Kudos to John Fairwell, author of an interesting but factually incorrect letter on Pravin Gordhan, now SA’s public enterprises minister (“Pravin Gordhan, architect of financial ruin, must go”, August 4).
He asserts that SA entered the 2000s with a debt-to-GDP ratio of 43%, which was reduced to 27% by 2008 under the steady and trusted hands of then finance minister Trevor Manuel and then president Thabo Mbeki.
On May 10 2009, Jacob Zuma appointed Gordhan finance minister, and during his first five years in that position the country’s debt-to-GDP ratio increased from 27% to 47%, undoing all the hard work of his predecessor. That was the original sin, Fairwell says.
Debates about public debt help a great deal when they are both factual and in the correct economic context. I’m afraid Fairwell’s letter distorts pretty much everything. He in effect blames the December holidays for creating Christmas Day.
It is not difficult to see why he may believe Gordhan was a bad minister in previous assignments. It is clear Fairwell does not approve of the government’s outlook when it comes to SAA and aviation policy in general. Therefore, Gordhan’s record must now be rewritten to fit Fairwell’s disagreement in the debate about our economic direction.
He ignores how the SA democratic system works. The cabinet has taken a decision to save jobs and help the economy weather a number of storms related to tough economic conditions generally and the Covid-19 pandemic in particular. The department of public enterprises, the Treasury and the department of transport are implementing agencies in this regard.
Having ignored that, Fairwell then twists the facts about our recent economic performance and the Treasury’s record under Gordhan’s stewardship. We may never know why it was necessary to do this. In any event, the distorted facts do not account for the department of public enterprises’s reform agenda.
It helps to look at the trail of the 2000s, which in some ways represents our glory years. In the colloquial sense, the media boasted about the “three Ts”. Those were then Reserve Bank governor Tito Mboweni, finance minister Trevor Manuel and president Thabo Mbeki. The three were praised for preaching the gospel of fiscal discipline and sound macroeconomics as the basis for our economic management.
That was the narrative. A number of great economists, public servants and others were the backbone behind the “three Ts” and were credited with improving our fiscal situation to the extent of running a budget surplus. The end of that media and commentariat melody coincided with the global financial crisis of 2008 and 2009.
Across the world, governments had to blow their borrowing ceilings to manage the impact on their economies. Hard economic positions made way for pragmatism. For example, the US, sometimes touted as a paragon of the free-market world, started speaking a different language. The US government had to “bail out” companies, from the financial services sector to auto manufacturers.
Chief in the economic policy arsenal was taking up equity in private corporates, just to stem the tide. Quantitative easing became a dominant theme in the internal political economy discourse. The commentariat, and not necessarily Gordhan, largely believes SA managed to weather the storm because of the base it had laid out in the preceding years, by building solid institutions such as the SA Revenue Service (Sars), and the solid macroeconomic framework it operated within, as it mitigated the crisis.
Gordhan’s names, or his initials and nickname (PG), did not fit with the rhyme and celebrity culture favoured by the media. Nobody could single him out for his role at Sars, never mind the solid work to modernise and improve the economic performance at Sars, which created a solid tax collection mechanism that allowed and funded our social welfare drive and other economic advancement initiatives. Correctly, the narrative credited the Treasury for its management of citizens’ taxes, and criticised it for its shortcomings.
The “glory years” had a particular culture, as demonstrated by the media in its reporting. Tax compliance was a big part of that era. Transgressing taxpayers were hounded down diligently. Some went to hide overseas but a dogged fight was given to them. Contraband and illicit cigarette smugglers knew there was a feared taxman hot on their heels.
As finance minister from 2009, Gordhan operated under the political economy outlook directed by the New Growth Path, among other policy interventions, which emphasised infrastructure development as a pillar for greater economic activity. Naturally, when you no longer have a budget surplus or enough money of your own, you have to borrow to finance this.
The debt picture painted by the likes of Fairwell does not take account of the growth story. Our debt is high but this is in relation to our anaemic growth. Our performance has been dismal compared with our peers. Our problems are hugely structural. They are political too. They call for a different and honest conversation about our leadership across the board, and the required pragmatism to move SA forward.
The rest of the world sees this, sadly not Fairwell. He can choose what he likes and make a sexy letter out of his work. Sadly, prejudices have been proven to be dangerous right across the world. They create a fertile ground for false narratives and feed the populist wave. Dare we forget that it was yesterday that SA politicians were hounded out of office based on false narratives that created serious economic and social problems for most of us.
Public enterprises spokesperson
(Writing in his personal capacity)
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