“It could almost have been Trevor Manuel speaking,” said Philip Dexter, the spokesperson of the Congress of the People (Cope), after listening to new Finance Minister Pravin Gordhan deliver his first major financial policy statement in the National Assembly on Tuesday.
He, like others, praised the stability and continuity of what Gordhan was proposing, though he suggested that what was happening was a papering over of the great divide in the ruling party over economic policy.
The African Christian Democratic Party’s Steve Swart said his party supports in general the statement. “Congratulations to the minister,” Swart said, “we believe that it is balanced and presented under very difficult economic conditions. He has stuck with prudent fiscal policy. There are no great deviations from that. Foreign investors should be pleased about that. We are however — as many others are — concerned about the high budget deficit: 7,6% or R81-billion. This is clearly not sustainable over the long term. And we welcome the minister’s attempt to effect savings and to stop government wasteful expenditure.”
According to Democratic Alliance spokesperson on finance Dion George, Gordhan has passed his first test, and George claimed a number of proposals as the DA’s own ideas.
He claimed wage subsidies to lower the cost of employment as a DA idea, and also accelerated exchange-control liberalisation.
“The minister also referred favourably to openness to trade, export processing zones, and tax incentives to stimulate job creation, also DA proposals,” George said.
He added that the statement shows that the global financial crisis has had a much worse effect on our economy than anyone previously thought. “Unlike most other emerging markets, we entered the crisis extremely vulnerable with low savings rates, high inflation and a large current-account deficit,” he said.
“Structural rigidities in our economy generally, and specifically in our labour market, worsened the impact once the crisis hit. This is a clear indictment of the ANC’s micro-economic management of our economy; the minister’s admission in this regard is the first step towards much-needed reform.”
Independent Democrats finance spokesperson Lance Greyling said: “We certainly support the disciplined stance the minister is taking, particularly fighting corruption and effecting savings in government departments, though we think that R14-billion is just the start of the process. We are going to have to effect even more savings in the long term.
“We welcome also finally the announcement that the child support grant will be extended to children under 18.
“We also welcome the statement that public enterprises need to be put on a sound financial basis, and in this regard we notice that for the first time in a long time the PBMR [Pebble Bed Modular Reactor] has not received a huge appropriation.”
Pieter Groenewald, the parliamentary leader of the Freedom Front Plus, said: “If the minister says taxpayers must get value for money you must not only look at corruption, you will also have to look at the spending of all government departments. For instance, if you take at local government they are spending millions on luxury parties and conferences. If you look at public enterprises, R200-million for the SABC is actually not needed because it is because of mal-management in the SABC.
“As the general approach is concerned, we see that it is a more realistic approach. What is worrying is if you look at the loan amount of 21% that will be increased to 41% over three years.
“We also have to broaden the taxpayers because we cannot allow that seven million people pay for 50-million people in South Africa.”
Meanwhile, convener of the business side at the National Economic, Development and Labour Council (Nedlac) Raymond Parsons, who was in the gallery, said he believed it was “a very balanced and realistic approach under difficult global and domestic circumstances”.
He added: “From a business point of view I think the new minister struck the right balance.”
But he cautioned: “We must understand that we cannot borrow our way indefinitely out of the recession. But it is the right decision at the moment.
“We need to get renewed growth as soon as possible. Given the three-year view he’s taken, the reconfiguration and reprioritisation of government spending is essential so that the borrowing of one can start to be wound down.”
From the Labour side of Nedlac, the general secretary of Congress of South African Trade Unions, Zwelinzima Vavi, said: “We would have liked to have tightened up the exchange control, that is how the Asian countries responded to the crisis in 1997. We think he should have done that.
“He speaks very worryingly in support of the inflation targeting. We don’t think inflation targeting has helped anybody. He speaks in glowing terms about the role of the outgoing Reserve Bank governor. We think the success of any economic policy must judged by the impact it has on the poor. The reality is now that we are seeing rising unemployment. Unemployment is way above any competing nation we have on the planet. That is not success, that is failure.” — I-Net Bridge