In late 2000, the South African government put its proposals on the table. Spoornet, the country’s long-distance (not urban) rail network, was to be partially privatised.

Spoornet is a division of Transnet, the transport parastatal in South Africa. It covers 20,000 route kilometres, employs 36,000 workers, and carries nearly 60 per cent of the total freight of the country.

Government proposals entailed concessioning off two business units which were considered “profitable”: Coal-link which carries coal from northern Kwazulu-Natal to Richards Bay, the biggest coal terminal in the world; and Orex which carries iron ore from the mines near Sishen to Saldanha Bay on the west coast. Luxrail which operates the “Blue Train”, a kind of luxury hotel on wheels, was also to be sold off.

Mainline passenger services on the busiest routes between the major cities would be concessioned out. Some of the concession fees would be used to beef up the general freight business. Meanwhile, “non-profitable” customers and lines would be got rid of, and staff cut by about 15,000.

My union SATAWU first developed a broad position. We had a suspicion that if they were to take out the profitable lines, it would push the rest of the system into terminal decline. Our instinct was that the whole network should remain as intact as possible so it can be used to advance economic growth, particularly in less developed regions of the country. We supported the idea of improved efficiency but only if done democratically through consultation with the unions.

We took our ideas to our national shop stewards’ committee. We also linked up with the other two rail unions. Historically, relations have been poor because they were the unions for skilled white workers such as drivers. But in this case we had common interests and a united position.

At first the Ministers concerned, Transport and Public Enterprises, did not reply to our requests for meetings. But we spoke to parliamentary committees who soon realised the dangers of ministers appearing not to consult. The ANC party in power is very dependent on the unions to win votes.

Our first meeting with a minister took place in February 2001, and a joint government-labour “task team” soon followed. In late March, we used the ITF International Railway Workers’ Action Day to publicise our position, with marches keeping up the pressure. But government was unable to answer some key questions. What would it mean for socio-economic development if some lines were closed? Could the railway system sustain itself without them?

Probably the most critical factor is that Spoornet has been self-funding since it was established about 100 years ago. It is a body owned by the state, and has borrowed money and paid it back with government guarantees, but it has never relied on a state subsidy.

Still unable to answer our questions, government agreed to invite Spoornet management into the process. Their input was vital, providing detailed needs assessments for technology, labour and investment over the next 20 years. The long-term figures proved our hunch was right – the whole system would go into terminal decline if the profitable bits were cut away. Even “low-density” lines were shown to be an integral part of the whole, and important for keeping goods such as rural produce off the roads. Government saw the wider socio-economic arguments.

At the time of writing, the minister has agreed not to sell off Coal-link, and Orex will probably also stay. Passenger services are to remain in state hands, apparently learning the lesson from Britain. The unions have agreed to Luxrail being privatised, because to us it doesn’t have any strategic or social use, and accept, in the face of technological change, there will be some job losses.

It has been an exhausting process, and one that consumed union resources with two researchers apart from myself.

We were engaging with some of the biggest consultancies in the world, notably the UK-based bankers Rothschild. They are not experts in the field and have a vested interest in privatisation, as they were due to earn 2-5 per cent of the concession fee. We had to work hard to disprove what we considered was misleading information from them. Spoornet had also asked in the UK consultants Halcrow. They were former British Rail managers who at least could provide proper technical answers. In fact, in the end, their position and ours were very similar.

While the South African government has shown a drift towards privatisation, it nevertheless has a commitment to democratic governance, including consultation with the unions. It is also keenly aware of the need for socio-economic development, with unemployment at over 30 per cent. We were lucky that the technical arguments went our way. Now we have to turn our attention to ports privatisation.

Back on track
The Times newspaper called it “the biggest corporate disaster for a decade in Great Britain”. Many analysts believe that the way in which the British rail industry was broken up during privatisation was the ultimate cause of Railtrack’s downfall.

