Finance Minister Pravin Gordhan. (David Harrison, MG)
The takeaway image from the medium-term budget is Finance Minister Pravin Gordhan cutting up the credit cards of senior officials. Their rental cars will be smaller, they will fly more modestly and not stay in hotels while their homes are being built; fancy cars are going, as are the lavish entertainment accounts and free booze.
The only South Africans who will not applaud these measures are the newly clipped. But Gordhan's belt-tightening goes beyond the lifestyles of the powerful. State-owned enterprises will in future have to make their own funding arrangements: the days of turning to the public purse are over.
Gordhan's tough budget is seen in some quarters as election-conscious and populist, a budget that headlines crowd-pleasing moves such as these. In others, he is criticised for allowing our levels of public debt to climb so much that debt service – at R110-billion next year &mndash; is the fastest-growing single item.
The truth is that Gordhan's room to manoeuvre is minuscule. Revenues were down, but just R3-billion below budget – not bad considering disruptions such as Marikana and related strikes.
Gordhan managed to lower the budget deficit to 4.5% from 4.6% as a percentage of gross domestic product by raiding the contingency reserve and because some departments underspent their budgets. (It was also recalculated to 4.2%, using international best practice.)
A lower budget deficit matters: the suggestion by United States Federal Reserve boss Ben Bernanke that he would begin tapering monthly asset purchases provoked a crisis in emerging markets as foreigners pulled their money out to chase better rates in the US.
Under pressure from Gordhan and other leaders in emerging markets – who called for concerted international policies lest the taper create new, bigger problems – Bernanke put the taper on hold. But the likelihood is that, as the US economy improves, the dreaded taper will begin. Rates will rise in the US and there will be big outflows from emerging markets, which, when that happens, had better have their economies in the best possible shape.
So constrained is Gordhan and so bare the cupboard that he has mooted moving Parliament to Pretoria as a cost-saving measure. This is likely to produce pushback, and not only from the Western Cape: the idea of legislature and executive being 1 500km apart is deeply ingrained in the South African consciousness.
Cynics will see the proposed move to do with the fact the Western Cape is controlled by the Democratic Alliance and critics may say Parliament's location is unimportant if our politics are controlled from Luthuli House anyway.
Gordhan is telling us that a braver world is upon us. The high life of officials has to be curtailed as a signal to the rest of us that harder, more austere times are here. Even stuff that we take for granted – such as the location of Parliament – may have to be reconsidered.
In this moment of credit cards being cut up, it is worth noting that we will soon know more about the biggest credit card of all: the one used to build a R200-million fortification around Number One at Nkandla.