All eyes will be on parliament in the weeks ahead as the budget wends its way through the approval process, with the two largest parties in disagreement over its contents.
The political fight over the budget should have been anticipated by the biggest parties in the government of national unity (GNU), the ANC and DA.
In the event, being forced to postpone the budget speech when the finance minister’s attempt to increase VAT by two percentage points was rejected, was a big reality check for the ANC.
Never before has an ANC finance minister had to climb down on a crucial element contained in the budget. In the end he had to reduce the VAT hike to two half-point increases in successive years, and even that has not been accepted by the DA.
Other proposals made by the DA were contained in the latest budget, including a commitment to review spending. The two parties will continue negotiations in the coming weeks to try to ensure that finance minister Enoch Godongwana’s budget can be passed by parliament.
Two committees will be in the spotlight: the standing committee on finance chaired by the ANC’s Joe Maswanganyi, and the standing committee on appropriations, chaired by Build One SA leader Mmusi Maimane.
“The Appropriation Bill, which has to be voted for, has to carry the majority of the house ... if it doesn’t carry the majority of the house, then the budget is in essence rejected, which means further processes,” Maimane told Business Day.
— Essentially, parties do have time and space to negotiate.
“When the DA or any political party says it will not vote for the budget, it means that it will reject the Appropriation Bill on the day of voting ... should the first vote fail, you go back until the budget is passed”.
However, Maimane said there is provision to fall back to the previous budget, so parties do have time and space to negotiate.
The ANC will need the support of the DA, or the EFF and a few small parties, or the MK party, which is the official opposition and is vehemently opposed to President Cyril Ramaphosa. It is unlikely to entertain talks.
The EFF has also rejected a VAT hike, but should it be open to discussions with the ANC over helping the budget across the line it is likely to be more “extractive” in its demands, insiders say. The EFF always drives a more ruthless bargain than the DA — the Gauteng ANC has vast experience in this regard. In exchange for removing the DA from power in the metro in the aftermath of the 2021 election the EFF demanded the powerful finance portfolio in the council, even though its representative, Nkululeko Dunga, had no experience as a councillor, let alone an MMC.
If the EFF does work with the ANC to push its budget through it could spell the end of the DA’s participation in the GNU. In practical terms, this worse case scenario for the tie-up would be an enormous setback for the seventh administration and Ramaphosa’s last term in office. For instance, GNU partners have already agreed on a road map for the next five-year term, the medium-term development plan.
It is likely that the EFF would want to overhaul the plan in line with its own policy stance — in Johannesburg under Herman Mashaba’s mayorship the EFF exerted considerable influence over the administration, ensuring its policies were prioritised. The EFF and ANC also fish in the same pool for voters, another factor complicating the two parties working together nationally.
The least disruptive option remains for the ANC and DA to agree on a way forward on the budget, even though the DA believes the ANC has not compromised on any issue that is important to its constituency, especially National Health Insurance (NHI), the Expropriation Act and the Basic Education Laws Amendment Act.
But hinging horse-trading over the budget on these sixth administration issues may be short-sighted. Both the NHI and the Expropriation Act are subject to legal challenges, the former on multiple fronts. The DA itself is challenging the Expropriation Act in court.
The only reasonably palatable option for the ANC is to strike a deal with the DA, since by alienating the DA it also opens the possibility of handing power in KwaZulu-Natal to its bitter rival, MK, since it governs in coalition there with the IFP, DA and NFP.
For the DA, pulling out of the GNU would leave it back at square one: staring at an electoral ceiling with no viable avenue for growth through proving its governance ability outside the Western Cape.
Both parties will approach budget negotiations knowing they need to iron out their differences, because all other paths will put them on a road to nowhere.
• Marrian is Business Day editor at large.
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