The budget is the spending, taxation and borrowing plans of government.
Don’t just think of it as a series of hefty documents (the national budget review, the estimate of national expenditure, the appropriations bill and the division of revenue bill) – hundreds of pages and millions of calculations, graphs and tables.
It is more than just the grand plan to tax and borrow and divide the money between central , provincial government and municipal governments as well as between a thousand different priorities.
It is, in theory and in a functioning democracy at any rate, how the will of the people is exercised in the world; the full process of planning and execution by the elected government.
Obviously elected governments are not always perfect translations of “the popular will”, and “the popular will” itself is not always something more noble than a self serving and ugly little collection of prejudices, fear and greed.
But anyway, the questions I was asking of the budget were:
- Is the Treasury still the guiding hand in macro-economic policy – in the sense that it remains able to force prudence and fiscal rectitude on the rest of government?
- The New Growth Path calls for measures to make the currency more competitive: more restrained fiscal stance combined with more active monetary policy, accumulation of reserves, a sovereign wealth fund and possible controls on short term capital inflows. Does the Budget 2011 confirm these commitments?
- How much money will be allocated to removing infrastructural, skills and administrative bottlenecks in the economy? Is there the promised Marshall Plan type urgency to increase the economy’s capacity for growth?
- Are there measures to encourage domestic savings: compulsory retirement savings, discouraging high debt levels, increasing corporate savings by discouraging dividend payments and development bonds … and horror of horrors the return of a strong version of ‘directed investments’? Depending on how this is phrased it could spook investors and generally indicate hostility to open markets.
- Were the supportive measures in the State of the Nation address (in particular the R20bn to manufacturing subsides) something new or actually measures that had been announced before?
- Did the mention of a 9 billion rand jobs fund in the State of the National address refer to the long missing subsidy for first time youth workers? This is significant because it will show government preparedness to take on Cosatu over the labour market.
- Shifts in the over-all allocation of state money between priority areas as different as policing, housing, water and sewerage can indicate changing strategies as well as changing prioritisation. But in general we will be looking for the meat on the bones of the statement that government wishes to be a “developmental” not a “welfare” state.
- How close are we to a National Health Insurance scheme and how aggressive will that scheme be to the private sector?
- Is the allocation for the civil servants wage bill set to endlessly increase or does it look like government might, at some stage, dig in its heals and face down the public sector unions.
- What measure are in place or likely to be put in place to control corruption and cronyism within government departments and in the allocation of state contracts?
If that was where I was looking for the signs of where we are going, my next post will look at what the budget revealed with regard to these questions.