As our new Minister of Finance Tito Mboweni flirted with ideas from the old TM (Tito Mboweni/Trevor Manuel) fiscal responsibility and part-privatisation handbook this week, the left flank of the ANC’s parliamentary benches seemed to visibly wince. The minister repeated the sentiment that “our current challenges with state-owned companies present an opportunity to demolish the walls that exist between the private and public sectors,” just after stating that “we must choose public sector investment over consumption.”
Here’s the rub; the right hand of the ANC has never been able to control what the left hand is doing. This old but familiar dalliance between macroeconomic prudence mixed with the ego of the developmental state and demands for higher than inflation wages is as clumsy now as it has ever been. And none of the jokes and occasional ‘cheers’ to the gallery in the assembly can mask the whiff of déjà vu, of the ol’ dog up to his ol’ tricks. This show is becoming like an amateur magician who hopes that if we focus on his right hand we will not notice the left hand shifting the cards.
The Minister of Finance must act as the lead strategist of the government’s economic agenda, ensuring that all interventions steer the country towards sustained growth and increased employment. If all departments do not pull in the same direction, then the centre cannot and will not hold. The key feature of the ANC administration in national government is that ministers have governed their own fiefdoms, each with little concern for the strategy of the other. It is possible in one day for a minister to announce the intention to attract foreign investment and on the same day for a bill to be introduced by a different ministry that will achieve the contrary.
The ANC’s challenge in steering the country towards prosperity is political more than economic. The fiscal strategy - as we found out in the Medium-Term Budget Policy Statement - has once again been undermined by politics; borne out by the fact that the two salient fiscal risks which materialised were public wage growth above inflation and the continued financial deterioration of state owned enterprises.
In other words, the unions reasserted their role as the ANC’s political Achilles heel, the message is clear ‘put too much strain on us and we will bring the ANC to its knees.’ The continued deterioration of SOEs makes explicit what was apparent to anyone who understands organisational culture; the rot is deeply entrenched and superficial changes to boards is not strong enough an antidote.
While commendable, one must ask how the minister’s desire for a ‘data driven way’ squares up with the dogmatic fashion in which our economy has been led by ideological prescripts with scant regard for empirical evidence? It is heartening that more officials will be given the opportunity to pursue advanced qualifications in economics in order to “improve the interface between cutting-edge research and policy formulation.”
Does it take a PhD in economics to recognise that South Africa needs to find a new economic path, that leads us away from the corporatist arrangement between the big developmental state, big business, and big labour? This arrangement has locked out the unemployed and small business who have to suffer from the anticompetitive agreements forged in bargaining councils and flashy presidential jobs summits.
Twenty years ago, a presidential jobs summit was held in 1998 to forge a lasting compact between government, business, and labour. The cosy relationship lies at the political core of our economic stasis- money corrupts politics as much as politics corrupts economic transactions.
An arms-length government working in the interests of facilitating a competitive environment for all is what South Africa desperately needs. Such a government is not pro-business nor is it pro-poor, it is focused on creating the conditions necessary for economic growth, jobs and therefore wealth for all citizens. The rhetoric of pro-factional interests has meant that the national government transacts in the interests of its elite coterie, then appeases the unemployed and hungry majority through meagre cash and social transfers.
It is almost trite now to repeat the policy prescriptions South Africa requires as they have been articulated far and wide; including the need to unbundle uncompetitive and significantly loss-making state companies, holding public wages in line with productivity increases, scrapping the extension of bargaining council agreements to non-parties, committing to creating the conditions for market-led growth and doing away with the enrichment of a black elite to the detriment of the majority.
There are many more besides, but almost all could not be adopted by a political organisation committed to the idea that the state should exercise control over all strategic levers of the economy. This is the political naivety of pleading with the ANC to adopt liberal economic policies; yet this shallow political awareness is rampant. It is a wonder nobody is lobbying the EFF to adopt libertarian policy prescripts.
Suspicions that the economic stimulus is no stimulus at all have now been confirmed. Renaming existing allocations for infrastructure and budget reprioritisation which occurs in any case in every mid-term budget will not jumpstart the South African economy or resolve challenges which are structural rather than cyclical. However, asking the minister and the president to deliver a package of reforms that will radically alter the course of South Africa’s prospects would be to misunderstand the ideological foundations which circumscribe their economic options. These new tricks simply cannot be learnt by the same old operation.
When the minister began his speech by quoting Dicken’s ‘A tale of two cities’ he could have easily been describing the internal life of the ANC. Sadly the lack of coherence within the governing party spills over into the country, perpetuating a nation of two economies. As long as we talk right and act left never shall the two meet.
Gwen Ngwenya is a Member of Parliament for the Democratic Alliance and a member of the Standing Committee on Finance.