There has been a lot of media recently in South Africa about the Powerwall being introduced.  It is about to be introduced in South Africa while new versions of the batteries are released in America and I think it is tremendously exciting – using the sun to more effectively power houses, etc.  The costs that had been quoted in the media at ranging from R160 000,00 to R250 000,00 are however going to stop most people from doing it, given that it seems that they are typically targeting, at the moment, homeowners.  It is only going to be the person who is very wealthy who is going to be able to pay that much.  I am investigating it for our offices – having spent hundreds of thousands over the years replacing systems such as diesel generators designed by my architect (who designed a room which made it difficult to adequately cool down the diesel generator) and then having to replace the batteries.  It would not make sense for me though to get a Powerwall system until the current batteries start running out again in 2 to 3 years’ time. The Powerwall is popular because it does not have those issues and in fact the warranties are for 10 years and the system is expected to last 20 years.  

A few thoughts today – including the interesting one from the Budget speech with the introduction of a sugar tax from 2017.  The only pity is that it is only going to be on sweeteners and the basis for that is allegedly that South Africa has high rates of obesity than almost any other country apparently in Africa.  We certainly do have a sugar addiction, although it is still below that in many other countries.  I don’t see however that by targeting just sweeteners is going to resolve issues – the problem is the excessive consumption of sugar.  These days just about everything is cooked in sugar – mothers are feeding their children sugar when they cook sweetened carrots and sweetened peas and everything is being artificially sweetened to make it “easier” to eat.  One really has to question the value of sugared vegetables.  Yes, it is great that one’s kids are eating vegetables, but why don’t you just coat them in chocolate – its no different to cooking with sugar?  The principle is the same. Of course this is not new – this was introduced by Mayor Bloomberg in New York City as an extra tax on all carbon drinks sold in New York.  Hopefully the Minister will give some thought to that – because you cannot say that you are just taxing artificial sweeteners and then forget that all the drinks either have artificial sweeteners in them or sugars in them.  I think the idea is a good one, but I would not be surprised if they are not ready by next year to implement this tax.  

It seems that the media was ecstatic that the tax bullet was ducked this year.  In other words, the expected increases did not really happen, and as the media commented, there was no wealth tax on the wealthy which had been expected.  I think the thing that they are forgetting is that there were indeed wealth taxes on the wealthy – they just never called it a wealth tax.  

Firstly, they increased capital gains tax, which is something that largely only affects you if you are wealthy, because of the various exclusions and they increased transfer duty on all properties sold for more than R10 million. That of course is a wealth tax, because the only person who is going to be selling a house for more than R10 million is somebody who is wealthy in the first place!

I do think we are looking at years of increases unless we get Government salaries sorted out and the civil service reduced, but we were lucky to avoid it this year.

The Road Accident Fund did not get a cent in this year’s budget, the first time that has happened.  It did not even get a mention and one can only assume that that is because the government is intent on implementing RABS as soon as possible.  I understand that government is probably fed-up with the non-stop contributions that have to be made to the Road Accident Fund, but if the management was not settling cases at double the rate of previous years when they don’t need to be, the situation would not have arisen.  The problem is poor management of cash flow in my opinion.  

What everyone forgets is that every single year the awards that are made are bigger, because salaries typically go up with inflation so loss of income goes up and general damages awards go up with inflation so they too are larger.  If you do not give the entity at least an inflationary-linked increase each year, you will run into bigger financial issues, unless the management slows down the settling of cases.  An inflationary-linked increase this year would be 10,5c and so, by not giving any increase at all, the payment problems can only get worse.  

On 29 August this year I will have been an attorney for 21 years.  It does not seem long to me, because I know how quickly the time has flown by, but I am reminded that at the Annual General Meeting of the Law Society each year they give out certificates to attorneys who had been in practice for 25 years or more.  There are not that many attorneys who get those certificates, and while it is not something I aspire to at all – because really I think it is something you should get after 40 or 50 years – the very fact that they choose 25 years shows how few people last that long in the profession.  Many would leave for different fields altogether or become legal advisors and I think, similar to running Comrades, which I have done three times, it takes quite some mental endurance to handle the action of an attorney’s office for that long.  

I don’t think back on the early years that often, but when I do it is with some pride that there is nothing in the office that I did not do.  In fact, the only thing I did not do was to vacuum the offices twice a week, but apart from vacuuming the offices, I did everything else!  I used to have to close the offices, leave an answering machine on and go downstairs to Arnold at Prontaprint and do my photocopying there.  After about a year in practice I finally was earning enough to afford a secretary, as well as a filing lady.  For the filing position I hired a lady in the building, Joyce, who worked as a cleaner, and she is still with me some 20 years later. The firm today does not even remotely resemble what I started with, but much of the letters, the documents, etc are all the original or amended versions of the original documents that I personally typed up.  

