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Gordhan And The Grown-Ups Step Up To Demand Sound Fiscal Management

"South Africans, wherever you are: own this process, defend your gains, demand accountability."

22/02/2017 13:55 SAST | Updated 22/02/2017 17:33 SAST

Finance Minister Pravin Gordhan delivered a powerful and emotive budget speech on Wednesday, delivering a sober dose of fiscal reality to his detractors while rooting himself firmly in the Constitution, the National Development Plan and — most importantly — the vision of the African National Congress (ANC).

The minister of finance, in a longer than usual speech in which the word "radical" was used six times, agreed with President Jacob Zuma that rapid economic transformation was a societal imperative, but delivered a far more nuanced diagnosis of South Africa's problems than the head of state did 11 days ago.

It was a confident speech in which the minister — accused by some Cabinet ministers of being obstructive, targeted by his principal's friends, the Guptas — sounded a rallying call to the Treasury and the rest of South Africa.

"Obstacles there will be many. Overcome them. Detractors abound. Disprove them. Negativity inspired by greed and selfishness will obstruct us. Defeat the bearers of this toxic ethic," the speech says.

South Africans, wherever you are: own this process, defend your gains, demand accountability. Be an active agent for change. Umanyano ngamandla.Pravin Gordhan

"South Africans, wherever you are: own this process, defend your gains, demand accountability. Be an active agent for change. Umanyano ngamandla."

Gordhan quoted ANC scions Oliver Tambo and Albert Luthuli, in which they positioned South Africa as part of a globalised world and belonging to everyone who lives in it.

Although the minister — who was much calmer and more confident than this time last year, according to aides — emphasised the importance of dramatic social transformation, he was adamant about the framework and preconditions within which this was supposed to happen, mapping out guidelines that everyone would have to take to heart.

The central theme of these guidelines? New jobs, creation of new industries, the re-shaping of our world, the rule of law, and fiscal responsibility.

Gordhan, as he made clear in a press conference before the speech, said the imperative for faster social and economic change — again, echoing Zuma — is not merely because it ensures stability, but that it is a moral imperative.

"This is not a transformation to be achieved through conquest, conflict or extortion, as in our past. We do not seek to reproduce the racial domination that was the hallmark of apartheid nationalism. Our transformation will be built through economic participation, partnerships and mobilisation of all our capacities. It is a transformation that must unite, not divide South Africans.

"This is the task entrusted to us by Oliver Tambo, Helen Josephs,Walter Sisulu and Rolihlahla Mandela," Gordhan said.

He went to great pains to explain the dire straits in which our economy finds itself, and that there was extremely limited space within which to move. For the minister, it came down to a simple equation: South Africa cannot spend what it does not have. If it intended to spend more, it would have to borrow money. But borrowed money has to be paid back — and that's expensive.

The firing of former finance minister Nhlanhla Nene might be more than 14 months in the past, but the political and economic damage it wrought remains, and Gordhan — succinctly and elegantly — reminded Zuma of it, twice. He first remarked on the rand's recovery "from its rapid deterioration last year" before later mentioning Nene by name, in relation to new legislation.

Shots fired

The budget speech was lighter on heavy policy detail than in the past (the gist: revenue is under pressure, national debt must be managed better, the rich will be paying more in tax) and heavy on the fiscal and political environment.

The fiscus needs to be managed properly and responsibly and the government cannot ignore its own targets. Political expediency and "short-termism" (to borrow from Jeremy Cronin) would result in major crises: interest rate hikes, credit rating downgrades, capital flights and cutbacks in service delivery.

There is clear worry about events at Tom Moyane's Sars (in both his speech and at the press conference, Gordhan expressed worry), while the malaise at the patronage-trough of state-owned enterprises is reaching crisis point.

Treasury, in Gordhan's words, has produced a "credible budget". The deficit is shrinking over the medium term, debt is stabilising, growth will inch upwards. No great shakes.

But amid the sound and fury of those bent on state capture and paid Twitter, who hijack phrases like "white monopoly capital" and "radical economic transformation", Gordhan and the grownups have stepped forward.