Wed, 20 Mar 2019

"We must demonstrate we're the government, we're not petitioners. We must govern..." - Finance Minister Tito Mboweni at a press conference before his budget speech, 20 February 2019.

Tito Mboweni was in a take-no-prisoners and spare-me-the-ideology mood at the traditional press conference ahead of his budget speech in the National Assembly on Tuesday.

Nursing a cold, the minister of finance told the acting commissioner of the revenue service "to break some bones" when dealing with illicit tobacco traders.

He scoffed at "Soviet-era" thinking around state-owned enterprises, saying he is very clear in his mind what should happen to non-performing companies: "If it was the private sector they would be closed down."

And he fired a volley across the bow of errant and corrupt state-owned enterprises. "The days when you get money without supervision are over. We will put you under curatorship. So, my advice is: avoid National Treasury. It won't be nice."

The budget is a horror show.

There isn't a single metric - GDP growth, debt ratio, budget deficit - that isn't worse than it was six months ago. The warnings by National Treasury's economists, and ignored by former president Jacob Zuma's government, have mostly come to pass, which means ignoring problems and kicking the can down the road is no longer a viable policy option.

In the Budget Review, the world class document prepared by Treasury sets out the true state of the nation, the finance department repeatedly advises that "a range of structural reforms" are necessary to get South Africa out of the low-growth, underperforming and uncompetitive morass it finds itself in.

There is no more time, money or space left.

Zuma's government was weak, indecisive, corrupt, anti-modern, ant-globalist and anti-progressive. When President Cyril Ramaphosa spoke about "nine wasted years", he was being kind. It was nine years in which Zuma and his cronies, including a range of ministers as well as the governing party, went out of their way to debase, dismantle and defraud the South African state and taxpayer.

Mboweni, who was appointed minister of finance in October last year, is obviously tired of bullshit. He has been removed from active politics for years and his tenure as governor of the South African Reserve Bank has taught him how to be neutral and above silly and archaic ideological debates.

He is a reformist. He wants to ditch many state-owned enterprises (and wants to invite private capital into those he wishes to keep), he believes the private sector is the catalyst for growth, he denounces "Soviet"-type thinking, he demands accountability and he rubbishes attacks on the Reserve Bank.

Mboweni's brief speech (compared to Trevor Manuel and Pravin Gordhan) was short on sentiment and long on reality.

He laid it out for all to see: South Africa will spend R1.83 trillion this year, but will only receive R1.58 trillion in revenue. The country is borrowing R1.2 billion per day, and paying interest on that amount of R1 billion daily. It's unsustainable.

"Restoring our finances and fixing our state-owned enterprises will take great courage," he said.

Well, he is going to have to show enormous grit to tackle the unsustainable public sector wage bill, which gobbles up 35% of national expenditure. South Africa has a listless, ineffective and bloated public service that in many instances serve as nothing but sheltered employment. Mboweni knows this, and he also knows what political fights lay ahead if he is going to downsize the civil service.

The same goes for state-owned companies, and Mboweni asked the question in his budget speech: "It's about time the country asks the question: do we still need these enterprises? If we do, can we manage them better? If we don't need them, what should we do?"

At the press conference he was frank: to hold on to SOEs just for the sake of it is "Soviet-thinking", old and outdated. And the reasons in government for "hanging on" to these companies are in many instances "fuzzy". South Africa needs to "move with the times...we cannot remain stuck in the past".

"The Soviet Union collapsed a long time ago," he said and explained that even in post-communist era privatisation is a nettle this country hasn't come to terms with. He baulked at the inevitable accusations of being an instrument of "the Washington Consensus", the "1996 Class Project" or being a "neo-liberal". Insults won't change a thing.

Mboweni seemed more than enthusiastic about the imminent appointment of a chief reorgansation officer at Eskom - he positively lit up when talking "Treasury's man" at the utility. And said more CROs will be appointed at other SOEs. "We need to guard our cash, there's no free lunch here anymore. It's the taxpayer's money," he said.

There will be some trade-offs, a degree of consensus and a measure of consultation if the reformists are to put their plans in place to save this country and its economy. But if South Africa is to have a fighting chance its leaders must stop skirting around the issues.

For a finance minister, Mboweni is disruptive. But for a senior ANC leader, he's a wrecking ball.

Exactly what this country needs.

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