PETER ATTARD MONTALTO: A starting gun has been fired, but to what end?

This column was first published in Business Day. 

What does the tripartite alliance believe in? There are meant to be communists in there, some labour bods, a party that talks about a National Democratic Revolution. One maybe should expect some anticapitalist zeal, a sense of a profoundly different world with different priorities and different ways of operating the state.

In other words, a bit of spark — that you might disagree with, but you can still see the vision and internal consistency.

Reading Jeremy Corbin’s Labour party manifesto in the UK last year I got angry, I got passionate, I fired off rants on WhatsApp to friends (and ANC Labour party supporters), but I saw its framework of logic and understood fundamentally where it came from, even if I disagreed with it.

Instead, reading the recently released tripartite alliance paper on the “Political economy of the global Covid-19 pandemic and SA’s response”, I fell asleep. This was not stirring stuff.

It reminded me of a number of occasions I’ve been spoiling for a fight on TV with various leftists only for them to fall flat on their face and not put up a fight.

This speaks to a deeper set of problems that must be confronted as we now enter the crucial next phase of contestation, and then negotiation, and compacting on the post-Covid reform path.

The first is that no side has any new ideas. This is not a bad thing necessarily. SA is good at diagnosing its problems, and even coming up with solutions, its just not good at constructing those solutions into a sensible and implementable whole, regardless of what part of the political spectrum you are on.

Not having new ideas is an issue because the coming period is going to struggle with the sense we are going around in circles and it can breed distrust of lethargy from each side. Saying the same thing over and over again can lead to people switching off even before you’ve started.

The second issue is that there is no time. The Ramaphosa administration before the Covid crisis was mapping a 10-year governance master plan and happy to move at a snail’s pace in the short run with a longer term path in mind (wrongly, or rightly). That just isn’t going to work now.

The 2021 risk-reward balance for doing business, investing and creating jobs needs to be rapidly shifted which means change  is needed right now. There is quite simply no time.

This means that year-long Nedlac processes are not going to work unless the government is happy to sacrifice a year of temporary job losses becoming permanent and constrained fiscal space hindering a social wage.

Parts of the government do of course know the need for boldness and speed. The third issue, however, is the government’s need to resolve its internal differences and act in a concerted way.

Reform seen as negotiation raises certain requirements for success — the key of which is that the other side will always be able to exploit your weaknesses if you are not firm and united on what you want. This is where the tripartite alliance has been successful against the government in the past two years — playing off the government’s own risk aversion, but also where additional delays creep in.

The fourth issue is that the government needs to build a reform framework that plays to its factual weaknesses which is its lack of capacity; rather than its pipe-dream strengths of a well-functioning state.

The government should focus on this rather than trying to do everything to please all people. Similarly, it should be aware of being captured by particular interests that can divert it from its focus.

The same is true in terms of expanding fiscal space. New tax measures that might theoretically work (a land tax for example) are too complex to introduce. Rather, the government should focus on shifting existing taxes (say increasing inheritance tax) or dealing with leakages and actually kick-starting growth to expand the tax base.

The final, fifth issue is that all parties can easily be distracted by the need for circus and spectacle in speaking to their base, pet issues and vested interests that don’t actually move the dial, and by easy scapegoats.

This will be particularly testing with respect to the banking sector. The loan guarantee scheme was seen as the answer to the need for some policy to do the heavy lifting, yet has seen very limited take-up so far (given some design flaws that have crept in — such as the need for personal surety). Such problems are better rapidly dealt with behind the scenes through policy design adjustments rather than making them into political economy footballs.

History would suggest that we are about to see a huge flurry of positivity, Thuma Mina-ness and big numbers that then rapidly fades as the long slog begins.

Will this time be any different and these five historic lessons learnt?

• Attard Montalto is head of Capital Markets Research at Intellidex.