The ANC rejected the DA’s proposal to amend the Expropriation Act and the National Health Insurance Act in exchange for the party’s support of the budget because the two sets of legislation are now being prepared for implementation.
The proposals were part of a wider range of demands sent by the DA to President Cyril Ramaphosa and finance minister Enoch Godongwana during negotiations held in the three weeks between February 19, the initial date of the budget tabling, and March 12.
The DA, as the second-largest party in the government of national unity (GNU), sought to use its 87 seats in the 400-seat National Assembly as leverage to ensure the two pieces of legislation were amended. Business Day understands Ramaphosa shared the DA’s demands in a cabinet meeting before Wednesday’s budget speech.
“I knew about their demands and [tried] to tell them the president is no walkover, they should abort that mission,” a cabinet minister told Business Day after a heated cabinet meeting before the tabling of the budget.
“The DA wants special treatment and [for] the president to sign off its demands privately instead of arguing for it themselves in GNU and cabinet meetings. Yes, it is blackmail,” said another cabinet minister.
The ANC leadership rejected the demands, leading to Godongwana tabling the budget without the DA’s support.
The budget proposes a 0.5 percentage point VAT increase, a compromise on the original two percentage point hike. The ANC’s coalition partners met this with widespread criticism despite efforts to soften the blow by expanding the list of VAT-exempt essential items.
“The legal practicalities of those laws [Expropriation Act and National Health Insurance Act] are that they are now active and their respective regulations are being prepared for implementation,” a source close to the negotiations told Business Day.
“What will the president do with the NHI and the Expropriation Act, for example? Let’s say you want to amend those two acts — that means they have to be sent back to parliament.”
The revised budget, however, is not cast in stone and will undergo a parliamentary process before it is passed. The ANC would require the support of either the DA, EFF or MK party, which constitute the majority of seats in the house, for it to pass in the National Assembly.
“This is a national budget presented by the minister. The ANC MPs will engage all MPs in parliament to support it, irrespective of party affiliations. The DA MPs will also be engaged and be persuaded, hopefully,” ANC chief whip Mdumiseni Ntuli said.
The DA opposed the two pieces of legislation before the formation of the GNU and continues to do so in the cabinet.
The DA has hauled the government to court over the Expropriation Act, saying it does not meet constitutional requirements and should be declared invalid. It argues that the legislation is vague and contradictory.
DA MPs including the party’s deputy federal council chair and deputy finance minister, Ashor Sarupen, held a webinar on Thursday to explain why the DA could not support a VAT increase that would contribute to a higher cost of living and a budget that did not promote economic growth and job creation.
They said what was needed was to cut unnecessary expenditure and do a comprehensive expenditure review across government. This would release the funds that would have been collected through a VAT increase. Greater tax compliance would also generate more revenue.
“The ANC’s VAT budget does not resolve the fundamental problems in the economy. It is just business as usual, which is not good enough. Employment has [not] gone up in the last 15 years or so,” Sarupen said, adding the only way to get out of the crisis of high indebtedness and onerous debt service costs was through economic growth.
“The same policy agenda that they [the ANC] have been pursuing, they cannot now try to pursue when they only have 39.75% of the seats in parliament.
“The SA electorate kicked them out for a reason and they can’t expect us to be a rubber stamp. We want those reforms, we want growth, we want people to get into jobs, we want to lower the cost of living. This budget raises the cost of living and it does so in a way that passes the cost of this on to poor and middle-class families.
“It is fundamentally unfair to every South African that we have to pay the price for the ANC’s failed policies of the last 15 years. There is a simple reality that we can’t take more money out of the economy and out of the tax system to try to make South Africans more wealthy and prosperous because it is never going to work.
“We need to get things moving on the economy. We proposed a whole range of measures and until they agree to those we are going to be having this budget fight every year.”
Sarupen criticised the above-inflation public sector wage increase of R7bn, which was far higher above inflation than the increase in social grants. “When you look at those things it is not a pro-poor budget, it is a pro-poverty budget,” he said.
The DA would push hard for economic reforms such as turning around the ports and rail system, which has acted as a constraint on growth. It would not bend on this.
The DA also opposes the National Health Insurance Act, which is facing legal challenges from civil society organisations, saying that the legislation in its current form is harmful to the economy.
Updated: March 13 2025
This article has been updated with additional information.
With Hajra Omarjee and Natasha Marrian
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