Gordhan fills some of JZ's political potholes

One had to feel sorry for Minister Pravin Gordhan after President Jacob Zuma’s performance last Thursday. Given that the state of the nation speech was a double disaster, having been both lacklustre rhetorically and short on detail, it was naturally going to be up to the Minister of Finance to fill some of the political potholes left by the speech.

One pseudo-justification for the president’s focus on broad thematic brushstrokes rather than granular policy detail is the promise that detail would follow in the weeks ahead. The budget speech is the first major speech since. This raises the obvious question of whether the budget speech adequately spelt out the kind of detail that was sorely lacking in the president’s speech? Do we now have less reason to worry about whether there are comprehensive plans and numbers behind government’s policy focus areas?

On balance the speech met most expectations. Perhaps its greatest virtue was a sensible balance between numbers and principled themes spanning the entire speech. For example, the emphasis on a moral contract with taxpayers to underscore the tax collectors’ commitment to deal with tax evaders spoke to a character who is as much concerned with questions of fairness and justice as he is with cold numbers. Or, to take a different example, the emphasis on social capital at the beginning, and the realisation that “our most precious national asset” is social capital, oozed conviction. It is amazing that by contrast, when the president attempted to throw sound bites our way, few were prepared to swallow it. But Minister Gordhan spoke with a sincerity and authority that convinced.

This matters because the determinant of whether or not we reach the developmental goals the state has set itself is not just how much money we throw at the problems. Success is in no small part also going to be a function of the collective energy and national self-confidence we have as a workforce and as a nation. It is therefore with some relief that the tone from both the media and, crucially, opposition political parties changed drastically over the past twenty four hours. A whiff of a spirit of co-operation was in the air. That is a good thing.

These successes are not just because Minister Gordhan is a private individual with no publically known moral stains to distract us from solely focusing on the content of his work. It is also because the minister showed incredible political astuteness. On the one hand, he appeased labour by sharing its analysis that a labour absorbing growth strategy is crucial while on the other agreeing with business that “doubling the size of the economy within a generation” is a critical outcome to aim at. This gives all stakeholders a sense of having been heard.

On the numbers and policy side, the rhetorical stuff was matched with equal brilliance. It is comforting to know that by and large taxes will not have to be increased as a trade off for spending to remain the same or for spending to increase in some areas. We are still reaping the rewards of the historic budget surplus of recent years. The current budget project a deficit of 7,3% going forward. This compares favourably with other economies including ones within the global north. More worryingly, perhaps, is that a hidden cost of our decision to not cut spending nor raise taxes is that public debt will creep up to around 40% of GDP by 2013. This is undesirable for the obvious reason that when the global economy is truly on the up again it will be the economies with smaller amounts of public debt to settle who will see the tangible benefits of economic growth most palpably. Furthermore, revenues unlocked through economic growth cannot be put to optimal social use when a high debt burden requires servicing. We would do well therefore to not get overly excited about having the space to go into debt - for now.

Still, in the short-term at least, most South Africans can look forward to continuing to live withing a caring state but one whose fundamentals remain friendly to investors. Of course, operational efficiencies within the state, and effective strategic partnerships with the private sector, will determine whether or not these by-and-large decent plans actually translate into the governing party's lofty ideal of a 'better life for all.'