I have always felt that to be good in business you have to be able to do it all, and I am proud to say I have done it all – whether it was standing at the fax machine, running up and down the steps and doing photocopying or typing my own letters and agreements.  If you want to get ahead, you have to be able to do things yourself and I can honestly say that I had far more pride in the layout and look of my letters with the correct justification, margins, consistent fonts, etc than most of today’s secretaries have.  There is a lot of truth in the saying that if you want something done properly, you do it yourself.

We all like to grumble about the Rand and various other things, and I thought today I would focus my blog on some of the positives of South Africa.  Having done a lot of travelling I can tell you that, and it may seem trivial, we have some of the best beaches in the world.  I like that, because when people complain about how much money a holiday cost, they forget that children are never as happy as they are at the seaside, and it does not cost you anything to be on the beach other than getting there and staying there.  

Some of the beaches I have seen in other countries that are rated the best of that country would not make the top 50 in South Africa and look more to be like the sand close to the Durban Harbour mouth. World famous beaches like Daytona Beach are horrible, dirty sand beaches that nobody in South Africa would even consider acceptable.  Anyway, enough about beaches, but it is summer, and so it is always good to think about that, but I think another thing we can all be grateful for is the cost of living in South Africa.  We all read that living in Johannesburg is one of the most affordable cities in the world and from personal experience I can tell you that it is absolutely true.  You have no idea how much money people in other countries pay for food, vegetables, milk, bread and all the basics that we use and in many cases South Africa is as much as 70% less than most other countries.  The things that are important in life really don’t cost much in South Africa and housing too is much cheaper than overseas.  Sure, we are ripped off on some things, especially Internet and the cost of cell phone calls and data, but by and large it is far cheaper to live in South Africa than in any other country in the world and there are very few countries where you could live so cheaply with such good weather and climate.  Lastly, I think as a smaller country we are probably friendlier.  The people in South Africa are very friendly – that is when they are not squabbling with each other as part of office politics and they will always make a bit more time to give a little bit of help or advice to strangers. Those are some of the quick positives that I thought of – what are yours?

I regularly check the daily fuel prices which are updated at www.cefgroup.co.za/petrol-price/ and for March there is a substantial decrease to look forward to.  It is amazing how often the petrol price comes down at around the budget speech time, which allows the Government the opportunity to sneak in a few more taxes into a petrol price that is already so over-taxed in South Africa.  As it is, we are currently paying R12,15 for 93 petrol, but the basic price is R4,66 and so everything else is taxes and profits and only some of that money which goes to the Road Accident Fund is actually really benefiting the man in the street.  

At the moment, and the Rand has been showing more strength in recent days, we are looking at a 60c per litre decrease in March.  That can change dramatically of course, but either way, it seems pretty much assured that we are going to get quite a bit of relief in the petrol price which would take it down to around R11,50 a litre for 93, well short of the R14,00 or so that we had some time ago.  

What will worry some people is that one of the reasons that the Rand has been strengthening recently is that the markets are better with inflation having increased a little bit earlier than expected to 6,2% currently, that the Reserve Bank will have no option but to increase the interest rates – so those who are paying off bonds and cars you are probably going to get your next interest rate increase soon – but that should not surprise you because you must have known when you bought anything in the last year or two that we were at the bottom of the interest rate cycle and the only way was up.  Now is a good time to start paying extra amounts into your bond or your car payments so that you can reduce the liabilities that you will face once there have been 3 or 4 interest rate hikes.  One never wants to be in a situation where, like the sellers of the first house I bought in Parkhurst were, when interest rates were so high that they made it difficult for people to make payments and they had to join many people in flooding the market with sales.  I don’t recall exactly what the interest rates were in 1998, but they were close to 24%, and so one must not be surprised if one gets continued increases over the next few years.  Worldwide we are in a low interest rate environment but South Africa’s situation is somewhat different.  The lowest interest rate we ever had in South Africa was in July 2012 at 5%, so people who bought things at that time were really buying at the lowest rates ever and over the last 18 years interest rates in South Africa had averaged approximately 12,9.  That means take advantage of the petrol price reduction and use that extra money to pay into your debts – whether it is payments on your car or payments on your house so that you don’t feel completely naked if interest rates continue to hike over the next 2 or 3 years.