Political class ignores pleas by Gordhan for restraint

Independent Newspapers

Pravin Gordhan, Minister of Finance. Photo: Matthew Jordaan.

Finance Minister Pravin Gordhan emphasised the need for all South Africans to make sacrifices to help reduce inequality, promote economic growth and hasten job creation.

It sounds good but doesn’t add up to a row of beans when the political elites are the very last to demonstrate any restraint – particularly as they and their increasingly ineffective flunkies in the public service sacrifice absolutely nothing.

During the week of the debate on the State of the Nation speech, President Jacob Zuma and his huge entourage of blue-light vehicles were in the parliamentary precinct. Men with weapons were all over the show. It reminded one of Julius Malema appearing outside court with Winnie Madikizela-Mandela with a bevy of heavily armed bodyguards. It is a testimony to deep-seated insecurity if our political leaders feel unsafe in the midst, not only of their electorate – but of their fellow MPs.

Much has been written about Gordhan’s Budget being prudent and polished. Yes, we can say thank you, Mr President, for not appointing Economic Development Minister Ebrahim Patel or, horror of all horrors, SACP general secretary (and Higher Education Minister) Blade Nzimande as the minister of finance.

Gordhan understands his sums and appears to have read all the Budget documents thoroughly – something one cannot say of Home Affairs Minister Nkosazana Dlamini Zuma during the governance cluster briefing. It was patently clear that the woman who aspires to run the African Union had never seen the document before.

Outside of Gordhan and one or two others – one could possibly include Minister in the Presidency Trevor Manuel and Mineral Resources Minister Susan Shabangu – there is not a lot of talent gathered in the over-large, and heavily paid cabinet. They are each paid almost R2 million a year, have mansions in Pretoria and Cape Town, fast cars, bodyguards and support staff – and endless access to the state cookie jar.

Gordhan, however, probably earns his government keep, given that it is far less than what most top company chief executives earn, including the bosses of state-owned enterprises.

But it is still irksome hearing that everyone in South Africa needs to tighten their belts while the ballooning cost of the public service is a matter of concern even for Gordhan. His director-general, Lungisa Fuzile, reported that there had been “several years of across-the-board salary increases above the rate of inflation”.

He also reported that since 2009, which happens to be when Manuel left the Treasury, the government had been running a sizeable current deficit “meaning the state has been borrowing to finance spending on recurrent costs such as compensation of employees and goods and services”. Borrowing to finance recurrent spending created debt obligations, he said, and over the next three years, the government had prioritised closing the current deficit. At least the intention is right, whether it will happen is another matter.

Then there is Gordhan’s worry about the cost of the National Health Insurance scheme, which has the potential to strangle the medical insurance industry. Gordhan acknowledged in his Budget speech that it could be funded by an increase in VAT, a payroll tax on employers, a surcharge on taxable income of individuals or a combination of these.

And there is the envisaged obligatory retirement insurance system, which will be run – probably inefficiently – by the state.

Whatever else he is doing, Gordhan is not putting a brake on the expanding – and largely destructive – intrusion of the government in the economy. - Donwald Pressly