The reconstruction and development programme White Paper may have doused some hopes.
By Reg Rumney
‘NO cornucopia of new money for social upliftment programmes” is the hidden message of the White Paper on the reconstruction and development programme, the ANC’s grand plan to put right the economic wrongs created by apartheid, released last week.
The White Paper is likely to fuel the suspicions of the left that the RDP, as it relates to government spending, is a perpetuation of National Party policy followed since 1990 and continued in the last Budget.
Briefly, this entailed increasing social spending while cutting down spending on items like defence, at the same time as trying to rein in government spending on salaries and rather spending more on capital projects.
The White Paper released last week is a “discussion document”, not a definitive programme with detailed spending plans. It does not differ substantially from the RDP itself. A second White Paper will be released in March. Inasmuch as the RDP Fund fits closely with the Budget, this is logical.
The second White Paper will set out detailed policies for, among other things, economic growth, and monitor what has been done so far.
The latest document reiterates that the RDP is about more than spending money on projects: it is about reshaping budgetary spending on one hand, and, on the other, more ambitious side, remoulding South African society.
The central RDP Fund, financed through the annual Budget, will initially be used as leverage to redirect resources, taking from departments and giving back to them to spend on new priorities.
In particular, the White Paper promises, the RDP Fund will steer government spending away from consumption, mainly on salaries, to spending on lasting bricks and mortar-type projects.
It also says the RDP Fund will get money in future from, among other sources:
* Investment of money already set aside;
* Gambling and lotteries;
* Privatisation of assets “not relevant to the RDP”; and
* Donor grants and loan money, which is now being assessed to sort out the true aid from the financing of trade, and the cost of concessional loans.
Aside from the RDP Fund and the Budget, the White Paper makes clear the real role of the RDP: “The structure of the main body of the RDP White Paper is meant to assist both personnel of the government of national unity and all South Africans who are taking an active role in the implementation of the RDP.
“The RDP is a vision for the fundamental transformation in our society.”
For businessmen, the White Paper makes most of the right noises about economic policy.
Foreign and local investors will be keen to see the White Paper recommits the government to fiscal and monetary discipline and drops some of the business- bashing rhetoric of the published RDP itself. It retains a threat to act against financial institutions which discriminate in lending racially or on the basis of sex. Whether it goes far enough to entice foreign investors or allay domestic investor fears is debatable: the assumption is that the fulfilment of the RDP itself will lead to investment, but the RDP relies on growth, and growth relies on investment.
While the RDP White Paper does nothing to startle nervous investors, it does nothing radically new to soothe their fears about socialist leanings.
On the other hand, if the White Paper is to be believed, the government is serious about running a tight ship, and this should pay off over time.