LETTER: Basic economics baffles the government
Confusion over income statement and balance sheet
The head of the policy unit in the presidency, Busani Ngcaweni, has been quoted as saying executives of nonperforming state-owned enterprises (SOEs) will no longer get pay increases and bonuses unless the income statements reflect strong performance.
Previously, executives received bonuses on the basis of the strength of SOE balance sheets, many of which reflected bailouts. This beggars belief, so I’ll repeat it: the incentive scheme was built around the balance sheet rather than the income statement!
The reason for the government’s support of national health insurance (NHI) is becoming increasingly obvious. It simply doesn’t understand basic economics.