In his most recent column Peter Bruce eloquently laid out the constraints the finance minister faces in the upcoming medium-term budget (“Medium-term budget could take the shine off GNU”, October 17).
There are fiscal realities that Enoch Godongwana understands perfectly well, but if you think addressing the country’s debt trap is hard, you should try explaining the natural consequences of it to some of his ANC colleagues.
A year ago, speaking at the Kgalema Motlanthe Foundation’s annual inclusive growth summit, Godongwana said, “They call me Mr Austerity. I don’t like it, but I can live with it.”
The summit meets again at the weekend, and the minister is again on the bill. Ahead of what will be a tricky budget, it will be interesting to see what his message will be in a room that is not generally fond of liberal economics.
After decades of one-party rule, the reflexive approach to contemplating the political constraints vexing a finance minister is to ponder the ANC and the pressures imposed on it by its traditional partners on the left — the labour unions and the communist party, as well as the leftist constituencies within its own broad church.
But coalition government is a further complication, and with a strong opposition presence in certain key ministries the whole environment requires a deft political touch. Godongwana and President Cyril Ramaphosa are pretty tight, but it is the ANC’s internal squabbling and the fruitless squandering of political capital that must surely weigh on the coalition government.
All of Godongwana’s planning and thinking will be based on certain assumptions about the medium-term future. These assumptions are carefully considered and properly tested by economists and public policy experts, but one of the broad assumptions is likely to be that there will be relative stability in markets and government over the period.
Ousting mayor
It’s easy to let that slip by without comment, and I’m sorry but I need to raise awkward topics. We are all very comfortable with the recovery of Eskom’s electricity supply despite the mysterious and suspicious disappearance of the gangsterism and vandalism that was turning Eskom’s coal plants and their supply chains into war zones only a year ago. That, with more than 4GW of rooftop solar added by private owners in response, is all that has changed.
The difficult truth is that all the improvements we have seen ... are all pure sentiment.
There are other reasons to be uncomfortable. Ramaphosa’s failure to get on top of his own internecine squabbles has resulted in a serious betrayal of the spirit of the coalition agreement in Tshwane. There, the ANC has rather chosen to cosy up to the thuggery of the EFF and the principle-free political Kgalagadi that is ActionSA, ousting the DA’s mayor in the city.
Observers might mistake this as having occurred without consequences, but that is likely to be wrong. It is likely that the DA — with an eye on its voters — feels it is fresh out of room to manoeuvre. That makes two topics rather more existential for the coalition than they were before the president dozed through the fisticuffs between Panyaza Lesufi and Fikile Mbalula: National Health Insurance (NHI), which seeks to abolish private healthcare; and the Basic Education Laws Amendment (Bela) Bill, which seeks to reduce parents’ influence in the running of schools.
These topics are fraught with danger, and it’s worth contemplating what would happen if the coalition was to collapse on the basis of these issues. It would make the bloodbath after the appointment of “Weekend Special” Des van Rooyen into the finance ministry by then president Jacob Zuma for three days in 2015 look like a walk in the park.
Pure sentiment
Among the scenarios that would follow, the best is a chaotic minority ANC government that can’t get anything done. The worst would be the arrival into government of those committed to the complete abolition of the constitution (MK) or those who wish to nationalise mines, banks and even the Reserve Bank (EFF).
The difficult truth is that all the improvements we have seen in the currency, in the markets, in business confidence, manufacturing confidence and even GDP projections, all the stories about the return of private equity and about bonds, are all pure sentiment.
It seems we have a more competent police minister. It appears there is a less ideologically rigid minister at trade, industry & competition. It seems as though Transnet has better management. It seems that Eskom has a good team at the top. It looks like our new foreign affairs minister doesn’t want our most important economic partners to hate us. But other than some excellent changes to the visa regime at home affairs and because the administration is mere months old, nothing has actually been done. Crime is still rampant, the “localisation master plans” are still in place, the ports are still useless, the trains don’t run and Eskom hasn’t added a watt of energy.
If it is built on sentiment, it can be removed by it too. So, the smart money is watching deputy president Paul Mashatile and his “clearing house” for coalition disputes with great care. Last week he kicked both festering pustules — NHI and Bela — into touch. But play must resume at some point. More hangs on it than people realise.
• Parker is Business Day editor-in-chief.
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