The chances of the government of national unity reaching agreement on the budget are hanging by a thread after the Presidency rejected a ramped-up set of demands from the DA, which include shared control of the economy.
The Sunday Times has established that the Presidency on Friday sent a team of DA negotiators packing after they upped the ante in negotiations on the ANC’s budget, demanding a “coherent and comprehensive review of economic policy”.
The breakdown in discussions puts a question mark over what will happen when parliament meets on Wednesday to vote on the budget tabled by finance minister Enoch Godongwana earlier this month.
Without DA support the ANC will not be able to pass the budget even if it secures the support of such parties as the EFF or MK Party, because other parties in the GNU also oppose the budget in its current form.
The impasse has prompted some in the DA to renew their calls for the party to quit the GNU. The DA federal executive is due to meet tonight to decide on the way forward.
Sources in the DA said members of the Presidency at the meeting on Friday were “not impressed” with the party’s demands:
- The scrapping of import tariffs on manufactured goods;
- Publication within two weeks of requests for information (RFIs) for the concessioning of freight rail lines and the ports of Cape Town and Richards Bay;
- The scrapping of the ANC’s localisation policy;
- Withdrawal of the draft regulations for the NHI Fund published in the Government Gazette this month;
- Assurances that there would be no VAT increase after 2026;
- Cabinet agreement on amendments to the Expropriation Act by April 17;
- A spending review; and
- An audit of ghost workers in the government, commencing on May 1.
One of the DA’s top negotiators said the party told President Cyril Ramaphosa’s envoys that it wanted a total overhaul of economic policy, led by a committee of eight — four from the ANC and four from the DA.
The sources said the ANC side had argued that the DA’s proposals could be addressed through the “normal cabinet processes”, but the DA rejected this approach.
The issue we have is that unless the country achieves much more rapid economic growth, there’s not going to be enough money in this budget, in the next budget and the one after that
— DA source
“The issue we have is that unless the country achieves much more rapid economic growth, there’s not going to be enough money in this budget, in the next budget and the one after that. Economic growth has been lower than population growth,” said a DA leader.
“The ANC’s economic policy is not working. It’s doing some right things but many other wrong things that are undermining growth,” said the source, citing the import tariffs on steel products as an example of mistaken policy. “We have to be able share ownership of the economic agenda because that’s what the voters decided. The ANC does not have a majority and nor do we.”
The source said the ANC had to accept policies that it did not like.
“You can’t have a situation where the ANC says ‘We will draw up economic policy and you must support it.’ It has behaved with breathtaking arrogance.
“The DA asked the ANC to agree to share control of South Africa’s economic growth agenda and adopt a range of reforms that would drive growth, create jobs and increase the money the government has to spend on priority programmes, but the ANC refused.
“The ANC is saying ‘Let’s rather have political control than a successful economy’. Negotiations then ended,” the DA leader said.
Ramaphosa’s spokesperson Vincent Magwenya declined to comment on details of the negotiations but said the Presidency continued to believe a deal could be struck before Wednesday.
“The door is not shut on the DA or any party ... in parliament that wants to engage over the budget. Formal negotiations will continue in parliament and the president will continue giving a hearing to any party that wants to give input [on] how we get this budget approved,” said Magwenya.
By late yesterday afternoon, ANC negotiators reached out to the DA for a resumption of the budget negotiations.
Other top government officials familiar with the budget talks said they viewed discussions with the DA as “informal engagements” to help enrich discussion at cabinet level. They insisted that some of the economic reforms tabled by the DA were being implemented through the government’s economic structural reform programme, Operation Vulindlela.
“They are seeking some kind of a sideshow agreement at the exclusion of other parties in the GNU so that they can walk away and say, ‘We’ve won something out of the GNU’,” said one government insider.
Willie Aucamp, the DA’s national spokesperson, said yesterday that despite the negotiations stalemate the party regarded the door to agreement as remaining open “until the last minute” when the National Assembly votes on Wednesday afternoon.
“So the ANC sits with a conundrum at this stage, they will not get the support for this budget. They went to parties outside the GNU to seek support and they’ve been shown the door by all those smaller parties,” he said.
If the government fails to win enough support to pass the budget in its current form by Wednesday, it might be forced to cancel the proposed staged VAT hikes of 50 basis points a year for two years.
This would necessitate deep cuts in spending, including on health and education.
Should the budget not be approved by parliament, section 29 of the Public Finance Management Act allows the finance minister to authorise departments to spend 45% of their previous allocations.
But this money could only be spent on essential items such as salaries and unavoidable expenditure; new spending programmes are not allowed until parliament approves the budget.
The ANC’s task team, headed by its chief whip Mdumiseni Ntuli, is expected to meet with the DA on Tuesday. It is understood the ANC would have bilaterals with Bosa and ActionSA in the coming days. The ANC is also expected to meet with the FF Plus on Monday.
“Once we agree with one between ActionSA, MK Party and the EFF, we are going to pass the first hurdle which is in the portfolio committee. I think it’s obvious that anyone who agrees to work with us in the portfolio committee will work with us on Wednesday,” an ANC source said.
The ANC leader said discussions with the EFF had stalled since their meeting last week. EFF spokesperson Sinawo Thambo said: “We have had one engagement which was between our whippery groups. Other than that there’ve been none and none scheduled.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.