PETER ATTARD MONTALTO: Talk without action threatens to shove us over the fiscal cliff edge

This column was first published in Business Day. 

Sometimes we become immune to things when we hear them too much.

Something a lot of people have always said to me is “government is happy because it discussed the issue, no-one has given a thought to implementation”. This phrase has been more regularly heard since President Cyril Ramaphosa came to power more than two years ago and in particular in relation to the recovery planning process now supposedly happening.

It is completely mad. Why would the government — whose job is ultimately to make the country a better place — be happy to stop at discussion?

Perhaps this is laziness — implementation is hard with a lack of capacity in the state. Perhaps it’s a shyness from taking on vested interests such as the taxi industry. Perhaps it’s the active kowtowing to such interests that favours the status quo more than implementation and change.

Perhaps it’s historical and cultural — the inability to transition fully from being a struggle organisation to an implementation machine.

An example has been energy policy over the past three years, where despite numerous promises of liberalisation, the process has moved at a snail’s pace and the government will have to live with the consequences of load-shedding through the recovery in the coming years.

This issue of talk vs action sounds almost comical, but is crucial for recovery. For instance, wider government outside Treasury seems happy for the moment with a geeky discussion on fiscal multipliers rather than an analysis of what it is spending on what implementation.

The contrasts between the ANC recovery plan and the SA Communist Party (SACP) plan on the one side and the Business for SA (B4SA) plan and the “Tito paper” on the other is stark in this regard. Ignoring prescribed assets, the ANC’s references to the Reserve Bank and import-substitution obsession can broadly be nodded along to. Yet such a high-level debating document has no detail and is lightweight. There is no sense of drive to implementation.

The “Tito paper”, by contrast, is specific and, shock, evidence-based with references to background detail. Yet both have notionally been accepted by the ANC.

The contrast between the SACP paper and the B4SA paper is stark too. The SACP paper takes up a good majority of its space talking about the basics of epidemiology and is backwards-looking on what the government has done. The SACP doesn’t even succeed in laying out an interesting vision of a socialist state.

The B4SA presentation, by contrast, is (a lot of) detail on what must come next to unlock growth, with a focus on specifics that needs change across the whole of the government. The B4SA paper can be criticised for its length and complexity but is still an important exercise in showing the volume of what needs to change to unlock growth.

The fear I have is that a government that can’t implement cannot even begin to make decisions on a document such as this. It can kick it for touch into the long grass, and into social compacting, yet this is the wrong place for such specifics, which by their nature cannot be compacted.

I have been struck in the past two weeks in interactions with people right across the ideological spectrum how much pessimism there is for Nedlac as an institution of social compacting. While there is a recognition that a social compact is needed for a recovery, there seems a growing consensus that Nedlac is not the place to do this.

Powerful central leadership is needed that can make and deploy implementation directives, which can hold the machine of the state accountable, and can be solely focused on implementation after it has sensitively created the new social contract.

The alternative is lowest-common-denominator policymaking and a hunt for free lunches. If you mash the ANC and B4SA plans together in a lowest-common-denominator machine, you are going to get nothing much out — but something closer to the ANC plan. Or put another way, the B4SA plan without the implementation specifics.

The dawning realisation after that point that there are no funds to deploy, a fiscus that cannot perform, employment rising and a fiscal cliff edge becoming inevitable means the option will be attempts to grab hold of the Bank and Treasury power as well as the power over more than capital deployment through “real” prescribed assets. There will be no other choice because it will be too late and the final lever left.

Now the plans are on the table, we have a problem in a lowest-common-denominator world. Much of what business asks for, and much of what is in the ANC paper, is notionally agreed to in the government or is in the Tito paper or the National Development Plan (NDP) as examples. The government seems too happy to point at them and say “look, the Tito paper is accepted by cabinet”.

The response instead must be “so what?” If something isn’t implemented fully to conclusion, it doesn’t exist in the reality business operates in and ANC voters live in.

It will take everyone to call out the nakedness of policy without implementation and highlight its consequences pushing towards more than the fiscal cliff edge.

Attard Montalto is head of capital markets research at Intellidex.