Does Godongwana’s budget reflect the reality of South Africa?

A Treasury budget divorced from reality is a futile exercise. It’s a wish list, not an executable plan.

Unfortunately, the ties between the budget and reality are even more tenuous. It’s an untethering that started during the presidency of Jacob Zuma and accelerated under Cyril Ramaphosa.

That reality gap – the difference between dreamy intentions and SA’s dismal fiscal situation – is starkly evident in the annual budget.

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Last week’s second attempt by Finance Minister Enoch Godongwana to table a budget that passes parliamentary muster must be measured against an ANC-managed economy in desperate straits.

And time is of the essence.

There has to be a commitment to the privatisation of state-owned entities.

Big increases to public service workers have to be rescinded. The skills development agencies have to be shuttered.

The burden that failed broad-based black economic empowerment (B-BBEE) policies place on public procurement has to be reduced.

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Instead of getting to grips with these realities, Wednesday’s budget was just another rendition of the ANC’s favourite pastime, magical thinking.

It is premised on assumptions that the national debt will stabilise, the public service will shrink, the major state-owned entities will function without bailouts, and dysfunctional and corrupt municipalities and departments will be transformed.

The 5.5% above-inflation pay rise for public servants was justified by the expected number of employees opting for early retirement. Health got an extra R29 billion, of which about R10 billion was earmarked for NHI ground work, but Godongwana didn’t even mention the hole left in public finances by President Donald Trump’s ending of financial aid to SA.

Most importantly, Godongwana’s charade fails to adequately address the crunch issue – the proposed VAT increase that the DA had made clear would cause them to vote against the adoption of the budget and possibly sink the government of national unity (GNU).

Instead of a two-percentage-point hit, VAT will increase by half a point this year and another half a point next year.

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The ANC’s disdain for the DA goes further.

The DA notion that because it held the whip hand of the budget, it could bargain its support on VAT to extract concessions on other matters, such as the Expropriation Act, the National Health Insurance Act, and B-BBEE, has so far failed.

Godongwana said the DA attempted to “twist the government’s arm” on these policy issues. “One of the issues they highlighted was that they have lost a couple of battles, and it is creating tensions within their party, and, therefore, they want to win something.

So, it is not surprising that their submission to the president includes items outside the budget.

The following day, during a News24 webinar, Godongwana attacked the DA for “campaigning” against the budget and “compromising” the Treasury by saying, “This is an ANC Budget”.

“What they have done, which is bad for the GNU, is constitute themselves as an opposition within the GNU.”

In other words, what the ANC wants is the international credibility and parliamentary majority that the GNU provides, but it will not shift an inch on its policies.

While it’s expected that the DA would struggle to get the ANC to make concessions on ideologically loaded issues like expropriation and race quotas, it now appears it cannot even get it to make policy adaptations that are evidently necessary to prevent the economic slide from becoming an avalanche.

This puts the DA in a dilemma regarding its participation in the GNU, with a steadily widening gap between what it had hoped to achieve there and the reality.

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