New finance minister Pravin Gordhan has breathed fresh air into political discourse.
In his first budget policy speech, Gordhan threw open several doors which before have been kept firmly shut. He proposed a debate on SA's economic growth path. He complained that the economy was not creating enough jobs. He said he would open discussions with the governor of the SA Reserve Bank on the need to balance employment and inflation. And he appealed to MPs to join him in declaring zero tolerance for corruption.
These commitments, and others in the statement, are ones that the ANC and its allies Cosatu and the SACP - as opposed to government - have been banging on about for ages.
They feature prominently in ANC conference resolutions and in the ANC election manifesto, which promises to put job creation at the centre of all economic policy. Gordhan has clearly made an effort to apply his mind to interpreting the manifesto - a commitment that the ANC and its allies are likely to find deeply gratifying.
With this approach, the vexed question of whether it is the Left or the Centre (of the ANC) who are in control of economic policy was (at least, for the moment) rendered irrelevant: Gordhan kicked off the debate which, he said, will be run and moderated by the presidency.
But the debate on SA's economic growth path, Gordhan pointed out, is a matter for the future. This week's budget policy statement (30 October 2009) is exactly that: it signals the intent for the future, but does not change anything right now. There are realities to be faced.
Gordhan has severe problems to deal with: a R70bn expected revenue shortfall; commitments to large wage increases for public servants; rocketing power costs which could make free basic electricity for the poor unaffordable; and an underfunded treatment programme for HIV/Aids.
Importantly, for those on the other end of the political spectrum and in particular for the markets, he has promised to meet his spending commitments with prudence.
To prove this he put forward a credible plan to bring down the budget deficit over the next three years, and signalled that while "borrowing now is the right thing to do", SA cannot borrow too much for too long. This kind of balancing act is as much political as economic, and it will not offer much ammunition to ideologues of any hue.
With such demonstrations of political skill as this, Gordhan could turn out to be far more adept than his predecessor Trevor Manuel in building consensus over the direction of the economy.
On the proposed National Health Insurance (NHI) scheme - the ANC programme that could potentially blow a huge hole in the budget - Gordhan was pragmatic. A determined Leftist lobby has insisted that the NHI will be law within the first year of this government's administration. But the absence of any real technical work and the potential for spiralling health costs will ensure vigilance by Gordhan's treasury team.
While signalling that he accepts the concept and that "strengthening the public health services are important in laying the foundation for a national health insurance system ", Gordhan also hinted strongly that this was a long-haul process. Again, it is hard to see how arguments can be marshalled against this, given the scale of the project.
Reform of the health system would be undertaken according to a 10-point programme, said Gordhan, and, he told journalists at his briefing, "was the end point, not the beginning... and it is a work in progress".
Fighting corruption and cleaning up the procurement system was another of Gordhan's themes. Plans are under way to centralise procurement in a move that he hopes will cut down on wastage and free up resources for spending on service delivery. And government departments will apparently no longer be able to spend on "frills" with impunity: "wasteful extravagances and golf days" are over, said Gordhan at his most puritanical. Again, it remains to be seen whether the bureaucracy can be tamed.
Politically, so far, Gordhan looks all set to make everyone happy. Cabinet colleagues like Ebrahim Patel, whose role in determining economic policy is still not clear, and union leaders like Zwelinzima Vavi would be hard put to find holes in Gordhan's arguments.
As Gordhan pointed out, to achieve both an increase in jobs and good financial management, trade-offs will have to be made. The spending constraints both until the end of this financial year and over the next are going to be severe. If there was a political shortcoming in his speech, it was his failure to emphasise enough what this is going to mean. There was perhaps too much "business as usual" to be taken from what he said.
Over the medium term - the next three years - spending will be heavily constrained if treasury's plans are to work.
The higher-than-anticipated wage deal for public servants - 11,5%, rather than the 6% government had originally budgeted, together with occupation-specific dispensations for professionals - will cost government an additional R12bn this year. The carry-through effects will be around R18bn over the next three years - the additional amounts that provinces will need to pay teachers, health workers and other staff.
Higher electricity costs are another inescapable expense that government will have to bear, and 16% of new spending over the next period will be channelled to local government to help municipalities provide free electricity to the poor.
Gordhan's only large discretionary spending decision was to put another R900m into treatment of HIV/Aids through government's ARV programme. The extra appropriation is well-chosen: without it, the public health sector wouldn't have had a chance of reaching its target of treating 80% of infected people by 2011.
It was in this scenario of constrained and falling spending that Gordhan made the call for a debate on the direction of the economy, presumably cheering up those on the Left who were being forced to contemplate reduced spending. Right now, he told parliament, "it's not about how much more we propose to do. It is about what needs to be done differently."
In particular, he explained in a briefing before his speech, "we need to take serious stock of the present economic model - it doesn't bring us enough jobs."
As well as opening up debate on the economic trajectory, Gordhan is keen to examine the budget and its allocations from top to bottom. The first step in this process is reducing wasteful expenditure and corruption. So the public outrage against lavish ministerial cars and hotel accommodation has found some resonance in government. Gordhan, together with cabinet colleagues Collins Chabane and Richard Baloyi, are to examine all perks and frills and will soon rewrite government's ministerial handbook - which has provided the licence for recent lavish spending.
In the second phase, the intention is that government entities and agencies will be rationalised and re-evaluated. Key among the tasks is cutting down on wasteful non core jobs and putting money directly into the jobs that deliver the services. This is arguably the most ambitious and difficult project, where vested interests will be threatened and bureaucrats will employ their endless talent for delay.
The third phase will be scrutinising every department's budget. So instead of departments working to securing annual increases based on their previous budgets, some could have their budgets totally reviewed.
So it seems fair to say that, in his maiden policy speech, Gordhan has outlined the choices with clarity, firmness and diplomacy. During much of the first six months of Jacob Zuma's presidency, political interest groups, factions and commentators have spent a good deal of time arguing over who it is that has the upper hand in economic policy: the Left or the Centre of the ANC.
In tabling his statement, Gordhan skilfully accommodated diversity of opinion about future policy, while leaving no doubt about what is possible and undesirable now. His real test will be to ensure he gets the backing of his cabinet colleagues, in their daily work, for the tough choices he says are essential. The danger is not that they will contradict him, but that they simply won't do as he says.
