Four of the parliamentary committee chairs who will be charged with processing and overseeing the budget once tabled have expressed unease at the possibility of the budget including a value-added tax (VAT) proposal, but acknowledge the economy is in dire straits.
Finance minister Enoch Godongwana is set to table his budget speech in parliament on Wednesday after a disagreement at cabinet level over his proposal to increase VAT by two percentage points, from 15% to 17%, forced a postponement last month.
Since the first postponement of a national budget in SA’s democratic history, the cabinet of the government of national unity has been working and negotiating towards a resolution behind the scenes, with Godongwana reportedly not backing down from a VAT hike.
Holding a briefing in Cape Town on Monday, the chairs of the standing committee on public accounts (Scopa), standing committee on finance (Scof), select committee on appropriations, select committee on finance and select committee on appropriations discussed the urgency of tabling a sound growth-oriented budget.
We have borrowed an additional R2.6-trillion-R2.7-trillion and we have nothing to show for it
— Scopa chair Songezo Zibi
Scopa chair Songezo Zibi told reporters South Africa was in a quandary, as the country was heavily indebted with sluggish growth and a highly taxed population. The challenge, he said, was in the inefficiency of spending.
“Measured in inflation-adjusted terms, the burden for public debt per working age individual, says Treasury, climbed from R70,000 in 2014-15 to R114,000 in 2023-24. During the decade of economic underperformance, real GDP per person fell from R80,046 to R74,599.
“We have borrowed an additional R2.6-trillion-R2.7-trillion and we have nothing to show for it. We cannot discuss a budget while totally ignoring the fact government misuses money through bad policy and wasteful administration and loses it entirely through corruption.”
He said Scopa was determined to play its role in enforcing the constitutional provision that public funds must be spent efficiently. He said a non-revenue water provision should be reduced to 25% through repairs, refurbishment and maintenance, which could yield revenue in the order of R5bn in only four municipalities.
Standing committee on appropriations chair Mmusi Maimane said for the first time there was no outright majority in national government, and SA would have to test the might of the legislature to produce a budget that serves South Africans best.
“The events that took place at the first attempt to table the budget will mean for the people of SA that we have to find a way of making sure that as the budget is processed, it follows its intended legislative process, which is that parliament would eventually make the budget law.”
He said the problem South Africa faced was not a VAT problem, but a growth problem.
“There is no reality on which you can sustain low levels of growth in a geopolitical climate of suppressed growth and keep hoping you will make several adjustments within the budget to keep yourself sustainable.”
Standing committee on finance (Scof) chair Joe Maswanganyi said after 30 years of being an instrument for translating priorities and plans to public goods and services for SA, National Treasury found itself in a difficult situation related to debt, revenue and spending.
“We find ourselves today facing a fiscal cliff. Scof is responsible for the fiscal framework. After tabling the budget, the speaker refers the budget to our committee to deal with the fiscal framework. After adopting the fiscal framework report, the next process is the appropriation committee. They deal with the actual allocation of the budget until parliament passes what is called the division of revenue act and from there it goes to the National Council of Provinces (NCOP).”
Maswanganyi said the committee has repeatedly asked National Treasury to come to Scof with a debt management strategy, and it planned to again raise the matter with the finance minister once the budget is tabled.
Select committee on appropriations chair Tidimalo Legwase said the 2024 medium-term budget policy statement sets the foundation for the 2025 budget and her committee had the responsibility to deal with allocations through the division of revenue act.
“This is the bill that takes about six weeks to be processed, encompassing the National Assembly, the NCOP and the provincial legislature public participation process. This is the bill that provides for the equitable division of nationally raised revenue among the national, provincial and local sphere of government for the medium-term expenditure framework.”
Select committee on finance chair Sanny Ndhlovu said her committee’s work complements Scof's, and it has the unique mandate of ensuring provincial interests are taken into account at national level.
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