The beauty of the 2025 national budget is that it might be the most significant and positive in 20 years. It encompasses far-reaching changes and ideas that have largely gone unnoticed. The budget beast is that it perpetuates the tax, deficit, debt and spending levels that drive the terrible triplets of unemployment, poverty and inequality.
In a country where slogans often substitute for substance, and budgets have long been parliamentary performances rather than democratic instruments, “Budget 3.0” is historic not for what was trumpeted, but for what went unnoticed.
What the budget contains and what it lacks was overshadowed by the Trump-Ramaphosa reality show, which monopolised media attention and pushed the budget into obscurity. Six major elements were overlooked; only one made the headlines.
First democratic budget
Budget beauty includes what many dismissed as beastly. Instead of lamenting a tortuous budget process, it should be celebrated as the first in living memory that was more than an arbitrary decree. It was subjected, as all legislation should be, to a transparently contested process. Trump trumped Ramaphosa with dubious claims; budgetary integrity trumped bureaucratic power.
Because it is democratic at last, the budget is not yet law. It remains a bill, open to debate. It is a proposal, not a fait accompli. Much may change in response to public submissions, parliamentary deliberations and discourse such as this.
A century of nationalised monopolies ended
A second feature, easy to miss, is finance minister Enoch Godongwana’s announcement that what was nationalised more than a century ago and run as a government monopoly (single supplier) and monopsony (single buyer) has come to an end.
He confirmed what had been brewing in the wings: that there would be private participation and competition in our economic arteries of rail, energy and network sectors. The government is committed to private rail operations, signalling partnerships and open-track access. Private electricity generation and trade have moved from apartheid-era taboo to economic logic. These are profound ideological corrections – and reasons for optimism.
NHI death sentence
Perhaps the most important aspect of the budget is what’s missing: any funding for, or even mention of, National Health Insurance (NHI). NHI is arguably the biggest, costliest and stupidest idea in South African policy history. To fund full, high-quality health care as envisioned by its architects would consume the entire R7-trillion economy, according to statistician Garth Zietsman.
In a brutal attack on public health care, the minister read extracts from a doctor’s letter describing the ghastly state of a public hospital. The subtext was clear: a nationalised health-care monopoly under the current minister and senior officials does not merit mention. The letter defended the dedication of public health workers battling a system so broken that they buy surgical gloves with their own money. Central planning, he showed, is sick. Private care, funded by private insurance and public subsidies for the poor, is the best way to provide quality care for all.
SOE dinosaur extinction
Another quiet revolution: the extinction of apartheid-era dinosaurs in state-owned enterprises (SOEs). In another passing remark, the minister said SOEs or their functions would become public-private partnerships (PPPs), where viable. That might be code for privatisation. The rest would be dealt with, which is possibly code for liquidated.
The implicit message is no more bailouts.
Whether through liquidation or privatisation, the budget appeared to mark the beginning of the end for what should have ended with apartheid. PPPs will cover logistics, energy (under the Integrated Resource Plan), transportation, water and sanitation. A new framework for fast-tracking unsolicited proposals is expected next month.
No more tax-and-spend
Uncharacteristically, the budget did not raise income tax rates and spending, apart from the inflation impact of “bracket creep”. The fifth feature is that we are spared the annual ritual of fiscal punishment.
Contrary to popular rhetoric, a VAT increase might be the least bad if there must be an increase, which, mercifully, is not the case. Indirect, consumption-based taxation allows people to choose when and how they contribute to the fiscus and leaves productive income and capital to create jobs, growth and wealth.
Land to the people
There might not have been a single media mention of the sixth giant feature, land redistribution – dare we say privatisation? No-one knows how much land the government has, whether by what is typically mentioned and utterly irrelevant, area, or what matters and is unknown, value. Less is known of other criteria: usage, locality, occupation, government level, organs of state, development and the like.
Government is by far the biggest landowner by all criteria. As little as 10% of government land, if distributed, could provide every landless household with a plot.
Perpetual stagnation
The six overlooked reforms are all positive. But the seventh ugly monster in the room is not: the absence of anything meaningful to drive short-term growth.
The most boring mantras in all budgets for the past 20 years have been promises of increased growth rates, reduced red tape, investor-friendly policies and reduced deficits. Like the horizon, they recede as we approach.
Every budget is tabled in parliament with multiple measures to the opposite effect. Maybe a mysterious gas is fed into the parliamentary ventilation system that prevents anyone from noticing the contradiction.
Ronald Reagan once lamented that government programmes never disappear. “A government bureau is the nearest thing to eternal life on this earth.”
Zero-based budgeting, once a promise of discipline, has vanished, with nil prospect of real reform inside the machinery of the state.
Budgetary detritus
There was much of lesser significance. Four “key pillars” for “faster and more inclusive growth” were macroeconomic stability, structural reform, state capability and infrastructure investment. Wrapped within customary fluff, the real pillars highlighted above were hidden.
Much was made of the decision to “professionalise” government functions; the implication being the end of employing unqualified people. Digital transformation and computerisation are a welcome commitment.
The turning tide
The big six overlooked positives will be momentous if they materialise, which is more likely under governments of shifting coalitions of the kind that most experts predict.
Leon Louw is the founder of the Free Market Foundation, and the CEO of Freedom Foundation and Izwe Lami.
Sign up to Currency’s weekly newsletters to receive your own bulletin of weekday news and weekend treats. Register here.
