Reneva Fourie
For the first time in South Africa’s history, the budget vote for the forthcoming fiscal period, which Minister of Finance Enoch Godongwana was to table to Parliament on Wednesday, 19 February, did not materialise.
An extraordinary coalition of more than twenty organisations, including the SACP, COSATU and SAFTU, protested against the content of the intended budget. Among the objections was that the budget prioritises austerity measures while promoting greater private sector investment in essential services critical for human survival, including water and electricity. Additionally, the budget was going to include an increase in Value Added Tax (VAT), which adversely affects poorer communities.
While the protests, which included two alliance partners of the ANC, did not affect the intended budget, the DA’s late objection on Budget Vote Day halted Parliament. In a tweet, they stated that the ‘Budget Vote has been postponed following intense DA pressure against a proposed 2% VAT increase by the ANC’.
The DA’s reckless opportunism is deceptive. Firstly, the ANC does not determine the budget. It emanates from an interactive consultation process between Cabinet (which the DA is part of) and government departments, starting as early as October every year.
Budget changes severely affect national government departments and the monies available to provincial and local governments. Secondly, the sudden concern expressed by the DA is surprising given that its member, Ashor Sarupen, is the Deputy Minister of Finance. Lastly, it is well known that the DA prioritises market-friendly policies that benefit established businesses, often at the expense of social justice and transformation.
By boasting about holding the country to ransom, the DA once again demonstrated that its political strategy is driven by an insatiable hunger for short-term political gains rather than national interest. While the party often speaks about the importance of investor confidence and economic stability, its actions tell a different story.
The negative ramifications of delaying the budget far outweigh any controversial executive order issued by President Donald Trump. The uncertainty created by delaying the budget exacerbates market jitters, undermines business confidence, and sends a troubling message to investors that South Africa is politically unstable.
The protest action by the broad Left coalition differs significantly from the sudden awakening of the DA. Just as the DA only recognised the plight of Palestinians at the last minute for electoral expediency, the successful protests by the Left, led it to jump onto the pro-poor wagon. Despite its new-found commitment to the poor, it remains an advocate for reduced social spending and privatisation.
The austerity measures advocated by the DA and its allies often lead to cuts to public sector jobs. In a country already grappling with high unemployment rates, this could lead to further economic suffering, social unrest, and rising crime rates. In the crime-ridden, DA-led Western Cape, 2,400 teaching positions have already been eliminated, and essential medical posts remain unfilled. Furthermore, introducing private financing into essential services typically increases tariffs, which overstretched South Africans can ill afford.
Conversely, an expansionary budget, which the Left is calling for, stimulates economic growth. This strategy is commonly applied during periods of economic downturn, high unemployment, or slow growth. South Africa faces economic stagnation, worsened by several global factors such as a recent pandemic, political instability, technological changes, and economic uncertainties.
As a result, the country has experienced increasing rates of unemployment, poverty, and inequality. Increased government spending on infrastructure projects, education, and healthcare boosts economic demand, encouraging businesses to expand and invest. For South Africa, this could mean improved roads, better healthcare facilities, and enhanced education systems, all contributing to long-term economic growth.
A country’s economic development relies not only on infrastructure, industry, and trade but is also profoundly influenced by the well-being and financial security of its population. Implementing a comprehensive social security network and a Basic Income Grant (BIG) are two effective strategies that can alleviate poverty, provide financial stability, enhance workforce productivity, increase consumer spending, and stimulate entrepreneurship.
Higher consumer spending propels industries and creates jobs, contributing to GDP growth. Additionally, a BIG can be leveraged to initiate microenterprises that contribute to sustainable livelihoods. The push for the rollout of National Health Insurance highlights the reality that workers unburdened by worries about medical expenses or basic survival are more focused, healthier, and efficient in their jobs.
Countries and regions experimenting with BIG and comprehensive social security systems have observed promising outcomes. For instance, Finland’s Basic Income Experiment (2017-2018) indicated that recipients experienced better mental wellbeing and job satisfaction. Similarly, Brazil’s Bolsa Família Program, a targeted cash transfer initiative, has significantly reduced poverty and improved economic indicators. Meanwhile, Alaska’s Permanent Fund Dividend provides residents with an annual universal cash grant, contributing to economic stability while reducing poverty.
Advocating for an expansionary budget does not undermine the importance of fiscal sustainability. Addressing public sector inefficiencies is crucial; this can be achieved by enhancing resource management, cutting down on waste, improving accountability, and leveraging technology effectively.
According to the Auditor General, by the end of the 2023-24 fiscal year, the accumulated irregular expenditure reached an alarming R582,40 billion. Greater efforts should also be directed towards countering tax evasion and illicit financial flows, which amount to approximately R400 billion annually. Above all, expanding the tax base through job creation is essential.
Achieving a balanced approach that safeguards vulnerable populations while ensuring fiscal sustainability is vital for South Africa’s long-term prosperity. However, the country also needs leadership that prioritises stability, transformation, and inclusive development.
The DA’s actions are a stark reminder that its commitment to investor confidence and economic growth applies only when it aligns with the party’s political agenda. When allowed to act in the national interest, the DA chooses to manufacture crises, undermine crucial processes, and hinder transformation efforts. It might be time to rethink whether the DA’s participation in the GNU benefits South Africa.
* Dr Reneva Fourie is a policy analyst specialising in governance, development and security and co-author of the book ‘The Art of Power: Pursuing Liberation and Nation-building’.
** The views expressed do not necessarily reflect the views of IOL or Independent Media.