Budget 3.0 and the looming battle between politicians and technocrats in Treasury

With the Finance Ministry working on what is inevitably being called “Budget 3.0” we are now likely to see an unprecedented process involving politicians from different parties, and technocrats from National Treasury. 

This is likely to lead to some kind of tension between them. At the same time, increasing opposition to the DA within the ANC could put intense pressure on the whole process.

Over the past few days it has been confirmed by the DA that at least two of its members are now working with Finance Minister Enoch Godongwana to draw up the new Budget.

Meanwhile, the Sunday Times has reported that many members of the ANC’s caucus in Parliament are again pushing for the party to stop working with the DA. 

They claim its actions in voting against the previous fiscal framework, and its various court cases against aspects of government policy, show that it must be removed.

Hanging over all of this is our recent history of tension between the DA and the ANC.

It should not be forgotten that the DA is but one of 10 parties in the current coalition and many of the others have big differences with the ANC.

For example, if the Patriotic Alliance were to go to court to try to overturn the government’s current policy stance towards Israel, would ANC caucus members demand that they be forced out too? 

Perhaps. Which indicates how complicated this situation is.

But for the moment the key tension in this coalition is what it has always been: the relationship between the ANC and the DA (along with all of its complications, including the fact that it is inextricably intertwined with President Cyril Ramaphosa and the leadership battle within the ANC).

This means that Godgonwana’s decision to work with the DA in drawing up the Budget makes political sense. It also makes it impossible for the DA to oppose it – it would look foolish for opposing a Budget it helped draw up.

And the political reality is that because of the numbers of the game (the ANC and the DA together have 60% of the seats in the National Assembly) other parties would just have to go along with it.

The chair of the DA’s Federal Council, Helen Zille, has said: “We do not talk about red lines. We are aiming at a balanced Budget which will involve cutting some items of expenditure that do not add value.”

This is probably clever politics. It means the DA is deliberately trying to avoid any more disputes. It also means that if any money is saved through whichever cuts, it can claim some kind of victory.

Of course, the ANC has also already agreed to the kind of process that could lead to cuts.

In the original Budget proposal, Budget 1.0, the written text of the speech (which was never delivered) promised a process of spending reform. Essentially, this is the same thing, a series of reforms that would lead to spending cuts.

But the scope for tension remains.

It is likely that the two DA members involved in this (Deputy Finance Minister Ashor Sarupen and Mark Burke) will push hard for some cuts. And, being politicians, they may want to force the ANC to make politically significant concessions (imagine for example, they insist that the National Youth Development Agency be shut down).

Godongwana might want to oppose that, suggesting it is not politically feasible for his constituency (and the inevitable patronage opportunities that would be lost).

In the middle of this are the technocrats, the officials in National Treasury who have to manage the actual numbers.

Technically, they are politically neutral. But now they are going to be stuck in the middle of a very difficult political fight.

At the same time the importance of this moment should not be forgotten.

We are now in a situation where politicians from different parties are negotiating over how the government will spend money.

For the moment, it is relatively simple, it is between just two parties. 

And the agendas of those two parties are also relatively clear: the DA wants reform, the ANC (presumably) wants to keep things as they are.

But this is only the starting point of a major change that will shake through our politics.

In the near future it is likely that other parties will be a part of this process. It is entirely possible that after the next election there will be three major parties needed to support a coalition.

In fact, if ANC MPs in the party’s caucus have their way, it would be even sooner, with a large number of parties necessary to vote in favour of a Budget.

This will lead to simple patronage politics; parties will demand certain policies or even that their own people be appointed, as the price of their support.

The only people standing in the way of this are the technocrats. And they, technically, work to the national good, but must also obey democratically elected politicians.

This is likely to result in some very complicated situations in the future.

And this moment is vitally important to our future. How our society deals with this current situation might well set precedents and conventions as to how we deal with this.

Meanwhile, there have been suggestions, again, that the finance minister should be someone who is not a politician, that a complete outsider should be asked to do the job.

This would follow the example of Derek Keys who was appointed to the position by FW de Klerk during the transition to democracy.

While there may be merit in this (certainly, an independent finance minister might well enjoy more legitimacy among all voters than a person from any one party), it also has drawbacks.

For a start, while Keys (and Chris Liebenberg, who followed him) were seen to be doing their national duty by helping the transition to democracy, the situation is much more complicated, and politicised, now.

Someone with a stellar business reputation might well want to avoid politics altogether. Would you risk your career by engaging with politics?

And a party in the coalition that opposes their decisions would probably say so publicly, putting them in a dangerous position.

In the short term there are several scenarios that could now play out.

Godongwana and the DA are probably likely to reach an agreement relatively easily, allowing a Budget to be passed.

The voices in the ANC calling for the DA to leave the national coalition might well be silenced, or muzzled, or simply ignored over the next few months. If only because, were the ANC to push the DA out of the coalition Ramaphosa would probably be fatally weakened (that in turn would lead to Deputy President Paul Mashatile lobbying to take over early, something that would cause intense division in the party).

It is also possible, but probably less likely, that the DA and the ANC continue to fight, and can’t reach an agreement.

And, if the voices in the ANC who oppose the DA’s inclusion in the coalition gain in strength, that would lead to the end of the coalition. The ANC would then be forced to govern with the help of many smaller parties.

The result of that would be a kind of governance we have seen in metros like Joburg and Tshwane in recent times. This would be a disaster.

It has often been said that this first proper coalition in national government was going to be a vital period in the development of our democracy.

It may turn out that the next three weeks, leading up to the publication of the next Budget, will be the most important period of this coalition, and thus of the next few years. DM