Address by Minister Trevor Manuel to the Sunday Times Top 100 Companies Awards, Johannesburg, October 25 2011
Master of Ceremonies
Sunday Times Editor, Ray Hartley:
Business Leaders;
Ladies and Gentlemen.
Having accepted your kind invitation to be here this evening, I should submit my resignation as Minister responsible for planning forthwith. The idea that I could be in Parliament for the tabling of the MTBPS this afternoon, rush here for this event and be back in the Cabinet Room by 08h30 tomorrow, without either a private jet or blue lights speaks to the kind of calamity that should be avoided by serious planners.
Clearly, the MTBPS speaks bravely to the challenge. Budget-making in a time such as this is unbelievably difficult. The global environment is risky, with growth prospects middling at best; the bond market remains under severe pressure; in South Africa we have used up more than our fair share of luck in revenue collections and the quality of budget spending is in decline as a consequence of the rapid growth of the wage bill. Minister Pravin Gordhan must therefore be commended for providing a positive signal with the announcement of the R 25 Billion economic support package in these times.
The Economist magazine last week had an absolutely wonderful one-liner. It said, "The global economy is sicker that a man with a bellyful of bad oysters." Whilst much of the focus is, and has been on Europe, there is little to celebrate from anywhere. It does actually not matter whether we are trying to understand the depth of the rut in the US economy, a rut that will deepen as the Presidential elections next year grinds everything to a halt; or the likely impact on Europe and the world of the 60% haircut that Greek bondholders will now take - and it is unlikely that bondholders of other European sovereigns will not be similarly affected; or whether, in respect of China, we agree with the Economist (this past week) "Perhaps the only thing growing faster than China's economy is worry about the country's economy." Or, consider the fact that Britons now retiring will receive an income 30% less than those who retired three years ago. The world is not a happy place.
The solution is embedded in the views articulated by Larry Summers in a recent article, explained in his own Summeresque way, "The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending." But who has the confidence and the war chest to spend? The truth of the matter is that the solutions, as well as the problems, are global in nature. The problems arise from global imbalances that have been left unattended - not ignored, but unattended - coupled with ideological decision-making and weakening supervision; and now the solutions must be found at a global level. The fundamental problem is that the electorates, especially in large countries, cannot conceive of allowing their Heads of State or government to work with peers to find global solutions.