While finance minister Enoch Godongwana shifted to damage control after parliament held a joint sitting for a budget that was never tabled, signs were present that the budget was bound for uncharted territory from the beginning of the day.
From the media being briefed on the Budget Review in the morning ahead of cabinet, to his occasional stepping away from said briefing to answer phone calls, much of the events surrounding Wednesday's budget were unusual.
The government of national unity’s (GNU) first budget speech was scheduled to be tabled on Wednesday afternoon, but a cabinet meeting ahead of the tabling could not agree on issues including the proposed two percentage point increase in VAT to 17%.
Within an hour of National Assembly speaker Thoko Didiza announcing a postponement at the beginning of the joint sitting, parties including the DA and Freedom Front Plus were already telling reporters that they rejected the VAT hike proposal in cabinet and that they first heard about it during the cabinet meeting on that day.
Time challenges
Asked if the VAT-hike proposal was the sole reason the cabinet could not approve the budget, Godongwana said the circumstances behind the budget postponement were more complicated than a mere rejection of the VAT hike proposal.
A tax such as VAT carries political risk. Most political parties would probably be scared knowing they are going to lose the base.
— Enoch Godongwana, finance minister
“You can’t have the [two percentage points] alone without talking about what’s going to replace it and that does not become contentious ... What we are grappling with is not necessarily [two percentage points], per se. What we are grappling with [is], even the challenges and priorities we are facing, how do we fund them? Do we borrow more? Do we continue cutting expenditure? Do we raise tax? What are the implications of that?”
Godongwana said his team had to balance the market sensitivity of the Budget Review’s contents with a change in the schedule for the cabinet meeting on the budget. He announced that the new date for the budget would be March 12.
This coupled with President Cyril Ramaphosa flying from Johannesburg on the morning of the budget created time challenges.
“[Regarding the briefing to cabinet before the budget is tabled], is it normal? The answer is yes. Because some of the information is market-sensitive. Because of that nature, we normally give an indication.
“For instance, two weeks ago, we went to cabinet and gave an indication precisely because of the market sensitivity of some of the issues, we didn’t put some of these issues on the table and then we normally put it [on the table] early in the morning. The unfortunate thing today — that’s why we didn’t start early, is because the president wasn’t around, so we started late,” he said.
‘Uncharted territory’
National Treasury director-general Duncan Pieterse said because the postponement put South Africa in “uncharted territory”, the embargo on the Budget Review technically remained in place.
He said National Treasury would have to reflect on what this means and make announcements “fairly quickly”. Minister in the presidency Khumbudzo Ntshavheni said the assumption that the budget was rejected only by DA ministers was “incorrect”.
She said even those who would be called ANC ministers said they could not approve the budget until they had more time to contemplate the trade-offs.
‘Political tightrope’
Even during the morning briefing to media before the postponement, Godongwana acknowledged the political perils that came with tabling the budget speech.
He remarked that it was “unprecedented” that he would brief the media on the speech before briefing cabinet and that he did not know how his fellow ministers would respond to his proposals.
As always, the minister held a briefing in parliament lock-up ahead of the tabling of the budget speech where he was flanked by deputy ministers David Masondo and Ashor Sarupen, National Treasury DG Pieterse, Sars commissioner Edward Kieswetter and Reserve Bank governor Lesetja Kganyago.
My understanding is that the DA’s position is more nuanced than to say that they are rejecting the budget. I am not at liberty to say more than that.
— Enoch Godongwana, finance minister
However, this time, the briefing took place at 10am, about an hour and a half before it usually takes place.
Asked about the decision to propose a VAT hike, Godongwana said he understood the political risks that came with the decision, but said it was the least detrimental option where the alternatives were cutting funding for critical programmes and taking on risk debt. “Of course, political risk [exists].
“A tax such as VAT carries political risk. Most political parties would probably be scared knowing they are going to lose the base.
“The ANC is no exception in that regard. There will be a great deal of negotiation to manage that political risk.”
Asked about reports that the DA planned to reject the budget in the morning, Godongwana said the DA as well as its ministers and deputies in cabinet have supported National Treasury’s fiscal policy path since the inception of the GNU.
“I don’t want to second-guess the DA and engage the DA based on what I hear in the press. My understanding is that the DA’s position is more nuanced than to say that they are rejecting the budget. I am not at liberty to say more than that.”
‘Galvanise’
Godongwana said he would appreciate support for the budget and its proposals from all political parties represented in parliament, including parties like the EFF, which are not represented in the GNU’s executive. “A tax like this ... [concerns] not only the DA.
“There is the ANC and other parties like the EFF, in an environment like this, you would like to galvanise as much forces as possible. A budget is to try to deal with all of these political parties and try to avoid a political game with the budget.”
Other instances during the briefing that saw the panel cut unusual figures included the late arrival of deputy minister Sarupen, who was still preparing for the budget briefing to cabinet, and Godongwana momentarily leaving his seat during the briefing to take phone calls.
Asked if the opposition deputy minister would reject the budget, Godongwana said it was “unfair” to ask Sarupen to comment on whether the DA will reject the budget as the panel was briefing reporters in their capacity as officials of National Treasury, the Sars and the Reserve Bank.
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