Godongwana scoffs at fuel levy electioneering charge: here’s what else he said …
Finance minister Enoch Godongwana shrugged off and denied claims by opposition MPs that the fuel levy relief he announced in Wednesday’s medium-term budget policy statement (MTBPS) was aimed at appeasing voters before the local government elections.
The minister was speaking at a post-MTBPS breakfast organised by RMB in Cape Town on Thursday morning. During the tabling of his MTBPS in parliament on Wednesday, Godongwana announced the government would provide temporary fuel price relief, saying that the fuel levy will be reduced by R3 per litre for diesel and R1.50 per litre for petrol from November 4 until December.
The commencement date raised eyebrows, as this is the day South Africans go to the polls in elections in which the ANC is expected to face bruising electoral battles in key councils, especially the country’s eight metropolitan municipalities.
Godongwana was asked by RMB chief economist Isaah Mhlanga about what has been called an “unusual coincidence” in the timing of the fuel levy coming into effect, and the EFF’s criticism of the announcement as an “election ploy”.
“By the way, I was also shocked when I heard the EFF yesterday, [saying] that [we] are electioneering by announcing it for the fourth. But if it were in December, it would have been done on the second, because the change to the fuel price happens on the first Wednesday of the month. Then the first Wednesday of November happens to be the fourth of November,” said Godongwana.
He said the “coincidence” did not occur to him until EFF MPs pointed it out after he tabled his MTBPS. “These people are leading with elections when the date has got nothing to do with elections at all,” he insisted.
Godongwana said the challenges facing municipalities were deeper and much more complex than broad cost drivers, but they also have a great impact on South Africa’s investment and development case at a macroeconomic level.
He said state capacity as a pillar of National Treasury’s budget and fiscal priorities has come into sharp focus as South Africa heads towards local government elections, but Treasury has always flagged this as a key challenge.
“I think we normally have got a standard kind of approach, where we say we’ve got four pillars. The first one is to achieve macroeconomic stability … The second one deals with the binding constraints [in the network industries]. That’s structural reforms. The third one is state capacity.
“It’s coming into sharp focus … because we are going into an election, but we have always said that’s a problem, because municipalities provide the basic needs, not only in terms of performance and infrastructure, but in the regulatory framework and how long it takes to rezone.”
Godongwana has been known to adopt a tough-love approach towards municipalities over their equitable share allocations and service delivery failures. He said a close friend in business told him it takes 80 days to get a rezoning licence in one municipality, and sometimes it can take up to 200 days in another.
“Those minor things influence how people make decisions about investment. I am just stating those kinds of regulatory challenges that we are talking about. So, we are talking about structural concerns and state capacity and also infrastructure itself.
“Take Johannesburg as a starting point. When you are dealing with Johannesburg, you are not only dealing with leakages; you are dealing with old water infrastructure that needs rehabilitation … We have got to sort those things out so that we can see investment. No one is going to invest if you can’t get water and you can’t get electricity; basic things.”
Mhlanga said the MTBPS showed flexibility to provide breathing room for the successes of National Treasury to take hold in the broader economy while allowing market-friendly stability and predictability.