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20 March 2018 15:48 (South Africa)
South Africa

2013 budget: Help us to help you, Mr Gordhan

  • Paul Berkowitz
    Paul Berkowitz

    Paul Berkowitz: studied economics, maths stats. Worked at Econometrix, FNB, Wits. Interested in South African politics, economics.

  • South Africa
praving gordhan paul 01.jpg

This year's budget speech was similar to last year's in its tone: more collective responsibility, fewer expectations, more rolling up of sleeves. That's fine. We South Africans can definitely work hard. But, Mr Gordhan, please don't socialise the responsibility while privatising the hard work. Your government can do a lot more to keep its promises and to meet its commitments. By PAUL BERKOWITZ.

Finance Minister Pravin Gordhan started his 2013 budget speech by referencing President Jacob Zuma's State of the Nation Address. Gordhan focused specifically on Zuma's exhortations for the greater South African public to work together to "put South Africa first" and to "build and promote our country".

Gordhan's emphasis of the National Development Plan (NDP) was expected, but the NDP also allowed him to frame the national budget in terms of collective, shared responsibility and an incremental, long-term approach to economic recovery and prosperity. It doesn't hurt that such a sober and gradualist approach dovetails nicely with Gordhan's own persona.

It also takes some of the pressure off the government and transfers it to the private sector and the citizens of the country, and serves the additional purpose of managing people's expectations, keeping them focused on the long-term prizes.

It's a fair approach, and we've often argued that national success is the responsibility of all of us. What should not be allowed to happen, however, is for a focus on a longer time horizon to bleed into the realm of liminal time, and for the sharing of responsibility to allow government to evade its own responsibilities.

The NDP, by its nature, is a long-term strategic document that targets a number of reforms. These reforms cannot be effected overnight, and no-one is arguing for that. At the same time, this government has a track record of inaction, complacency and compromise to the point in inefficacy when it comes to making difficult reforms.

The best example of this is the introduction of policies to tackle youth unemployment, particularly youth employment tax incentives. Assistance for unemployed youth was mooted during the Mbeki administration but has been consistently opposed by the ANC's labour partners. Implementation of any incentives (vouchers, tax breaks, wage subsidies) has been held up in Nedlac and in Parliament.

In Chapter 2 of this year's Budget Review, there is a brief discussion of a study conducted by the Treasury and the African Micro-Economic Research Unit at Wits, which tracked the impact of a R5,000 hiring voucher on the employment outcomes for non-economically active and unemployed young people. Half of the sample of unemployed youth received the voucher while the other half did not.

The voucher could be used to subsidise the initial cost of labour for a prospective employer. Although the voucher might only subsidise the costs of hiring for six months, and R5,000 is not a great deal of money, the study found that those youths who were allocated a voucher were up to 25% more likely to be employed than those without a voucher, and the effects of the voucher persisted for two years beyond the allocation of the voucher. Furthermore, most firms claimed that they would not replace older workers with younger ones if such a voucher were made available, which speaks directly to Cosatu's fears of employment losses among its members.

Even such a small measure to boost the demand for youth labour is likely to be bitterly opposed by organised labour. According to the Budget Review, this measure "will be tabled for consideration by Parliament". There are no indications of deadlines and there is no sense of urgency in this statement, despite the frustration that the Treasury might be expressing behind the scenes.

Hopefully this debate will worm its way through the parliamentary sausage machine, not being thoroughly diluted in the process. Possibly it might even be signed into law late this year, and could even be budgeted for by next year's budget. By then, it will have taken just under a decade for such a subsidy to have moved from the conception to the implementation stage.

More resources will be allocated to the existing expanded public-works programmes: over the medium-term government hopes to provide a 36% cumulative increase in the number of "full-time equivalent jobs" (from 502,000 to 685,000) through a 24% increase in spending (from R1.7 billion in 2012/13 to R2.2 billion in 2015/16).

It's obviously easier to scale up an existing programme, and the spending per "full-time equivalent job" is far cheaper than, say, the money earmarked for protecting manufacturing jobs. But there is little evidence of skills transfer or the long-term viability of "jobs" created in this way.

The programme looks more like a social welfare package than an employment creation/enhancement scheme. Let us rather diagnose it and label it as such, and then we can debate the sustainability and desirability of such "jobs" (and whether the government should be in the business of subsidising them), rather than pretend that they constitute a needed microeconomic reform in the labour market.

Similarly, the moves to clamp down on corruption and accelerate public infrastructure spending must come with clear timelines and goals. The Treasury mentioned the creation of a chief procurement officer in last year's medium-term budget policy statement and Gordhan claimed in this budget speech that he would "soon be able to announce" who this person is.

At this point, there is no indication of what "soon" could mean, and, while there is a fair amount of detail from Gordhan as to the needed actions of a corruption-busting team, there is no confirmation of deadlines and targets. Gordhan ended the portion of his speech devoted to the fight against corruption by saying that "[r]ooting out corruption requires collective effort from all of us." While that's true in a vague, absolute sense I still struggle to connect the implied dots.

If every private citizen woke up tomorrow and stopped paying bribes to policemen, councillors and other public servants, how will we as a country be any closer to ending tender fraud and eliminating the collusion between miscreants in the business and public sectors?
If the government is serious about cleaning up corruption it needs to do a lot more than wave its arms at the rest of us in a vaguely encouraging fashion. It could reform corporate law, allowing for the incarceration of private- and public-sector management who steal and waste money – if it can introduce a streamlined justice system for violent protestors (which I see as a dubious way of cracking down on civil protest) then it can certainly prioritise the prosecution of the corrupt.

It could create a nationally-administered resource for the dissemination of all public tender records once the tenders have been awarded, giving details of all bidders, prices submitted and private persons connected to the bids. If Gordhan wants the general public to help fight corruption then let him give the rest of us the tools and information we need to decide whether our tax money is being put to good use.

At the moment, Corruption Watch is doing more to beat corruption than the entire bureaucratic apparatus, with far fewer resources and in a much shorter time. It collects, collates and analyses data (submitted by the public), releases its reports and recommendations and goes about its business of empowering the public. It's already putting pressure on institutions like the JMPD to clean up their acts. All it has done is inform the world what it would do, and then it did it. It has made an impact in a matter of months. It didn't have to wear smooth the skin on its palms through constant hand-wringing.

There are other examples of the government dragging its feet, not doing enough to make a difference or neglecting the necessary detail. These include reforms for assisting small business, ensuring the prompt and efficient roll-out of infrastructure, deregulating the electricity market, fixing public education and providing policy clarity on investment. In most of these cases there is a large gap between the high-level pronouncements on What Is To Be Done and the hard work of determining How (and By When) To Do It.

Here's a simple suggestion for future budgets. If an idea or programme is mooted in any budget, it must be fully formed (costed, funded, given timelines and targets) by the end of that medium-term period. If this is not done, the programme must be removed from the budget and cannot be introduced by the ruling party for at least two years.

This would mean that politicians and parties have a period of three years to learn how to translate their fancy words into useful actions. It would also give the public an easy way to gauge whether a particular administration can do more than just talk about things.

We're not asking for increased spending or a growth in the state apparatus, Mr Gordhan – in fact if your government actually gets around to corruption-busting there should be a lot more money available for all of us. Just do what you say you will do. You'll find very quickly that the rest of us will meet you halfway. DM

Photo: Pravin Gordhan (Reuters)

  • Paul Berkowitz
    Paul Berkowitz

    Paul Berkowitz: studied economics, maths stats. Worked at Econometrix, FNB, Wits. Interested in South African politics, economics.

  • South Africa

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