The impasse over the budget has exposed a fault line in the seventh administration: the ANC and the DA do not agree on what the GNU is and how it should function. This makes genuine negotiations virtually impossible.
At the time of going to print on Tuesday, the vote on finance minister Enoch Godongwana’s budget — which had been rescheduled for delivery from February to March 12 — was set to go ahead. This was after weeks of negotiations between the ANC and the DA on the one hand, and the ANC and all other parties in parliament on the other.
The budget vote will in effect determine whether the GNU continues. The ANC has had discussions with two parties outside the GNU, ActionSA and the EFF; both say they will help pass the budget only if the DA is removed from the GNU.
The FM understands that the DA would leave if it was kicked out of the GNU by President Cyril Ramaphosa, who appoints the cabinet. But its departure would place the unity government in KwaZulu-Natal at risk, opening a path for Jacob Zuma’s MK Party to step into power in that province.
At the heart of the disagreement between the DA and the ANC is a difference in understanding of what the GNU is, and how it should function.
“The DA is attempting to reintroduce a grand coalition in the GNU,” a senior ANC insider privy to the negotiations tells the FM. “There is almost schizophrenic behaviour by the DA. On the one hand, it behaves as an opposition and on the other, it is a partner in the government.
“You can’t have both. If there are quarrels between the government partners, they are better resolved internally instead of going out as an opposition party. So the DA needs to make up its mind.” To which the DA might reasonably reply that it might as well behave as an opposition if it is ignored by the ANC as a governing partner.
For the ANC, there are apparently three options: the DA remains in the GNU; the ANC forms a minority government; or the DA works with MK and the EFF to remove Ramaphosa.
“Remember, there is still the option of a minority government,” says the ANC insider. “Does it [the DA] want to relate to the government on an issue-by-issue basis? If that is the case, it’s a minority government with confidence, with supply. That is where it is moving towards.”
The DA, however, believes that as the second-largest party in the GNU, it should have a say in economic policy — and it has sought to extract that concession through the budget negotiations.
It has argued that taxes will have to be increased annually if the GNU does not accelerate economic reforms to boost growth, create jobs and curb wasteful government spending. The two parties largely agree on how this can be accomplished, but the main sticking point remains who should lead the processes and whether sixth-administration legislation such as the National Health Insurance (NHI) Act and the Expropriation Act are now open to negotiation.
The DA effectively threw all its disagreements with the ANC since the formation of the GNU into the budget negotiation process.
As the DA sees it, the problem with how negotiations have been conducted is that the ANC still does not acknowledge the precarious position of both the country and itself as a party, with only 40% of the vote. The DA believes ANC leaders have approached negotiations flippantly and with hubris.
Insiders say the ANC appears to have forgotten that no party in the GNU signed up for a VAT increase, which will have an impact on all South Africans, and on its own electoral support as well as that of other parties. Accelerating reforms to bring about economic growth is hardly unreasonable.
On the one hand, [the DA] behaves as an opposition and on the other, it is a partner in the government. You can’t have both
— ANC insider
The ANC, however, does not see it this way. Its stance, admitted to by ANC secretary-general Fikile Mbalula in a media briefing on Tuesday, is that negotiations should be limited to the content of the budget. Godongwana last week publicly chastised the DA for its opening demand in the negotiations for amendments to the Expropriation Act. Ramaphosa’s spokesperson, Vincent Magwenya, on Friday told the DA to simply vote for the budget, with nothing offered in return.
The DA wants a written agreement between the two parties in exchange for its support on the budget, while the ANC is resisting this — an indication that the party still refuses to accept that the DA plays a crucial role in the GNU. The negotiations also showed that a grouping in the ANC would prefer a tie-up with the EFF and MK, which other senior leaders describe as the “nuclear option”.
Friday’s curt message from the presidency to the DA indicated that an end could be in sight to the fledgling GNU. Markets reacted negatively — but two hours later, the ANC reopened talks. Over the following 48 hours, significant progress was apparently made.
The ANC presented a document DA insiders conceded was “good” and workable. The DA made slight amendments and returned the document to the ANC, and it seemed a near-done deal.
However, on Tuesday morning DA leader John Steenhuisen took to social media declaring: “Last night, the ANC refused to finalise an agreement on growth and spending reforms, imperilling the GNU. The DA will oppose the budget unless a written agreement is reached.”
It was back to the drawing board.
Steenhuisen abruptly cancelled a media briefing he was scheduled to address at 8.30am and was called to a meeting with Ramaphosa. The pair were scheduled to meet twice on Tuesday: in the morning and then in the afternoon, after the leaders had consulted their parties.
“So close, yet so far,” a senior ANC insider told the FM on Tuesday morning.
The latest impasse arose over three amendments the DA made to the ANC document.
The FM has seen the documents exchanged by the parties.
The contentious issues are around the role of the deputy minister of finance in the day-to-day running of Operation Vulindlela; the DA’s demand for an advisory council on NHI made up of sector experts; and proposed amendments to the Expropriation Act.
The DA has already lodged a court challenge to the Expropriation Act and parties have tentatively agreed to respect the court outcome on the matter.
The reforms already agreed on between the two parties were positive.
According to the document, they include private sector participation in ports and rail; a devolution strategy for passenger rail; energy sector reform; a review of housing subsidy programmes to increase access to affordable housing; a roadmap for digital transformation; and a review of the Public Procurement Act to ensure that it meets constitutional requirements while promoting transformation and economic growth.
The second pillar of the potential deal is a comprehensive review of government spending, including a review of programmes that should be scaled down, closed down or postponed; a comprehensive ghost employee audit for every provincial and national department, state-owned company and public entity; and protecting spending on policing, health and education where possible.
The final pillar of the deal would be a regulatory review to reduce the administrative burden on business.
However, the document may never see the light of day, should parties remain locked in their laagers over the GNU.
One of them will have to blink.
All this is causing uncertainty even as South Africa continues to put out fires on multiple fronts, locally and internationally.
A resolution to the impasse requires maturity from both the ANC and the DA.
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