Mini budget to test pillars of government philosophy

Cape Town - The medium-term budget (mini budget) to be tabled in Parliament on Wednesday by Finance Minister Pravin Gordhan is widely seen as the most important and interesting for a long time.

The mini budget usually merely focuses on adjustments halfway through the tax year, as well as forecasts for the next three years. The national budget in February contains more concrete announcements on tax rates, financing of (new) government initiatives and possible changes in fiscal policy and the government's general economic direction.

But this time around the mini budget might entail more than the fundamental role and use of state finances. This is because the pillars of government philosophy around spending and service delivery are at stake; strong leadership is required from Gordhan.

The reasons are plenty: the country’s worsening fiscal position due to poor economic growth; a possible downgrade by international rating agencies of South Africa to junk status as an investment destination and safe borrower; the debates (or rather chaos) around financing institutions of higher education; the possibility of spending a massive amount on nuclear power stations; the insatiable destruction of capital by many state enterprises and state institutions; state capture for personal gain at the highest level and last but not the least, the future of quite a lot of leading players on our national stage – like our president and Gordhan himself . Not to mention the future of their party, the once-inconquerable ANC.

South Africa more or less knows where Gordhan stands - and who his adversaries are - on these and other current developments. The question is how far he can and will go, and who will have to pay. He will need to find money somewhere.

As finance minister and before that, the efficient head of the South African Revenue Service, Gordhan has been described as fairly conservative, prudent, workmanlike, “not one to rock the boat”, and even boring.

As a former socialist, or at least a sympathiser of socialist ideas, he still believes in the state and government as prime mover and shaker in society. But as a chemist by training he is also scientifically intelligent (and wise?) enough to know that the books, like the prescribed medicine potions, must balance. Money buys strong potions, and attracts more money.

Because of low economic growth, wastage of tax money and enrichment, South Africa's fiscal position is tight and does not give Gordhan much of a choice. Therefore, he will in general probably make a few adjustments, continue with prudency measures and indicate tax rises in February – even if he is no longer the finance minister by then.

He will probably stand fairly firm concerning big projects (free higher education; the nuclear power project; further funding of state enterprises, etc). But will he bravely, definitely and firmly give an indication of a change in direction regarding government’s thinking on state finances? It is doubtful - although especially the ordinary hardworking, not-so-rich citizen should start insisting on it.

Such a change is necessary. SA urgently needs to adapt her approach on growth, employment and wealth creation, poverty and the gap between the haves and have nots in this country. Or in current “incorrect” political vernacular, the gap between the “privileged whites” and the “disadvantaged blacks”. And believe me, there are other routes than the madness of decolonising everything and being anti-white.

A new way of thinking

A quite simple starting point is a different way of thinking, free from ideological and other modern popular myths around equality, rights, government’s role and regulation of human behaviour. People must be liberated to improve their own lives without excessive government intervention.

For Gordhan (and his government) this means reducing tax, not raising it, prudent government expenditure, even cutting back on government spending; respecting, encouraging and enhancing property ownership and individual empowerment and responsibilities; the raising of standards at all levels of public service delivery; insisting on due process in business; concentrating on the rule of law, the safety of citizens, level playing fields, the separation of power and deregulation in every field that cannot be classified as a core government responsibility.

If leaders tend to think of problems as “out there” and not at least partly of their own doing, they can’t really do something about them. The character and world view of leaders will be reflected in government actions, their followers’ efforts and economic progress or stagnation.

A country is in trouble if almost every relationship between humans is seen as in need of government assistance, or with government providing a solution. Venezuela is the latest to prove that. Proof to the contrary also abounds; that we must rely (mostly) on the natural human ability of most people to improve themselves and their surroundings.

Otherwise, we assume that people who are disadvantaged can’t help themselves in a free world and we should take the responsibility out of their hands to do something about it. Why not rather look at reasons - not excuses - for being disadvantaged in the social and physical environment - the background and skills of people, fairness and freedom in civil society, basic protection, law and order, and so on.

For the sake of our children’s future in this country, I hope Gordhan will give just the slightest indication of his thinking in this direction instead of playing the old blame game, using the need for transformation as a tool for redistribution and enrichment and creating unrealistic and impractical, unsustainable expectations. And thus enhancing the anger that is too often at the heart of South Africans’ thinking on matters of public and national interest.

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