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Gordhan Says ANC Doesn’t Need Populist Budget to Win Vote

South African Finance Minister Pravin Gordhan
South African Finance Minister Pravin Gordhan. Photographer: Jason Alden/Bloomberg

Oct. 24 (Bloomberg) -- South African Finance Minister Pravin Gordhan said the ruling African National Congress is assured of about 60 percent support in next year’s election and he doesn’t need to take populist measures in his budget to win votes for the party.

“We don’t have to engage in that kind of conduct in order to attract votes,” he said in an interview in Cape Town yesterday. “Over the years we have had programs in the place which appealed to different constituencies.”

Gordhan presented his mid-term budget in Parliament yesterday that pledged to cut perks for government ministers, provincial premiers and mayors, including on transport, housing and entertainment. The comments were met with cheers by lawmakers and welcomed by labor unions and opposition parties, who have criticized government leaders for excessive spending.

The ANC has won every election since the first multiracial one in 1994 with more than 60 percent of the vote. The ANC is facing challenges next year from a raft of new parties, including a breakaway faction led by former youth leader Julius Malema.

The mid-term budget is a “pre-election one,” because it aims to curb wasteful spending and makes no mention of higher taxes, AJ Jansen van Nieuwenhuizen, a tax partner at Grant Thornton in Johannesburg, said in an e-mailed statement. “This is a very politically targeted budget with initiatives announced that will resonate with the larger voting public.”

The rand gained 0.3 percent to 9.7622 against the dollar as of 9:07 a.m. in Johannesburg, trimming its decline this year to 13 percent.

Welfare Grants

Gordhan, 64, was elected in December to the ANC’s national executive council, the top decision-making body of the ruling party.

The ANC appeals to a range of voters because of its spending on welfare grants for the poor, affirmative action policies that have helped fuel a growing black middle class and favorable taxes for businesses, Gordhan said.

“For the large number of people in the lower income ranks and the poverty ranks, we’ve had the social grants that have made a huge difference in their lives and people appreciate the fact that it is supporting them,” he said. “The investments we made in education, housing, health, are all part of that 57% of social wage that we commit to South Africans as part of both making people comfortable now, but overcoming the legacies as well.”

Wage Subsidy

Gordhan said he will introduce a bill in Parliament to subsidize wages for new entrants to the labor market, a program that’s been opposed by the ANC’s labor ally, the Congress of South African Trade Unions. The federation called the proposed law an “attack on the security of employment of workers” in an e-mailed statement on Oct. 16.

“Within the government and the ANC broadly we have a set of policies which is consistent with what the ANC is, which is a broad church,” Gordhan said. “At this point in time we will do what we have to do to make sure that the economy grows and we run a good, tight fiscal ship.”

National and provincial elections in South Africa are set to take place by July next year. Gordhan said it’s too early to say whether he will remain in his post after the vote.

To contact the reporters on this story: Rene Vollgraaff in Johannesburg at rvollgraaff@bloomberg.net; Mike Cohen in Cape Town at mcohen21@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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