Treasury now a hollow shell, scoured of ideals and power
TODAY’S budget day will be different from any that has gone before. When Finance Minister Pravin Gordhan stands up to speak in parliament he will know, and we will know, that he does not have President Jacob Zuma’s support.
As admired and respected as Gordhan is by the public and by the financial and investor community, that reality casts doubt over the credibility of the entire exercise.
As much as Gordhan will stress that the budget is a collective and collaborative outcome of the Cabinet, his words and proposals will be weighed against whether, in real terms, he has political support to achieve them.
The Treasury still has a firm hold on big, important things like the fiscal ceiling and the tax regime. The budget framework is still intact. For the investor community, this may be reassuring.
However, the real reason these fundamentals remain intact is not because there is consensus over their importance, but because those who oppose the Treasury – from within the government and without – haven’t been able to summon up the power to remove them yet.
A year ago, at the budget media briefing, Gordhan was asked whether he thought he had the political support to do what he had set out to.
His reply was: “If you see me sitting another year. Zuma’s support in the ANC has finally begun to weaken; all things considered, it would be risky to remove Gordhan if he wants to keep the ANC relatively intact until its December conference.
The price of the standoff has been dysfunction at many levels. Gordhan and South African Revenue Service commissioner Tom Moyane are pretty much at war; Gordhan’s application to the high court for an order clarifying his powers with regard to the banks is in effect a court application against his own president and the Cabinet.
The perfect bubble in which the Treasury existed for so many years burst some time ago.
In that world, the finance minister was esteemed by all; he was the ANC’s best son, the most articulate and the most capable. The Treasury was made up of good men and women well versed in the teachings of development economists of our time. Human devel- opment was the cornerstone of the budget. The redress of poverty and inequality was to be done by developing human capabilities and raising incomes. Harvard professors, World Bank experts and international gurus on poverty like Amartya Sen were their advisers. Inclusive growth was the theoretical framework that encompassed it all.
How far we have moved from the idealism of that world. This world is one in which the Treasury has lost its status as the arbiter of the general good; its vision of inclusive growth is in tatters.
The fuzzy term “radical economic transformation” has taken its place. While Gordhan is more isolated than any finance minister before him, the Treasury has not had the political power to give effect to its vision, which required not just prudence but structural reform of the economy.
Because of that failure, the post-1994 consensus has crumbled. Across the political spectrum, everyone is looking for new solutions.
Carol Paton is deputy editor of Business Day