The pressure was on: with downgrades from Moody’s and Standard & Poor’s, Finance Minister Pravin Gordhan had to allay concerns of a “terminal crisis” and balance fiscal prudence with the need to stimulate growth and encourage job creation. This was never going to be a Medium-Term Budget Policy (MTBP) speech that deviated too significantly from his Budget 2012 speech in February. What was needed was evidence of a steady, stable ship.
One could argue that more of the same is what we got – if the word clouds are anything to go by. Infrastructure, growth, investment received the airplay they warrant. It was interesting to observe that while the National Development Plan was mentioned and quoted from numerous times, the New Growth Plan received little exposure in yesterday’s speech. There was, however, a slightly greater focus placed on fiscal discipline and “spending” than in the February speech. Gordhan even deviated from his scripted speech to emphasise this point.
The majority of spending is made up of public sector wages – a segment that has grown faster than any other category of spending over the past four years. While Gordhan may emphasise the need for belt-tightening, just how much power does National Treasury actually have when it comes to converting policy proposals into action? It is concerning that Government has had to draw down on its contingency reserves to cater for the un-budgeted above-inflation increases in salaries agreed to earlier this year. The wage bill will cost an extra R5.5bn this year and another R37.5bn in the next three years.
Is South Africa the new Greece? In the strictest sense: no. The debt-to-GDP ratio is forecast to remain well below that of many developed countries – although debt is nevertheless still forecast to grow from R1.2tr to R1.8tr over a five fiscal-year period. The cumulative borrowing over the next three fiscal years has been raised by a considerable R46bn.
But that definition would be to look at a symptom, rather than a cause. An idea explored in Michael Lewis’ book, Boomerang: The Meltdown Tour is that, at the core of the situation, Greece finds itself in a moral crisis. He theorises that the situation arises from a cultural identity where the individual advancement and one-upmanship has superseded the collective; where there has been a level of pride and arrogance in corruption. How else to explain the blatant non-disclosure of the true nature of Greece’s financial state prior to October 2009? Or the seeming unwillingness to come to the fiscal austerity, risking the economic cataclysm that would result in a default or exit – despite the devastation this would wreak not just on the eurozone, but on individual Greek citizens.
There are too many instances of this loss of the collective in favour of individual gain in SA. Individuals choosing to enrich themselves at the expense of their fellow citizen is a worrying trend that is becoming ever more common in the local political landscape. If not openly and timeously addressed, and sufficiently punished, there is a danger that all Government officials become stereotyped as corrupt, all tenders as dodgy and all business as exploitative.
We cannot risk losing our sense of the collective, the power of Ubuntu, if we are to take our nation forward.