Budget test for ‘new dawn’

Let us not forget that the document tabled in parliament today is an ANC budget – and the ANC is incapable of applying sound monetary and fiscal policies.

Today’s budget speech will be a test for the “new dawn” sentiment which has emerged since last week’s election of Cyril Ramaphosa as president. Pain looms, starting with spending cuts and higher taxes. Former president Jacob Zuma will be blamed, for two reasons. First, his administration left a R50.8 billion shortfall. Second, most of the work in preparation for today’s budget will have been done under Zuma’s influence.

Ramaphosa’s inauguration coincides with an upturn in the global economy and outpourings of optimistic goodwill at home. It may look like a rising tide. However, this will not be enough in the short term to shield us from the inevitable. VAT is likely to be increased for the first time since 1993, along with other austerity measures.

Of course it is possible to deliver such news in ways that inspire confidence. Many could be duped by Malusi Gigaba, an early implementer of state capture, who opened doors for the Guptas at several state-owned enterprises and home affairs. But the repetition of mantras about expropriation without compensation must also be included in any calculation of confidence in SA’s future.

Cope leader Mosiuoa Lekota did the nation a service on Monday when he asked: “Who will you take the land from, and to whom will you give it?” He also highlighted the unconstitutionality of such expropriation. How does it square with the rule of law and investor confidence?

Yet expropriation was supported by the ANC national conference in December – the same ANC which has put Ramaphosa in office. Let us not forget that the document tabled in parliament today is an ANC budget – and the ANC in its current form is incapable of uttering or applying sound monetary and fiscal policies.

The grand corruption of the Zuma years has not been expunged, not by a long way. Many of the perpetrators are still in public office, while others were elected to the ANC top six. Unsound policies extend beyond expropriation without compensation. They include uncosted “free” higher education and the endorsement of a national health insurance scheme without a feasible funding model.

The above are current ANC policies which Ramaphosa is duty-bound to implement. Failure to do so would widen existing rifts in the governing party. How will all this be paid for when tax collections have plummeted? The World Bank recently predicted South Africa’s economy will grow by just 1.1% in 2018.

Short of incurring cognitive dissonance or getting lost in Zuma-like delusions – “I have done nothing wrong” – it is impossible to marry the radical expectations of ANC members with any growth-enhancing policy.

That is why it will be smart for Ramaphosa to let Gigaba deliver the budget. Obviously, the speech will be vetted by Ramaphosa and trusted advisors. But there will be just enough distance to create a public perception that any flaws can be attributed to the man who was president until last week.

Ramaphosa will retain his Teflon quality for now. But dawns don’t last forever. Night must fall. And when it does, will this lot be able to keep lights on, affordably?