months later he spent
thousands on a new car. In response to the public outcry Nzimande
stated that "I have not abandoned my values. I don't think I've
abandoned my moral leadership. I am still a communist, I am still
committed to the working class, and I am still committed to taking
up the issues relating to the poor."

3. (U) In a study commissioned by the Democratic Alliance (DA) it
was found that if every Minister, Deputy Minister, Premier and
Minister in the Executive Committee (MEC) were to spend the full
amount allowed by the Ministerial Handbook on vehicles, the total
cost would come to approximately 32 million USD for 220 motor
vehicles. That is enough to have built 5500 houses, 25 schools, or
to pay the salaries of 1500 nurses for a year. The DA has submitted
a letter to the Director-General in the President's Office
requesting that the Ministerial Handbook be amended to reflect a
more sympathetic appreciation for the financial hardships faced by
most South Africans. In addition, the DA has launched an
"austerity" drive as well as a wasteful expenditure monitor and
Western Cape MECs have been told to use vehicles in the government
garage car pool rather than purchase new ones. Western Cape Premier
Zille is using an old vehicle and the official car she used as mayor
of Cape Town, a hybrid Prius, is now being used by her successor.
Zille has also said that the Western Cape executives would no longer
QZille has also said that the Western Cape executives would no longer
use blue light escorts for travelling and would cancel their
corporate credit cards, stop using VIP lounges for domestic air
travel, and give up their state subsidies for domestic employees.
Recognizing the need to address the situation Minister in the
Presidency Collins Chabane, issued a statement saying that Cabinet
has established a ministerial task team to look at government
spending in the context of the economic meltdown.


4. (U) Comment: The global economic recession has unleashed a
reappraisal of the role of state spending in the South African
economy and the Zuma administration should be on the cutting edge of
defining this role for South Africa. Zuma's government has failed to
do this and, despite winning an overwhelming majority in the April
general election, is currently faced with a credibility problem as
on the one hand it advocates serving the needs of the poor and
encourages all South Africans to tighten their belts during the
current economic crisis, while on the other it is allowing excessive
spending of public money on personal luxuries. In order to restore
public confidence in the government, there needs to be a marked
improvement in service delivery and an eradication of entitlement
and inefficiency. Effective management of government is a priority.
This also applies to the curtailment of corruption and overspending
which is sapping state coffers and inhibiting the delivery of basic
services. However, there needs to be a political will to combat
corruption and self enrichment, as any failures to do so weaken the
government's authority to combat corruption and excessive spending
at lower levels in government. Local municipal elections are due to
be held in 2010 with many constituencies expected to be closely
contested. Opposition parties have already expressed the possibility
of an alliance to contest the local elections and the ANC could find
itself in a precarious position should its legitimacy be weakened.
South Africa is believed to have one of the highest per capita rates
of protest action in the world, and South Africans are openly
critical of a government most of them vote for at the polls.
Politically, the "cargate" scandal has the ability to weaken the
Zuma government and increase protests, as a loss of credibility has
the potential to create a climate for instability, unrest and

CAPE TOWN 00000204 002 OF 002


1. (U) In recent months government Ministers and senior officials
have spent roughly 4 million USD on luxury vehicles. Although the
spending is in accordance with the Ministerial Handbook and no
regulations have been broken, the public outcry has been enormous.
(Note: Ministers are entitled to a state-purchased car equivalent
to the value of 70 percent of their annual salary End Note.) In
light of the global economic crisis, and the fact that many South
Africans lack access to basic services such as water, sewage,
electricity and garbage removal, there is a renewed public awareness
and discontent over excessive government spending.

2. (U) In August, President Jacob Zuma stated that newly sworn-in
Ministers were thinking about the recession and no longer spending
large amounts of public money on luxury cars. However the spending
spree continued throughout August and September leading to
opposition parties raising the issue in Parliament and trade unions
weighing in on the matter. The Congress of South African Trade
Unions (Cosatu) went so far as to urge those Ministers who bought
extravagantly expensive cars to give them back, leading to a war of
words between the trade union and Communications Minister Siphiwe
Nyanda. Nyanda, who himself purchased vehicles totaling several
thousand dollars, the most spent by anyone in the Cabinet, said it
was absurd for Cosatu to suggest that the Ministers should return
the official vehicles because vehicles are needed to deliver on
their mandate and meet the expectations of the public. It is,
however, the expenditure incurred by Blade Nzimande, Minister of
Higher Education and Training and leader of the South African
Communist Party (SACP) that has caused the most strident public
backlash. Nzimande's vehicle purchase has evoked the most criticism
as it highlights the double standards at play in government. In
June this year while endorsing the principles and values behind
Nelson Mandela Day, Nzimande stated it was necessary to reaffirm the
values Mandela represents and "roll back the greed, corruption and
selfishness of capitalism." However, two months later he spent
thousands on a new car. In response to the public outcry Nzimande
stated that "I have not abandoned my values. I don't think I've
abandoned my moral leadership. I am still a communist, I am still
committed to the working class, and I am still committed to taking
up the issues relating to the poor."

3. (U) In a study commissioned by the Democratic Alliance (DA) it
was found that if every Minister, Deputy Minister, Premier and
Minister in the Executive Committee (MEC) were to spend the full
amount allowed by the Ministerial Handbook on vehicles, the total
cost would come to approximately 32 million USD for 220 motor
vehicles. That is enough to have built 5500 houses, 25 schools, or
to pay the salaries of 1500 nurses for a year. The DA has submitted
a letter to the Director-General in the President's Office
requesting that the Ministerial Handbook be amended to reflect a
more sympathetic appreciation for the financial hardships faced by
most South Africans. In addition, the DA has launched an
"austerity" drive as well as a wasteful expenditure monitor and
Western Cape MECs have been told to use vehicles in the government
garage car pool rather than purchase new ones. Western Cape Premier
Zille is using an old vehicle and the official car she used as mayor
of Cape Town, a hybrid Prius, is now being used by her successor.
Zille has also said that the Western Cape executives would no longer
QZille has also said that the Western Cape executives would no longer
use blue light escorts for travelling and would cancel their
corporate credit cards, stop using VIP lounges for domestic air
travel, and give up their state subsidies for domestic employees.
Recognizing the need to address the situation Minister in the
Presidency Collins Chabane, issued a statement saying that Cabinet
has established a ministerial task team to look at government
spending in the context of the economic meltdown.

general lawlessness. End Comment