The disjuncture between the way technocrats see things and the way politics plays out was very visible in the televised clash at Parliament between students and police this week.
The disjuncture between the way technocrats see things and the way politics plays out was very visible in the televised clash at Parliament between students and police this week.
Just in case you were interested, the Minister of Finance announced at that same venue that the budget deficit for the 2015 fiscal year would be 3.8%, slightly less than the February budget estimate.
That bald statement is what was wrong with the whole mini-budget speech in by Nhlanhla Nene, our very capable head of a very capable department of finance. Budgets are, after all, political documents.
The budget often sounds like it is directed to financial markets rather than voters and so does the mini-budget, which is supposed to update the February budget and outline spending and revenue plans for the next three year fiscal years.
What was going down outside while the minister calmly talked about issues like deficits, which most people don’t understand, was much more dramatic.
Nene didn’t know police were throwing stun grenades and manhandling student protestors, who had done the logical thing and taken their protest to the people’s parliament. But he did know that student protests had shut down universities all over the country.
This week would have been a good time to depart from the formality and face the burning political issue of the day head-on.
Instead, there was a brief and rather dry reference to “the need to strengthen student financing further”.
It is not Mr Nene’s fault. He should have been briefed by the Minister of Higher Education, Mr Blade Nzimande, to say something more inspiring, something that evidenced serious engagement with the student demands and the responsibility of governments to act urgently on fee inflation at universities.
Again, that he did not is not that surprising.
By and large, our budgets have involved tweaking this or that, raising spending here a bit and cutting it there a bit.
Even our bravest redistributive effort, the introduction, increase and expansion of social grants was done gradually.
In some ways we should be grateful past budgets have mostly been boring. The cautious handling of South Africa’s finances has enabled the country to deliver gradual but steady economic growth year after year. Those with long memories will remember the roller-coaster rides of the boom-bust apartheid economy’s later years.
Only once was the budget anything like dramatic,when Derek Keys in 1994 introduced a levy on companies and individuals to pay for the costs of the transition from apartheid.
Now is the time once more to take bold steps. Solving the problem of high student fees is instructive, and point to how to solve even bigger funding problems.
The official line on government helping to cut student fees is that there is no money to increase grants to universities. University subsidies from the Higher Education Department will be around R26-billion this year, according to the Adjusted Estimates of National Expenditure of the MTBPS.
In 2014 around 40% of total university income or R25-billion, which includes fees, in the country came from government.
This year State electricity provider Eskom will receive R23-billion, financed through the sale, or privatisation if you will, of government’s shareholding in cellular services provider Vodacom.
I am not suggesting that this money should have or could have been diverted from Eskom this year. Eskom may have to get even more from government to strengthen its balance sheet to lower the cost of borrowing.
What it does signal is how much money could be saved by privatisation of State-Owned Companies, and how expensive it can be to “control the commanding heights of the economy” to use Lenin’s phrase.
Privatisation of what clearly does not belong in State hands is only a matter of time. Public Enterprises Minister Lynne Brown emphatically opposes this. Yet the Finance Minister almost hinted at it in his Budget speech.
“… financing of state-owned companies that are responsible for growth-enhancing infrastructure investments is one thing. Relief for entities that should be self-sustaining or that have mismanaged their commercial activities is quite another.”
So let the private sector do what the private sector does best, which is running companies, other than monopolies. And let government shoulder its responsibilities, one of which is properly funding higher education. Another is financing a comprehensive public health service.
That won’t happen for a while. In the meantime, the Finance Minister announced a number of welcome developments this week. But their importance was not spelled out, and are likely to be ignored in the focus on the student protests.
Just one of these was the announcement that the Community Works Programme, which is a form of grant to employ otherwise unemployed people to improve communities, would be rolled out to all municipalities by 2017.
That the budget deficit had not ballooned was another. It means the ratings agencies probably won’t downgrade our credit rating, sending the cost of debt soaring. And it’s a pity the importance of this was drowned out.
