BURIED in the budget was an implied message to business. The government wants to talk to and work with it. But it wants it also to take more responsibility for our social and economic ills. The result may be a new government-business conversation — but no changes to the economic policy framework. It may not address the problem, but may offer business the prospect of a new relationship with government.
On the surface, the budget speech was yet another government warning of the need to fix poverty and inequality that gives no details of what it wants fixed. Finance Minister Pravin Gordhan declared that we need "a different trajectory if we are to address the challenges ahead". He talked of "a new strategic framework for growth and development". He urged that growth become more inclusive. He seemed likely to propose an agenda for change.
He didn’t. Beyond the now obligatory reference to a social compact, Gordhan offered no proposals that might challenge business. Predictably, despite dire warnings, he did not raise taxes — which would have been odd as the government has asked a team to look at current tax levels. He even threw in a sweetener — an unspecified form of youth employment incentive.
Much of the speech seemed directed at business fears rather than at the rest of society. It also followed other government statements in stressing the National Development Plan not as a vehicle for demanding change from business or other interests, but as a means of getting its own house in order by building a more "capable" state better able to tackle poverty.
But, if the minister did not threaten to act against business, he did ask it to share responsibility for key problems.
As he did last year, Gordhan promised that the government would tackle corruption and mismanagement. But he became the first government minister to acknowledge that the problem is deep-rooted and not amenable to magic cures. "Let me be frank," he said. "This is a difficult task with too many points of resistance!" In other words, corruption is not simply a creation of a few political fat cats: it is deeply rooted in society and the culprits are private as well as public. So the solutions lie in the hands not only of government, but of business.
More specifically, he said, the Treasury was "scrutinising" 76 businesses with contracts worth R8.4bn suspected of infringing procurement rules. This reinforces the point that corruption is a product of relations between government and business and that both (and labour) must take responsibility.
Similarly, Gordhan addressed a core economic problem — unsecured lending by workers, which helped to fuel last year’s strikes. He said the Treasury was talking to other government agencies and the banks to address "abuse" of the garnishee orders imposed on workers’ pay and to ensure that "the lending market remedies its behaviour".
He urged employers to help workers manage their finances and ensure that orders were "properly issued", and urged law societies to act against members "who abuse the system". Again, private actors were asked to take part responsibility.
In similar vein, the minister complained that some companies were shifting profits "to low tax jurisdictions where only a few people are employed". But the South African Revenue Service was "engaging" with them, not threatening to throw the book at them.
Whether the government strategy of getting better at serving the poor and asking business to join in finding new approaches to problems will work, is open to serious question. The budget sent mixed messages to the poor. It promised a symbolic breakthrough — the end of means testing on pensions. If it happens, pensioners will no longer be stigmatised and the barrier between them and other older people will be removed, enhancing the social solidarity of which Gordhan spoke.
But it also raised social grants by only a miserly amount. More generally, the government won’t get much better until it gets more accountable and it is by no means sure that it will.
Our economic challenges may also need more than a government-business partnership based on a shared moral responsibility. Some tough bargaining may be essential.
But the speech does challenge business to take responsibility, with government, for addressing key problems and this could open up other conversations. The key question is how business will respond.
• Friedman directs the Centre for the Study of Democracy.
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