Under the Conservative government’s 1993 Railway Act, the old British Rail (BR) was split into some 130 parts. Railtrack was set up as the rail infrastructure authority, owning the 22,500 kilometres of track plus the stations, bridges and tunnels, level crossings and signal boxes. It was responsible for improvements to the existing lines and for building and operating new lines.

To run the passenger service, franchises were awarded to 25 passenger train operating companies. Freight operations were sold off to two companies. There are also three firms which lease out rolling stock to the operating companies. Plus there are about 100 other companies providing a wide range of contracted services such as maintenance, cleaning, catering, and much more.

Railtrack was responsible for keeping the network safe, but did little work itself. Inspections and repairs were contracted out. Amid repeated crashes and near-misses, many concluded that the system was unable to deliver adequate safety standards.

Collapse
For British taxpayers, privatisation of British Rail has been a disaster. When British Rail was sold off, US$5.7 billion was raised for the public purse. However, to make the passenger service run, the government had to pour in money. The annual subsidy doubled from around US$1.4 billion under BR to over US$2.8 billion under Railtrack.

Meanwhile, by contrast, Railtrack shareholders saw the value of their shares climb steadily. From an original price in May 1996 of US$5.40, shares reached a peak of US$25.11 in 1998. Shareholders also continued to receive generous dividends from sympathetic directors.

Eventually, however, market confidence crumbled. By September 2001, shares had hit a record low of US$3.58 each. The trigger was a series of fatal rail crashes.

After four more deaths on 17 October 2000, Railtrack set about a massive nationwide engineering project, which provoked the worst ever peace-time disruption of the British rail network. At its peak, it imposed 1,200 speed restrictions, causing huge delays and cancellations. Railway stations saw scenes of abandoned passengers angrily harassing station staff. Morale among railway workers not surprisingly hit rock bottom.

Meanwhile, Railtrack directors kept on promising that the industry was about to get back to normal and the government continued to bail out the company. Yet by May 2001 Railtrack announced losses of US$758 million. Even so, directors used an advanced payment of US$2.1 billion from taxpayers’ money to pay dividends worth US$199 million to shareholders. By early October 2001, Railtrack asked for yet more from the public purse, US$994 million by December, rising to US$2.4 billion by March 2002. It was also planning a radical cost-cutting programme in 2003-2005, slashing overheads by 10 per cent and axing over 1,000 jobs.

Finally the British government rejected Railtrack’s demands, and on 7 October 2001 a high court judge ordered the company to be put into administration. Shareholders were outraged. They apparently thought that Railtrack would indefinitely be bailed out. A political storm ensued, with UK Secretary of State for Transport Stephen Byers under huge pressure.

What next?
For at least a year, and rising, the remains of Railtrack will be run by the administrators, Ernst & Young. They are reported to have found “a huge black hole” in the finances. Between November 2001 and April 2002, the UK government will have had to put in something like US$5 billion just to keep the railway network operating. It may have to find US$85 billion over the next 10 years.

At first, the secretary of state announced that Railtrack’s successor would be a not-for-profit company, with a board including representatives of the train operating companies, passenger groups and employees. He seemed keen to ensure that operating surpluses would be ploughed back into the rail network rather than into shareholders’ pockets. He also envisaged companies set up on a project-by-project basis, funded by a combination of private investment and government grants.

Operating companies came up with their own suggestions. Some proposed taking over responsibility for lines. Unions were horrified as this would keep the network fragmented.

Whatever structures are adopted, it is now widely accepted that there must be a return to greater public control. This is what the British rail unions, the RMT, TSSA and Aslef have been demanding in their joint “Take back the track” campaign. The unions want a publicly-owned company to take responsibility for the maintenance and safety work that has been sub- and sub-sub-contracted out with such disastrous consequences.

“We are urging the government to return the railway to full public ownership and public accountability,” said RMT Acting General Secretary Vernon Hince. “It is the only system that has ever worked and it’s what the travelling public, railway staff and the taxpayers deserve.”