The real cost of blue light brigades and Nkandla

By Alec Hogg

On my way to Cape Town's airport last week, one of those despicable Blue Light Brigades brought rush hour traffic to a standstill. I counted six black sedans and two top end SUVs. All spanking new. Each costing north of R600 000. The tinted windows obscured the view of who exactly was inside (Minister of Stationery perhaps?) but from the little I could see, there were at least two people in each car. At a conservative calculation of the hourly pay of escorts and fuel and insurance costs of the vehicles, that little trip from city to airport cost us taxpayers north of R20 000.

That's one of the most serious problems with many in the public sector. They appear to have lost all perspective of the value of money. President Zuma leads the way, unfortunately, by brazening out the R250m spent by the public purse on his private residence. He shows no remorse, refuses to take any responsibility, suggesting he believes he is entitled to it. How delusional can one man become? Especially as our country already provides its First Citizen with two huge Presidential residences – one in Cape Town, the other in Pretoria.

Zuma and his bloated, blue light demanding cabinet could learn much about the value of money from the private sector. I especially like the way Warren Buffett described his "indefensible" luxury in the 1986 annual letter to Berkshire Hathaway shareholders. Said Buffett: "We bought a corporate jet last year. What you have heard about such planes is true: they are very expensive and a luxury in situations like ours where little travel to out-of-the-way places is required."

Buffett added: "Planes not only cost a lot to operate, they cost a lot to look at. Pre-tax, cost of capital plus depreciation on a $15m plane probably runs to $3m annually. On our own plane, bought for $850 000 used, such costs run close to $200 000 annually." Extending the example, at a cost of capital of just 8%, Nkandla costs taxpayers a chunky R20m a year just to look at. As most Government bonds have 20 years to maturity, the interest payments alone on Zuma's residence would add up to R400m. Add back the capital cost, and keeping the man in the style to which he believes he is due will leave taxpayers will an eventual bill of R650m. Zuma will need to add a huge amount of value to get close to repaying that debt to his countrymen.