I was dreading yesterday’s mini-budget.
Firstly the objective conditions were against us. It was clear that the Great Recession was going to squeeze revenue – and therefore the space available for the new Minister of Finance to operate in. As it turns out, lower revenue and higher than expected expenditure has pushed the estimated deficit on the consolidated budget to R184bn or 7.6% of GDP.
Now that is a significant shortfall, but not bigger – and in some cases a lot smaller – than governments around the world are operating on in these difficult times.
Secondly the long triumphalist Polokwane after-party had led me to miscalculate. It had begun to feel as if every milestone we reached was another opportunity to celebrate the crushing of “the 1996 class project” (read “fiscal rectitude”) and the rise to dominance of woolly thinking and left populism in an uneasy alliance with a new more voracious layer of vampire capitalist aspirants.
And here comes stout Pravin Gordhan and the new parliamentary autocue to wipe away my cynical fears. He said it loud and clear for all to hear:
Special appreciation is therefore due to Minister Manuel for his sound stewardship of our public finances.
The new Minister of Finance stood before our parliament and clearly phrased the budget in the terms of this ANC’s election manifesto (emphasising education, health, rural development/agrarian reform/land, crime/corruption and the creation of decent jobs). However he did so while clearly placing himself within the macro-economic framework of the past – including by continuing to relax exchange controls and defending inflation targeting.
I have no reason to think that Gordhan will gradually bow to pressures from any quarter before the the real budget early next year. This does not mean that we won’t have higher taxation and more poverty relief in future. In a country like South Africa these thrusts are inevitable and appropriate.
So the chickens that actually came home to roost yesterday were not born in Polokwane in December 2007. They are in fact the fruits of pro-investment policies and fiscal austerity in the mid-90′s. Those chicken were hatched as part of the macro-economic framework developed under Nelson Mandela and Thabo Mbeki and guided by the stewardship of Trevor Manuel.
Pravin Gordhan yesterday spent some of the heritage of a sound macro-economic framework that has prevailed for the last 14 years. It is this very framework that the ANC’s left-wing and Cosatu and the SACP excoriate at every opportunity. It feels better to know that the politician dealing with these issues at the centre of the Zuma government understands perfectly well what is owed to those men and women who held the line against self-serving economic populism in the 90′s – at great cost to themselves and their future careers.