South Africa

Good mini-budget politics: the amazing Gordhan/Zuma double act

By Stephen Grootes 24 October 2013

The art of politics is essentially the art of allocating resources in a fashion that keeps everyone happy while still voting for the ruling party. You'd think this means that the most popular person in the country is the one who can make this happen in the best possible way. But truth is, this most popular person would soon lose pole position if he had to keep making those decisions. So the job gets outsourced to someone called the Finance Minister. Sometimes they're a tooth fairy to an electorate that's about to vote. Sometimes they're an enforcer. Pravin Gordhan is not a tooth fairy. By STEPHEN GROOTES.

Due the peculiarities of our own odd political cycle of ANC conferences, then national and provincial elections, followed by local government elections, we spend more time in election mode than most countries. But the peak is still the national elections, which are now just around six months away.

The smart money ahead of Gordhan’s Medium Term Budget Policy Statement was on something that would buy votes. If he were in Venezuela, it would have been a mini-budget aimed at taking from the rich and giving to the poor in the most populist of ways. In South Africa, it seemed Gordhan was going to have to try and appease the frustration of many of our people with some increase in spending.

The problem was, he doesn’t have the money, what clever economists call the “fiscal space” with which to do that. Instead, Pravin being cleverer than just about anyone else in our politics (I really do mean that) went another way. He had the anger and frustration of people on one hand and no money on the other. So, instead of spending more money that he doesn’t have, he found a way to have his cake and eat it.

He’s going to attack the bling culture in government. The anger of the people will be appeased, and he gets to save money at the same time.

There are not that many people in our politics who would have thought of it. (Those in the running would include Gwede Mantashe, and oh yes, Number One himself.)

President Zuma is going to be key to this. Someone has to rein in Cabinet, and it cannot just be Gordhan on his own. He is the Finance Minister, he is the most powerful cabinet minister in terms of accessing and controlling resources, but he doesn’t necessarily have the rank in the ANC that he would need to carry it through.

He wasn’t on the NEC until fairly recently, which would seem to make it hard for him to have the political authority to make it happen.

This is one of those mini-budgets that demonstrate the power of having a close relationship with Zuma. He and Gordhan go back years, and ran Operation Vula in Kwa-Zulu/Natal together during the ’80s (for those with an interest in these things, the other member of this trio was one Mac Maharaj). Gordhan’s other main source of political strength comes from the fact that he seems to be un-sackable at the moment, for the simple reason that there is no one else Zuma trusts enough to appoint in his place and whom the markets, and the world, would accept.

This means that Gordhan is using Zuma’s political capital here, to rein in government spending, and soothe some of the anger of the voting population. It’s very, very good politics.

Still, in the much shorter term, it also means that every time some MEC takes their entire family along on a “fact-finding” mission to the Bahamas, Gordhan’s speech will be hauled out by the DA’s press-relations team and used against them. Stand by for more bad headlines about misspending ministers.

One thing does appear from Gordhan’s speech. Read his lips, he is not going to increase government spending.

This is bad news for government employees. Our wonderful civil servants are not going to get paid any more money for spending their days playing solitaire or watching Isidingo between 8am and 2:30 pm every day. Later, down the line, this could well lead to some serious frustration from our unions, and don’t be surprised if we start to see some moaning from them at some point.

Gordhan’s main problem with this mini-budget was to find a way to reassure those pesky foreign ratings agencies that he means business when he says he’s serious about sorting out our finances. It was about making sure it doesn’t cost us any more to borrow money. That seems to have loomed large in his thinking and he’s made sure that there are no more promises of spending.

Which brings us nicely, in a way, to the future.

It’s now clear, both from this speech, and from the way the Treasury has been dealing with what’s now called the Tax Employment Incentive Bill in Parliament, that what we all know as the Youth Wage Subsidy is going to be implemented. Gordhan is going to have his way here, and the unions, and by that we really mean Cosatu, are just going to have to lump it. (Ahem. – Ed.)

Cosatu knows this, and has already voiced its opposition, and asked how dare he go ahead and manoeuvre around Nedlac, when the current legal position appears to be that any bill dealing with employment and labour must first go through that platform. Gordhan’s response would no doubt be that Cosatu has simply held up the Nedlac process for three years and that he has to do what’s best for the entire country and not just organised labour.

We have to ask if Gordhan would be saying this as well as going ahead with keeping our fiscal stance as it is and not increasing spending (and thus civil service salaries) if Cosatu were not the weakened beast it currently is? Is it too much to claim there’s a direct link between the certain misuse of a desk at Cosatu House and Gordhan’s speech?

Perhaps, but it certainly makes one think about how a weakened Cosatu could mean more emboldened Gordhan.

Speeches reveal more than just the country’s financial position. They expose what top people in government feel about where we are as a country. This shows us that the top people are Zuma and Gordhan and that they are very, very worried about our finances. That, and that they are determined to do something about it. Let’s hope that they succeed. DM

Grootes is the Senior Political Reporter at Eyewitness News and the host of the Midday Report on Talk Radio 702 and 567 Cape Talk. Gordhan, Maharaj, and yes, Zuma, all feature in his new books SA Politics Unspun. So – does Zwelinzima Vavi and that desk?

Photo: South Africa’s Finance Minister Pravin Gordhan speaks to President Jacob Zuma (R) during closing remarks during the 5th BRICS Summit in Durban, March 27, 2013. REUTERS/Rogan Ward


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