Fine line for finance minister

On his big day as finance minister Pravin Gordhan, who was presenting the medium term budget for 2009/2010, had no presents to give his parliamentary colleagues the way his predecessor Trevor Manuel used to do.

MPs and journalists were in recent years treated to apples, grapes, and sometimes even trees when Manuel took the podium to announce how the government will spend its money.

Gordhan came empty-handed, reflecting dire straits that government is facing after the devastating effect that the global financial crisis has had on the state’s treasure chest.

In addition to this he faced a more energetic group of MPs than Manuel has ever done. Partially bolstered by their new say in public finances – parliament can now pass money bills – the MPs were quick to make their voices heard. Grumblings became boos when Gordhan announced that big money will be allocated to the SABC and the Landbank, both public entities that are fraught with controversy.

No broadcast

Only when Gordhan warned them to stop the boo-ing “otherwise this broadcast might not go through”, the tension in the chamber lifted.

Parliamentarians also had to be prompted to applaud the Reserve Bank’s achievement in keeping $40 billion in official reserves, it was clear MPs feel money should be spent, not hoarded.

Gordhan told parliament that the state purse only has R658 billion, and this money needs to be spent wisely.

He was eagerly supported by opposition MPs when he harped on about corruption, saying the state fiscus is not to be “pickpocketed” by officials and politicians, but declined to refer to the public uproar about his cabinet colleagues’ expensive taste in cars and houses.

Most cabinet members were recently criticized for buying cars worth millions of rands during a time of severe financial hardship.

“It is a very sensitive issue for him,” said Cosatu general secretary Zwelinzima Vavi when asked for comment.

Careful about colleagues

“These are his colleagues, he has to be careful what he says about them,” Cosatu general secretary Zwelinzima Vavi told the Mail&Guardian on the steps of parliament after the speech.

The budget deficit will increase to 7,6%, which is more than Gordhan would have liked, but not enough for Cosatu.

Vavi said he would have preferred the medium-term budget to be “more aggressive” in its commitment to fighting unemployment.

Vavi was also worried about Gordhan’s glowing tributes to Manuel and former Reserve Bank governor Tito Mboweni, saying their so-called successes in economic policy led to rising inequality in South Africa.

Gordhan did have some good news – that the gloom of the financial crisis will start lifting soon, bringing down the deficit levels and increasing growth.

But even then he made it clear a new sheriff is in town, with a change in the culture of laziness that is pervasive in the public service. He signaled to those who received big salary increases following the recent wage negotiations that they will have to work for their money, and that corruption is not an option anymore.

Gordhan identified a number of public servants who are being investigated for fraud and corruption in various departments, his policy statement that was distributed to journalists before the speech, revealed.

Left behind

As for the left – who were Manuel’s biggest critics – they seem to be left behind again.

There is no word on the much-vaunted national health insurance, with Gordhan telling reporters this issue is still ongoing and therefore not on the budget agenda yet.

Inflation targeting will remain in place, and although Vavi welcomed Gordhan’s willingness to discuss the issue, it seems clear that the finance minister has no appetite for big policy changes.

Public entities are all being reviewed to check if they are needed and effective. This rationalization process may leave some jobs in its wake.

But his less abrasive style and openness to take stock of the current economic model is an olive branch in the battle between Treasury and the left.

So there is at least a branch for the left, but no tree is yet in sight. And as for the fruit? That will take a while.

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Mandy Rossouw
Guest Author

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