PETER ATTARD MONTALTO: Coalitions make weird, exciting things happen

Something is quietly boiling below the surface. The headline faces of the election are broadly the same — tired, generally quite old — and this is not just the ANC.

Dig a little deeper, particularly at provincial level, and fresh faces start to pop up. Their ability to cut through their elders always seems a challenge, particularly with the ANC (where the whole party, bar some exceptions that prove the rule, seems to move stepwise upwards through the party ranks by age only).

The media doesn’t help. The desire for big beast politics and the theory of strong (usually male) leaders has dominated much coverage. The Electoral Commission of SA (IEC) doesn’t help by putting party leaders’ faces on the ballot paper — something that is surely a rarity globally.

Yet these stirrings of younger leaders and politicians below the surface is interesting precisely because straight after this election thoughts will turn to 2026 local elections and then even the 2029 national elections. Why? Because coalitions make weird, exciting things happen in politics.

Coalitions not only at national but also at least in KwaZulu-Natal and Gauteng will bring a broader range of voices to the fore, not only those who end up in executive positions but also those who try to differentiate their party’s stance from that of a coalition they are in.

Then there is the consolidation we are likely to see. Smaller parties are burgeoning this year, but many are unlikely to survive on their own. This process could, given egos that keep many smaller parties apart, lead to destruction, but it could equally create a stronger range of actors that last through 2029.

Then we have the dynamics around the 2026 local elections and a realisation that who actually stands at a metro level is an issue of national importance for growth, trade and investor confidence. It will be the head of steam of younger leaders to find other outlets.

Even at national level, the risks of no-confidence votes and the dynamics of a range of parties given likely tight maths — perhaps complicated by secret ballot — will make a wider range of voices more important.

The need to move on was aptly seen in the conspiracy theory-laden musings of former president Thabo Mbeki two weeks ago, a topic well covered by fellow columnist Jonny Steinberg last week. While one might disagree with the views of some younger political types, they seem rarely to slide into such farcical muttering.

All this sounds marvellously rosy, and I am tempted to ask someone to pass the sick bucket reading it back. Traditionally, of course, such positives have not emerged — as we’ve seen in the ongoing mess of Gauteng metros (with Tshwane only recently starting to find its feet). There is also some truth to the belief that politicians can always be trusted to mess stuff up.

As the traditional position (slowly) slips on the ANC and as contestation and negotiation through and outside coalitions at national level create a wider dispersion of power within the political economy, some younger voices are starting to be heard. There is at least some possibility of a different, better outcome. The fact that the parliamentary lists are just the right balance of new and old blood (unlike 2019, which was a broad sweep of the new and inexperienced) might also help.

We should also forget that the ANC always starts the campaign for its next elective conference as soon as the prior national election is complete. With a president with no succession strategy, this will prove more interesting than usual with a new generation waiting in the wings. Similarly, the likely exit of Helen Zille at the DA’s next elective conference opens up interesting possibilities for a party that has such a strong central locus.

This might all seem esoteric to investors, yet with some large battles coming of (unusually) macro relevance it shouldn’t be scoffed at.

The broad political economy — not just whomever is in government coalitions at national levels but provincial and below too (who have to actually “do” healthcare) — is going to have to grapple with implementation of National Health Insurance (NHI) and the Treasury’s forthcoming fiscal rule.

It is a fascinating juxtaposition. NHI itself is not contrary to a fiscal rule — you can raise taxes to cover the cost, of course. The government has positioned it as being neutral on the fiscus but also neutral on households that will pay more tax to the government rather than contributions to medical aids.

A fiscal rule, however, will reinforce the need to either raise tax very sharply or cut spending elsewhere. The NHI “frequently asked questions” released last week conveniently forgot that the National Treasury has told the department of health and cabinet that VAT hikes would almost certainly be necessary in addition to the per employee taxes levied on employers and employees as well as income tax supercharges and the removal of medical aid tax credits.

The point here is that the quality of service cannot be matched by averaging spending across public and private healthcare systems as the same spending pot that is bifurcated between public and private is amalgamated and spread evenly across the population. The president’s assertions last week about comparative health quality seemed to defy reams and reams of community-based journalism about the public health sector or any number of international comparative health studies that can easily be googled.

Back to fiscal. The effect of raising tax so much would come at the same time as there is broad contestation for a broader social wage and, in particular, a richer and broader successor to the social relief of distress (SRD) grant. This implies yet more tax to pay for that. No-one in the NHI space has put forward a credible socio-economic study that I have seen of how this could possibly be fundable and neutral from a household perspective.

The political economy doesn’t like making choices, yet will have to — especially under a fiscal rule that supports lower borrowing costs and higher credibility. Making long-term choices from now out to 2028, when NHI is actually meant to be fully up and running, is even harder still. Who in a coalition environment is going to be able to take such big tax decisions before the 2026 elections or just before the 2028 elections to fund NHI and assume it has a neutral effect rather than hitting the edges of a narrow tax base?

Some fresh and bright thinking on credible alternatives to achieve universal and quality healthcare within the country’s fiscal and tax constraints is urgently needed. This is where the next generation of young political leaders might find a calling should they emerge through the election ahead.

Peter Attard Montalto leads on political economy, markets and the just energy transition at Krutham, a SA research-led consulting company.

This article first appeared in Business Day.