As our new Minister of Finance Tito Mboweni flirted with ideas from the old TM (Tito Mboweni/Trevor Manuel) fiscal responsibility and part-privatisation handbook this week, the left flank of the ANC’s parliamentary benches seemed to visibly wince. The minister repeated the sentiment that “our current challenges with state-owned companies present an opportunity to demolish the walls that exist between the private and public sectors,” just after stating that “we must choose public sector investment over consumption.”
Here’s the rub; the right hand of the ANC has never been able to control what the left hand is doing. This old but familiar dalliance between macroeconomic prudence mixed with the ego of the developmental state and demands for higher than inflation wages is as clumsy now as it has ever been. And none of the jokes and occasional ‘cheers’ to the gallery in the assembly can mask the whiff of déjà vu, of the ol’ dog up to his ol’ tricks. This show is becoming like an amateur magician who hopes that if we focus on his right hand we will not notice the left hand shifting the cards.
The Minister of Finance must act as the lead strategist of the government’s economic agenda, ensuring that all interventions steer the country towards sustained growth and increased employment. If all departments do not pull in the same direction, then the centre cannot and will not hold. The key feature of the ANC administration in national government is that ministers have governed their own fiefdoms, each with little concern for the strategy of the other. It is possible in one day for a minister to announce the intention to attract foreign investment and on the same day for a bill to be introduced by a different ministry that will achieve the contrary.
The ANC’s challenge in steering the country towards prosperity is political more than economic. The fiscal strategy - as we found out in the Medium-Term Budget Policy Statement - has once again been undermined by politics; borne out by the fact that the two salient fiscal risks which materialised were public wage growth above inflation and the continued financial deterioration of state owned enterprises.
In other words, the unions reasserted their role as the ANC’s political Achilles heel, the message is clear ‘put too much strain on us and we will bring the ANC to its knees.’ The continued deterioration of SOEs makes explicit what was apparent to anyone who understands organisational culture; the rot is deeply entrenched and superficial changes to boards is not strong enough an antidote.
While commendable, one must ask how the minister’s desire for a ‘data driven way’ squares up with the dogmatic fashion in which our economy has been led by ideological prescripts with scant regard for empirical evidence? It is heartening that more officials will be given the opportunity to pursue advanced qualifications in economics in order to “improve the interface between cutting-edge research and policy formulation.”