ANC sidelines DA to get budget support

The ANC has secured a majority in the Standing Committee on Finance to adopt the budget framework report, with “recommendations”, but no guarantees.

This follows a strained debate in the committee, where parties, including the DA and EFF, opposed the proposed budget and the one percentage point VAT hike over the next two years.

Ahead of the committee meeting, the DA and ANC were deep in negotiations, trying to find common ground and compromise to pass the budget.

However, the ANC reportedly would not agree to demands from the DA, which was seeking greater control and influence on economic policy.

The parties failed to reach an agreement when the committee met, leading to anxiety over the outcome.

Ahead of the meeting, parties made it clear that they would not support a VAT hike.

During deliberations, former DA partner ActionSA proposed eliminating the VAT hike and Treasury’s decision not to adjust tax brackets for inflation, and giving the finance minister 30 days to adjust the budget.

The DA also put forward a proposal to avoid a VAT hike, while cutting expenditure to balance the books.

The ANC threw its support behind ActionSA’s proposal.

However, the party argued that the fiscal framework should be supported at the meeting, provided that the National Treasury adopts and makes the proposed adjustments.

The DA and EFF argued that the framework could not be supported and opposed at the same time.

DA MP Mark Burke said it was “absurd” to support the framework while also proposing to amend it.

Regardless, ActionSA ultimately voted with the ANC to support the framework, with its proposal securing a majority vote. The matter will now proceed to National Assembly on Wednesday (2 April).

ActionSA said that it will now be the responsibility of parliament, together with National Treasury, to finalise alternative revenue and expenditure proposals within 30 days.

The party added that its vote ensures “that substitute revenue proposals and corresponding expenditure savings are considered to offset the R28 billion shortfall from scrapping the tax increases”.

The DA called the decision to vote in support of the framework a betrayal of the people of South Africa.

The party said the vote means the committee adopted the budget without changes, including the VAT hike.

“By adopting this budget, without the reforms and changes that were needed, ActionSA has shamefully shut down the required government spending review,” said DA spokesperson Willie Aucamp.

“This is extremely irresponsible, and will hand a blank cheque to the ANC to continue spending government money without review.”

The party also called the ANC’s decision to secure the budget approval from outside the Government of National Unity (GNU) a “serious infraction”.

The outcome has thrown the future of the GNU into question, with the ANC stating earlier in the day that the outcome of the meeting may require a “restructuring” of the coalition.

The EFF said that the adoption was deeply flawed, incoherent and illegal, noting that it was accomplished through “backroom deals” with no due regard for Parliamentary procedure.

It said that the recommendations by Action SA after the fact hold no legislative weight, as the fiscal framework, including the VAT hike, have been approved by the committee.

“The request to the National Treasury to find alternative measures….are meaningless and will do nothing to halt the hikes,” it said.

“The Standing Committee on Finance has effectively adopted” the fiscal framework along with accompanying recommendations and referred it to the the National Assembly for approval, Joseph Maswanganyi, the panel’s chairman said in an interview.

“We must make it clear that we have not amended the fiscal framework,” but have requested the minister to reconsider the VAT issue and try to find alternative ways to raise revenue, he said.