Government policy capacity and sovereignty at stake
JOHANNESBURG – The key rocking highlights last week was the return of the Copyright Amendment Bill to parliament and Minister Tito Mboweni’s Supplementary Budget.
The return of the Copyright bill reminded us of the questionable capacity to develop and implement appropriate policies. On the other hand, the supplementary budget has helped to, once again, demonstrate to all and sundry how weaknesses in policy and enforcement has created dire economic conditions we find ourselves in.
Not that the Supplementary budget in itself helped to clarify policy and assist to point at policies that will help recovery, jobs, and inclusive growth. It didn’t. In fact, it was a lost opportunity to point out at measurable policy interventions, beyond reference to Treasury and Public Enterprise papers adopted by cabinet.
To effect structural reforms, the key question government would ask itself will be what are the policy impediments that have led to the current economic situation of lack of growth, and jobs; and in its response would include recovery interventions from Covid-19 crises.
With that question answered the focus would be on targeted recovery policy Programme that would have been presented. The analysis of the situation would tell government that the R500bn stimulus package is no longer sufficient. In fact, a more than a trillion-rand direct stimulus would have been closer to dealing with the economic bloodbath.
In a crises situation, with policy sovereignty South Africa has, there has been no convincing argument why South African Reserve Bank (SARB) with the assistance of the Minister of Finance maintain and insists on a conservative fiscal and monetary policy posture not sufficiently responsive to the crises. It would seem the accountability to adjust the policy stance lies elsewhere but not with the governing party.
In “normal” conditions, indeed the quantitative easing (QE) would signal recklessness and lack of integrity. With its integrity intact, SARB does have the capability to manage quality QE Programme. Going all out to borrow would be costly not only financially but will deprive any chance government would have in its policy choices that favor a radical development trajectory in a long time.
The quality of policies that pass through or fail is alarming. This questions to the core the capacity of government to objectively implement policies that create jobs and inclusive growth. Numerous bills that were politically intended to attain jobs and inclusive growth have technically failed to pass the master; some do the opposite of what was intended. In many instances it is because the government is strong armed by those who can pay to lobby and have lawyers ready to protect their interests and maintain the status quo.
Foreign dominant forces are at play in deciding the policy programme that see the light of the day. No wonder the government would not trust itself to confidently present an argument for a QE Programme to society and international markets.
Critical bills such as Mineral and Petroleum Resources Development Amendment Bill (MPRD Bill) failed to pass through, and why? Private Security Industry Regulation Amendment Bill, was not signed, and why? The Copyright bill that if the President had signed would have wiped out businesses and entrepreneurs in the creative industries affecting thousands of jobs.
Has government audited its technical expertise? Have they vetted their experts who work on policies, and conducted life-style audits? Is there over-reliance on conflicted external capacity undermining state security and interests?
The report of the High-Level Panel on the assessment of key legislation and the acceleration of fundamental change led by former President Kgalema Motlanthe (published in November 2017) is a good reference point for some of the answers we are seeking here. The report, for example, noted the extent to which government officials understand their mandate under various pieces of legislation determines their prospects of success in implementation.
The Panel received evidence of officials’ lack of understanding of core elements of law and policy. The panel recommended that parliament must lead the discussion on how to professionalize public service.
Surely legislation such as Labour Relations Act, and Companies Act, with their nobility would have been amended and fast-tracked to fully serve the interest of small businesses and the informal sector, as key to job creation and inclusive growth. The broad black economic empowerment and preferential procurement policy would have been fast-tracked and amended to accommodate black businesses, small businesses and the informal sector more effectively.
Also, opportunities to fast-track the amendment to Competition law to reduce barriers to entry for small and black businesses. Also, the tax laws are still very hostile and does not serve to encourage participation of the small businesses and the informal sector. They do require more positive reinforcement to protect and support nurture of new entrants, especially at a point when they have no administrative capacity, and could not breakeven in the first 10years.
All of the above laws and others have been noted as impeding job creation and inclusive growth.
With regard to SOEs reforms the ball is squarely in the court of government. An informed developmental rationalization policy in the interest of jobs and inclusive growth will be paramount. The decisions should be fast-tracked, but not with the arrogant attitude that seeks to black-mail stakeholders by imposing wholesale privatization. Of course, going out to borrow from Washington would inevitably reinforce that neo-liberal policy position.
Clarity of policy and enforcement within the next 6 to 12 months will be critical and help us deal with 3 main hurdles highlighted in the supplementary budget i.e. lack of growth and jobs, spiraling budget deficit, and debt to GDP.
The government would have played its part if it were to focus on reinforcing its policy capacity, protect its sovereignty, and enforcement that will stimulate recovery, jobs, and inclusive growth.
Dr Bheki Mfeka, is the Economic Advisor and Strategist at SE Advisory; and former Economic Advisor to the Presidency. | Twitter: @bhekimfeka | Website: www.seadvisory.co.za | Email: [email protected]