Gordhan must be presidential in Budget delivery
TOMORROW, Finance Minister Pravin Gordhan will address the government’s role in our finances for the coming years. His submission to Parliament and the nation will reflect more than the mathematics of revenue and spending; it will embody our ideals, aspirations, and even fears. It is the monetary representation of a nation’s yearning for prosperity.
In a capitalist system, public finances need to fill the void between what companies produce and citizens need, especially the economically weak. Ideally, a government’s expenditure choices attempt to correct any misalignment.
Among the advanced nations, there is ample evidence of politics endangering prosperity. In Europe, it is proving a feat to reconcile domestic politics with European macroeconomics and, in the US, the drive to unsettle President Barack Obama comes at the expense of fiscal consolidation.
While the ANC’S “broad church” once found unanimity in a lone adversary, apartheid, now its breadth seems debilitating. Some members crave more reward than salaried service offers, and so the nation’s transformation path is under pressure to be rewritten. This atmosphere introduces volatility to the cost of government loans and, broadly, is unsympathetic to a nation on credit alert.
Cosatu wants better margins for its constituency and has a tenuous link to a work ethic. Chinese urban workers are enjoying double-digit wage increases, in sync with productivity growth, and are less prone to settle for unfulfilling work in garment manufacturing as they seize opportunities in technology sectors. In contrast, Cosatu’s preservation model is archaic, while its political swagger feeds a vicious cycle of uncompetitiveness and low economic growth. This spoils Gordhan’s revenue ambitions and simultaneously, imposes a labour expense he cannot afford.
There’s an element of German assem- bly in Gordhan. He believes that more can be achieved when seemingly incompatible parties unite around an idea. Tomorrow he will provide detail on the state’s infrastructure project, but he will be aware that even lesser past ambitions have failed. The heavy lifting required to capitalise South Africa is the private sector’s realm, but rooted in the government’s effective lead. There are bridges to be built from all sides; for instance, to create trust between business and the government. Yet it is hard for any minister to be presidential, even one charged with, arguably, the most influential government portfolio.
Corporate South Africa has responded to slowing global growth by looking inward, attempting to become steeled in a low-growth environment. Meanwhile, the government is bloated and bungling, and a decade of strident protest among the urban poor against “service delivery” implies mistrust in the state’s effectiveness.
Gordhan is one of only a few ministers to exude sophisticated pragmatism. He will speak softly tomorrow, but he must wield a big stick. He needs to be presidential.