First National Bank consulting economist Cees Bruggemans:Trying to make the Grade
First National Bank consulting economist Cees Bruggemans



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Trying to make the cut

2013-10-29

It has been a volatile month, with the first half dominated by the partial US government shutdown and debt ceiling showdown risks, and then the flood of global relief when it all went away, at least for a couple of months (but probably for far longer).

Yet throughout the months that lie behind us, with all its domestic noise and the many global issues and potential flowering crises, something very vague could be discerned struggling to come into focus.

Our key politicians and policy makers were trying to slowly make the grade in ways sceptically questioned.

There was the sudden elevation of the Great Plan (the NDP) last December, reminding strongly of RDP and GEAR in their heyday, only for these to be subsequently blasted off their pedestal.

Yet despite deep Alliance splits, the NDP became the chosen way last December, with no let-up thereafter.

From May the SARB distinguished itself through striking calls for national leadership, championing a policy agenda pure NDP.

Throughout, foreign rating agencies made known their scepticism about the sustainability of directionless policy, in turn looking for evidence that the NDP philosophy was gaining traction.

A powerful backer came on board from midyear following a Consultation IV visit as the IMF made it known that a future without NDP was a slippery slope and unthinkable.

As the labour (or rather union) strife hotted up this year, there seemingly came a point where political hands were washed in public, strongly suggesting the Alliance was not going to survive as a unity, with the Plan again in the forefront.

Indeed, a sense of parallel tracks came into being.

Ideologues were still punting socialist and populist agendas even as the government, sounding more centrist than what it had in a long time, plouged on with its by now revered NDP.

More nails went in as the Minister of Finance presented his mini-budget this month, with a youth subsidy tax variation being pushed through, and offering spending restraint containing the budget deficit without (as yet) recourse to tax hikes and it all centrally anchored by the NDP.

So much Washington Consensus discipline had not been seen in years outside of the macro policy parameters.

The Zuma-led government was steadily acknowledging the dangerous global risks facing us, the need to retain our macro monetary and fiscal discipline, and the need for micro reform as embodied by the NDP.

The Strategic Infrastructure Initiatives came more and more into focus, in energy (electricity, gas, nuclear, coal, renewables) as in transport (Sanral etolling, Transnet rolling stock contracts).

This was now being matched on the labour front, if still with much innuendo.

The positive infrastructure moves (giving the nod) were being matched with negative labour moves (no you can’t).

Much of this is seen by some as pre-election positioning with no shred of real intention. Neutralising labour would also silence opposition to corruption and other undesirable trends.

But that may be too cynical.

It may well be that a bit of everything is being served. The country needs to get ahead. Spoiling opposition tactics no longer cut it as the government steadily loses ground.

It is not the same thing as being able to tick off boxes, that meritocracy has been established in the public sector rather than far too much mediocrity keeping social delivery back and infrastructure plans hamstrung, or that the labour market has acquired desirable flexibility rather than becoming even less flexible, or that intrusive regulatory disruption is being curtailed, or supply side constraints lifted, and that in consequence business confidence has started to respond positively, in turn upping its game.

But all this is certainly a beginning, a possible move away from destructive options and the start of the kind of reinforcement that might eventually lift our cloud cover as the actuality connects.

It remains early days, but reinforcement of macro discipline, an apparent willingness to thwart a key portion of organized labour, attempts to get the public sector to perform better, however elementary, it all suggests a turning of sorts (reform) to be underway.

Whether it outlasts the 2014 election, or the end of global crisis stations, remains to be seen. But at least it would suggest something is stirring that is different from what has played for many years now.

Even so, AMCU is already stirring up the platinum patch anew, the metal bashing industries face Numsa next winter, as does government the civil servants unions. And Julius is promising us militant unions to come.

It suggests much more needs to be done before we can reap the fruits of greater stability, better business confidence and more proactive risk taking.





Trying to make the cut

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