Finance minister Pravin Gordhan crafted his maiden budget with political astuteness and moral courage.
Despite the cacophony in the ANC alliance over the past two years, he firmly endorsed existing macroeconomic policies and put to rest the debate on inflation targeting, while acknowledging that more must be done to create jobs.
He stated baldly that high wages were pricing young people out of the job market and told public-sector trade unions that it was time to choose between real wage increases and the availability of jobs in government departments.
Gordhan has also gone where previous finance ministers neglected or feared to go: he is using the Public Finance Management Act to poke his nose into the affairs of the provinces, probing corruption and fraud and scrutinising suspicious procurement practices.
It appears he wants to use his term as finance minister to make a difference. He believes this will be achieved through a combination of political will and practical steps.
At the political level, he explained at a press briefing before delivering his speech in parliament, government must start by being "frank and humble that we have serious challenges... We have to acknowledge that our existing growth path will not enable us to meet our economic and social challenges."
Everyone - business, labour and civil society - needs to engage on these issues and be prepared to set short-term, sectional interests aside, he says. SA will have "to act now to strengthen the institutions through which public services are delivered".
On the practical side, a "new growth path" is in the offing. This includes strategies to reduce joblessness among young people; industrial policy plans that will encourage the growth of labour-intensive and export-orientated businesses; sustaining high levels of public and private investment; and improving the performance of the state.
Crucially, there is a commitment to old policies as well: low inflation through inflation targeting; retaining the mandate of the SA Reserve Bank, although described in more flexible terms ; and a commitment to bringing the budget deficit down by 2013.
The continuity drew elation from business leaders in the parliamentary gallery.
Michael Spicer, CEO of Business Leadership SA, describes the budget as "outstanding" for marrying "the vision of social justice with the need for higher growth and prudent and stable management of the economy".
Iraj Abedian, CEO of Pan African Advisory Services, says "all concerns have been put to bed".
Although labour did not meet Gordhan's first budget with similar enthusiasm - Cosatu general secretary Zwelinzima Vavi praises Gordhan's efforts "to rally society" but denounces the fact that "conservative economic policies would remain" - the finance minister cleverly welcomed in his budget speech points made recently by business and labour.
Chief among the challenges that all of SA must confront, says Gordhan, is the time bomb of youth unemployment: 35% of people between 15 and 34 are unemployed, and employment scenarios suggest this is unlikely to change soon.
In his state of the nation speech last week President Jacob Zuma proposed introducing a wage subsidy for workers aged 18-24, which will be administered as a tax incentive to employers.
Young workers are expensive relative to their productivity, Gordhan said to the disapproval of Vavi, because "collective bargaining arrangements push up entry- level wages".
Cosatu, which has for years resisted the wage subsidy because subsided jobs may replace real ones, objects once again. "We've always rejected that. It is a way of subsidising capitalists," says Vavi.
But employment analysts believe it will take SA two years to regain the 900 000 jobs lost last year.
Without intervention, SA might face enduring unemployment.
Gordhan expects everyone to set aside their own interests as he believes SA will need "courage and humility" to do things differently.
However, it is not just labour that will need to show courage. Government, too, will have to summon up the political will to do the hard things required to increase the pace of delivery.
While the deficiencies in government departments are in part caused by the paucity of skills and capacity, they are also a result of corruption and fraud in the supply chains of provinces and municipalities.
While in the past, the national treasury has tended to stay out of other sections of government unless invited, Gordhan - backed by minister in the presidency Collins Chabane - has deployed officials into the provinces to seek out and take on corruption.
"In the past the focus has been on financial management. Now we are uncovering transgressions more and more frequently... Among them are tender processes not followed; inflated prices; officials benefiting from government contracts; unnecessary purchases for goods that are left lying around; and, worst of all, payments for services not rendered at all," says Gordhan.
Budget office head Kuben Naidoo says Gordhan has taken a different approach to corruption.
"Coming from Sars he has the experience of dealing with fraud that we didn't have.
"And corruption is now a bigger priority. With spending growth of only 2%, the reality is that government has to clamp down on corruption and if it doesn't, it won't be able to deliver."
Treasury is also formulating plans to centralise much of government procurement and make tender awards and related information transparent.
With 50% of government's R907bn budget transferred to the provinces and municipalities, it is critical to monitor these tiers of government.
WHAT IT MEANS
 Policy continuity brings relief
But some things need to be done differently
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The doubling of the public-service wage bill over the past five years hit provinces particularly hard, prompting Gordhan's warning that last year's generous wage settlement overstepped the mark and further generosity cannot be considered.
But provinces do not always spend their resources on the programmes for which they are intended. For example, provinces commonly divert their health allocations to other departments.
"That is why our health system finds itself in dire straits and that is why we consistently run out of money for sheets, drugs, gloves, toilet paper and drugs, among things... We need better alignment of priorities," says Gordhan.
He is probably trampling on the egos of provincial politicians, but Zuma is negotiating "a framework agreement" on budgeting with premiers.
