Cocktail of economic realities make ANC election guarantees unrealistic
THE ECONOMIC and bureaucratic cocktail that the new Jacob Zuma-led ANC government will inherit and have to work with is messy. So much so that the party’s sweeping election promises to ramp up public spending and then channel it through an efficient, state-of-the-art public service that will start meeting people’s needs – especially health, education and safety – look naïve, if not insincere political hand-waving.
The current economic realities form the cocktail’s base ingredient. The ANC fails to even mention those in its manifesto. The truth is that the new government’s financial ability to use social welfare to address poverty and unemployment – South Africa’s most serious economic problem – is going to be constrained. While the economic slowdown and high inflation rates will intensify the need for social assistance, voters are being promised expanded social security and “massive” public investment that’ll create 5m new jobs over the next five years.
The next cocktail ingredient is the public service’s culture of mediocrity that, the Institute for Justice and Reconciliation warns, stands to foil economic growth. Then comes the skills deficit, followed by Parliament’s paralysis. Finance Minister Trevor Manuel’s upcoming Budget might introduce a stimulus package that will go some way towards reconciling the political pressure he’s under to increase expenditure by 16% (as the ANC’s election drivers have promised) and the fact that there’s a lot less money to go around.
Word from Treasury officials is that prudence will prevail. That means actual allocations to Government departments are more likely to keep abreast with inflation rather than reflect substantial real increases. Manuel’s principal call – expected to be for more bang for each budget buck – points to the nub of what Team Zuma will be up against.
The truth is that with regard to health and education (two of the ANC’s three election priority areas) SA already spends more (as a percentage of GDP) than any other emerging economy. And yet – as the ANC itself concedes – the desired results in both departments are just not there.
Throwing more money at the delivery problem, according to Applied Fiscal Research Centre’s (Afrec) Tania Ajam, hasn’t necessarily delivered commensurate improvements in performance – for one main reason: there’s no accountability. And it’s not for lack of systems, agencies and studies to point out where the problems are.
The dismal performance of management in the public service, the lack of disclosure of personal business interests by politicians and top public servants and the impact all that has on financial management and delivery are documented and reported annually to Parliament by the Public Services Commission. Several departments (big spenders, such as Health and Home Affairs, included) have been receiving consecutive qualified audits for several years.
The auditor-general repeatedly gives detailed explanations of where the serious contraventions of the Public Finance Management Act (PFMA) are. But nobody gets fired. Nobody is held personally liable, as the PFMA allows. Parliament may blow some hot air in Cabinet’s direction – especially in situations where almost 2m commuters start demanding to know how, for the third year in a row, the Transport Department has this year again failed to meet its contractual obligations to pay bus subsidies.
Treasury allocates specific money for that line item – the biggest, after the Gautrain. How do chief financial officers not anticipate the shortfall and sound alarm bells in time for contingency plans to be made? Parliament never calls for a minister’s head. It sometimes threatens not to pass a delinquent department’s budget until it’s made certain changes. But that’s never actually happened.
Economist and Pan-African Capital Holding CEO Iraj Abedian says the ruling party is going to have to draw a line in the sand and have a real zero tolerance attitude toward things such as mismanagement and qualified audits – irrespective of who’s in charge of that department.
Last year’s brief period, where ANC MPs were publicly lambasting ministers for delivery failures, was a Prague Spring made possible in the spell when former President Thabo Mbeki and his Cabinet remained in charge of Government but not of the ANC’s headquarters. Now that the ruling party and Cabinet leaders are again the same faces, Parliament has embarked on a new season of rubber-stamping party instructions.
The question is: How far, if at all, will the ruling party take a Parliament-commissioned report that calls for electoral reform so that MPs depend on voters – not party bosses – for their jobs/reelection? Without that there’s no incentive for MPs to hold political bosses or their right-hand mandarins to account.
The cholera outbreak speaks precisely to the hoary dilemma of insufficient accountability and monitoring, says Idasa’s Judith February. It also speaks, she argues, to the consequences of
it: Government departments battling to fulfil their core functions, deteriorating infrastructure and a very weak tier of municipal government.
Of course, it also speaks to a desperate lack of specialist skills – which has become the mantra of all Government officials. For example, in KwaZulu-Natal 70% of all medical specialist posts are unoccupied. Vacancies in the SA Police Service means only 12 researchers and statisticians currently serve the entire force with crime data. The social security agency that administers social security payments to 12m South Africans each month is running at a 58% vacancy rate.
Abedian says no system where there’s uniform payment and uniform annual increases will achieve the kind of productivity the ANC needs to fulfil its promises. He says professionalising and depoliticising the public service are critical to preventing a deepening of the “culture of mediocrity and bureaucratic compliance”. The IJR’s recent Transformation Audit echoes that sentiment. It warns the state that the system is currently undermining sustainable growth and social development.
February asks: “Is the (ANC) leadership strong enough to lead (through those issues)? In my view, it’s shown itself to be weak so far and is led by an individual (Zuma) that’s beholden.”
There’s another obstacle to Team Zuma’s promise to hit the ground running when the new government is sworn in. Move- ment on the OSD issue, regional electricity distribution, whether we can afford provinces or any other issue requiring critical decision-making is likely to be non-existent until about June this year. This hiatus in bureaucratic activity is, of course, typical in bureaucracies waiting for the arrival of a president and ministers, who, in turn, take time to settle, review and appoint their own mandarins and advisers. Ajam expects the “When in doubt chicken out” rule to apply to most Government decisionmaking until mid-year.
This time the changing of the guard also comes with more uncertainty than usual, because there’s little clarity on whether Treasury (a source of predictability for the past 13 years) is also in for some big changes – both in policy and personality. The ANC’s statements on economic policy and its alliance partners’ statements on Manuel himself seem to have taken an oft-confusing, different-message-for-adifferent-day approach.
While February says there’s “no sense of a systematic handover”, Abedian says it’s critical for the ANC to communicate and tackle the “monumental challenge” that’s the machinery of implementation, which is key to economic growth and delivering its spoils. There’s also no quick fix. Other countries have shown it takes between seven and 10 years to turn a state bureaucracy from zero to working hero.