This is the worst of times for the finance minister. But think about the best of times. In 2007, then finance minister Trevor Manuel announced a budget surplus in what was perhaps the most triumphant budget speech since democracy.
“Sound management of public finances and the improved tax compliance culture on which it rests provides us with the resources to invest in our public services, renew our infrastructure, reshape our residential areas, provide water, electricity, housing, sanitation, schooling, health care and access roads to millions who were previously denied these elementary building blocks of modern society” he said then.
We did not know how good we had it. The economy had grown 4.9%; employment had risen 3%; there was a fiscal surplus of 0.7% of GDP. While the global economic environment was positive, there is no doubt that reforms driven by the Mbeki government meant we could take advantage of it.
This week’s budget speech is the toughest since democracy. Tito Mboweni is torn by irreconcilable ends: he must cut back government spending while assuring unions that job and wage cuts are not in the offing; he must convince a sceptical public that the government really is pushing ahead with the structural reforms his department has highlighted, while sidestepping vociferous opposition from some in his own party; he must somehow raise taxes from an economy in decline.
Yet in 2007, the political putsch that ejected president Thabo Mbeki, and ultimately Manuel, was growing. The economic successes had to be undermined through a political strategy. Growth, it was said, was “jobless” even though the unemployment rate had fallen from more than 30% in 2001 to 22% that year. Economic policy was increasing inequality, it was claimed, even though tax revenue had grown 17% in each of the previous three years, financing an unprecedented increase in social spending.