DOES the National Treasury still have a grasp on where SA is going? Every February and October, it always surprises to the upside, delivering pretty much what the markets and ratings agencies want to see — in the main prudence, discipline and a credible plan to achieve key objectives.
In the past year, this meant tax increases and promises to slow the growth of the public sector wage bill. But in February, a promise was also made to restore growth through structural reforms. The Treasury knows, as does everybody else, that without growth, SA will slide inexorably into crisis. So, in February, Finance Minister Pravin Gordhan promised: to relieve infrastructure bottlenecks, especially the electricity supply; to improve policy co-ordination; to reform state-owned enterprises, especially their governance and the debt burden they place on the fiscus; to sort out the mining regulation regime; to stabilise labour relations and to speed up broadband and spectrum allocation.
Progress has been made on the alleviation of electricity constraints, aided by shrinking demand of almost 1%. With added capacity from Medupi and Ingula, Eskom has been able to meet demand without load-shedding for 11 months. It is anticipated that a deal on strike balloting will be announced soon. This would lower the risk of protracted labour action by preventing strikes by coercion.
But other than that, we are nowhere. Communications Minister Faith Muthambi is years behind with the digital migration process, which means that spectrum cannot be freed up and so broadband cannot be allocated.
The mining bill has made no progress. It did not reappear at Parliament in the last session. The bill has been stalled for 18 months, despite repeated promises that it will be finalised.
State-owned enterprises continue to charge recklessly ahead, engaging in transactions and making deals with no regard for the Treasury or the laws that govern them. Taken by surprise by Denel in January, which entered a joint-venture without their permission, it might have been expected that the Treasury would have tightened the screws and increased its oversight. But since then, it has twice been caught unaware by the Strategic Fuel Fund, which sold the country’s strategic fuel stock and announced an audacious bid for the R14bn assets of Chevron SA.
The SABC is ploughing through its cash reserves like water. By the time the Treasury gets up to speed, it will likely be too late and the broadcaster will be knocking on the door for another guarantee. SAA continues on its path of destruction, circumventing treasury rules to do transactions that are risky and madly expensive, and engaging in far-reaching business transactions such as restructuring R15bn of debt, which the Public Finance Management Act says can’t be done without the Treasury’s involvement.
The promised reform of state-owned enterprises, headed by Deputy President Cyril Ramaphosa and Public Enterprises Minister Lynne Brown, stretches into the future.
It’s not surprising that so little progress was made in a chaotic political environment. The wider ANC is at war with the Zuma ANC — most explicitly over broadcasting, SAA and Denel, but also over the exercising of presidential power. The SACP is also at war with the Zuma ANC, Cosatu is paralysed and politically ineffective, other than to vote with the Zuma bloc, and the leading lights of the liberation struggle have been reduced to writers of letters to the president.
The structural reforms listed by Gordhan, and urged by ratings agencies, the IMF and business, all require political muscle. Even in the heyday of the Treasury’s power under Trevor Manuel and Maria Ramos, who had presidential support in Thabo Mbeki, no headway was made. Now, with the ANC split and a president who exercises power capriciously, the Treasury has become an observer as things slide further into disrepair.
• Paton is deputy editor