Mashaba’s budget coup rescues ANC, as the DA fumes

Not many saw this coming. With just hours to go until parliament was due to meet and vote on finance minister Enoch Godongwana’s unpopular budget, which had proposed a VAT hike from 15% to 16% over the next two years, it seemed this was a mission impossible.

The process over the past few weeks had, after all, been an “absolute clown show”, in the words of DA strategist Ryan Coetzee, ever since Godongwana first cancelled his budget presentation in parliament an aeon back on February 19.

“Consider for a moment what the ANC has done,” said Coetzee yesterday. 

First, it tabled a budget not supported by its biggest partner in the grand coalition, the DA; then, it tried to recruit Julius Malema’s EFF and Jacob Zuma’s MK Party to vote for that budget; and then, when it failed to find backers, it headed to parliament’s standing committee on finance, a day before the vote, seemingly without any plan.

“Who runs a country like that,” Coetzee asked.

It’s an apposite question. Talks between the ANC and DA have dragged on into the night and early mornings in recent days, and yesterday President Cyril Ramaphosa met DA leader John Steenhuisen to try and find a compromise. “Ramaphosa could have had this meeting any time in the past month. He waits till now,” said Coetzee.

With the vote in parliament scheduled for Wednesday, parliament’s standing committee on finance was due to discuss the fiscal framework, and hopefully reach an agreement. But with the EFF and MK Party out, and no deal with the DA, the light appeared slim.

And yet by the end of the day, in a somewhat miraculous comeback, the ANC had won enough support for the standing committee on finance to recommend passing this budget – subject to a bizarre caveat that the whole thing must be overhauled within 30 days.

In the end, the big winner from all of this was Herman Mashaba, the businessman and former mayor of Joburg, who broke away from the DA to form ActionSA in 2020.

To squeeze the budget over the line, the ANC had agreed to support a conditional proposal from ActionSA, which had also won support from the IFP. 

“We are going to vote for this budget,” said Mashaba on television channel eNCA last night. Cryptically, he added: “Come May 1, you’re not going to have VAT, you’re not going to have salary adjustments.”

Which all seems a bit confusing – this budget does propose a VAT hike, after all.

But essentially, what ActionSA’s proposal entails is that it will vote for this budget – but only on the condition that Godongwana comes back to parliament within 30 days with a new budget that contains no VAT hike and which adjusts the tax brackets for inflation.

In other words, ActionSA will support the VAT hike, on condition the VAT hike is scrapped and replaced with as-yet undetermined revenue-raising measures. 

Which, in a way, is congruent to the absurdity of the whole process.

ActionSA argued that its proposal would achieve “fiscal consolidation without worsening inequality or placing undue financial strain on citizens”.

While ActionSA had conceded that scrapping the VAT hike and including salary adjustments would lead to a R28bn hole in the budget, Mashaba was characteristically confident that this money could be found elsewhere. 

Finding R28bn “is a walk in the park”, he said, adding that “we can assure the people of South Africa that long before 30 days are up, there will be a new budget presented. 

Coup suitably sewn up, the politicians retreated to their cigar lounges, some to celebrate, some to lick their wounds.

A bigger casualty

So does this mean the budget crisis is over?

That’s a far harder question to answer. 

First, there will be no vote in parliament today as the law stipulates that the finance minister must be given 48 hours to consider this amendment. And even then, it may be delayed until some time in the next 30 days, when Godongwana presents the new, new, new budget.

But more critically, it’s hard to say what will be left standing of the government of national unity (GNU) by then.

By bypassing its coalition partners and seeking approval from ActionSA – a party outside the GNU – the ANC may well have triggered the collapse of the administration. 

At the least, an overhaul of the government seems likely.

Initially, Mashaba was adamant that ActionSA would not be part of the GNU. But speaking yesterday on Newzroom Afrika, he said: “If it does happen that [Ramaphosa] does invite ActionSA to be part of the government, we will gladly participate in ensuring we keep our country stable.”

Which sounds a lot like a deal has already been struck. 

Quite what happened behind closed doors in the discussions between Ramaphosa and Steenhuisen, when news filtered through of ActionSA’s agreement, will no doubt occupy many column inches in the next few weeks. 

The DA, outmanoeuvred by its own coalition partner, seethed after the deal was struck. Mark Burke, the DA representative on the finance committee, said he was “completely dumbfounded” by what had happened. Pointedly, he said had no faith that the VAT hike would really be cancelled later. 

“The IFP, ActionSA and ANC have come together to support a 1% VAT increase over two years,” he said. “They will not amend the fiscal framework. They will make some flimsy recommendations and hope that somewhere down the line we can find the money so that maybe a portion of the VAT increase does not happen.”

History, he said, will judge the ANC, ActionSA and IFP harshly.

By striking a political deal, the ANC may have won this particular budget battle. But it’s hard not to see this as a significant defeat in the more crucial war to keep this particular coalition, with these particular parties, alive.

_{Top image: Rawpixel/Currency.}