It was more State of the Nation address than budget speech. And when Finance Minister Pravin Gordhan began his medium-term budget speech in Parliament on Wednesday, he received a roaring standing ovation from all the members in the house.
With Gordhan due in court next week on charges by the Hawks that have been described as politically motivated and legally vacuous, Wednesday’s budget speech was important as much in terms of what it said about SA’s politics as what it said about the state of the public purse.
There were numbers and fiscal ratios in Gordhan’s speech, but it had a lot less of the dry budgetary detail and a lot more of the inspirational and the visionary. The finance minister quoted Nelson Mandela and Oliver Tambo.
He spoke about the Constitution and democracy, and about the need to work together in a social contract — as well as the need for faster, more inclusive growth.
He made pointed comments, given the context of capture and corruption, such as: "Those who are called upon to serve in public institutions have an added responsibility to work with integrity, honesty and accountability, and to ensure that their efforts are directed towards the shared interests of all South Africans." And even more pointedly: "Put simply, this means that public funds must not be diverted to private ends."
On Wednesday, as students protested (yet again) in the streets outside Parliament, Gordhan stepped into the leadership vacuum in the higher education crisis too. The big increase in the allocation to post-school education was the standout spending item in the budget, with Gordhan providing R17bn more over the three-year medium-term framework to close the universities’ funding gap as well as to top up the National Student Financial Aid Scheme.
That’s over and above the R16bn he had already added to the higher education budget in February and the clear signal to students and universities was that "we hear them".
Gordhan brought Higher Education Minister Blade Nzimande and head of the interministerial task team, Jeff Hadebe, in on his pre-budget media briefing. But it was the finance minister who made much of the running, making it clear there was no room for violence but also opening up the space for debate about the options that a variety of people — students included — have proposed as ways to solve the fee crisis.
The way Gordhan positioned himself and his budget speech, and the clear support for him in Parliament, as well as what’s likely to be a huge groundswell of support when he appears in court next week, may provide important pointers to the balance of forces in SA’s politics, and in particular to how much the position of President Jacob Zuma might have been weakened.
In the end, though, the budget is about the fiscal numbers, and with the threat of a ratings downgrade looming over SA, the numbers mattered a great deal.
Economic growth is expected to come in below even the muted expectations of February’s budget, and the budget review pencils in a sizeable R23bn revenue shortfall for the current fiscal year, with further shortfalls in years to come.
Gordhan had to try to find a difficult balance. He had to take firm action, by cutting spending or raising taxes, to prevent the budget deficits sliding and deliver on the government’s commitment to stabilise public debt over the next three years. But he had to do so in a way that didn’t do too much damage to growth.
Whether the budget numbers have indeed found a balance that will satisfy markets and ratings agencies will emerge only in the next few days and months. Higher growth rates would make the challenges easier, but that needs structural reforms and a conducive political environment. By taking the lead politically, Gordhan must surely hope he and his supporters can make it possible to tackle SA’s pressing economic challenges.
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