What happens next for a contested Budget?

The process of passing South Africa’s Budget has never had a year like this one. The first attempt at a Budget, scheduled for 19 February, didn’t even make it to the National Assembly, after it collapsed in last-minute talks within the Government of National Unity (GNU) Cabinet following opposition to its proposed two percentage point VAT increase.

Finance Minister Enoch Godongwana’s second attempt at tabling a Budget, on 12 March, seemed destined to go ahead more smoothly — before DA leader and GNU minister John Steenhuisen tweeted, moments before the start of the speech: “Good afternoon, South Africa. The DA will not support the budget in its current form”.

That’s potentially a headache for the ANC, since the Budget has to be passed by majority vote and the DA is the ANC’s biggest GNU partner.

But that didn’t stop a seemingly fairly relaxed Godongwana from going ahead with a speech in which he insisted that the Budget was one which reflected the will of the GNU with only “minor disagreements”.

How does the Budget process normally work? 

The Budget gets tabled in the National Assembly by the minister of finance, as happened on Wednesday.

Thereafter, it moves to the parliamentary committees, where each committee discusses the elements relevant to each portfolio. Then it returns to the National Assembly for a vote.

For the past 30 years, this process has gone off without a hitch because the ANC held the majority in every committee and the majority in the National Assembly, meaning it could push through anything it wanted.

But because the ANC lost a whopping 71 seats in the 2024 general elections, that is no longer a privilege it enjoys. To pass any legislation, it needs to enlist at least 42 other MPs to vote with it.

Without the DA’s support, this is extremely difficult without the buy-in of either the EFF or MK.

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What was the general response to the Budget? 

The proposed VAT hike of 0.5 percentage point was a compromise from the initial offering of 2%, offset by extending the basket of VAT-exempt basic goods, but it was still widely rejected.

The ANC’s alliance partners, Cosatu and the South African Communist Party (SACP), were adamant that the Budget was anti-poor, with the SACP stating that VAT increases had a “disproportionate impact on workers and the poor”. Cosatu termed it an “ill-considered pickpocketing of workers”.

This sentiment was shared by political parties across the political spectrum.

Of the four next-biggest parties in Parliament — the DA, MK, EFF and IFP — only the IFP looked as if it might be prepared to back the Budget at the time of writing on Wednesday evening.

The DA’s statement on the matter predicted that the ANC would not be able to reach a parliamentary majority on the matter: “The ANC VAT Budget doesn’t have a majority, and the DA won’t give it one.”

Does the ANC have a path to pass this Budget as it stands? 

There are two considerations here: the number of parliamentary votes involved, and the future of the GNU.

The former is more clearcut. As mentioned, the ANC needs 42 MPs to vote it through.

Daily Maverick’s back-of-an-envelope calculations on Wednesday suggested that even with the support of the IFP, the Patriotic Alliance and the majority of smaller parties in the National Assembly, the ANC would fall short by about five MPs.

If it could persuade MK or the EFF to vote with it, the job would be simple — with MK, no further parties are needed. But both parties have come out swinging against the VAT hikes.

ActionSA also says it will not support the Budget in its current form — but if it could be somehow persuaded, its six MPs would be sufficient to carry the ANC over the line alongside other smaller parties.

This is not impossible, though unlikely.

The question is, however, what this would mean in terms of the future of the GNU — if both the DA and the FF Plus remained opposed to arguably the most important piece of legislation put forward by what is supposed to be their own government. For the two parties to remain in the GNU in the face of such humiliation would surely be untenable.

What would happen if Parliament cannot pass the Budget? 

The phrase “uncharted territory” has been thrown around a lot lately, but never with more force than in this context.

A Parliament brochure on the Budget process from 2016, which is now mysteriously unavailable but can be accessed through internet archive the Wayback Machine, states: “The Budget is so important that if Parliament rejects the Budget, the government will usually resign and an election will be held to elect a new government”.

It would, in other words, be a massive political crisis.

It’s unlikely that the government would resign voluntarily, but a motion of no confidence could be passed in Parliament against President Cyril Ramaphosa. This would, however, probably require the DA and MK to vote together, which is a truly outlandish scenario.

None of this has ever happened before, so it’s difficult to predict outcomes with any certainty. But what is sure is that there’s quite a way to go before we start the real political catastrophising.

What’s the more likely scenario? 

Parliament can, thankfully, still amend the Budget in terms of the Money Bills Amendment Procedure and Related Matters Act, and has many weeks to do so.

This is the most likely scenario, given what is at stake.

It is also probable that some political brinkmanship is about to be played out, despite all the seemingly high-minded objections to the VAT hike.

GNU parties implacably opposed to this Budget, for instance, could use their ultimate sign-off as leverage to press an advantage when it comes to the other contentious pieces of legislation currently stirring up the GNU: the Expropriation Act, the Bela Act and the National Health Insurance Bill.

Since it’s unlikely that the ANC’s own constituencies are in favour of the VAT hike, a climbdown on that matter would not cost the party much political capital.

But the deeper problem is what this fracas suggests about the GNU. The DA has a deputy minister of finance post, so the party was obviously privy to all the discussions about the Budget, and has said it made its position on VAT clear.

Similarly, the Cabinet was briefed on the Budget before its tabling on Wednesday afternoon, and a number of the GNU ministers in that body would also have voiced strenuous opposition — but seemingly impotently.

If positions in the GNU do not offer a chance to meaningfully shape policy, these politicians — and, more importantly, their voters — will start to ask serious questions about the utility of remaining within it. DM