Intense talks behind closed doors between the ANC and DA stretched late into Sunday night over the fiscal framework before a parliamentary vote on Wednesday in a bitter standoff that has the government of national unity teetering.
At the centre of the clash is finance minister Enoch Godongwana’s VAT rate increase in the budget, tabled two weeks ago, which has become a battleground for competing visions of SA’s economic recovery.
On Sunday, the DA and ANC were locked in separate meetings to discuss a way forward to salvage the coalition and keep the budget process on track.
On Monday President Cyril Ramaphosa is expected to meet DA leader John Steenhuisen to thrash out differences.
Godongwana’s decision to fund the budget shortfall with VAT hikes has raised the prospect of the budget framework failing to stand up to parliamentary scrutiny, a reflection of an altered political landscape due to the ANC’s loss of electoral majority in last year’s polls.
In a scathing letter on Friday that accused the ANC of treating the government of national unity (GNU) as a mere extension of its own policy framework, the DA warned that unless genuine compromises were made, the coalition’s very survival hangs in the balance.
“This is the first reason we are now at an impasse. Had the ANC negotiated on the budget in a meaningful way from the start, we would not now be in a situation where two budgets that lack the support of parliament have been presented within three weeks of each other,” the leaked document reads.
“The second reason we are at an impasse on the budget is the lack of a credible growth plan to return SA to above-projected levels of growth and secure our fiscal position into the future,” the DA said.
In the document, the DA has made its position clear, saying it would support the budget framework and VAT increase on a trifecta of conditions.
First, the DA wants accelerated growth reforms, lobbying for deputy finance minister Ashor Sarupen to join the second deputy as co-chair of Operation Vulindlela to speed up the reforms in both passenger and freight rail.
Other demands to boost growth include replacing references to nil compensation with “just and equitable” in the Expropriation Act, withdrawing the National Health Insurance legal entity in the Government Gazette, removing tariffs on goods that are not made in SA and amending the Public Procurement Act to ensure preferential policies do not inflate the cost the government pays for goods and services.
Spending review
Second, the DA is calling for a spending review to identify R50bn-R100bn in recurring revenue, accompanied by a “public undertaking to decrease the tax burden within two years” as the third condition for the budget framework to secure the party’s vote.
“The DA is not looking for a tactical ‘win’ on the budget and we will not be bought off with a tactical concession.
“What we require is a strategic partnership with the ANC in the GNU to take SA into a more prosperous future,” the document reads.
DA spokesperson Karabo Khakhau said: “There is no deal. The ANC is telling us they are not willing to hear anything that we are telling them that can be fixed with the budget.
“They are threatening to end the GNU by seeking other partners outside the GNU partners,” Khakhau said.
The ANC’s national executive committee (NEC), which met over the past four days to thrash out a solution to the budget impasse, among other things, dismissed the DA’s demands as unrealistic, particularly given the tight timeline, according to six members of the highest decision-making body between national conferences.
ANC secretary-general Fikile Mbalula said at a media briefing on the sidelines of the NEC meeting at the weekend that the party would not “sell out” on transformation.
But six other ANC members of the party’s NEC told Business Day on Sunday that there was no big push within the ANC to throw the DA out of the GNU.
Stabilising
This comes as speculation is rife that the ANC would — in a bid to secure sufficient votes in Wednesday’s vote — lean towards the EFF, which has made the removal of the DA from the GNU a condition of its participation.
“The GNU is finally stabilising there. Parties are working through appropriate channels to resolve disputes,” an ANC NEC member said.
“Why would we want to kick the DA out now and introduce the EFF, who are more than likely to be more opportunistic and cause disruption if they don’t get every small thing they want?” the member said.
Business Day understands the ANC NEC has tasked Ramaphosa and deputy president Paul Mashatile to find the votes to have the fiscal framework passed after Godongwana’s tabling of the budget on March 12.
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