PETER BRUCE: Budget’s lack of a growth pitch stumps even Mantashe

ANC chair and minerals minister Gwede Mantashe did his best to defend the budget that his colleague over at the Treasury delivered yesterday. “There’s nothing in it that’s antigrowth,” he told a TV camera. 

Quite. In a way, modern-day SA finance ministers have come to play an almost underhand role in our politics at budget time. Because our parliament and cabinet, and indeed budgets, are modelled on Westminster, we sort of expect the outcomes to resemble the UK as well. 

But the fact is that anyone expecting, these days, an SA budget to be about actual policies that might lead to actual growth is simply living in the wrong country. Our finance ministers are bank tellers, glorified accountants or financial advisers to the rest of the cabinet. 

Policy is made in the departments of transport, health, communications and trade & industry, and the finance minister is merely supposed to fund them. Like all accounting types they can be difficult, but even then that would only matter if they were getting in the way of even remotely growth-driving policy. Building infrastructure is good only if there are real prospects of it being used to increase the wealth of the nation. Are investors lining up? A few, maybe. Not nearly enough.

There was nothing about growth from the Treasury in the budget, and there’s been nothing from the policy departments to hang a rag on. Sure, Enoch Godongwana might have said yesterday that his budget was “bold and pragmatic”, but that’s a little like travellers taking comfort from the fact that though their aircraft has just lost both engines it is still, technically, flying. 

“The truth is,” said Godongwana, momentarily climbing back on the wagon, “that our economy has stagnated for over a decade. In that time, GDP growth has averaged less than 2%, far below the level required to meet our expanding list of needs.”  And then he immediately fell off again: “To meet our goals of redistribution, redress and structural transformation, the economy needs to grow much faster and in an inclusive manner. This is the central objective of the current administration.” 

The lie inside that is that there may not be any growth in inclusivity at all. The ANC may not really even understand what economic growth is — there’s been no growth for decades and, look, they’re still in charge and still being driven around in fine cars, so why would they need it? 

I know that without inclusivity there’s no peace in the land, and peace is a prerequisite for investment and growth. But the governing party, and President Cyril Ramaphosa as its leader in particular, is hooked on this false and seductive notion of “inclusive growth”, which arose in advanced economies 40 years ago when corporations were being encouraged to empower their employees with incentives and share schemes. In SA it is applied to race. This breeds resentment and discourages investment.

We need to find ways to talk about how to make BEE work more clearly for the poor and, frankly, for the fiscus. No-one in their right mind would try to make a case against redress in SA, but it has taken a particularly dead hand to drain the life out of the notion of economic growth as a driver of prosperity.

In that regard though, as in many others, the ANC is simply not prepared to do anything uncomfortable, which is why the finance minister went to parliament on Wednesday for the second time in less than a month, with a budget for which a parliamentary majority doesn’t exist. 

Hard to believe, but true. The DA will tell you it made it clear that it would not support a VAT increase, not the two percentage points attempted on February 19 and not the successive half points attempted on Wednesday. But the DA also talks about growth without explaining exactly why the voting poor should care. 

Actually, I understand the DA were prepared to talk about VAT, in return for guarantees that it could co-chair a proper review of public spending, with the terms of reference agreed ahead of the budget, and guaranteed progress on introducing concessions at the port of Cape Town, which is being left to last for fixing for the obvious reason that the DA runs the Western Cape and not the ANC. 

It was simply ignored, which will raise questions about what conditions would have to apply for the DA to give up on the government of national unity altogether. Does it wait until the economy actually begins to tank, or perhaps until it is kicked out? Either way, if the ANC can’t give the DA anything on policy, not even a port concession, a parting of the ways is inevitable. 

For me, the best part of Wednesday was Tuesday, because I got to listen to Songezo Zibi, who chairs the standing committee on public accounts (Scopa) and Michael Sachs, former head of the budget office at the Treasury and now teaching at Wits, during a most intelligent online budget discussion. I asked Sachs what I should look for as signs of a sure pitch for growth in Godongwana’s budget, and he basically told me not to bother. 

Well what would work then? “What is required,” he said, “is a clear and compelling plan from a united cabinet.” Which is of course precisely what didn’t happen, which is why Mantashe, a man capable in even the most bleak circumstances of extracting some shiny nugget for the ANC, found himself truly lost after the speech. 

What may have to happen now is a new conversation. Why is growth good? Can someone please explain? 

• Bruce is a former editor of Business Day and the Financial Mail.