A sho't left to nowhere - Thought Leader

By Isobel Frye

The transparency of the South African budgeting system is hailed internationally as a standard for other countries to emulate: its three-year rolling budget allocations, and the use of the Medium Term Budget Policy Statement, which is issued three months ahead of the national budget, provide pointers for the priorities that will emerge with the next national budget. This system is meant to provide policy stability and to enable labour, business and other stakeholders to anticipate how their needs and interests will be mediated by the state.

In truth, however, transparency is only as good as the information that is communicated. For the last two years, the nation has been waiting for concrete communication of the “Polokwane way” as a signal that a decisive break from the previous fundamentals of growth policy has been made. South Africans listened to promises of an industrial strategy, a new economic growth path, and, best of all, a national planning commission that would provide overall direction to these new initiatives that would provide a grand plan to carry us forward. It was believed that these initiatives would at last address the concerns that people had of the effect of continuing and severe challenges in South Africa.

In such an environment, the 2010 Medium Term Budget Policy Statement should have been a chance for us to evaluate progress against these plans and to experience a palpable new way of planning and progressing. Instead, we appear to be even more adrift than before. The work of the planning commission is not readily known to the majority of South Africans, and its vision, which should focus on building a new consensus towards solidarity and sacrifice, still eludes us. The Industrial Action Plan is complete and being implemented, but it is hamstrung by the absence of certainty about the promised new economic growth path from the Department of Economic Development.

For example, in spite of the current lack of direction, there has been confirmation of the move towards a national health insurance system. Whether the nation will be able to afford the price tag of such a comprehensive health system is unclear.

In previous years, civil-society bodies such as the People’s Budget Campaign criticised the state for appearing to make policy through the budget. At this stage we have a budgeting process that appears to exist in a vacuum from policies. Instead of giving critical direction, these policies continue to be elusive in their ability to address the key challenges facing our country.

There are complex links that need to be understood concerning industrial policy, trade policies that should support our industrial plan, the skills and training policies that are required to skill the workforce to implement the industrial and manufacturing plans, and the spatial planning, housing and transport policies that are required to provide a safe and mobile workforce to implement the plans. All of this is critical if we are going to change the direction of the economy so that it can absorb the unemployed, create jobs and distribute incomes. The economy needs to achieve the latter in a manner that promotes social justice, breaks intergenerational poverty traps and provides a grassroots up vision of a robust and functioning society. A society that is capable of leading both the sub-region and the continent, and one that continues to be an inspiration to the world.

Although the Minister in the Presidency for Planning is to be congratulated on his appointment to assist in the development of the Nepad infrastructure development corridor, we wonder whether it will affect his ability to drive a comprehensive planning process for South Africa — one that co-ordinates the links between economic and social policy development.

Innovative ideas exist on how we can move away from the current drivers of poverty and inequality. Many were showcased at a recent multidisciplinary conference* — Overcoming Inequality and Structural Poverty in South Africa: Towards inclusive growth and development. However, for the usefulness of empirical evidence explored through research to be translated into applied knowledge, it is necessary for policy certainty to prevail. The current policy impasse is dangerous because it risks an approach where we stray from real engagement with the substantive issues we face. What we need is a Medium Term Budget Policy Statement that reflects policies based on clear direction and dialogue.

Isobel Frye is director of Studies in Poverty and Inequality Institute (SPII), a not-for-profit research and policy analysis think-tank based in Johannesburg.

*The conference was co-hosted by SPII, PLAAS (the Institute for Poverty, Land and Agrarian Studies), the Isandla Institute, the Chronic Poverty Research Centre and the Programme to Support Pro-Poor Policy Development of the Presidency. The papers can be downloaded from www.plaas.org.za.